Document:

Exhibit 10.2

 

AMENDMENT NO. 2 TO FIVE-YEAR
SENIOR CREDIT AGREEMENT 

(FIRE & SAFETY AND ENGINEERED PRODUCTS BUSINESS)

 

AMENDMENT NO. 2 TO FIVE-YEAR SENIOR CREDIT AGREEMENT (FIRE &
SAFETY AND ENGINEERED PRODUCTS BUSINESS) (this “Amendment”),
dated as of June 25, 2008, among TYCO INTERNATIONAL LTD., a Bermuda
company (the “Guarantor”), TYCO
INTERNATIONAL FINANCE S.A., a Luxembourg company (the “Borrower”),
each Person executing this Amendment as a Lender and CITIBANK, N.A., as
Administrative Agent.

 

PRELIMINARY STATEMENTS

 

(1)           The Borrower, the
Guarantor, the Lenders and the Administrative Agent are parties to the
Five-Year Senior Credit Agreement, dated as of April 25, 2007 (as amended,
supplemented and otherwise modified through the date hereof, the “Credit  Agreement”).

 

(2)           The Borrower, the
Guarantor, the Lenders party hereto and the Administrative Agent desire to
amend the Credit Agreement in certain respects.

 

NOW, THEREFORE, in
consideration of the mutual covenants and agreements contained in this Amendment,
and for other good and valuable consideration, the receipt and sufficiency of
which hereby are acknowledged, the parties hereto agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.01.        Defined Terms. 
Capitalized terms used but not defined in this Amendment shall have the
meaning set forth in the Credit Agreement.

 

Section 1.02.        Rules of Construction.  The rules of construction set forth in Section 1.03
of the Credit Agreement shall apply to this Amendment as if fully set forth
herein.

 

ARTICLE II

AMENDMENTS TO CREDIT AGREEMENT

 

Section 2.01.        Amendment to Article I of the Credit Agreement.

 

(a)           Section 1.01
of the Credit Agreement is hereby amended by inserting the following new
definition in the appropriate alphabetical order:

 

“‘Three-Year
Credit Agreement’ means that certain Three-Year Senior Unsecured Credit
Agreement dated as of June 24, 2008, among the Borrower, the Guarantor,
the lenders party thereto and Citibank, N.A., as Administrative Agent, as the
same may be amended, supplemented or otherwise modified from time to time.”

 

 

(b)           The
definition of “Material Debt” set forth in Section 1.01 of the Credit
Agreement is hereby amended and restated in its entirety to read as follows:

 

“‘Material
Debt’ means Debt (other than Loans or other Debt under this Agreement) of
any one or more of the Guarantor and its Subsidiaries in an aggregate principal
amount exceeding $100,000,000.”

 

Section 2.02.        Amendments to Section 5.10 of the Credit Agreement.

 

(a)           The
introductory paragraph to Section 5.10 of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:

 

“Section 5.10       Limitation on Restrictions
on Subsidiary Dividends and Other Distributions.  The Guarantor will not, and will not permit
any Subsidiary to, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any encumbrance or restriction on the ability of
any Subsidiary, other than the Borrower, to (a) pay dividends or make any
other distributions on its capital stock or any other interest or participation
in its profits, owned by the Guarantor or any Subsidiary, or pay any Debt owed
by any Subsidiary to the Guarantor or any Subsidiary that is a direct or
indirect parent of such former Subsidiary, (b) make loans or advances to
the Guarantor or any Subsidiary that is a direct or indirect parent of such
former Subsidiary or (c) transfer any of its properties or assets to the
Guarantor or any such Subsidiary that is a direct or indirect parent of such
former Subsidiary (or, solely in the case of clause (xii) hereof, any
other Consolidated Person in respect of such Nonrecourse Debt), except for such
encumbrances or restrictions existing under or by reason of:

 

(b)           Subclause
(ii) of Section 5.10 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:

 

“(ii)         this Agreement, the
Three-Year Credit Agreement and any other agreement or instrument governing
Debt containing only such encumbrances and/or restrictions that are on terms
substantially similar in all material respects to, and in no event more
restrictive than, any such encumbrances and/or restrictions under this
Agreement,”

 

(c)           Subclause
(xi) of Section 5.10 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:

 

“(xi)         provisions governing
Preferred Stock issued by a Subsidiary or Debt issued or incurred by a
Subsidiary that is owed to the Guarantor or another Subsidiary,”

 

2

 

Section 2.03.        Amendment to Section 10.01 of the Credit Agreement.  Section 10.01(a)(i) of the Credit
Agreement is hereby amended by deleting the notice information for Tyco
International Finance S.A. set forth therein and replacing it with the
following:

 

Tyco International Finance S.A.

29 Avenue de la Porte Neuve

L2227 Luxembourg

Attn:  Enrica Maccarini

Tel: +352 266 378 1

Fax: +352 266 378 91

email:
emaccarini@tyco.com

 

Section 2.04.        Amendment to Section 10.02(b) of the Credit Agreement.  Section 10.02(b) of the Credit
Agreement is hereby amended by inserting the following new sentence at the end
thereof:

 

“Notwithstanding
the foregoing provisions of this Section 10.02(b), to the extent that the
Borrower or any of its Affiliates shall have acquired Commitments or Loans, the
consent of the Borrower or any of its Affiliates (solely in its capacity as a
Lender) otherwise required under this Section 10.02(b) for any
waiver, amendment or modification shall not be required.”

 

Section 2.05.        Amendment to Section 10.04(b)(ii) of the Credit Agreement.  Section 10.04(b)(ii) of the Credit
Agreement is hereby amended by inserting a new subclause (D) immediately
after subclause (C) to read as follows:

 

“(D)        in the case of a proposed assignment to a
non-U.S. Affiliate of a Lender or a non-U.S. Approved Fund, for which the Borrower’s
consent is not required, the assigning Lender shall provide three Business Days’
written notice to the Borrower of such proposed assignment.”

 

Section 2.06.        Amendment to Section 10.04(c) of the Credit Agreement.  Section 10.04(c) of the Credit Agreement
is hereby amended and restated in its entirety to read as follows:

 

“(c)         (i)            Any
Lender may, without the consent of, or notice to, the Borrower or the
Administrative Agent, sell participations to any Person (other than a natural
Person or the Borrower or any of the Borrower’s Affiliates or subsidiaries)
(each a “Participant”) in all or a portion of such Lender’s rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it); provided that (A) such Lender’s obligations
under this Agreement shall remain unchanged, (B) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations and (C) the Borrower, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s 

 

3

 

rights and obligations under this
Agreement.  Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, modification or
waiver described in the first proviso to Section 10.02(b) that
affects such Participant.  Subject to
paragraph (d) of this Section, the Borrower agrees that each Participant
shall be entitled to the benefits of Sections 9.03, 9.04 and 9.05 to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section (except that, although the
selling Lender shall have a direct claim against the Borrower for amounts
arising under such Sections in respect of the Participant’s interest
(calculated as if the Participant held such interest directly), the Participant
shall have no direct claim against the Borrower pursuant to such
Sections).  To the extent permitted by
law, each Lender shall be entitled to exercise rights under Section 10.08
with respect to deposits held by or obligations owing by any Participant in
such Lender’s Loans or Commitments, provided that, for the avoidance of doubt,
such exercise shall be subject to the obligations of such Lender under Section 2.13(c).  For the avoidance of doubt, no Participant
shall have any contractual claim against the Borrower, and the Borrower shall
have no obligation to any Participant, under this Agreement or the other Loan
Documents. Furthermore, no Lender shall be treated under this Agreement as an
agent of any Participant with respect to any obligations of the Borrower to
such Lender under this Agreement or the other Loan Documents.”

 

Section 2.07.        Amendments to Section 10.14 of the Credit Agreement.

 

(a)           Subclause
(a) of Section 10.14 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:

 

“(a) to
their and their Affiliates’ directors, officers, managers, administrators,
trustees, partners, advisors, employees and agents whom they determine need to
know such Information in connection with matters relating directly to this
Agreement, the other Loan Documents and the Transactions, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information confidential
and the Administrative Agent or the applicable Lenders shall be responsible for
breach of this Section by any such Person to whom it disclosed such
Information),”

 

(b)           Subclause
(f) of Section 10.14 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:

 

4

 

“(f) subject
to an agreement in writing to be bound by the provisions of this Section (and
of which the Guarantor shall be a third party beneficiary) or in the case of a
repurchase arrangement (“repo transaction”) subject to an arrangement to be
bound by provisions at least as restrictive as this Section, to (i) any
assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement or any other Loan
Document or (ii) any actual or prospective counterparty (or its managers,
administrators, trustees, partners, directors, officers, employees, agents,
advisors and other representatives) to any swap or derivative or similar transaction
under which payments are made by reference to the Borrower and its obligations,
this Agreement or payments hereunder, (iii) any rating agency or (iv) the
CUSIP Service Bureau or any similar organization,”

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

Section 3.01.        Representations and Warranties.

 

(a)           Each
Obligor represents and warrants to the Administrative Agent and each Lender
that this Amendment has been duly authorized, executed and delivered by each
Obligor and constitutes the legal, valid and binding obligation of such Obligor
enforceable against such Obligor in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally
and subject to general principles of equity, regardless of whether considered
in a proceeding in equity or at law.

 

(b)           Each
Obligor represents and warrants to the Administrative Agent and each Lender
that, as of the Amendment Effective Date (as defined below), and after giving
effect to this Amendment, the representations and warranties set forth in Article III
of the Credit Agreement (other than Section 3.04, Section 3.05(a)(i) or
(b) or Section 3.09) or any other Loan Document or which are
contained in any certificate or notice delivered at any time by any Obligor
under or in connection herewith or therewith are true and correct in all
material respects on and as of the Amendment Effective Date with the same
effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date, in which
case such representations and warranties were true and correct in all material
respects on and as of such earlier date.

 

Section 3.02.        No Default.  Each
of the Obligors represents and warrants to the Administrative Agent and each
Lender that as of the Amendment Effective Date, and after giving effect to this
Amendment, no Default has occurred and is continuing.

 

5

 

ARTICLE IV

EFFECTIVENESS

 

Section 4.01.        Conditions to Effectiveness.  This Amendment will become effective on and
as of the first date (the “Amendment
Effective Date”) on which all of the following conditions
precedent shall have been first satisfied (unless waived by the Required
Lenders):

 

(a)           The
Administrative Agent (or its counsel) shall have received this Amendment, duly
executed and delivered by the Borrower, the Guarantor, the Administrative Agent
and each of the Required Lenders.

 

(b)           As
of the Amendment Effective Date, and after giving effect to this Amendment, the
representations and warranties set forth in Section 3.01 of this Amendment
are true and correct in all material respects on and as of the Amendment
Effective Date with the same effect as though made on and as of such date,
except to the extent such representations and warranties expressly relate to an
earlier date, in which case such representations and warranties were true and
correct in all material respects on and as of such earlier date.

 

(c)           As
of the Amendment Effective Date, and after giving effect to this Amendment, no
Default or Event of Default shall have occurred and be continuing.

 

Section 4.02.        References to Agreement. 
The Credit Agreement and this Amendment shall be read, taken and
construed as one and the same instrument from and after the Amendment Effective
Date.  Any references in the Credit
Agreement to “this Agreement”, “hereunder”, “herein” or words of like import,
and each reference in any other document executed in connection with the Credit
Agreement (including, without limitation, the Notes), to “the Agreement”, “thereunder”,
“therein” or words of like import, shall, from and after the Amendment
Effective Date, mean and be a reference to the Credit Agreement as amended
hereby.

 

Section 4.03.        Continued Effectiveness; Ratification of Loan Documents.  The Credit Agreement and the other Loan
Documents, each as modified by this Amendment, are and shall continue to be in
full force and effect and are hereby ratified and confirmed in all respects.

 

ARTICLE V

MISCELLANEOUS

 

Section 5.01.        Execution in Counterparts.  This Amendment may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. 
Delivery of an executed counterpart of a signature page of this
Amendment by facsimile or any electronic means that reproduces an image of the
actual executed signature page shall be effective as delivery of a
manually executed counterpart of this Amendment.

 

6

 

Section 5.02.        Fees, Costs and Expenses.  The Borrower agrees to pay all reasonable out
of pocket expenses incurred by the Administrative Agent, including the
reasonable fees, charges and disbursements of counsel for the Administrative
Agent, in connection with the preparation, negotiation, execution, delivery and
administration of this Amendment and the other Loan Documents or any amendments,
modifications or waivers of the provisions hereof and thereof (whether or not
the transactions contemplated hereby or thereby shall be consummated).

 

Section 5.03.        Loan Document. 
This Amendment shall be deemed to be a Loan Document.

 

Section 5.04.        Binding Effect. 
Upon the Amendment Effective Date, this Amendment shall be binding upon
and inure to the benefit of the Borrower, the Lenders and the Administrative
Agent and, in each case, their respective successors and assigns.

 

Section 5.05.        Governing Law. 
This Amendment shall be governed by, and construed in accordance with,
the law of the State of New York.

 

[Remainder of page intentionally left blank]

 

7

 

[Signature Page to Amendment No. 2
to Five-Year Senior Credit Agreement

(Fire &
Safety and Engineered Products)]

 

IN WITNESS WHEREOF, the
parties hereto have caused this Amendment to be duly executed by their
respective authorized officers as of the day and year first above written.

 

 

	
   

  	
  TYCO INTERNATIONAL FINANCE S.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ ENRICA MACCARINI

  
	
   

  	
   

  	
  Name: Enrica Maccarini

  
	
   

  	
   

  	
  Title: Managing Director

  

 

 

[Signature Page to Amendment No. 2
to Five-Year Senior Credit Agreement

(Fire &
Safety and Engineered Products)]

 

 

	
   

  	
  TYCO INTERNATIONAL LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ CHRISTOPHER J. COUGHLIN

  
	
   

  	
   

  	
  Name: Christopher J. Coughlin

  
	
   

  	
   

  	
  Title: EVP & CFO

  

 

 

[Signature Page to Amendment No. 2
to Five-Year Senior Credit Agreement

(Fire & Safety
and Engineered Products)]

 

 

	
   

  	
  CITIBANK, N.A., as a Lender and as 

  Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ KEVIN A. EGE

  
	
   

  	
   

  	
  Name: Kevin A. Ege

  
	
   

  	
   

  	
  Title: Vice President

  

 

 

[Signature Page to Amendment No. 2
to Five-Year Senior Credit Agreement

(Fire & Safety
and Engineered Products)]

 

 

	
   

  	
  BANK OF AMERICA, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ EDWIN B. COX, JR.

  
	
   

  	
   

  	
  Name: Edwin B. Cox, Jr.

  
	
   

  	
   

  	
  Title: Senior Vice President

  

 

 

[Signature Page to Amendment No. 2
to Five-Year Senior Credit Agreement

(Fire & Safety
and Engineered Products)]

 

 

	
   

  	
  DEUTSCHE BANK AG NEW YORK BRANCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ MING K. CHU

  
	
   

  	
   

  	
  Name: Ming K. Chu

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ HEIDI SANDQUIST

  
	
   

  	
   

  	
  Name: Heidi Sandquist

  
	
   

  	
   

  	
  Title: Vice President

  

 

 

[Signature Page to Amendment No. 2
to Five-Year Senior Credit Agreement

(Fire & Safety
and Engineered Products)]

 

 

	
   

  	
  UBS LOAN FINANCE LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ IRJA R. OTSA

  
	
   

  	
   

  	
  Name: Irja R. Otsa

  
	
   

  	
   

  	
  Title: Associate Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ MARY E. EVANS

  
	
   

  	
   

  	
  Name: Mary E. Evans

  
	
   

  	
   

  	
  Title: Associate Director

  

 

 

[Signature Page to Amendment No. 2
to Five-Year Senior Credit Agreement

(Fire & Safety
and Engineered Products)]

 

 

	
   

  	
  BARCLAYS BANK PLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ ALICIA BORYS

  
	
   

  	
   

  	
  Name: Alicia Borys

  
	
   

  	
   

  	
  Title: Manager

  

 

 

[Signature Page to Amendment No. 2
to Five-Year Senior Credit Agreement

(Fire & Safety
and Engineered Products)]

 

 

	
   

  	
  BNP PARIBAS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ RICHARD PACE

  
	
   

  	
   

  	
  Name: Richard Pace

  
	
   

  	
   

  	
  Title: Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ MELISSA BALLEY

  
	
   

  	
   

  	
  Name: Melissa Balley

  
	
   

  	
   

  	
  Title: Vice President

  

 

 

[Signature Page to Amendment No. 2
to Five-Year Senior Credit Agreement

(Fire & Safety
and Engineered Products)]

 

 

	
   

  	
  JPMORGAN CHASE BANK, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ ANTHONY WHITE

  
	
   

  	
   

  	
  Name: Anthony White

  
	
   

  	
   

  	
  Title: Vice President

  

 

 

[Signature Page to Amendment No. 2
to Five-Year Senior Credit Agreement

(Fire & Safety
and Engineered Products)]

 

 

	
   

  	
  MORGAN STANLEY SENIOR FUNDING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Janine Haas

  
	
   

  	
   

  	
  Name: Janine Haas

  
	
   

  	
   

  	
  Title: Vice President

  

 

 

[Signature Page to Amendment No. 2
to Five-Year Senior Credit Agreement

(Fire & Safety
and Engineered Products)]

 

 

	
   

  	
  WILLIAM STREET COMMITMENT 

  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Mark Walton

  
	
   

  	
   

  	
  Name: Mark Walton

  
	
   

  	
   

  	
  Title: Assistant Vice President

  

 

 

[Signature Page to Amendment No. 2
to Five-Year Senior Credit Agreement

(Fire & Safety
and Engineered Products)]

 

 

	
   

  	
  LEHMAN BROTHERS BANK, FSB

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ JANINE M. SHUGAN

  
	
   

  	
   

  	
  Name: Janine M. Shugan

  
	
   

  	
   

  	
  Title: Authorized Signatory

  

 

 

[Signature Page to Amendment No. 2
to Five-Year Senior Credit Agreement

(Fire & Safety
and Engineered Products)]

 

 

	
   

  	
  ING CAPITAL LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ EMMA CONDON

  
	
   

  	
   

  	
  Name: Emma Condon

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ AIDAN NEILL

  
	
   

  	
   

  	
  Name: Aidan Neill

  
	
   

  	
   

  	
  Title: Vice President

  

 

 

[Signature Page to Amendment No. 2
to Five-Year Senior Credit Agreement

(Fire & Safety
and Engineered Products)]

 

 

	
   

  	
  MELLON BANK, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ DANIEL J. LENCKOS

  
	
   

  	
   

  	
  Name: Daniel J. Lenckos

  
	
   

  	
   

  	
  Title: First Vice President

  

 

 

[Signature Page to Amendment No. 2
to Five-Year Senior Credit Agreement

(Fire & Safety
and Engineered Products)]

 

 

	
   

  	
  MIZUHO CORPORATE BANK, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ ROBERT GALLAGHER

  
	
   

  	
   

  	
  Name: Robert Gallagher

  
	
   

  	
   

  	
  Title: Authorized Signatory

  

 

 

[Signature Page to Amendment No. 2
to Five-Year Senior Credit Agreement

(Fire & Safety
and Engineered Products)]

 

 

	
   

  	
  THE BANK OF NOVA SCOTIA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ TODD MELLER

  
	
   

  	
   

  	
  Name: Todd Meller

  
	
   

  	
   

  	
  Title: Managing Director

  

 

 

[Signature Page to
Amendment No. 2 to Five-Year Senior Credit Agreement

(Fire & Safety
and Engineered Products)]

 

 

	
   

  	
  WESTPAC BANKING CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ BRADLEY SCAMMELL

  
	
   

  	
   

  	
  Name: Bradley Scammell

  
	
   

  	
   

  	
  Title: Head of Corporate and Institutional

  
	
   

  	
   

  	
  Banking, Americas

  

 

 

[Signature Page to Amendment No. 2
to Five-Year Senior Credit Agreement

(Fire &
Safety and Engineered Products)]

 

 

	
   

  	
  AUSTRALIA AND NEW ZEALAND BANKING

  GROUP LIMITED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Damodar Menon

  
	
   

  	
   

  	
  Name: Damodar Menon

  
	
   

  	
   

  	
  Title: Director

  

 

 

[Signature Page to
Amendment No. 2 to Five-Year Senior Credit Agreement

(Fire & Safety
and Engineered Products)]

 

 

	
   

  	
  INTESA SANPAOLO S.P.A., NEW YORK

  BRANCH (AS SUCCESSOR TO SANPAOLO

  IMI S.P.A.)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/  LUCA SACCHI

  
	
   

  	
   

  	
  Name: Luca Sacchi

  
	
   

  	
   

  	
  Title: VP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ FRANCESCO DI MARIO

  
	
   

  	
   

  	
  Name: Francesco Di Mario

  
	
   

  	
   

  	
  Title: FVP, Credit Manager

  

 

 

[Signature Page to
Amendment No. 2 to Five-Year Senior Credit Agreement

(Fire & Safety
and Engineered Products)]

 

 

	
   

  	
  THE NORTHERN TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ PETER J. HALLAN

  
	
   

  	
   

  	
  Name: Peter J. Hallan

  
	
   

  	
   

  	
  Title: Vice PresidentExhibit 4.2

 

THE KROGER CO.

 

2008 LONG-TERM INCENTIVE AND CASH BONUS PLAN

 

 1.            Definitions

 

In this Plan the following
definitions will apply:

 

1.1           “Agreement” means a written instrument
implementing a grant of an Option, Right or Performance Unit, an award of
Restricted Stock or Incentive Shares, or setting forth the terms of a Cash
Bonus.

 

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

 

1.3           “Cash Bonus” means an annual or long-term bonus
awarded to a participant under the Cash Bonus Program and determined by the
Committee based on performance measured against Performance Goals established
by the Committee.

 

1.4           “Cash Bonus Program” means that portion of the
Plan under which a participant is awarded a Cash Bonus.

 

1.5           “Code” means the Internal Revenue Code of 1986, as
amended.

 

1.6           “Committee” means the committee appointed to
administer each of the Programs under the Plan. 
For purposes of the Insider Program and the Cash Bonus Program the
Committee will be a committee of the Board meeting the standards of Rule 16b-3(d)(1) under
the Exchange Act, or any similar successor rule, appointed by the Board to
administer the Insider Program and the Cash Bonus Program, which initially will
be composed of those members of the Compensation Committee of the Board who
qualify as “outside directors” under Section 162(m) of the Code.  For purposes of the Non-Insider Program, the
Committee will be the Stock Option Committee.

 

1.7           “Common Stock” means the common stock, par value
$1.00 per Share, of the Company.

 

1.8           “Company” means THE KROGER CO.

 

1.9           “Date of Exercise” means the date on which the
Company receives notice of the exercise of an Option, Right or Performance Unit
in accordance with the terms of Article 9.

 

1.10         “Date of Grant” means the date on which an Option,
Right or Performance Unit is granted or Restricted Stock or Incentive Shares
are awarded by the Committee.

 

1.11         “Director” means a member of the Board of the
Company.

 

1.12         “Employee” means any person determined by the
Committee to be an employee of the Company or a Subsidiary.

 

1.13         “Exchange Act” means the Securities Exchange Act
of 1934, as amended.

 

 

1.14         “Fair Market Value” of a Share of Common Stock
means the amount equal to the fair market value of a Share of Common Stock
determined pursuant to a reasonable method adopted by the Committee in good
faith for such purpose. Unless otherwise provided in an Agreement to the
contrary, the Fair Market Value of a Share will be the closing price on the
date of determination on the New York Stock Exchange—Composite Transactions, or
if no sales are made on such date, on the most recent prior date for which
sales are reported.

 

1.15         “Grantee” means an Employee or a Director to whom
Restricted Stock has been awarded pursuant to Article 11 or to whom Incentive
Shares have been awarded pursuant to Article 12.

 

1.16         “Incentive Share” means a Share awarded pursuant
to Article 12.

 

1.17         “Insider” means an officer of the Company subject
to Section 16(a) of the Exchange Act.

 

1.18         “Insider Program” means that portion of the Plan
under which grants or awards are made to Insiders and Directors.

 

1.19         “Non-Insider Program” means that portion of the
Plan under which grants or awards are made to Employees, excluding Insiders.

 

1.20         “Option” means a nonstatutory stock option granted
under the Plan that does not qualify as an incentive stock option under Section 422
of the Code.

 

1.21         “Option Period” means the period during which an
Option may be exercised.

 

1.22         “Option Price” means the price per Share at which
an Option may be exercised.  The Option
Price will be determined by the Committee, but in no event will the Option
Price of an Option be less than the Fair Market Value per Share determined as
of the Date of Grant, and, except as otherwise permitted pursuant to Article 13
or Article 15, the Option Price of an Option as set forth on the Date of
Grant will not be reduced during the term of the Option (i.e., Options will not
be “repriced”).

 

1.23         “Optionee” means an Employee or Director to whom
an Option, Right or Performance Unit has been granted.

 

1.24         “Performance
Goals” means performance goals established by the Committee that may be based
on: (i) earnings or earnings per
share of Kroger, a unit of Kroger, or designated projects; (ii) total
sales, identical sales, or comparable sales of Kroger, a unit of Kroger, or
designated projects; (iii) cash flow; (iv) cash flow from operations;
(v) operating profit or income; (vi) net income; (vii) operating
margin; (viii) net income margin; (ix) return on net assets; (x) economic
value added; (xi) return on total assets; (xii) return on common equity; (xiii)
return on total capital; (xiv) total shareholder return; (xv) revenue; (xvi)
revenue growth; (xvii) earnings before interest, taxes, depreciation and
amortization (“EBITDA”); (xviii) EBITDA growth; (xix) funds from operations per
share and per share growth; (xx) cash available for distribution; (xxi) cash
available for distribution per share and per share growth; (xxii) share price
performance on an absolute basis and relative to an index of earnings per share
or improvements in Kroger’s attainment of expense levels; (xxiii) reduction in
operating costs as a percentage of sales; (xxiv) performance in key categories;
and (xxv) implementing or completion of strategic initiatives or critical
projects, or any other objective
goals established by the Committee, and may be absolute in their terms or
measured against or in relationship to other companies similarly or otherwise
situated.  Performance goals may be particular
to an employee or the department, branch, Subsidiary or other division in which
he or she works, or may be based on the performance of the Company generally,
and may cover such period as may be specified by the Committee.

 

 

1.25         “Performance Unit” means a performance unit
granted under the Plan in accordance with Article 8.

 

1.26         “Performance Unit Period” means the period during
which a Performance Unit may be exercised.

 

1.27         “Plan” means THE KROGER CO. 2008 Long-Term
Incentive and Cash Bonus Plan.

 

1.28         “Related Option” means the Option in connection
with which, or by amendment to which, a specified Right or Performance Unit is
granted.

 

1.29         “Related Performance Unit” means the Performance
Unit granted in connection with, or by amendment to, a specified Option.

 

1.30         “Related Right” means the Right granted in
connection with, or by amendment to, a specified Option.

 

1.31         “Restricted Stock” means Shares awarded pursuant
to Article 11.

 

1.32         “Right” means a stock appreciation right granted
under the Plan pursuant to Article 7.

 

1.33         “Right Period” means the period during which a
Right may be exercised.

 

1.34         “Share” means a share of authorized but unissued
Common Stock or a reacquired share of issued Common Stock.

 

1.35         “Stock Option Committee” means a committee of three
or more members appointed by the Chief Executive Officer of the Company to
administer the Non-Insider Program, each of whom is ineligible to receive
grants or awards under the Non-Insider Program, and has been so ineligible for
at least one year.

 

1.36         “Subsidiary” means a corporation at least 50% of
the total combined voting power of all classes of stock of which is owned by
the Company, either directly or through one or more other Subsidiaries.

 

 2.            Purpose

 

The Plan is intended to assist
in attracting and retaining Employees and Directors of outstanding ability and
to promote the identification of their interests with those of the shareholders
of the Company.

 

 3.            Administration

 

The Plan will be administered by
the Committee.  In addition to any other
powers granted to the Committee, it will have the following powers, subject to
the express provisions of the Plan:

 

3.1           to determine in its discretion the Employees to
whom Options, Performance Units or Rights will be granted, to whom Restricted
Stock and Incentive Shares will be awarded, and those Employees eligible to
receive Cash Bonuses; the number of Shares to be subject to each Option, Right,
Performance Unit, Restricted Stock or Incentive Share award, and the terms upon
which Options, Rights or Performance Units may be acquired and exercised and
the terms and conditions of Restricted Stock and Incentive Share awards and
Cash Bonuses;

 

 

3.2           to determine all other terms and provisions of
each Agreement, which need not be identical;

 

3.3           without limiting the generality of the foregoing,
to provide in its discretion in an Agreement:

 

(a)           for an agreement by the Optionee or Grantee to
render services to the Company or a Subsidiary upon such terms and conditions
as may be specified in the Agreement, provided that the Committee will not have
the power to commit the Company or any Subsidiary to employ or otherwise retain
any Optionee or Grantee;

 

(b)           for restrictions on the transfer, sale or other
disposition of Shares issued to the Optionee upon the exercise of an Option,
Right or Performance Unit, for other restrictions permitted by Article 11
with respect to Restricted Stock or for conditions with respect to the issuance
of Incentive Shares;

 

(c)           for an agreement by the Optionee or Grantee to
resell to the Company, under specified conditions, Shares issued upon the
exercise of an Option, Right or Performance Unit or awarded as Restricted Stock
or Incentive Shares;

 

(d)           for the payment of the Option Price upon the
exercise by an Employee or Director of an Option otherwise than in cash,
including without limitation by delivery of shares of Common Stock (other than
Restricted Stock) valued at Fair Market Value on the Date of Exercise of the
Option, or a combination of cash and shares of Common Stock; and

 

(e)           for the deferral of receipt of amounts that
otherwise would be distributed upon exercise of a Performance Unit, the terms
and conditions of any such deferral and any interest or dividend equivalent or
other payment that will accrue with respect to deferred distributions;

 

3.4           to construe and interpret the Agreements and the
Plan;

 

3.5           to require, whether or not provided for in the
pertinent Agreement, of any person exercising an Option, Right or Performance
Unit or acquiring Restricted Stock or Incentive Shares, at the time of such
exercise or acquisition, the making of any representations or agreements that
the Committee may deem necessary or advisable in order to comply with the
securities laws of the United States or of any state;

 

3.6           to provide for satisfaction of an Optionee’s or
Grantee’s tax liabilities arising in connection with the Plan through, without
limitation, retention by the Company of shares of Common Stock otherwise
issuable on the exercise of an Option, Right or Performance Unit or pursuant to
an award of Incentive Shares or through delivery of Common Stock to the Company
by the Optionee or Grantee under such terms and conditions as the Committee
deems appropriate; and

 

3.7           to make all other determinations and take all
other actions necessary or advisable for the administration of the Plan.

 

Any determinations or actions
made or taken by the Committee pursuant to this Article will be binding
and final.

 

 4.            Eligibility

 

Options, Rights, Performance
Units, Restricted Stock and Incentive Shares may be granted or awarded only to
Employees and Directors.  Cash Bonuses
may only be awarded to Employees.  In no
event may any participant receive awards and grants totaling more than
3,000,000 Shares in the aggregate under 

 

 

this Plan, and no single Cash Bonus to a
participant may exceed $5,000,000.

 

 5.            Stock Subject to the Plan

 

5.1           The maximum number of Shares that may be issued
under the Plan is 20,000,000 Shares. 
Except as otherwise provided in the following sentence, the maximum
number of Shares that may be issued as Restricted Stock or Incentive Shares
under the Plan is 8,000,000 Shares in the aggregate.  Notwithstanding the foregoing, the Committee
for the Insider Program may increase the number of Shares that may be issued as
Restricted Stock or Incentive Shares to an amount in excess of 8,000,000
Shares, provided that for each such Share in excess of 8,000,000 Shares that
are issued as Restricted Stock or Incentive Shares, in the aggregate, the
number of Shares that may be issued under the Plan will be reduced by four
Shares.  In addition to the decisions
that it makes in administering the Insider Program, annually the Committee for
the Insider Program will approve the number of Shares to be granted under the
Non-Insider Program for that fiscal year.

 

5.2           If an Option, Right or Performance Unit expires or
terminates for any reason (other than termination by virtue of the exercise of
a Related Option, Related Right or a Related Performance Unit, as the case may
be) without having been fully exercised, if Shares of Restricted Stock are
forfeited or if Incentive Shares are not issued or are forfeited, the unissued
or forfeited Shares that had been subject to the Agreement relating thereto
will become available for the grant of other Options, Rights and Performance
Units or for the award of additional Restricted Stock or Incentive Shares,
provided that in the case of forfeited Shares, the Grantee has received no
dividends prior to forfeiture with respect to such Shares.

 

5.3           The Shares issued upon the exercise of a Right or
Performance Unit (or, if cash is payable in connection with such exercise, that
number of Shares having a Fair Market Value equal to the cash payable upon such
exercise), will be charged against the number of Shares issuable under the Plan
and will not become available for the grant of other Options, Rights and
Performance Units or for the award of Restricted Stock or Incentive
Shares.  If the Right referred to in the
preceding sentence is a Related Right, or if the Performance Unit referred to
in the preceding sentence is a Related Performance Unit, the Shares subject to
the Related Option, to the extent not charged against the number of Shares
subject to the Plan in accordance with this Section 5.3, will become
available for the grant of other Options, Rights and Performance Units or for
the award of additional Restricted Stock or Incentive Shares.

 

6.             Options

 

6.1                                 The Committee is authorized to grant Options to
Employees and Directors.

 

6.2           The Option Period for Options granted to Employees
and Directors will be determined by the Committee and specifically set forth in
the Agreement.  No Option will be
exercisable before six months after the Date of Grant (except that this
limitation need not apply in the event of the death or disability of the
Optionee within the six-month period) or after ten years from the Date of
Grant.

 

6.3           The maximum number of Shares of Common Stock with
respect to which Options may be granted to any Employee or Director under this
Plan during its term is 3,000,000 Shares. 
In no event will the Option Price of an Option be less than the Fair
Market Value of a Share of Common Stock at the time of the grant.

 

6.4           All other terms of Options granted under the Plan
will be determined by the Committee in its sole discretion.

 

 

 7.            Rights

 

7.1           The Committee is hereby authorized to grant Rights
to Employees and  Directors.

 

7.2           A Right may be granted under the Plan:

 

(a)           in connection with, and at the same time as, the
grant of an Option under the Plan;

 

(b)           by amendment of an outstanding Option granted
under the Plan; or

 

(c)           independently of any Option granted under the
Plan.

 

A Right granted under
clause (a) or (b) of the preceding sentence is a Related
Right.  A Related Right may, in the
Committee’s discretion, apply to all or a portion of the Shares subject to the
Related Option.

 

7.3           A Right may be exercised in whole or in part as
provided in the Agreement, and, subject to the provisions of the Agreement,
entitles its Optionee to receive, without any payment to the Company (other
than required income tax withholding amounts), either cash or that number of
Shares (equal to the highest whole number of Shares), or a combination thereof,
in an amount or having a Fair Market Value determined as of the Date of Exercise
not to exceed the number of Shares subject to the portion of the Right
exercised multiplied by an amount equal to the excess of (i) the Fair
Market Value of a share of Common Stock on the Date of Exercise of the Right
over (ii) either (A) the Fair Market Value of a share of Common Stock
on the Date of Grant of the Right if it is not a Related Right, or (B) the
Option Price as provided in the Related Option if the Right is a Related Right.

 

7.4           The Right Period will be determined by the
Committee and specifically set forth in the Agreement, provided, however —

 

(a)           a Right may not be exercised before the expiration
of six months from the Date of Grant (except that this limitation need not
apply in the event of the death or disability of the Optionee within the
six-month period);

 

(b)           a Right will expire no later than the earlier of (i) ten
years from the Date of Grant, or (ii) in the case of a Related Right, the
expiration of the Related Option; and

 

(c)           a Right may be exercised only when the Fair Market
Value of a share of Common Stock exceeds either (i) the Fair Market Value
of a share of Common Stock on the Date of Grant of the Right if it is not a
Related Right, or (ii) the Option Price as provided in the Related Option
if the Right is a Related Right.

 

7.5           The exercise, in whole or in part, of a Related
Right will cause a reduction in the number of Shares subject to the Related
Option equal to the number of Shares with respect to which the Related Right is
exercised.  Similarly, the exercise, in
whole or in part, of a Related Option will cause a reduction in the number of
Shares subject to the Related Right equal to the number of Shares with respect
to which the Related Option is exercised.

 

7.6           Rights granted under the Plan, to the extent
determined by the Committee, will comply with the requirements of Rule 16b-3
under the Exchange Act during the term of this Plan.  Should any additional provisions be necessary
for this Article 7 to comply with the requirements of Rule 16b-3 or
any other rules or regulations, the Board may amend this Plan to delete,
add to or modify the provisions of the Plan accordingly, subject to the
provisions of Article 14, if applicable. 
The Company intends to comply, if and to the extent 

 

 

applicable, with the requirements of Rule 16b-3;
however, the Company’s failure for any reason whatsoever to comply with such
requirements will not impose any liability on the Company to any Optionee or
any other party.

 

7.7           To the extent required by Rule 16b-3 under
the Exchange Act or otherwise provided in the Agreement, the Committee will
have sole discretion to consent to or disapprove the election of any Optionee
to receive cash in full or partial settlement of a Right.  In cases where an election of settlement in
cash must be consented to by the Committee, the Committee may consent to, or
disapprove, such election at any time after such election, or within such
period for taking action as is specified in the election, and failure to give
consent will be disapproval.  Consent may
be given in whole or as to a portion of the Right surrendered by the
Optionee.  If the election to receive
cash is disapproved in whole or in part, the Right will be deemed to have been
exercised for Shares, or, if so specified in the notice of exercise and
election, not to have been exercised to the extent the election to receive cash
is disapproved.

 

7.8           The maximum number of Shares of Common Stock with
respect to which Rights may be granted to any Employee or Director under this
Plan during its term is 3,000,000 Shares.

 

8.             Performance Units

 

8.1           The Committee is hereby authorized to grant
Performance Units to Employees and Directors.

 

8.2           Performance Units may be granted under the Plan:

 

(a)           in connection with, and at the same time as, the
grant of an Option under the Plan;

 

(b)           by amendment of an outstanding Option under the
Plan; or

 

(c)           independently of any Option granted under the
Plan.

 

A Performance Unit granted under clause (a) or
(b) of the preceding sentence is a Related Performance Unit.  A Related Performance Unit may, in the
Committee’s discretion, apply to all or a portion of the shares subject to the
Related Option.

 

8.3           A Performance Unit may be exercised in whole or in
part as provided in the Agreement, and, subject to the provisions of the
Agreement, entitles its Optionee to receive, without any payment to the Company
(other than required income tax withholding amounts), cash, Shares or a
combination of cash and Shares, based upon the degree to which Performance
Goals established by the Committee and specified in the Agreement have been
achieved.

 

8.4           The Performance Unit Period will be determined by
the Committee and specifically set forth in the Agreement, provided, however —

 

(a)           a Performance Unit may not be exercised before the
expiration of six months from the Date of Grant (except that this limitation
need not apply in the event of the death or disability of the Optionee within
the six-month period); and

 

(b)           a Performance Unit will expire no later than the
earlier of (i) ten years from the Date of Grant, or (ii) in the case
of a Related Performance Unit, the expiration of the Related Option.

 

8.5           Each Agreement granting Performance Units will
specify the number of Performance Units 

 

 

granted; provided, however, that the maximum
number of Related Performance Units may not exceed the maximum number of Shares
subject to the Related Option.

 

8.6           The exercise, in whole or in part, of Related
Performance Units will cause a reduction in the number of Shares subject to the
Related Option and the number of Performance Units in accordance with the terms
of the Agreement.  Similarly, the
exercise, in whole or in part, of a Related Option, will cause a reduction in
the number of Shares subject to the Related Performance Unit equal to the
number of Shares with respect to which the Related Option is exercised.

 

8.7           Performance Units granted under the Plan, to the
extent determined by the Committee, will comply with the requirements of Rule 16b-3
under the Exchange Act during the term of this Plan.  Should any additional provisions be necessary
for this Article 8 to comply with the requirements of Rule 16b-3 or
any other applicable rule or regulation, the Board may amend this Plan to
delete, add to or modify the provisions of the Plan accordingly, subject to the
provisions of Article 14, if applicable. 
The Company intends to comply, if and to the extent applicable, with the
requirements of Rule 16b-3; however, the Company’s failure for any reason
whatsoever to comply with such requirements will not impose any liability on
the Company to any Optionee or any other party.

 

8.8           To the extent required by Rule 16b-3 under
the Exchange Act or otherwise provided in the Agreement, the Committee will
have sole discretion to consent to or disapprove the election of any Optionee
to receive cash in full or partial settlement of a Performance Unit.  In cases where an election of settlement in
cash must be consented to by the Committee, the Committee may consent to, or
disapprove, such election at any time after such election, or within such
period for taking action as is specified in the election, and failure to give
consent will be disapproval.  Consent may
be given in whole or as to a portion of the Performance Unit surrendered by the
Optionee.  If the election to receive
cash is disapproved in whole or in part, the Performance Unit will be deemed to
have been exercised for Shares, or, if so specified in the notice of exercise
and election, not to have been exercised to the extent the election to receive
cash is disapproved.

 

8.9           The maximum number of Shares that may be issued to
any Employee or Director pursuant to the exercise of Performance Units may not
exceed 3,000,000 Shares.  For purposes of
the preceding sentence, any Performance Units paid in the form of cash will be
deemed to have been paid in Shares, with the number of Shares being deemed paid
equal to the amount of cash paid to the Employee or Director divided by the
Fair Market Value of a Share on the date of payment.

 

 9.            Exercise

 

An Option, Right or Performance
Unit, subject to the provisions of the Agreement under which it was granted,
may be exercised in whole or in part by the delivery to the Company of written
notice of the exercise, in such form as the Committee may prescribe,
accompanied, in the case of an Option, by (i) full payment for the Shares
with respect to which the Option is exercised, or (ii) irrevocable
instructions to a broker selected by the Committee to consummate “cashless”
exercises to deliver promptly to the Company cash equal to full payment for the
Shares for which the Option is exercised.

 

10.          Non-transferability

 

Unless otherwise provided in the
Agreement respecting the grant or award, Options, Rights, Performance Units and
Incentive Shares granted or awarded under the Plan will not be transferable
otherwise than by will or the laws of descent and distribution, and an Option,
Right or Performance Unit may be exercised during his or her lifetime only by
the Optionee or, in the event of his or her legal disability, by his or her
legal representative.  A Related Right or
Related Performance Unit is transferable only when the 

 

 

Related Option is transferable and only with
the Related Option and under the same conditions.

 

11.          Restricted Stock Awards

 

11.1         The Committee is hereby authorized to award Shares
of Restricted Stock to Employees and Directors.

 

11.2         Restricted Stock awards under the Plan will
consist of Shares that are restricted against transfer, subject to forfeiture,
and subject to such other terms and conditions intended to further the purposes
of the Plan as may be determined by the Committee.  The terms and conditions may provide, in the
discretion of the Committee, for the vesting of such awards to be contingent
upon the achievement of one or more Performance Goals.

 

11.3         Restricted Stock awards will be evidenced by
Agreements containing provisions setting forth the terms and conditions
governing such awards.  Each such
agreement will contain the following:

 

(a)           prohibitions against the sale, assignment,
transfer, exchange, pledge, hypothecation, or other encumbrance of (i) the
Shares awarded as Restricted Stock under the Plan, (ii) the right to vote
the Shares, or (iii) the right to receive dividends thereon in each case
during the restriction period applicable to the Shares; provided, however, that
the Grantee will have all the other rights of a shareholder including, but not
limited to, the right to receive dividends and the right to vote the Shares;

 

(b)           at least one term, condition or restriction
constituting a “substantial risk of forfeiture” as defined in Section 83(c) of
the Code;

 

(c)           such other terms, conditions and restrictions as
the Committee in its discretion may specify (including, without limitation,
provisions creating additional substantial risks of forfeiture);

 

(d)           a requirement that each certificate or other
evidence of ownership representing Shares of Restricted Stock must be deposited
with the Company, or its designee, and will bear the following legend:

 

“This certificate or other
evidence of ownership and the shares of stock represented hereby are subject to
the terms and conditions (including the risks of forfeiture and restrictions
against transfer) contained in THE KROGER CO. 2008 Long-Term Incentive and
Cash Bonus Plan and an Agreement entered into between the registered owner and
The Kroger Co.  Release from such
terms and conditions will be made only in accordance with the provisions of the
Plan and the Agreement, a copy of each of which is on file in the office of the
Secretary of The Kroger Co.

 

(e)           the applicable period or periods of any terms,
conditions or restrictions applicable to the Restricted Stock, provided,
however, that the Committee in its discretion may accelerate the expiration of
the applicable restriction period with respect to any part or all of the Shares
awarded to a Grantee; and

 

(f)            the terms and conditions upon which any
restrictions upon Shares of Restricted Stock awarded under the Plan will lapse
and new certificates free of the foregoing legend will be issued to the Grantee
or his or her legal representative.

 

11.4         The Committee may include in an Agreement a
requirement that in the event of a Grantee’s termination of employment for any
reason prior to the lapse of restrictions, all Shares of Restricted Stock will 

 

 

be forfeited by the Grantee to the Company
without payment of any consideration by the Company, and neither the Grantee
nor any successors, heirs, assigns or personal representatives of the Grantee
will thereafter have any further rights or interest in the Shares or certificates.

 

11.5         The maximum number of Shares of Restricted Stock
that may be awarded to any Employee or Director under this Plan during its term
is 3,000,000 Shares.

 

12.          Incentive Share Awards

 

12.1         The Committee is hereby authorized to award
Incentive Shares to Employees and Directors.

 

12.2         Incentive Shares will be Shares that are issued at
such times, subject to achievement of such Performance Goals or other goals and
on such other terms and conditions as the Committee deems appropriate and
specify in the Agreement relating thereto.

 

12.3         The maximum number of Shares of Incentive Shares
that may be awarded to any Employee or Director under this Plan during its term
is 3,000,000 Shares.

 

13.          Capital Adjustments

 

The number and class of Shares
subject to each outstanding Option, Right or Performance Unit or Restricted
Stock or Incentive Share award, the Option Price and the aggregate number and
class of Shares for which grants or awards thereafter may be made will be
subject to such adjustment, if any, as the Committee in its sole discretion
deems appropriate to reflect such events as stock dividends, stock splits,
adoption of stock rights plans, recapitalizations, mergers, consolidations or
reorganizations of or by the Company.

 

14.          Termination or Amendment

 

The Board may amend or terminate this Plan in any respect at any
time.  Board approval must be accompanied
by (i) shareholder approval in those cases in which amendment requires
shareholder approval under applicable law or regulations or the requirements of
the principal exchange or interdealer quotation system on which the Common
Stock is listed or quoted, and (ii) affected Optionee or Grantee approval
if the amendment or termination would adversely affect the holder’s rights
under any outstanding grants or awards.  The Cash Bonus Program may be wholly or
partially amended or otherwise modified, suspended or terminated at any time or
from time to time by the Committee or the Board.  To the extent required by Section 162(m) of
the Internal Revenue Code with respect to bonus awards that the Committee
determines should qualify as performance-based compensation as described in Section 162(m)(4)(C),
no action may modify the performance criteria or bonus potentials after the
commencement of the measurement period with respect to which such bonus awards
relate.

 

15.                               Modification, Extension and Renewal of Options,
Rights, Performance Units, Restricted Stock and Incentive Shares

 

Subject to the terms and
conditions and within the limitations of the Plan, the Committee may modify,
extend or renew outstanding Options, Rights and Performance Units, or accept
the surrender of outstanding options, rights and performance units (to the
extent not theretofore exercised) granted under the Plan or under any other
plan of the Company, a Subsidiary or a company or similar entity acquired by
the Company or a Subsidiary, and authorize the granting of new Options, Rights
and Performance Units pursuant to the Plan in substitution therefor (to the
extent not theretofore exercised), and the substituted Options, Rights and 

 

 

Performance Units may specify a longer term
than the surrendered options, rights and performance units or may have any
other provisions that are authorized by the Plan; provided that the exercise
price may not be less than that of the surrendered option, rights and
performance units.  Subject to the terms
and conditions and within the limitations of the Plan, the Committee may modify
the terms of any outstanding Agreement providing for awards of Restricted Stock
or Incentive Shares.  Notwithstanding the
foregoing, however, no modification of an Option, Right or Performance Unit
granted under the Plan, or an award of Restricted Stock or Incentive Shares,
will, without the consent of the Optionee or Grantee, alter or impair any of
the Optionee’s or Grantee’s rights or obligations.

 

16.          Cash Bonuses

 

Two
types of bonuses can be awarded under the Cash Bonus Program; an annual bonus
award for each fiscal year, and a long-term bonus award for measurement periods
in excess of one year. Bonus payments are based on the Company’s performance
measured against Performance Goals established by the Committee. The Committee
establishes a bonus “potential” for each bonus payable under the Cash Bonus
Program for each participant, based on the participant’s level within the
Company, and actual payouts can exceed that amount when the Company’s
performance exceeds the pre-established thresholds. Initially the Performance
Goals for annual bonuses will include the following components: (i) EBITDA;
(ii) identical sales; (iii) achievement of strategic initiatives; and
(iv) sales and earnings results of designated capital projects. Initially
the Performance Goals for long-term bonuses will include the following
components: (i) performance in four key categories in the Company’s
strategic plan, (ii) operating costs as a percentage of sales, and (iii) performance
in eleven key categories designed to measure associate satisfaction and one key
category designed to determine how the Company’s focus on values supports how
associates do business.

 

17.          Effectiveness of the Plan

 

The Plan and any amendments
requiring shareholder approval pursuant to Article 14 are subject to
approval by vote of the shareholders of the Company within 12 months after
their adoption by the Board.  Subject to
that approval, the Plan is effective upon approval by the shareholders and any
amendments are effective on the date on which they are adopted by the Board.  Options, Rights, Performance Units,
Restricted Stock and Incentive Shares may be granted or awarded prior to
shareholder approval of the Plan or amendments, but each such Option, Right,
Performance Unit, Restricted Stock or Incentive Share grant or award will be
subject to the approval of the Plan or amendments by the shareholders.  The date on which any Option, Right,
Performance Unit, Restricted Stock or Incentive Shares granted or awarded prior
to shareholder approval of the Plan or amendment is granted or awarded will be
the Date of Grant for all purposes as if the Option, Right, Performance Unit,
Restricted Stock or Incentive Shares had not been subject to approval.  No Option, Right or Performance Unit may be
exercised prior to such shareholder approval, and any Restricted Stock or
Incentive Shares awarded will be forfeited if such shareholder approval is not
obtained.

 

18.          Term of the Plan

 

Unless sooner terminated by the
Board pursuant to Article 14, the Plan will terminate on the date ten
years after its adoption by the Board, and no Options, Rights, Performance Units,
Restricted Stock or Incentive Shares may be granted or awarded after
termination.  The termination will not
affect the validity of any Option, Right, Performance Unit, Restricted Stock or
Incentive Shares outstanding on the date of termination.

 

 

19.          Indemnification of Committee

 

In addition to such other rights
of indemnification as they may have as Directors or as members of the
Committee, the members of the Committee will be indemnified by the Company
against the reasonable expenses, including attorneys’ fees, actually and
reasonably incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan or any grant or award hereunder, and against all
amounts reasonably paid by them in settlement thereof or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, if such
members acted in good faith and in a manner that they believed to be in, and
not opposed to, the best interests of the Company.

 

20.          General Provisions

 

20.1         The establishment of the Plan will not confer upon
any Employee or Director any legal or equitable right against the Company, any
Subsidiary or the Committee, except as expressly provided in the Plan.

 

20.2         The Plan does not constitute inducement or
consideration for the employment of any Employee or the service of any
Director, nor is it a contract of employment between the Company or any
Subsidiary and any Employee or Director. 
Participation in the Plan, or the receipt of a grant or award hereunder,
will not give an Employee or Director any right to be retained in the service
of the Company or any Subsidiary.

 

20.3         The Company and its Subsidiaries may assume
options, warrants, or rights to purchase stock issued or granted by other
corporations whose stock or assets are acquired by the Company or its
Subsidiaries, or that is merged into or consolidated with the Company.  Assumed options will not be counted
toward the limit specified in Section 6.3 unless the Committee determines
that application of the limit is necessary for the grants of Options to qualify
as “performance-based compensation” under Section 162(m) of the
Code.  Neither
the adoption of this Plan, nor its submission to the shareholders, may be taken
to impose any limitations on the powers of the Company or its affiliates to
issue, grant, or assume options, warrants, rights, or restricted stock,
otherwise than under this Plan, or to adopt other long-term incentive plans or
to impose any requirement of shareholder approval upon the same.

 

20.4         The interests of any Employee or Director under
the Plan are not subject to the claims of creditors and may not, in any way, be
assigned, alienated or encumbered except as provided in Article 10.

 

20.5         The Plan will be governed, construed and
administered in accordance with the laws of Ohio.

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