Document:

Exhibit 10.2

 

AMENDED AND RESTATED

INVESTMENT TECHNOLOGY GROUP, INC.

STOCK UNIT AWARD PROGRAM SUBPLAN

 

1.             Purpose

 

                This Investment Technology Group, Inc. Stock
Unit Award Program Subplan, as amended and restated herein (the “Program”) was
originally implemented by Investment Technology Group, Inc. (the “Company”)
under the Investment Technology Group, Inc. Amended and Restated 1994
Stock Option and Long-Term Incentive Plan (the “1994 Plan”).  The Program was merged as a subplan with and
into the Investment Technology Group, Inc. 2007 Omnibus Equity
Compensation Plan (the “Plan”) effective as of May 8, 2007, and was amended
and restated, effective January 1, 2008 (the “Effective Date”).    The Program has been further amended and
restated, as set forth herein, effective (unless otherwise set forth herein) on
the Effective Date, and the Program has been frozen as to new benefits
effective for compensation earned for any calendar year after calendar year
2008, as set forth in Section 6(a)(iii) below.

 

                The purpose of the Program is to provide an
additional incentive to selected members of senior management and key employees
to increase the success of the Company, by substituting stock units for a
portion of the cash compensation payable to such persons, which stock units
represent an equity interest in the Company to be acquired and held under the
Program on a long-term, tax-deferred basis, and otherwise to promote the
purposes of the Plan.  The Program is
amended and restated herein, effective for deferrals made from compensation
earned for periods on or after the Effective Date.  Deferrals made from compensation earned for
periods prior to the Effective Date shall be governed by the Program as in effect
prior to the Effective Date.  Shares with
respect to deferrals prior to May 8, 2007 were issued under the 1994
Plan.  Persons selected to be eligible to
participate in the Program will participate only if they elect to participate
for a calendar year.

 

2.             Definitions

 

                Capitalized terms used in the Program but not defined
herein shall have the same meanings as defined in the Plan.  In addition to such terms and the terms
defined in this Program, the following terms used in the Program shall have the
meanings set forth below:

 

                2.1           “Account” means the account established
for each Participant pursuant to Section 7(g) hereof.

 

                2.2           “Actual Reduction Amount” means the
amount by which a given semi-annual or year-end bonus payment to a Participant
is in fact reduced under Section 6.

 

                2.3           “Administrator” shall be the person
or committee appointed by the Committee to perform ministerial functions under
the Program and to exercise other authority delegated by the Committee.

 

 

2.4           “Assigned
Reduction Amount” means an amount determined by the Administrator in accordance
with Section 6(b), in the case of an individual Current Participant, which
shall be used under Section 7(a) to determine the number of Stock
Units to be credited to the Current Participant’s Account semi-annually.  The Assigned Reduction Amount does not accumulate.

 

2.5           “Basic
Stock Unit” means a Stock Unit granted pursuant to the first sentence of Section 7(a).

 

2.6           “Cause”
shall be deemed to exist where a Participant: (i) commits any act of
fraud, willful misconduct or dishonesty in connection with their employment; (ii) fails,
refuses or neglects to timely perform any material duty or job responsibility
and such failure, refusal or neglect is not cured after appropriate warning; (iii) commits
a material violation of any law, rule, regulation or by-law of any governmental
authority (state, federal or foreign), any securities exchange or association
or other regulatory or self-regulatory body or agency applicable to Company or
any of its subsidiaries or affiliates or any general written policy or
directive of Company or any of its subsidiaries or affiliates; (v) commits
a crime involving dishonesty, fraud or unethical business conduct, or a felony;
or (vii) is expelled or suspended, or is subject to an order temporarily
or permanently enjoining Participant from an area of activity which constitutes
a significant portion of Participant’s activities by the Securities and
Exchange Commission, the Financial Industry Regulatory Authority, any national
securities exchange or any self-regulatory agency or governmental authority,
state, foreign or federal.

 

2.7           “Current
Participant” means a Participant who, for the calendar year, has elected, in
accordance with Section 5 below (as modified by Section 11 below), to
participate in the Program and is, therefore, subject to mandatory payment of a
portion of his or her compensation for the calendar year by grant of Stock
Units under the Program.

 

2.8           “Disability”
shall have the meaning ascribed to such term in section 22(e)(3) of
the Code.

 

2.9           “Matching
Stock Unit” means a Stock Unit granted pursuant to Section 7(a).

 

2.10         “Participant”
means an eligible person who is granted Stock Units under the Program, which
Stock Units have not yet been settled.

 

2.11         “Related
Party” means (a) a majority-owned subsidiary of the Company; (b) an
employee or group of employees of the Company or any majority-owned subsidiary
of the Company; (c) a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any majority-owned subsidiary of the
Company; or (d) a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportion as their
ownership of Voting Securities.

 

                2.12         “Retirement” means Termination of
Employment (other than a termination for Cause) after the Participant has
reached age 65 or after the Participant has reached age 55 and has at least 10
years of service with the Company and its subsidiaries.

 

2

 

                2.13         “Stock Unit” means an award, granted
pursuant to Section 8 of the Plan, representing a generally
nontransferable right to receive one share of Company Stock at a specified
future date together with a right to Dividend Equivalents as specified in Section 7(d) hereof
and subject to the terms and conditions of the Plan and the Program.  Notwithstanding anything to the contrary, in
the case of Stock Units granted to employees of ITG Canada Corp., the Committee
may, in its discretion, settle such Stock Units by delivery of cash equal to
the Fair Market Value on the settlement date of the number of shares of Company
Stock equal to the number of such Stock Units. 
Stock Units are bookkeeping units, and do not represent ownership of
Company Stock or any other equity security.

 

                2.14         “Termination of Employment” means
termination of a Participant’s employment by the Company or a subsidiary for
any reason, including due to death or Disability, immediately after which event
the Participant is not employed by the Company or any subsidiary.

 

                2.15         “Voting Securities or Security” means
any securities of the Company which carry the right to vote generally in the
election of directors.

 

3.             Administration

 

                                (a)           Authority. 
The Program shall be established and administered by the Committee,
which shall have all authority under the Program as it has under the Plan; provided,
however, that terms of the grant of Stock Units hereunder may not be inconsistent
with the express terms set forth in the Program.  Ministerial functions under the Program and
other authority specifically delegated by the Committee shall be performed or
exercised by and at the direction of the Administrator.

 

                                (b)           Manner of Exercise of Authority.  Any action of the Committee or its delegatee
with respect to the Program shall be final, conclusive, and binding on all
persons, including the Company, subsidiaries, participants granted Stock Units
which have not yet been settled, and any person claiming any rights under the
Program from or through any Participant, except that the Committee may take
action within a reasonable time after any such action superseding or overruling
a prior action.

 

                                (c)           Limitation of Liability.  Each member of the Committee or delegatee
shall be entitled to, in good faith, rely or act upon any report or other
information furnished to him or her by any officer or other employee of the Company
or any subsidiary or any agent or professional assisting in the administration
of the Program, such member or person shall not be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to
the Program, and such member or person shall, to the extent permitted by law,
be fully indemnified and protected by the Company with respect to any such
action, determination, or interpretation.

 

                                (d)           Status as Subplan Under the Plan.  The Program constitutes a subplan implemented
under the Plan, to be administered in accordance with the terms of the
Plan.  Accordingly, all of the terms and
conditions of the Plan are hereby incorporated by reference, 

 

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and, if any provision of the Program or a
statement or document relating to Stock Units granted hereunder conflicts with
a provision of the Plan, the provision of the Plan shall govern.

 

4.             Stock Subject to the Program

 

Shares of Company Stock delivered upon settlement of
Stock Units under the Program shall be shares reserved and available under the
Plan.  Accordingly, Stock Units may be
granted under the Program if sufficient shares are then reserved and available
under the Plan, and the number of shares delivered in settlement of Stock Units
hereunder shall be counted against the shares reserved and available under the
Plan.  Awards may be granted under the
Plan even though the effect of such grants will be to reduce the number of
shares remaining available for grants hereunder.  Stock Units granted under the Program in
place of compensation under the Plan resulting from an award intended to comply
with the applicable requirements of section 162(m) of the Code shall be
subject to the annual per-person limitations under the Plan.  Stock Units granted under the Program in
place of compensation under the Company’s Pay-for-Performance Incentive Plan
shall be subject to annual per-person limitations under the Pay-for-Performance
Plan.

 

5.             Eligibility and Election

 

The Committee may select any person who is eligible
to be granted an Award under the Plan to be eligible to be granted Stock Units
under the Program in lieu of compensation otherwise payable to the person (such
persons are referred to herein as “Eligible SUA Participants”).  A Participant who is selected to be an
Eligible SUA Participant in one year will not necessarily be selected to be an
Eligible SUA Participant in a subsequent year. 
An Eligible SUA Participant may elect to participate in the Program and,
therefore, be a Current Participant for a calendar year by filing a written
irrevocable election with the Company prior to the beginning of that calendar
year.  Participation elections (for
persons who continue to be Eligible SUA Participants) will automatically carry
forward for subsequent calendar years unless the Participant irrevocably elects
in writing, by no later than the last day of the immediately preceding calendar
year, not to participate in the Program for a calendar year.  Notwithstanding the foregoing, an Eligible
SUA Participant may make an election to participate in the Program within 30
days after first becoming an Eligible SUA Participant, but, notwithstanding any
provision of this Program to the contrary, only with respect to compensation
earned for services provided after the effective date of the election, which,
in the case of bonus payable for a period beginning prior to and ending after
the effective date of the election, shall be prorated for the portion of the
period beginning after the effective date of the election.

 

6.             Mandatory Reduction of Bonus Compensation

 

(a)          (i)  Amount of Mandatory Reduction.  A Current Participant’s cash compensation
earned for the calendar year of participation shall be automatically reduced by
an amount determined in accordance with the following schedule:

 

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0%
of the first $200,000 of annual compensation;

15% of the next
$100,000 of annual compensation; and

20% of annual compensation in excess of $300,000.

 

The foregoing
notwithstanding, the Committee may, prior to the beginning of the calendar
year, adjust the schedule applicable to an individual Current Participant and
in no event will the amount by which cash compensation is reduced exceed the
amount of bonus payable to the Participant for the calendar year.  For purposes of the Program, the amount by
which cash compensation is reduced hereunder shall be calculated without regard
to any reductions in compensation resulting from Participant’s contributions
under any section 401(k), section 125, pension plan, or other plan of the Company
or a subsidiary, and such amount shall not be deemed a reduction in the Participant’s
compensation for purposes of any such section 401(k), section 125, pension
plan, or other plan of the Company or a subsidiary.  For the avoidance of doubt, effective for
bonus payments for calendar year 2008 that are due after December 31, 2008
and on or before March 15, 2009, references to annual compensation in this
Section 6 shall mean annual cash compensation and shall not include any
awards under the Company’s Equity Deferral Award Program.

 

(ii)  Grandfathered
Schedule.  In lieu of the schedule
set forth in Section 6(a)(i) above, each Current Participant who
participated in the Program for the portion of calendar year 2003 prior to June 30
and who made a one-time written election (in the form specified by the
Committee) on or prior to June 30, 2003 to have any and all mandatory reductions
under the Program based on the following schedule shall have all reductions hereunder
based on such following schedule:

 

5% of the first $100,000 of
annual compensation;

10% of the next $100,000 of annual compensation;

15% of the next $100,000 of annual compensation; and

20% of annual compensation in excess of 
$300,000.

 

(iii)  Program
Frozen After 2008.  This Program
shall not apply to compensation earned for any calendar year after calendar
year 2008, no such compensation shall be reduced under the Program, and no
Stock Units will be granted under the Program in respect of such compensation.  For the avoidance of doubt, this Program will
apply (in accordance with its terms, including Section 11 below) to annual
bonus for calendar year 2008 that is paid after December 31, 2008 and on
or before March 15, 2009.

 

(b)               Manner of Reduction of Compensation.  Amounts by which compensation is reduced
under Section 6(a)(i) or (ii) will be subtracted from bonus
amounts in respect of services during the year otherwise payable to the Current
Participant at or following the end of the first half of such year and at or following
the end of the year.  The amount by which
the bonus amount payable will be reduced following the end of the first half of
the year will be calculated based on a reasonable estimate of total
compensation for the year (i.e., in the case of a Current Participant employed
since the beginning of the year by calculating an estimated aggregate amount by
which compensation will be reduced for the year and 

 

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reducing the semi-annual bonus payment by
one-half of such amount), and will be calculated at the time the year-end bonus
amount otherwise becomes payable based on actual compensation for the year, taking
into account the amount by which compensation previously has been reduced for
the year (i.e., by calculating the actual amount by which compensation will be
reduced for the year and reducing the year-end bonus payment by that amount
less the amount by which the compensation was reduced previously in such year).

 

7.             Grant of Stock Units

 

(a)           Automatic Grant of Stock Units.  Except as set forth below, each Participant
shall be automatically granted Basic Stock Units as of the date the Participant’s
bonus would have otherwise been paid, in a number equal to the Participant’s Actual
Reduction Amount or Assigned Reduction Amount (as applicable) divided by the
Fair Market Value of a share of Company Stock on such date. In addition, each
Participant shall be automatically granted Matching Stock Units as of the date
the Participant’s bonus would have otherwise been paid, in a number equal to
20% of the number of Basic Stock Units granted under this Section 7(a) at
that date. Stock Units shall be credited to the Participant’s Account as of the
date of grant.  Other provisions of the
Program notwithstanding, no grant of Stock Units shall be effective until the
date of grant specified in this Section 7(a).

 

(b)           Risk of Forfeiture; Cancellation of Certain Stock Units.  The Basic Stock Units, together with any
Dividend Equivalents credited thereon, shall at all times be fully vested and
non-forfeitable.  Matching Stock Units
(together with any Dividend Equivalents credited thereon) will vest 100% on the
third anniversary of the date of grant, if the Participant remains continuously
employed by the Company through such vesting date; provided that (i) all
Matching Stock Units (together with Dividend Equivalents credited thereon) will
vest in full at the time of Retirement of the Participant or upon the
occurrence of a Change in Control, but in either such event the Matching Stock
Units shall continue to be settled on the schedule set forth in Section 8(a) below;
and (ii) all Matching Stock Units (together with Dividend Equivalents credited
thereon) will vest in full at the time a Participant’s employment terminates
due to his or her death or Disability, and all Stock Units held by such
Participant shall be settled, subject to Section 9(d) below, within 60
days thereafter.

 

If the Participant’s employment by the
Company terminates for any reason other than Retirement, death or Disability
prior to a vesting date, unless the Committee provides otherwise, all unvested
Matching Stock Units, together with any Dividend Equivalents credited thereon,
shall be forfeited to the Company.  The
foregoing notwithstanding, if, at the end of a given year (upon calculation of
year-end bonuses), the aggregate of the Participant’s Actual Reduction Amounts
and any Assigned Reduction Amounts used to determine the  number of Stock Units credited under Section 7(a) for
such year exceeds the amount by which the full-year’s compensation should have
been reduced under Section 6(a) (the “corrected full-year amount”),
the Participant shall be paid, prior to March 15 of the following year, in
cash, without interest, the amount (if any) by which such Actual Reduction
Amounts and Assigned Reduction Amounts exceeded such corrected full-year
amount, and any Stock Units (including Basic Stock Units and Matching Stock
Units relating thereto) credited to the 

 

6

 

Participant under Section 7 as a result of such excess Actual
Reduction Amounts and Assigned Reduction Amounts shall be cancelled.  Unless otherwise determined by the Administrator,
the Stock Units to be cancelled shall be cancelled from each of the semi-annual
grants in the proportion the Actual Reduction Amounts and Assigned Reduction
Amounts used in determining such semi-annual grant bore to the aggregate of the
Actual Reduction Amounts and Assigned Reduction Amounts used in determining all
grants of Stock Units over the full year.

 

(c)           Nontransferability. 
Stock Units and all rights relating thereto shall not be transferable or
assignable by a Participant, other than by will or the laws of descent and
distribution, and shall not be pledged, hypothecated, or otherwise encumbered
in any way or subject to execution, attachment, or similar process.

 

(d)           Dividend Equivalents on Stock Units.  Dividend Equivalents shall be credited on
Stock Units as follows:

 

(i)            Cash and Non-Company Stock Dividends.  If the Company declares and pays a dividend
or distribution on Company Stock in the form of cash or property other than
shares of Company Stock, then a number of additional Stock Units shall be
credited to a Participant’s Account as of the payment date for such dividend or
distribution equal to (i) the number of Stock Units credited to the
Account as of the record date for such dividend or distribution multiplied by (ii) the
amount of cash plus the fair market value of any property other than shares
actually paid as a dividend or distribution on each outstanding share of
Company Stock at such payment date, divided by (iii) the Fair Market Value
of a share of Company Stock at such payment date.

 

(ii)           Company Stock Dividends and Splits.  If the Company declares and pays a dividend
or distribution on Company Stock in the form of additional shares of Company
Stock, or there occurs a forward split of Company Stock, then a number of
additional Stock Units shall be credited to the Participant’s Account as of the
payment date for such dividend or distribution or forward split equal to (i) the
number of Stock Units credited to the Account as of the record date for such
dividend or distribution or split multiplied by (ii) the number of
additional shares of Company Stock actually paid as a dividend or distribution
or issued in such split in respect of each outstanding share of Company Stock.

 

(e)           Adjustments to Stock Units.  The number of Stock Units credited to each
Participant’s Account shall be appropriately adjusted, in order to prevent
dilution or enlargement of Participants’ rights with respect to such Stock
Units, to reflect any changes in the number of outstanding shares of Company
Stock resulting from any event referred to in Section 5.5 of the Plan,
taking into account any Stock Units credited to the Participant in connection
with such event under Section 7(d).

 

7

 

(f)            Fractional Shares. 
The number of Stock Units credited to a Participant’s Account shall
include fractional shares calculated to at least three decimal places, unless
otherwise determined by the Committee.

 

(g)           Accounts and Statements. The Administrator shall
establish, or cause to be established, an Account for each Participant.  An individual statement of each Participant’s
Account will be issued to each Participant not less frequently than
annually.  Such statements shall reflect
the Stock Units credited to the Participant’s Account, transactions therein
during the period covered by the statement, and other information deemed
relevant by the Administrator.  Such
statement may include information regarding other plans and compensatory
arrangements for Directors.

 

(h)           Consideration for Stock Units.  Stock Units shall be granted for the general
purposes set forth in Section 1 of the Program. Except as specified in Section 6
and 7 of the Program, a Participant shall not be required to pay any cash
consideration or other tangible or definable consideration for Stock
Units.  No negotiation shall take place
between the Company and any Participant as to the amount, timing, or other
terms of an award of Stock Units.

 

8.             Settlement

 

(a)           Issuance and Delivery of Shares in Settlement.  Except as otherwise provided in Section 7(b) above
in the case of a Participant’s death or Disability, Stock Units (together with
any Dividend Equivalents credited thereon) shall be settled by issuance and
delivery to the Participant (or following his or her death, to the Participant’s
designated beneficiary) of a number of shares of Company Stock equal to the
number of such Stock Units within 30 days of the third anniversary of the date
of grant of the Stock Units.

 

The Committee may, in its discretion, make
delivery of shares hereunder by depositing such shares into an account
maintained for the Participant (or of which the Participant is a joint owner,
with the consent of the Participant) established in connection with the Company’s
Employee Stock Purchase Plan or another plan or arrangement providing for
investment in Company Stock and under which the Participant’s rights are
similar in nature to those under a stock brokerage account.  If the Committee determines to settle Stock
Units by making a deposit of shares into such an account, the Company may
settle any fractional share by means of such deposit.  In other circumstances or if so determined by
the Committee, the Company shall instead pay cash in lieu of fractional shares,
on such basis as the Committee may determine. 
In no event will the Company in fact issue fractional shares.  Notwithstanding any provision of the Program
to the contrary, in the case of Stock Units  granted to employees of ITG Canada Corp., the
Committee may, in its discretion, settle such Stock Units by delivery of cash
equal to the Fair Market Value on the settlement date of the number of shares
of Company Stock equal to the number of such Stock Units.  Upon settlement of Stock Units, all
obligations of the Company in respect of such Stock Units shall be terminated,
and the shares so distributed shall no longer be subject to any restriction or
other provision of the Program.

 

8

 

(b)           Tax Withholding. 
The Company and any subsidiary may deduct from any payment to be made to
a Participant any amount that federal, state, local, or foreign tax law requires
to be withheld with respect to the settlement of Stock Units.  At the election of the Committee, the Company
may withhold from the shares of Company Stock to be distributed in settlement
of Stock Units that number of shares having a Fair Market Value, at the
settlement date, equal to the amount of such withholding taxes.

 

(c)           No Elective Deferral.  Participants may not elect to further defer
settlement of Stock Units or otherwise to change the applicable settlement date
under the Program.

 

9.             General Provisions

 

(a)           No Right to Continued Employment.  Neither the Program nor any action taken
hereunder, including the grant of Stock Units, will be construed as giving any
employee the right to be retained in the employ of the Company or any of its
subsidiaries, nor will it interfere in any way with the right of the Company or
any of its subsidiaries to terminate such employee’s employment at any time.

 

(b)           No Rights to Participate; No Stockholder Rights.  No Participant or employee will have any
claim to participate in the Program, and the Company will have no obligation to
continue the Program.  A grant of Stock
Units will confer on the Participant none of the rights of a stockholder of the
Company (including no rights to vote or receive dividends or distributions)
until settlement by delivery of Company Stock, and then only to the extent that
such Stock Unit has not otherwise been forfeited by the Participant.

 

(c)           Changes to the Program.  The Committee may amend, alter, suspend,
discontinue, or terminate the Program without the consent of Participants;
provided, however, that, without the consent of an affected Participant, no
such action shall materially and adversely affect the rights of such
Participant with respect to outstanding Stock Units.

 

(d)           Section 409A. 
It is intended that the Program and Stock Units issued hereunder comply
with section 409A of the Code (and any regulations and guidelines issued
thereunder) to the extent the Program and Stock Units are subject thereto, and
the Program and such Stock Units shall be interpreted on a basis consistent
with such intent.  If any award or
benefit hereunder cannot be provided or made at the time specified herein
without incurring sanctions on the Participant under section 409A of the Code,
then such award or benefit shall be provided in full at the earliest time
thereafter when such sanctions will not be imposed.  In no event shall a Participant, directly or
indirectly, designate the calendar year of payment. The Program may be amended
in any respect deemed by the Committee to be necessary in order to preserve
compliance with section 409A of the Code. 
Notwithstanding any provision to the contrary in this Program, if a
Participant is deemed on the date of his or her “separation from service”
(within the meaning of Treas. Reg. Section 1.409A-1(h)) with the Company
to be a “specified employee” (within the meaning of Treas. Reg. Section 1.409A-1(i)),
then with regard to any payment that is considered deferred compensation under Section 409A
payable on account of a “separation from service” that is required to be
delayed 

 

9

 

pursuant to Section 409A(a)(2)(B) of
the Code (after taking into account any applicable exceptions to such
requirement), such payment shall be made on the date that is the earlier of (i) the
expiration of the six (6)-month period measured from the date of the
Participant’s “separation from service,” or (ii) the date of the Participant’s
death (the “Delay Period”).  Upon the
expiration of the Delay Period, all payments delayed pursuant to this Section 9(d) (whether
they would have otherwise been payable in a single sum or in installments in
the absence of such delay) shall be paid to the Participant in a lump sum and
any remaining payments due under this Program shall be paid in accordance with
the normal payment dates specified for them herein.  Notwithstanding any provision of this Program
to the contrary, for purposes of any provision of this Program providing for
the payment of any amounts or benefits upon or following a termination of
employment, references to a Participant’s “termination of employment” (and corollary
terms) with the Company shall be construed to refer to the Participant’s “separation
from service” (within the meaning of Treas. Reg. Section 1.409A-1(h)) with
the Company.  Whenever a payment under
this Program specifies a payment period with reference to a number of days (e.g.,
“payment shall be made within thirty (30) days after termination of employment”),
the actual date of payment within the specified period shall be within the sole
discretion of the Company.

 

10.          Effective Date and Termination of Program

 

                The Program as set forth herein shall become
effective as of the Effective Date, and shall apply to deferrals from
compensation earned for periods on or after the Effective Date.  Unless earlier terminated under Section 9(c),
the Program shall terminate at such time after 2007 as no Stock Units
previously granted under the Program remain outstanding.

 

	
  Adopted
  by the Committee:

  	
  June 4,
  1998

  
	
  Amended
  and restated by the Committee:

  	
  February 25,
  1999

  
	
  Amended
  and restated by the Committee:

  	
  March 20,
  2002

  
	
  Amended
  and restated by the Committee:

  	
  September 3,
  2002

  
	
  Amended
  and restated by the Committee:

  	
  June 30,
  2003

  
	
  Amended
  and restated by the Board:

  	
  November 17,
  2005

  
	
  Amended
  and restated by the Committee:

  	
  March 20,
  2006

  
	
  Amended
  and restated by the Committee:

  	
  March 15,
  2007

  
	
  Amended
  and restated by the Committee:

  	
  November 26,
  2007

  
	
  Amended
  and restated by the Committee:

  	
  October 7 ,
  2008

  

 

11.          Special 2008 Election

 

Notwithstanding any
provision of the Program to the contrary, a Participant may elect in writing on
or before December 1, 2008 to cease participation in the Program effective
with respect to the reduction of bonus payments for calendar year 2008 that are
due after December 31, 2008 and on or before March 15, 2009, which
payments, if any, shall instead be made to the Participant in cash on the due
date for the bonus (which is after December 31, 2008 and on or before March 15,
2009).  For the avoidance of doubt, such
an election 

 

10

 

shall not affect any reduction
of compensation or grant of Stock Units under the Program during calendar year
2008 or earlier years.

 

11Exhibit 10(j)

 

CANTEL
MEDICAL CORP.

2006 EQUITY
INCENTIVE PLAN

 

1. Purpose. The
purpose of the Cantel Medical Corp. 2006 Equity Incentive Plan (“the Plan”) is
to attract and retain employees and Directors of the Company and its
Subsidiaries, and to provide such persons incentives and rewards for
performance, by making available to them stock options and other awards. It is
believed that these increased incentives and rewards stimulate the efforts of
employees and non-employee Directors towards the continued success of the
Company and its Subsidiaries.

 

2. Definitions. As
used in the Plan, the following terms shall have the meanings set forth below:

 

“Award” means any Option, Stock Appreciation Right, Restricted Stock
Award, Performance Award, or any other right, interest or option relating to
Shares granted pursuant to the provisions of the Plan.

 

“Award Agreement” means any written agreement, contract or other
instrument or document evidencing any Award granted by the Committee hereunder.

 

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

 

“Cause” means, unless otherwise provided in a particular Award
Agreement, “cause” as defined in any employment or severance agreement the
Participant may have with the Company or a Subsidiary or, if no such agreement
exists, (a) commission of any criminal act; (b) engaging in any act
involving dishonesty or moral turpitude; (c)  material violation of the
Company’s or any of its Subsidiaries’ written policies; (e) serious
neglect or misconduct in the performance of the Participant’s duties for the
Company or any of its Subsidiaries or willful or repeated failure or refusal to
perform such duties; in each case as determined by the Committee in its sole
discretion, which determination will be final, binding and conclusive.

 

“Change in Control” means the occurrence of any of the following
events: (i) at any time after the Effective Date at least a majority of
the Board shall cease to consist of “Continuing Directors” (meaning directors
of the Company who either were directors on the Effective Date or who
subsequently became directors and whose election, or nomination for election by
the Company’s stockholders, was approved by a majority of the then Continuing
Directors); or (ii) any “person” or “group” (as determined for purposes of
Section 13(d)(3) of the Exchange Act, except any majority-owned
subsidiary of the Company or any employee benefit plan of the Company or any
trust thereunder, shall have acquired “beneficial ownership” (as determined for
purposes of Securities and Exchange Commission (“SEC”) Regulation 13d-3) of
Shares having 40% or more of the voting power of all outstanding Shares, unless
such acquisition is approved by a majority of the directors of the Company in
office immediately preceding such acquisition; or (iii) a merger or
consolidation occurs to which the Company is a party, in which outstanding 

 

 

Shares are converted into shares of another company (other than a
conversion into shares of voting common stock of the successor corporation or a
holding company thereof representing 80% of the voting power of all capital
stock thereof outstanding immediately after the merger or consolidation) or
other securities (of either the Company or another company) or cash or other
property; or (iv) the sale of all, or substantially all, of the Company’s
assets occurs; or (v) the stockholders of the Company approve a plan of
complete liquidation of the Company.

 

“Change in Control Price” means, with respect to a Share, the average
per share closing sales price of a Share (rounded to four decimal places), as
reported on the New York Stock Exchange Consolidated Tape, over the ten
consecutive trading day period prior to and including the date of a Change in
Control; provided, however, that in the case of Incentive Stock Options, Change
in Control Price shall be the Fair Market Value of such Share on the date such
Incentive Stock Option is exercised or deemed exercised pursuant to Section 10(b).
To the extent the consideration paid in any such transaction described above
consists in full or in part of securities or other noncash consideration, the
value of such securities or other noncash consideration shall be determined in
the sole discretion of the Board.

 

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

 

“Committee” means the Compensation and Stock Option Committee of the
Board or such other person(s) or committee to whom it has delegated any
authority, as may be appropriate. A person may serve on the Compensation
Committee only if he or she (i) is a “Non-employee Director” for purposes
of Rule 16b-3 under the Exchange Act, and (ii) satisfies the
requirements of an “outside director” for purposes of Section 162(m) of
the Code.

 

“Company” means Cantel Medical Corp., a Delaware corporation.

 

“Covered Employee” means a “covered employee” within the meaning of Section 162(m)(3) of
the Code, or any successor provision thereto.

 

“Disability” means a permanent and total disability within the meaning
of Section 22(e)(3) of the Code.

 

“Director” means a member of the Board.

 

“Effective Date” means November 14, 2006, the date this Plan is
effective.

 

“Employee” means any employee of the Company or any Subsidiary. For any
and all purposes under this Plan, the term “Employee” shall not include a
person hired as an independent contractor, leased employee, consultant or a
person otherwise designated by the Committee, the Company or a Subsidiary at
the time of hire as not eligible to participate in or receive benefits under
the Plan or not on the payroll, even if such 

 

2

 

ineligible person is subsequently determined to be a common law
employee of the Company or a Subsidiary or otherwise an employee by any
governmental or judicial authority. Unless otherwise determined by the
Committee in its sole discretion, for purposes of the Plan, an Employee shall
be considered to have terminated employment or services and to have ceased to
be an Employee if his or her employer ceases to be a Subsidiary, even if he or
she continues to be employed by such employer.

 

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

 

“Fair Market Value” means, with respect to Shares, as of any date, the
closing sales price for the Shares as reported on the New York Stock Exchange
Consolidated Tape for that date or, if no closing price is reported for that
date, the closing sales price on the next preceding date for which such prices
were reported, unless otherwise determined by the Committee.

 

“Incentive Stock Option” means an Option granted under Section 6
that is intended to meet the requirements of Section 422 of the Code or
any successor provision thereto.

 

“Nonqualified Stock Option” means either an Option granted under Section 6
that is not intended to be an Incentive Stock Option or an Incentive Stock
Option that has been disqualified.

 

“Option” means any right granted to a Participant under the Plan
allowing such Participant to purchase Shares at such price or prices and during
such period or periods as the Committee shall determine.

 

“Participant” means an Employee or a non-employee member of the Board
who is selected by the Committee or the Board from time to time in their sole
discretion to receive an Award under the Plan.

 

“Performance Award” means any Award of Performance Shares granted
pursuant to Section 9.

 

“Performance Period” means that period established by the Committee at
the time any Performance Award is granted or at any time thereafter during
which any performance goals specified by the Committee with respect to such
Award are to be measured.

 

“Performance Share” means any grant pursuant to Section 9 of a
unit valued by reference to a designated number of Shares, which value may be
paid to the Participant by delivery of such property as the Committee shall
determine, including, without limitation, cash, Shares, other property, or any
combination thereof, upon achievement of such performance goals during the
Performance Period as the Committee shall establish at the time of such grant
or thereafter.

 

3

 

“Person” means any individual, corporation, partnership, association,
limited liability company, joint-stock company, trust, unincorporated
organization or government or political subdivision thereof.

 

“Restricted Stock” means any Share issued with the restriction that the
holder may not sell, transfer, pledge or assign such Share and with such other
restrictions as the Committee, in its sole discretion, may impose (including,
without limitation, any restriction on the right to vote such Share and the
right to receive any cash dividends), which restrictions may lapse separately
or in combination at such time or times, in installments or otherwise, as the
Committee may deem appropriate.

 

“Restricted Stock Award” means an award of Restricted Stock under Section 8.

 

“Shares” means the shares of common stock of the Company.

 

“Stock Appreciation Right” means any right granted to a Participant
pursuant to Section 7 to receive, upon exercise by the Participant, the
excess of (i) the Fair Market Value of one Share on the date of exercise
over (ii) the grant price of the right on the date of grant. Any payment
by the Company in respect of such right may be made in cash, Shares, other
property, or any combination thereof, as the Committee, in its sole discretion,
shall determine.

 

“Subsidiary” means a corporation, company or other entity in which the
Company beneficially owns, directly or indirectly, at least 50 percent of the
total combined voting stock or voting power.

 

“Substitute Awards” means Awards granted or Shares issued by the
Company in assumption of, or in substitution or exchange for, awards previously
granted, or the right or obligation to make future awards, by a company
acquired by the Company or with which the Company combines.

 

3. Administration.

 

(a) The Plan shall be
administered by the Committee. The Committee shall have full power and
authority, subject to such orders or resolutions not inconsistent with the
provisions of the Plan as may from time to time be adopted by the Board, to (a) select
the Employees of the Company and its Subsidiaries to whom Awards may from time
to time be granted hereunder; (b) determine the type or types of Award to
be granted to each Participant hereunder; (c) determine the number of
Shares to be covered by or relating to each Award granted hereunder; (d) determine
the terms and conditions, not inconsistent with the provisions of the Plan, of
any Award granted hereunder; (e) determine whether, to what extent and under
what circumstances Awards may be settled in cash, Shares or other property or
canceled or suspended; (f) determine whether, to what extent, and under
what circumstances payment of cash, Shares and other property payable with
respect to an Award made under the Plan shall be deferred either automatically
or at the election of the Participant; (g) interpret and administer the
Plan and any instrument or agreement 

 

4

 

entered into under the Plan; (h) establish such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and (i) make any other determination and take
any other action that the Committee deems necessary or desirable for
administration of the Plan. The decisions of the Committee shall be final,
conclusive and binding with respect to the interpretation and administration of
the Plan and any grant made under it. The Committee shall make, in its sole
discretion, all determinations arising in the administration, construction or
interpretation of the Plan and Awards under the Plan, including the right to
construe disputed or doubtful Plan or Award terms and provisions, and any such
determination shall be conclusive and binding on all persons, except as
otherwise provided by law. A majority of the members of the Committee may
determine its actions and fix the time and place of its meetings.

 

(b) Except as provided in Section 12, the Committee shall be
authorized to make adjustments in Performance Award criteria or in the terms
and conditions of other Awards in recognition of unusual or nonrecurring events
affecting the Company or its financial statements or changes in applicable
laws, regulations or accounting principles. The Committee may correct any
defect, supply any omission or reconcile any inconsistency in the Plan or any
Award in the manner and to the extent it shall deem desirable to carry it into
effect. In the event that the Company shall assume outstanding employee benefit
awards or the right or obligation to make future such awards in connection with
the acquisition of or combination with another corporation or business entity,
the Committee may, in its discretion, make such adjustments in the terms of
Awards under the Plan as it shall deem appropriate.

 

(c) The Committee shall have the right, from time to time, to
delegate to the Chief Executive Officer or one or more other officers of the
Company such duties or powers as the Committee may deem advisable with respect
to the designation of employees to be recipients of Awards and the nature and
size of any such Awards, subject to the requirements of Section 157(c) of
the Delaware General Corporation Law (or any successor provision) and such
other limitations as the Committee shall determine; provided, however, that (i) in
no event shall any such delegation of authority be permitted with respect to
Awards to any members of the Board or to any other person who is subject to Rule 16b-3
under the Exchange Act or Section 162(m) of the Code and (ii) the
resolution providing for such authorization sets forth the extent and
limitations of such authority, including without limitation the maximum size of
Awards and number of Awards that can be approved by the delegatee(s) in
any fiscal quarter. The Committee shall also be permitted to delegate, to any
appropriate officer or employee of the Company, responsibility for performing
certain ministerial and administrative functions under the Plan. In the event
that the Committee’s authority is delegated to officers or employees in
accordance with the foregoing, all provisions of the Plan relating to the
Committee shall be interpreted in a manner consistent with the foregoing by
treating any such reference as a reference to such officer or employee for such
purpose. Any action undertaken in accordance with the Committee’s delegation of
authority hereunder shall have the same force and effect as if such action was
undertaken directly by the Committee and shall be deemed for all purposes of
the Plan to have been taken by the Committee.

 

5

 

(d) Notwithstanding the foregoing to the contrary, any Awards or
formula for granting Awards under the Plan made to Non-Employee Directors shall
be approved by the Board. With respect to awards to such directors, all rights,
powers and authorities vested in the Committee under the Plan shall instead be
exercised by the Board, and all provisions of the Plan relating to the
Committee shall be interpreted in a manner consistent with the foregoing by
treating any such reference as a reference to the Board for such purpose.

 

(e) The terms and conditions of all Awards granted pursuant to the
Plan, including the grant date, shall be approved in writing by the Board,
Committee or Chief Executive Officer (or other permitted delegate), as the case
may be. The grant date for an Award shall be on or after, but never
earlier then, the date of such written approval. In no event shall the grant
date for an Award be changed after such approval.

 

4. Shares Subject to the Plan.

 

(a) Subject to adjustment as provided in Section 4(c), a
total of one million (1,000,000) Shares shall be authorized for issuance
pursuant to Awards granted under the Plan, of which (i) an aggregate of
five hundred thousand (500,000) Shares are authorized for issuance pursuant to
Options and Stock Appreciation Rights and (ii) an aggregate of five
hundred thousand (500,000) Shares are authorized for issuance pursuant to
Restricted Stock Awards and Performance Awards.

 

(b) Any Shares issued hereunder may consist, in whole or in part,
of authorized and unissued Shares, treasury Shares or Shares purchased in the
open market or otherwise.

 

(c) In the event of any change in the Shares by reason of any
merger, reorganization, consolidation, recapitalization, stock dividend, stock
split, reverse stock split, spin-off or similar transaction or any other change
in corporate structure affecting the Shares, (i) the maximum aggregate
number and kind of shares specified herein as available for the grant of
Awards, (ii) the number and kind of shares or the amount of cash or other
property that may be issued and delivered to Participants upon the exercise of
any Award or in payment with respect to any Award, that is outstanding at the
time of such change, (iii) the exercise or grant price per share of
Options or Stock Appreciation Rights subject to outstanding Awards granted
under the Plan, shall be correspondingly adjusted so as to prevent substantial
dilution or enlargement of the rights granted to, or available for, the
Participants hereunder.  Such adjustment
shall be automatic in the case of stock dividends, stock splits, reverse stock
splits and other transactions where the requisite adjustment is readily
ascertainable such that the Participant’s proportionate interest in the Company
or in the cash, Shares or other property issuable under an Award shall be
maintained to the same extent, as near as may be practicable, as immediately
before the occurrence of any such event. In all other cases, the adjustment
shall be made in such manner as the Compensation Committee, in its sole
discretion, may deem equitable to achieve the above stated purpose as near as
may be practicable; provided, however, that the number of Shares subject to any
Award shall always be a whole number and further 

 

6

 

provided that in no event may any change be made to an Incentive Stock
Option that would constitute a “modification” within the meaning of Section 424(h)(3) of
the Code.

 

(d) Any Shares that are not purchased or awarded under an Award
that has terminated or lapsed, either by its terms or pursuant to the exercise
(in whole or in part) of an Award granted under the Plan, may be used for the
further grant of Awards.

 

5. Eligibility. Any
Employee or non-employee Director shall be eligible to be selected as a
Participant; provided, however, that Incentive Stock Options shall only be
awarded to Employees of the Company, or a parent or subsidiary, within the
meaning of Section 422 of the Code. Notwithstanding any provision in this
Plan to the contrary, the Board shall have the authority, in its sole and
absolute discretion, to select non-employee members of the Board as
Participants who are eligible to receive Awards other than Incentive Stock
Options under the Plan. The Board shall set the terms of any such Awards in its
sole and absolute discretion, and the Board shall be responsible for
administering and construing such Awards in substantially the same manner that
the Committee administers and construes Awards to Employees.

 

6. Stock Options.
Options may be granted hereunder to any Participant, either alone or in
addition to other Awards granted under the Plan and shall be subject to the
following terms and conditions:

 

(a) Exercise Price. The exercise price per Share shall be not less
than the Fair Market Value of the Shares on the date the Option is granted.

 

(b) Number of Shares. The Option shall state the number of Shares
covered thereby.

 

(c) Exercise of Option. Unless otherwise determined by the
Committee, an Option will be deemed exercised by the optionee, or in the event
of death, an option shall be deemed exercised by the estate of the optionee, or
by a person who acquired the right to exercise such option by bequest or inheritance
or otherwise by reason of the death of the optionee, upon delivery of (i) a
notice of exercise to the Company or its representative, or by using other
methods of notice as the Committee shall adopt, and (ii) accompanying
payment of the exercise price in accordance with any restrictions as the
Committee shall adopt. The notice of exercise, once delivered, shall be
irrevocable.

 

(d) Term of Option. The Committee shall determine the option
exercise period of each Option. The period for Options shall not exceed ten
years from the grant date.

 

(e) First Exercisable Date. Subject to Section 10, no Option
may be exercised during the first year of its term or such longer period as may
be specified in the Option; provided, however, that the Committee may in its
discretion make any Options that are not yet exercisable immediately
exercisable.

 

(f) Termination of Option. Subject to Section 13 below, all
Options shall terminate upon their expiration, their surrender, upon breach by
the optionee of any provisions of the 

 

7

 

Option, or in accordance with any other rules and procedures
incorporated into the terms and conditions governing the Options as the
Committee shall deem advisable or appropriate.

 

(g) Incorporation by Reference. The Option shall contain a
provision that all the applicable terms and conditions of this Plan are
incorporated by reference therein.

 

(h) Deferred Payment. To the extent permitted by law, any Option
may provide for deferred payment of the exercise price from the proceeds of
sale through a bank or broker on a date satisfactory to the Company of some or
all of the shares to which such exercise relates. If any such deferral is to be
permitted by the Committee, the Committee shall establish rules and
procedures relating to such deferral in a manner intended to comply with the
requirements of Section 409A of the Code, including, without limitation,
the time when an election to defer may be made, the time period of the deferral
and the events that would result in payment of the deferred amount, the
interest or other earnings attributable to the deferral and the method of
funding, if any, attributable to the deferred amount.

 

(i) Other Provisions. The Option shall also be subject to such
other terms and conditions as the Committee shall deem advisable or
appropriate, consistent with the provisions of the Plan as herein set forth. In
addition, Incentive Stock Options shall contain such other provisions as may be
necessary to meet the requirements of the Code and the Treasury Department
rulings and regulations issued thereunder with respect to Incentive Stock
Options.

 

7. Stock Appreciation Rights. Stock
Appreciation Rights may be granted hereunder to any Participant either alone or
in addition to other Awards granted under the Plan. The provisions of Stock
Appreciation Rights need not be the same with respect to each recipient. The
Committee may impose such terms and conditions or restrictions on the exercise
of any Stock Appreciation Right, as it shall deem advisable or appropriate; provided that a Stock Appreciation Right
shall not have a grant price less than Fair Market Value of a Share on the date
of grant or a term of greater than ten years.

 

8. Restricted Stock.

 

(a) Issuance. A Restricted
Stock Award shall be subject to restrictions imposed by the Committee at the
time of grant for a period of time specified by the Committee (the “Restriction
Period”). Restricted Stock Awards may be issued hereunder to Participants for
no cash consideration or for such minimum consideration as may be required by
applicable law, either alone or in addition to other Awards granted under the
Plan. Any Restricted Stock grant shall also be subject to such other terms and
conditions as the Committee shall deem advisable or appropriate, consistent
with the provisions of the Plan as herein set forth.

 

(b) Registration. Any Restricted Stock issued hereunder may be
evidenced in such manner, as the Committee, in its sole discretion, shall deem
appropriate, including, 

 

8

 

without limitation, book entry registration or issuance of a stock
certificate or certificates. In the event any stock certificates are issued in
respect of Shares of Restricted Stock awarded under the Plan, such certificates
shall be registered in the name of the Participant and shall bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such Award.

 

(c) First Year Restriction. Subject to Section 10, Shares of
Restricted Stock awarded to a Participant shall be subject to forfeiture if the
employment or directorship of such Participant is terminated for any reason
within one year following the issuance date of such Restricted Stock or such
longer period as may be specified in the Restricted Stock Award; provided,
however, that the Committee may in its discretion permit “pro rata” accelerated
vesting of a Restricted Stock Award based on the number of days the Participant
was employed by the Company or Subsidiary or served as a director of the
Company during the one year period following such issuance date.  In addition, subject to the foregoing,
Restricted Stock Awards shall vest no more favorably than ratably (1/3, 1/3,
1/3) over three years commencing from the grant date.

 

9. Performance Awards. Performance
Awards may be paid in cash, Shares, other property, or any combination thereof,
and may be subject to such other terms and conditions as the Committee shall
deem advisable or appropriate, consistent with the provisions of the Plan as
set forth, in the sole discretion of the Committee at the time of payment. Each
grant of Performance Shares will specify the performance goals which, if
achieved, will result in payment or early payment of the award, and each grant
may specify in respect of such specified performance goals a level or levels of
achievement and will set forth a formula for determining the number of
Performance Shares that will be earned if performance is at or above the
minimum level or levels, but falls short of full achievement of the specified
performance goal. The performance levels to be achieved for each Performance
Period and the amount of the Performance Shares to be distributed shall be
conclusively determined by the Committee. Performance Awards may be paid in a
lump sum or in installments following the close of the Performance Period or,
in accordance with procedures established by the Committee, on a deferred
basis. The Committee may designate whether any Performance Award, either alone
or in addition to other Awards granted under the Plan, being granted to any
Employee is intended to be “performance-based compensation” as that term is
used in Section 162(m) of the Code. Any such awards designated to be “performance-based
compensation” shall be conditioned on the achievement of one or more
performance measures, to the extent required by Code Section 162(m), and
shall be issued in accordance with Section 12.

 

Subject to Section 10, Performance Shares awarded to an Employee
shall be subject to forfeiture if the employment of such Participant is
terminated for any reason within one year following the issuance date of such
Performance Shares or such longer period as may be specified in the Restricted
Stock Award; provided, however, that the Committee may in its discretion permit
(i) “pro rata” accelerated vesting of a Performance Award based on the
number of days the Participant was employed by the Company or Subsidiary during
the one year period following such issuance date.

 

9

 

10. Change In Control Provisions.

 

(a) Unless the Committee
or Board shall determine otherwise at the time of grant with respect to a
particular Award, and notwithstanding any other provision of the Plan to the
contrary, in the event a Participant’s employment or service is involuntarily
terminated without cause (as determined by the Committee or Board in its sole
discretion) during the 12-month period following a Change in Control:

 

(i)            any Options and Stock Appreciation
Rights outstanding, and which are not then exercisable and vested, shall become
immediately fully vested and exercisable;

 

(ii)           the
restrictions and deferral limitations applicable to any Restricted Stock shall
lapse, and such Restricted Stock shall immediately become free of all restrictions
and limitations and become fully vested and transferable to the full extent of
the original grant; and

 

(iii)          all
Performance Awards shall be considered to be earned and payable in full, based
on the applicable performance criteria or, if not determinable, at the target
level and any deferral or other restriction shall lapse and such Performance
Awards shall be immediately settled or distributed.

 

(b) Change in Control Cash Out. Notwithstanding any other
provision of the Plan, in the event of a Change in Control the Committee or
Board may, in its discretion, provide that each or any Award outstanding at the
time of the Change in Control shall, upon the occurrence of a Change in
Control, be cancelled in exchange for a cash payment to be made within 30 days
of the Change in Control in an amount equal to (i) with respect to an
Option or Stock Appreciation Right, the amount by which the Change in Control
Price per Share exceeds the exercise or grant price per Share under the Option
or Stock Appreciation Right (the “spread”) multiplied by the number of Shares
granted under the Option or Stock Appreciation Right and (ii) with respect
to Restricted Stock Awards and Performance Awards, an amount equal to the
Change in Control Price multiplied by the number of Shares issuable under the
Restricted Stock Award or Performance Award, as the case may be.

 

11.  Compliance with Section 409A of the Code.

 

(a) To the extent applicable, it is intended that this Plan and
any grants made hereunder comply with the provisions of Section 409A of
the Code. This Plan and any grants made hereunder shall be administrated in a
manner consistent with this intent, and any provision that would cause this
Plan or any grant made hereunder to fail to satisfy Section 409A of the
Code shall have no force and effect unless and until amended to comply with Section 409A
of the Code (which amendment may be retroactive to the extent permitted by Section 409A
of the Code and may be made by the Board without the consent of Participants).
Any reference in this Plan to Section 409A of the Code will also include
any proposed, temporary or final regulations, or any other guidance,
promulgated 

 

10

 

with respect to such Section by the U.S. Department of the Treasury
or the Internal Revenue Service.

 

(b) In order to determine for purposes of Section 409A of the
Code whether a Participant is in the service of a member of the Company’s
controlled group of corporations under Section 414(b) of the Code (or
by a member of a group of trades or businesses under common control with the
Company under Section 414(c) of the Code) and, therefore, whether the
Common Shares that are or have been purchased by or awarded under this Plan to
the Participant are shares of “service recipient” stock within the meaning of Section 409A
of the Code:

 

(i)            In applying Code Section 1563(a)(1),
(2) and (3) for purposes of determining the Company’s controlled
group under Section 414(b) of the Code, the language “at least 50
percent” is to be used instead of “at least 80 percent” each place it appears
in Code Section 1563(a)(1), (2) and (3), and

 

(ii)           In applying Treasury Regulation Section 1.414(c)-2
for purposes of determining trades or businesses under common control with the
Company for purposes of Section 414(c) of the Code, the language “at
least 50 percent” is to be used instead of “at least 80 percent” each place it
appears in Treasury Regulation Section 1.414(c)-2.

 

12. Code Section 162(M) Provisions.

 

(a) Notwithstanding any
other provision of the Plan if the Committee determines at the time, a
Performance Award is granted to a Participant who is then an officer that such
Participant is, or is likely to be as of the end of the tax year in which the
Company would ordinarily claim a tax deduction in connection with such Award, a
Covered Employee, then the Committee may provide that this Section 12 is
applicable to such Award.

 

(b) If a Performance Award
is subject to this Section 12, then the lapsing of restrictions thereon
and the distribution of cash, Shares or other property pursuant thereto, as
applicable, shall be subject to the achievement of one or more objective
performance goals established by the Committee, which shall be based on the
attainment of specified levels of one or any combination of the following:
revenues, cost reductions, operating income, income before taxes, net income,
adjusted net income, earnings per share, adjusted earnings per share, operating
margins, working capital measures, return on assets, return on equity, return
on invested capital, cash flow measures, market share, shareholder return or
economic value added of the Company or the Subsidiary or division of the
Company for or within which the Participant is primarily employed. Such
performance goals also may be based on the achievement of specified levels of
Company performance (or performance of an applicable Subsidiary) under one or
more of the measures described above relative to the performance of other
corporations. Such performance goals shall be set by the Committee within the
time period prescribed by, and shall otherwise comply with the requirements of,
Section 162(m) of the Code, or any successor provision thereto, and
the regulations thereunder.

 

11

 

(c) Notwithstanding any
provision of the Plan other than Section 10, with respect to any
Performance Award that is subject to this Section 12, the Committee may
adjust downwards, but not upwards, the amount payable pursuant to such Award,
and the Committee may not waive the achievement of the applicable performance
goals except in the case of the death or disability of the Participant, or
under such other conditions where such waiver will not jeopardize the treatment
of other Awards under this Section as “performance-based compensation”
under Section 162(m) of the Code.

 

(d) The Committee shall have the power to impose such other
restrictions on Awards subject to this Section 12 as it may deem necessary
or appropriate to ensure that such Awards satisfy all requirements for “performance-based
compensation” within the meaning of Section 162(m)(4)(C) of the Code,
or any successor provision thereto.

 

13. Termination of Service.

 

(a) Unless otherwise provided in the relevant Award Agreement,
upon the termination of a Participant’s service as an employee or non-employee
director of the Company or as an employee of one of its Subsidiaries (the date
of such termination referred to as the “Service Termination Date”):

 

(i)            Options and
Stock Appreciation Rights of such Participant shall terminate on the earlier of
(A) the date that the Option terminates or expires in accordance with its
terms or (B) the expiration of the following time periods after
termination of service with the Company or Subsidiary: (1) twelve months
if such service ceased due to death or Disability and (2) three months if
such service ceased as a result of a termination for any other reason; provided
that, in the event of a termination for Cause, such Participant’s right to any
further payments, vesting or exercisability with respect to any Award shall be
forfeited in its entirety;

 

(ii)           the Participant shall forfeit
each (i) share of Restricted Stock and (ii) Performance Share
held by the Participant at the Service Termination Date, as to which, as of
that date, any restrictions, conditions, or contingencies have not lapsed;
provided, however, that if the Participant paid an acquisition price for any of
such Restricted Stock, the Company shall fully reimburse the acquisition price
to the Participant on or promptly following the Service Termination Date.

 

(b) Notwithstanding anything set forth above, if a non-employee
director of the Company ceases to serve as a director of the Company for any
reason other than removal for cause, and such director has served as a
non-employee director of the Company for at least ten years and is at least 65
years of age on the Service Termination Date, then on the Service Termination
Date (i) all outstanding Options and Stock Appreciation Rights held by
such director on the Service Termination Date that are not then exercisable and
vested shall become immediately fully vested and exercisable, (ii) each
Option and Stock Appreciation Right held by such director on the Service
Termination Date shall remain exercisable and not terminate until the
expiration of the original term of such Option or Stock Appreciation Right, and
(iii) the restrictions and deferral limitations applicable to 

 

12

 

any Restricted Stock held by such director on the Service Termination
Date shall immediately become free of all restrictions and limitations and
become fully vested and transferable to the full extent of the original grant.

 

(c) Notwithstanding anything set forth above or in Section 6,
and unless the Committee determines otherwise, in the event that (i) the
holder of an Option or a Stock Appreciation Right dies, (ii) his
representative has a right to exercise such Option or Stock Appreciation Right
(the “Decedent’s Award”), (iii) the Decedent’s Award is not exercised by
the last day on which it is exercisable (the “Final Exercise Date”), and (iv) the
exercise or grant price per share is below the Fair Market Value of a Share on
such date, the Committee shall either (i) cancel the Option or Stock
Appreciation Right in exchange for a cash payment equal to the excess of (a) the
Fair Market Value of one Share on the Final Exercise Date over (b) the
exercise or grant price of the Decedent’s Award, multiplied by the number of
Shares granted under the Option or Stock Appreciation Right or (ii) deem
the Decedent’s Award to be exercised on the Final Exercise Date via a cashless
exercise procedure determined by the Committee, and in either case, the
resulting proceeds net of any required tax withholding shall be paid to the
representative.

 

14. Amendments and Termination.

 

(a) The Board may amend, alter, suspend, discontinue or terminate
the Plan or any portion thereof at any time; provided,
however, that no such amendment, alteration, suspension, discontinuation
or termination shall be made without (a) stockholder approval if such
approval is necessary to qualify for or comply with any tax or regulatory
requirement for which or with which the Board deems it necessary or desirable
to qualify or comply, (b) the consent of the affected Participant, if such
action would materially impair the rights of such Participant under any
outstanding Award or (c) approval of the holders of a majority of the
outstanding Common Stock with respect to any alteration or amendment to the
Plan which increases the maximum number of shares of Common Stock which may be
issued under the Plan, extends the term of the Plan or of options granted
thereunder, changes the eligibility criteria in Section 5, or reduces the
exercise or grant price below that now provided for in the Plan.

 

(b) The Committee may delegate to another committee, as it may
appoint, the authority to take any action consistent with the terms of the
Plan, either before or after an Award has been granted, which such other
committee deems necessary or advisable to comply with any government laws or
regulatory requirements of a foreign country, including but not limited to,
modifying or amending the terms and conditions governing any Awards, or
establishing any local country plans as sub-plans to this Plan. In addition,
under all circumstances, the Committee may make non-substantive administrative
changes to the Plan as to conform with or take advantage of governmental
requirements, statutes or regulations.

 

(c) The Committee may amend the terms of any Award theretofore
granted, prospectively or retroactively, but no such amendment shall (a) materially
impair the rights of any 

 

13

 

Participant without his or her consent or (b) except for
adjustments made pursuant to Section 4(c) or in connection with
Substitute Awards, reduce the exercise or grant price of outstanding Options or
Stock Appreciation Rights or cancel or amend outstanding Options or Stock
Appreciation Rights for the purpose of repricing, replacing or regranting such
Options or Stock Appreciation Rights with an exercise or grant price that is
less than the exercise or grant price of the original Options or Stock
Appreciation Rights without stockholder approval. Any change or adjustment to
an outstanding Incentive Stock Option shall not, without the consent of the
Participant, be made in a manner so as to constitute a “modification” that
would cause such Incentive Stock Option to fail to continue to qualify as an
Incentive Stock Option. Notwithstanding the foregoing, any adjustments made
pursuant to Section 4(c) shall not be subject to these restrictions.

 

(d) If permitted by Section 409A of the Code, in case of
termination of service by reason of death, disability or normal or early
retirement, or in the case of unforeseeable emergency or other special
circumstances, of a Participant who holds an Option or Stock Appreciation Right
not immediately exercisable in full, or any shares of Restricted Stock as to
which the substantial risk of forfeiture or the prohibition or restriction on
transfer has not lapsed, or any Performance Shares that have not been fully
earned, the Committee may, in its sole discretion, accelerate the time at which
such Option, Stock Appreciation Right or other award may be exercised or the
time at which such substantial risk of forfeiture or prohibition or restriction
on transfer will lapse or the time when such Restriction Period will end or the
time at which such Performance Shares will be deemed to have been fully earned
or may waive any other limitation or requirement under any such award, except
in the case of an award to a “covered employee” who is designated by the Board
as intended to satisfy the requirements for “qualified performance-based compensation”
under Section 162(m) of the Code where such action would result in
the loss of the otherwise available exemption of the award under Section 162(m) of
the Code.

 

15. Dividends. Subject
to the provisions of the Plan and any Award Agreement, the recipient of a
Restricted Stock Award may, if so determined by the Committee, be entitled to
receive, currently or on a deferred basis, cash or stock dividends, or cash
payments in amounts equivalent to cash or stock dividends on Shares (“dividend
equivalents”) with respect to the number of Shares covered by the Restricted
Stock Award, as determined by the Committee, in its sole discretion, and the
Committee may provide that such amounts (if any) shall be deemed to have been
reinvested in additional Shares or otherwise reinvested.

 

16. General Provisions.

 

(a) An Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Participant, only by the Participant or, in the event of a Participant’s legal
incapacity to do so, by his or her guardian or legal representative acting on
behalf of the Participant in a fiduciary capacity under state law and/or court
supervision.; provided that the Committee, in its sole discretion, may permit
additional 

 

14

 

transferability, on a general or specific basis, and may impose
conditions and limitations on any permitted transferability.

 

(b) No Employee shall have the right to be selected to receive an
Option or other Award under this Plan or, having been so selected, to be
selected to receive a future Award grant or Option. Neither the Award nor any
benefits arising out of this Plan shall constitute part of a Participant’s
employment or service contract with the Company or any Subsidiary and,
accordingly, this Plan and the benefits hereunder may be terminated at any time
in the sole and exclusive discretion of the Board without giving rise to
liability on the part of the Company or any Subsidiary for severance payments.
The Awards under this Plan are not intended to be treated as compensation for
any purpose under any other Company plan.

 

(c) No Employee shall have any claim to be granted any Award under
the Plan, and there is no obligation for uniformity of treatment of Employees
or Participants under the Plan.

 

(d) The prospective recipient of any Award under the Plan shall
not, with respect to such Award, be deemed to have become a Participant, or to
have any rights with respect to such Award, until and unless such recipient
shall have accepted any Award Agreement or other instrument evidencing the
Award.

 

(e) Nothing in the Plan or any Award granted under the Plan shall
be deemed to constitute an employment or service contract or confer or be
deemed to confer on any Employee or Participant any right to continue in the
employ or service of, or to continue any other relationship with, the Company
or any Subsidiary or limit in any way the right of the Company or any
Subsidiary to terminate an Employee’s employment or Participant’s service at
any time, with or without cause.

 

(f) All certificates for Shares delivered under the Plan pursuant
to any Award shall be subject to such stock-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Shares are then listed, and any applicable federal or
state securities law, and the Committee may cause a legend or legends to be put
on any such certificates to make appropriate reference to such restrictions.

 

(g) No Award granted hereunder shall be construed as an offer to
sell securities of the Company, and no such offer shall be outstanding, unless
and until the Committee in its sole discretion has determined that any such
offer, if made, would comply with all applicable requirements of the U.S.
federal securities laws and any other laws to which such offer, if made, would
be subject.

 

(h) Except as otherwise required in any applicable Award Agreement
or by the terms of the Plan, recipients of Awards under the Plan shall not be
required to make any payment or provide consideration other than the rendering
of services.

 

15

 

(i)The Company and its Subsidiaries shall be authorized to withhold
from any Award granted or payment due under the Plan the amount of withholding
taxes due in respect of an Award or payment hereunder and to take such other
action as may be necessary in the opinion of the Company or Subsidiary to
satisfy all obligations for the payment of such taxes. The Committee shall be
authorized to establish procedures for election by Participants to satisfy such
obligation for the payment of such taxes by delivery of or transfer of Shares
to the Company (to the extent the Participant has owned the surrendered shares
for more than six months if such a limitation is necessary to avoid a charge to
the Company for financial reporting purposes), or by directing the Company to
retain Shares (up to the employee’s minimum required tax withholding rate)
otherwise deliverable in connection with the Award.

 

(j) Nothing contained in the Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder approval
if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases.

 

(k) Any Award shall contain a provision that it may not be
exercised at a time when the exercise thereof or the issuance of shares
thereunder would constitute a violation of any federal or state law or listing
requirements of the New York Stock Exchange for such shares or a violation of
any foreign jurisdiction where Awards are or will be granted under the Plan.
The provisions of the Plan shall be construed, regulated and administered
according to the laws of the State of New York without giving effect to
principles of conflicts of law, except to the extent superseded by any
controlling Federal statute.

 

(l) If any provision of the Plan is or becomes or is deemed
invalid, illegal or unenforceable in any jurisdiction, or would disqualify the
Plan or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable laws or
if it cannot be construed or deemed amended without, in the determination of
the Committee, materially altering the intent of the Plan, it shall be stricken
and the remainder of the Plan shall remain in full force and effect.

 

(m) Awards may be granted to Participants who are foreign
nationals or employed outside the United States, or both, on such terms and
conditions different from those applicable to Awards to Employees employed in
the United States as may, in the judgment of the Committee, be necessary or
desirable in order to recognize differences in local law or tax policy. The
Committee also may impose conditions on the exercise or vesting of Awards in
order to minimize the Company’s obligation with respect to tax equalization for
Employees on assignments outside their home country.

 

(n) If approved by the Committee in its sole discretion, an
Employee’s absence or leave because of military or governmental service,
disability or other reason shall not be considered an interruption of
employment for any purpose under the Plan.

 

16. Term of Plan.
The Plan shall terminate on the tenth anniversary of the Effective Date, unless
sooner terminated by the Board pursuant to Section 14.

 

16

 

17. Compliance with Section 16.
With respect to Participants subject to Section 16 of the Exchange Act (“Members”),
transactions under the Plan are intended to comply with all applicable conditions
of Rule 16b-3 or its successors under the Exchange Act. To the extent that
compliance with any Plan provision applicable solely to such Members that is
included solely for purposes of complying with Rule 16b-3 is not required
in order to bring a transaction by such Member in compliance with Rule 16b-3,
it shall be deemed null and void as to such transaction, to the extent
permitted by law and deemed advisable by the Committee. To the extent any
provision in the Plan or action by the Committee involving such Members is
deemed not to comply with an applicable condition of Rule 16b-3, it shall
be deemed null and void as to such Members, to the extent permitted by law and
deemed advisable by the Committee.

 

17

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