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                                                                    EXHIBIT 10.1

                                     FORM OF
                          EXECUTIVE SEVERANCE AGREEMENT

THIS AGREEMENT by and between VALEANT PHARMACEUTICALS INTERNATIONAL, a Delaware
corporation and _____________________(the "Executive") is made as of
_____________________, 2005 (the "Effective Date").

WHEREAS, the Board of Directors of the Company (the "Board") has determined that
appropriate steps should be taken to reinforce and encourage the continued
employment and dedication of the Company's key personnel of the Company and its
affiliates, including the development of standard severance agreements for
certain senior executives;

NOW, THEREFORE, as an inducement for and in consideration of the Executive
remaining in its employ and for the Executive's various agreements as set forth
in this Agreement, the Company agrees that the Executive shall receive the
severance benefits set forth in this Agreement in the event the Executive's
employment with the Company is terminated under the circumstances described
below.

1. Key Definitions. As used herein, the following terms shall have the following
respective meanings:

          1.1. Cause means, for purposes of this Agreement: (A) Executive's act
of fraud or embezzlement against the Company or an unauthorized disclosure of
confidential information of the Company, in each case which is willful and
results in material damage to the Company; (B) after written notice thereof and
a reasonable opportunity to cure (if such misconduct is susceptible to cure by
Executive), any material, willful and knowing violation by Executive of any of
his fiduciary duties to the Company or of the Company's written corporate code
of conduct as in effect on the date hereof, which has, or was intended to have,
a material adverse impact on the Company; (C) Executive's self-dealing with
respect to the Company's assets, properties or business opportunities which in
any case is intended to result in the substantial personal enrichment of
Executive (or another person or entity related to Executive) at the expense of
the Company; (D) Executive's conviction (or a plea of nolo contendere to) a
felony (other than traffic-related offenses or as a result of vicarious
liability); (E) Executive's willful misconduct that results in material damage
to the Company or its reputation and continues after written notice thereof and
a reasonable opportunity to cure (if such misconduct is susceptible to cure by
Executive); (F) Executive's violation of the restrictions set forth in Sections
9, 10 or 11 of this Agreement. No action or inaction shall be deemed willful if
not demonstrably willful and if taken or not taken by the Executive in good
faith as not being adverse to the best interests of the Company. The Company may
suspend, with pay, the Executive upon Executive's indictment for the commission
of a felony as described under clause (D) above. Such suspension may remain
effective until such time as the indictment is either dismissed or a verdict of
not guilty has been entered, or a finding occurs that Cause under this Agreement
has occurred.

          1.2. Change in Control means, for purposes of this Agreement, any of
the following events:

               1.2.a. the acquisition (other than from the Company), by any
     person (as such term is defined in Section 13(c) or 14(d) of the Securities
     Exchange Act of 1934, as amended (the "1934 Act")) of beneficial ownership
     (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of thirty
     percent (30%) or more of the combined voting power of the Company's then
     outstanding voting securities;

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               1.2.b. the individuals who, as of the date hereof, are members of
     the Board (the "Incumbent Board"), cease for any reason to constitute at
     least a majority of the Board, unless the election, or nomination for
     election by the Company's stockholders, of any new director was approved by
     a vote of at least a majority of the Incumbent Board, and such new director
     shall, for purposes of this Agreement, be considered as a member of the
     Incumbent Board; or

               1.2.b.i.       the closing of:

               1.2.b.ii.      a merger or consolidation involving the Company if
                              the stockholders of the Company, immediately
                              before such merger or consolidation, do not as a
                              result of such merger or consolidation, own,
                              directly or indirectly, more than fifty percent
                              (50%) of the combined voting power of the then
                              outstanding voting securities of the corporation
                              resulting from such merger or consolidation in
                              substantially the same proportion as their
                              ownership of the combined voting power of the
                              voting securities of the Company outstanding
                              immediately before such merger or consolidation;
                              or

               1.2.b.iii.     a complete liquidation or dissolution of the
                              Company or an agreement for the sale or other
                              disposition of all or substantially all of the
                              assets of the Company.

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because thirty percent (30%) or more of the combined voting power of the
Company's then outstanding securities is acquired by (i) a trustee or other
fiduciary holding securities under one or more employee benefit plans maintained
by the Company or any of its subsidiaries or (ii) any corporation which,
immediately prior to such acquisition, is owned directly or indirectly by the
stockholders of the Company in the same proportion as their ownership of stock
in the Company immediately prior to such acquisition. In addition, no
transaction involving solely the stock or the assets of an Affiliate shall
constitute a Change in Control unless the transaction meets the definition of
"Change in Control" vis-a-vis the Company.

          1.3. Change in Control Date means a date during the Term (as defined
in Section 2) on which a Change in Control occurs. Anything in this Agreement to
the contrary notwithstanding, if (a) a Change in Control occurs, and (b) the
Executive's employment with the Company is terminated prior to the date on which
the Change in Control occurs, but in contemplation of such Change in Control,
then for all purposes of this Agreement the "Change in Control Date" shall mean
the date immediately prior to the date of such termination of employment.

          1.4. Company shall mean Valeant Pharmaceuticals International and, as
appropriate in context, all affiliates and subsidiaries of the Company to the
extent the Company in its sole discretion identifies the entity as an affiliate
or subsidiary of the Company. Reference in this Agreement to materiality and
material adverse impact shall be measured based on the action or inaction and
the impact upon the Company taken as a whole. 1.5. Disability means Executive's
inability to substantially perform his duties and responsibilities hereunder by
reason of any physical or mental incapacity for two or more periods of ninety
(90) consecutive days each in any three hundred and sixty (360) day period, as
determined by a physician with no history of prior dealings with the Company or
Executive, as reasonably agreed upon by the Company and Executive.

          1.6. Good Reason means the occurrence of any of the events or
conditions described in Subsections a through f hereof which are not cured by
the Company (if susceptible to cure by the Company) within 20 days after the
Company has received written notice from Executive specifying the particular
events or conditions which constitute Good Reason and the specific cure
requested by Executive:

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               1.6.a. the assignment to Executive of duties inconsistent in any
     material respect with Executive's position (including status, offices, and
     reporting requirements), authority or responsibilities as previously
     existing; provided, however, that assignment to Executive of duties for an
     affiliate or subsidiary of the Company shall not be deemed to constitute
     Good Reason unless such duties are inconsistent in any material respect
     with Executive's position, authority or responsibilities as previously
     existing;

               1.6.b. a reduction in Executive's annual base salary or level of
     eligible (or target) participation in the Company Annual Incentive Plan (or
     such bonus plan as may be substituted from time to time);

               1.6.c. the Company's requiring Executive to be based at any place
     outside either (x) a 30-mile radius from his/her current principal work
     location, or (y) the Company's executive offices, except for reasonably
     required travel on the Company's business;

               1.6.d. the failure by the Company to (i) continue in effect any
     material compensation or benefit plan in which Executive was participating,
     including, but not limited to, the Company's deferred compensation plan and
     401(k) plan, any life, insurance, medical, health, and accident or
     disability plan and any vacation or automobile program or policy, if any,
     in which the Executive participates, unless an equitable arrangement
     (embodied in an ongoing substitute or alternative plan) has been made with
     respect to such plan or program; (ii) continue the Executive's
     participation therein (or in such substitute or alternative plan) on a
     basis not materially less favorable than the basis previously existing;

               1.6.e. the failure of the Company to obtain the agreement from
     any successor to the Company to assume and agree to perform this Agreement.

               1.6.f. any other breach by the Company of any material provision
     of this Agreement.

Executive's right to terminate the Executive's employment for Good Reason shall
not be affected by Executive's incapacity due to physical or mental illness.

          1.7. Measurement Date means the earliest to occur of (i) the Change in
Control Date, (ii) the date of the execution by the Company of the initial
written agreement or instrument providing for the Change in Control or (iii) the
date of the adoption by the Board of Directors of a resolution providing for the
Change in Control.

2. Term of Agreement. This Agreement, and all rights and obligations of the
parties hereunder, shall take effect upon the Effective Date and shall expire
upon the first to occur of (a) the expiration of the Term (as defined below) if
a Change in Control has not occurred during the Term, or (b) the fulfillment by
the Company of all of its obligations under Sections 4 and 5.2 if the
Executive's employment with the Company terminates within 12 months following
the Change in Control Date. "Term" shall mean the period commencing as of the
Effective Date and continuing in effect through December 31, 2010; provided,
however, that on January 1, 2011 and each January 1, thereafter, the Term shall
be automatically extended for one additional year unless, not later than six
months prior to the scheduled expiration of the Term (including any extension
thereof), the Company shall have given the Executive written notice that the
Term will not be extended.

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3. Employment Status; Not an Employment Contract. Executive acknowledges that
this Agreement does not constitute a contract of employment or impose on the
Company any obligation to retain Executive as an employee and that this
Agreement does not prevent Executive from terminating employment at any time;
provided, however, this Agreement does set forth the amounts payable and
benefits to be provided to Executive in the event of a termination of
Executive's employment under the circumstances described hereunder.

4. Compensation Upon Termination Without a Change in Control Having Occurred.
Upon termination of Executive's employment during the Term of Agreement absent a
Change in Control, Executive shall be entitled to the following benefits:

          4.1. Termination by the Company for Cause or by Executive Without Good
Reason. If Executive's employment is terminated by the Company for Cause or by
Executive without Good Reason, without a Change in Control having occurred, the
Company shall pay Executive all amounts earned or accrued hereunder through the
termination date, including:

               4.1.a. any accrued and unpaid wages;

               4.1.b. reimbursement for any and all monies advanced or expenses
     incurred in connection with Executive's employment for reasonable and
     necessary expenses incurred by Executive on behalf of the Company for the
     period ending on the termination date;

               4.1.c. any previous compensation which Executive has previously
     deferred (including any interest earned or credited thereon), in accordance
     with the terms and conditions of the applicable deferred compensation plans
     then in effect;

               4.1.d. as provided under any benefit or equity plan or program
     (the foregoing items in Sections 4.1.a through 4.1.d being collectively
     referred to as the "Accrued Compensation").

          4.2. Termination by the Company for Disability or By Reason of Death.
If Executive's employment is terminated by the Company for Disability or by
reason of Executive's death, without a Change in Control having occurred, the
Company shall pay Executive (or his beneficiaries, as applicable) the Accrued
Compensation, and provide the following benefits:

               4.2.a. to the extent not already paid, an amount equal to the
     bonus or incentive award otherwise payable to Executive with respect to the
     fiscal year immediately prior to the fiscal year in which Executive's date
     of termination of employment (the "Date of Termination") occurs; provided,
     however, that any requirement as to continued service after the end of the
     performance year shall be deemed met and the amount shall be payable in a
     lump sum, calculated as if all performance target and goals (if applicable)
     had been fully met by Executive and the Company at the "target" level, as
     applicable, for such fiscal year (a "Prior Year Bonus");

               4.2.b. an amount equal to the bonus or incentive award that
     Executive would have been entitled to receive in respect of the fiscal year
     in which Executive's Date of Termination occurs, had Executive continued in
     employment until the end of such fiscal year and met any other
     service-related requirements with respect to such award, which amount shall
     be payable in a lump sum, calculated as if all performance targets and
     goals (if applicable) had been fully met at the "target" level by the
     Company and by Executive, as applicable, for such fiscal year, multiplied
     by a

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     fraction (A) the numerator of which is the number of days in such
     fiscal year through termination date and (B) the denominator of which is
     365 (a "Pro Rata Bonus");

               4.2.c. Executive's entitlement to any other compensation or
     benefits hereunder shall be determined in accordance with the Company's
     employee benefit plans and other applicable programs and practices then in
     effect.

          4.3. Compensation upon Termination Without Cause or for Good Reason.
If the Executive's employment with the Company is terminated by the Company
(other than for Cause, Disability or death) or by the Executive for Good Reason
without a Change in Control having occurred, then the Executive shall be
entitled to the Accrued Compensation as well as to the following benefits:

               4.3.a.         the Company shall pay to the Executive in a lump
                              sum cash within 30 days after the Date of
                              Termination the aggregate following amounts:

               4.3.a.i.       a Prior Year Bonus, if applicable, and a Pro Rata
                              Bonus; and

               4.3.a.ii.      the amount equal to the sum of (x) the Executive's
                              annual base salary and (y) the lesser of (i) the
                              average of the bonuses paid under the Annual
                              Incentive Program for the five prior payouts (or
                              such shorter period of time during which Executive
                              was eligible for the Annual Incentive Program at
                              the participation level applicable upon the
                              Termination Date) or (ii) the Executive's Target
                              Bonus (as defined in the Annual Incentive Program)
                              for the year during which the Date of Termination
                              occurs.

               4.3.b. to the extent not previously paid or provided, the Company
     shall timely pay or provide to the Executive any other amounts or benefits
     required to be paid or provided or which the Executive is eligible to
     receive following the Executive's termination of employment under any plan,
     program, policy, practice, contract or agreement of the Company and its
     affiliated companies, (a "Company Plan") provided, however, that the
     Company shall not be required to pay (a) severance benefits, or (b) any
     other duplicate benefit under such a Company Plan (such other amounts and
     benefits, as are payable hereunder shall be hereinafter referred to as the
     "Other Benefits").

5. Change in Control.

          5.1. Stock Acceleration. If the Change in Control Date occurs during
the Term, then, effective upon the Change in Control Date, (a) each outstanding
option to purchase shares of Common Stock of the Company held by the Executive
shall become immediately exercisable in full and the shares underlying the
option will no longer be subject to a right of repurchase by the Company and (b)
each outstanding restricted stock award or other unvested equity compensation
rights shall be deemed to be fully vested and will no longer be subject to a
right of repurchase by the Company.

          5.2. Notice Requirement. Any termination of employment in connection
with a Change in Control must meet the requirements of Section 14.

          5.3. Termination by the Company for Cause or by Executive Without Good
Reason. If Executive's employment is terminated by the Company for Cause or
Disability or by Executive without

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Good Reason, after, or in contemplation of, a Change in Control, the Company
shall pay Executive the applicable Accrued Compensation.

          5.4. Termination by the Company for Disability or By Reason of Death.
If Executive's employment is terminated by the Company for Disability or by
reason of Executive's death, after a Change in Control has occurred, the Company
shall pay Executive (or his beneficiaries, as applicable) the Accrued
Compensation, and provide the following benefits:

               5.4.a. a Prior Year Bonus, if applicable, and a Pro Rata Bonus;
     and

               5.4.b. the Other Benefits.

          5.5. Compensation upon Termination Without Cause or for Good Reason
following a Change in Control. If the Executive's employment with the Company is
terminated by the Company (other than for Cause, Disability or death) or by the
Executive for Good Reason, in contemplation of a Change of Control or within 12
months following the Change in Control Date, then the Executive shall be
entitled to the following benefits:

               5.5.a.         the Company shall pay to the Executive in a lump
                              sum in cash within 30 days after the Date of
                              Termination the aggregate of the following
                              amounts:

               5.5.a.i.       the Accrued Obligations;

               5.5.a.ii.      a Prior Year Bonus, if applicable, and a Pro Rata
                              Bonus; and

               5.5.a.iii.     the amount equal to (a) two multiplied by the sum
                              of (x) the Executive's annual base salary in
                              effect as of the Measurement Date and (y) the
                              higher of (i) the average of the bonuses paid
                              under the Annual Incentive Program for the five
                              prior payouts (or such shorter period of time
                              during which Executive was eligible for the Annual
                              Incentive Program at the participation level
                              applicable upon the Change in Control Date) or
                              (ii) the Executive's Target Bonus (as defined in
                              the Annual Incentive Program) for the year during
                              which the Change in Control Date occurs.

               5.5.b. for one year after the Date of Termination, or such longer
     period as may be provided by the terms of the appropriate plan, program,
     practice or policy, the Company shall continue to provide medical, dental
     and life insurance, retirement (including 401(k) match) benefits, executive
     health benefits, executive allowance and other benefits to the Executive
     and the Executive's family at least equal to those which would have been
     provided to them if the Executive's employment had not been terminated, in
     accordance with the applicable medical, dental and life insurance Benefit
     Plans in effect on the Measurement Date or, if more favorable to the
     Executive and the Executive's family, in effect generally at any time
     thereafter with respect to other peer executives of the Company and its
     affiliated companies; provided, however, that (A) if the terms of any
     benefit plan do not permit continued participation therein by a former
     employee, then an equitable arrangement shall be made by the Company (such
     as a substitute or alternative plan) or a cash payment to provide as
     substantially equivalent a benefit as is reasonably possible and (B) if the
     Executive becomes reemployed with another employer and is eligible to
     receive a health or welfare (e.g., medical insurance) benefit from such
     employer on terms at least as favorable to the Executive and the
     Executive's family as those being provided by the Company,

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     then the Company shall no longer be required to provide those particular
     benefits to the Executive and the Executive's family; and

               5.5.c. the Other Benefits.

          5.6. Miscellaneous.

               5.6.a. In the event that the Executive dies while employed by the
     Company, the Date of Termination shall be the date of the Executive's death
     and in the event that the Company determines to terminate the Executive on
     account of Cause, the Date of Termination shall be date determined by the
     Company, in its sole discretion. In the event the Company fails to satisfy
     the requirements of this Agreement regarding a Notice of Termination, the
     purported termination of the Executive's employment pursuant to such Notice
     of Termination shall not be effective for purposes of this Agreement.

               5.6.b. The failure by the Executive or the Company to set forth
     in the Notice of Termination any fact or circumstance which contributes to
     a showing of Good Reason or Cause shall not waive any right of the
     Executive or the Company, respectively, hereunder or preclude the Executive
     or the Company, respectively, from asserting any such fact or circumstance
     in enforcing the Executive's or the Company's rights HEREUNDER.

               5.6.c. Any Notice of Termination for Good Reason given by the
     Executive must be given within 90 days of the occurrence of the event(s) or
     circumstance(s) which constitute(s) Good Reason.

          5.7. Taxes.

               5.7.a. If the acceleration of the vesting and exercisability of
     stock options or equity awards, together with payments and other benefits
     of the Executive (collectively, the "Payment") (i) constitute a "parachute
     payment" within the meaning of Section 280G of the Code, or any comparable
     successor provisions, and (ii) but for this Section 5.7 would be subject to
     the excise tax imposed by Section 4999 of the Code, or any comparable
     successor provisions (the "Excise Tax"), then such Payment shall be either
     (1) provided to Executive in full, or (2) provided to Executive as to such
     lesser extent that would result in no portion of such Payment being subject
     to the Excise Tax, whichever of the foregoing amounts, when taking into
     account applicable federal, state, local and foreign income and employment
     taxes, the Excise Tax, and any other applicable taxes, results in the
     receipt by Executive, on an after-tax basis, of the greatest amount of the
     Payment, notwithstanding that all or some portion of the Payment may be
     subject to the Excise Tax. If a reduction in the Payment is to be made as
     provided above, reductions shall occur in the following order unless
     Executive elects in writing a different order (provided, however, that such
     election shall be subject to Company approval if made on or after the date
     that triggers the Payment or a portion thereof):(A) reduction of cash
     payments; (B) cancellation of accelerated vesting of options and other
     equity awards; and (C) reduction of other benefits paid to Executive. If
     acceleration of vesting is to be reduced, such acceleration of vesting
     shall be cancelled in the reverse order of date of grant (i.e., the
     earliest granted equity award cancelled last) unless Executive elects in
     writing a different order for cancellation.

               5.7.b. A national accounting firm with no current significant
     business relationship with the Company shall perform the calculations
     referenced to in this Section 5.7. If the accounting firm so engaged by the
     Company is serving as accountant or auditor for the individual, entity or
     group effecting the Change in Control, the Company shall appoint a
     nationally recognized accounting firm to make the determinations required
     hereunder. The Company shall bear all expenses with respect to the
     determinations by such accounting firm required to be made hereunder. For

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     purposes of making the calculations required by this Section 5.7, the
     accounting firm may make reasonable assumptions and approximations
     concerning applicable taxes and may rely on reasonable, good faith
     interpretations concerning the application of the Code and other applicable
     legal authority. The Company and Executive shall furnish to the accounting
     firm such information and documents as the accounting firm may reasonably
     request in order to make such a determination.

               5.7.c. The accounting firm engaged to make the determinations
     hereunder shall provide its calculations, together with detailed supporting
     documentation, to the Company and Executive within fifteen (15) calendar
     days after the date on which Executive's right to a Payment is triggered
     (if requested at that time by the Company or Executive) or such other time
     as requested by the Company or Executive. If the accounting firm determines
     that no Excise Tax is payable with respect to a Payment, either before or
     after the application of the Reduced Amount, it shall furnish the Company
     and Executive with an opinion reasonably acceptable to Executive that no
     Excise Tax will be imposed with respect to such Payment. Any good faith
     determinations of the accounting firm made hereunder shall be final,
     binding and conclusive upon the Company and Executive.

6. Outplacement Services. In the event the Executive is terminated by the
Company (other than for Cause, Disability or death), or the Executive terminates
employment for Good Reason, the Company shall provide outplacement services
through one or more outside firms of the Executive's choosing up to an aggregate
of $20,000, with such services to extend until the earlier of (i) 12 months
following the termination of the Executive's employment or (ii) the date the
Executive secures full time employment.

7. Mitigation. The Executive shall not be required to mitigate the amount of any
payment or benefits provided for in this Agreement by seeking other employment
or otherwise. Further, except as provided in Section 5.5.b the amount of any
payment or benefits provided for in this Agreement shall not be reduced by any
compensation earned by the Executive as a result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Company or otherwise.

8. Release of Claims bv Executive. The Executive shall not be entitled to any
payments or other benefits hereunder unless the Executive executes and, if
applicable, does not revoke, a full and complete release and separation
agreement in a form substantially similar to the form attached hereto as
Attachment A, except that the Company may revise such form in the Company's
discretion to reflect the requirements of applicable anti-discrimination laws.

9. Confidentiality. Executive agrees as follows:

          9.1. That his services to the Company are of a special, unique and
extraordinary character, and that his position places him in a position of
confidence and trust with the Company's customers and employees. Executive also
recognizes that his position with the Company will give him substantial access
to Confidential Information (as that term is defined below), the disclosure of
which to competitors of the Company would cause the Company to suffer
substantial and irreparable damage. Executive recognizes, therefore, that it is
in the Company's legitimate business interest to restrict his use of
Confidential Information for any purposes other than the discharge of his
employment duties at the Company, and to limit any potential appropriation of
Confidential Information by him for the benefit of the Company's competitors and
to the detriment of the Company. Accordingly, Executive agrees as follows:

               9.1.a. During and after Executive's employment by the Company,
     Executive will not

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     disclose to any other person or company, nor use for his own
     personal benefit, except as may be necessary in the performance of his
     duties as an employee of the Company, any Confidential Information
     disclosed to him or of which he becomes aware by reason of his employment
     or association with the Company.

               9.1.b. The term "Confidential Information" means any and all data
     and information relating to the business of the Company (whether or not it
     constitutes a trade secret), which is or has been disclosed to Executive or
     of which Executive became aware as a consequence of his employment or
     relationship with the Company, and which has value to the Company and is
     not generally known by its competitors, including but not limited to
     information relating to experimental and research work of the Company, the
     Company's methods, processes, tools, machinery, formulas, drawings or
     appliances, and the financial or business affairs of the Company relating
     to services, customers, customer lists, employees or employees'
     compensation, projections, plans, development, accounting and marketing
     studies or analyses. Confidential Information shall not include any data or
     information that has been disclosed voluntarily to the public by the
     Company (except where such public disclosure has been made by Executive or
     some other person without authorization), or that has been independently
     developed and disclosed by others, or that otherwise enters the public
     domain through lawful and legitimate means. Confidential Information shall
     also not be deemed to be public merely because individual portions of the
     information have been separately made public, but shall be deemed public
     only if all material features comprises such information have been made
     public in combination. Further, this Section 9.1 shall not be construed to
     mean that Executive is precluded from using his/her skills or knowledge in
     gainful employment (or self-employment).

               9.1.c. Executive agrees that upon the termination of his
     employment with the Company, Executive will not take with him or retain
     without written authorization any documents, files or other property of the
     Company, and Executive will return promptly to the Company any such
     documents, files or property in his possession or custody. In connection
     with this Agreement, Executive recognizes that all documents, files and
     property which Executive has received and will receive from the Company,
     including but not limited to customer lists, handbooks, memoranda, policy
     manuals, product specifications, and other materials (with the exception of
     documents relating to benefits to which Executive might be entitled
     following the termination of his employment with the Company), are for the
     exclusive use of the Company and employees who are discharging their
     responsibilities on behalf of the Company, and that Executive has no claim
     or right to the continued use, possession or custody of such documents,
     files or property following the termination of Executive's employment with
     the Company.

10. Intellectual Property. Executive will communicate to the Company any and all
novel ideas, concepts, inventions, processes, and improvements, patentable or
unpatentable, made or conceived by him, either solely or jointly with others,
from the time of entering the Company's employ until Executive leaves, along the
line of the Company's business, or resulting from or suggested by any work which
Executive may do for the Company, or at its request, and Executive will, at all
times during his employment with the Company and after his termination for any
reason, assist the Company in every proper way (at the Company's expense), to
obtain for the Company's own benefit patents for any or all of these ideas,
concepts, inventions, processes and improvements in the United States and any
and all foreign countries, if patentable, by executing and delivering to the
Company any and all applications, assignments, and other instruments, by giving
evidence and testimony, and by executing and delivering to the Company all
drawings, blueprints, notes, and specifications deemed necessary by the Company
in order to apply for and obtain patents in the United States or foreign
countries for such ideas, concepts, inventions, processes and improvements, and
Executive does hereby assign and will assign and convey to the Company his
entire right, title and interest in and to all such ideas, concepts, inventions,
processes, and improvements, and all patent applications and patents thereon.
Executive further agrees to conduct himself as described above after leaving the
Company's employment as to all ideas, concepts, inventions, processes and
improvements conceived or disclosed while with the Company (collectively,

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"Intellectual Property").

11. Non-Solicitation.

          11.1. Executive further covenants and agrees that during his
employment by the Company and for the period of one (1) year thereafter (this
post termination obligation being applicable only to the extent Executive
receives benefits under 4.3ai, 4.3aii, 5.5aii or 5.5aiii hereof), Executive will
not, except with the prior written consent of the Board, directly or indirectly,
solicit or hire, or encourage the solicitation or hiring of, or promise
employment or a service contract to any person who is an employee of the
Company, by any employer other than the Company for any position as an employee,
independent contractor, consultant or otherwise; provided, however, that it
shall not be a violation of this provision if any employee of Company responds
to a general advertisement of a position and Executive does not participate in
the recruiting, screening or hiring decision with respect to such an employee.

          11.2. Executive covenants and agrees that during his employment by the
Company and for a period of one (1) year thereafter (this post termination
obligation being applicable only to the extent Executive receives benefits under
4.3ai, 4.3aii, 5.5aii or 5.5aiii hereof), Executive will not, except with the
prior written consent of the Board, manage, operate, or control as an officer,
partner, principal, consultant or otherwise or use or permit his name to be used
in connection with, the operations of any business or enterprise in any country
or geographic region for which Executive was responsible during the last year of
his employment at the Company to the extent such operations manufacture, market
or sell products competitive to those manufactured, marketed or sold by the
through the efforts of the Executive in such country or geographic region; it
being acknowledged and agreed this provision does not prohibit or limit the
Executive from acting in any capacity at, with or for a company having
operations which are competitive with those of Company, so long as Executive
does not act in any capacity with respect to those competitive operations in
violation of this provision.

12. Enforcement.

          12.1. Executive acknowledges and agrees that the type and periods of
restrictions imposed in Sections 9, 10 and 11 of this Agreement are fair and
reasonable, and that such restrictions are intended solely to protect the
legitimate interests of the Company, rather than to prevent Executive from
earning a livelihood. Executive recognizes that the Company competes throughout
the United States, and that Executive's access to Confidential Information makes
it necessary for the Company to restrict Executive's post-employment activities
in any market in which the Company competes, and in which Executive's access to
Confidential Information and other proprietary information could be used to the
detriment of the Company. In the event that any restriction set forth in this
Agreement is determined to be overbroad with respect to scope, time or
geographical coverage, Executive agrees that such a restriction or restrictions
should be modified and narrowed, either by a court or by the Company, so as to
preserve and protect the legitimate interests of the Company as described in
this Agreement, and without negating or impairing any other restrictions or
agreements set forth herein.

          12.2. Because the Executive's services are unique and because the
Executive has access to Confidential Information and Intellectual Property, the
parties hereto agree that money damages would be an inadequate remedy for any
breach of this Agreement or the Executive engaging in conduct constituting
Cause. Therefore, in the event of a breach or threatened breach of this
Agreement or if the Executive engages in any other conduct that constitutes
Cause, the Company or its successors or assigns may, in addition to other rights
and remedies existing in its favor at law or in equity, apply to any court of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce, or prevent any violations of, the provisions hereof
(without posting a bond or other security).

                                 Page 10 of 16
<PAGE>

          12.3. In addition to the remedies available to the Company under
Section 12.2 above, the Company may cancel, rescind, suspend, withhold or
otherwise limit or restrict any unpaid or deferred amounts owed to Executive, or
exercise or vesting in equity awards, under this Agreement or otherwise, if the
Executive engages in any conduct that constitutes Cause. In the event the
Executive engages in conduct that constitutes Cause prior to, or during the six
months after, any payment or delivery pursuant to this Agreement or otherwise or
the vesting or exercise of any equity rights, such payment, delivery, exercise
or vesting may be rescinded by the Company within two years thereafter. In the
event of any such rescission, the Executive shall pay to the Company the amount
of any gain realized or payment received as a result of the rescinded payment,
delivery, exercise or vesting, in such manner and on such terms and conditions
as may be required, and the Company shall be entitled to set-off against the
amount of any such gain any amount owed to the Executive by the Company.

          12.4. The Executive understands that the foregoing restrictions may
limit his ability to earn a livelihood in a business similar to the business of
the Company, but he nevertheless believes that he has received and will receive
sufficient consideration and other benefits as an employee of the Company and as
otherwise provided hereunder or as described in the recitals hereto to clearly
justify such restrictions which, in any event (given his education, skills and
ability), the Executive does not believe would prevent him from otherwise
earning a living. The Executive further understands that the Company would not
enter into this Agreement but for the covenants contained in Sections 9, 10, and
11 of this Agreement, and the provisions of Sections 9, 10 and 11 of this
Agreement are reasonable and necessary to preserve the business of the Company.

          12.5. Executive agrees that if the Company fails to take action to
remedy any breach by Executive of this Agreement or any portion of the
Agreement, such inaction by the Company shall not operate or be construed as a
waiver of any subsequent breach by Executive of the same or any other provision,
agreement or covenant.

          12.6. Executive hereby states that he has read this Agreement in its
entirety, that Executive has been given an opportunity to consider the Agreement
and discuss it with the attorney of his choice, and that Executive enters into
this Agreement voluntarily and intending to be legally bound.

13. Disputes.

          13.1. Settlement of Disputes; Arbitration. If any legally actionable
dispute arises under this Agreement or otherwise which cannot be resolved by
mutual discussion between the parties, then the Company and Executive each agree
to resolve that dispute by binding arbitration before an arbitrator experienced
in employment law. Said arbitration will be conducted in accordance with the
rules applicable to employment disputes of the Judicial Arbitration and
Mediation Services ("JAMS") and the law applicable to the claim. The parties
shall have 30 calendar days after notice of such arbitration has been given to
attempt to agree on the selection of an arbitrator from JAMS. In the event the
parties are unable to agree in such time, JAMS will provide a list of five
available arbitrators and an arbitrator will be selected from such five-member
panel provided by JAMS by the parties alternately striking out one name of a
potential arbitrator until only one name remains. The party entitled to strike
an arbitrator first shall be selected by a toss of a coin. The parties agree
that this agreement to arbitrate includes any such disputes that the Company may
have against Executive, or Executive may have against the Company and/or its
related entities and/or employees, arising out of or relating to this Agreement,
or Executive's employment or Executive's termination including, but not limited
to, any claims of discrimination or harassment in violation of applicable law
and any other aspect of Executive's compensation, employment, or Executive's
termination. The parties further agree that arbitration as provided for in this
Section is the exclusive and binding remedy for any such dispute and will be
used instead of any court action, which is hereby expressly waived, except for
an administrative claim with an administrative agency. The parties agree that
the arbitration provided herein shall be conducted in Orange County, California.
The Company

                                 Page 11 of 16
<PAGE>

shall pay the cost of any arbitration brought pursuant to this paragraph,
excluding, however, the cost of representation of Executive unless such cost is
awarded in accordance with law or otherwise awarded by the arbitrators.

14. Successors.

          14.1. Successor to Company. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of the Company expressly to
assume and agree to perform this Agreement to the same extent that the Company
would be required to perform it if no such succession had taken place. Failure
of the Company to obtain an assumption of this Agreement at or prior to the
effectiveness of any succession shall be a breach of this Agreement and shall
constitute Good Reason if the Executive elects to terminate employment, except
that for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As used in
this Agreement, "Company" shall mean the Company as defined above and any
successor to its business or assets as aforesaid which assumes and agrees to
perform this Agreement, by operation of law or otherwise.

          14.2. Successor to Executive. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amount would still
be payable to the Executive or the Executive's family hereunder if the Executive
had continued to live, all such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Agreement to the executors,
personal representatives or administrators of the Executive's estate.

          14.3. Notice Requirement. Any termination of the Executive's
employment by the Company (other than due to the death of the Executive) shall
be communicated by a written notice to the Executive hereto (the "Notice of
Termination"). Any Notice of termination shall: (i) indicate the specific
termination provision (if any) of this Agreement relied upon by the party giving
such notice, (ii) to the extent applicable, set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii) specify the
Date of Termination (as defined below). For purposes of this Agreement, the
effective date of an employment termination (the "Date of Termination") shall be
the close of business on the date specified in the Notice of Termination (which
date may not be less than 90 days or more than 120 days after the date of
delivery of such Notice of Termination), except in the case of a termination due
to the Executive's death or on account of the Company terminating the Executive
for Cause, in which case the Date of Termination can be immediate.

          14.4. Notice. All notices, instructions and other communications given
hereunder or in connection herewith shall be in writing. Any such notice,
instruction or communication shall be sent either (i) by registered or certified
mail, return receipt requested, postage prepaid, or (ii) prepaid via a reputable
nationwide overnight courier service, in each case addressed to the Company, at
3300 Hyland Ave, Costa Mesa, CA 92626 and to the Executive at the Executive's
principal residence as currently reflected on the Company's records (or to such
other addresses as either the Company or the Executive may have furnished to the
other in writing in accordance herewith). Any such notice, instruction or
communication shall be deemed to have been delivered five business days after it
is sent by registered or certified mail, return receipt requested, postage
prepaid or one business day after it is sent via a reputable nationwide
overnight courier service. Either party may give any notice, instruction or
other communication hereunder using any other means, but no such notice,
instruction or other communication shall be deemed to have been duly delivered
unless and until it actually is received by the party for whom it is intended.

15. Miscellaneous.

                                 Page 12 of 16
<PAGE>

          15.1. Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

          15.2. Injunctive Relief. The Company and the Executive agree that any
breach of this Agreement by the Company is likely to cause the Executive
substantial and irrevocable damage and therefore, in the event of any such
breach, in addition to such other remedies which may be available, the Executive
shall have the right to specific performance and injunctive relief.

          15.3. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the internal laws of the
State of California, without regard to conflicts of law principles.

          15.4. Waivers. No waiver by the Executive at any time of any breach
of, or compliance with, any provision of this Agreement to be performed by the
Company shall be deemed a waiver of that or any other provision at any
subsequent time.

          15.5. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original but both of which together shall
constitute one and the same instrument.

          15.6. Tax Withholding. Any payments provided for hereunder shall be
paid net of any applicable tax withholding required under federal, state or
local law .

          15.7. Entire Agreement. This Agreement sets forth the entire agreement
of the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties; whether oral or written, by any
officer, employee or representative of any party hereto in respect of the
subject matter contained herein, including any offer letter executed by the
Company and counter-signed by Executive.

          15.8. Amendments. This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Executive.

                                 Page 13 of 16
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first set forth above.

VALEANT PHARMACEUTICALS INTERNATIONAL

By:
   -------------------------------------------

Title:
      ----------------------------------------

EXECUTIVE

Signed:
       ---------------------------------------

                                 Page 14 of 16
<PAGE>

                                  ATTACHMENT A

                     SEVERANCE AGREEMENT AND GENERAL RELEASE

          Valeant Pharmaceuticals International (the "Company") has agreed that,
in return for my signing this Release Agreement (the "Agreement"), the Company
will provide me with the severance benefits described in the Executive Severance
Agreement dated as of _____________ between the Company and me (the "Executive
Agreement"). I understand that I am not entitled to these severance benefits
unless I sign this Agreement. I understand that, regardless of whether I sign
this Agreement, the Company will pay me any accrued salary and vacation to which
I am entitled by law. In consideration for the severance benefits I am receiving
under this Agreement:

          (1) I hereby release the Company and its parent, subsidiaries,
predecessors, successors, and affiliates, and their officers, directors,
employees, shareholders, and agents from any and all claims, liabilities, or
obligations of every kind, but only to the extent (a) actually known by me or,
if unknown, are of such a nature that a prudent person acting under similar
circumstances would know of such claims; and (b) arising at any time prior to
and through the date I sign this Agreement. This general release includes, but
is not limited to: all federal and state statutory and common law claims; claims
related to my employment, termination of my employment, breach of contract,
tort, discrimination, harassment, retaliation, fraud, emotional distress,
compensation or benefits; and claims for any form of equity or compensation. In
releasing claims potentially unknown to me at present, I acknowledge that I have
understood and waived all rights and benefits under Section 1542 of the
California Civil Code, and any law or legal principle of similar effect in any
jurisdiction. California Civil Code Section 1542 provides as follows: " A
general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor."

          (2) I acknowledge that I am knowingly and voluntarily waiving and
releasing any rights that I may have under the Age Discrimination in Employment
Act of 1967, as amended ("ADEA"), and that the consideration given for the
waiver and release in the preceding paragraph is in addition to anything of
value to which I was already entitled and provided to me in order to obtain a
full release of all claims, including claims for age discrimination. I further
acknowledge that I have been advised by this writing that: (a) my waiver and
release do not apply to any rights or claims that may arise after the execution
date of this Agreement; (b) I have the right to consult with an attorney prior
to executing this Agreement; (c) I have twenty-one (21) days to consider this
Agreement (although I may choose voluntarily to execute this Agreement earlier);
(d) I have seven (7) days following the execution of this Agreement to revoke
the Agreement as to only any claim I may have for age discrimination under the
ADEA by providing written notice to the head of the Company's Human Resources
department which is received by 5:00 p.m. on the seventh day following my
execution of this Agreement (I acknowledge that I do not have a right to
revocation with respect to any other claims); and (e) this Agreement will be
effective upon my execution of it, but that no severance benefits will be owed
to me any sooner than the eighth day following my execution of this Agreement. I
further acknowledge that 90% of the benefits provided to me by this Agreement
are for the release of any potential claim for age discrimination I may have
under the ADEA.

          (3) Notwithstanding anything herein to the contrary, I am not
releasing: (a) any claims that relate to my right to enforce this Agreement or
the Executive Agreement, (b) my rights of indemnification and directors and
officers liability insurance coverage (or replacements therefor) to which I was
entitled immediately prior to the date of this Agreement with regard to my
service on behalf of the Company and its affiliates (including, without
limitation, under Section 13(d) of the Executive Employment Agreement); (c) my
rights under any tax-qualified pension or claims for accrued vested benefits
under any other employee benefit plan, policy or arrangement maintained by the
Company or under COBRA; (d) my rights under the provisions of the Executive
Agreement which are intended to survive the termination of my employment; or (e)
my rights as a stockholder.

                                 Page 15 of 16
<PAGE>

                                      * * *

          This Agreement constitutes the complete, final and exclusive
embodiment of the entire agreement between the Company and me with regard to my
release of all known and unknown claims against the Company. I acknowledge and
understand that certain provisions in my Executive Agreement are intended to and
do survive the termination of my employment and the execution of this Agreement.
I am not relying on any promise or representation, written or oral, that is not
expressly stated herein. This Agreement may only be modified by a written
agreement signed by both me and a duly authorized officer of the Company and
approved by the Company's Board of Directors.

UNDERSTOOD AND AGREED:

-------------------------------------       ----------------------
                                            Date

-------------------------------------       ----------------------
Valeant Pharmaceuticals International       Date

                                 Page 16 of 16exv10w1

 

Exhibit 10.1

MICHAELS STORES, INC.

2005 INCENTIVE COMPENSATION PLAN

 

 

MICHAELS STORES, INC.

2005 INCENTIVE COMPENSATION PLAN

	 	 	 	 	 
	SECTION	 	PAGE	 
	1. Purpose
	 	 	1	 
	2. Term
	 	 	1	 
	3. Definitions
	 	 	1	 
	4. Shares Available Under Plan
	 	 	6	 
	5. Limitations on Awards
	 	 	6	 
	6. Stock Options
	 	 	7	 
	7. Appreciation Rights
	 	 	8	 
	8. Restricted Shares
	 	 	10	 
	9. Restricted Stock Units
	 	 	11	 
	10. Performance Shares and Performance Units
	 	 	12	 
	11. Senior Executive Plan Bonuses
	 	 	13	 
	12. Transferability
	 	 	14	 
	13. Adjustments
	 	 	14	 
	14. Fractional Shares
	 	 	15	 
	15. Withholding Taxes
	 	 	15	 
	16. Administration of the Plan
	 	 	15	 
	17. Amendments and Other Matters
	 	 	16	 
	18. Governing Law
	 	 	17	 

 

 

MICHAELS STORES, INC.

2005 INCENTIVE COMPENSATION PLAN

     Michaels Stores, Inc., a Delaware corporation (the “Company”), establishes the Michaels
Stores, Inc. 2005 Incentive Compensation Plan (the “Plan”), effective as of June 16, 2005, subject
to stockholder approval.

	1.	 	     Purpose. The purpose of the Plan is to attract and retain the best available talent and
encourage the highest level of performance by directors, executive officers and selected
employees, and to provide them incentives to put forth maximum efforts for the success of the
Company’s business, in order to serve the best interests of the Company and its stockholders.

	2.	 	     Term. The Plan will expire on the tenth anniversary of the date on which it is approved by
the stockholders of the Company. No further Awards will be made under the Plan on or after
such tenth anniversary. Awards that are outstanding on the date the Plan terminates will
remain in effect according to their terms and the provisions of the Plan.

	3.	 	     Definitions. The following terms, when used in the Plan with initial capital letters, will
have the following meanings:

	 	(a)	 	     Appreciation Right means a right granted pursuant to Section 7.
	 
	 	(b)	 	     Award means the award of a Senior Executive Plan Bonus; the grant of
Appreciation Rights, Stock Options, Performance Shares, Performance Units or Restricted
Stock Units; or the grant or sale of Restricted Shares.
	 
	 	(c)	 	     Board means the Board of Directors of the Company.
	 
	 	(d)	 	     Change in Control means the occurrence of any of the following events:

	 	(i)	 	     the acquisition by any person (as such term is used in Section
13(d)(3) or Section 14(d)(2) of the Exchange Act) (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 33-1/3% or more of the combined voting power of the then outstanding shares
of Voting Stock of the Company; provided, however, that for purposes of this
definition, the following acquisitions will not constitute a Change in Control:
(A) any issuance of Voting Stock of the Company directly from the Company that
is approved by the Incumbent Board (as defined below), (B) any acquisition by
the Company or a Subsidiary of Voting Stock of the Company, (C) any acquisition
of Voting Stock of the Company by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any Subsidiary, or (D) any
acquisition of Voting Stock of the Company by any Person pursuant to a Business
Combination that complies with clauses (A), (B) and (C) of paragraph (iii)
below;

 

 

	 	(ii)	 	     individuals who, as of the effective date of the Plan,
constitute the Board (the “Incumbent Board”) cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a director after the effective date of the Plan whose election, or
nomination for election by the Company’s stockholders, was approved by a vote
of at least two-thirds of the directors then comprising the Incumbent Board
(either by a specific vote or by approval of the proxy statement of the Company
in which such person is named as a nominee for director, without objection to
such nomination) will be deemed to have been a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption
of office occurs as a result of an actual or threatened election contest
(within the meaning of Rule 14a-11 of the Exchange Act) with respect to the
election or removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board;
	 
	 	(iii)	 	     the consummation of a reorganization, merger or consolidation,
sale or other disposition of all or substantially all of the assets of the
Company, or other similar transaction (each, a “Business Combination”), unless,
in each case, immediately following such Business Combination, (A) all or
substantially all of the individuals and entities who were the beneficial
owners of Voting Stock of the Company immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 66-2/3% of the
combined voting power of the then outstanding shares of Voting Stock of the
entity resulting from such Business Combination (including, without limitation,
an entity which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or
more subsidiaries), (B) no Person (other than the Company, any Subsidiary, such
entity resulting from such Business Combination, or any employee benefit plan
(or related trust) sponsored or maintained by the Company, any Subsidiary or
such entity resulting from such Business Combination) beneficially owns,
directly or indirectly, 33-1/3% or more of the combined voting power of the
then outstanding shares of Voting Stock of the entity resulting from such
Business Combination, and (C) at least a majority of the members of the Board
of Directors of the entity resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement or of the action of the Board providing for such Business
Combination; or
	 
	 	(iv)	 	     the approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company, except pursuant to a Business
Combination that complies with clauses (A), (B) and (C) of paragraph (iii)
above.

	 	(e)	 	     Code means the Internal Revenue Code of 1986, as in effect from time to time.

2

 

	 	(f)	 	     Committee means the Compensation Committee of the Board and, to the extent the
administration of the Plan has been assumed by the Board pursuant to Section 16, the
Board.
	 
	 	(g)	 	     Common Stock means the common stock, par value $.10 per share, of the Company
or any security into which such Common Stock may be changed by reason of any
transaction or event of the type described in Section 13.
	 
	 	(h)	 	     Date of Grant means the date specified by the Committee on which an Award will
become effective.
	 
	 	(i)	 	     Deferral Period means the period of time during which Restricted Stock Units
are subject to deferral limitations under Section 9.
	 
	 	(j)	 	     Director means a member of the Board.
	 
	 	(k)	 	     Evidence of Award means an agreement, certificate, resolution or other type or
form of writing or other evidence approved by the Committee which sets forth the terms
and conditions of an Award. An Evidence of Award may be in any electronic medium, may
be limited to a notation on the books and records of the Company and need not be signed
by a representative of the Company or a Participant.
	 
	 	(l)	 	     Exchange Act means the Securities Exchange Act of 1934, as amended.
	 
	 	(m)	 	     Grant Price means the price per share of Common Stock at which an Appreciation
Right is granted.
	 
	 	(n)	 	     Management Objectives means the measurable performance objectives, if any,
established by the Committee for a Performance Period that are to be achieved with
respect to an Award. Management Objectives may be described in terms of company-wide
objectives (i.e., the performance of the Company and all of its Subsidiaries) or in
terms of objectives that are related to the performance of the individual Participant
or of the division, Subsidiary, department, region or function within the Company or a
Subsidiary in which the Participant receiving the Award is employed or on which the
Participant’s efforts have the most influence. The achievement of the Management
Objectives established by the Committee for any Performance Period will be determined
without regard to the effect on such Management Objectives of any acquisition or
disposition by the Company of a trade or business, or of substantially all of the
assets of a trade or business, during the Performance Period and without regard to any
change in accounting standards by the Financial Accounting Standards Board or any
successor entity.

          The Management Objectives applicable to any Award to a Participant who is, or is
determined by the Committee to be likely to become, a “covered employee” within the meaning
of Section 162(m) of the Code (or any successor provision) will be limited to specified
levels of, growth in, or performance relative to peer company performance in,

3

 

one or more of the following performance measures (excluding the effect of
extraordinary or nonrecurring items unless the Committee specifically includes any such
extraordinary or nonrecurring item at the time such Award is granted):

	 	(i)	 	profitability measures;

	 	(ii)	 	revenue, sales and same store sales measures;
	 
	 	(iii)	 	business unit performance;
	 
	 	(iv)	 	leverage measures;
	 
	 	(v)	 	stockholder return;
	 
	 	(vi)	 	expense management;
	 
	 	(vii)	 	asset and liability measures;
	 
	 	(viii)	 	individual performance;
	 
	 	(ix)	 	supply chain efficiency;

	 	(x)	 	customer satisfaction;
	 
	 	(xi)	 	productivity measures;
	 
	 	(xii)	 	cash flow measures;
	 
	 	(xiii)	 	return measures; and
	 
	 	(xiv)	 	product development and/or performance

          If the Committee determines that, as a result of a change in the business, operations,
corporate structure or capital structure of the Company (other than an acquisition or
disposition described in the first paragraph of this Section 3(n)), or the manner in which
the Company conducts its business, or any other events or circumstances, the Management
Objectives are no longer suitable, the Committee may in its discretion modify such
Management Objectives or the related minimum acceptable level of achievement, in whole or in
part, with respect to a Performance Period as the Committee deems appropriate and equitable.

	 	(o)	 	     Market Value per Share means, at any date, the closing sale price of the Common
Stock on that date (or, if there are no sales on that date, the last preceding date on
which there was a sale) on the principal national securities exchange or in the
principal market on or in which the Common Stock is traded.
	 
	 	(p)	 	     Option Price means the purchase price per share payable on exercise of a Stock
Option.

4

 

	 	(q)	 	     Participant means a (i) person who is selected by the Committee to receive an
Award under the Plan and who at that time is an executive officer or other key employee
of the Company or any Subsidiary or (ii) a Director.
	 
	 	(r)	 	     Performance Share means a bookkeeping entry that records the equivalent of one
share of Common Stock awarded pursuant to Section 10.
	 
	 	(s)	 	      Performance Period means, with respect to an Award, a period of time within
which the Management Objectives relating to such Award are to be measured. The
Performance Period for a Senior Executive Plan Bonus will be the fiscal year of the
Company, and, unless otherwise expressly provided in the Plan, the Performance Period
for all other Awards will be established by the Committee at the time of the Award.
	 
	 	(t)	 	     Performance Unit means a unit equivalent to $1.00 (or such other value as the
Committee determines) granted pursuant to Section 10.
	 
	 	(u)	 	     Restricted Shares means shares of Common Stock granted or sold pursuant to
Section 8 as to which neither the ownership restrictions nor the restrictions on
transfer have expired.
	 
	 	(v)	 	      Restricted Stock Units means an Award pursuant to Section 9 of the right to
receive shares of Common Stock at the end of a specified Deferral Period.
	 
	 	(w)	 	      Rule 16b-3 means Rule 16b-3 under Section 16 of the Exchange Act as amended (or
any successor rule to the same effect), as in effect from time to time.
	 
	 	(x)	 	     Senior Executive Plan Bonus means an Award of annual incentive compensation
made pursuant to and subject to the conditions set forth in Section 11.
	 
	 	(y)	 	      Spread means the excess of the Market Value per Share on the date an
Appreciation Right is exercised over (i) the Option Price provided for in the Stock
Option granted in tandem with the Appreciation Right or (ii) if there is no tandem
Stock Option, the Grant Price provided for in the Appreciation Right, in either case
multiplied by the number of shares of Common Stock in respect of which the Appreciation
Right is exercised.
	 
	 	(z)	 	      Stock Option means the right to purchase shares of Common Stock upon exercise
of an option granted pursuant to Section 6.
	 
	 	(aa)	 	     Subsidiary means (i) any corporation of which at least 50% of the combined
voting power of the then outstanding shares of Voting Stock is owned directly or
indirectly by the Company, (ii) any partnership of which at least 50% of the profits
interest or capital interest is owned directly or indirectly by the Company and (iii)
any other entity of which at least 50% of the total equity interest is owned directly
or indirectly by the Company.

5

 

	 	(bb)	 	     Voting Stock means the securities entitled to vote generally in the election of
directors or persons who serve similar functions.

	4.	 	     Shares Available Under Plan. The number of shares of Common Stock that may be (i) subject to
an Award of Appreciation Rights or Stock Options (ii) issued or transferred as Restricted
Shares and released from all restrictions or in payment of Performance Shares, Performance
Units, Restricted Stock Units or Senior Executive Plan Bonuses will not exceed in the
aggregate 12 million shares. Such shares may be shares of original issuance or treasury
            shares or a combination of the foregoing. The number of shares of Common Stock available
under this Section 4 will be subject to adjustment as provided in Section 13 and will be
further adjusted to include shares that relate to Awards that expire or are forfeited. The
number of shares of Common Stock available under this Section 4 will not be adjusted to
include (i) any shares withheld by, or tendered to, the Company in payment of the Option Price
with respect to a Stock Option or in satisfaction of the taxes required to be withheld in
connection with any Award granted under the Plan or (ii) any shares subject to an Appreciation
Right that are not transferred to a Participant upon exercise of the Appreciation Right.
	 
	5.	 	     Limitations on Awards. Awards under the Plan will be subject to the following limitations:

	 	(a)	 	     No more than an aggregate of 3 million shares of Common Stock, subject to
adjustment as provided in Section 4, will be issued or transferred upon the exercise of
Appreciation Rights or as Performance Shares, Restricted Shares and Restricted Stock
Units.
	 
	 	(b)	 	     No more than 12 million shares of Common Stock, subject to adjustment as
provided in Section 4, may be subject to an Award of Stock Options that are intended to
qualify as incentive stock options under Section 422 of the Code.
	 
	 	(c)	 	     The maximum number of shares of Common Stock that:

	 	(i)	 	     may be subject to Stock Options or Appreciation Rights granted
to a Participant during any calendar year will not exceed 300,000 shares plus
an additional 700,000 shares with respect to Stock Options or Appreciation
Rights granted a Participant who has not previously been employed by the
Company or any Subsidiary; and
	 
	 	(ii)	 	     may be granted to a Participant during any calendar year as
Performance Shares, Restricted Shares or Restricted Stock Units may not exceed
150,000 shares plus an additional 350,000 shares with respect to Performance
Shares, Restricted Shares or Restricted Stock Units granted a Participant who
has not previously been employed by the Company or any Subsidiary.

          The limitations set forth in this Section 5(c) will apply without regard to
whether the applicable Award is settled in cash or in shares of Common Stock.

6

 

	 	(d)	 	     The maximum aggregate cash value of payments to any Participant for any
Performance Period pursuant to an award of Performance Units will not exceed $4
million.
	 
	 	(e)	 	     The payment of a Senior Executive Plan Bonus to any Participant will not exceed
$3 million.

	6.	 	     Stock Options. The Committee may from time to time authorize grants of options to any
Participant to purchase shares of Common Stock upon such terms and conditions as it may
determine in accordance with this Section 6. Each Participant who is a key employee of the
Company or any Subsidiary will be eligible to receive a grant of Stock Options that are
intended to qualify as incentive stock options within the meaning of Section 422 of the Code.
Each grant of Stock Options may utilize any or all of the authorizations, and will be subject
to all of the requirements, contained in the following provisions:

	 	(a)	 	     Each grant will specify the number of shares of Common Stock to which it
relates.
	 
	 	(b)	 	     Each grant will specify the Option Price, which will not be less than 100% of
the Market Value per Share on the Date of Grant.
	 
	 	(c)	 	     Each grant will specify whether the Option Price will be payable (i) in cash or
by check acceptable to the Company, (ii) by the actual or constructive transfer to the
Company of shares of Common Stock owned by the Participant for at least six months (or,
with the consent of the Committee, for less than six months) having an aggregate Market
Value per Share at the date of exercise equal to the aggregate Option Price, (iii) with
the consent of the Committee, by authorizing the Company to withhold a number of shares
of Common Stock otherwise issuable to the Participant having an aggregate Market Value
per Share on the date of exercise equal to the aggregate Option Price or (iv) by a
combination of such methods of payment; provided, however, that the payment methods
described in clauses (ii) and (iii) will not be available at any time that the Company
is prohibited from purchasing or acquiring such shares of Common Stock.
	 
	 	(d)	 	      To the extent permitted by law, any grant may provide for deferred payment of
the Option Price from the proceeds of sale through a bank or broker of some or all of
the shares to which such exercise relates.
	 
	 	(e)	 	     Successive grants may be made to the same Participant whether or not any Stock
Options or other Awards previously granted to such Participant remain unexercised or
outstanding.
	 
	 	(f)	 	     Each grant will specify the required period or periods of continuous service by
the Participant with the Company or any Subsidiary that are necessary before the Stock
Options or installments thereof will become exercisable. Except as may be approved by
the Committee (i) in connection with Stock Options

7

 

	 	 	 	granted to Directors solely in their capacity as Directors or (ii) in the case of
the death, disability or retirement of a Participant, Stock Options will not be
exercisable at a rate that is faster than one-third of the shares of Common Stock
subject to the Stock Options on each anniversary of the Date of Grant unless
specified Management Objectives are achieved.

	 	(g)	 	     Any grant may specify the Management Objectives that must be achieved as a
condition to the exercise of the Stock Options.
	 
	 	(h)	 	     Any grant may provide for the earlier exercise of the Stock Options in the
event of a Change in Control or other similar transaction or event.
	 
	 	(i)	 	     Stock Options may be (i) options which are intended to qualify under particular
provisions of the Code, (ii) options which are not intended to so qualify or (iii)
combinations of the foregoing.
	 
	 	(j)	 	     On or after the Date of Grant, the Committee may provide for the payment to the
Participant of dividend equivalents thereon in cash or Common Stock on a current,
deferred or contingent basis.
	 
	 	(k)	 	      No Stock Option will be exercisable more than five years from the Date of
Grant, unless the Evidence of Award provides for an extended exercise period in the
event of death, disability or retirement.
	 
	 	(l)	 	      The Committee will have the right to substitute Appreciation Rights for
outstanding Options granted to one or more Participants, provided the terms and the
economic benefit of the substituted Appreciation Rights are at least equivalent to the
terms and economic benefit of such Options, as determined by the Committee in its
discretion.
	 
	 	(m)	 	      Any grant may provide for the effect on the Stock Options or any shares of
Common Stock issued, or other payment made, with respect to the Stock Options of any
conduct of the Participant determined by the Committee to be injurious, detrimental or
prejudicial to any significant interest of the Company or any Subsidiary.
	 
	 	(n)	 	Each grant will be evidenced by an Evidence of Award, which may contain such
terms and provisions, consistent with the Plan, as the Committee may approve, including
without limitation provisions relating to the Participant’s termination of employment
or other termination of service by reason of retirement, death, disability or
otherwise.

	7.	 	     Appreciation Rights. The Committee may also from time to time authorize grants to any
Participant of Appreciation Rights upon such terms and conditions as it may determine in
accordance with this Section 7. Appreciation Rights may be granted in tandem with Stock
Options or separate and apart from a grant of Stock Options. An Appreciation Right will be a
right of the Participant to receive from the Company upon exercise an amount which will be
determined by the Committee at the Date of Grant and

8

 

will be expressed as a percentage of the Spread (not exceeding 100%) at the time of
exercise. An Appreciation Right granted in tandem with a Stock Option may be exercised only
by surrender of the related Stock Option. Each grant of an Appreciation Right may utilize
any or all of the authorizations, and will be subject to all of the requirements, contained
in the following provisions:

	 	(a)	 	      Each grant will state whether it is made in tandem with Stock Options and, if
not made in tandem with any Stock Options, will specify the number of shares of Common
Stock in respect of which it is made.
	 
	 	(b)	 	     Each grant made in tandem with Stock Options will specify the Option Price and
each grant not made in tandem with Stock Options will specify the Grant Price, which in
either case will not be less than 100% of the Market Value per Share on the Date of
Grant.
	 
	 	(c)	 	      Any grant may provide that the amount payable on exercise of an Appreciation
Right may be paid (i) in cash, (ii) in shares of Common Stock having an aggregate
Market Value per Share equal to the Spread (or the designated percentage of the Spread)
or (iii) in a combination thereof, as determined by the Committee in its discretion.
	 
	 	(d)	 	     Any grant may specify that the amount payable to the Participant on exercise of
an Appreciation Right may not exceed a maximum amount specified by the Committee at the
Date of Grant.
	 
	 	(e)	 	     Successive grants may be made to the same Participant whether or not any
Appreciation Rights or other Awards previously granted to such Participant remain
unexercised or outstanding.
	 
	 	(f)	 	     Each grant will specify the required period or periods of continuous service by
the Participant with the Company or any Subsidiary that are necessary before the
Appreciation Rights or installments thereof will become exercisable, and will provide
that no Appreciation Rights may be exercised except at a time when the Spread is
positive and, with respect to any grant made in tandem with Stock Options, when the
related Stock Options are also exercisable. Except as may be approved by the Committee
(i) in connection with Appreciation Rights granted to Directors solely in their
capacity as Directors or (ii) in the case of the death, disability or retirement of a
Participant, Appreciation Rights will not be exercisable at a rate that is faster than
one-third of the shares of Common Stock subject to the Appreciation Rights on each
anniversary of the Date of Grant unless specified Management Objectives are achieved.
	 
	 	(g)	 	     Any grant may specify the Management Objectives that must be achieved as a
condition to the exercise of the Appreciation Rights.
	 
	 	(h)	 	     Any grant may provide for the earlier exercise of the Appreciation Rights in
the event of a Change in Control or other similar transaction or event.

9

 

	 	(i)	 	     On or after the Date of Grant, the Committee may provide for the payment to the
Participant of dividend equivalents thereon in cash or Common Stock on a current,
deferred or contingent basis.
	 
	 	(j)	 	     No Appreciation Right will be exercisable more than ten years from the Date of
Grant.
	 
	 	(k)	 	     Any grant may provide for the effect on the Appreciation Rights or any shares
of Common Stock issued, or other payment made, with respect to the Appreciation Rights
of any conduct of the Participant determined by the Committee to be injurious,
detrimental or prejudicial to any significant interest of the Company or any
Subsidiary.
	 
	 	(l)	 	      Each grant will be evidenced by an Evidence of Award, which may contain such
terms and provisions, consistent with the Plan, as the Committee may approve, including
without limitation provisions relating to the Participant’s termination of employment
or other termination of service by reason of retirement, death, disability or
otherwise.

	8.	 	     Restricted Shares. The Committee may also from time to time authorize grants or sales to any
Participant of Restricted Shares upon such terms and conditions as it may determine in
accordance with this Section 8. Each grant or sale will constitute an immediate transfer of
the ownership of shares of Common Stock to the Participant in consideration of the performance
of services, entitling such Participant to voting and other ownership rights, but subject to
the restrictions set forth in this Section 8. Each such grant or sale may utilize any or all
of the authorizations, and will be subject to all of the requirements, contained in the
following provisions:

	 	(a)	 	     Each grant or sale may be made without additional consideration or in
consideration of a payment by the Participant that is less than the Market Value per
Share at the Date of Grant, except as may otherwise be required by the Delaware General
Corporation Law.
	 
	 	(b)	 	     Each grant or sale may limit the Participant’s dividend rights during the
period in which the shares of Restricted Shares are subject to any such restrictions.
	 
	 	(c)	 	      Each grant or sale will provide that the Restricted Shares will be subject, for
a period to be determined by the Committee at the Date of Grant, to one or more
restrictions, including without limitation a restriction that constitutes a
“substantial risk of forfeiture” within the meaning of Section 83 of the Code and the
regulations of the Internal Revenue Service under such section. Except as may be
approved by the Committee (i) in connection with Restricted Shares granted or sold to
Directors solely in their capacity as Directors or (ii) in the case of the death,
disability or retirement of a Participant, the restrictions imposed on Restricted
Shares will not terminate at a rate that is faster than with respect to

10

 

one-third of the Restricted Shares on each anniversary of the Date of Grant unless
specified Management Objectives are achieved.

	 	(d)	 	     Any grant or sale may specify the Management Objectives that, if achieved, will
result in the termination or early termination of the restrictions applicable to the shares.
	 
	 	(e)	 	     Any grant or sale may provide for the early termination of any such
restrictions in the event of a Change in Control or other similar transaction or event.
	 
	 	(f)	 	      Each grant or sale will provide that during the period for which such
restriction or restrictions are to continue, the transferability of the Restricted
Shares will be prohibited or restricted in a manner and to the extent prescribed by the
Committee at the Date of Grant (which restrictions may include without limitation
rights of repurchase or first refusal in favor of the Company or provisions subjecting
the Restricted Shares to continuing restrictions in the hands of any transferee).
	 
	 	(g)	 	     Any grant or sale may provide for the effect on the Restricted Shares or any shares of Common Stock issued free of restrictions, or other payment made, with respect
to the Restricted Shares of any conduct of the Participant determined by the Committee
to be injurious, detrimental or prejudicial to any significant interest of the Company
or any Subsidiary.
	 
	 	(h)	 	      Each grant or sale will be evidenced by an Evidence of Award, which may contain
such terms and provisions, consistent with the Plan, as the Committee may approve,
including without limitation provisions relating to the Participant’s termination of
employment or other termination of service by reason of retirement, death, disability
or otherwise.

	9.	 	     Restricted Stock Units. The Committee may also from time to time authorize grants or sales
to any Participant of Restricted Stock Units upon such terms and conditions as it may
determine in accordance with this Section 9. Each grant or sale will constitute the agreement
by the Company to issue or transfer shares of Common Stock to the Participant in the future in
consideration of the performance of services, subject to the fulfillment during the Deferral
Period of such conditions as the Committee may specify. Each such grant or sale may utilize
any or all of the authorizations, and will be subject to all of the requirements, contained in
the following provisions:

	 	(a)	 	     Each grant or sale may be made without additional consideration from the
Participant or in consideration of a payment by the Participant that is less than the
Market Value per Share on the Date of Grant, except as may otherwise be required by the
Delaware General Corporation Law.
	 
	 	(b)	 	     Each grant or sale will provide that the Restricted Stock Units will be subject
to a Deferral Period, which will be fixed by the Committee on the Date of Grant, and
any grant or sale may provide for the earlier termination of such period

11

 

in the event of a Change in Control or other similar transaction or event. Except
as the Committee may approve (i) in connection with Restricted Stock Units granted
to Directors solely in their capacity as Directors or (ii) in the case of the death,
disability or retirement of a Participant, the Deferral Period will not terminate at
a rate that is faster than with respect to one-third of the Restricted Stock Units
on each anniversary of the Date of Grant unless specified Management Objectives are
achieved.

	 	(c)	 	     During the Deferral Period, the Participant will not have any right to transfer
any rights under the Restricted Stock Units, will not have any rights of ownership in
the Restricted Stock Units and will not have any right to vote the Restricted Stock
Units, but the Committee may on or after the Date of Grant authorize the payment of
dividend equivalents on such shares in cash or Common Stock on a current, deferred or
contingent basis.
	 
	 	(d)	 	     Any grant or sale may provide for the effect on the Restricted Stock Units or
any shares of Common Stock issued free of restrictions, or other payment made, with
respect to the Restricted Stock Units of any conduct of the Participant determined by
the Committee to be injurious, detrimental or prejudicial to any significant interest
of the Company or any Subsidiary.
	 
	 	(e)	 	     Each grant or sale will be evidenced by an Evidence of Award, which will
contain such terms and provisions as the Committee may determine consistent with the
Plan, including without limitation provisions relating to the Participant’s termination
of employment or other termination of service by reason of retirement, death,
disability or otherwise.

	10.	 	      Performance Shares and Performance Units. The Committee may also from time to time authorize
grants to any Participant of Performance Shares and Performance Units, which will become
payable upon achievement of specified Management Objectives, upon such terms and conditions as
it may determine in accordance with this Section 10. Each such grant may utilize any or all
of the authorizations, and will be subject to all of the requirements, contained in the
following provisions:

	 	(a)	 	      Each grant will specify the number of Performance Shares or Performance Units
to which it relates.
	 
	 	(b)	 	      The Performance Period with respect to each Performance Share and Performance
Unit will be determined by the Committee at the time of grant.
	 
	 	(c)	 	      Each grant will specify the Management Objectives that, if achieved, will
result in the payment of the Performance Shares or Performance Units.
	 
	 	(d)	 	      Each grant will specify the time and manner of payment of Performance Shares or
Performance Units which have become payable, which payment may be made in (i) cash,
(ii) shares of Common Stock having an aggregate Market Value per Share equal to the
aggregate value of the Performance Shares or Performance

12

 

Units which have become payable or (iii) any combination thereof, as determined by
the Committee in its discretion at the time of payment.

	 	(e)	 	      Any grant of Performance Shares may specify that the amount payable with
respect thereto may not exceed a maximum specified by the Committee on the Date of
Grant. Any grant of Performance Units may specify that the amount payable, or the
number of shares of Common Stock issued, with respect to the Performance Units may not
exceed maximums specified by the Committee on the Date of Grant.
	 
	 	(f)	 	      On or after the Date of Grant, the Committee may provide for the payment to the
Participant of dividend equivalents on Performance Shares in cash or Common Stock on a
current, deferred or contingent basis.
	 
	 	(g)	 	      Any grant may provide for the effect on the Performance Shares or Performance
Units or any shares of Common Stock issued, or other payment made, with respect to the
Performance Shares or Performance Units of any conduct of the Participant determined by
the Committee to be injurious, detrimental or prejudicial to any significant interest
of the Company or any Subsidiary.
	 
	 	(h)	 	      Each grant will be evidenced by an Evidence of Award, which will contain such
terms and provisions as the Committee may determine consistent with the Plan, including
without limitation provisions relating to the payment of the Performance Shares or
Performance Units in the event of a Change in Control or other similar transaction or
event and provisions relating to the Participant’s termination of employment or other
termination of service by reason of retirement, death, disability or otherwise.

	11.	 	      Senior Executive Plan Bonuses. The Committee may from time to time authorize the payment of
annual incentive compensation to a Participant who is, or is determined by the Committee to be
likely to become, a “covered employee” within the meaning of Section 162(m) of the Code (or
any successor provision), which incentive compensation will become payable upon achievement of
specified Management Objectives. Subject to Section 5(e), Senior Executive Plan Bonuses will
be payable upon such terms and conditions as the Committee may determine in accordance with
the following provisions:

	 	(a)	 	      No later than 90 days after the first day of the Company’s fiscal year, the
Committee will specify the Management Objectives that, if achieved, will result in the
payment of a Senior Executive Plan Bonus for such year.
	 
	 	(b)	 	      Following the close of the Company’s fiscal year, the Committee will certify in
writing whether the specified Management Objectives have been achieved. Approved
minutes of a meeting of the Committee at which such certification is made will be
treated as written certification for this purpose. The Committee will also specify the
time and manner of payment of a Senior

13

 

	 	 	 	Executive Plan Bonus which becomes payable, which payment may be made in (i) cash,
(ii) shares of Common Stock having an aggregate Market Value per Share equal to the
aggregate value of the Senior Executive Plan Bonus which has become payable or (iii)
any combination thereof, as determined by the Committee in its discretion at the
time of payment.

	 	(c)	 	      If a Change in Control occurs during a Performance Period, the Senior Executive
Plan Bonus payable to each Participant for the Performance Period will be determined at
the highest level of achievement of the Management Objectives, without regard to actual
performance and without proration for less than a full Performance Period. The Senior
Executive Plan Bonus will be paid at such time following the Change in Control as the
Committee determines in its discretion, but in no event later than 30 days after the
date of an event which results in a Change in Control.
	 
	 	(d)	 	      Each grant may be evidenced by an Evidence of Award, which will contain such
terms and provisions as the Committee may determine consistent with the Plan, including
without limitation provisions relating to the Participant’s termination of employment
by reason of retirement, death, disability or otherwise.

	12.	 	      Transferability. No Award may be sold, pledged, assigned or transferred in any manner other
than by will or the laws of descent and distribution, pursuant to a qualified domestic
relations order or, with the consent of the Committee, by gifts to family members of the
Participant, including to trusts in which family members of the Participant own more than 50%
of the beneficial interests, to foundations in which family members of the Participant or the
Participant controls the management of assets, to other entities in which more than 50% of the
voting interests are owned by family members of the Participant or the Participant and to
charitable organizations described in Section 170(c) of the Code. No Stock Option or
Appreciation Right granted to a Participant will be exercisable during the Participant’s
lifetime by any person other than the Participant or the Participant’s guardian or legal
representative or any permitted transferee.
	 
	13.	 	      Adjustments.

	 	(a)	 	      The Committee may make or provide for such adjustments in (i) the maximum
number of shares of Common Stock specified in Sections 4 and 5, (ii) the number of shares of Common Stock covered by outstanding Stock Options, Appreciation Rights,
Performance Shares and Restricted Stock Units granted under the Plan, (iii) the Option
Price or Grant Price applicable to any Stock Options and Appreciation Rights, and (iv)
the kind of shares covered by any such Awards (including shares of another issuer), as
the Committee in its discretion, exercised in good faith, may determine is equitably
required to prevent dilution or enlargement of the rights of Participants that
otherwise would result from (x) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company, or (y) any
merger, consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial
or

14

 

	 	 	 	complete liquidation or other distribution of assets, issuance of rights or warrants
to purchase securities, or (z) any other corporate transaction or event having an
effect similar to any of the foregoing. In the event of any such transaction or
event, the Committee, in its discretion, may provide in substitution for any or all
outstanding Awards such alternative consideration as it, in good faith, may
determine to be equitable in the circumstances and may require in connection with
such substitution the surrender of all Awards so replaced. Moreover, the Committee
may on or after the Date of Grant provide in the Evidence of Award under the Plan
that the holder of the Award may elect to receive an equivalent award in respect of
securities of the surviving entity of any merger, consolidation or other transaction
or event having a similar effect, or the Committee may provide that the holder will
automatically be entitled to receive such an equivalent award.

	 	(b)	 	      The Committee may accelerate the payment of, or vesting with respect to, any
Award under the Plan upon the occurrence of a transaction or event described in this
Section 13; provided, however, that in the case of any Award that constitutes a
deferral of compensation within the meaning of Section 409A of the Code, the Committee
will not accelerate the payment of the Award unless it determines in good faith that
such transaction or event satisfies the requirements of a change in control event under
guidance issued by the Secretary of the Treasury under Section 409A.

	14.	 	      Fractional Shares. the Company will not be required to issue any fractional share of Common
Stock pursuant to the Plan. The Committee may provide for the elimination of fractions or for
the settlement of fractions in cash.
	 
	15.	 	      Withholding Taxes. To the extent that the Company is required to withhold federal, state,
local or foreign taxes in connection with any payment made or benefit realized by a
Participant or other person under the Plan, and the amounts available to the Company for such
withholding are insufficient, it will be a condition to the receipt of such payment or the
realization of such benefit that the Participant or such other person make arrangements
satisfactory to the Company for payment of the balance of such taxes required to be withheld.
In addition, if permitted by the Committee, the Participant or such other person may elect to
have any withholding obligation of the Company satisfied with shares of Common Stock that
would otherwise be transferred to the Participant or such other person in payment of the
Participant’s Award. However, without the consent of the Committee, shares of Common Stock
will not be withheld in excess of the minimum number of shares required to satisfy the
Company’s withholding obligation.
	 
	16.	 	      Administration of the Plan.

	 	(a)	 	      Unless the administration of the Plan has been expressly assumed by the Board
pursuant to a resolution of the Board, the Plan will be administered by the Committee,
which at all times will consist of two or more Directors appointed by the Board, all of
whom are intended (i) to meet all applicable independence requirements of the New York
Stock Exchange or the principal national securities

15

 

	 	 	 	exchange or principal market on or in which the Common Stock is traded and (ii) to
qualify as “non-employee directors” as defined in Rule 16b-3 and as “outside
directors” as defined in regulations adopted under Section 162(m) of the Code, as
such terms may be amended from time to time; provided, however, that the failure of
a member of the Committee to so qualify will not invalidate any Award granted under
the Plan. A majority of the Committee will constitute a quorum, and the action of
the members of the Committee present at any meeting at which a quorum is present, or
acts unanimously approved in writing, will be the acts of the Committee.

	 	(b)	 	     The Committee has the full authority and discretion to administer the Plan and
to take any action that is necessary or advisable in connection with the administration
of the Plan, including without limitation the authority and discretion to interpret and
construe any provision of the Plan or of any agreement, notification or document
evidencing an Award. The interpretation and construction by the Committee of any such
provision and any determination by the Committee pursuant to any provision of the Plan
or of any such agreement, notification or document will be final and conclusive. No
member of the Committee will be liable for any such action or determination made in
good faith.
	 
	 	(c)	 	     It is the Company’s intention that any Award granted under the Plan that
constitutes a deferral of compensation within the meaning of Section 409A of the Code
and the guidance issued by the Secretary of the Treasury under Section 409A satisfy the
requirements of Section 409A. In granting such an Award, the Committee will use its
best efforts to exercise its authority under the Plan with respect to the terms of such
Award in a manner that the Committee determines in good faith will cause the Award to
comply with Section 409A and thereby avoid the imposition of penalty taxes and interest
upon the Participant receiving the Award.
	 
	 	(d)	 	     If the administration of the Plan is assumed by the Board pursuant to Section
16(a), the Board will have the same authority, power, duties, responsibilities and
discretion given to the Committee under the terms of the Plan.

	17.	 	      Amendments and Other Matters.

	 	(a)	 	      The Plan may be amended from time to time by the Committee or the Board but may
not be amended without further approval by the stockholders of the Company if such
amendment would result in the Plan no longer satisfying any applicable requirements of
the New York Stock Exchange (or the principal national securities exchange on which the
Common Stock is traded), Rule 16b-3 or Section 162(m) of the Code.
	 
	 	(b)	 	     Neither the Committee nor the Board will authorize the amendment of any
outstanding Stock Option to reduce the Option Price without the further approval of the
stockholders of the Company. Furthermore, no Stock Option will be cancelled and
replaced with Stock Options having a lower Option Price without

16

 

	 	 	 	further approval of the stockholders of the Company. The provisions of this Section
17(b) are intended to prohibit the repricing of “underwater” Stock Options and will
not be construed to prohibit the adjustments provided for in Section 13.

	 	(c)	 	     The Plan may be terminated at any time by action of the Board. The termination
of the Plan will not adversely affect the terms of any outstanding Award.
	 
	 	(d)	 	      The Plan does not confer upon any Participant any right with respect to
continuance of employment or other service with the Company or any Subsidiary, nor will
it interfere in any way with any right the Company or any Subsidiary would otherwise
have to terminate such Participant’s employment or other service at any time.
	 
	 	(e)	 	     If the Committee determines, with the advice of legal counsel, that any
provision of the Plan would prevent the payment of any Award intended to qualify as
performance-based compensation within the meaning of Section 162(m) of the Code from so
qualifying, such Plan provision will be invalid and cease to have any effect without
affecting the validity or effectiveness of any other provision of the Plan.

	18.	 	      Governing Law. The Plan, all Awards and all actions taken under the Plan and the Awards will
be governed in all respects in accordance with the laws of the State of Delaware, including
without limitation, the Delaware statute of limitations, but without giving effect to the
principles of conflicts of laws of such State.

17

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