Document:

exv10w2

 

SHOPKO STORES, INC.

2005

DIRECTORS DEFERRED COMPENSATION PLAN

Effective November 18, 2004

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 
	Section

	 	 	1.	 	 	Establishment and Purpose
	 	 	1	 
	

	 	 	1.1	 	 	Establishment
	 	 	1	 
	

	 	 	1.2	 	 	Purpose
	 	 	1	 
	Section

	 	 	2.	 	 	Definitions
	 	 	1	 
	

	 	 	2.1	 	 	Definitions
	 	 	1	 
	

	 	 	2.2	 	 	Gender and Number
	 	 	4	 
	Section

	 	 	3.	 	 	Eligibility For Participation
	 	 	4	 
	Section

	 	 	4.	 	 	Election to Defer
	 	 	4	 
	

	 	 	4.1	 	 	Deferrals
	 	 	4	 
	

	 	 	4.2	 	 	Procedures
	 	 	4	 
	

	 	 	4.3	 	 	Maximum and Minimum Deferrals
	 	 	5	 
	

	 	 	4.4	 	 	Election to Defer Irrevocable
	 	 	5	 
	

	 	 	4.5	 	 	Early Distribution Deferrals
	 	 	5	 
	Section

	 	 	5.	 	 	Accounts
	 	 	5	 
	

	 	 	5.1	 	 	Establishment and Crediting of Account
	 	 	5	 
	

	 	 	5.2	 	 	Compensation Deferrals
	 	 	6	 
	

	 	 	5.3	 	 	Investment Elections
	 	 	6	 
	

	 	 	5.4	 	 	Crediting Rate
	 	 	6	 
	

	 	 	5.5	 	 	Contractual Obligation
	 	 	6	 
	

	 	 	5.6	 	 	Charges Against and Balance of Accounts
	 	 	7	 
	

	 	 	5.7	 	 	Statement of Accounts
	 	 	7	 
	Section

	 	 	6.	 	 	Payment of Benefits
	 	 	7	 
	

	 	 	6.1	 	 	Termination Benefits
	 	 	7	 
	

	 	 	6.2	 	 	Benefits Following a Change of Control
	 	 	7	 
	

	 	 	6.3	 	 	Survivorship Benefits
	 	 	8	 
	

	 	 	6.3.1	 	 	Death Prior to Commencement of Benefits
	 	 	8	 
	

	 	 	6.3.2	 	 	Death After Commencement of Benefits
	 	 	8	 
	

	 	 	6.4	 	 	Small Account Exception
	 	 	8	 
	

	 	 	6.5.	 	 	Recipients of Payments; Designation of Beneficiary
	 	 	8	 
	

	 	 	6.6	 	 	Financial Emergency
	 	 	9	 
	

	 	 	6.7	 	 	Pre-Retirement Benefits
	 	 	9	 
	Section

	 	 	7.	 	 	Forfeiture
	 	 	10	 
	Section

	 	 	8.	 	 	Non-Transferability
	 	 	10	 
	Section

	 	 	9.	 	 	Administration
	 	 	10	 
	

	 	 	9.1	 	 	Administration
	 	 	10	 
	

	 	 	9.2	 	 	Finality of Determination
	 	 	10	 
	

	 	 	9.3	 	 	Claims Procedure
	 	 	10	 
	

	 	 	9.3.1	 	 	Original Claim
	 	 	11	 
	

	 	 	9.3.2	 	 	Claim Review Procedure
	 	 	11	 
	

	 	 	9.3.3	 	 	General Rules
	 	 	12	 
	

	 	 	9.4	 	 	Expenses
	 	 	13	 
	

	 	 	9.5	 	 	Tax Withholding
	 	 	13	 

 

 

	 	 	 	 	 	 	 	 	 	 	 
	Section

	 	 	10.	 	 	Amendment and Termination
	 	 	13	 
	Section

	 	 	11.	 	 	Applicable Law
	 	 	14	 
	Section

	 	 	12.	 	 	Binding Agreement
	 	 	14	 
	Section

	 	 	13.	 	 	Notice
	 	 	14	 
	Section

	 	 	14.	 	 	Errors in Benefit Statement or Distribution
	 	 	14	 

 

 

SHOPKO STORES, INC.

2005

DIRECTORS DEFERRED COMPENSATION PLAN

SECTION 1. Establishment and Purpose

1.1 Establishment

ShopKo Stores, Inc., a Wisconsin corporation (hereinafter called the
“Company”), by action of its Board of Directors, hereby establishes this
deferred compensation plan for certain of its directors known as the SHOPKO
STORES, INC. 2005 DIRECTORS DEFERRED COMPENSATION PLAN (hereinafter called the
“Plan”), effective November 18, 2004.

1.2 Purpose

The purpose of the plan is (i) to attract high quality directors by providing a
means whereby amounts payable by the Company to directors may be deferred to a
future period, (ii) to motivate such directors to continue to make
contributions to the growth and profits of the Company and (iii) to provide
such directors certain benefits as hereinafter described upon termination as a
Director.

SECTION 2. Definitions

2.1 Definitions

Whenever used hereinafter, the following terms shall have the meaning set forth
below:

	 	(a)	 	“Account” means the account or accounts established for a
Particular Participant pursuant to Section 5 of the Plan.
	 
	 	(b)	 	“Administrator” means the person or persons appointed by the
Retirement Committee of the Company to administer the Plan pursuant
to Section 9 of the Plan.
	 
	 	(c)	 	“Beneficiary” means the person designated by a Participant
pursuant to Section 6.6 hereof.
	 
	 	(d)	 	“Board” means the Board of Directors of the Company.
	 
	 	(e)	 	“Change of Control” means any of the following events:

     (1) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”) (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (i) the then outstanding shares
of Common Stock of the Company (the “Outstanding Company Common Stock”)
or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding

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Company Voting Securities”); provided, however, that for purposes
of this subsection (1), the following acquisitions shall not constitute
a Change of Control: (i) any acquisition directly from the Company, (ii)
any acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company, (iv) any acquisition by
any corporation pursuant to a transaction which complies with clauses
(i) and (ii) of subsection (3) below, or (v) any acquisition of 20% or
more but less than a majority of either the Outstanding Company Common
Stock or the Outstanding Company Voting Securities by any individual,
entity or group if at least a majority of the members of the Board of
Directors of the Company were members of the Incumbent Board, as defined
below, at the time of such acquisition; or

     (2) individuals who, as of the date hereof, 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 subsequent to the date hereof whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at
least a majority of the directors then constituting the Incumbent Board
shall be considered as though such individual were 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 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; or

     (3) consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
the Company for which approval of the shareholders of the Company is
required (a “Business Combination”), in each case, unless, immediately
following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation, a
corporation 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) in substantially the same proportions
as their ownership, immediately prior to such Business Combination of
the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be and (ii) at least a majority of the
members of the Board of Directors of the corporation 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

     (4) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.

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	 	(f)	 	“Chief Executive Officer” means the chief executive officer
of the Company or the person who regularly performs the duties
normally associated with such office on behalf of the Company.
	 
	 	(g)	 	“Company” means SHOPKO STORES, INC., a Wisconsin corporation.
	 
	 	(h)	 	“Compensation” means the Participant’s annual retainer and
meeting fees for serving as a Director payable by the Company,
before reductions for deferrals under the Plan.
	 
	 	(i)	 	“Code” means the Internal Revenue Code of 1986, as amended.
	 
	 	(j)	 	“Crediting Rate” means the notional gains and losses credited
on a Participant’s Account balance based on such Participant’s
choice among investment alternatives made available by the
Administrator pursuant to Section 5.4 of the Plan.
	 
	 	(k)	 	“Deferred Compensation Election Form” means a written
agreement between a Participant and the Company whereby the
Participant agrees to defer a portion of his Compensation and the
Company agrees to make benefit payments all in accordance with the
terms and conditions of the Plan. The Deferred Compensation
Election Form may take the form of an electronic communication
followed by appropriate written confirmation as determined by the
Administrator.
	 
	 	(l)	 	“Director” means an individual who is a member of the Board
and who is not an employee of the Company.
	 
	 	(m)	 	“Effective Date” means November 18, 2004.
	 
	 	(n)	 	“Participant” means those eligible Directors who have elected
to participate in the Plan by filing a Deferred Compensation
Election from hereunder.
	 
	 	(o)	 	“Plan Year” means the calendar year.
	 
	 	(p)	 	“Retirement Committee” means the SHOPKO STORES, INC.
Retirement
Committee appointed by the Board for the purpose of performing certain
administrative functions with respect to the employee benefit plans of
the Company, including the Plan.
	 
	 	(p)	 	“Settlement Date” means the date by which a lump sum payment
shall be made or the date by which installment payments shall
commence pursuant to Section 6. Unless otherwise specified, the
Settlement Date shall be the later of (i) the last day of January of
the Plan Year following the year in which the event triggering
distribution occurs or (ii) ninety (90) days following such event.
In the case of death, the event triggering payout shall be deemed to
occur upon the date the Administrator is provided with the
documentation reasonably necessary to establish the fact of the
Participant’s death.

3

 

	 	(q)	 	“Valuation Date” means the date through which notional
earnings and losses are credited and shall be the last day of the
month preceding the month in which the distribution or other basis
for valuation occurs.

2.2 Gender and Number

Except when otherwise indicated by the context, any masculine terminology, when
used in the Plan, shall also include the feminine gender and the definition or
use of any term herein in the singular shall also include the plural.

SECTION 3. ELIGIBILITY FOR PARTICIPATION

Participation in the Plan is limited to Directors. Directors eligible to
become Participants shall be entitled to defer Compensation hereunder as of the
first day of the Plan Year if they are directors as of the Effective Date, or
the first day of the Plan Year following their becoming a Director; provided
they submit a Deferred Compensation Election Form to the Administrator in
accordance with Section 4.1 of the Plan. Notwithstanding the foregoing, the
Retirement Committee may establish a special enrollment period for Directors
joining the Board during a Plan Year. Such special enrollment period shall run
for a maximum of thirty days following the person’s appointment/election as a
Director. A participant shall cease to be a Participant upon termination as a
Director.

SECTION 4. ELECTION TO DEFER

4.1 Deferrals

Any Director eligible to become a Participant may elect to defer Compensation,
otherwise payable in subsequent Plan Years, by submitting a Deferred
Compensation Election Form to the Administrator during the enrollment period
established by the Administrator, but in no event later than December 31 of the
year prior to the Plan Year to which the election relates. The Retirement
Committee may establish a special enrollment period for Directors joining the
Board during a Plan Year to allow such Directors to defer Compensation payable
for such Plan Year. The enrollment period shall be the thirty days following
the person’s appointment/election as a Director and shall relate to pay periods
beginning after the date of the deferral election.

4.2 Procedures

A participant shall make the election provided for in Section 4.1 hereof by
executing a Deferred Compensation Election Form in the form provided by the
Administrator, subject to such terms and conditions as the Retirement Committee
may impose, including, but not limited to, medical examinations, health
screening, medical records reviews, etc. The Deferred Compensation Election
Form shall set forth the Participant’s election to defer any whole percentage
of Compensation earned by the Participant during the Plan Year in accordance
with Section 4.3. A Participant shall only be entitled to defer Compensation
in the amounts and for the periods determined, from time to time, in the sole
and absolute discretion of the Retirement Committee. A Deferred Compensation
Election Form shall be effective if, and only if, it is timely accepted by the
Administrator on behalf of the Company. If accepted by the Administrator, the

4

 

Compensation to be deferred, as specified in the Deferred Compensation Election
Form, shall be deferred and the Participant’s Compensation shall be
correspondingly reduced.

4.3 Maximum and Minimum Deferrals

The following maximum and minimum deferrals of Compensation shall apply to the
amount to be deferred by any Participant, provided, however, that the
Retirement Committee may from time to time, in its sole and absolute
discretion, adjust the maximum and minimum deferrals permitted hereunder:

	 	(i)	 	Minimum Deferral: one percent (1%) of
Compensation;
	 
	 	(ii)	 	Maximum Deferral: one hundred percent (100%) of
Compensation.

4.4 Election to Defer Irrevocable

Except as provided in this Plan or by action of the Retirement Committee, a
Participant’s election to defer any amounts of any nature whatsoever pursuant
to the Plan shall be irrevocable when made and accepted by the Administrator
and shall not be subject to amendment or modification in any manner whatsoever
thereafter.

4.5 Early Distribution Deferrals

At the time of submitting a Deferred Compensation Election Form, a Participant
may make an irrevocable election to create a Scheduled Withdrawal Account as to
the amounts deferred pursuant to that Form, including any earnings thereon,
which will be paid out at an earlier time than termination as a Director as
provided in Section 6 hereunder; provided, however, that the deferral period
shall in no case be less than three (3) years from the first day of the Plan
Year to which the Deferred Compensation Election Form applies; provided,
further, that the payment of the Scheduled Withdrawal Account shall be in one
lump sum, and, once paid, the Participant shall be entitled to no further
benefits with respect to such Scheduled Withdrawal Account. A Participant may
have multiple Scheduled Withdrawal Accounts.

SECTION 5. Accounts

5.1 Establishment and Crediting of Account

The Company shall establish a separate Account on its books with respect to
each deferral election made by each Participant, and shall credit to such
Account(s) certain amounts in accordance with the provisions of the Plan.
Accounts shall be deemed to be credited with notional gains or losses as
provided in Section 5.4 from the date deferral is credited to the Account
through the Valuation Date.

5.2 Compensation Deferrals

The Compensation that is deferred pursuant to a Participant’s Deferred
Compensation Election Form shall be credited to a Participant’s Account as of
the date the Participant would have otherwise received the Compensation. The
Company shall be entitled to deduct from the Participant’s Compensation which
is subject to a Deferred Compensation Election Form any amount it is required
to withhold or collect under any federal, state or local law for taxes or other
charges, including, without limitation, Social Security (FICA) and Medicare
taxes.

5

 

5.3 Investment Elections

The Administrator shall establish a procedure by which a Participant may elect
among investment alternatives or rates made available by the Administrator and
by which the Participant may change investment elections at least quarterly.
The Administrator may allow a Participant to make a different election for each
Account, or may provide that the investment election applies of all of a
Participant’s Accounts. The Participant’s choice among investments shall be
solely for purposes of calculating the Crediting Rate. If the Participant
fails to elect an investment election, the Crediting Rate shall be based on the
investment alternative which is a money market fund or alternative most similar
to a money market fund. At no time shall the Company be obligated to set aside
or invest funds as directed by the Participant and, if the Company elects to
invest funds as directed by the Participant, the Participant shall have no more
right to such investments than any other unsecured general creditor.

5.4 Crediting Rate

The Crediting Rate on amounts in a Participant’s Account(s) shall be based on
the Participant’s investment election(s) pursuant to Section 5.3. A
Participant’s Account(s) shall reflect the investments selected by the
Participant. If an investment on which the Crediting Rate is based sustains a
loss, the Participant’s Account(s) shall be reduced to reflect such loss.
During installment distributions, a Participant’s Account(s) shall continue to
be credited at the Crediting Rate.

5.5 Contractual Obligation

It is intended that the Company is under a contractual obligation to make
payments in accordance with terms and conditions of the Plan. A Participant
shall have no rights to such payments, other than as a general, unsecured
creditor of the Company. Account balances shall not be financed through a
trust fund or any other assets or properties in which a Participant has any
interest whatsoever. Payments from such Accounts shall be made out of the
general funds of the Company. All such Accounts shall be utilized solely as a
device for the measurement and determination of the amounts to be paid to a
Participant pursuant to the Plan. Such Accounts shall not constitute or be
treated as a trust fund or an interest in any specific assets or properties of
the Company of any sort.

5.6 Charges Against and Balance of Accounts

Each Participant’s Account, as of each Valuation Date, shall consist of the
balance of such Account as of the immediately preceding Valuation Date, plus
deferrals credited to the Account since the immediately preceding Valuation
Date, plus (or minus if the investment return is negative) the amount to be
credited to such Account by the Company based on the Crediting Rate pursuant to
Section 5.4 hereof, (taking into account the timing of any contribution or
distribution), less the amount of all distributions, if any, made from such
Account since the immediately preceding Valuation Date.

5.7 Statement of Accounts

The Administrator, shall from time to time, at least quarterly, provide to each
Participant a statement in such form as the Retirement Committee deems
desirable setting forth the Participant’s Accounts as of the end of the prior
period.

6

 

SECTION 6. Payment of Benefits

6.1 Termination Benefits

Upon the Participant’s termination as a Director, for any reason, including
Death, the Participant shall be entitled to receive an amount equal to the
total balance(s) of the Participant’s Account(s) credited with notional
earnings as provided in Section 5 through the Valuation Date. The Participant
may elect, at the same time he makes a deferral election, to receive benefits
from the Account credited with such deferrals, in a lump sum or in annual
installments over 3, 5, 10 or 15 years. In other words, the Participant may
have different benefit payout elections for each of his or her Accounts. If
the Participant fails to make a timely election, the benefits shall be paid
over fifteen (15) years. Payments shall begin on the Settlement Date following
termination, unless the Participant has made a timely election to have payments
begin on any one of the first five (5) anniversaries of such date but in no
event later than the Settlement Date following the date the Participant attains
age seventy (70). An election to change the form of benefit payout for any
Account may be made at any time prior to termination by submitting to the
Administrator the form provided for such purpose, but elections shall not be
effective unless made no less than thirteen (13) calendar months prior to
termination, and shall only be effective if they comply with Section 409A of
the Code and any regulations promulgated thereunder.

6.2 Benefits Following a Change of Control

A new Participant may make an irrevocable election with respect to all future
deferral Accounts on the Participant’s first Deferred Compensation Election
Form, to receive the full amount in his Account(s), credited with notional
earnings as provided in Section 5 through the Valuation Date, in the event of a
Change of Control prior to Termination of Employment. Such benefit shall be
payable in a lump sum no later than the last day of the month following the
month in which such Change of Control occurs, unless the Participant has
elected in the Deferred Compensation Election Form to have such benefit paid in
five (5) annual installments beginning on such date. In no event will
accelerated payments of Accounts be made by the Administrator under this
Section 6.2 if doing so would violate Section 409A of the Code and any
regulations promulgated thereunder.

6.3 Survivorship Benefits

6.3.1 Death Prior to Commencement of Benefits

If a Participant dies prior to receiving any benefits due hereunder, the
Company shall pay to the Participant’s Beneficiary a benefit equal to the
Participant’s Account(s) at death credited with notional earnings as provided
in Section 5, payable in one lump sum as soon as possible after the Retirement
Committee receives a certified copy of the Participant’s death certificate.
Payment of the benefit under this Section 6.31 shall relieve the company of any
further obligation to pay benefits under the Plan.

6.3.2 Death After Commencement of Benefits

If a participant dies after payments pursuant to this Section 6 have commenced
hereunder, but prior to receiving all of the scheduled annual payments, the
Company shall pay the remaining annual payments to the Participant’s
Beneficiary.

7

 

6.4 Small Account Exception

Notwithstanding any other provision of the Plan or a Participant’s Deferred
Compensation Election Form the Administrator, taking into account the expense
and inconvenience of administering the Plan with respect to small Accounts as
set forth herein, may, in its sole discretion, elect to distribute a
Participant’s benefits in a lump sum. This Section 6.4 shall only apply to
small Accounts which shall mean all Accounts attributable to a Participant that
have an aggregate balance of $25,000 or less at the time benefits payable
pursuant to this Section 6 would otherwise commence. In addition, if the
installments payable under this Section 6 would, in the aggregate, be less than
$3,000 per year, the Administrator, in its sole discretion, may shorten the
period over which the installment payments are made. In no event will
accelerated payments of small Accounts be made by the Administrator if doing so
would violate Section 409A of the Code and any regulations promulgated
thereunder.

6.5 Recipients of Payments; Designation of Beneficiary

All payments to be made by the Company shall be made to the Participant, if
living. Except as otherwise provided herein, in the event of a Participant’s
death prior to the receipt of all benefit payments, all subsequent payments to
be made under the Plan shall be to the Beneficiary of the Participant in
accordance with a Participant’s designation of Beneficiary. Unless otherwise
specified in the Participant’s Beneficiary designation, in the event a
Beneficiary dies before receiving all payments due to such Beneficiary pursuant
to this Plan, the then remaining payment shall be paid to the legal
representatives of the Beneficiary’s estate. The Participant shall designate a
Beneficiary, or during his lifetime change such designation, by filing a
written notice of such designation with the Administrator in such form and
subject to such rules and regulations as the Administrator may prescribe. If
the Participant’s Compensation constitutes community property, then any
Beneficiary designation made by the Participant other than a designation of
such Participant’s spouse shall not be effective if any such Beneficiary or
beneficiaries are to receive more than fifty percent (50%) of the aggregate
benefits payable hereunder, unless such spouse shall approve such designation
in writing. If no designation shall be in effect at the time when any benefits
payable under this Plan shall become due, the Beneficiary shall be the legal
representatives of the Participant’s estate. In the event a benefit is payable
to a minor or person declared incompetent or to a person incapable of handling
the disposition of his property, the Retirement Committee may determine to pay
such benefit to the guardian, legal representative or person having the care or
custody of such minor, incompetent or person. The Retirement Committee may
require proof of incompetence, minority or guardianship as it may deem
appropriate prior to distribution of the benefit. Such distribution shall
completely discharge the Retirement Committee and the Company from all
liability with respect to such benefit.

6.6 Financial Emergency

In the event of a Participant’s unforeseeable emergency, the Retirement
Committee, in its sole and absolute discretion, may alter the timing or manner
of payment of any benefits or deferred amounts to be paid pursuant to the Plan
or release the Participant from the obligation of making deferrals. For
purposes of this section, an unforeseeable emergency shall mean a severe
financial hardship to the Participant resulting from an illness or accident of
the Participant, the Participant’s spouse, or a dependent (as defined in
Section 152(a) of the Code) of the Participant,

8

 

loss of the Participant’s property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant. Any early payment of benefits or
withdrawal of deferred amounts due to an unforeseeable emergency shall be
limited to the amount necessary to satisfy such emergency plus amounts
necessary to pay taxes reasonably anticipated as a result of the distribution,
after taking into account the extent to which such hardship is or may be
relieved through reimbursement or compensation by insurance or otherwise or by
liquidation of the Participant’s assets (to the extent the liquidation of such
assets would not itself cause severe financial hardship). The foregoing
standard for distributions shall be modified so that it is consistent with any
regulations promulgated under Section 409A of the Code. The Retirement
Committee’s decision in passing upon severe financial hardship of the
Participant and the manner in which, if at all, the payment or deferral of any
amounts pursuant to the Plan shall be altered or modified shall be final,
conclusive and not subject to appeal. The Participant shall have no right to
make up any amount distributed or transferred as a result of a determination of
financial emergency by the Retirement Committee pursuant to this Section 6.6.

6.7 Pre-Termination Benefits

In the event that Participant has made the election(s) provided for in Section
4.5 to receive amounts prior to termination as a Director, such pre-termination
benefits shall be paid in accordance with such election(s). The calculation of
the amount of such pre-termination benefit shall be made in accordance with the
terms and conditions of the Plan, including, without limitation, Section 5
hereof.

SECTION 7. Forfeiture

In the event of a Participant’s suicide during the first two (2) years after
the filing of any Deferred Compensation Election Form the Retirement Committee,
in its sole and absolute discretion, may terminate all or any part of a
Participant’s (or Beneficiary’s) right to receive any benefits whatsoever
hereunder, provided, however, that the Beneficiary of such a Participant shall
be entitled to receive at least an amount equal to that portion of the
Participant’s Account which has in fact been deferred pursuant to the Plan,
without increase, growth addition or any other amount, payable in such manner
as the Retirement Committee, in its sole and absolute discretion shall
determine.

In the event a Participant (i) makes any material misstatement of information
in connection with any Deferred Compensation Election Form (ii) fails to
disclose to the Company or its agents any material item of his personal or
medical history (including, but not limited to, habits of drug, chemical or
tobacco use), (iii) takes any other action (or fails to take any action), which
action (or failure to act) results in a loss to the Company under the Plan,
then the Retirement Committee, in its sole and absolute discretion, may
terminate all or any part of a Participant’s (or Beneficiary’s) right to
receive any benefits whatsoever hereunder.

9

 

SECTION 8. Non-Transferability

In no event shall the Company make any payment under the Plan to any assignee
or creditor of a Participant or a Beneficiary. Prior to the time of payment
hereunder, a Participant or Beneficiary shall have no rights by way of
anticipation or otherwise to assign or otherwise dispose of any interest under
the Plan nor shall such rights be assigned or transferred by operation of law.

SECTION 9. Administration

9.1 Administration

This Plan shall be administered by the Retirement Committee and the
Administrator. The Retirement Committee may from time to time establish rules
for the administration of the Plan that are not inconsistent with the
provisions of the Plan.

9.2 Finality of Determination

Except as otherwise provided herein, any interpretation or determination by the
Retirement Committee as to any disputed questions arising under the Plan,
including questions of fact (or questions of construction and interpretation),
shall be final, binding and conclusive upon all persons, subject only to a
determination otherwise by the Board.

9.3 Claims Procedure

If any Participant, Beneficiary or other properly interested party is in
disagreement with any determination that has been made under the Plan, a claim
may be presented, but only in accordance with the procedures set forth herein.

9.3.1 Original Claim

Any Participant, Beneficiary or other properly interested party may, if he so
desires, file with the Retirement Committee a written claim for benefits or a
determination under the Plan. Within ninety (90) days after the filing of such
a claim, the Retirement Committee shall notify the claimant in writing whether
his claim is upheld or denied in whole or in part or shall furnish the claimant
a written notice describing specific special circumstances requiring a
specified amount of additional time (but not more than one hundred eighty (180)
days from the date the claim was filed) to reach a decision on the claim. If
the claim is denied in whole or in part, the Retirement Committee shall state
in writing:

	 	(i)	 	the specific reason or reasons for the denial;
	 
	 	(ii)	 	the references to the pertinent provisions of
this Plan on which the denial is based;
	 
	 	(iii)	 	a description of any additional material or
information necessary for the claimant to perfect the claim
and an explanation of why such material or information is
necessary; and
	 
	 	(iv)	 	an explanation of the claims review procedure set
forth in this section, including a statement of the claimant’s
right, if any, to bring a civil action under ERISA Section
502(a) following a denial on review.

10

 

9.3.2 Claim Review Procedure

Within sixty (60) days after receipt of notice that his claim has been denied
in whole or in part, the claimant may file with the Retirement Committee a
written request for a review and may, in conjunction therewith, submit written
comments, documents, records and other information relating to the Claim. The
claimant or his authorized representative, shall be provided, upon request and
free of charge, reasonable access to, and copies of, all documents, records and
other information relevant to the claimant’s claim. For purposes of this
section, a document, record or other information shall be considered “relevant”
to a claimant’s claim if such document, record or other information (i) was
relied upon by the Retirement Committee in making its decision on the claim,
(ii) was submitted, considered or generated in the course of the Retirement
Committee’s making its decision on the claim, without regard to whether the
Retirement Committee relied upon such document, record or other information in
making its decision, or (iii) complies with administrative processes and
safeguards which are designed to insure and to verify that decisions on claims
are made in accordance with governing Plan documents, whose provisions are
applied consistently with respect to similarly situated claimants. The
Retirement Committee’s review of the claimant’s claim and of the Retirement
Committee’s denial of such claim shall take into account all comments,
documents, records, and other information submitted by the claimant or his
authorized representative relating to the claim, without regard to whether such
information was submitted or considered in the initial decision on the claim.
Within sixty (60) days after the filing of such a request for review, the
Retirement Committee shall notify the claimant in writing whether, upon review,
the claim was upheld or denied in whole or in part or shall furnish the
claimant a written notice describing specific circumstances requiring a
specified amount of additional time (but not more than one hundred twenty (120)
days from the date the request for review was filed) to reach a decision on the
request for review. In the case of a decision on appeal upholding the
Retirement Committee’s initial denial of the claimant’s claim, such notice
shall set forth, in a manner calculated to be understood by the claimant, the
following information:

	 	(i)	 	the specific reason or reasons for the decisions
on appeal;
	 
	 	(ii)	 	references to the pertinent provisions of this
Plan on which the decision on appeal is based;
	 
	 	(iii)	 	a statement that the claimant is entitled to
receive, upon request and free of charge, reasonable access
to, and copies of, all documents, records and other
information relevant to the claimant’s claim for benefits; and
	 
	 	(iv)	 	a statement of the claimant’s right to bring an
action under ERISA Section 502(a).

9.3.3 General Rules

	 	(i)	 	No inquiry or question shall be deemed to be a
claim or a request for a review of a denied claim unless made
in accordance with the foregoing claims procedure. The
Retirement Committee may require that any claim for benefits
and any request for a review of denied claim be filed on forms
to be furnished by the Administrator upon request.

11

 

	 	(ii)	 	All decisions on claims and on requests for a
review of denied claims shall be made by the Retirement
Committee. In accordance with Section 9.2 hereof, decisions
of the Retirement Committee shall be final, binding and
conclusive upon all persons.
	 
	 	(iii)	 	The Retirement Committee may, in its discretion,
hold one or more hearings on a claim or a request for a review
of a denied claim.
	 
	 	(iv)	 	Claimants may be represented by a lawyer or other
representative (at their own expense), but the Retirement
Committee reserves the right to require the claimant to
furnish written authorization. A claimant’s representative
shall be entitled to copies of all notices given to the
claimant.
	 
	 	(v)	 	The decision of the Retirement Committee on a
claim and on a request for a review of a denied claim shall be
served on the claimant in writing. If a decision or notice is
not received by a claimant within the time specified, the
claim or request for a review of a denied claim shall be
deemed to have been denied.
	 
	 	(vi)	 	Prior to filing a claim or a request for a review
of a denied claim, the claimant or his representative shall
have a reasonable opportunity to review a copy of this Plan
and all other pertinent documents in the possession of the
Company and the Retirement Committee.
	 
	 	(vii)	 	The Administrator and the individuals serving on
the Retirement Committee shall, except as prohibited by law,
be indemnified and held harmless by the employer from any and
all liabilities, costs, and expenses (including legal fees),
to the extent not covered by liability insurance arising out
of any action taken by any individual of this Committee with
respect to this plan, unless such liability arises from the
individual’s own claim for his or her own benefit, the proven
gross negligence, bad faith, or (if the individual had
reasonable cause to believe his or her conduct was unlawful)
the criminal conduct of such individual. This indemnification
shall continue as to an individual who has ceased to be a
member of the Retirement Committee for the employer and shall
enure to the benefit of the heirs, executors and
administrators of such an individual.

9.4 Expenses

The cost of payment from the Plan and the expense of administering the Plan
shall be borne by the Company.

9.5 Tax Withholding

The Company shall have the right to deduct from all payments to be made under
the Plan, any federal, state or local taxes or other charges required by law to
be withheld with respect to such payments, as determined in the sole discretion
of the Retirement Committee.

12

 

SECTION 10. Amendment and Termination

The Board, or the Retirement Committee, in the circumstances provided below,
may at any time amend, modify, terminate or suspend, this Plan and no
Participant or any other person shall have any right, title, interest or claim
against the Company, its directors, officers or employees for any amounts,
except that (i) the Participant shall be fully vested in his Account hereunder
as of the date on which the Plan is terminated or suspended, (ii) no amendment
shall eliminate the crediting of an investment return on an Account prior to
the complete distribution thereof or provide for a distribution method which
accelerates the timing of distributions hereunder without the consent of a
Participant and (iii) subsequent to a Change of Control, unless a majority of
the holders of Account balances agree to the contrary, the Company or the
Administrator may not alter (a) the choice of investments in the Investment
Election as in effect immediately before the Change of Control and (b) the
payout options as in effect immediately before the Change of Control. Any such
amendment, modification or termination of the Plan may occur either (i) without
limitation, by resolution of the Board or (ii) in any respect that does not
materially increase the cost of the Plan to the Company, by action of the
Retirement Committee (with the written concurrence of the Chief Executive
Officer). Notwithstanding the foregoing, if any provision of this Plan or the
accompanying election forms does not comply with the requirements of Section
409A of the Code, or any regulations or other guidance promulgated thereunder,
such that, absent correction, any Participant would be subject to a 20% penalty
under Section 409A(a)(1)(B)(i)(II) of the Code, the Retirement Committee may
amend or modify this Plan or the election forms in a manner designed to avoid
such penalty, without the consent of any affected Participant, even if such
change is otherwise detrimental to any Participant in the Plan.

SECTION 11. Applicable Law

The Plan shall be governed and construed in accordance with the laws of the
State of Wisconsin, without regard to its conflict of laws provisions, unless
federal law supersedes Wisconsin law in which event the applicable federal law
shall apply. The invalidity of any portion of the Plan shall not invalidate
the remainder hereof and said remainder shall continue in full force. The
captions and other titles herein are designed for convenience only and are not
to be resorted to for the purposes interpreting any provision of the Plan. The
waiver by the Company of any breach of any provision of the Plan shall not
operate or be construed as a waiver of any subsequent breach by that
Participant or any other Participant.

SECTION 12. Binding Agreement

The provisions of the Plan shall be binding upon the Participant, his or her
heirs, personal representatives and beneficiaries, and subject to the rights
granted to amend or terminate the Plan, the provisions of the Plan shall also
be binding upon the Company, its successors and assigns.

13

 

SECTION 13. Notice

Any notice or filing required or permitted to be given to the Company or a
Participant under this Plan shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, in the case of the
Company, to the principal office of the Company, directed to the attention of
the Administrator, and in the case of a Participant, to the last known address
of such Participant indicated on the records of the Company. Such notice
shall be deemed given as of the date of delivery or, if delivery is made by
mail, as of the date shown on the postmark on the receipt for registration or
certification.

SECTION 14. Errors in Benefit Statement or Distribution

In the event an error is made in a benefit statement, such error shall be
corrected on the next benefit statement following the date such error is
discovered. In the event of an error in a distribution, the Participant’s
Account(s) shall, immediately upon discovery of such error, be adjusted to
reflect such under or overpayment and, if possible, the next distribution shall
be increased or decreased to correct such prior error. If the remaining
balance of a Participant’s Account(s) is insufficient to cover an erroneous
overpayment, the Company, may, at its discretion, offset any amount payable to
the Participant from the Company (including but not limited to subsequent
annual retainer fees and meeting fees) to recoup the amount of such
overpayment.

Adopted by the Board of Directors: November 17, 2004

14exv10w30

 

EXHIBIT 10.30

WESTERN DIGITAL CORPORATION

2004 PERFORMANCE INCENTIVE PLAN

          1.     Purpose
of Plan

     
The purpose of this Western Digital Corporation
2004 Performance Incentive Plan (this “Plan”) of
Western Digital Corporation, a Delaware corporation (the
“Corporation”), is to promote the success of the
Corporation and to increase stockholder value by providing an
additional means through the grant of awards to attract,
motivate, retain and reward selected employees and other
eligible persons.

          2.     Eligibility

     
The Administrator (as such term is defined in
Section 3.1) may grant awards under this Plan only to those
persons that the Administrator determines to be Eligible
Persons. An “Eligible Person” is any person who
is either: (a) an officer (whether or not a director) or
employee of the Corporation or one of its Subsidiaries;
(b) a director of the Corporation or one of its
Subsidiaries; or (c) an individual consultant or advisor
who renders or has rendered bona fide services (other than
services in connection with the offering or sale of securities
of the Corporation or one of its Subsidiaries in a
capital-raising transaction or as a market maker or promoter of
securities of the Corporation or one of its Subsidiaries) to the
Corporation or one of its Subsidiaries and who is selected to
participate in this Plan by the Administrator; provided,
however, that a person who is otherwise an Eligible Person under
clause (c) above may participate in this Plan only if such
participation would not adversely affect either the
Corporation’s eligibility to use Form S-8 to register
under the Securities Act of 1933, as amended (the
“Securities Act”), the offering and sale of
shares issuable under this Plan by the Corporation or the
Corporation’s compliance with any other applicable laws. An
Eligible Person who has been granted an award (a
“participant”) may, if otherwise eligible, be granted
additional awards if the Administrator shall so determine. As
used herein, “Subsidiary” means any corporation
or other entity a majority of whose outstanding voting stock or
voting power is beneficially owned directly or indirectly by the
Corporation; and “Board” means the Board of
Directors of the Corporation.

          3.     Plan
Administration

     
3.1     The
Administrator. This Plan shall be administered by and
all awards under this Plan shall be authorized by the
Administrator. The “Administrator” means the
Board or one or more committees appointed by the Board or
another committee (within its delegated authority) to administer
all or certain aspects of this Plan. Any such committee shall be
comprised solely of one or more directors or such number of
directors as may be required under applicable law. A committee
may delegate some or all of its authority to another committee
so constituted. The Board or a committee comprised solely of
directors may also delegate, to the extent permitted by
Section 157(c) of the Delaware General Corporation Law and
any other applicable law, to one or more officers of the
Corporation, its powers under this Plan (a) to designate
the officers and employees of the Corporation and its
Subsidiaries who will receive grants of awards under this Plan,
and (b) to determine the number of shares subject to, and
the other terms and conditions of, such awards. The Board may
delegate different levels of authority to different committees
with administrative and grant authority under this Plan. Unless
otherwise provided in the Bylaws of the Corporation or the
applicable charter of any Administrator: (a) a majority of
the members of the acting Administrator shall constitute a
quorum, and (b) the vote of a majority of the members
present assuming the presence of a quorum or the unanimous
written consent of the members of the Administrator shall
constitute action by the acting Administrator.

     
With respect to awards intended to satisfy the
requirements for performance-based compensation under
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the “Code”), this Plan shall be
administered by a committee consisting solely of two or more
outside directors (as this requirement is applied under
Section 162(m) of the Code); provided, however, that the
failure to satisfy such requirement shall not affect the
validity of the action of any committee otherwise duly
authorized and acting in the matter. Award grants, and
transactions in or involving awards, intended to be exempt under
Rule 16b-3 under the Securities

1

 

Exchange Act of 1934, as amended (the
“Exchange Act”), must be duly and timely
authorized by the Board or a committee consisting solely of two
or more non-employee directors (as this requirement is applied
under Rule 16b-3 promulgated under the Exchange Act). To
the extent required by any applicable listing agency, this Plan
shall be administered by a committee composed entirely of
independent directors (within the meaning of the applicable
listing agency).

     
3.2 Powers of the Administrator.
Subject to the express provisions of this Plan, the
Administrator is authorized and empowered to do all things
necessary or desirable in connection with the authorization of
awards and the administration of this Plan (in the case of a
committee or delegation to one or more officers, within the
authority delegated to that committee or person(s)), including,
without limitation, the authority to:

		
	 	     
    (a) determine eligibility and, from among
    those persons determined to be eligible, the particular Eligible
    Persons who will receive an award under this Plan;
    
	 
	 	     
    (b) grant awards to Eligible Persons,
    determine the price at which securities will be offered or
    awarded and the number of securities to be offered or awarded to
    any of such persons, determine the other specific terms and
    conditions of such awards consistent with the express limits of
    this Plan, establish the installments (if any) in which such
    awards shall become exercisable or shall vest (which may
    include, without limitation, performance and/or time-based
    schedules), or determine that no delayed exercisability or
    vesting is required (subject to the minimum vesting rules of
    Section 5.1.5), establish any applicable performance
    targets, and establish the events of termination or reversion of
    such awards;
    
	 
	 	     
    (c) approve the forms of award agreements
    (which need not be identical either as to type of award or among
    participants);
    
	 
	 	     
    (d) construe and interpret this Plan and any
    agreements defining the rights and obligations of the
    Corporation, its Subsidiaries, and participants under this Plan,
    further define the terms used in this Plan, and prescribe, amend
    and rescind rules and regulations relating to the administration
    of this Plan or the awards granted under this Plan;
    
	 
	 	     
    (e) cancel, modify, or waive the
    Corporation’s rights with respect to, or modify,
    discontinue, suspend, or terminate any or all outstanding
    awards, subject to any required consent under Section 8.6.5;
    
	 
	 	     
    (f) accelerate or extend the vesting or
    exercisability or extend the term of any or all such outstanding
    awards (in the case of options or stock appreciation rights,
    within the maximum ten-year term of such awards) in such
    circumstances as the Administrator may deem appropriate
    (including, without limitation, in connection with a termination
    of employment or services or other events of a personal nature)
    subject to any required consent under Section 8.6.5 and subject
    to the minimum vesting rules of Section 5.1.5;
    
	 
	 	     
    (g) adjust the number of shares of Common
    Stock subject to any award, adjust the price of any or all
    outstanding awards or otherwise change previously imposed terms
    and conditions, in such circumstances as the Administrator may
    deem appropriate, in each case subject to Sections 4 and
    8.6, and provided that in no case (except due to an adjustment
    contemplated by Section 7 or any repricing that may be
    approved by stockholders) shall such an adjustment constitute a
    repricing (by amendment, cancellation and regrant, exchange or
    other means) of the per share exercise or base price of any
    option or stock appreciation right;
    
	 
	 	     
    (h) determine the date of grant of an award,
    which may be a designated date after but not before the date of
    the Administrator’s action (unless otherwise designated by
    the Administrator, the date of grant of an award shall be the
    date upon which the Administrator took the action granting an
    award);
    
	 
	 	     
    (i) determine whether, and the extent to
    which, adjustments are required pursuant to Section 7
    hereof and authorize the termination, conversion, substitution
    or succession of awards upon the occurrence of an event of the
    type described in Section 7;
    
	 
	 	     
    (j) acquire or settle (subject to
    Sections 7 and 8.6) rights under awards in cash, stock of
    equivalent value, or other consideration; and
    

2

 

		
	 	     
    (k) determine the fair market value of the
    Common Stock or awards under this Plan from time to time and/or
    the manner in which such value will be determined.
    

     
3.3     Binding
Determinations. Any action taken by, or inaction of, the
Corporation, any Subsidiary, or the Administrator relating or
pursuant to this Plan and within its authority hereunder or
under applicable law shall be within the absolute discretion of
that entity or body and shall be conclusive and binding upon all
persons. Neither the Board nor any Board committee, nor any
member thereof or person acting at the direction thereof, shall
be liable for any act, omission, interpretation, construction or
determination made in good faith in connection with this Plan
(or any award made under this Plan), and all such persons shall
be entitled to indemnification and reimbursement by the
Corporation in respect of any claim, loss, damage or expense
(including, without limitation, attorneys’ fees) arising or
resulting therefrom to the fullest extent permitted by law
and/or under any directors and officers liability insurance
coverage that may be in effect from time to time.

     
3.4     Reliance
on Experts. In making any determination or in taking or
not taking any action under this Plan, the Board or a committee,
as the case may be, may obtain and may rely upon the advice of
experts, including employees and professional advisors to the
Corporation. No director, officer or agent of the Corporation or
any of its Subsidiaries shall be liable for any such action or
determination taken or made or omitted in good faith.

     
3.5     Delegation.
The Administrator may delegate ministerial,
non-discretionary functions to individuals who are officers or
employees of the Corporation or any of its Subsidiaries or to
third parties.

          4.     Shares
of Common Stock Subject to the Plan; Share Limits

     
4.1     Shares
Available. Subject to the provisions of
Section 7.1, the capital stock that may be delivered under
this Plan shall be shares of the Corporation’s authorized
but unissued Common Stock and any shares of its Common Stock
held as treasury shares. For purposes of this Plan,
“Common Stock” shall mean the common stock of
the Corporation and such other securities or property as may
become the subject of awards under this Plan, or may become
subject to such awards, pursuant to an adjustment made under
Section 7.1.

     
4.2     Share
Limits. The maximum number of shares of Common Stock
that may be delivered pursuant to awards granted to Eligible
Persons under this Plan (the “Share Limit”) is
equal to the sum of the following:

		
	 	     
    (a) 4,500,000 shares of Common Stock, plus
    
	 
	 	     
    (b) the number of shares of Common Stock
    available for additional award grant purposes under the
    Corporation’s Employee Stock Option Plan (the
    “Employee Option Plan”) immediately prior to
    the expiration of that plan on November 10, 2004; plus
    
	 
	 	     
    (c) the number of shares of Common Stock
    available for additional award grant purposes under the
    Corporation’s Stock Option Plan for Non-Employee Directors
    (the “Director Option Plan”), and the
    Corporation’s Broad-Based Stock Incentive Plan (the
    “Broad-Based Plan” and, together with the
    Employee Option Plan and the Director Option Plan, the
    “Option Plans”) as of the date of stockholder
    approval of this Plan (the “Stockholder Approval
    Date”) and determined immediately prior to the
    termination of the authority to grant new awards under the
    Director Option Plan and the Broad-Based Plan as of the
    Stockholder Approval Date, plus
    
	 
	 	     
    (d) the number of any shares subject to
    stock options granted under the Option Plans and outstanding on
    the Stockholder Approval Date which expire, or for any reason
    are cancelled or terminated, after the Stockholder Approval Date
    without being exercised; plus
    
	 
	 	     
    (e) the number of any shares of restricted
    stock granted under the Broad-Based Plan that are outstanding
    and unvested on the Stockholder Approval Date that are
    forfeited, terminated, cancelled or otherwise reacquired by the
    Corporation without having become vested;
    

provided that in no event shall the Share Limit
exceed 35,199,313 shares (which is the sum of the 4,500,000
shares set forth above, plus the number of shares available
under the Option Plans for additional award grant

3

 

purposes as of the Effective Date (as such term
is defined in Section 8.6.1), plus the aggregate number of
shares subject to options previously granted and outstanding
under the Option Plans as of the Effective Date, plus the
maximum number of shares subject to restricted stock awards
previously granted and outstanding under the Broad-Based Plan
that had not vested as of the Effective Date).

     
Shares issued in respect of any “Full-Value
Award” granted under this Plan shall be counted against the
foregoing Share Limit as 1.35 shares for every one share
actually issued in connection with such award. (For example, if
a stock bonus of 100 shares of Common Stock is granted under
this Plan, 135 shares shall be charged against the Share Limit
in connection with that award.) For this purpose, a
“Full-Value Award” means any award under this Plan
that is not either: (1) a delivery of shares in respect of
compensation earned but deferred, (2) except as expressly
provided in Section 5.1.1 (which generally provides that
“discounted” stock option grants are Full-Value
Awards), a stock option grant, and (3) except as expressly
provided in Section 5.1.2 (which generally provides that
“discounted” stock appreciation right grants are
Full-Value Awards), a stock appreciation right grant.

     
The following limits also apply with respect to
awards granted under this Plan:

		
	 	     
    (1) The maximum number of shares of Common
    Stock that may be delivered pursuant to options qualified as
    incentive stock options granted under this Plan is 35,199,313
    shares.
    
	 
	 	     
    (2) The maximum number of shares of Common
    Stock subject to those options and stock appreciation rights
    that are granted during any calendar year to any individual
    under this Plan is 1,000,000 shares.
    
	 
	 	     
    (3) Additional limits with respect to
    Performance-Based Awards are set forth in Section 5.2.3.
    

     
Each of the foregoing numerical limits is subject
to adjustment as contemplated by Section 4.3,
Section 7.1, and Section 8.10.

     
4.3     Awards
Settled in Cash, Reissue of Awards and Shares. The share
limits of this Plan are subject to adjustment pursuant to the
following, subject to any applicable limitations under
Section 162(m) of the Code with respect to awards intended
as performance-based compensation thereunder. Refer to
Section 8.10 for application of this Plan’s share
limits with respect to assumed awards.

		
	 	     
    (a) Shares that are subject to or underlie
    awards which expire or for any reason are cancelled or
    terminated, are forfeited, fail to vest, or for any other reason
    are not paid or delivered under this Plan shall again be
    available for subsequent awards under this Plan.
    
	 
	 	     
    (b) To the extent that an award is settled
    in cash or a form other than shares of Common Stock, the shares
    that would have been delivered had there been no such cash or
    other settlement shall not be counted against the shares
    available for issuance under this Plan.
    
	 
	 	     
    (c) Shares that are exchanged by a
    participant or withheld by the Corporation as full or partial
    payment in connection with any award under this Plan or under
    any of the Option Plans (with respect to such a payment in
    connection with any award under any of the Option Plans, only to
    the extent such transaction occurs after the Effective Date), as
    well as any shares exchanged by a participant or withheld by the
    Corporation or one of its Subsidiaries to satisfy the tax
    withholding obligations related to any award under this Plan or
    under any of the Option Plans (with respect to such an exchange
    or withholding in connection with any award under any of the
    Option Plans, only to the extent such transaction occurs after
    the Effective Date), shall be available for subsequent awards
    under this Plan.
    
	 
	 	     
    (d) In the event that shares are delivered
    in respect of a dividend equivalent, stock appreciation right,
    or other award, only the actual number of shares delivered with
    respect to the award shall be counted against the share limits
    of this Plan.
    

     
4.4     Reservation
of Shares; No Fractional Shares; Minimum Issue. The
Corporation shall at all times reserve a number of shares of
Common Stock sufficient to cover the Corporation’s
obligations and contingent obligations to deliver shares with
respect to awards then outstanding under this Plan (exclusive of
any dividend equivalent obligations to the extent the
Corporation has the right to settle such rights in cash). No
fractional

4

 

shares shall be delivered under this Plan. The
Administrator may pay cash in lieu of any fractional shares in
settlements of awards under this Plan.

          5.     Awards

     
5.1     Type and
Form of Awards. The Administrator shall determine the
type or types of award(s) to be made to each selected Eligible
Person. Awards may be granted singly, in combination or in
tandem. Awards also may be made in combination or in tandem
with, in replacement of, as alternatives to, or as the payment
form for grants or rights under any other employee or
compensation plan of the Corporation or one of its Subsidiaries.
The types of awards that may be granted under this Plan are:

		
	 	     
    5.1.1 Stock Options. A stock option
    is the grant of a right to purchase a specified number of shares
    of Common Stock during a specified period as determined by the
    Administrator. An option may be intended as an incentive stock
    option within the meaning of Section 422 of the Code (an
    “ISO”) or a nonqualified stock option (an
    option not intended to be an ISO). The award agreement for an
    option will indicate if the option is intended as an ISO;
    otherwise it will be deemed to be a nonqualified stock option.
    The maximum term of each option (ISO or nonqualified) shall be
    ten (10) years. The per share exercise price for each
    option shall be not less than 100% of the fair market value of a
    share of Common Stock on the date of grant of the option, except
    as follows: (a) in the case of a stock option granted
    retroactively in tandem with or as a substitution for another
    award, the per share exercise price may be no lower than the
    fair market value of a share of Common Stock on the date such
    other award was granted (to the extent consistent with
    Sections 422 and 424 of the Code in the case of options
    intended as incentive stock options); and (b) in any other
    circumstances, a nonqualified stock option may be granted with a
    per share exercise price that is less than the fair market value
    of a share of Common Stock on the date of grant, provided that
    any shares delivered in respect of such option shall be charged
    against the Share Limit as a Full-Value Award. When an option is
    exercised, the exercise price for the shares to be purchased
    shall be paid in full in cash or such other method permitted by
    the Administrator consistent with Section 5.5.
    
	 
	 	     
    5.1.2     Additional
    Rules Applicable to ISOs. To the extent that the
    aggregate fair market value (determined at the time of grant of
    the applicable option) of stock with respect to which ISOs first
    become exercisable by a participant in any calendar year exceeds
    $100,000, taking into account both Common Stock subject to ISOs
    under this Plan and stock subject to ISOs under all other plans
    of the Corporation or one of its Subsidiaries (or any parent or
    predecessor corporation to the extent required by and within the
    meaning of Section 422 of the Code and the regulations
    promulgated thereunder), such options shall be treated as
    nonqualified stock options. In reducing the number of options
    treated as ISOs to meet the $100,000 limit, the most recently
    granted options shall be reduced first. To the extent a
    reduction of simultaneously granted options is necessary to meet
    the $100,000 limit, the Administrator may, in the manner and to
    the extent permitted by law, designate which shares of Common
    Stock are to be treated as shares acquired pursuant to the
    exercise of an ISO. ISOs may only be granted to employees of the
    Corporation or one of its subsidiaries (for this purpose, the
    term “subsidiary” is used as defined in
    Section 424(f) of the Code, which generally requires an
    unbroken chain of ownership of at least 50% of the total
    combined voting power of all classes of stock of each subsidiary
    in the chain beginning with the Corporation and ending with the
    subsidiary in question). There shall be imposed in any award
    agreement relating to ISOs such other terms and conditions as
    from time to time are required in order that the option be an
    “incentive stock option” as that term is defined in
    Section 422 of the Code. No ISO may be granted to any
    person who, at the time the option is granted, owns (or is
    deemed to own under Section 424(d) of the Code) shares of
    outstanding Common Stock possessing more than 10% of the total
    combined voting power of all classes of stock of the
    Corporation, unless the exercise price of such option is at
    least 110% of the fair market value of the stock subject to the
    option and such option by its terms is not exercisable after the
    expiration of five years from the date such option is granted.
    
	 
	 	     
    5.1.3     Stock
    Appreciation Rights. A stock appreciation right or
    “SAR” is a right to receive a payment, in cash
    and/or Common Stock, equal to the excess of the fair market
    value of a specified number of shares of Common Stock on the
    date the SAR is exercised over the fair market value of a share
    of Common Stock on the date the SAR was granted (the “base
    price”) as set forth in the
    

5

 

		
	 	
    applicable award agreement, except as follows:
    (a) in the case of a SAR granted retroactively in tandem
    with or as a substitution for another award, the base price may
    be no lower than the fair market value of a share of Common
    Stock on the date such other award was granted; and (b) in
    any other circumstances, a SAR may be granted with a base price
    that is less than the fair market value of a share of Common
    Stock on the date of grant, provided that any shares actually
    delivered in respect of such award shall be charged against the
    Share Limit as a Full-Value Award. The maximum term of an SAR
    shall be ten (10) years.
    
	 
	 	     
    5.1.4     Other
    Awards. The other types of awards that may be granted
    under this Plan include: (a) stock bonuses, restricted
    stock, performance stock, stock units, phantom stock, dividend
    equivalents, or similar rights to purchase or acquire shares,
    whether at a fixed or variable price or ratio related to the
    Common Stock, upon the passage of time, the occurrence of one or
    more events, or the satisfaction of performance criteria or
    other conditions, or any combination thereof; (b) any
    similar securities with a value derived from the value of or
    related to the Common Stock and/or returns thereon; or
    (c) cash awards granted consistent with Section 5.2
    below.
    
	 
	 	     
    5.1.5     Minimum
    Vesting Requirements. Absent special circumstances,
    except for any accelerated vesting required or permitted
    pursuant to Section 7, and subject to such additional
    vesting requirements or conditions as the Administrator may
    establish with respect to the award, each award granted under
    this Plan that is a Full-Value Award shall be subject to the
    following minimum vesting requirements: (a) if the award
    includes a performance-based vesting condition, the award shall
    not vest earlier than the first anniversary of the date of grant
    of the award and vesting shall occur only if the award holder is
    employed by, a director of, or otherwise providing services to
    the Corporation or one of its Subsidiaries on such vesting date;
    and (b) if the award does not include a performance-based
    vesting condition, the award shall not vest more rapidly than in
    monthly installments over the three-year period immediately
    following the date of grant of the award and vesting of any
    vesting installment of the award shall occur only if the award
    holder is employed by, a director of, or otherwise providing
    services to the Corporation or one of its Subsidiaries on the
    date such installment is scheduled to vest.
    

     
5.2     Section 162(m)
Performance-Based Awards. Without limiting the
generality of the foregoing, any of the types of awards listed
in Section 5.1.4 above may be, and options and SARs granted
with an exercise or base price not less than the fair market
value of a share of Common Stock at the date of grant
(“Qualifying Options” and “Qualifying
SARS,” respectively) typically will be, granted as
awards intended to satisfy the requirements for
“performance-based compensation” within the meaning of
Section 162(m) of the Code (“Performance-Based
Awards”). The grant, vesting, exercisability or payment
of Performance-Based Awards may depend (or, in the case of
Qualifying Options or Qualifying SARs, may also depend) on the
degree of achievement of one or more performance goals relative
to a pre-established targeted level or level using one or more
of the Business Criteria set forth below (on an absolute or
relative basis) for the Corporation on a consolidated basis or
for one or more of the Corporation’s subsidiaries,
segments, divisions or business units, or any combination of the
foregoing. Any Qualifying Option or Qualifying SAR shall be
subject only to the requirements of Section 5.2.1 and 5.2.3
in order for such award to satisfy the requirements for
“performance-based compensation” under Section 162(m)
of the Award. Any other Performance-Based Award shall be subject
to all of the following provisions of this Section 5.2.

		
	 	     
    5.2.1     Class;
    Administrator. The eligible class of persons for
    Performance-Based Awards under this Section 5.2 shall be
    officers and employees of the Corporation or one of its
    Subsidiaries. The Administrator approving Performance-Based
    Awards or making any certification required pursuant to
    Section 5.2.4 must be constituted as provided in
    Section 3.1 for awards that are intended as
    performance-based compensation under Section 162(m) of the
    Code.
    
	 
	 	     
    5.2.2     Performance
    Goals. The specific performance goals for
    Performance-Based Awards (other than Qualifying Options and
    Qualifying SARs) shall be, on an absolute or relative basis,
    established based on one or more of the following business
    criteria (“Business Criteria”) as selected by
    the Administrator in its sole discretion: earnings per share,
    cash flow (which means cash and cash equivalents derived from
    either net cash flow from operations or net cash flow from
    operations, financing and investing activities), total
    stockholder return, gross revenue, revenue growth, operating
    income (before or
    

6

 

		
	 	
    after taxes), net earnings (before or after
    interest, taxes, depreciation and/or amortization), return on
    equity or on assets or on net investment, cost containment or
    reduction, or any combination thereof. These terms are used as
    applied under generally accepted accounting principles or in the
    financial reporting of the Corporation or of its Subsidiaries.
    To qualify awards as performance-based under
    Section 162(m), the applicable Business Criterion (or
    Business Criteria, as the case may be) and specific performance
    goal or goals (“targets”) must be established and
    approved by the Administrator during the first 90 days of
    the performance period (and, in the case of performance periods
    of less than one year, in no event after 25% or more of the
    performance period has elapsed) and while performance relating
    to such target(s) remains substantially uncertain within the
    meaning of Section 162(m) of the Code. Performance targets
    shall be adjusted to mitigate the unbudgeted impact of material,
    unusual or nonrecurring gains and losses, accounting changes or
    other extraordinary events not foreseen at the time the targets
    were set unless the Administrator provides otherwise at the time
    of establishing the targets. The applicable performance
    measurement period may not be less than three months nor more
    than 10 years.
    
	 
	 	     
    5.2.3     Form of
    Payment; Maximum Performance-Based Award. Grants or
    awards under this Section 5.2 may be paid in cash or shares
    of Common Stock or any combination thereof. Grants of Qualifying
    Options and Qualifying SARs to any one participant in any one
    calendar year shall be subject to the limit set forth in
    Section 4.2(2). The maximum number of shares of Common
    Stock which may be delivered pursuant to Performance-Based
    Awards (other than Qualifying Options and Qualifying SARs, and
    other than cash awards covered by the following sentence) that
    are granted to any one participant in any one calendar year
    shall not exceed 800,000 shares, either individually or in the
    aggregate, subject to adjustment as provided in
    Section 7.1. In addition, the aggregate amount of
    compensation to be paid to any one participant in respect of all
    Performance-Based Awards payable only in cash and not related to
    shares of Common Stock and granted to that participant in any
    one calendar year shall not exceed $5,000,000. Awards that are
    cancelled during the year shall be counted against these limits
    to the extent permitted by Section 162(m) of the Code.
    
	 
	 	     
    5.2.4     Certification
    of Payment. Before any Performance-Based Award under
    this Section 5.2 (other than Qualifying Options and
    Qualifying SARs) is paid and to the extent required to qualify
    the award as performance-based compensation within the meaning
    of Section 162(m) of the Code, the Administrator must
    certify in writing that the performance target(s) and any other
    material terms of the Performance-Based Award were in fact
    timely satisfied.
    
	 
	 	     
    5.2.5     Reservation
    of Discretion. The Administrator will have the
    discretion to determine the restrictions or other limitations of
    the individual awards granted under this Section 5.2
    including the authority to reduce awards, payouts or vesting or
    to pay no awards, in its sole discretion, if the Administrator
    preserves such authority at the time of grant by language to
    this effect in its authorizing resolutions or otherwise.
    
	 
	 	     
    5.2.6     Expiration
    of Grant Authority. As required pursuant to
    Section 162(m) of the Code and the regulations promulgated
    thereunder, the Administrator’s authority to grant new
    awards that are intended to qualify as performance-based
    compensation within the meaning of Section 162(m) of the
    Code (other than Qualifying Options and Qualifying SARs) shall
    terminate upon the first meeting of the Corporation’s
    stockholders that occurs in the fifth year following the year in
    which the Corporation’s stockholders first approve this
    Plan.
    

     
5.3     Award
Agreements. Each award shall be evidenced by a written
award agreement in the form approved by the Administrator and
executed on behalf of the Corporation and, if required by the
Administrator, executed by the recipient of the award. The
Administrator may authorize any officer of the Corporation
(other than the particular award recipient) to execute any or
all award agreements on behalf of the Corporation. The award
agreement shall set forth the material terms and conditions of
the award as established by the Administrator consistent with
the express limitations of this Plan.

     
5.4     Deferrals
and Settlements. Payment of awards may be in the form of
cash, Common Stock, other awards or combinations thereof as the
Administrator shall determine, and with such restrictions as it
may

7

 

impose. The Administrator may also require or
permit participants to elect to defer the issuance of shares or
the settlement of awards in cash under such rules and procedures
as it may establish under this Plan. The Administrator may also
provide that deferred settlements include the payment or
crediting of interest or other earnings on the deferral amounts,
or the payment or crediting of dividend equivalents where the
deferred amounts are denominated in shares.

     
5.5     Consideration
for Common Stock or Awards. The purchase price for any
award granted under this Plan or the Common Stock to be
delivered pursuant to an award, as applicable, may be paid by
means of any lawful consideration as determined by the
Administrator, including, without limitation, one or a
combination of the following methods:

			
	 	• 	
    a reduction in compensation otherwise payable to
    the recipient of such award for services rendered by the
    recipient;
    
	 
	 	• 	
    cash, check payable to the order of the
    Corporation, or electronic funds transfer;
    
	 
	 	• 	
    notice and third party payment in such manner as
    may be authorized by the Administrator;
    
	 
	 	• 	
    the delivery of previously owned shares of Common
    Stock;
    
	 
	 	• 	
    by a reduction in the number of shares otherwise
    deliverable pursuant to the award; or
    
	 
	 	• 	
    subject to such procedures as the Administrator
    may adopt, pursuant to a “cashless exercise” with a
    third party who provides financing for the purposes of (or who
    otherwise facilitates) the purchase or exercise of awards.
    

     
In no event shall any shares newly-issued by the
Corporation be issued for less than the minimum lawful
consideration for such shares or for consideration other than
consideration permitted by applicable state law. In the event
that the Administrator allows a participant to exercise an award
by delivering shares of Common Stock previously owned by such
participant and unless otherwise expressly provided by the
Administrator, any shares delivered which were initially
acquired by the participant from the Corporation (upon exercise
of a stock option or otherwise) must have been owned by the
participant at least six months as of the date of delivery.
Shares of Common Stock used to satisfy the exercise price of an
option shall be valued at their fair market value on the date of
exercise. The Corporation will not be obligated to deliver any
shares unless and until it receives full payment of the exercise
or purchase price therefor and any related withholding
obligations under Section 8.5 and any other conditions to
exercise or purchase have been satisfied. Unless otherwise
expressly provided in the applicable award agreement, the
Administrator may at any time eliminate or limit a
participant’s ability to pay the purchase or exercise price
of any award or shares by any method other than cash payment to
the Corporation.

     
5.6     Definition
of Fair Market Value. For purposes of this Plan,
“fair market value” shall mean, unless otherwise
determined or provided by the Administrator in the
circumstances, the closing price of a share of Common Stock as
reported on the composite tape for securities listed on the New
York Stock Exchange (the “Exchange”) for the
date in question or, if no sales of Common Stock were made on
the Exchange on that date, the closing price of a share of
Common Stock as reported on said composite tape for the next
preceding day on which sales of Common Stock were made on the
Exchange. The Administrator may, however, provide with respect
to one or more awards that the fair market value shall equal the
last closing price of a share of Common Stock as reported on the
composite tape for securities listed on the Exchange available
at the relevant time or the average of the high and low trading
prices of a share of Common Stock as reported on the composite
tape for securities listed on the Exchange for the date in
question or the most recent trading day. If the Common Stock is
no longer listed or is no longer actively traded on the Exchange
as of the applicable date, the fair market value of the Common
Stock shall be the value as reasonably determined by the
Administrator for purposes of the award in the circumstances.
The Administrator also may adopt a different methodology for
determining fair market value with respect to one or more awards
if a different methodology is necessary or advisable to secure
any intended favorable tax, legal or other treatment for the
particular award(s) (for example, and without limitation, the
Administrator may provide that fair market value for purposes of
one or

8

 

more awards will be based on an average of
closing prices (or the average of high and low daily trading
prices) for a specified period preceding the relevant date).

     
5.7     Transfer
Restrictions.

		
	 	     
    5.7.1     Limitations
    on Exercise and Transfer. Unless otherwise expressly
    provided in (or pursuant to) this Section 5.7, by
    applicable law and by the award agreement, as the same may be
    amended, (a) all awards are non-transferable and shall not
    be subject in any manner to sale, transfer, anticipation,
    alienation, assignment, pledge, encumbrance or charge;
    (b) awards shall be exercised only by the participant; and
    (c) amounts payable or shares issuable pursuant to any
    award shall be delivered only to (or for the account of) the
    participant.
    
	 
	 	     
    5.7.2     Exceptions.
    The Administrator may permit awards to be exercised by
    and paid to, or otherwise transferred to, other persons or
    entities pursuant to such conditions and procedures, including
    limitations on subsequent transfers, as the Administrator may,
    in its sole discretion, establish in writing. Any permitted
    transfer shall be subject to compliance with applicable federal
    and state securities laws.
    
	 
	 	     
    5.7.3     Further
    Exceptions to Limits on Transfer. The exercise and
    transfer restrictions in Section 5.7.1 shall not apply to:
    

		
	 	     
    (a) transfers to the Corporation,
    
	 
	 	     
    (b) the designation of a beneficiary to
    receive benefits in the event of the participant’s death
    or, if the participant has died, transfers to or exercise by the
    participant’s beneficiary, or, in the absence of a validly
    designated beneficiary, transfers by will or the laws of descent
    and distribution,
    
	 
	 	     
    (c) subject to any applicable limitations on
    ISOs, transfers to a family member (or former family member)
    pursuant to a domestic relations order if approved or ratified
    by the Administrator,
    
	 
	 	     
    (d) if the participant has suffered a
    disability, permitted transfers or exercises on behalf of the
    participant by his or her legal representative, or
    
	 
	 	     
    (e) the authorization by the Administrator
    of “cashless exercise” procedures with third parties
    who provide financing for the purpose of (or who otherwise
    facilitate) the exercise of awards consistent with applicable
    laws and the express authorization of the Administrator.
    

     
5.8     International
Awards. One or more awards may be granted to Eligible
Persons who provide services to the Corporation or one of its
Subsidiaries outside of the United States. Any awards granted to
such persons may be granted pursuant to the terms and conditions
of any applicable sub-plans, if any, appended to this Plan and
approved by the Administrator.

          6.     Effect
of Termination of Service on Awards

     
6.1     General.
The Administrator shall establish the effect of a
termination of employment or service on the rights and benefits
under each award under this Plan and in so doing may make
distinctions based upon, inter alia, the cause of termination
and type of award. If the participant is not an employee of the
Corporation or one of its Subsidiaries and provides other
services to the Corporation or one of its Subsidiaries, the
Administrator shall be the sole judge for purposes of this Plan
(unless a contract or the award otherwise provides) of whether
the participant continues to render services to the Corporation
or one of its Subsidiaries and the date, if any, upon which such
services shall be deemed to have terminated.

     
6.2     Events Not
Deemed Terminations of Service. Unless the express
policy of the Corporation or one of its Subsidiaries, or the
Administrator, otherwise provides, the employment relationship
shall not be considered terminated in the case of (a) sick
leave, (b) military leave, or (c) any other leave of
absence authorized by the Corporation or one of its
Subsidiaries, or the Administrator; provided that unless
reemployment upon the expiration of such leave is guaranteed by
contract or law, such leave is for a period of not more than
90 days. In the case of any employee of the Corporation or
one of its Subsidiaries on an approved leave of absence,
continued vesting of the award while on leave from the employ of
the Corporation or one of its Subsidiaries may be suspended
until the employee returns to service, unless the Administrator

9

 

otherwise provides or applicable law otherwise
requires. In no event shall an award be exercised after the
expiration of the term set forth in the award agreement.

     
6.3     Effect of
Change of Subsidiary Status. For purposes of this Plan
and any award, if an entity ceases to be a Subsidiary of the
Corporation a termination of employment or service shall be
deemed to have occurred with respect to each Eligible Person in
respect of such Subsidiary who does not continue as an Eligible
Person in respect of another entity within the Corporation or
another Subsidiary that continues as such after giving effect to
the transaction or other event giving rise to the change in
status.

          7.     Adjustments;
Acceleration

     
7.1     Adjustments.
Upon or in contemplation of: any reclassification,
recapitalization, stock split (including a stock split in the
form of a stock dividend) or reverse stock split (“stock
split”); any merger, combination, consolidation, or other
reorganization; any spin-off, split-up, or similar extraordinary
dividend distribution in respect of the Common Stock (whether in
the form of securities or property); any exchange of Common
Stock or other securities of the Corporation, or any similar,
unusual or extraordinary corporate transaction in respect of the
Common Stock; or a sale of all or substantially all the business
or assets of the Corporation as an entirety; then the
Administrator shall, in such manner, to such extent (if any) and
at such time as it deems appropriate and equitable in the
circumstances:

		
	 	     
    (a) proportionately adjust any or all of
    (1) the number and type of shares of Common Stock (or other
    securities) that thereafter may be made the subject of awards
    (including the specific share limits, maximums and numbers of
    shares set forth elsewhere in this Plan), (2) the number,
    amount and type of shares of Common Stock (or other securities
    or property) subject to any or all outstanding awards,
    (3) the grant, purchase, or exercise price (which term
    includes the base price of any SAR or similar right) of any or
    all outstanding awards, (4) the securities, cash or other
    property deliverable upon exercise or payment of any outstanding
    awards, or (5) (subject to Sections 7.8 and 8.8.3(a)) the
    performance standards applicable to any outstanding awards, or
    
	 
	 	     
    (b) make provision for a cash payment or for
    the assumption, substitution or exchange of any or all
    outstanding share-based awards or the cash, securities or
    property deliverable to the holder of any or all outstanding
    share-based awards, based upon the distribution or consideration
    payable to holders of the Common Stock upon or in respect of
    such event.
    

     
The Administrator may adopt such valuation
methodologies for outstanding awards as it deems reasonable in
the event of a cash or property settlement and, in the case of
options, SARs or similar rights, but without limitation on other
methodologies, may base such settlement solely upon the excess
if any of the per share amount payable upon or in respect of
such event over the exercise or base price of the award. With
respect to any award of an ISO, the Administrator may make such
an adjustment that causes the option to cease to qualify as an
ISO without the consent of the affected participant.

     
In any of such events, the Administrator may take
such action prior to such event to the extent that the
Administrator deems the action necessary to permit the
participant to realize the benefits intended to be conveyed with
respect to the underlying shares in the same manner as is or
will be available to stockholders generally. In the case of any
stock split or reverse stock split, if no action is taken by the
Administrator, the proportionate adjustments contemplated by
clause (a) above shall nevertheless be made.

     
7.2     Automatic
Acceleration of Awards. Upon a dissolution of the
Corporation or other event described in Section 7.1 that
the Corporation does not survive (or does not survive as a
public company in respect of its Common Stock), then each
then-outstanding option and SAR shall become fully vested, all
shares of restricted stock then outstanding shall fully vest
free of restrictions, and each other award granted under this
Plan that is then outstanding shall become payable to the holder
of such award; provided that such acceleration provision shall
not apply, unless otherwise expressly provided by the
Administrator, with respect to any award to the extent that the
Administrator has made a provision for the substitution,
assumption, exchange or other continuation or settlement of the
award, or the award would otherwise continue in accordance with
its terms, in the circumstances.

10

 

     
7.3     Possible
Acceleration of Awards. Without limiting
Section 7.2, in the event of a Change in Control Event (as
defined below), the Administrator may, in its discretion,
provide that any outstanding option or SAR shall become fully
vested, that any share of restricted stock then outstanding
shall fully vest free of restrictions, and that any other award
granted under this Plan that is then outstanding shall be
payable to the holder of such award. The Administrator may take
such action with respect to all awards then outstanding or only
with respect to certain specific awards identified by the
Administrator in the circumstances and may condition any such
acceleration upon the occurrence of another event (such as,
without limitation, a termination of the award holder’s
employment). For purposes of this Plan, “Change in
Control Event” means any of the following:

		
	 	     
    (a) Any “person” (as such term is
    used in Sections 13(d) and 14(d) of the Exchange Act, a
    “Person”), alone or together with its
    affiliates and associates, including any group of persons which
    is deemed a “person” under Section 13(d)(3) of
    the Exchange Act (other than the Corporation or any subsidiary
    thereof or any employee benefit plan (or related trust) of the
    Corporation or any subsidiary thereof, or any underwriter in
    connection with a firm commitment public offering of the
    Corporation’s capital stock), becomes the “beneficial
    owner” (as such term is defined in Rule 13d-3 of the
    Exchange Act, except that a person shall also be deemed the
    beneficial owner of all securities which such person may have a
    right to acquire, whether or not such right is presently
    exercisable, referred to herein as “Beneficially
    Own” or “Beneficial Owner” as the
    context may require) of thirty-three and one third percent or
    more of (i) the then outstanding shares of the
    Corporation’s common stock (“Outstanding Company
    Common Stock”) or (ii) securities representing
    thirty-three and one-third percent or more of the combined
    voting power of the Corporation’s then outstanding voting
    securities (“Outstanding Company Voting
    Securities”) (in each case, other than an acquisition
    in the context of a merger, consolidation, reorganization, asset
    sale or other extraordinary transaction covered by, and which
    does not constitute a Change in Control Event under, clause
    (c) below);
    
	 
	 	     
    (b) A change, during any period of two
    consecutive years, of a majority of the Board as constituted as
    of the beginning of such period, unless the election, or
    nomination for election by the Company’s stockholders, of
    each director who was not a director at the beginning of such
    period was approved by vote of at least two-thirds of the
    Incumbent Directors then in office (for purposes hereof,
    “Incumbent Directors” shall consist of the
    directors holding office as of the Effective Date and any person
    becoming a director subsequent to such date whose election, or
    nomination for election by the Company’s stockholders, is
    approved by a vote of at least a majority of the Incumbent
    Directors then in office);
    
	 
	 	     
    (c) Consummation of any merger,
    consolidation, reorganization or other extraordinary transaction
    (or series of related transactions) involving the Corporation, a
    sale or other disposition of all or substantially all of the
    assets of the Corporation, or the acquisition of assets or stock
    of another entity by the Corporation or any of its subsidiaries
    (each, a “Business Combination”), in each case
    unless, following such Business Combination, (1) all or
    substantially all of the individuals and entities that were the
    Beneficial Owners of the Outstanding Company Common Stock and
    the Outstanding Company Voting Securities immediately prior to
    such Business Combination Beneficially Own, directly or
    indirectly, more than 50% of the then-outstanding shares of
    common stock and the combined voting power of the
    then-outstanding voting securities entitled to vote generally in
    the election of directors, as the case may be, of the entity
    resulting from such Business Combination (including, without
    limitation, an entity that, as a result of such transaction,
    owns the Corporation or all or substantially all of the
    Corporation’s assets directly or through one or more
    subsidiaries (a “Parent”)), (2) no Person
    (excluding any entity resulting from such Business Combination
    or a Parent or any employee benefit plan (or related trust) of
    the Corporation or such entity resulting from such Business
    Combination or Parent, and excluding any underwriter in
    connection with a firm commitment public offering of the
    Corporation’s capital stock) Beneficially Owns, directly or
    indirectly, more than thirty-three and one third percent of,
    respectively, the then-outstanding shares of common stock of the
    entity resulting from such Business Combination or the combined
    voting power of the then-outstanding voting securities of such
    entity, and (3) at least a majority of the members of the
    board of directors or trustees of the entity resulting from
    

11

 

		
	 	
    such Business Combination or a Parent were
    Incumbent Directors at the time of the execution of the initial
    agreement or of the action of the Board providing for such
    Business Combination; or
    
	 
	 	     
    (d) The stockholders of the Corporation
    approve a plan of complete liquidation or dissolution of the
    Corporation (other than in the context of a merger,
    consolidation, reorganization, asset sale or other extraordinary
    transaction covered by, and which does not constitute a Change
    in Control Event under, clause (c) above).
    

     
7.4     Early
Termination of Awards. Any award that has been
accelerated as required or contemplated by Section 7.2 or
7.3 (or would have been so accelerated but for Section 7.5,
7.6 or 7.7) shall terminate upon the related event referred to
in Section 7.2 or 7.3, as applicable, subject to any
provision that has been expressly made by the Administrator,
through a plan of reorganization or otherwise, for the survival,
substitution, assumption, exchange or other continuation or
settlement of such award and provided that, in the case of
options and SARs that will not survive, be substituted for,
assumed, exchanged, or otherwise continued or settled in the
transaction, the holder of such award shall be given reasonable
advance notice of the impending termination and a reasonable
opportunity to exercise his or her outstanding options and SARs
in accordance with their terms (subject to Sections 7.5,
7.6 and 7.7 after giving effect to the acceleration of vesting)
before the termination of such awards (except that in no case
shall more than ten days’ notice of accelerated vesting and
the impending termination be required and any acceleration may
be made contingent upon the actual occurrence of the event).

     
7.5     Other
Acceleration Rules. Any acceleration of awards pursuant
to this Section 7 shall comply with applicable legal
requirements and, if necessary to accomplish the purposes of the
acceleration or if the circumstances require, may be deemed by
the Administrator to occur a limited period of time not greater
than 30 days before the event. Without limiting the generality
of the foregoing, the Administrator may deem an acceleration to
occur immediately prior to the applicable event and/or reinstate
the original terms of an award if an event giving rise to an
acceleration does not occur. The Administrator may override the
provisions of Section 7.2, 7.3, 7.4 and/or 7.6 by express
provision in the award agreement and may accord any Eligible
Person a right to refuse any acceleration, whether pursuant to
the award agreement or otherwise, in such circumstances as the
Administrator may approve. The portion of any ISO accelerated in
connection with a Change in Control Event or any other action
permitted hereunder shall remain exercisable as an ISO only to
the extent the applicable $100,000 limitation on ISOs is not
exceeded. To the extent exceeded, the accelerated portion of the
option shall be exercisable as a nonqualified stock option under
the Code.

     
7.6     Possible
Rescission of Acceleration. If the vesting of an award
has been accelerated expressly in anticipation of an event or
upon stockholder approval of an event and the Administrator
later determines that the event will not occur, the
Administrator may rescind the effect of the acceleration as to
any then outstanding and unexercised or otherwise unvested
awards.

     
7.7     Golden
Parachute Limitation. Notwithstanding anything else
contained in this Section 7 to the contrary, in no event
shall an award be accelerated under this Plan to an extent or in
a manner which would not be fully deductible by the Corporation
or one of its Subsidiaries for federal income tax purposes
because of Section 280G of the Code, nor shall any payment
hereunder be accelerated to the extent any portion of such
accelerated payment would not be deductible by the Corporation
or one of its Subsidiaries because of Section 280G of the
Code. If a participant would be entitled to benefits or payments
hereunder and under any other plan or program that would
constitute “parachute payments” as defined in Section
280G of the Code, then the participant may by written notice to
the Corporation designate the order in which such parachute
payments will be reduced or modified so that the Corporation or
one of its Subsidiaries is not denied federal income tax
deductions for any “parachute payments” because of
Section 280G of the Code. Notwithstanding the foregoing, if
a participant is a party to an employment or other agreement
with the Corporation or one of its Subsidiaries, or is a
participant in a severance program sponsored by the Corporation
or one of its Subsidiaries, that contains express provisions
regarding Section 280G and/or Section 4999 of the Code
(or any similar successor provision), the Section 280G
and/or Section 4999 provisions of such employment or other
agreement or plan, as applicable, shall control as to any awards
held by that participant (for example, and without limitation, a
participant may be a party to an employment agreement with the
Corporation or one

12

 

of its Subsidiaries that provides for a
“gross-up” as opposed to a “cut-back” in the
event that the Section 280G thresholds are reached or
exceeded in connection with a change in control and, in such
event, the Section 280G and/or Section 4999 provisions
of such employment agreement shall control as to any awards held
by that participant).

          8.     Other
Provisions

     
8.1     Compliance
with Laws. This Plan, the granting and vesting of awards
under this Plan, the offer, issuance and delivery of shares of
Common Stock, the acceptance of promissory notes and/or the
payment of money under this Plan or under awards are subject to
compliance with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal
securities law, federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority
as may, in the opinion of counsel for the Corporation, be
necessary or advisable in connection therewith. The person
acquiring any securities under this Plan will, if requested by
the Corporation or one of its Subsidiaries, provide such
assurances and representations to the Corporation or one of its
Subsidiaries as the Administrator may deem necessary or
desirable to assure compliance with all applicable legal and
accounting requirements.

     
8.2     Employment
Status. No person shall have any claim or rights to be
granted an award (or additional awards, as the case may be)
under this Plan, subject to any express contractual rights (set
forth in a document other than this Plan) to the contrary.

     
8.3     No
Employment/Service Contract. Nothing contained in this
Plan (or in any other documents under this Plan or in any award)
shall confer upon any Eligible Person or other participant any
right to continue in the employ or other service of the
Corporation or one of its Subsidiaries, constitute any contract
or agreement of employment or other service or affect an
employee’s status as an employee at will, nor shall
interfere in any way with the right of the Corporation or one of
its Subsidiaries to change a person’s compensation or other
benefits, or to terminate his or her employment or other
service, with or without cause. Nothing in this
Section 8.3, however, is intended to adversely affect any
express independent right of such person under a separate
employment or service contract other than an award agreement.

     
8.4     Plan Not
Funded. Awards payable under this Plan shall be payable
in shares or from the general assets of the Corporation, and no
special or separate reserve, fund or deposit shall be made to
assure payment of such awards. No participant, beneficiary or
other person shall have any right, title or interest in any fund
or in any specific asset (including shares of Common Stock,
except as expressly otherwise provided) of the Corporation or
one of its Subsidiaries by reason of any award hereunder.
Neither the provisions of this Plan (or of any related
documents), nor the creation or adoption of this Plan, nor any
action taken pursuant to the provisions of this Plan shall
create, or be construed to create, a trust of any kind or a
fiduciary relationship between the Corporation or one of its
Subsidiaries and any participant, beneficiary or other person.
To the extent that a participant, beneficiary or other person
acquires a right to receive payment pursuant to any award
hereunder, such right shall be no greater than the right of any
unsecured general creditor of the Corporation.

     
8.5     Tax
Withholding. Upon any exercise, vesting, or payment of
any award or upon the disposition of shares of Common Stock
acquired pursuant to the exercise of an ISO prior to
satisfaction of the holding period requirements of
Section 422 of the Code, the Corporation or one of its
Subsidiaries shall have the right at its option to:

		
	 	     
    (a) require the participant (or the
    participant’s personal representative or beneficiary, as
    the case may be) to pay or provide for payment of at least the
    minimum amount of any taxes which the Corporation or one of its
    Subsidiaries may be required to withhold with respect to such
    award event or payment; or
    
	 
	 	     
    (b) deduct from any amount otherwise payable
    in cash to the participant (or the participant’s personal
    representative or beneficiary, as the case may be) the minimum
    amount of any taxes which the Corporation or one of its
    Subsidiaries may be required to withhold with respect to such
    cash payment.
    

     
In any case where a tax is required to be
withheld in connection with the delivery of shares of Common
Stock under this Plan, the Administrator may in its sole
discretion (subject to Section 8.1) grant (either at the

13

 

time of the award or thereafter) to the
participant the right to elect, pursuant to such rules and
subject to such conditions as the Administrator may establish,
to have the Corporation reduce the number of shares to be
delivered by (or otherwise reacquire) the appropriate number of
shares, valued in a consistent manner at their fair market value
or at the sales price in accordance with authorized procedures
for cashless exercises, necessary to satisfy the minimum
applicable withholding obligation on exercise, vesting or
payment. In no event shall the shares withheld exceed the
minimum whole number of shares required for tax withholding
under applicable law. The Corporation may, with the
Administrator’s approval, accept one or more promissory
notes from any Eligible Person in connection with taxes required
to be withheld upon the exercise, vesting or payment of any
award under this Plan; provided that any such note shall be
subject to terms and conditions established by the Administrator
and the requirements of applicable law.

     
8.6     Effective
Date, Termination and Suspension, Amendments.

		
	 	     
    8.6.1     Effective
    Date. This Plan is effective as of September 21,
    2004, the date of its approval by the Board (the
    “Effective Date”). This Plan shall be submitted
    for and subject to stockholder approval no later than twelve
    months after the Effective Date. Unless earlier terminated by
    the Board, this Plan shall terminate at the close of business on
    the day before the tenth anniversary of the Effective Date.
    After the termination of this Plan either upon such stated
    expiration date or its earlier termination by the Board, no
    additional awards may be granted under this Plan, but previously
    granted awards (and the authority of the Administrator with
    respect thereto, including the authority to amend such awards)
    shall remain outstanding in accordance with their applicable
    terms and conditions and the terms and conditions of this Plan.
    
	 
	 	     
    8.6.2     Board
    Authorization. The Board may, at any time, terminate or,
    from time to time, amend, modify or suspend this Plan, in whole
    or in part. No awards may be granted during any period that the
    Board suspends this Plan.
    
	 
	 	     
    8.6.3     Stockholder
    Approval. An amendment to this Plan shall be subject to
    stockholder approval: (a) if stockholder approval for the
    amendment is then required by applicable law or required under
    Sections 162, 422 or 424 of the Code to preserve the
    intended tax consequences of this Plan; (b) if the
    amendment constitutes a “material revision” of this
    Plan within the meaning of the applicable New York Stock
    Exchange listing rules or other applicable listing requirements;
    or (c) if stockholder approval for the amendment is
    otherwise deemed necessary or advisable by the Board.
    
	 
	 	     
    8.6.4     Amendments
    to Awards. Without limiting any other express authority
    of the Administrator under (but subject to) the express limits
    of this Plan, the Administrator by agreement or resolution may
    waive conditions of or limitations on awards to participants
    that the Administrator in the prior exercise of its discretion
    has imposed, without the consent of a participant, and (subject
    to the requirements of Sections 3.2 and 8.6.5) may make
    other changes to the terms and conditions of awards. Any
    amendment or other action that would constitute a repricing of
    an award is subject to the limitations set forth in
    Section 3.2(g).
    
	 
	 	     
    8.6.5     Limitations
    on Amendments to Plan and Awards. No amendment,
    suspension or termination of this Plan or change of or affecting
    any outstanding award shall, without written consent of the
    participant, affect in any manner materially adverse to the
    participant any rights or benefits of the participant or
    obligations of the Corporation under any award granted under
    this Plan prior to the effective date of such change. Changes,
    settlements and other actions contemplated by Section 7
    shall not be deemed to constitute changes or amendments for
    purposes of this Section 8.6.
    

     
8.7     Privileges
of Stock Ownership. Except as otherwise expressly
authorized by the Administrator or this Plan, a participant
shall not be entitled to any privilege of stock ownership as to
any shares of Common Stock not actually delivered to and held of
record by the participant. No adjustment will be made for
dividends or other rights as a stockholder for which a record
date is prior to such date of delivery.

14

 

     
8.8     Governing
Law; Construction; Severability.

		
	 	     
    8.8.1     Choice
    of Law. This Plan, the awards, all documents evidencing
    awards and all other related documents shall be governed by, and
    construed in accordance with the laws of the State of Delaware.
    
	 
	 	     
    8.8.2     Severability.
    If a court of competent jurisdiction holds any provision
    invalid and unenforceable, the remaining provisions of this Plan
    shall continue in effect.
    
	 
	 	     
    8.8.3     Plan
    Construction.
    

		
	 	     
    (a)     Rule 16b-3.
    It is the intent of the Corporation that the awards and
    transactions permitted by awards be interpreted in a manner
    that, in the case of participants who are or may be subject to
    Section 16 of the Exchange Act, qualify, to the maximum
    extent compatible with the express terms of the award, for
    exemption from matching liability under Rule 16b
    promulgated under the Exchange Act. Notwithstanding the
    foregoing, the Corporation shall have no liability to any
    participant for Section 16 consequences of awards or events
    under awards if an award or event does not so qualify.
    
	 
	 	     
    (b)     Section 162(m).
    Awards under Section 5.1.4 to persons described in
    Section 5.2 that are either granted or become vested,
    exercisable or payable based on attainment of one or more
    performance goals related to the Business Criteria, as well as
    Qualifying Options and Qualifying SARs granted to persons
    described in Section 5.2, that are approved by a committee
    composed solely of two or more outside directors (as this
    requirement is applied under Section 162(m) of the Code)
    shall be deemed to be intended as performance-based compensation
    within the meaning of Section 162(m) of the Code unless
    such committee provides otherwise at the time of grant of the
    award. It is the further intent of the Corporation that (to the
    extent the Corporation or one of its Subsidiaries or awards
    under this Plan may be or become subject to limitations on
    deductibility under Section 162(m) of the Code) any such
    awards and any other Performance-Based Awards under
    Section 5.2 that are granted to or held by a person subject
    to Section 162(m) will qualify as performance-based
    compensation or otherwise be exempt from deductibility
    limitations under Section 162(m).
    

     
8.9     Captions.
Captions and headings are given to the sections and
subsections of this Plan solely as a convenience to facilitate
reference. Such headings shall not be deemed in any way material
or relevant to the construction or interpretation of this Plan
or any provision thereof.

     
8.10     Stock-Based
Awards in Substitution for Stock Options or Awards Granted by
Other Corporation. Awards may be granted to Eligible
Persons in substitution for or in connection with an assumption
of employee stock options, SARs, restricted stock or other
stock-based awards granted by other entities to persons who are
or who will become Eligible Persons in respect of the
Corporation or one of its Subsidiaries, in connection with a
distribution, merger or other reorganization by or with the
granting entity or an affiliated entity, or the acquisition by
the Corporation or one of its Subsidiaries, directly or
indirectly, of all or a substantial part of the stock or assets
of the employing entity. The awards so granted need not comply
with other specific terms of this Plan, provided the awards
reflect only adjustments giving effect to the assumption or
substitution consistent with the conversion applicable to the
Common Stock in the transaction and any change in the issuer of
the security. Any shares that are delivered and any awards that
are granted by, or become obligations of, the Corporation, as a
result of the assumption by the Corporation of, or in
substitution for, outstanding awards previously granted by an
acquired company (or previously granted by a predecessor
employer (or direct or indirect parent thereof) in the case of
persons that become employed by the Corporation or one of its
Subsidiaries in connection with a business or asset acquisition
or similar transaction) shall not be counted against the Share
Limit or other limits on the number of shares available for
issuance under this Plan.

     
8.11     Non-Exclusivity
of Plan. Nothing in this Plan shall limit or be deemed
to limit the authority of the Board or the Administrator to
grant awards or authorize any other compensation, with or
without reference to the Common Stock, under any other plan or
authority.

15

 

     
8.12     No
Corporate Action Restriction. The existence of this
Plan, the award agreements and the awards granted hereunder
shall not limit, affect or restrict in any way the right or
power of the Board or the stockholders of the Corporation to
make or authorize: (a) any adjustment, recapitalization,
reorganization or other change in the capital structure or
business of the Corporation or any Subsidiary, (b) any
merger, amalgamation, consolidation or change in the ownership
of the Corporation or any Subsidiary, (c) any issue of
bonds, debentures, capital, preferred or prior preference stock
ahead of or affecting the capital stock (or the rights thereof)
of the Corporation or any Subsidiary, (d) any dissolution
or liquidation of the Corporation or any Subsidiary,
(e) any sale or transfer of all or any part of the assets
or business of the Corporation or any Subsidiary, or
(f) any other corporate act or proceeding by the
Corporation or any Subsidiary. No participant, beneficiary or
any other person shall have any claim under any award or award
agreement against any member of the Board or the Administrator,
or the Corporation or any employees, officers or agents of the
Corporation or any Subsidiary, as a result of any such action.

     
8.13     Other
Company Benefit and Compensation Programs. Payments and
other benefits received by a participant under an award made
pursuant to this Plan shall not be deemed a part of a
participant’s compensation for purposes of the
determination of benefits under any other employee welfare or
benefit plans or arrangements, if any, provided by the
Corporation or any Subsidiary, except where the Administrator
expressly otherwise provides or authorizes in writing. Awards
under this Plan may be made in addition to, in combination with,
as alternatives to or in payment of grants, awards or
commitments under any other plans or arrangements of the
Corporation or its Subsidiaries.

16

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