Document:

Exhibit 4.8

 

DEFERRED SHARES AGREEMENT

PURSUANT TO

THE 2010 EQUITY AND INCENTIVE PLAN

OF

HAWAIIAN ELECTRIC INDUSTRIES, INC.

 

This
Deferred Shares Agreement (“Agreement”) is made and entered into as of [Date] (the “Date of Grant”), by and between Hawaiian Electric
Industries, Inc., a Hawaii corporation (the “Company”), and [Name] (the “Employee”). Capitalized terms not defined
herein shall have the meanings assigned to them in the 2010 Equity and
Incentive Plan of Hawaiian Electric Industries, Inc., as amended (the “Plan”).

 

WHEREAS,
the Compensation Committee of the Company’s Board of Directors or a
subcommittee thereof (hereinafter referred to as the “Committee”), appointed to
administer the Plan, has determined that it would be to the advantage and best
interest of the Company and its shareholders to grant to the Employee deferred
shares pursuant to the Plan as an inducement to the Employee to remain in the
service of the Company or its Subsidiaries and as a long-term incentive for
sustained high levels of performance for the Company and its Subsidiaries; and

 

WHEREAS,
the Committee has instructed the Company to issue said deferred shares as
authorized under the Plan, pursuant to the terms and conditions set forth
herein;

 

NOW,
THEREFORE, in consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto do hereby agree as follows:

 

1.             Number
of Units.  The Company hereby grants
to the Employee [number of shares] deferred shares
(the “Deferred Shares”), subject to all of the terms and conditions of this
Agreement and the Plan.

 

2.             Lapse
of Restrictions; Settlement.  Subject
to Section 4 below, the restrictions with respect to the Deferred Shares
shall lapse in accordance with the schedule attached hereto as Exhibit A.  Upon the lapse of restrictions relating to a
Deferred Share, the Company shall, no later than sixty (60) days following the
date on which such restrictions lapse, issue to the Employee (or the Employee’s
beneficiary designated on the form attached hereto as Exhibit B, as
the case may be), net of any withholding for taxes in accordance with Section 8
below, one share of Common Stock (in either certificated or book entry form) in
settlement of each Deferred Share with respect to which such restrictions have
lapsed.

 

3.             Adjustments
and Modifications.  In the event of a
Change in Capitalization, an appropriate and proportionate equitable adjustment
shall be made in accordance with Section 6 of the Plan in the number of Deferred
Shares subject to this Agreement. The Company will make cash payments in
settlement of any fractional shares at the time the shares of Common Stock are
issued.  This Agreement may also be
modified, in the discretion of the Committee, both with regard to the Vesting
Schedule attached as Exhibit A hereto and termination, by leaves of
absence, changes from full to part time employment, partial disability or other
changes in Employee’s status.

 

 

4.             Termination of Service.

 

(a)           If the Employee’s employment or
service with the Company or any Subsidiary is terminated for any reason (including,
but not limited to, voluntary termination by Employee and termination of
Employee without Cause, including, but not limited to, termination due to elimination
of Employee’s position) other than death, Disability or Retirement, the Employee
shall forfeit any or all of the Deferred Shares for which the restrictions have
not yet lapsed (the “Unvested Shares”).

 

(b)           If
the Employee’s employment or service with the Company or any Subsidiary is
terminated by reason of death, Disability or Retirement, then (i) restrictions
based on Performance Goals, if any, 
shall lapse based on actual performance during the full performance
period and (ii) restrictions based on lapse of time shall be deemed to
have lapsed pro-rata based on a ratio in which the numerator is the number of
completed months from the Date of Grant to the date of termination and the
denominator is the total number of months from the Date of Grant to the date
the restrictions lapse in accordance with the schedule set forth in Exhibit A
hereto, and the Employee shall forfeit all remaining Unvested Shares.  As used in this Agreement, a “month” is a
calendar month, and a “completed month” requires employment or service from the
first day through the last day of the month. 
However, in that calendar month in which the Deferred Shares are
granted, a completed month only requires employment or service from the Date of
Grant through the last day of that month.

 

(c)           Except
as provided in Sections 4(a) and 4(b) hereof, the restrictions on
Unvested Shares shall otherwise terminate in accordance with the schedule for
the lapse of the restrictions set forth in Exhibit A hereto.

 

5.             Notices.  All notices and other communications under
this Agreement shall be in writing and shall be given by hand delivery, facsimile
or first class mail and shall be deemed to have been duly given upon hand
delivery, or three days after mailing or 24 hours after transmission by facsimile.  Any notice to be given under the terms of
this Agreement to the Company shall be addressed to the Company in care of its
Secretary and any notice to be given to the Employee shall be addressed to him
at the address given beneath his signature hereto.  By a notice given pursuant to this Section 5,
either party may hereafter designate a different address for notices to be
given to such party.  Any notice which is
required to be given to the Employee shall, if the Employee is then deceased,
be given to the Employee’s personal representative if such representative has
previously informed the Company of his status and address by written notice
under this Section 5.

 

6.             Rights
as a Stockholder.  Subject to the
restrictions set forth in the Plan and this Agreement, the Employee shall not
have any of the rights or privileges of a stockholder of the Company with
respect to the Deferred Shares granted pursuant to this Agreement unless and
until shares of Common Stock have been issued and delivered to the Employee following
the lapse of restrictions on such Deferred Shares.  Notwithstanding the foregoing, the Employee
shall have the right to receive dividends with respect to the Deferred Shares,
which dividends shall accumulate and be paid upon the delivery of the underlying
shares of Common Stock in accordance with Section 2 hereof.  The dividends shall be calculated as follows:  on each date that a cash dividend is paid by
the Company while the Deferred Shares are outstanding, the 

 

2

 

Employee shall be credited with an amount in cash
equal to the aggregate dollar amount of the cash dividends that would have been
paid on the Deferred Shares had the Deferred Shares been issued as shares of
Common Stock on the date of the dividend. The amount of the cash dividends
credited to the Employee pursuant to this Section 6 shall be subject to
the same terms and conditions as are applicable to the Deferred Shares awarded
hereunder (including without limitation as to time of vesting and payment) and
may be reduced to satisfy any or all of a Employee’s tax liabilities owed in
connection with the Deferred Shares granted pursuant to this Agreement.

 

7.             Protections
Against Violations of Agreement.  No
purported sale, assignment, mortgage, hypothecation, alienation, transfer,
pledge, encumbrance, gift, transfer in trust or other disposition of, or
creation of a security interest in or lien on, any of the Deferred Shares (or
the underlying shares of Common Stock) by any holder thereof in violation of
the provisions of this Agreement or the Plan will be valid, and the Company
will not transfer any of such Deferred Shares on its books (or issue shares of
Common Stock in settlement thereof), nor will any dividends be credited with
respect thereto, unless and until there has been full compliance with such
provisions to the satisfaction of the Company. The foregoing restrictions are
in addition to and not in lieu of any other remedies, legal or equitable,
available to enforce said provisions.

 

8.             Taxes.  Upon the lapse of restrictions with respect
to the Deferred Shares (and/or any later settlement thereof), the Company shall
withhold from the shares of Common Stock issued and cash dividends otherwise
payable to the Employee an amount of taxes that the Company determines is the
statutory minimum it is required to withhold under applicable tax laws with
respect to the Deferred Shares and any cash dividends payable.  The amount withheld shall first be deducted
from the cash dividends payable and, to the extent insufficient, then from the
Common Stock that would otherwise be issued to the Employee.  The number of shares required to be withheld
shall be based on the Fair Market Value of the Common Stock on the settlement
date.  Any fractional share of Common
Stock resulting from such withholding shall be paid in cash.

 

Upon
the Employee’s attainment of Retirement eligibility before the lapse of
restrictions, any employment taxes thereafter (but prior to the lapse of
restrictions) payable by the Employee shall be satisfied by withholding from
the Employee’s regular salary payable immediately following the date the
employment tax obligation arises (and, to the extent insufficient, by cash
payment by the Employee).

 

9.             Failure
to Enforce Not a Waiver.  The failure
of the Company to enforce at any time any provision of this Agreement shall in
no way be construed to be a waiver of such provision or of any other provision
hereof.

 

10.           Governing
Law.  This Agreement shall be
governed by and construed according to the laws of the State of Hawaii without
regard to its principles of conflict of laws.

 

11.           Incorporation
of Plan.  The Plan is hereby
incorporated by reference and made a part hereof, and the Deferred Shares and
this Agreement shall be subject to all terms and conditions of the Plan.

 

3

 

12.           Entire
Agreement; Relationship to the Plan. 
This Agreement and the Plan set forth the sole entire agreement and
understanding between the parties as to the subject matter hereof, and merge
with and supersede all prior and contemporaneous discussions, agreements and
understandings of every and any nature between them with respect to the subject
matter hereof.  Except to the extent
provided in Section 3 or 15 hereof, and except to the extent that
provisions hereof are by their terms subject to any subsequent amendment of the
Plan, this Agreement may not be changed or modified, except by agreement in
writing, signed by the Company and the Employee.  In the event of any conflict or inconsistency
between this Agreement and the Plan as written on the Date of Grant, the Plan
shall govern.

 

13.           Survival
of Terms.  This Agreement shall apply
to and bind the Employee, the Employee’s heirs, legatees, executors and
administrators, the Company and the Company’s legal successors.

 

14.           Agreement
Not a Contract for Services.  Neither
the Plan, the granting of the Deferred Shares, this Agreement nor any other
action taken pursuant to the Plan shall constitute or be evidence of any
agreement or understanding, express or implied, that the Employee has a right
to continue to provide services as an officer, director, employee, consultant
or advisor of the Company or any Subsidiary or Affiliate of the Company for any
period of time or at any specific rate of compensation, or shall interfere with
or restrict in any way the rights of the Company and its Subsidiaries, which
are hereby expressly reserved, to discharge the Employee at any time for any
reason whatsoever, with or without Cause.

 

15.           Authority
of the Committee.  The Committee shall
have full authority to interpret and construe the terms of the Plan and this
Agreement. The determination of the Committee as to any such matter of
interpretation or construction, including, without limitation, as to any
adjustment or related matter under Section 3 hereof or any matter under Section 4
hereof, shall be final, binding and conclusive.

 

16.           Representations.  The Employee has reviewed with his or her own
tax advisors the federal, state, local and foreign tax consequences of the
transactions contemplated by this Agreement. The Employee is relying solely on
such advisors and not on any statements or representations of the Company or
any of its agents. The Employee understands that he or she (and not the
Company) shall be responsible for any tax liability that may arise as a result
of the transactions contemplated by this Agreement.

 

17.           Acceptance.  The Employee hereby acknowledges receipt of a
copy of the Plan and this Agreement. The Employee has read and understands the
terms and provisions thereof, and accepts the Deferred Shares subject to all of
the terms and conditions of the Plan and this Agreement. The Employee hereby
agrees to accept as binding, conclusive and final all decisions or interpretations
of the Committee upon any questions arising under the Plan and this Agreement.

 

18.           Committee
Action.  Execution of this Agreement by
the Chair or other member of the Committee signifies that this Agreement, the
award of Deferred Shares made hereby and the conditions upon which the
restrictions on the Deferred Shares shall lapse or be satisfied have been
approved by the Committee either at a meeting of the Committee or by the
unanimous written consent of its members.

 

4

 

19.           Section 409A.  To the extent applicable, it is intended that
this Agreement comply with the provisions of Section 409A (“Section 409A”)
of the Code.  This Agreement will be
administered and interpreted in a manner consistent with this intent, and any
provision that would cause this Agreement to fail to satisfy Section 409A
will have no force and effect until amended to comply therewith (which
amendment may be retroactive to the extent permitted by Section 409A).  Notwithstanding anything contained herein to
the contrary, the Employee shall not be considered to have terminated
employment with the Company for purposes of this Agreement and no payments
shall be due to the Employee under this Agreement which are payable upon the Employee’s
termination of employment unless the Employee would be considered to have
incurred a “separation from service” from the Company within the meaning of Section 409A.  To the extent required in order to avoid
accelerated taxation and/or tax penalties under Section 409A, amounts that
would otherwise be payable and benefits that would otherwise be provided
pursuant to the Agreement during the six-month period immediately following the
Employee’s termination of employment shall instead be paid on the first
business day after the date that is six months following the Employee’s
termination of employment (or upon the Employee’s death, if earlier).

 

20.           Severability.  If one or more of the provisions of this
Agreement shall be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby and the invalid, illegal or
unenforceable provisions shall be deemed null and void; provided, however, to
the extent permissible by law, any provisions which could be deemed null and
void shall first be construed, interpreted or revised retroactively to permit
this Agreement to be construed so as to foster the intent of this Agreement and
the Plan and to avoid any such finding of invalidity, illegality or
unenforceability.

 

21.           Headings.  Headings in this Agreement are used solely
for the convenience of the parties and shall not be deemed to be a limitation
upon or descriptive of the contents of any Section hereof.

 

22.           No
Limit on Other Arrangements.

 

(a)           Nothing
contained in this Agreement shall be construed to prevent the Company or any Subsidiary
thereof from adopting or continuing in effect other compensation arrangements,
which may, but need not, provide for the grant of any type of equity-based
award (subject to stockholder approval if such approval is required).

 

(b)           Nothing
contained in this Agreement shall be construed to prevent the Company or any Subsidiary
thereof from taking any corporate action which is deemed by it to be
appropriate or in its best interest, whether or not such action would have an
adverse effect on the Deferred Shares granted under this Agreement.  No employee, beneficiary or other person
shall have any claim against the Company or any subsidiary thereof as a result
of any such action.

 

23.           Signature
in Counterparts.  This Agreement may
be signed in two or more counterparts, each of which shall be deemed an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument.

 

5

 

IN WITNESS WHEREOF, the parties hereto have executed
and delivered this Agreement as of the Date of Grant.

 

 

	
   

  	
  HAWAIIAN ELECTRIC INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Chair or Member of the Compensation Committee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Senior Vice President, General Counsel, Secretary & Chief
  Administrative Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Employee’s
  Name: [Name]

  
	
   

  	
   

  
	
   

  	
  Employee’s
  Social Security Number: [SSN]

  
	
   

  	
   

  
	
   

  	
  Employee’s
  Address:

  
	
   

  	
   

  
	
   

  	
   

  

 

6

 

Exhibit A

 

VESTING SCHEDULE

 

Subject
to Sections 10 and 12 of the Plan and Section 4 of the Agreement to which
this Exhibit A is attached, the restrictions on the Deferred Shares
granted pursuant to this Agreement shall lapse if:

 

Employee
is continually employed by the Company or its Subsidiaries from the Date of
Grant through [DATE][.][;and]

 

[The
following Performance Goals are met: 
PERFORMANCE GOALS.]

 

 

Exhibit B

 

BENEFICIARY DESIGNATION

 

This
beneficiary designation is made in accordance with the Agreement to which this Exhibit B
is attached, the Employee hereby makes an:

 

o  INITIAL DESIGNATION OF
BENEFICIARY

OR

o  REVISED DESIGNATION OF
BENEFICIARY

 

I
hereby direct that, in the event of my death prior to delivery of the stock
certificates contemplated to be delivered by the Agreement to which this
Beneficiary Designation is attached, such stock certificates be issued in the
name of and be delivered to, and any cash amounts payable in accordance with
the Agreement be paid to:

 

	
  Name

  	
   

  	
    Relationship

  	
   

  
	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Social
  Security No.

  	
   

  	
    Date
  of Birth

  	
   

  
						

 

This
beneficiary designation revokes any and all other beneficiary designations
under the Agreement made prior to the date of this designation.

 

 

By
signing below, I acknowledge that I have read and understood the foregoing.

 

 

	
  Signed
  by

  	
   

  	
    Date

  	
   

  
	
   

  	
  Employee

  	
   

  	
   

  

 

Receipt
acknowledged

Hawaiian
Electric Industries, Inc.

 

	
  By

  	
   

  	
    DateExhibit 10.A

 

ECOLAB INC.

2010 STOCK INCENTIVE PLAN

 

1.             Purpose of Plan.

 

The purpose of the Ecolab
Inc. 2010 Stock Incentive Plan (the “Plan”) is to advance the interests of
Ecolab Inc. (the “Company”) and its stockholders by enabling the Company and
its Subsidiaries to attract and retain qualified individuals through
opportunities for equity participation in the Company, and to reward those
individuals who contribute to the achievement of the Company’ economic
objectives.

 

2.             Definitions.

 

The following terms will
have the meanings set forth below, unless the context clearly otherwise
requires:

 

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

 

2.2           “Broker Exercise Notice” means a written notice
pursuant to which a Participant, upon exercise of an Option, irrevocably
instructs a broker or dealer to sell a sufficient number of shares or loan a
sufficient amount of money to pay all or a portion of the exercise price of the
Option and/or any related withholding tax obligations and remit such sums to the
Company and directs the Company to deliver stock certificates to be issued upon
such exercise directly to such broker or dealer or their nominee.

 

2.3           “Cause” means (i) dishonesty, fraud,
misrepresentation, embezzlement or deliberate injury or attempted injury, in
each case related to the Company or any Subsidiary, (ii) any unlawful or
criminal activity of a serious nature, (iii) any intentional and
deliberate breach of a duty or duties that, individually or in the aggregate,
are material in relation to the Participant’s overall duties, or (iv) any
material breach of any confidentiality or noncompete agreement entered into
with the Company or any Subsidiary.

 

2.4           “Change in Control” means an event described in
Section 14.1 of the Plan; provided, however, if an Incentive Award
constitutes a deferral of compensation subject to Section 409A of the
Code, and if that Incentive Award provides for a change in the time or form of
payment upon a Change in Control, then no Change in Control shall be deemed to
have occurred upon an event described in Section 14.1 of the Plan unless
the event would also constitute, under Section 409A of the Code and the
regulations and rulings issued thereunder, either a change in the ownership or
effective control of the Company or in the ownership of a substantial portion
of the assets of the Company.

 

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

 

2.6           “Committee” means the group of individuals
administering the Plan, as provided in Section 3 of the Plan.

 

 

2.7           “Common Stock” means the common stock of the
Company, par value $1.00 per share, or the number and kind of shares of stock
or other securities into which such Common Stock may be changed in accordance
with Section 4.3 of the Plan.

 

2.8           “Covered Employee” means a person who is, or is
determined by the Committee to likely become, a “covered employee” (as defined
in Section 162(m)(3) of the Code).

 

2.9           “Disability” means the disability of the
Participant such as would entitle the Participant to receive disability income
benefits pursuant to the long-term disability plan of the Company or Subsidiary
then covering the Participant or, if no such plan exists or is applicable to
the Participant, the permanent and total disability of the Participant in the
sense that he or she is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for
a continuous period of not less than 12 months; provided, however, if
distribution of an Incentive Award subject to Section 409A of the Code is
or can be triggered by an Eligible Recipient’s Disability, such term will mean
that the Eligible Recipient is disabled as defined by Section 409A of the
Code and the regulations and rulings issued thereunder.

 

2.10         “Eligible Recipients” means all employees
(including, without limitation, officers and directors who are also employees)
of the Company or any Subsidiary, all Non-Employee Directors and any
consultants, advisors and independent contractors of the Company or any
Subsidiary.

 

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

 

2.12         “Fair Market Value” means, with respect to the
Common Stock, as of any date (or, if no shares were traded or quoted on such
date, as of the next preceding date on which there was such a trade or quote)
the mean between the reported high and low sale prices of the Common Stock
during the regular daily trading session, as quoted in the WALL STREET JOURNAL
reports of the New York Stock Exchange - Composite Quotations.

 

2.13         “Good Reason” means, without the express
written consent of the affected Participant, any of the following events
involving the Company or Subsidiary that employs or receives services from the
Participant:

 

(a)           the assignment to the Participant of any duties
inconsistent in any substantial respect with the Participant’s position,
authority or responsibilities as in effect during the 90-day period immediately
preceding the Change in Control which assignment results in a substantial
diminution in such position, authority or responsibilities or any other
substantial adverse change in such position (including titles), authority or
responsibilities, excluding an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by the Company or applicable
Subsidiary as set forth below;

 

(b)           any failure by the Company or applicable Subsidiary to
furnish the Participant with compensation and benefits at a level substantially
equal to or exceeding 

 

2

 

those received by the
Participant from the Company or applicable Subsidiary during the 90-day period
preceding the Change in Control, other than (i) an insubstantial and
inadvertent failure remedied by the Company or applicable Subsidiary as set
forth below, (ii) a reduction in compensation which is applied to all
non-union employees of the Company or applicable Subsidiary in the same dollar
amount or percentage, or (iii) a reduction or modification of any employee
benefit program covering substantially all of the employees of the Company or
applicable Subsidiary, which reduction or modification generally applies to all
employees covered under such program; or

 

(c)           the Company or applicable Subsidiary requiring the
Participant to be based or to perform services at any office or location that
is in excess of 50 miles from the principal location of the Participant’s work
during the 90-day period immediately preceding the Change in Control, except
for travel reasonably required in the performance of the Participant’s
responsibilities.

 

Before a termination by
the Participant under this Section 2.13 will constitute termination for
Good Reason, the Participant must give the Company a notice of termination
within 30 calendar days of the occurrence of the event that constitutes Good
Reason.  The notice must set forth in
reasonable detail the specific reason for the termination and the facts and
circumstances claimed to provide a basis for termination of employment under
the provision indicated.  Failure to
provide such notice within such 30-day period shall be conclusive proof that
the Participant does not have Good Reason to terminate employment.

 

For purposes of this Section 2.13,
Good Reason shall exist only if the Company or applicable Subsidiary fails to
remedy the event or events constituting Good Reason within 30 calendar days
after receipt of the notice of termination from the Participant.  If the Participant determines Good Reason for
termination exists and timely files a notice of termination, such determination
shall be presumed to be true and the Company will have the burden of proving
that Good Reason does not exist.

 

2.14         “Incentive Award” means an Option, Stock
Appreciation Right, Restricted Stock Award, Stock Unit Award or Performance
Award granted to an Eligible Recipient pursuant to the Plan.

 

2.15         “Incentive Stock Option” means a right to
purchase Common Stock granted to an Eligible Recipient pursuant to Section 6
of the Plan that qualifies as an “incentive stock option” within the meaning of
Section 422 of the Code.

 

2.16         “Non-Employee Director” means a member of the
Board who is not an employee of the Company or any Subsidiary.

 

2.17         “Non-Statutory Stock Option” means a right to
purchase Common Stock granted to an Eligible Recipient pursuant to Section 6
of the Plan that does not qualify as an Incentive Stock Option.

 

3

 

2.18         “Option” means an Incentive Stock Option or a
Non-Statutory Stock Option.

 

2.19         “Participant” means an Eligible Recipient who
receives one or more Incentive Awards under the Plan.

 

2.20         “Performance-Based Compensation” means an
Incentive Award to a Covered Employee that is intended to constitute “performance-based
compensation” within the meaning of Section 162(m)(4)(C) of the
Code.  Options and Stock Appreciation
Rights granted to Covered Employees are intended to be Performance-Based
Compensation.

 

2.21         “Performance Award” means a right granted to an
Eligible Recipient pursuant to Section 10 of the Plan to receive an amount
of cash, shares of Common Stock, or a combination of both, contingent upon
achievement of Performance Criteria or other objectives during a specified
period.

 

2.22         “Performance Criteria” means the performance
criteria that are used by the Committee in granting Incentive Awards contingent
upon achievement of performance goals over a specified performance period.  For any Incentive Award intended to constitute
Performance-Based Compensation, the Performance Criteria shall consist of one
or a combination of two or more of the following: net sales; operating income;
net income; net income per share (basic or diluted); earnings before or after
any one or more of taxes, interest, depreciation and amortization;
profitability as measured by return ratios (including return on invested
capital, return on assets, return on equity, return on investment and return on
sales); cash flow; market share; cost reduction goals; margins (including one
or more of gross, operating and net income margins); stock price; total return
to stockholders; economic value added; working capital and strategic plan
development and implementation.  The
Committee may select one criterion or multiple criteria for measuring
performance, and the measurement may be based upon Company, Subsidiary or
business unit performance, and may be expressed in absolute amounts, on a per
share basis, as a growth rate or change from preceding periods, or by relative
comparison to the performance of other companies or any other external measure
of the selected criteria.  The Committee
shall, in its sole discretion, define in an objective fashion the manner of
calculating the performance goals based on the Performance Criteria it selects
to use in any performance period, which may include adjustments to such
criteria as otherwise defined under U.S. Generally Accepted Accounting
Principles.

 

2.23         “Previously Acquired Shares” means shares of
Common Stock that are already owned by the Participant.

 

2.24         “Prior Plan” means the Ecolab Inc. 2005 Stock
Incentive Plan.

 

2.25         “Restricted Stock Award” means an award of
Common Stock granted to an Eligible Recipient pursuant to Section 8 of the
Plan that is subject to restrictions on transferability and a risk of
forfeiture.

 

4

 

2.26         “Retirement” means termination of employment or
service at or after age fifty-five (55) with five (5) or more years of
continuous employment or other service with the Company and any Subsidiaries.

 

2.27         “Securities Act” means the Securities Act of
1933, as amended.

 

2.28         “Stock Appreciation Right” means a right
granted to an Eligible Recipient pursuant to Section 7 of the Plan to
receive a payment from the Company, in the form of shares of Common Stock, cash
or a combination of both, equal to the difference between the Fair Market Value
of one or more shares of Common Stock and a specified exercise price of such
shares.

 

2.29         “Stock Unit Award” means a right granted to an Eligible
Recipient pursuant to Section 9 of the Plan to receive the Fair Market
Value of one or more shares of Common Stock, payable in cash, shares of Common
Stock, or a combination of both, the payment, issuance, retention and /or
vesting of which is subject to the satisfaction of specified conditions, which
may include achievement of Performance Criteria or other objectives.

 

2.30         “Subsidiary” means any entity that is directly
or indirectly controlled by the Company or any entity in which the Company has
a significant equity interest, as determined by the Committee.

 

2.31         “Substitute Award” means an Incentive Award
granted upon the assumption of, or in substitution or exchange for, outstanding
awards granted by a company or other entity acquired by the Company or any
Subsidiary or with which the Company or any Subsidiary combines.

 

2.32         “Tax Date” means the date any withholding tax
obligation arises under the Code for a Participant with respect to an Incentive
Award.

 

3.             Plan Administration.

 

3.1           The Committee.  The Plan will
be administered by the Board or by a committee of the Board.  So long as the Company has a class of its
equity securities registered under Section 12 of the Exchange Act, any
committee administering the Plan will consist solely of two or more members of
the Board who are “non-employee directors” within the meaning of Rule 16b-3
under the Exchange Act, who are “independent” as required by the listing
standards of the New York Stock Exchange and who are “outside directors” within
the meaning of Section 162(m) of the Code, but any action taken by
such a committee shall be valid and effective even if the members of such
committee at the time of such action are later determined not to have satisfied
all the requirements for membership specified above.  Such a committee, if established, will act by
majority approval of the members (unanimous approval with respect to action by
written consent), and a majority of the members of such a committee will
constitute a quorum.  As used in the
Plan, “Committee” will refer to the Board or to such a committee, if
established.  To the extent consistent
with applicable corporate law of the Company’s jurisdiction of incorporation,
the Committee may delegate to one or more of its members or to any officers of
the Company the 

 

5

 

duties, power and
authority of the Committee under the Plan pursuant to such conditions or
limitations as the Committee may establish; provided, however, that only the
Committee may exercise such duties, power and authority with respect to
Eligible Recipients who are subject to Section 16 of the Exchange Act or
whose compensation in the fiscal year may be subject to the limits on
deductible compensation pursuant to Section 162(m) of the Code.  The Committee may also delegate to one or
more agents or advisors such non-discretionary administrative duties or powers
as it deems advisable.  The Committee may
exercise its duties, power and authority under the Plan in its sole and
absolute discretion without the consent of any Participant or other party,
unless the Plan specifically provides otherwise.  Each determination, interpretation or other
action made or taken by the Committee pursuant to the provisions of the Plan
will be conclusive and binding for all purposes and on all persons, and no
member of the Committee will be liable for any action or determination made in
good faith with respect to the Plan or any Incentive Award granted under the
Plan.

 

3.2           Authority of the Committee.

 

(a)           In accordance with and subject to the provisions of
the Plan, the Committee will have the authority to determine all provisions of
Incentive Awards as the Committee may deem necessary or desirable and as
consistent with the terms of the Plan, including, without limitation, the
following:  (i) the Eligible
Recipients to be selected as Participants; (ii) the nature and extent of
the Incentive Awards to be made to each Participant (including the number of
shares of Common Stock to be subject to each Incentive Award, any exercise
price, the manner in which Incentive Awards will vest or become exercisable and
whether Incentive Awards will be granted in tandem with other Incentive Awards)
and the form of written or electronic agreement, if any, evidencing such
Incentive Award; (iii) the time or times when Incentive Awards will be
granted; (iv) the duration of each Incentive Award; and (v) the
restrictions and other conditions to which the payment or vesting of Incentive
Awards may be subject.  In addition, the
Committee will have the authority under the Plan in its sole discretion to (A) establish,
amend or rescind rules to administer the Plan; (B) interpret the Plan
and any Incentive Award or related agreement made under the Plan; (C) make
all other determinations necessary or desirable for the administration of the
Plan; and (D) pay the intrinsic value of any Incentive Award in the form
of cash, Common Stock or any combination of both.

 

(b)           Subject to Section 3.2(d) below, the
Committee will have the authority under the Plan to amend or modify the terms
of any outstanding Incentive Award in any manner, including, without
limitation, the authority to modify the number of shares or other terms and
conditions of an Incentive Award, extend the term of an Incentive Award, accelerate
the exercisability or vesting or otherwise terminate any restrictions relating
to an Incentive Award, accept the surrender of any outstanding Incentive Award
or, to the extent not previously exercised or vested, authorize the grant of
new Incentive Awards in substitution for surrendered Incentive Awards;
provided, however that (i) the amended or modified terms are permitted by
the Plan as then in effect; (ii) any Participant adversely affected by
such amended or modified terms shall have consented to such amendment or
modification unless such amendment is necessary to comply with applicable law
or stock exchange rules; and (iii) the authority to accelerate the
exercisability or vesting or 

 

6

 

otherwise terminate
restrictions relating to an Incentive Award may be exercised only in connection
with a Participant’s death, Disability or Retirement, in connection with a
Change in Control, or to the extent such actions involve an aggregate number of
shares of Common Stock not in excess of 5% of the number of shares available
for Incentive Awards under the first sentence of Section 4.1.

 

(c)           In the event of (i) any reorganization, merger,
consolidation, recapitalization, liquidation, reclassification, stock dividend,
stock split, combination of shares, rights offering, extraordinary dividend or
divestiture (including a spin-off) or any other change in corporate structure
or shares; (ii) any purchase, acquisition, sale, disposition or write-down
of a significant amount of assets or a significant business; (iii) any
change in accounting principles or practices, tax laws or other such laws or
provisions affecting reported results; (iv) any uninsured catastrophic
losses or extraordinary non-recurring items as described in Accounting
Principles Board Opinion No. 30 or in management’s discussion and analysis
of financial performance appearing in the Company’s annual report to
stockholders for the applicable year; or (v) any other similar change, in
each case with respect to the Company or any other entity whose performance is
relevant to the grant or vesting of an Incentive Award, the Committee (or, if
the Company is not the surviving corporation in any such transaction, the board
of directors of the surviving corporation) may, without the consent of any
affected Participant, amend or modify the vesting criteria (including
Performance Criteria and related performance goals) of any outstanding
Incentive Award that is based in whole or in part on the financial performance
of the Company (or any Subsidiary or division or other subunit thereof) or such
other entity so as equitably to reflect such event, with the desired result
that the criteria for evaluating such financial performance of the Company or
such other entity will be substantially the same (in the sole discretion of the
Committee or the board of directors of the surviving corporation) following
such event as prior to such event; provided, however, that (A) the amended
or modified terms are permitted by the Plan as then in effect and (B) with
respect to any Incentive Award intended to qualify as Performance-Based
Compensation, any such amendment or modification would not result in such
Incentive Award failing to qualify as “performance-based compensation” for
purposes of Section 162(m) of the Code.

 

(d)           Notwithstanding any other provision of this Plan other
than Section 4.3, the Committee may not, without prior approval of the
Company’s stockholders, seek to effect any re-pricing of any previously
granted, “underwater” Option by:  (i) amending
or modifying the terms of the Option to lower the exercise price; (ii) canceling
the underwater Option and granting either (A) replacement Options or Stock
Appreciation Rights having a lower exercise price; (B) Restricted Stock
Awards; or (C) Stock Unit Awards or Performance Awards in exchange; or (iii) repurchasing
the underwater Options.  For purposes of
this Section 3.2(d), an Option will be deemed to be “underwater” at any
time when the Fair Market Value of the Common Stock is less than the exercise
price of the Option.

 

(e)           In addition to the authority of the Committee under Section 3.2(b) and
notwithstanding any other provision of the Plan, the Committee may, in its sole

 

7

 

discretion, amend the
terms of the Plan or Incentive Awards with respect to Participants resident
outside of the United States or employed by a non-U.S. Subsidiary in order to
comply with local legal requirements, to otherwise protect the Company’s or
Subsidiary’s interests, or to meet objectives of the Plan, and may, where
appropriate, establish one or more sub-plans (including the adoption of any
required rules and regulations) for the purposes of qualifying for
preferred tax treatment under foreign tax laws. 
The Committee shall have no authority, however, to take action pursuant
to this Section 3.2(e): (i) to reserve shares or grant Incentive
Awards in excess of the limitations provided in Section 4.1; (ii) to
effect any re-pricing in violation of Section 3.2(d); (iii) to grant
Options having an exercise price less than 100% of the Fair Market Value of one
share of Common Stock on the date of grant in violation of Section 6.2; or
(iv) for which stockholder approval would then be required pursuant to Section 422
of the Code or Section 162(m) of the Code or the rules of the
New York Stock Exchange.

 

(f)            Notwithstanding anything in this Plan to the contrary,
the Committee will determine whether an Incentive Award is subject to the
requirements of Section 409A of the Code and, if determined to be subject
to Section 409A of the Code, the Committee will make such Incentive Award
subject to such written terms and conditions determined necessary or desirable
to cause such Incentive Award to comply in form with the requirements of Section 409A
of the Code.  Further, the Plan, as it
relates to Incentive Awards that are subject to Section 409A of the Code,
will be administered in a manner that is intended to comply with the
requirements of Section 409A of the Code and any regulations or rulings
issued thereunder.

 

4.             Shares Available for Issuance.

 

4.1           Maximum Number of Shares Available; Certain
Restrictions on Awards.  Subject to Section 4.2
and to adjustment as provided in Section 4.3 of the Plan, the maximum
number of shares of Common Stock that will be available for issuance under the
Plan will be 12,000,000, plus any Shares of Common Stock remaining available
for future grants under the Prior Plan on the effective date of this Plan.  The shares available for issuance under the
Plan may, at the election of the Committee, be either treasury shares or shares
authorized but unissued, and, if treasury shares are used, all references in
the Plan to the issuance of shares will, for corporate law purposes, be deemed
to mean the transfer of shares from treasury. 
Notwithstanding any other provisions of the Plan to the contrary, (i) no
Participant in the Plan may be granted Incentive Awards denominated in shares
of Common Stock relating to more than 2,000,000 shares of Common Stock in the
aggregate during any calendar year; (ii) no Participant in the Plan may be
granted Incentive Awards denominated in cash in an amount in excess of
$5,000,000 in the aggregate during any calendar year; and (iii) no more
than 12,000,000 shares of Common Stock may be issued pursuant to the exercise
of Incentive Stock Options granted under the Plan, with the foregoing share
limits subject, in each case, to adjustment as provided in Section 4.3 of
the Plan.

 

4.2           Accounting for Incentive Awards. 
Shares of Common Stock that are issued under the Plan or that are
potentially issuable pursuant to outstanding Incentive Awards will be applied
to reduce the maximum number of shares of Common Stock remaining available for
issuance 

 

8

 

under the Plan; provided,
however, that (A) the total number of shares remaining available for
issuance under the Plan shall be reduced by 2.5 shares for each share issued
pursuant to an Incentive Award other than an Option or a Stock Appreciation
Right, or potentially issuable pursuant to an outstanding Incentive Award other
than an Option or a Stock Appreciation Right; and (B) Substitute Awards
shall not reduce the maximum number of shares of Common Stock remaining
available for issuance under the Plan. 
Any shares of Common Stock subject to an Incentive Award, or to an award
granted under the Prior Plan that is outstanding on the effective date of this
Plan (a “Prior Plan Award”), that lapses, expires, is forfeited (including
issued shares forfeited under a Restricted Stock Award) or for any reason is
terminated unexercised or unvested or is settled or paid in cash or any form
other than shares of Common Stock shall, to the extent of such lapse,
expiration, forfeiture or settlement other than in shares of Common Stock,
automatically again become available for issuance under the Plan and
correspondingly increase the total number of shares available for issuance
under Section 4.1 (with such increase in connection with Incentive Awards
other than Options and Stock Appreciation Rights based on the same ratio
specified in clause (A) of the proviso to the first sentence of this Section 4.2).  Notwithstanding anything to the contrary in
this Section 4.2, the following shares of Common Stock will not again
become available for issuance under the Plan: (i) any shares which would
have been issued upon any exercise of an Option but for the fact that the
exercise price was paid by a “net exercise” pursuant to Section 6.4(b) or
any Previously Acquired Shares tendered (either actually or by attestation) by
a Participant in payment of the exercise price of an Option; (ii) any
shares withheld by the Company or Previously Acquired Shares tendered (either
actually or by attestation) by a Participant to satisfy any tax withholding
obligation with respect to an Incentive Award or a Prior Plan Award; (iii) shares
covered by a stock appreciation right issued under the Plan or the Prior Plan
that are not issued in connection with the stock settlement of the stock appreciation
right upon its exercise; or (iv) shares that are repurchased by the
Company using Option exercise proceeds.

 

4.3           Adjustments to Shares and Incentive Awards. 
In the event of any equity restructuring (within the meaning of FASB ASC
Topic 718, Compensation - Stock Compensation) that
causes the per share value of shares of Common Stock to change, such as a stock
dividend, stock split, spinoff, rights offering or recapitalization through an
extraordinary dividend, the Committee shall make such adjustments as it deems
equitable and appropriate to (i) the aggregate number and kind of shares
or other securities issued or reserved for issuance under the Plan, (ii) the
number and kind of shares or other securities subject to outstanding Incentive
Awards, (iii) the exercise price of outstanding Options and Stock
Appreciation Rights, and (iv) any maximum limitations prescribed by the
Plan with respect to certain types of Incentive Awards or the grants to
individuals of certain types of Incentive Awards.  In the event of any other change in corporate
capitalization, including a merger, consolidation, reorganization, or partial
or complete liquidation of the Company, such equitable adjustments described in
the foregoing sentence may be made as determined to be appropriate and
equitable by the Committee (or, if the Company is not the surviving corporation
in any such transaction, the board of directors of the surviving corporation)
to prevent dilution or enlargement of rights of Participants.  In either case, any such adjustment shall be
conclusive and binding for all purposes of the Plan.  No adjustment shall be made pursuant to this Section 4.3
in connection with the conversion of any convertible securities of the Company,
or in a manner that would cause 

 

9

 

Incentive Stock Options
to violate Section 422(b) of the Code or cause an Incentive
Award to be subject to adverse tax consequences under Section 409A
of the Code.

 

4.4           Effect of Plans Maintained by Acquired Companies. 
If a company acquired by the Company or any Subsidiary or with which the
Company or any Subsidiary combines has shares available under a pre-existing
plan approved by stockholders and not adopted in contemplation of such
acquisition or combination, the shares available for grant pursuant to the
terms of such pre-existing plan (as adjusted, to the extent appropriate, using
the exchange ratio or other adjustment or valuation ratio or formula used in
such acquisition or combination to determine the consideration payable to the
holders of common stock of the entities party to such acquisition or
combination) may be used for Incentive Awards under the Plan and shall not
reduce the shares of Common Stock authorized for issuance under the Plan.  Incentive Awards using such available shares
shall not be made after the date awards could have been made under the terms of
the pre-existing plan, absent the acquisition or combination, and shall only be
made to individuals who were not employees of the Company or any Subsidiary or
Non-Employee Directors prior to such acquisition or combination.

 

5.             Participation.

 

Participants in the Plan
will be those Eligible Recipients who, in the judgment of the Committee, have
contributed, are contributing or are expected to contribute to the achievement
of economic objectives of the Company or its Subsidiaries.  Eligible Recipients may be granted from time
to time one or more Incentive Awards, singly or in combination or in tandem
with other Incentive Awards, as may be determined by the Committee in its sole
discretion.  Incentive Awards will be
deemed to be granted as of the date specified in the grant resolution of the
Committee, which date will be the date of any related agreement with the
Participant.

 

6.             Options.

 

6.1           Grant.  An Eligible
Recipient may be granted one or more Options under the Plan, and such Options
will be subject to such terms and conditions, consistent with the other
provisions of the Plan, as may be determined by the Committee in its sole
discretion.  The Committee may designate
whether an Option is to be considered an Incentive Stock Option or a
Non-Statutory Stock Option.  To the
extent that any Incentive Stock Option granted under the Plan ceases for any
reason to qualify as an “incentive stock option” for purposes of Section 422
of the Code, such Incentive Stock Option will continue to be outstanding for
purposes of the Plan but will thereafter be deemed to be a Non-Statutory Stock
Option.

 

6.2           Exercise Price.  The per share
price to be paid by a Participant upon exercise of an Option will be determined
by the Committee in its discretion at the time of the Option grant, provided
that such price will not be less than 100% of the Fair Market Value of one
share of Common Stock on the date of grant, except in the case of Substitute
Awards.

 

6.3           Exercisability and Duration. 
An Option will become exercisable at such times and in such installments
and upon such terms and conditions as may be determined by the Committee in its
sole discretion at the time of grant (including without limitation (i) the

 

10

 

achievement of one or
more of the Performance Criteria; and/or that (ii) the Participant remain
in the continuous employ or service of the Company or a Subsidiary for a
certain period; provided, however, that no Option may be exercisable after 10
years from its date of grant.

 

6.4           Payment of Exercise Price.

 

(a)           The total purchase price of the shares to be purchased
upon exercise of an Option will be paid entirely in cash (including check, bank
draft or money order); provided, however, that the Committee, in its sole
discretion and upon terms and conditions established by the Committee, may
allow such payments to be made, in whole or in part, by (i) tender of a
Broker Exercise Notice; (ii) by tender, or attestation as to ownership, of
Previously Acquired Shares that have been held for the period of time necessary
to avoid a charge to the Company’s earnings for financial reporting purposes
and that are otherwise acceptable to the Committee; (iii) by a “net
exercise of the Option (as further described in paragraph (b), below); or (iv) by
a combination of such methods.

 

(b)           In the case of a “net exercise” of an Option, the
Company will not require a payment of the exercise price of the Option from the
Participant but will reduce the number of shares of Common Stock issued upon
the exercise by the largest number of whole shares that has a Fair Market Value
that does not exceed the aggregate exercise price for the shares exercised
under this method. Shares of Common Stock will no longer be outstanding under
an Option (and will therefore not thereafter be exercisable) following the
exercise of such Option to the extent of (i) shares used to pay the
exercise price of an Option under the “net exercise,” (ii) shares actually
delivered to the Participant as a result of such exercise and (iii) any
shares withheld for purposes of tax withholding pursuant to Section 13.1.

 

(c)           Previously Acquired Shares tendered or covered by an
attestation as payment of an Option exercise price will be valued at their Fair
Market Value on the exercise date.

 

6.5           Manner of Exercise.  An Option may
be exercised by a Participant in whole or in part from time to time, subject to
the conditions contained in the Plan and in the agreement evidencing such
Option, by giving written or electronic notice of exercise to the Company at
its principal executive office in St. Paul, Minnesota or through the procedures
established with any Company-appointed third-party administrator specifying the
number of shares of Common Stock as to which the Option is being exercised and
by paying in full the total exercise price for the shares of Common Stock to be
purchased in accordance with Section 6.4 of the Plan.

 

7.             Stock Appreciation Rights.

 

7.1           Grant.  An Eligible
Recipient may be granted one or more Stock Appreciation Rights under the Plan,
and such Stock Appreciation Rights will be subject to such terms and
conditions, consistent with the other provisions of the Plan, as may be
determined by the Committee in its sole discretion.  The Committee will have the sole discretion
to determine the form in which payment of the intrinsic value of Stock
Appreciation Rights will be made to a 

 

11

 

Participant (i.e., cash,
Common Stock or any combination thereof) or to consent to or disapprove the
election by a Participant of the form of such payment.

 

7.2           Exercise Price.  The exercise
price of a Stock Appreciation Right will be determined by the Committee, in its
discretion, at the date of grant but may not be less than 100% of the Fair
Market Value of one share of Common Stock on the date of grant, except as
provided in Section 7.4 below and except in the case of Substitute Awards.

 

7.3           Exercisability and Duration. 
A Stock Appreciation Right will become exercisable at such time and in
such installments as may be determined by the Committee in its sole discretion
at the time of grant; provided, however, that no Stock Appreciation Right may be
exercisable after 10 years from its date of grant.  A Stock Appreciation Right will be exercised
by giving notice in the same manner as for Options, as set forth in Section 6.5
of the Plan.

 

7.4           Grants in Tandem with Options. 
Stock Appreciation Rights may be granted alone or in addition to other
Incentive Awards, or in tandem with an Option, either at the time of grant of
the Option or at any time thereafter during the term of the Option.  A Stock Appreciation Right granted in tandem
with an Option shall cover the same number of shares of Common Stock as covered
by the Option (or such lesser number as the Committee may determine), shall be
exercisable at such time or times and only to the extent that the related
Option is exercisable, have the same term as the Option and shall have an
exercise price equal to the exercise price for the Option.  Upon the exercise of a Stock Appreciation
Right granted in tandem with an Option, the Option shall be canceled
automatically to the extent of the number of shares covered by such exercise;
conversely, upon exercise of an Option having a related Stock Appreciation
Right, the Stock Appreciation Right shall be canceled automatically to the
extent of the number of shares covered by the Option exercise.

 

8.             Restricted Stock Awards.

 

8.1           Grant.  An Eligible
Recipient may be granted one or more Restricted Stock Awards under the Plan,
and such Restricted Stock Awards will be subject to such terms and conditions,
consistent with the other provisions of the Plan, as may be determined by the
Committee in its sole discretion.  The
Committee may impose such restrictions or conditions, not inconsistent with the
provisions of the Plan, to the vesting of such Restricted Stock Awards as it
deems appropriate, including, without limitation, (i) the achievement of
one or more of the Performance Criteria; and/or that (ii) the Participant
remain in the continuous employ or service of the Company or a Subsidiary for a
certain period.

 

8.2           Rights as a Stockholder; Transferability. 
Except as provided in Sections 8.1, 8.3, 8.4 and 15.3 of the Plan, a
Participant will have all voting, dividend, liquidation and other rights with
respect to shares of Common Stock issued to the Participant as a Restricted
Stock Award under this Section 8 upon the Participant becoming the holder
of record of such shares as if such Participant were a holder of record of
shares of unrestricted Common Stock.

 

8.3           Dividends and Distributions. 
Unless the Committee determines otherwise in its sole discretion (either
in the agreement evidencing the Restricted Stock Award at the time of 

 

12

 

grant or at any time
after the grant of the Restricted Stock Award), any dividends or distributions
(other than regular quarterly cash dividends in the case of Restricted Stock
Awards that are subject only to service-based vesting conditions) paid with
respect to shares of Common Stock subject to the unvested portion of a
Restricted Stock Award will be subject to the same restrictions as the shares
to which such dividends or distributions relate.  The Committee will determine in its sole
discretion whether any interest will be paid on such restricted dividends or
distributions.  In its discretion, the
Committee may provide in any award agreement evidencing a Restricted Stock
Award for the waiver by the Participant of any right to receive dividends and
distributions with respect to shares of Common Stock subject to the unvested
portion of the Restricted Stock Award.

 

8.4           Enforcement of Restrictions. 
To enforce the restrictions referred to in this Section 8, the
Committee may place a legend on the stock certificates referring to such
restrictions and may require the Participant, until the restrictions have
lapsed, to keep the stock certificates, together with duly endorsed stock
powers, in the custody of the Company or its transfer agent, or to maintain
evidence of stock ownership, together with duly endorsed stock powers, in a
certificateless book-entry stock account with the Company’s transfer agent.

 

9.             Stock Unit Awards.

 

An Eligible Recipient may
be granted one or more Stock Unit Awards under the Plan, and such
Stock Unit Awards will be subject to such terms and conditions, consistent
with the other provisions of the Plan, as may be determined by the Committee in
its sole discretion.  The Committee may
impose such restrictions or conditions, not inconsistent with the provisions of
the Plan, to the payment, issuance, retention and/or vesting of such Stock Unit
Awards as it deems appropriate, including, without limitation, (i) the
achievement of one or more of the Performance Criteria; and/or that (ii) the
Participant remain in the continuous employ or service of the Company or a
Subsidiary for a certain period.  The
agreement evidencing a Stock Unit Award shall either (i) provide that in
all cases payment of the Stock Unit Award will be made within two and one-half
months following the end of the Eligible Recipient’s tax year during which
receipt of the Stock Unit Award is no longer subject to a “substantial risk of
forfeiture” within the meaning of Section 409A of the Code, or (ii) contain
terms and conditions necessary to avoid adverse tax consequences specified in Section 409A
of the Code.

 

10.           Performance Awards.

 

An Eligible Recipient may
be granted one or more Performance Awards under the Plan, and such Performance
Awards will be subject to such terms and conditions, if any, consistent with
the other provisions of the Plan, as may be determined by the Committee in its
sole discretion, including, but not limited to, the achievement of one or more
of the Performance Criteria.  The
agreement evidencing a Performance Award shall either (i) provide that in
all cases payment of the Performance Award will be made within two and one-half
months following the end of the Eligible Recipient’s tax year during which
receipt of the Performance Award is no longer subject to a “substantial risk of
forfeiture” within the meaning of Section 409A of the Code, or (ii) contain
terms and conditions necessary to avoid adverse tax consequences specified in Section 409A
of the Code.

 

13

 

11.           Minimum Vesting Periods.

 

Except as otherwise
provided in this Section 11, (i) Restricted Stock Awards and Stock
Unit Awards that vest solely as a result of the passage of time and continued
service by the Participant shall be subject to a vesting period of not less
than three years from the date of grant of the applicable Incentive Award (but
permitting pro rata vesting over such time); and (ii) Restricted Stock
Awards, Stock Unit Awards and Performance Awards whose vesting is subject to
the achievement of specified Performance Criteria over a performance period
shall be subject to a performance period of not less than one year from the
date of grant of the applicable Incentive Award.  The minimum vesting periods specified in
clauses (i) and (ii) of the preceding sentence shall not apply: (A) to
Incentive Awards made in payment of earned performance-based Incentive Awards
and other earned cash-based incentive compensation; (B) to a termination
of employment due to death, Disability or Retirement; (C) upon a Change in
Control; (D) to a Substitute Award that does not reduce the vesting period
of the award being replaced; or (E) to Incentive Awards involving an
aggregate number of shares of Common Stock not in excess of 5% of the number of
shares available for Incentive Awards under the first sentence of Section 4.1.

 

12.           Effect of Termination of Employment or Other Service.

 

The following provisions
shall apply upon termination of a Participant’s employment or other service
with the Company and all Subsidiaries, except to the extent that the Committee
provides otherwise in an agreement evidencing an Incentive Award at the time of
grant or determines pursuant to Section 12.4.

 

12.1         Termination of Employment Due to Death or Disability. 
In the event a Participant’s employment or other service with the
Company and all Subsidiaries is terminated by reason of death or Disability:

 

(a)           All outstanding Options and Stock Appreciation Rights
then held by the Participant will become immediately exercisable in full and will
remain exercisable for a period of five years after such termination (but in no
event after the expiration date of any such Option or Stock Appreciation
Right).

 

(b)           All unvested Restricted Stock Awards and Stock Unit
Awards then held by the Participant that are subject only to service-based
vesting conditions will become fully vested.

 

(c)           The service-based vesting conditions associated with
all unvested Restricted Stock Awards, Stock Unit Awards and Performance Awards
then held by the Participant that are also subject to the achievement of
specified Performance Criteria over a performance period as a condition of
vesting will be deemed satisfied, but vesting of such Incentive Awards shall
occur only when and to the extent the applicable Performance Criteria are
satisfied.

 

14

 

12.2         Termination of Employment Due to Retirement. 
Subject to Section 12.5 of the Plan, in the event a Participant’s
employment or other service with the Company and all Subsidiaries is terminated
by reason of Retirement:

 

(a)           All outstanding Options and Stock Appreciation Rights
then held by the Participant that have been outstanding for at least six months
from the applicable date of grant will become immediately exercisable in full
and will remain exercisable for a period of five years after such termination
(but in no event after the expiration date of any such Option or Stock
Appreciation Right), and any Options and Stock Appreciation Rights then held by
the Participant that have not been outstanding for at least six months will
terminate and be forfeited.

 

(b)           All unvested Restricted Stock Awards and Stock Unit
Awards then held by the Participant that are subject only to service-based
vesting conditions will terminate and be forfeited.

 

(c)           The service-based vesting conditions associated with
all unvested Restricted Stock Awards, Stock Unit Awards and Performance Awards
then held by the Participant that are also subject to the achievement of
specified Performance Criteria over a performance period as a condition of
vesting shall be deemed satisfied if such Incentive Awards have been
outstanding for at least six months from the applicable date of grant, but
vesting of such Incentive Awards will occur only when and to the extent the
applicable Performance Criteria are satisfied; any such Incentive Awards then
held by the Participant that have not been outstanding for at least six months
will terminate and be forfeited.

 

12.3         Termination of Employment for Reasons Other than
Death, Disability or Retirement. Subject to Section 12.5 of the Plan, in the
event a Participant’s employment or other service is terminated with the
Company and all Subsidiaries for any reason other than death, Disability or
Retirement, or a Participant is in the employ or service of a Subsidiary and
the Subsidiary ceases to be a Subsidiary of the Company (unless the Participant
continues in the employ or service of the Company or another Subsidiary):

 

(a)           All outstanding Options and Stock Appreciation Rights
then held by the Participant will, to the extent exercisable as of such
termination, remain exercisable for a period of three months after such
termination (but in no event after the expiration date of any such Option or
Stock Appreciation Right), and will, to the extent not exercisable as of such
termination, terminate and be forfeited.

 

(b)           All unvested Restricted Stock Awards, Stock Unit
Awards and Performance Awards then held by the Participant will terminate and
be forfeited.

 

12.4         Modification of Rights Upon Termination. 
Notwithstanding the other provisions of this Section 12, upon a
Participant’s termination of employment or other service with the Company and
all Subsidiaries, the Committee may, in its sole discretion (which may be
exercised at any time on or after the date of grant, including following such
termination), except as

 

15

 

provided in clauses (ii) and
(iii) below, cause Options or Stock Appreciation Rights (or any part
thereof) then held by such Participant to terminate, become or continue to
become exercisable and/or remain exercisable following such termination of
employment or service, and Restricted Stock Awards, Stock Unit Awards or
Performance Awards then held by such Participant to terminate, vest and/or
continue to vest or become free of restrictions and conditions to payment, as
the case may be, following such termination of employment or service, in each
case in the manner determined by the Committee; provided, however, that (i) no
Incentive Award may remain exercisable or continue to vest for more than two
years beyond the date such Incentive Award would have terminated if not for the
provisions of this Section 12.4 but in no event beyond its expiration
date; (ii) any such action adversely affecting any outstanding Incentive
Award will not be effective without the consent of the affected Participant
(subject to the right of the Committee to take whatever action it deems
appropriate under Sections 3.2(c), 4.3 and 14 of the Plan); and (iii) such
actions (other than termination of an Incentive Award) occurring other than in
connection with the death, Disability or Retirement of a Participant shall not
involve an aggregate number of shares of Common Stock in excess of 5% of the
number of shares available for Incentive Awards under the first sentence of Section 4.1).

 

12.5         Effects of Actions Constituting Cause. 
Notwithstanding anything in the Plan to the contrary, in the event that
a Participant is determined by the Committee, acting in its sole discretion, to
have committed any action which would constitute Cause as defined in Section 2.3,
irrespective of whether such action or the Committee’s determination occurs
before or after termination of such Participant’s employment with the Company or
any Subsidiary, all rights of the Participant under the Plan and any agreements
evidencing an Incentive Award then held by the Participant shall terminate and
be forfeited without notice of any kind. 
The Company may defer the exercise of any Option, the vesting of any
Restricted Stock Award or the payment of any Stock Unit Award or Performance
Award for a period of up to forty-five (45) days in order for the Committee to
make any determination as to the existence of Cause.

 

12.6         Determination of Termination of Employment or Other
Service.

 

(a)           The change in a Participant’s status from that of an
employee of the Company or any Subsidiary to that of a non-employee consultant
or advisor of the Company or any Subsidiary will, for purposes of the Plan, be
deemed to result in a termination of such Participant’s employment with the
Company and its Subsidiaries, unless the Committee otherwise determines in its
sole discretion.

 

(b)           The change in a Participant’s status from that of a
non-employee consultant or advisor of the Company or any Subsidiary to that of
an employee of the Company or any Subsidiary will not, for purposes of the
Plan, be deemed to result in a termination of such Participant’s service as a
non-employee consultant or advisor with the Company and its Subsidiaries, and
such Participant will thereafter be deemed to be an employee of the Company or
its Subsidiaries until such Participant’s employment is terminated, in which
event such Participant will be governed by the provisions of this Plan relating
to termination of employment (subject to paragraph (a), above).

 

16

 

(c)           Unless the Committee otherwise determines in its sole
discretion, a Participant’s employment or other service will, for purposes of the
Plan, be deemed to have terminated on the date recorded on the personnel or
other records of the Company or the Subsidiary for which the Participant
provides employment or other service, as determined by the Committee in its
sole discretion based upon such records; provided, however, if distribution or
payment of an Incentive Award subject to Section 409A of the Code is
triggered by a termination of a Participant’s employment, such termination must
also constitute a “separation from service” within the meaning of Section 409A
of the Code.

 

13.           Payment of Withholding Taxes.

 

13.1         General Rules.  The Company
is entitled to (a) withhold and deduct from future wages of the
Participant (or from other amounts that may be due and owing to the Participant
from the Company or a Subsidiary), or make other arrangements for the
collection of, all legally required amounts necessary to satisfy any and all
federal, foreign, state and local withholding and employment-related tax
requirements attributable to an Incentive Award, including, without limitation,
the grant, exercise or vesting of, or payment of dividends with respect to, an
Incentive Award or a disqualifying disposition of stock received upon exercise
of an Incentive Stock Option; (b) withhold cash paid or payable or shares
of Common Stock from the shares issued or otherwise issuable to the Participant
in connection with an Incentive Award; or (c) require the Participant
promptly to remit the amount of such withholding to the Company before taking
any action, including issuing any shares of Common Stock, with respect to an
Incentive Award.

 

13.2         Special Rules.  The Committee
may, in its sole discretion and upon terms and conditions established by the
Committee, permit or require a Participant to satisfy, in whole or in part, any
withholding or employment-related tax obligation described in Section 13.1
of the Plan by electing to tender, or by attestation as to ownership of,
Previously Acquired Shares that have been held for the period of time necessary
to avoid a charge to the Company’s earnings for financial reporting purposes
and that are otherwise acceptable to the Committee, by delivery of a Broker
Exercise Notice or a combination of such methods.  For purposes of satisfying a Participant’s
withholding or employment-related tax obligation, Previously Acquired Shares
tendered or covered by an attestation will be valued at their Fair Market
Value.

 

14.           Change in Control.

 

14.1         A “Change in Control” shall be deemed to have occurred
if the event set forth in any one of the following paragraphs shall have
occurred:

 

(a)           any “person” as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than 
the Company, any trustee or other fiduciary holding securities under any
employee benefit plan of the Company or any corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), is or becomes,
including pursuant to a tender or exchange offer for shares of Common Stock
pursuant to which purchases are made, the “beneficial owner” (as defined in Rule l3d-3
under the Exchange Act), directly or

 

17

 

indirectly, of securities
of the Company representing 25% or more of the combined voting power of the
Company’s then outstanding securities, provided, however, that the provisions
of this paragraph (a) shall not be applicable to a transaction in which a
corporation becomes the owner of all the Company’s outstanding securities in a
transaction that would not be a Change of Control under paragraph (c) of
this Section 14.1; or

 

(b)           during any twenty-four (24)  consecutive
calendar months, individuals who constitute the Board on the first day of such
period or any new director (other than a director whose initial assumption of
office is in connection with an actual or threatened election contest
including, but not limited to, a consent solicitation, relating to the election
of directors of the Company) whose appointment or election by the Board or
nomination for election by the Company’s stockholders was approved or
recommended by a vote of at least two-thirds (2/3) of the directors then still
in office who were either directors on the first day of such period, or whose
appointment, election or nomination for election was previously so approved or
recommended, shall cease for any reason to constitute at least a majority
thereof; or

 

(c)           there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior to such merger
or consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof) more than 50% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation, and in which no “person” (as defined under
paragraph (a) above) acquires 50% or more of the combined voting power of
the securities of the Company or such surviving entity or parent thereof
outstanding immediately after such merger or consolidation; or

 

(d)           there is consummated a plan of complete liquidation or
dissolution of the Company or there is consummated the sale or disposition by
the Company of all or substantially all of the Company’s assets, other than a
sale or disposition by the Company of all or substantially all of the Company’s
assets to an entity, more than 50% of the combined voting power of the voting
securities of which are owned by stockholders of the Company in substantially
the same proportions as their ownership of the Company immediately prior to
such sale.

 

14.2         Effect of a Change in Control. 
Unless otherwise provided in an agreement evidencing an Incentive Award,
the following provisions shall apply to outstanding Incentive Awards in the
event of a Change in Control.

 

(a)           Continuation, Assumption or Replacement of
Incentive Awards.  In the event of a Change in Control, the
surviving or successor entity (or its parent corporation) may continue, assume
or replace Incentive Awards outstanding as of the date of the Change in Control
(with such adjustments as may be required or permitted by Section

 

18

 

4.3), and such Incentive
Awards or replacements therefore shall remain outstanding and be governed by
their respective terms, subject to Section 14.2(d) below.  A surviving or successor entity may elect to
continue, assume or replace only some Incentive Awards or portions of Incentive
Awards.  For purposes of this Section 14.2(a),
an Incentive Award shall be considered assumed or replaced if, in connection
with the Change in Control and in a manner consistent with Sections 409A and
424 of the Code, either (i) the contractual obligations represented by the
Incentive Award are expressly assumed by the surviving or successor entity (or
its parent corporation) with appropriate adjustments to the number and type of
securities subject to the Incentive Award and the exercise price thereof that
preserves the intrinsic value of the Incentive Award existing at the time of
the Change in Control, or (ii) the Participant has received a comparable
equity-based award that preserves the intrinsic value of the Incentive Award
existing at the time of the Change in Control and provides for a vesting or
exercisability schedule that is the same as or more favorable to the
Participant.

 

(b)           Acceleration of Incentive Awards. 
If and to the extent that outstanding Incentive Awards under the Plan
are not continued, assumed or replaced in connection with a Change in Control,
then (i) outstanding Options and Stock Appreciation Rights issued to the
Participant that are not yet fully exercisable shall immediately become
exercisable in full and shall remain exercisable in accordance with their
terms, (ii) all unvested Restricted Stock Awards, Stock Unit Awards and
Performance Awards will become immediately fully vested and non-forfeitable;
and (iii) any Performance Criteria applicable to Restricted Stock Awards,
Stock Unit Awards and Performance Awards will be deemed to have been satisfied
to the maximum degree specified in connection with the applicable Incentive
Award.

 

(c)           Payment for Incentive Awards. 
If and to the extent that outstanding Incentive Awards under the Plan
are not continued, assumed or replaced in connection with a Change in Control,
then the Committee may terminate some or all of such outstanding Incentive
Awards, in whole or in part, as of the effective time of the Change in Control
in exchange for payments to the holders as provided in this Section 14.2(c).  The Committee will not be required to treat
all Incentive Awards similarly for purposes of this Section 14.2(c).  The payment for any Incentive Award or
portion thereof terminated shall be in an amount equal to the excess, if any,
of (i) the fair market value (as determined in good faith by the
Committee) of the consideration that would otherwise be received in the Change
in Control for the number of shares of Common Stock subject to the Incentive
Award or portion thereof being terminated, or, if no consideration is to be
received by the Company’s stockholders in the Change in Control, the Fair
Market Value of such number of shares immediately prior to the effective date
of the Change in Control, over (ii) the aggregate exercise price (if any)
for the shares of Common Stock subject to the Incentive Award or portion
thereof being terminated.  If there is no
excess, the Incentive Award may be terminated without payment.  Any payment shall be made in such form, on such
terms and subject to such conditions as the Committee determines in its discretion,
which may or may not be the same as the form, terms and conditions applicable
to payments to the Company’s stockholders in connection with the Change in
Control, and may include subjecting such payments to vesting conditions
comparable to

 

19

 

those of the Incentive
Award surrendered.

 

(d)           Termination After a Change in Control. 
If and to the extent that Incentive Awards are continued, assumed or
replaced under the circumstances described in Section 14.2(a), and if
within two years after the Change in Control a Participant experiences an
involuntary termination of employment or other service for reasons other than
Cause, or terminates his or her employment or other service for Good Reason,
then (i) outstanding Options and Stock Appreciation Rights issued to the
Participant that are not yet fully exercisable shall immediately become
exercisable in full and shall remain exercisable in accordance with their
terms, (ii) all unvested Restricted Stock Awards, Stock Unit Awards and
Performance Awards will become immediately fully vested and non-forfeitable;
and (iii) any Performance Criteria applicable to Restricted Stock Awards,
Stock Unit Awards and Performance Awards will be deemed to have been satisfied
to the maximum degree specified in connection with the applicable Incentive
Award.

 

15.           Rights of Eligible Recipients and Participants;
Transferability.

 

15.1         Employment or Service.  Nothing in
the Plan will interfere with or limit in any way the right of the Company or
any Subsidiary to terminate the employment or service of any Eligible Recipient
or Participant at any time, nor confer upon any Eligible Recipient or
Participant any right to continue in the employ or service of the Company or
any Subsidiary.

 

15.2         Rights as a Stockholder; Dividends. 
As a holder of Incentive Awards (other than Restricted Stock Awards), a
Participant will have no rights as a stockholder unless and until such
Incentive Awards are exercised for, or paid in the form of, shares of Common
Stock and the Participant becomes the holder of record of such shares.  Except as otherwise provided in the Plan or
otherwise provided by the Committee, no adjustment will be made in the amount
of cash payable or in the number of shares of Common Stock issuable under
Incentive Awards denominated in or based on the value of shares of Common Stock
as a result of cash dividends or distributions paid to holders of Common Stock
prior to the payment of, or issuance of shares of Common Stock under, such Incentive
Awards.  In its discretion, the Committee
may provide in an agreement evidencing a Stock Unit Award or a Performance
Award that the Participant will be entitled to receive dividend equivalents, in
the form of a cash credit to an account for the benefit of the Participant, for
any such dividends and distributions. 
The terms of any rights to dividend equivalents will be determined by
the Committee and set forth in the agreement evidencing the Stock Unit Award or
Performance Award, including the time and form of payment and whether such
equivalents will be credited with interest or deemed to be reinvested in Common
Stock; provided, however, that dividend equivalents in respect of the unvested
portions of Stock Unit Awards and Performance Awards whose vesting is subject
to the achievement of specified Performance Criteria will be subject to the
same restrictions as the underlying shares or units to which such dividend
equivalents relate.  No dividend
equivalents may be paid or credited in connection with Options and Stock
Appreciation Rights.

 

20

 

15.3         Restrictions on Transfer.

 

(a)           Except pursuant to testamentary will or the laws of
descent and distribution or as otherwise expressly permitted by subsections (b) and
(c) below, no right or interest of any Participant in an Incentive Award
prior to the exercise (in the case of Options) or vesting or issuance (in the
case of Restricted Stock Awards and Performance Awards) of such Incentive Award
will be assignable or transferable, or subjected to any lien, during the
lifetime of the Participant, either voluntarily or involuntarily, directly or
indirectly, by operation of law or otherwise.

 

(b)           A Participant will be entitled to designate a
beneficiary to receive an Incentive Award upon such Participant’s death, and in
the event of such Participant’s death, payment of any amounts due under the
Plan will be made to, and exercise of any Options (to the extent permitted
pursuant to Section 12 of the Plan) may be made by, such beneficiary.  If a deceased Participant has failed to
designate a beneficiary, or if a beneficiary designated by the Participant
fails to survive the Participant, payment of any amounts due under the Plan
will be made to, and exercise of any Options (to the extent permitted pursuant
to Section 12 of the Plan) may be made by, the Participant’s legal
representatives, heirs and legatees.  If
a deceased Participant has designated a beneficiary and such beneficiary
survives the Participant but dies before complete payment of all amounts due
under the Plan or exercise of all exercisable Options, then such payments will
be made to, and the exercise of such Options may be made by, the legal
representatives, heirs and legatees of the beneficiary.

 

(c)           Upon a Participant’s request, the Committee may, in
its sole discretion, permit a transfer of all or a portion of a Non-Statutory
Stock Option or Stock Appreciation Right, other than for value, to such
Participant’s child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, any person
sharing such Participant’s household (other than a tenant or employee), a trust
in which any of the foregoing have more than fifty percent of the beneficial
interests, a foundation in which any of the foregoing (or the Participant)
control the management of assets, and any other entity in which these persons
(or the Participant) own more than fifty percent of the voting interests.  Any permitted transferee will remain subject
to all the terms and conditions applicable to the Participant prior to the
transfer.  A permitted transfer may be
conditioned upon such requirements as the Committee may, in its sole
discretion, determine, including, but not limited to execution and/or delivery
of appropriate acknowledgements, opinion of counsel, or other documents by the
transferee.

 

15.4         Non-Exclusivity of the Plan. 
Nothing contained in the Plan is intended to modify or rescind any
previously approved compensation plans or programs of the Company or create any
limitations on the power or authority of the Board to adopt such additional or
other compensation arrangements as the Board may deem necessary or desirable.

 

21

 

16.           Securities Law and Other Restrictions.

 

Notwithstanding any other
provision of the Plan or any agreements entered into pursuant to the Plan, the
Company will not be required to issue any shares of Common Stock under this
Plan, and a Participant may not sell, assign, transfer or otherwise dispose of
shares of Common Stock issued pursuant to Incentive Awards granted under the
Plan, unless (a) there is in effect with respect to such shares a registration
statement under the Securities Act and any applicable securities laws of a
state or foreign jurisdiction or an exemption from such registration under the
Securities Act and applicable state or foreign securities laws, and (b) there
has been obtained any other consent, approval or permit from any other U.S. or
foreign regulatory body which the Committee, in its sole discretion, deems
necessary or advisable.  The Company may
condition such issuance, sale or transfer upon the receipt of any representations
or agreements from the parties involved, and the placement of any legends on
certificates representing shares of Common Stock, as may be deemed necessary or
advisable by the Company in order to comply with such securities law or other
restrictions.

 

17.           Performance-Based Compensation Provisions.

 

The Committee, when it is
comprised solely of two or more outside directors meeting the requirements of Section 162(m) of
the Code, in its sole discretion, may designate whether any Restricted Stock
Awards, Stock Unit Awards or Performance Awards to be made to Covered Employees
are intended to be Performance-Based Compensation.  The vesting of such Incentive Awards and the
distribution of cash, shares of Common Stock or other property pursuant
thereto, as applicable, will, to the extent required by Section 162(m) of
the Code, be conditioned upon the achievement of performance goals based on one
or more Performance Criteria specified in Section 2.20.  Such Performance Criteria will be selected
and performance goals established by the Committee within the time period
prescribed by, and will otherwise comply with the requirements of, Section 162(m) of
the Code.  Following completion of an
applicable performance period, the Committee shall certify in writing, in the
manner and to the extent required by Section 162(m) of the Code, that
the applicable performance goals based on the selected Performance Criteria
have been met prior to payment of the compensation, and may adjust downward,
but not upward, any amount determined to be otherwise payable in connection
with such an Incentive Award.

 

18.           Compliance with Section 409A.

 

It is intended that the
Plan and all Incentive Awards hereunder be administered in a manner that will
comply with Section 409A of the Code, including the final regulations and
other guidance issued by the Secretary of the Treasury and the Internal Revenue
Service with respect thereto.  The
Committee is authorized to adopt rules or regulations deemed necessary or
appropriate to qualify for an exception from or to comply with the requirements
of Section 409A of the Code (including any transition or grandfather rules relating
thereto).  Notwithstanding anything in
this Section 18 to the contrary, with respect to any Incentive Award
subject to Section 409A of the Code, no amendment to or payment under such
Incentive Award will be made unless permitted under Section 409A of the
Code and the regulations or rulings issued thereunder.  Without limiting the generality of the
foregoing, if any amount shall be payable with

 

22

 

respect to any Incentive
Award hereunder as a result of a Participant’s “separation from service” at
such time as the Participant is a “specified employee” (as those terms are
defined for purposes of Section 409A of the Code) and such amount is
subject to the provisions of Section 409A of the Code, then no payment
shall be made, except as permitted under Section 409A of the Code, prior
to the first day of the seventh calendar month beginning after the Participant’s
separation from service (or the date of his or her earlier death).  The Company may adopt a specified employee
policy that will apply to identify the specified employees for all deferred
compensation plans subject to Section 409A of the Code; otherwise,
specified employees will be identified using the default standards contained in
the regulations under Section 409A of the Code.

 

19.           Plan Amendment, Modification and Termination.

 

The Board may suspend or
terminate the Plan or any portion thereof at any time.  In addition to the authority of the Committee
to amend the Plan under Section 3.2(e), the Board may amend the Plan from
time to time in such respects as the Board may deem advisable in order that
Incentive Awards under the Plan will conform to any change in applicable laws
or regulations or in any other respect the Board may deem to be in the best
interests of the Company; provided, however, that no such amendments to the
Plan will be effective without approval of the Company’s stockholders if: (i) stockholder
approval of the amendment is then required pursuant to Section 422 of the
Code or Section 162(m) of the Code or the rules of the New York
Stock Exchange; or (ii) such amendment seeks to modify Section 3.2(d) hereof.  No termination, suspension or amendment of
the Plan may adversely affect any outstanding Incentive Award without the
consent of the affected Participant; provided, however, that (i) this
sentence will not impair the right of the Committee to take whatever action it
deems appropriate under Sections 3.2(c), 4.3 and 14 of the Plan, and (ii) no
consent of any affected Participant shall be required if such amendment is
necessary to comply with applicable law or stock exchange rules.

 

20.           Effective Date and Duration of the Plan.

 

The Plan will be
effective as of May 6, 2010, or such later date on which the Plan is
initially approved by the Company’s stockholders.  The Plan will terminate at midnight on the
tenth (10th) anniversary of such effective date, and may be terminated prior to
such time by Board action.  No Incentive
Award will be granted after termination of the Plan.  Incentive Awards outstanding upon termination
of the Plan may continue to be exercised, earned or become free of
restrictions, according to their terms.

 

21.           Miscellaneous.

 

21.1         Governing Law.  Except to the
extent expressly provided herein or in connection with other matters of
corporate governance and authority (all of which shall be governed by the laws
of the Company’s jurisdiction of incorporation), the validity, construction,
interpretation, administration and effect of the Plan and any rules,
regulations and actions relating to the Plan will be governed by and construed
exclusively in accordance with the laws of the State of Minnesota, notwithstanding
the conflicts of laws principles of any jurisdictions.

 

23

 

21.2         Successors and Assigns.  The Plan will
be binding upon and inure to the benefit of the successors and permitted
assigns of the Company and the Participants.

 

24

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00173-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00173-of-00352.parquet"}]]