Document:

EXHIBIT 10.3

 

CATERPILLAR
INC.

2006 LONG-TERM INCENTIVE PLAN

 

(as
amended and restated effective June 9, 2010)

 

Section
1.

Establishment, Objectives and Duration

 

1.1.     Establishment.  With the
approval of the stockholders of Caterpillar Inc., a Delaware corporation (the “Company”),
the Company established the Caterpillar Inc. 2006 Long-Term Incentive Plan (the
“Plan”) effective June 14, 2006.  The
Plan supersedes and replaces all prior equity and non-equity long-term
incentive compensation plans or programs maintained by the Company; provided
that, any prior plans of the Company shall remain in effect until all awards
granted under such prior plans have been exercised, forfeited, canceled,
expired or otherwise terminated in accordance with the terms of such grants.

 

1.2.     Purpose.  The Plan is
intended to provide certain present and future employees and Directors
cash-based incentives, stock-based incentives and other equity interests in the
Company thereby giving them a stake in the growth and prosperity of the Company
and encouraging the continuance of their services with the Company or its
Subsidiaries.

 

1.3.     Effective Date. The Plan was originally effective on June 14,
2006.  This amendment and restatement of
the Plan shall be effective as of the later of (a) the date the amendment and
restatement of the Plan is adopted by the Board or (b) the date the Company’s
stockholders approve the amendment and restatement of the Plan (the “Effective
Date”).  The amendment and restatement of
the Plan will be deemed to be approved by the stockholders if it receives the
affirmative vote of the holders of a majority of the shares of stock of the
Company present or represented and entitled to vote at a meeting duly held in
accordance with the applicable provisions of the Certificate of Incorporation
or Bylaws of the Company.

 

1.4.     Duration.  The Plan shall
remain in effect, subject to the right of the Company’s Board of Directors to
amend or terminate the Plan at any time pursuant to Section 16, until all
Shares subject to the Plan shall have been purchased or granted according to
the Plan’s provisions.  However, in no
event may an Award be granted under the Plan on or after the tenth anniversary
of the original effective date of the Plan, June 14, 2006.  Upon termination of the Plan, no Awards may
be granted but Awards previously granted shall remain outstanding in accordance
with the terms of the Plan and the applicable Award Document.

 

Section
2.

Definitions and Construction

 

When a word or phrase appears in the Plan with the
initial letter capitalized, and the word or phrase does not commence a
sentence, the word or phrase shall generally be given the meaning ascribed to
it in this Section unless a clearly different meaning is required by the
context.  The following words and phrases
shall have the following meanings:

 

2.1.     “Award” means, individually or collectively, a
grant under the Plan of Nonqualified Stock Options, Incentive Stock Options,
Stock Appreciation Rights, Restricted Stock, Performance Shares or Performance
Units.

 

1

 

2.2.     “Award Document” means any agreement, contract,
or other written instrument that evidences an Award granted to the Participant
under the Plan and sets forth the terms and provisions applicable to such
Award.

 

2.3.     “Award Gain” means (a) with respect to a given
Option exercise, the product of (X) the excess of the Fair Market Value of a
Share on the date of exercise over the Option Price times (Y) the number of
shares as to which the Option was exercised at that date, and (b) with respect
to any other settlement of an Award granted to the Participant, the Fair Market
Value of the cash or Shares paid or payable to the Participant (regardless of
any elective deferral pursuant to Section 13) less any cash or the Fair Market
Value of any Shares or property (other than an Award that would have itself
then been forfeitable hereunder and excluding any payment of tax withholding)
paid by the Participant to the Company as a condition of or in connection with
such settlement.

 

2.4.     “Board” means the Board of Directors of the
Company.

 

2.5.     “Cause” means, except as otherwise provided in
an Award Document, a willful engaging in gross misconduct materially and
demonstrably injurious to the Company. 
For this purpose, “willful” means an act or omission in bad faith and
without reasonable belief that such act or omission was in or not opposed to
the best interests of the Company.

 

2.6.     “Change of Control” means the occurrence of any
of the following events: (a) any person becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing twenty percent (20%) or more of the
combined voting power of the Company’s then outstanding common stock, unless
the Board by resolution negates the effect of this provision in a particular
circumstance, deeming that resolution to be in the best interests of Company
stockholders; (b) during any period of two consecutive years, there shall cease
to be a majority of the Board comprised of individuals who at the beginning of
such period constituted the Board; (c) upon the consummation of a Company
stockholder-approved merger or consolidation that results in the voting
securities of the Company outstanding immediately prior thereto representing
(either by remaining outstanding or by being converted into voting securities
of the surviving entity) less than fifty percent of the combined voting power
of the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or (d) Company stockholders
approve a plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all of its assets.

 

2.7.     “Code” means the Internal Revenue Code of 1986,
as amended from time to time, or any successor legislation thereto.

 

2.8.     “Committee” means the Compensation Committee of
the Board, appointed to administer the Plan, as provided in Section 3.

 

2.9.     “Company” means Caterpillar Inc., a Delaware
corporation, and any successor to such entity as provided in Section 18.

 

2.10.   “Director” means any individual who is a member
of the Board.

 

2.11.   “Disability” means, unless otherwise provided
for in an employment, change of control or similar agreement in effect between
the Participant and the Company or a Subsidiary or in an Award Document, (a) in
the case of an Employee, the Employee qualifying for long-term disability
benefits under any long-term disability program sponsored by the Company or
Subsidiary in which the Employee participates, and (b) in the case of a
Director, the inability of the Director to engage in any substantial gainful
business activity by reason of any medically determinable physical or mental impairment
that can be expected to result in death, or which has lasted or can be expected
to last for a continuous period of not less than 12 months, as determined by
the Committee, based upon medical evidence.

 

2.12.   “Effective
Date” means the date specified in Section 1.3.

 

2.13.   “Employee” means any employee of the Company or any Subsidiary.

 

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

 

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2.15.   “Fair Market Value” means, as of any given date, the fair
market value of a Share on a particular date determined by such methods or
procedures as may be established from time to time by the Committee.  Unless otherwise determined by the Committee,
the Fair Market Value of a Share as of any date shall be the mean between the
high and low prices at which the Share is traded on the New York Stock Exchange
for that date or, if no prices are reported for that date, the prices on the
next preceding date for which prices were reported.  Notwithstanding the foregoing, unless
otherwise determined by the Committee, for purposes of Section 6.5(d) of the
Plan, Fair Market Value means the actual price at which the Shares used to
acquire Shares are sold.

 

2.16.   “Family Member” means any (a) child; (b)
stepchild; (c) grandchild; (d) parent; (e) stepparent; (f) grandparent; (g)
spouse; (h) former spouse; (i) sibling; (j) niece; (k) nephew; (l)
mother-in-law; (m) father-in-law; (n) son-in-law; (o) daughter-in-law; (p)
brother-in-law; or (q) sister-in-law of the Participant (including adoptive
relationships).  Family Member also shall
mean any person sharing in the Participant’s household (other than a tenant or
an employee).

 

2.17.   “Good Reason” means, except as otherwise
provided in an Award Document, the occurrence of any of the following
circumstances (unless such circumstances are fully corrected by the Company
before a Participant’s termination of employment):

 

(a)    the Company’s assignment of any duties materially
inconsistent with the Participant’s position within the Company, or which have
a significant adverse alteration in the nature or status of the
responsibilities of the Participant’s employment; or

 

(b)    a material reduction by the Company in the
Participant’s annual base salary, unless such reduction is part of a
compensation reduction program affecting all similarly situated management
employees.

 

2.18.   “Incentive Stock Option” or “ISO” means
the right to purchase Shares pursuant to terms and conditions that provide that
such right will be treated as an incentive stock option within the meaning of
Code Section 422, as described in Section 6.

 

2.19.   “Long Service Separation” means, except as
otherwise provided in an Award Document, a termination of employment with the
Company or a Subsidiary after the attainment of age 55 and the completion of
ten or more years of service with the Company and/or its Subsidiaries.  Notwithstanding the foregoing and
notwithstanding anything in an Award Document to the contrary, for purposes of
determining whether a Participant has incurred a Long Service Separation, the
last period of continuous service with Progress Rail Services, Inc. and/or its
subsidiaries and affiliates (“Progress Rail”) prior to May 16, 2006 shall be
considered service with the Company and/or its Subsidiaries, subject to such
administrative rules that the Committee (or its delegate) determines are
appropriate and provided such participant was employed by Progress Rail on May
16, 2006.

 

2.20.   “Named Executive Officer” means a Participant
who is one of the group of covered employees as defined in the regulations
promulgated under Code Section 162(m), or any successor provision or statute.

 

2.21.   “Nonqualified Stock Option” or “NQSO”
means the right to purchase Shares pursuant to terms and conditions that
provide that such right will not be treated as an Incentive Stock Option, as
described in Section 6.

 

2.22.   “Option” means an Incentive Stock Option or a
Nonqualified Stock Option, as described in Section 6.

 

2.23.   “Option Price” means the per share price of a
Share available for purchase pursuant to an Option.

 

2.24.   “Participant” means an Employee, prospective
Employee, Director, beneficiary or any other person who has outstanding an
Award granted under the Plan, and includes those former Employees and Directors
who have certain post-termination rights under the terms of an Award granted
under the Plan.

 

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2.25.   “Performance-Based Exception” means the exception
for performance-based compensation from the tax deductibility limitations of
Code Section 162(m).

 

2.26.   “Performance Period” means the time period
during which performance goals must be achieved with respect to an Award, as
determined by the Committee.

 

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

 

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

 

2.29.   “Period of Restriction” means the period during
which the transfer of Shares of Restricted Stock is limited in some way, and
the Shares are subject to a substantial risk of forfeiture, as provided in
Section 8.

 

2.30.   “Permitted Transferee” means any one or more of
the following: (a) Family Members; (b) a trust in which the Participant and/or
Family Members have more than fifty percent of the beneficial interest; (c) a
foundation in which the Participant and/or Family Members control the
management of the assets; or (d) any other entity in which the Participant and/or
Family Members own more than fifty percent of the voting interests.

 

2.31.   “Plan” means the Caterpillar Inc. 2006
Long-Term Incentive Plan, as set forth herein.

 

2.32.   “Restricted Stock” means an Award of restricted
stock or restricted stock units granted to a Participant pursuant to Section 8.

 

2.33.   “Section 16 Officer” means any Employee who is
considered an officer of the Company for purposes of Section 16 of the Exchange
Act.

 

2.34.   “Share” or “Shares” means shares of
common stock of the Company.

 

2.35.   “Stock Appreciation Right” or “SAR”
means an Award, granted alone or in connection with a related Option,
designated as a SAR, pursuant to the terms of Section 7.

 

2.36.   “Subsidiary” means any partnership, limited
liability company, corporation, trust or other entity or association, directly
or indirectly, through one or more intermediaries, controlled by the
Company.  The term “control,” as used in
the immediately preceding sentence, means, with respect to a corporation or
limited liability company, the right to exercise, directly or indirectly, more
than fifty percent (50%) of the voting rights attributable to the controlled
corporation or limited liability company, and, with respect to any partnership,
trust, other entity or association, the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of the
controlled entity.

 

2.37.   “Tandem SAR” means a SAR that is granted in
connection with a related Option pursuant to Section 7, the exercise of which
shall require forfeiture of the right to purchase a Share under the related
Option (and when a Share is purchased under the Option, the Tandem SAR shall
similarly be forfeited).

 

2.38.   “Non-Tandem SAR” means a SAR that is granted
independently of any Options, as described in Section 7.

 

Section
3.

Administration

 

3.1.     Plan Administration.  The
Committee, or any other committee appointed by the Board, shall administer the
Plan.  The Committee or other committee
appointed to administer the Plan shall consist of not less than two
non-Employee Directors of the Company, within the meaning of Rule 16b-3 of the
Exchange Act and not less than two outside directors, within the meaning of
Code Section 162(m).  The Board may, from
time to time, remove members from, or add members to, the Committee.  Members of the Board shall fill any vacancies
on the Committee.  Acts of a majority of
the Committee at a meeting at which a quorum is present, or acts reduced to or
approved in writing by unanimous consent of the members of the Committee, shall
be valid acts of the Committee.

 

4

 

3.2.     Authority of the Committee. 
Except as limited by law or by the Certificate of Incorporation or
Bylaws of the Company, and subject to the provisions herein, the Committee
shall have full power to select Employees, prospective Employees and Directors
who shall participate in the Plan; determine the sizes and types of Awards;
determine the terms and conditions of Awards in a manner consistent with the
Plan; construe and interpret the Plan and any agreement or instrument entered
into under the Plan; establish, amend, or waive rules and regulations for the
Plan’s administration; and amend the terms and conditions of any outstanding
Award to the extent such terms and conditions are within the sole discretion of
the Committee as provided in the Plan and subject to Section 16.  Further, the Committee shall make all other
determinations, which may be necessary or advisable for the administration of
the Plan.  As permitted by law, the
Committee may delegate the authority granted to it herein.

 

3.3.     Electronic Administration. The Committee may, in its discretion,
utilize a system for complete or partial electronic administration of the Plan
and may replace any written documents described in the Plan with electronic
counterparts, as appropriate.

 

3.4.     Decisions Binding.  All
determinations and decisions made by the Committee pursuant to the provisions
of the Plan and all related orders and resolutions of the Board shall be final,
conclusive and binding on all persons, including the Company, its stockholders,
Employees, Participants, and their estates and beneficiaries.

 

Section
4.

Shares Subject to the Plan and Maximum Awards

 

4.1.                   Shares Available for Awards.

 

(a)    The Shares available for Awards may be
either authorized and unissued Shares or Shares held in or acquired for the
treasury of the Company.  The aggregate
number of Shares that may be issued or used for reference purposes under the
Plan or with respect to which Awards may be granted shall not exceed forty
million (40,000,000) Shares, subject to adjustment as provided in Section
4.3.  In addition, seventeen million six
hundred thousand (17,600,000) Shares authorized but unissued pursuant to the
Caterpillar Inc. 1996 Stock Option and Long-Term Incentive Plan shall be
reserved and available for grant under the Plan.  Accordingly, the total Shares authorized and
available for Awards under the Plan are fifty-seven million six hundred
thousand (57,600,000) Shares. 
Notwithstanding the foregoing, the aggregate number of Shares with
respect to which ISOs may be granted shall not exceed the number specified
above, and provided further, that no more than an aggregate of thirty-five
percent (35%) of the authorized Shares under the Plan may be issued with
respect to Awards of Restricted Stock and Awards of Performance Shares.

 

(b)    Upon:

 

(i)         a payout of a Non-Tandem SAR or Tandem
SAR in the form of cash;

 

(ii)        a cancellation, termination, expiration,
forfeiture, or lapse for any reason (with the exception of the termination of a
Tandem SAR upon exercise of the related Options, or the termination of a
related Option upon exercise of the corresponding Tandem SAR) of any Award; or

 

(iii)       payment of an Option Price or payout of
any Award with previously acquired Shares or by withholding Shares which
otherwise would be acquired on exercise or issued upon such payout (excluding
shares withheld for the payment of taxes),

 

the number of Shares underlying any such Award that
were not issued as a result of any of the foregoing actions shall again be
available for all purposes of Awards under the Plan (including, without
limitation, for purposes of applying the limitations set forth in the last
sentence of Section 4.1(a)).  In
addition, in the case of any Award granted in substitution for an award of a
company or business acquired by the Company or a Subsidiary, Shares issued or
issuable in connection with such substitute Award shall not be counted against
the number of Shares reserved under the Plan, but shall be available under the
Plan by virtue of the Company’s assumption of the plan or arrangement of the
acquired company or business.

 

5

 

4.2.     Individual
Participant Limitations. 
Unless and
until the Committee determines that an Award to a Named Executive Officer shall
not be designed to comply with the Performance-Based Exception, the following
rules shall apply to grants of such Awards under the Plan:

 

(a)    Subject to adjustment as provided in Section
4.3, the maximum aggregate number of Shares (including Options, SARs,
Restricted Stock and Performance Shares to be paid out in Shares) that may be
granted in any one fiscal year to a Participant shall be eight hundred thousand
(800,000) Shares.

 

(b)    Except as otherwise provided in Section
7.5(b) regarding SAR exercise, the maximum aggregate cash payout (including
Performance Units and Performance Shares paid out in cash) with respect to
Awards granted in any one fiscal year that may be made to any Participant shall
be five million dollars ($5,000,000).

 

4.3.     Adjustments in Authorized Shares. 
In the event of any change in corporate capitalization, such as a stock
split, or a corporate transaction, such as any merger, consolidation, separation,
including a spin-off, or other distribution of stock or property of the
Company, any reorganization (whether or not such reorganization comes within
the definition of such term in Code Section 368) or any partial or complete
liquidation of the Company, an adjustment shall be made in the number and class
of Shares available for Awards, the number and class of and/or price of Shares
subject to outstanding Awards granted under the Plan and the number of Shares
set forth in Sections 4.1 and 4.2, to prevent dilution or enlargement of
rights.  Such adjustment shall be made in
a manner determined by the Committee, in its sole discretion, to be appropriate
and equitable; provided, however, that (a) no such adjustment shall cause an
increase in the fair value of an Award for purposes of Statement of Financial
Accounting Standards No. 123 (revised 2004) or any successor thereto; and (b)
the number of Shares subject to any Award shall always be a whole number by
rounding any fractional Share (up or down) to the nearest whole Share.

 

Section
5.

Eligibility and Participation

 

5.1.     Eligibility.  Persons
eligible to participate in the Plan include all current and future Employees
(including officers), persons who have been offered employment by the Company
or a Subsidiary (provided that such prospective Employee may not receive any
payment or exercise any right relating to an Award until such person begins
employment with the Company or Subsidiary), and Directors, as determined by the
Committee.

 

5.2.     Participation.  Subject to
the provisions of the Plan, the Committee shall determine and designate, from
time to time, the Employees, prospective Employees, and Directors to whom
Awards shall be granted, the terms of such Awards, and the number of Shares
subject to such Award.

 

5.3.     Foreign Participants.  In order to
assure the viability of Awards granted to Participants employed in foreign
countries, the Committee may provide for such special terms as it may consider
necessary or appropriate to accommodate differences in local law, tax policy,
or custom.  Moreover, the Committee may
approve such supplements to, or amendments, restatements, or alternative
versions of the Plan as it may consider necessary or appropriate for such purposes
without thereby affecting the terms of the Plan as in effect for any other
purpose; provided, however, that no such supplements, amendments, restatements,
or alternative versions shall increase the share limitations contained in
Section 4 of the Plan.

 

Section
6.

Stock Options

 

6.1.                   Grant of Options.

 

(a)    Option Grant.  Subject to the terms and provisions of the
Plan, Options may be granted to one or more Participants in such number, upon
such terms and provisions, and at any time and from time to time, as determined
by the Committee, in its sole discretion. 
The Committee may grant either Nonqualified Stock Options or (in the
case of Options granted to Employees) Incentive Stock Options, and shall have
complete discretion in determining the number of Options of each granted to
each Participant, subject to the limitations of Section 4.  Each Option grant shall be evidenced by a
resolution of the Committee approving the Option grant.

 

6

 

(b)    Award Document.  All Options shall be evidenced by an Award
Document.  The Award Document shall
specify the Option Price, the term of the Option, the number of Shares subject
to the Option, and such other provisions as the Committee shall determine, and
which are not inconsistent with the terms and provisions of the Plan.  The Award Document shall also specify whether
the Option is to be treated as an ISO within the meaning of Code Section
422.  If such Option is not designated as
an ISO, such Option shall be a NQSO.

 

6.2.     Option Price.  The Committee
shall designate the Option Price for each Share subject to an Option under the
Plan, provided that such Option Price shall not be less than 100% of the Fair
Market Value of Shares subject to an Option on the date the Option is granted.  With respect to a Participant who owns,
directly or indirectly, more than 10% of the total combined voting power of all
classes of the stock of the Company or any Subsidiary, the Option Price of
Shares subject to an ISO shall be at least 110% of the Fair Market Value of
such Shares on the ISO’s grant date.

 

6.3.     Term of Options.  Each Option
granted to a Participant shall expire at such time as the Committee shall
determine at the time of grant, but in no event shall be exercisable later than
the 10th anniversary of the grant date.  Notwithstanding
the foregoing, with respect to ISOs, in the case of a Participant who owns,
directly or indirectly, more than 10% of the total combined voting power of all
classes of the stock of the Company or any Subsidiary, no such ISO shall be
exercisable later than the fifth anniversary of the grant date.

 

6.4.     Exercise of Options.  Options
granted under this Section 6 shall be exercisable at such times and be subject
to such restrictions and conditions as the Committee shall in each instance
approve, which need not be the same for each grant or for each Participant, and
shall be set forth in the applicable Award Document.  Notwithstanding the preceding sentence, the
Fair Market Value of Shares to which ISOs are exercisable for the first time by
any Participant during any calendar year (under all plans of the Company and
its Subsidiaries) may not exceed $100,000. 
Any ISOs that become exercisable in excess of such amount shall be
deemed NQSOs to the extent of such excess. 
If the Award Document does not specify the time or times at which the
Option shall first become exercisable, such an Option shall become fully vested
and exercisable by the Participant on the third anniversary of the grant date.

 

6.5.     Payment.  Options
granted under this Section 6 shall be exercised by the delivery of a notice of
exercise to the Company (or its designated agent(s)), setting forth the number
of Shares with respect to which the Option is to be exercised, accompanied by
full payment for the Shares.  The Option
Price upon exercise of any Option shall be payable to the Company in full
either:

 

(a)    in cash or its equivalent, or

 

(b)    by tendering previously acquired Shares
having an aggregate Fair Market Value at the time of exercise equal to the
total Option Price, or

 

(c)    by cashless exercise through delivery of
irrevocable instructions to a broker to promptly deliver to the Company the
amount of proceeds from a sale of shares having a Fair Market Value equal to
the purchase price.

 

6.6.     Termination of Employment or Service as a Director. 
The Committee, in its sole discretion, shall set forth in the applicable
Award Document the extent to which a Participant shall have the right to
exercise the Option or Options following termination of his or her employment
with the Company or any Subsidiary or following termination of his or her
service as a Director.  Such provisions
need not be uniform among all Options issued pursuant to the Plan, and may
reflect distinctions based on the reasons for such termination, including, but
not limited to, termination for Cause or for Good Reason, or reasons relating
to the breach or threatened breach of restrictive covenants.  Subject to Section 15, in the event that a
Participant’s Award Document does not set forth such provisions, the following
provisions shall apply:

 

(a)    Long Service Separation, Death or
Disability.  If a Participant’s
employment with the Company and/or any Subsidiary or service as a Director
terminates by reason of Long Service Separation, death or Disability, to the
extent that the Option is not exercisable, all Shares covered by his or her
Options shall immediately become fully vested and shall remain exercisable
until the earlier of (i) the remainder of the term of the Option, or (ii) 60
months from the date of such termination. 
In the case of the Participant’s death, the Participant’s beneficiary or
estate may exercise the Option.

 

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(b)    Termination for Cause.  If a Participant’s employment with the
Company and/or any Subsidiary or service as a Director terminates for Cause,
all Options granted to such Participant shall expire immediately and all rights
to purchase Shares (vested or nonvested) under the Options shall cease upon
such termination.

 

(c)    Other Termination. If a Participant’s
employment with the Company and/or any Subsidiary or service as a Director
terminates for any reason other than Long Service Separation, death,
Disability, or for Cause, all Options shall remain exercisable until the
earlier of (i) the remainder of the term of the Option, or (ii) 60 days from
the date of such termination.  In such
circumstance, the Option shall only be exercisable to the extent that it was
exercisable as of such termination date and shall not be exercisable with
respect to any additional Shares. 
Notwithstanding the foregoing or anything herein or in an Award Document
to the contrary, the Committee, in its sole discretion, shall have the
authority to extend the period during which an Option is exercisable pursuant
to this Section 6.6(c) to a period that is no longer than the earlier of (A)
the remainder of the term of the Option, or (B) 60 months from the date of the
Participant’s termination of employment.

 

6.7.     Restrictions on Shares.  The Committee
may impose such restrictions on any Shares acquired pursuant to the exercise of
an Option granted under this Section 6 as it may deem advisable, including,
without limitation, 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, and under any blue sky or state or foreign
securities laws applicable to such Shares.

 

6.8.                   Transferability of Options.

 

(a)    Incentive Stock Options.  No ISO 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.  Further, all ISOs granted to a Participant
under the Plan shall be exercisable during his or her lifetime only by such
Participant.

 

(b)    Nonqualified Stock Options.  NQSOs may only be transferred in accordance
with this Section 6.8(b).

 

(i)      Except as otherwise provided in paragraph
(ii) below or in an Award Document, no NQSO shall be assignable or transferable
by a Participant other than by will, by the laws of descent and distribution or
pursuant to a Domestic Relations Order (as such term is defined in Section
414(p)(1)(B) of the Code).

 

(ii)      NQSOs (whether vested or unvested) held by
(A) Participants who are Section 16 Officers; (B) Participants who are
Directors; or (C) any Participants who previously held the positions in clauses
(A) and (B) may be transferred by gift or by domestic relations order to one or
more Permitted Transferees.  NQSOs
(whether vested or unvested) held by all other Participants and by Permitted
Transferees may be transferred by gift or by domestic relations order only to
Permitted Transferees upon the prior written approval of the Company’s Director
of Compensation + Benefits.

 

6.9.     Prohibition on Repricing. 
Except (a) as provided in Section 4.3 or (b) to the extent approved by
the stockholders of the Company, the Option Price of an Option may not be
changed following the date such Option is granted.  Similarly, the exchange of an Option (an “Original
Option”) for cash, Shares, or other Awards at a time when the Option Price of
such Original Option is equal to or greater than the Fair Market Value of a
Share is prohibited.  Notwithstanding the
preceding sentence, the exchange of an Original Option for a SAR or another
Option (a “New Option”) shall be permitted only if: (a) the exchange is
approved by the stockholders of the Company and (b) either (i) the grant price
of the SAR is greater than the Option Price of the Original Option or (ii) the
Option Price of the New Option is greater than the Option Price of the Original
Option.

 

6.10.   Acceleration of Vesting. 
Notwithstanding anything in this Section 6 to the contrary, the
Committee, in its sole discretion, shall have the authority to accelerate the
vesting of Options at any time.

 

8

 

Section
7.

Stock Appreciation Rights

 

7.1.                   Grant of SARs.

 

(a)    SAR Grant.  Subject to the terms and provisions of the Plan, SARs
may be granted to Participants in such number, upon such terms and provisions,
and at any time and from time to time, as determined by the Committee in its
sole discretion.  The Committee may grant
Non-Tandem SARs, Tandem SARs, or any combination of these forms of SARs.  The Committee shall have complete discretion
in determining the number of SARs granted to each Participant (subject to
Section 4) and, consistent with the provisions of the Plan, in determining the
terms and conditions pertaining to such SARs. 
The Committee shall designate, at the time of grant, the grant price of
a Non-Tandem SAR, which grant price shall not be less than 100% of the Fair
Market Value of a Share on the grant date of the SAR.  The grant price of Tandem SARs shall equal
the Option Price of the related Option.

 

(b)    Award Document.  All SARs shall be evidenced by an Award
Document.  The Award Document shall
specify the grant price, the term of the SAR, and such other provisions as the
Committee shall determine, and which are not inconsistent with the terms and
provisions of the Plan.

 

7.2.     Term of SARs.  The term of a
SAR granted under the Plan shall be determined by the Committee, in its sole
discretion; provided, however, that unless otherwise designated by the
Committee, such term shall not exceed ten years from the grant date.

 

7.3.     Exercise of Tandem SARs.  Tandem SARs
may be exercised for all or part of the Shares subject to the related Option
upon the surrender of the right to exercise the equivalent portion of the
related Option.  A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.  Notwithstanding any other
provision of the Plan to the contrary, with respect to a Tandem SAR granted in
connection with an ISO:  (i) the Tandem
SAR will expire no later than the expiration of the underlying ISO; (ii) the
value of the payout with respect to the Tandem SAR may be for no more than 100%
of the difference between the Option Price of the underlying ISO and the Fair
Market Value of the Shares subject to the underlying ISO at the time the Tandem
SAR is exercised; and (iii) the Tandem SAR may be exercised only when the Fair
Market Value of the Shares subject to the ISO exceeds the Option Price of the
ISO.

 

7.4.     Exercise of Non-Tandem SARs. 
Non-Tandem SARs may be exercised upon whatever terms and conditions the
Committee, in its sole discretion, imposes upon them.

 

7.5.     Payment of SAR Amount.

 

(a)    Upon exercise of a SAR, a Participant shall
be entitled to receive payment from the Company in an amount determined by
multiplying:

 

(i)      The excess of the Fair Market Value of a
Share on the date of exercise over the grant price; by

 

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

 

(b)    Unless otherwise provided in the Award
Document, the payment upon SAR exercise may be in cash, in Shares of equivalent
value, or in some combination thereof. 
If, and to the extent that the payment upon SAR exercise is made in
cash, such cash payment shall not be subject to the limitation of Section
4.2(b).

 

7.6.     Termination of Employment or Service as a Director. 
The Committee, in its sole discretion, shall set forth in the applicable
Award Document the extent to which a Participant shall have the right to
exercise the SAR or SARs following termination of his or her employment with the
Company or any Subsidiary or following termination of his or her service as a
Director.  Such provisions need not be
uniform among all SARs issued pursuant to the Plan, and may reflect
distinctions based on the reasons for such termination, including, but not
limited to, termination for Cause or for Good Reason, or reasons relating to
the breach or threatened breach of restrictive covenants.  Subject to Section 15, in the event that a
Participant’s Award Document does not set forth such provisions, the following
provisions shall apply:

 

9

 

(a)    Long Service Separation, Death or
Disability.  If a Participant’s
employment with the Company and/or any Subsidiary or service as a Director
terminates by reason of Long Service Separation, death or Disability, to the
extent that the SARs are not exercisable, all of his or her SARs shall
immediately become fully vested and shall remain exercisable until the earlier
of (i) the remainder of the term of the SAR, or (ii) 60 months from
the date of such termination.  In the
case of the Participant’s death, the Participant’s beneficiary or estate may
exercise the SAR.

 

(b)    Termination for Cause.  If a Participant’s employment with the
Company and/or any Subsidiary or service as a Director terminates for Cause,
all SARs shall expire immediately and all rights thereunder shall cease upon
such termination.

 

(c)    Other Termination.  If a Participant’s employment with the
Company and/or any Subsidiary or service as a Director terminates for any
reason other than Long Service Separation, death, Disability, or for Cause, all
SARs shall remain exerciseable until the earlier of (i) the remainder of
the term of the SAR, or (ii) 60 days from the date of such
termination.  In such circumstance, the
SAR shall only be exercisable to the extent it was exercisable as of such termination
date and shall not be exercisable with respect to any additional SARs.  Notwithstanding the foregoing or anything
herein or in an Award Document to the contrary, the Committee, in its sole
discretion, shall have the authority to extend the period during which a SAR is
exercisable pursuant to this Section 76.6(c) to a period that is no
longer than the earlier of (A) the remainder of the term of the SAR, or (B) 60
months from the date of the Participant’s termination of employment.

 

7.7.     Transferability of SARs.  SARs may only
be transferred in accordance with this Section 7.7.

 

(a)    Except as otherwise provided in paragraph (b) below
or in an Award Document, no SAR shall be assignable or transferable by a
Participant other than by will, by the laws of descent and distribution or
pursuant to a Domestic Relations Order (as such term is defined in Section 414(p)(1)(B) of
the Code).

 

(b)    SARs held by (i) Participants who are Section 16
Officers; (ii) Participants who are Directors; or (iii) any
Participants who previously held the positions in clauses (i) and (ii) may
be transferred by gift or by domestic relations order to one or more Permitted
Transferees.  SARs held by all other
Participants and by Permitted Transferees may be transferred by gift or by domestic
relations order to Permitted Transferees only upon the prior written approval
of the Company’s Director of Compensation and Benefits.

 

(c)    Notwithstanding the foregoing, with respect
to a Tandem SAR granted in connection with an ISO, no such Tandem SAR may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution.

 

7.8.     Prohibition on Repricing. 
Except (a) as provided in Section 4.3 or (b) to the
extent approved by the stockholders of the Company, the grant price of a SAR
may not be changed following the date the SAR is granted.  Similarly, the exchange of a SAR (an “Original
SAR”) for cash, Shares, or other Awards at a time when the grant price of such
Original SAR is equal to or greater than the Fair Market Value of a Share is
prohibited.  Notwithstanding the
preceding sentence, the exchange of an Original SAR for an Option or another
SAR (a “New SAR”) shall be permitted only if: (a) the exchange is approved
by the stockholders of the Company and (b) either (i) the Option
Price amount is greater than the grant price of the Original SAR or (ii) the
grant price of the New SAR is greater than the grant price of the Original SAR.

 

7.9.     Acceleration of Vesting.  Notwithstanding
anything in this Section 7 to the contrary, the Committee, in its sole
discretion, shall have the authority to accelerate the vesting of SARs at any
time.

 

Section 8.

Restricted Stock

 

8.1.                   Grant of Restricted Stock.

 

(a)    Grant of Restricted Stock.  Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Restricted
Stock to Participants in such amounts as the Committee shall determine.

 

10

 

(b)    Award Document.  All grants of Restricted Stock shall be
evidenced by an Award Document.  The
Award Document shall specify the Period or Periods of Restriction, the number
of shares of Restricted Stock granted, and such other provisions as the
Committee shall determine pursuant to Section 8.2 or otherwise, and which
shall not be inconsistent with the terms and provisions of the Plan.  If no Period of Restriction is set forth in
the Award Document, the transfer and any other restrictions shall lapse (i) to
the extent of one-third of the shares (rounded to the nearest whole) covered by
the Restricted Stock Award on the third anniversary of the grant date, (ii) to
the extent of two-thirds of the shares (rounded to the nearest whole) covered
by the Restricted Stock Award on the fourth anniversary of the grant date, and (iii) to
the extent of 100% of the shares covered by the Restricted Stock Award on the
fifth anniversary of the grant date.

 

(c)    Limitation on the Committee.  Notwithstanding the preceding provisions of Section 8.1(b) and
subject to the provisions of the Plan, no more than five percent (5%) of the
shares that may be issued as Restricted Stock pursuant to Section 4.1 may
have a Period of Restriction as determined by the Committee at the time of
grant that will lapse prior to the third anniversary of the grant date.  All remaining shares that may be issued with
respect to Awards of Restricted Stock pursuant to Section 4.1 shall have a
Period of Restriction determined by the Committee at the time of grant that
will not lapse until on or after the third anniversary of the grant date.  For the avoidance of doubt, this Section 8.1(c) shall
not impair the Committee’s ability to accelerate the vesting of Restricted
Stock pursuant to Section 8.6 or to make grants that provide that vesting
is accelerated upon Long Service Separation, death or Disability pursuant to Section 8.5
and the shares of Restricted Stock for which such acceleration of vesting
occurs shall not be considered in applying the limitations set forth in this Section 8.1(c).

 

8.2.     Other Restrictions.  Subject to Section 10
herein, the Committee may impose such other conditions and/or restrictions on
any shares of Restricted Stock granted pursuant to the Plan as it may deem
advisable including without limitation, a requirement that Shares will not be
issued until the end of the applicable Period of Restriction (i.e., a
restricted stock unit), a requirement that Participants pay a stipulated
purchase price for each share of Restricted Stock, restrictions based upon the
achievement of specific performance goals (Company-wide, Subsidiary-wide,
divisional, and/or individual), time-based restrictions on vesting, which may
or may not be following the attainment of the performance goals, sales
restrictions under applicable shareholder agreements or similar agreements,
and/or restrictions under applicable Federal or state securities laws.  The Company shall 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.  Except as otherwise provided
in this Section 8 or in any Award Document, Shares of Restricted Stock
covered by each Restricted Stock grant made under the Plan shall become freely
transferable by the Participant after the last day of the applicable Period of
Restriction.

 

8.3.     Voting Rights.  Unless
otherwise designated by the Committee at the time of grant, Participants to
whom Shares of Restricted Stock  (but not
restricted stock units) have been granted hereunder may exercise full voting
rights with respect to those Shares during the Period of Restriction.

 

8.4.     Dividends and Other Distributions. 
Unless otherwise designated by the Committee at the time of grant, Participants
holding Shares of Restricted Stock (but not restricted stock units) granted
hereunder shall be credited with regular cash dividends paid with respect to
the underlying Shares while they are so held during the Period of Restriction.  The Committee may apply any restrictions to
the dividends that the Committee deems appropriate.  Without limiting the generality of the
preceding sentence, if the grant or vesting of Shares of Restricted Stock
granted to a Named Executive Officer is designed to comply with the
requirements of the Performance-Based Exception, the Committee may apply any
restrictions it deems appropriate to the payment of dividends declared with
respect to such Shares of Restricted Stock, such that the dividends and/or the
Shares of Restricted Stock maintain eligibility for the Performance-Based
Exception.  In the event that any
dividend constitutes a derivative security or an equity security pursuant to
the rules under Section 16 of the Exchange Act, such dividend shall
be subject to a vesting period equal to the remaining vesting period of the
Shares of Restricted Stock with respect to which the dividend is paid.

 

11

 

8.5.     Termination of Employment or Service as a Director. 
The Committee, in its sole discretion, shall set forth in the applicable
Award Document the extent to which the Participant shall have the right to
receive unvested Restricted Stock following termination of the Participant’s
employment with the Company and/or its Subsidiaries or termination of service
as a Director.  Such provisions need not
be uniform among all shares of Restricted Stock issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of employment
including; but not limited to, termination of employment for Cause or for Good
Reason, or reasons relating to the breach or threatened breach of restrictive
covenants; provided, however that, except in the cases of terminations
connected with a Change of Control and terminations by reason of death or
Disability, the vesting of Restricted Stock that qualify for the
Performance-Based Exception and that are held by Named Executive Officers shall
not occur before the time they otherwise would have, but for the employment
termination.  Subject to Section 15,
in the event that a Participant’s Award Document does not set forth such
termination provisions, the following termination provisions shall apply:

 

(a)    Long-Service Separation, Death and
Disability.  Unless the Award
qualifies for the Performance-Based Exception, if a Participant’s employment
with the Company and/or any Subsidiary or service as a Director is terminated
due to Long Service Separation, death or Disability, all shares of Restricted
Stock of such Participant shall immediately become fully vested on the date of
such termination and any restrictions shall lapse.

 

(b)    Other Termination.  If a Participant’s employment with the
Company and/or any Subsidiary or service as a Director is terminated for any
reason other than Long Service Separation, death or Disability, all shares of
Restricted Stock that are unvested at the date of termination shall be
forfeited to the Company.

 

8.6.     Acceleration of Vesting. 
Notwithstanding anything in this Section 8 to the contrary, the
Committee, in its sole discretion, shall have the authority to accelerate the
vesting of shares of Restricted Stock at any time.

 

8.7.     Transferability.  Except as
provided in this Section 8, the shares of Restricted Stock granted herein
may not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, voluntarily or involuntarily, until the end of the applicable
Period of Restriction established by the Committee and specified in the Award
Document, or upon earlier satisfaction of any other conditions, as specified by
the Committee in its sole discretion and set forth in the Award Document.  All rights with respect to the Restricted
Stock granted to a Participant under the Plan shall be available during his or
her lifetime only to such Participant.

 

Section 9.

Performance Units and Performance Shares

 

9.1.                   Grant of Performance Units/Shares.

 

(a)    Grant of Performance Unit/Shares.  Subject to the terms of the Plan, Performance
Units and/or Performance Shares may be granted to Participants in such amounts
and upon such terms, and at any time and from time to time, as shall be
determined by the Committee, which shall not be inconsistent with the terms and
provisions of the Plan and shall be set forth in an Award Document.

 

(b)    Award Document.  All Performance Units and Performance Shares
shall be evidenced by an Award Document. 
The Award Document shall specify the initial value of the Award, the
performance goals and the Performance Period, as the Committee shall determine,
and which are not inconsistent with the terms and provisions of the Plan.

 

9.2.     Value of Performance Units/Shares. 
Each Performance Unit shall have an initial value (which may be $0) 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 grant date.  The Committee shall set performance goals in
its sole discretion which, depending on the extent to which they are met will
determine the number and/or value of Performance Units and/or Performance
Shares that will be paid out to the Participant.  For purposes of this Section 9, the time
period during which the performance goals must be met shall be called a
Performance Period.  Performance Shares
not in excess of five percent of the number of shares that may be issued with
respect to Awards of Performance Shares, as provided in Section 4.1, may
have a Performance Period as determined by the Committee in its sole
discretion, and any other Performance Shares shall have a Performance Period,
as determined by the Committee, of not less than one year.

 

12

 

9.3.     Earning of Performance Units/Shares. 
Subject to the terms of the Plan, after the applicable Performance
Period has ended, the holder of Performance Units and/or Performance Shares
shall be entitled to receive payout on the number and value of Performance
Units and/or 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, as established by the Committee.

 

9.4.     Form and Timing of Payment of Performance
Units/Shares.  Except as provided below, payment of earned
Performance Units and/or Performance Shares shall be made in a single lump sum
as soon as reasonably practicable following the close of the applicable
Performance Period.  Subject to the terms
of the Plan, the Committee, in its sole discretion, may pay earned Performance Units
and/or Performance Shares in the form of cash or in Shares (or in a combination
thereof) which have an aggregate Fair Market Value equal to the value of the
earned Performance Units and/or Performance Shares at the close of the
applicable Performance Period.  Such
Shares may be granted subject to any restrictions deemed appropriate by the
Committee.  At the sole discretion of the
Committee, Participants may be entitled to receive any dividends declared with
respect to Shares which have been earned in connection with grants of
Performance Units and/or Performance Shares which have been earned, but not yet
distributed to Participants.

 

9.5.     Termination of Employment or Service as a Director. 
The Committee, in its sole discretion, shall set forth in the applicable
Award Document the extent to which the Participant shall have the right to
receive payment for Performance Units and/or Performance Shares following
termination of the Participant’s employment with the Company and/or its
Subsidiaries or termination of service as a Director.  Such provisions need not be uniform among all
Performance Units and/or Performance Shares granted pursuant to the Plan, and
may reflect distinctions based on the reasons for such termination including;
but not limited to, termination for Cause or for Good Reason, or reasons
relating to the breach or threatened breach of restrictive covenants.  Subject to Section 15, in the event that
a Participant’s Award Document does not set forth such termination provisions,
the following termination provisions shall apply:

 

(a)    Long Service Separation, Death or
Disability.  Subject to Section 15,
if a Participant’s employment with the Company and/or any Subsidiary or service
as a Director is terminated during a Performance Period due to Long Service
Termination, death or Disability, the Participant shall receive a prorated
payout of the Performance Units and/or Performance Shares, unless the Committee
determines otherwise.  The prorated
payout shall be determined by the Committee, shall be based upon the length of
time that the Participant held the Performance Units and/or Performance Shares
during the Performance Period, and shall further be adjusted based on the
achievement of the pre-established performance goals.  Unless the Committee determines otherwise in
the event of a termination due to death, Disability or Long Service Separation,
payment of earned Performance Units and/or Performance Shares shall be made at
the same time as payments are made to Participants who did not terminate
employment during the applicable Performance Period.

 

(b)    Other Termination.  If a Participant’s employment with the
Company and/or any Subsidiary or service as a Director is terminated during a
Performance Period for any reason other than Long Service Termination, death or
Disability all Performance Units and/or Performance Shares shall be forfeited
by the Participant to the Company.

 

9.6.     Nontransferability.  Except as
otherwise provided in a Participant’s Award Document, Performance Units and/or
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.  Further,
except as otherwise provided in a Participant’s Award Document, a Participant’s
rights under the Plan shall be exercisable during the Participant’s lifetime
only by the Participant or the Participant’s legal representative.

 

9.7.     Acceleration of Vesting. 
Notwithstanding anything in this Section 9 to the contrary, the
Committee, in its sole discretion, shall have the authority to accelerate the
vesting of Performance Units and/or Performance Shares at any time.

 

13

 

Section 10.

Performance Measures

 

10.1.   Performance Measures.  Unless and
until the Committee proposes for stockholder vote and stockholders approve a
change in the general performance measures set forth in this Section 10,
the attainment of which may determine the degree of payout and/or vesting with
respect to Awards to Named Executive Officers that are designed to qualify for
the Performance-Based Exception, the performance goals to be used for purposes
of such grants shall be established by the Committee in writing and stated in
terms of the attainment of specified levels of or percentage changes in any one
or more of the following measurements: (a) revenue; (b) primary or
fully-diluted earnings per Share; (c) earnings before interest, taxes,
depreciation, and/or amortization; (d) pretax income; (e) cash flow
from operations; (f) total cash flow; (g) return on equity; (h) return
on invested capital; (i) return on assets; (j) net operating profits
after taxes; (k) economic value added; (l) total stockholder return; (m) return
on sales; or (n) any individual performance objective which is measured
solely in terms of quantifiable targets related to the Company or the Company’s
business; or any combination thereof.  In
addition, such performance goals may be based in whole or in part upon the
performance of the Company, a Subsidiary, division and/or other operational
unit under one or more of such measures.

 

10.2.   Performance Procedures.  The degree of
payout and/or vesting of such Awards designed to qualify for the
Performance-Based Exception shall be determined based upon the written
certification of the Committee as to the extent to which the performance goals
and any other material terms and conditions precedent to such payment and/or
vesting have been satisfied.  The
Committee shall have the sole discretion to adjust the determinations of the
degree of attainment of the pre-established performance goals; provided,
however, that the performance goals applicable to Awards which are designed to
qualify for the Performance-Based Exception, and which are held by Named
Executive Officers, may not be adjusted so as to increase the payment under the
Award (the Committee shall retain the sole discretion to adjust such
performance goals upward, or to otherwise reduce the amount of the payment
and/or vesting of the Award relative to the pre-established performance goals).  In the event that applicable tax and/or
securities laws change to permit Committee sole discretion to alter the
governing performance measures without obtaining stockholder approval of such
changes, the Committee shall have sole discretion to make such changes without obtaining
stockholder approval.  In addition, in
the event that the Committee determines that it is advisable to grant Awards
which shall not qualify for the Performance-Based Exception, the Committee may
make such grants without satisfying the requirements of Code Section 162(m) and,
thus, which use performance measures other than those specified above.

 

Section 11.

Award Forfeitures

 

11.1.   Forfeiture of Options and Other Awards. 
Each Award granted hereunder shall be subject to the following
additional forfeiture conditions, to which the Participant, by accepting an
Award hereunder, agrees.  If any of the
events specified in Section 11.2 occurs (a “Forfeiture Event”), all of the
following forfeitures will result:

 

(a)    The unexercised portion of any Option,
whether or not vested, and any other Award not then settled (except for an
Award that has not been settled solely due to an elective deferral pursuant to Section 13
by the Participant and otherwise is not forfeitable in the event of any
termination of service of the Participant) will be immediately forfeited and
canceled upon the occurrence of the Forfeiture Event; and

 

(b)    The Participant will be obligated to repay
to the Company, in cash, within five business days after demand is made
therefor by the Company, the total amount of Award Gain (as defined herein)
realized by the Participant upon each exercise of an Option or settlement of an
Award (regardless of any elective deferral pursuant to Section 13) that
occurred on or after (i) the date that is six months before the occurrence
of the Forfeiture Event, if the Forfeiture Event occurred while the Participant
was employed by the Company or a Subsidiary, or (ii) the date that is six
months before the date the Participant’s employment by, or service as a Director
with the Company or a Subsidiary terminated, if the Forfeiture Event occurred
after the Participant ceased to be so employed.

 

11.2.   Events Triggering Forfeiture. 
The forfeitures specified in Section 11.1 will be triggered upon
the occurrence of any one of the following Forfeiture Events at any time during
the Participant’s employment by or service as a Director with the Company or a
Subsidiary or during the one-year period following termination of such
employment or service:

 

14

 

(a)    Non-Solicitation.  The Participant, for his or her own benefit or for the
benefit of any other person, company or entity, directly or indirectly, (i) induces
or attempts to induce or hires or otherwise counsels, induces or attempts to
induce or hire or otherwise counsel, advise, encourage or solicit any person to
leave the employment of or the service for the Company or any Subsidiary, (ii) hires
or in any manner employs or retains the services of any individual employed by
or providing services to the Company or any Subsidiary as of the date of his or
her termination of employment, or employed by or providing services to the
Company or any Subsidiary subsequent to such termination, (iii) solicits,
pursues, calls upon or takes away, any of the customers of the Company or any
Subsidiary, (iv) solicits, pursues, calls upon or takes away, any
potential customer of the Company or any Subsidiary that has been the subject
of a bid, offer or proposal by the Company or any Subsidiary, or of substantial
preparation with a view to making such a bid, proposal or offer, within six
months before such Participant’s termination of employment with the Company or
any Subsidiary, or (v) otherwise interferes with the business or accounts of
the Company or any Subsidiary.

 

(b)    Confidential Information.  The Participant discloses to any person or
entity or makes use of any “confidential or proprietary information” (as
defined below in this subparagraph (b)) for his or her own purpose or for the
benefit of any person or entity, except as may be necessary in the ordinary
course of employment with or other service to the Company or any
Subsidiary.  Such “confidential or
proprietary information” of the Company or any Subsidiary, includes, but is not
limited to, the design, development, operation, building or manufacturing of
products manufactured and supplied by the Company and its Subsidiaries, the
identity of the Company’s or any Subsidiary’s customers, the identity of
representatives of customers with whom the Company or any Subsidiary has dealt,
the kinds of services provided by the Company or any Subsidiary to customers
and offered to be performed for potential customers, the manner in which such
services are performed or offered to be performed, the service needs of actual
or prospective customers, pricing information, information concerning the
creation, acquisition or disposition of products and services, customer
maintenance listings, computer software and hardware applications and other
programs, personnel information, information identifying, relating to or
concerning investors in the Company or any Subsidiary, joint venture partners
of the Company or any Subsidiary, business partners of the Company or any
Subsidiary or other entities providing financing to the Company or any
Subsidiary, real estate and leasing opportunities, communications and
telecommunications operations and processes, zoning and licensing matters,
relationships with, or matters involving, landlords and/or property owners, and
other trade secrets.

 

11.3.   Agreement Does Not Prohibit Competition or Other
Participant Activities.  Although the conditions set
forth in this Section 11 shall be deemed to be incorporated into an Award,
the Plan does not thereby prohibit the Participant from engaging in any
activity, including but not limited to competition with the Company and its
Subsidiaries.  Rather, the non-occurrence
of the Forfeiture Events set forth in Section 11.2 is a condition to the
Participant’s right to realize and retain value from his or her compensatory
Awards, and the consequence under the Plan if the Participant engages in an
activity giving rise to any such Forfeiture Event are the forfeitures specified
herein.  This provision shall not
preclude the Company and the Participant from entering into other written
agreements concerning the subject matter of Sections 11.1 and 11.2 and, to the
extent any terms of this Section 11 are inconsistent with any express
terms of such agreement, this Section 11 shall not be deemed to modify or
amend such terms.

 

11.4.   Committee Discretion.  The Committee
may, in its sole discretion, waive in whole or in part the Company’s right to
forfeiture under this Section 11, but no such waiver shall be effective
unless evidenced by a writing signed by a duly authorized officer of the
Company.  In addition, the Committee may
impose additional conditions on Awards, by inclusion of appropriate provisions
in the Award Document.  Nothing contained
herein shall require the Committee to enforce the forfeiture provisions of this
Section 11.  Failure to enforce
these forfeiture provisions against any individual shall not be construed as a
waiver of the Company’s right to forfeiture under this Section 11.

 

11.5.   Clawback Provision. 
Notwithstanding any other provision of the Plan to the contrary,
including Section 16.1 which prohibits material and adverse changes to any
outstanding Award, any Participant who is an officer of the Company whose
negligent, intentional or gross misconduct contributes to the Company’s having
to restate all or a portion of its financial statements, will be required to
forfeit Awards granted under this Plan and repay the Company the total amount
of Award Gain realized by the Participant upon the exercise of an Option or
settlement of an Award,  as determined by
the Board of Directors, an authorized committee, or its designee, pursuant to
the Caterpillar Inc. Guidelines on Corporate Governance Issues, as adopted on February 14,
2007 and any subsequent amendments.  Any
Awards granted under this Plan prior to February 14, 2007 are subject to
the provisions of this Section 11.5 only with the written consent of the
Participant.

 

15

 

Section 12.

Beneficiary Designation

 

12.1.    Beneficiary Designations. 
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
Company, 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.

 

Section 13.

Deferrals

 

13.1.    Deferrals.  The Committee
may permit 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
upon the exercise of any Option or by virtue of the lapse or waiver of
restrictions with respect to Restricted Stock, or the satisfaction of any
requirements or goals with respect to Performance Units/Shares.  If any such deferral election is required or
permitted, the Committee shall, in its sole discretion, establish rules and
procedures for such payment deferrals. 
All such deferrals (and rules and procedures) shall be consistent
with Code Section 409A and any other applicable law.

 

Section 14.

Rights and Obligations of Parties

 

14.1.    No Guarantee of Employment or Service Rights. 
Nothing in the Plan shall interfere with or limit in any way the right
of the Company to terminate any Participant’s employment at any time, nor
confer upon any Participant any right to continue in the employ of the Company
or any Subsidiary.

 

14.2.    Temporary Absence.  For purposes
of the Plan, temporary absence from employment because of illness, vacation,
approved leaves of absence, and transfers of employment among the Company and
its Subsidiaries, shall not be considered to terminate employment or to
interrupt continuous employment.

 

14.3.    Participation.  No Employee
or Director shall have the right to be selected to receive an Award under the
Plan, or, having been so selected, to be selected to receive a future Award.

 

14.4.    Right of Setoff.  The Company
or any Subsidiary may, to the extent permitted by applicable law, deduct from
and set off against any amounts the Company or Subsidiary may owe to the
Participant from time to time, including amounts payable in connection with any
Award, owed as wages, fringe benefits, or other compensation owed to the
Participant, such amounts as may be owed by the Participant to the Company,
although the Participant shall remain liable for any part of the Participant’s
payment obligation not satisfied through such deduction and setoff.  By accepting any Award granted hereunder, the
Participant agrees to any deduction or setoff under this Section 14.

 

14.5.    Section 83(b) Election. 
No election under Section 83(b) of the Code (to include in
gross income in the year of transfer the amounts specified in Code Section 83(b))
or under a similar provision of the laws of a jurisdiction outside the United
States may be made, unless expressly permitted by the terms of the Award
Document or by action of the Committee in writing before the making of such
election.  In any case in which a
Participant is permitted to make such an election in connection with an Award,
the Participant shall notify the Company of such election within ten days of
filing notice of the election with the Internal Revenue Service or other
governmental authority, in addition to any filing and notification required
pursuant to regulations issued under Code Section 83(b) or other
applicable provision.

 

14.6.    Disqualifying Disposition Notification. 
If any Participant shall make any disposition of Shares delivered
pursuant to the exercise of an Incentive Stock Option under the circumstances
described in Code Section 421(b) (relating to certain disqualifying
dispositions), such Participant shall notify the Company of such disposition
within ten days thereof.

 

16

 

Section 15.

Change of Control

 

15.1.   Change of Control.  If a
Participant’s employment or service with the Company and/or any Subsidiary
terminates either without Cause or for Good Reason within the 12 month period
following a Change of Control, unless otherwise specifically prohibited under
applicable laws, or by the rules and regulations of any governing
governmental agencies or national securities exchanges:

 

(a)    Any and all Options and SARs granted
hereunder shall become immediately exercisable, and shall remain exercisable
throughout their entire term;

 

(b)    Any Period of Restriction and other
restrictions imposed on Restricted Stock shall lapse; and

 

(c)    Unless otherwise specified in an Award
Document, the maximum payout opportunities attainable under all outstanding
Awards of Performance Units and Performance Shares shall be deemed to have been
fully earned for the entire Performance Period(s) as of the effective date
of the Change of Control.  The vesting of
all such Awards shall be accelerated as of the effective date of the Change of
Control, and in full settlement of such Awards, there shall be paid out in cash
to Participants within 30 days following the effective date of the Change of
Control the maximum of payout opportunities associated with such outstanding
Awards.

 

Section 16.

Amendment, Modification, and Termination

 

16.1.   Amendment, Modification, and Termination. 
The Board may amend, suspend or terminate the Plan or the Committee’s
authority to grant Awards under the Plan without the consent of stockholders or
Participants; provided, however, that any amendment to the Plan shall be
submitted to the Company’s stockholders for approval not later than the
earliest annual meeting for which the record date is after the date of such
Board action if such stockholder approval is required by any federal or state
law or regulation or the rules of any stock exchange or automated
quotation system on which the Shares may then be listed or quoted and the Board
may otherwise, in its sole discretion, determine to submit other amendments to
the Plan to stockholders for approval; and provided further, that, without the
written consent of an affected Participant, no such Board action may materially
and adversely affect the rights of such Participant under any outstanding
Award.  The Committee shall have no
authority to waive or modify any other Award term after the Award has been
granted to the extent that the waived or modified term was mandatory under the
Plan.

 

Section 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, an amount sufficient 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 the 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, or upon any other taxable event arising as a
result of Awards granted hereunder, the withholding requirement shall be
satisfied by the Company withholding Shares having a Fair Market Value on the
date the tax is to be determined equal to the minimum statutory total tax which
would be imposed on the transaction.

 

Section 18.

Miscellaneous

 

18.1.   Unfunded Plan.  The Plan is
intended to constitute an “unfunded” plan for incentive and deferred
compensation.  With respect to any
payments not yet made to a Participant or obligation to deliver Shares pursuant
to an Award, nothing contained in the Plan or any Award shall give any such
Participant any rights that are greater than those of a general creditor of the
Company; provided that the Committee may authorize the creation of trusts and
deposit therein cash, Shares, other Awards or other property, or make other
arrangements to meet the Company’s obligations under the Plan.  Such trusts or other arrangements shall be
consistent with the “unfunded” status of the Plan unless the Committee
otherwise determines with the consent of each affected Participant.  No such funding shall be established that
would cause an amount to be taxable under Code Section 409A before it is
received by a Participant or cause an amount to be subject to additional tax
under such Section.

 

17

 

18.2.    Forfeitures; Fractional Shares. 
Unless otherwise determined by the Committee, in the event of a
forfeiture of an Award with respect to which a Participant paid cash
consideration, the Participant shall be repaid the amount of such cash
consideration.  No fractional Shares
shall be issued or delivered pursuant to the Plan or any Award.  The Committee shall determine whether cash,
other Awards or other property shall be issued or paid in lieu of such
fractional Shares or whether such fractional Shares or any rights thereto shall
be forfeited or otherwise eliminated.

 

18.3.    Compliance with Code Section 162(m). 
The Company intends that Options and SARs granted to Named Executive
Officers and other Awards designated as Awards to Named Executive Officers
shall constitute qualified “performance-based compensation” within the meaning
of Code Section 162(m) and regulations thereunder, unless otherwise
determined by the Committee at the time of allocation of an Award.  Accordingly, the terms of Sections 4.2, 6, 7,
8.5, 8.6, 9 and 10, including the definitions of Named Executive Officer and
other terms used therein, shall be interpreted in a manner consistent with Code
Section 162(m) and regulations thereunder.  The foregoing notwithstanding, because the
Committee cannot determine with certainty whether a given Participant will be a
Named Executive Officer with respect to a fiscal year that has not yet been
completed, the Committee may, in its discretion, extend the terms of such
Sections to any Participant that the Committee deems appropriate.  If any provision of the Plan or any Award
Document relating to a Performance Award that is designated as intended to
comply with Code Section 162(m) does not comply or is inconsistent
with the requirements of Code Section 162(m) or regulations
thereunder, such provision shall be construed or deemed amended to the extent
necessary to conform to such requirements, and no provision shall be deemed to
confer upon the Committee or any other person sole discretion to increase the
amount of compensation otherwise payable in connection with any such Award upon
attainment of the applicable performance objectives.

 

18.4.    Gender and Number; Headings. 
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. 
Headings are included for the convenience of reference only and shall
not be used in the interpretation or construction of any such provision
contained in the Plan.

 

18.5.    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.

 

18.6.    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 merger,
consolidation, purchase of all or substantially all of the business and/or
assets of the Company or otherwise.

 

18.7.    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.

 

18.8.    Securities Law Compliance. 
With respect to “insiders,” transactions under the Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors
under the Exchange Act.  To the extent
any provision of the Plan or action by the Committee fails to so comply, it
shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.  An “insider”
includes any individual who is, on the relevant date, an officer, Director or
more than 10% beneficial owner of any class of the Company’s equity securities
that is registered pursuant to Section 12 of the Exchange Act, all as
defined under Section 16 of the Exchange Act.

 

18.9.    Governing Law.  To the extent
not preempted by Federal law, the Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Illinois
without regard to the conflict of law provisions thereof.

 

18EXHIBIT 4.2

 

	
  CS - #

  	
   

  	
  Common Stock Shares

  
	
   

  	
   

  	
  No. of shares

  

 

[STATE BANK
FINANCIAL CORPORATION LOGO]

 

STATE BANK
FINANCIAL CORPORATION

INCORPORATED
UNDER THE LAWS OF THE STATE OF GEORGIA

 

This
certifies that                                                               is the owner of                                                                              fully
paid and non-assessable Shares of $.01 par value Common Stock of

 

STATE BANK FINANCIAL CORPORATION

 

transferable on the books of the Corporation by the holder
hereof in person or by a  duly authorized
attorney upon surrender of this Certificate properly endorsed.  This Certificate is not valid until
countersigned and registered by the Transfer Agent and Registrar.

 

WITNESS
the facsimile seal of the Corporation and the facsimile signatures of its duly
authorized officers.

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ J. Daniel Speight

  	
   

  	
  [Corporate Seal]

  	
  /s/ Joseph W. Evans

  
	
  J. Daniel Speight

  	
   

  	
   

  	
  Joseph W. Evans

  
	
  Vice Chairman and Secretary

  	
   

  	
   

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [Countersigned and
  Registered]

  
	
   

  	
   

  	
   

  	
  American Stock
  Transfer & Trust

  
	
   

  	
   

  	
   

  	
  Company, LLC (New York, NY)
  /

  
	
   

  	
   

  	
   

  	
  Transfer Agent and Registrar
  /

  
	
   

  	
   

  	
   

  	
  Authorized Signature

  

 

 

STATE BANK FINANCIAL CORPORATION

 

The
following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.

 

	
  TEN
  COM

  	
  —

  	
  as
  tenants in common

  	
   

  	
  UNIF GIFT MIN ACT —

  	
   

  	
  Custodian

  	
   

  	
  (Minor)

  
	
  TEN
  ENT

  	
  —

  	
  as
  tenants by the entireties

  	
   

  	
  under Uniform Gifts to Minors Act

  	
   

  	
   

  	
   

  	
  (State)

  
	
  JT
  TEN

  	
  —

  	
  as
  joint tenants with right of survivorship and not as tenants in common

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Additional abbreviations may also be used though not in the list.

 

For value received,                                                                the
undersigned hereby sells, assigns and transfers unto

 

Please insert Social Security or Other Identifying
Number of Assignee

 

 

 

PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING
POSTAL ZIP CODE OF ASSIGNEE

 

 

 

 

Shares of the common stock represented by the within
Certificate, and do hereby irrevocably constitute and appoint

 

Attorney to transfer the said stock on the books of the
within-named Corporation with full power of substitution in the premises.

 

 

	
  Dated,

  	
   

  	
   

  	
   

  
	
   

  
	
   

  	
   

  
	
   

  	
  NOTICE:

  	
   

  
	
   

  	
  THE SIGNATURE TO THIS ASSIGNMENT MUST  CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE
  OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR
  ENLARGEMENT, OR ANY CHANGE WHATEVER.

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  SIGNATURE(S) GUARANTEED:

  	
   

  
	
   

  	
  THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE  GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS
  AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED
  SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}]]