Document:

Exhibit
4.12

[FACE OF NOTE]

Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the issuer or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co.
or such other name as requested by an authorized representative of The
Depository Trust Company and any payment is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest
herein.

	
  REGISTERED

   

  	
  CUSIP: 
  22541FED4

   

  
	
   

  	
   

  
	
   

  	
  PRINCIPAL AMOUNT: $ 989,000

  
	
  NO. 1 

  	
   

  

 

CREDIT SUISSE (USA), INC.

Buffered Accelerated Return Equity Securities (BARES) Linked to

the
Value of a Global Basket of Equity Indices

due October 29, 2010

CREDIT SUISSE (USA), INC., a Delaware corporation (the
“Company”, which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to Cede
& Co., or registered assigns, at the office or agency of the Company in New
York, New York, the Redemption Amount (as defined on the reverse hereof) on the
Maturity Date (as defined on the reverse hereof).

Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

This Note shall not be valid or become obligatory for
any purpose until the certificate of authentication hereon shall have been
manually signed by the Trustee under the Indenture referred to on the reverse
hereof.

This Note will not pay
interest.

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IN WITNESS WHEREOF, the
Company has caused this Note to be duly executed under its corporate seal.

	
  

  	
  CREDIT SUISSE (USA), INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  [SEAL]

  	
  By:

  	
    /s/ Peter Feeney

  
	
   

  	
   

  	
  Name:

  	
  Peter Feeney

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CREDIT SUISSE (USA), INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Grace Koo

  
	
   

  	
   

  	
  Name:

  	
  Grace Koo

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  
					

 

CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.

Dated:  October
31, 2006

	
   

  	
  THE BANK OF NEW YORK,

  
	
   

  	
  as successor Trustee to

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE, N.A.,

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Van K. Brown

  	
   

  
	
   

  	
  Name:

  	
  Van K. Brown

  
	
   

  	
  Title:

  	
  Authorized Signatory

  
					

 

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[REVERSE OF NOTE]

CREDIT SUISSE
(USA), INC.

Buffered Accelerated Return Equity Securities (BARES) Linked to

the Value of a Global Basket of Equity Indices

due October 29, 2010

This Note is one
of a duly authorized issue of debentures, notes, bonds or other evidences of
indebtedness of the Company (the “Securities”) of the series hereinafter
specified, all issued or to be issued under and pursuant to a senior indenture,
dated as of June 1, 2001 (the “Indenture”), between the Company and the Bank of
New York (the “Trustee”), as successor Trustee to JPMorgan Chase Bank, to which
Indenture and all indentures supplemental thereto reference is hereby made for
a description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company, and the Holders of the
Securities.  The Securities may be issued
in one or more series, which different series may be issued in various
aggregate principal amounts, may mature at different times, may bear interest
(if any) at different rates, may be subject to different redemption provisions
(if any), may be subject to different sinking, purchase or analogous funds (if
any) and may otherwise vary as provided in the Indenture.  This Note is one of a series designated as
the Buffered Accelerated Return Equity
Securities (BARES) Linked to the Value of a Global Basket of Equity Indices due
October 29, 2010 (the “Note”).

This Note will not pay interest.

This Note is payable in the manner, with the effect
and subject to the conditions provided in the Indenture.

If a payment date is not a Business Day as defined in
the Indenture at a place of payment, payment may be made at that place on the
next succeeding day that is a Business Day, and no interest shall accrue for
the intervening period.

The Indenture provides that, without prior notice to
any Holders, the Company and the Trustee may amend the Indenture and the
Securities of any series with the written consent of the Holders of a majority
in principal amount of the outstanding Securities of all series affected by
such amendment (all such series voting as one class), and the Holders of a
majority in principal amount of the outstanding Securities of all series
affected thereby (all such series voting as one class) may waive future
compliance by the Company with any provision of the Indenture or the Securities
of such series by written notice to the Trustee; provided that, without the
consent of each Holder of the Securities of each series affected thereby, an
amendment or waiver, including a waiver of past defaults, may not: (i) extend
the stated maturity of the Principal of, or any sinking fund obligation or any
installment of interest on, such Holder’s Security, or reduce the principal
amount thereof or the rate of interest thereon (including any amount in respect
of original issue discount), or any premium payable with respect thereto, or
adversely affect the rights of such Holder under any mandatory redemption or
repurchase provision or any right of redemption or repurchase at the option of
such Holder, or reduce the amount of the Principal of an Original Issue
Discount Security that would be due and payable upon an acceleration of the
maturity thereof or the amount thereof provable in bankruptcy, or

 R-1
 

 

change any place of
payment where, or the currency in which, any Security of such series or any
premium or the interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the due date therefor;
(ii) reduce the percentage in principal amount of outstanding Securities of the
relevant series the consent of whose Holders is required for any such
supplemental indenture, for any waiver of compliance with certain provisions of
the Indenture or certain Defaults and their consequences provided for in the
Indenture; (iii) waive a Default in the payment of Principal of or interest on
any Security of such Holder; or (iv) modify any of the provisions of the
Indenture governing supplemental indentures with the consent of Securityholders
except to increase any such percentage or to provide that certain other
provisions of the Indenture cannot be modified or waived without the consent of
the Holder of each outstanding Security affected thereby.

The Indenture provides that, subject to certain
conditions, the Holders of at least a majority in principal amount (or, if any
Securities are Original Issue Discount Securities, such portion of the
Principal as is then accelerable) of the outstanding Securities of all series
affected (voting as a single class), by notice to the Trustee, may waive an
existing Default or Event of Default with respect to the Securities of such
series and its consequences, except a Default in the payment of Principal of or
interest on any Security or in respect of a covenant or provision of the
Indenture which cannot be modified or amended without the consent of the Holder
of each outstanding Security affected. 
Upon any such waiver, such Default shall cease to exist, and any Event
of Default with respect to the Securities of such series arising therefrom
shall be deemed to have been cured, for every purpose of the Indenture; but no
such waiver shall extend to any subsequent or other Default or Event of Default
or impair any right consequent thereto.

The Indenture provides that a series of Securities may
include one or more tranches (each a “tranche”) of Securities, including
Securities issued in a Periodic Offering. 
The Securities of different tranches may have one or more different
terms, including authentication dates and public offering prices, but all the
Securities within each such tranche shall have identical terms, including
authentication date and public offering price. 
Notwithstanding any other provision of the Indenture, subject to certain
exceptions, with respect to sections of the Indenture concerning the execution,
authentication and terms of the Securities, redemption of the Securities,
Events of Default of the Securities, defeasance of the Securities and amendment
of the Indenture, if any series of Securities includes more than one tranche,
all provisions of such sections applicable to any series of Securities shall be
deemed equally applicable to each tranche of any series of Securities in the
same manner as though originally designated a series unless otherwise provided
with respect to such series or tranche pursuant to a board resolution or a
supplemental indenture establishing such series or tranche.

No reference herein to the Indenture and no provision
of this Note or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the Redemption Amount of
this Note in the manner, at the place, at the time and in the coin or currency
herein prescribed.

The Securities are issuable initially only in
registered form without coupons in denominations of $1,000 and any integral
multiples of $1,000 in excess of that amount at the office or agency of the
Company in the Borough of Manhattan, The City of New York, and in the manner
and subject to the limitations provided in the Indenture.

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The Securities will not be redeemable at the option of
the Company prior to maturity.

The Company will not be required to pay any Additional
Amounts on the Securities.

Maturity
Date

The Maturity Date of the Securities is October 29, 2010 (the “Maturity Date”);
however, if a market disruption event exists on the valuation date, as
determined by the Calculation Agent, the Maturity Date will be the later of October 29, 2010, and the fifth
Business Day following the date on which the final basket level is calculated.

Redemption
Amount

The Company will redeem the Securities at maturity for
a redemption amount in cash that will equal the principal amount of the
Securities multiplied by the sum of 1 plus the basket return (the “Redemption
Amount”).  The basket return will be
based on the difference between the final basket level and the initial basket
level, expressed as a percentage.  How
the basket return will be calculated depends on whether the final basket level
is greater than or less than or equal to the initial basket level and, if less
than the initial basket level, how much less:

·                  If the final
basket level is greater than the initial basket level, then the basket return
will equal:

final basket level - initial basket level

122%   *                                 initial basket level

Thus, if the final
basket level is greater than the initial basket level, the basket return will
be a positive number, and the Redemption Amount will equal more than the
principal amount of the Securities.

·                  If
the final basket level is less than or equal to the initial basket level, but
is greater than or equal to 80% of the initial basket level, then the basket
return will equal zero and the Redemption Amount will equal the principal
amount of the Securities.

·                  If
the final basket level is less than 80% of the initial basket level, then the
basket return will equal:

final basket level — (80%  * 
initial basket level)

initial basket
level

Thus, if the final
basket level is less than 80% of the initial basket level, the basket return
will be negative, and the Redemption Amount will equal less than the principal
amount of the Securities at maturity.

For purposes of calculating the basket return, the
basket level on any valuation date will be equal to the sum of:

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(i) the product of (x) 0.40, the weighting of the
S&P 500 Index in the basket, and (y) the closing level of the S&P 500
Index on the valuation date divided by 1389.08, the closing level of the
S&P 500 Index on October 26, 2006, the index business day immediately
following the day the Securities are priced for initial sale to the public (the
“trade date”);

(ii) the product of (x) 0.30, the weighting of the
EURO STOXX 50 Index in the basket, and (y) the closing level of the EURO STOXX
50 Index on the valuation date divided by 4027.29, the closing level of the
EURO STOXX 50 Index on October 26, 2006, the index business day immediately
following the trade date; and

(iii) the product of (x) 0.30, the weighting of the
Nikkei 225 Index in the basket, and (y) the closing level of the Nikkei 225
Index on the valuation date divided by 16811.60, the closing level of the
Nikkei 225 Index on October 26, 2006, the index business day immediately
following the trade date.

The “closing level” for any reference index will be,
on any relevant index business day, the level of that reference index
determined by the calculation agent at the “valuation time” for that reference
index, which is the time at which the index sponsor for that reference index
calculates the closing level of that reference index on such index business
day, as such level is calculated and published by such index sponsor, subject
to the provisions described regarding adjustments to the calculation of the
reference indices below.

The “valuation date” will be October 25, 2010, subject
to a postponement if a market disruption event occurs on that date.

A “business day” is any day, other than a Saturday,
Sunday or a day on which banking institutions in New York, New York are
generally authorized or obligated by law or executive order to close.

An “index business day” with respect to any reference
index is any day that is (or, but for the occurrence of a market disruption
event, would have been) a day on which trading is generally conducted on the
applicable exchanges and related exchanges (each as defined below), other than
a day on which one or more of the applicable exchanges or related exchanges is
scheduled to close prior to its regular weekday closing time. “Exchange” with
respect to any reference index means the principal exchange on which any stock
underlying that reference index is traded. “Related exchange” means any
exchange on which futures or options contracts relating to that reference index
are traded.

Market
Disruption Events

A “market disruption event”
is, in respect of any reference index, the occurrence or existence on any index
business day for that reference index during the one-half hour period that ends
at the relevant valuation time, of any suspension of or limitation imposed on
trading (by reason of movements in price exceeding limits permitted by the
relevant exchange or otherwise) on:

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(a) an exchange in securities that comprise 20% or
more of the level of the relevant reference index based on a comparison of (1)
the portion of the level of the reference index attributable to each security
in which trading is, in the determination of the calculation agent, materially
suspended or materially limited relative to (2) the overall level of the
reference index, in the case of (1) or (2) immediately before that suspension
or limitation;

(b) a related exchange in
options contracts on the relevant reference index; or

(c) a related exchange in
futures contracts on the relevant reference index;

in the case of (a), (b)
or (c) if, in the determination of the calculation agent, such suspension or
limitation is material.

If the Calculation Agent
determines that a market disruption event exists in respect of a reference
index on a valuation date, then that valuation date for such reference index
will be postponed to the first succeeding index business day for that reference
index on which the Calculation Agent determines that no market disruption event
exists in respect of such reference index, unless in respect of the valuation
date the Calculation Agent determines that a market disruption event exists in
respect of such reference index on each of the five index business days
immediately following the scheduled valuation date. In that case, (a) the fifth
succeeding index business day following the scheduled valuation date will be
deemed to be the valuation date for such reference index, notwithstanding the
market disruption event in respect of such reference index, and (b) the
Calculation Agent will determine the index level for that reference index on
that deemed valuation date in accordance with the formula for and method of
calculating that reference index last in effect prior to the commencement of
the market disruption event in respect of such reference index using exchange
traded prices on the relevant exchanges (as determined by the Calculation Agent
in its sole and absolute discretion) or, if trading in any security or
securities comprising such reference index has been materially suspended or
materially limited, its good faith estimate of the prices that would have
prevailed on the exchanges (as determined by the Calculation Agent in its sole
and absolute discretion) but for the suspension or limitation, as of the
valuation time on that deemed valuation date, of each such security comprising
such reference index (subject to the provisions on adjustments to the
calculation of the reference indices below). The valuation date for each
reference index not affected by a market disruption event shall be the
scheduled valuation date.

In the event that a
market disruption event exists in respect of a reference index on the valuation
date, the Maturity Date of the Securities will be postponed to the fifth
business day following the day as of which the closing level on the valuation
date for each reference index has been calculated. No interest or other payment
will be payable because of any such postponement of the Maturity Date.

All determinations made
by the Calculation Agent will be at the sole discretion of the Calculation
Agent and will be conclusive for all purposes and binding on us and the
beneficial owners of the Securities, absent manifest error.

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Adjustments
to the calculation of the reference indices

If any of the reference
indices is (a) not calculated and announced by its sponsor but is calculated
and announced by a successor acceptable to the Calculation Agent or (b)
replaced by a successor index using, in the determination of the Calculation
Agent, the same or a substantially similar formula for and method of
calculation as used in such reference index, then such reference index will be
deemed to be the index so calculated and announced by that successor sponsor or
that successor index, as the case may be.

Upon any selection by the
Calculation Agent of a successor index, the Calculation Agent will cause notice
to be furnished to the Company and the Trustee, which will provide notice of
the selection of the successor index to the registered holders of the
Securities in the manner set forth in the prospectus.

If (x) on or prior to a
valuation date any index sponsor makes, in the determination of the Calculation
Agent, a material change in the formula for or the method of calculating a
reference index or in any other way materially modifies a reference index
(other than a modification prescribed in that formula or method to maintain
such reference index in the event of changes in constituent stocks and
capitalization and other routine events) or (y) on any valuation date an index
sponsor (or a successor sponsor) fails to calculate and announce a reference
index, then the Calculation Agent will calculate the Redemption Amount using,
in lieu of a published level for such reference index, the level for such
reference index as at the valuation time on the valuation date as determined by
the Calculation Agent in accordance with the formula for and method of
calculating such reference index last in effect prior to that change or
failure, but using only those securities that comprised such reference index
immediately prior to that change or failure. Notice of adjustment of such
reference index will be provided by the Trustee in the manner set forth in the
prospectus.

All determinations made
by the Calculation Agent will be at the sole discretion of the Calculation
Agent and will be conclusive for all purposes and binding on the Company and
the beneficial owners of the Securities, absent manifest error.

Events of Default and Acceleration

In case an Event of Default (as defined in the
Indenture) with respect to the Securities shall have occurred and be
continuing, the amount declared due and payable upon any acceleration of the
Securities (in accordance with the acceleration provisions set forth in the
prospectus) will be determined by the Calculation Agent and will equal, for
each security, the arithmetic average, as determined by the Calculation Agent,
of the fair market value of the Securities as determined by at least three but
not more than five broker-dealers (which may include Credit Suisse Securities
(USA) LLC or any of the Company’s other subsidiaries or affiliates) as will
make such fair market value determinations available to the Calculation Agent.

The Company, the Trustee and any agent of the Company
or the Trustee may deem and treat the registered Holder hereof as the absolute
owner of this Note (whether or not this Note shall be overdue and
notwithstanding any notation of ownership or other writing hereon) for the
purpose of receiving payment of, or on account of, the Redemption Amount

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hereof, and for all other
purposes, and neither the Company nor the Trustee nor any agent of the Company
or the Trustee shall be affected by any notice to the contrary.

No recourse under or upon any obligation, covenant or
agreement contained in the Indenture or any indenture supplemental thereto or
in any Note, or because of any indebtedness evidenced thereby, shall be had
against any incorporator as such, or against any past, present or future
stockholder, officer, director or employee, as such, of the Company or of any
successor, either directly or through the Company or any successor, under any
rule of law, statute or constitutional provision or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the acceptance hereof and as
part of the consideration for the issue hereof.

The calculation agent for the Securities (the “Calculation
Agent”) is Credit Suisse International. 
The calculations and determinations of the Calculation Agent will be
final and binding upon all parties (except in the case of manifest error).  The Calculation Agent will have no
responsibility for good faith errors or omissions in its calculations and
determinations, whether caused by negligence or otherwise.

Terms used herein that are defined in the Indenture
and not otherwise defined herein shall have the respective meanings assigned
thereto in the Indenture.

The laws of the State of New York (without regard to
conflicts of laws principles thereof) shall govern this Note.

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FOR VALUE RECEIVED, the
undersigned hereby sell(s), assign(s) and transfer(s) unto

[PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE]

 

[PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
ASSIGNEE]

 

the within Note and all rights thereunder, hereby irrevocably constituting
and appointing

 

                                                                                                                                                
Attorney to transfer such Note on the books of the Issuer, with full power of
substitution in the premises.

 

	
   

  	
  Signature:

   

  
	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  NOTICE: The signature to this assignment must
  correspond with the name as written upon the face of the within Note in every
  particular without alteration or enlargement or any change whatsoever.

  
				

 

 R-8Exhibit 10.1

 

DYNAMIC MATERIALS CORPORATION

5405 SPINE ROAD, BOULDER, COLORADO 80301

Dynamic
Materials Corporation 2006 Stock Incentive Plan

1)              ESTABLISHMENT, OBJECTIVES AND DURATION.

a)              Establishment
of the Plan.  Dynamic Materials
Corporation (hereinafter referred to as the “Company”), hereby establishes an
incentive compensation plan to be known as The “Dynamic Materials Corporation
2006 Stock Incentive Plan” (hereinafter referred to as the “Plan”).  The Plan permits the granting of Nonqualified
Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted
Stock, Restricted Stock Units, Performance Shares, Performance Units and Other
Stock-Based Awards.  The Plan is
effective as of September 21, 2006 (the “Effective Date”), subject to the approval
of the Plan by the stockholders of the Company at the 2006 Annual Meeting.  Definitions of capitalized terms used in the
Plan are contained in the attached Glossary, which is an integral part of the
Plan.

b)             Objectives
of the Plan.  The objectives of the
Plan are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to Participants and
to optimize the profitability and growth of the Company through incentives that
are consistent with the Company’s goals and that link the personal interests of
Participants to those of the Company’s stockholders.  The Plan is further intended to provide
flexibility to the Company in its ability to motivate, attract, and retain the
services of Participants who make or are expected to make significant
contributions to the Company’s success and to allow Participants to share in
the success of the Company.

c)              Duration
of the Plan.  No Award may be granted
under the Plan after the day immediately preceding the tenth (10th) anniversary of the Effective Date, or
such earlier date as the Board shall determine. 
The Plan will remain in effect with respect to outstanding Awards until
no Awards remain outstanding.

2)              Administration of the Plan.

a)              The
Committee.  The Plan shall be
administered by the Compensation Committee of the Board or such other committee
(the “Committee”) as the Board shall select consisting of two (2) or more
members of the Board each of whom is intended to be a “non-employee director” within
the meaning of Rule 16b-3 (or any successor rule) of the Exchange Act, an “outside
director” under regulations promulgated under Section 162(m) of the Code, and
an “independent director” under the NASDAQ Marketplace Rules.  The members of the Committee shall be
appointed from time to time by, and shall serve at the discretion of, the
Board.

b)             Authority
of the Committee.  Subject to
Applicable Laws and the provisions of the Plan (including any other powers
given to the Committee hereunder), and except as otherwise provided by the
Board, the Committee shall have full and final authority in its discretion to
take all actions determined by the Committee to be necessary in the
administration of the Plan, including, without limitation, discretion to:

i)                 select
the Employees, Directors and Consultants to whom Awards may from time to time
be granted hereunder;

ii)              determine
whether and to what extent Awards are granted hereunder;

iii)           determine
the size and types of Awards granted hereunder;

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iv)          approve
forms of Award Agreement for use under the Plan;

v)             determine
the terms and conditions of any Award granted hereunder;

vi)          establish
performance goals for any Performance Period and determine whether such goals
were satisfied;

vii)       amend
the terms of any outstanding Award granted under the Plan, provided that,
except as otherwise provided in Section 18, no such amendment shall reduce the
Exercise Price of outstanding Options or the grant price of outstanding SARs
without the approval of the stockholders of the Company, and provided further,
that any amendment that would adversely affect the Participant’s rights under
an outstanding Award shall not be made without the Participant’s written
consent;

viii)    construe
and interpret the terms of the Plan and any Award Agreement entered into under
the Plan, and to decide all questions of fact arising in its application; and

ix)            take
such other action, not inconsistent with the terms of the Plan, as the
Committee deems appropriate.

As permitted by
Applicable Laws, the Committee may delegate its authority as identified herein,
including the power and authority to make Awards to Participants who are not “insiders”
subject to Section 16(b) of the Exchange Act, pursuant to such conditions and
limitations as the Committee may establish.

c)              Effect
of Committee’s Decision.  All
decisions, determinations and interpretations of the Committee shall be final,
binding and conclusive on all persons, including the Company, its Subsidiaries,
its stockholders, Employees, Directors, Consultants and their estates and
beneficiaries.

3)              SHARES SUBJECT TO THE PLAN; EFFECT OF GRANTS; INDIVIDUAL LIMITS.

a)              Number
of Shares Available for Grants. 
Subject to adjustment as provided in Section 18 hereof, the maximum
number of Shares which may be issued pursuant to Awards under the Plan shall be
850,000, plus any Shares remaining available for issuance under the Prior Plan
as of the Effective Date, plus the number of Shares subject to outstanding
awards under the Prior Plan as of the Effective Date that are deemed not
delivered pursuant to paragraphs (i), (ii), (iii) or (iv) of this Section 3(a).

i)                 Shares
that are potentially deliverable under an Award or a Prior Plan award that
expires or is canceled, forfeited, settled in cash or otherwise settled without
the delivery of Shares shall not be treated as having been issued under the
Plan or the Prior Plan.

ii)              Shares
that are held back or tendered (either actually or constructively by
attestation) to cover the exercise price or tax withholding obligations with
respect to an Award or a Prior Plan award shall not be treated as having been
issued under the Plan or the Prior Plan.

iii)           Shares
that are issued pursuant to awards that are assumed, converted or substituted
in connection with a merger, acquisition, reorganization or similar transaction
shall not be treated as having been issued under the Plan or the Prior Plan.

iv)          Shares
that are repurchased in the open market with Option Proceeds from Awards or a
Prior Plan award shall not be treated as having been issued under the Plan or
the Prior Plan provided, however, that the aggregate number of Shares deemed
not issued pursuant to the repurchase of Shares with Option Proceeds shall not
be greater than the amount of such proceeds divided by the Fair Market Value of
a Share on the date of exercise of the Option or Prior Plan option giving rise
to such proceeds.

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Notwithstanding paragraphs (i) through (iv) above, for purposes of
determining the number of Shares available for grant as Incentive Stock
Options, only Shares that are subject to an Award or a Prior Plan award that
expires or is cancelled, forfeited or settled in cash shall be treated as not
having been issued under the Plan or the Prior Plan.

The Shares to be issued pursuant to Awards may be authorized but
unissued Shares or treasury Shares.

b)             Individual
Limits.  Subject to adjustment as
provided in Section 18 hereof, the following rules shall apply with respect to
Awards:

i)                 Options
and SARs:  The maximum aggregate number
of Shares with respect to which Options and SARs may be granted in any 36-month
period to any one Participant shall be 425,000 Shares.

ii)              Restricted
Stock, Restricted Stock Units, Performance Shares and Other Stock-Based
Awards:  The maximum aggregate number of
Shares of Restricted Stock and Shares with respect to which Restricted Stock
Units, Performance Shares and Other Stock-Based Awards may be granted in any
36-month period to any one Participant shall be 425,000 Shares.

iii)           Performance
Units:  The maximum aggregate
compensation that can be paid pursuant to Performance Units awarded in any one
fiscal year to any one Participant shall be $5,000,000 or a number of Shares
having an aggregate Fair Market Value not in excess of such amount.

4)              ELIGIBILITY AND PARTICIPATION.

a)              Eligibility.  Persons eligible to participate in the Plan
include all Employees, Directors and Consultants.

b)             Actual
Participation.  Subject to the
provisions of the Plan, the Committee may, from time to time, select from all
eligible Employees, Directors and Consultants, those to whom Awards shall be
granted and shall determine the nature and amount of each Award.  The Committee may establish additional terms,
conditions, rules or procedures to accommodate the rules or laws of applicable
foreign jurisdictions and to afford Participants favorable treatment under such
laws; provided, however, that no Award shall be granted under any such
additional terms, conditions, rules or procedures with terms or conditions
which are inconsistent with the provisions of the Plan.

5)              TYPES OF AWARDS.

a)              Type
of Awards.  Awards under the Plan may
be in the form of Options (both Nonqualified Stock Options and/or Incentive
Stock Options), SARs, Restricted Stock, Restricted Stock Units, Performance
Shares, Performance Units and Other Stock-Based Awards.

b)             Designation
of Award.  Each Award shall be
designated in the Award Agreement.

6)              OPTIONS.

a)              Grant
of Options.  Subject to the terms and
provisions of the Plan, Options may be granted to Participants in such number
and upon such terms, and at any time and from time to time, as shall be
determined by the Committee.

b)             Award
Agreement.  Each Option grant shall
be evidenced by an Award Agreement that shall specify the Exercise Price, the
duration of the Option, the number of Shares to which the Option pertains, and
such other provisions as the Committee shall determine including, but not
limited to, the Option vesting schedule, repurchase provisions, rights of first
refusal, forfeiture provisions, form of payment (cash, Shares, or other consideration)
upon settlement of the Award, and payment contingencies.  The Award Agreement also shall specify
whether the Option is intended to be an Incentive Stock Option or a
Nonqualified Stock 

 3
 

 

Option.  Options that are
intended to be Incentive Stock Options shall be subject to the limitations set
forth in Section 422 of the Code.

c)              Exercise
Price.  Except for Options adjusted
pursuant to Section 18 herein, and replacement Options granted in connection
with a merger, acquisition, reorganization or similar transaction, the Exercise
Price for each grant of an Option shall not be less than one hundred percent
(100%) of the Fair Market Value of a Share on the date the Option is
granted.  However, in the case of an Incentive
Stock Option granted to a Participant who, at the time the Option is granted,
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Subsidiary, the Exercise Price for each
grant of an Option shall not be less than one hundred ten percent (110%) of the
Fair Market Value of a Share on the date the Option is granted.

d)             Term
of Options.  The term of an Option
granted under the Plan shall be determined by the Committee, in its sole
discretion; provided, however, that such term shall not exceed ten (10)
years.  However, in the case of an
Incentive Stock Option granted to a Participant who, at the time the Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant thereof
or such shorter term as may be provided in the Award Agreement.

e)              Exercise
of Options.  Options granted under
this Section 6 shall be exercisable at such times and be subject to such
restrictions and conditions as set forth in the Award Agreement and as the
Committee shall in each instance approve, which need not be the same for each
grant or for each Participant; provided, however, that except as otherwise
provided in a Participant’s Award Agreement upon a termination of employment or
pursuant to Section 19 in the event of a Change in Control or Subsidiary
Disposition, no Option may be exercisable prior to one (1) year from the date
of grant.

f)                Payments.  Options granted under this Section 6 shall be
exercised by the delivery of a written notice to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised and
specifying the method of the Exercise Price. 
The Exercise Price of an Option shall be payable to the Company: (i) in
cash or its equivalent, (ii) by tendering (either actually or constructively by
attestation) Shares having an aggregate Fair Market Value at the time of
exercise equal to the Exercise Price, (iii) in any other manner then permitted
by the Committee, or (iv) by a combination of any of the permitted methods of
payment.  The Committee may limit any
method of payment, other than that specified under (i), for administrative
convenience, to comply with Applicable Laws or otherwise.

g)             Restrictions
on Share Transferability.  The
Committee may impose such restrictions on any Shares acquired pursuant to the
exercise of an Option granted under this Section 6 as it may deem advisable,
including, without limitation, restrictions under applicable federal securities
laws, under the requirements of any stock exchange or market upon which such
Shares are then listed and/or traded, and under any blue sky or state
securities laws applicable to such Shares.

h)             Termination
of Employment or Service.  Each
Participant’s Option Award Agreement shall set forth the extent to which the
Participant shall have the right to exercise the Option following termination
of the Participant’s employment or, if the Participant is a Director or
Consultant, service with the Company and its Subsidiaries.  Such provisions shall be determined in the
sole discretion of the Committee, need not be uniform among all Options, and
may reflect distinctions based on the reasons for termination of employment or
service.

7)              STOCK APPRECIATION RIGHTS.

a)              Grant
of SARs.  Subject to the terms and provisions
of the Plan, SARs may be granted to Participants in such amounts and upon such
terms, and at any time and from time to time, as shall be determined by the
Committee.  The Committee may grant
Freestanding SARs, Tandem SARs, or any combination of these forms of SAR.

 4
 

 

b)             Award Agreement.  Each SAR grant shall
be evidenced by an Award Agreement that shall specify the grant price, the term
of the SAR, and such other provisions as the Committee shall determine.

c)              Grant
Price.  The grant price of a
Freestanding SAR shall not be less than one hundred percent (100%) of the Fair
Market Value of a Share on the date of grant of the SAR, and the grant price of
a Tandem SAR shall equal the Exercise Price of the related Option; provided,
however, that these limitations shall not apply to Awards that are adjusted
pursuant to Section 18 herein.

d)             Term of SARs.  The term of an SAR
granted under the Plan shall be determined by the Committee, in its sole
discretion; provided, however, that such term shall not exceed ten (10) years.

e)              Exercise of Tandem SARs.  A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.  To the extent exercisable,
Tandem SARs may be exercised for all or part of the Shares subject to the
related Option.  The exercise of all or
part of a Tandem SAR shall result in the forfeiture of the right to purchase a
number of Shares under the related Option equal to the number of Shares with
respect to which the SAR is exercised. 
Conversely, upon exercise of all or part of an Option with respect to
which a Tandem SAR has been granted, an equivalent portion of the Tandem SAR
shall similarly be forfeited.

Notwithstanding
any other provision of the Plan to the contrary, with respect to a Tandem SAR
granted in connection with an ISO: (i) the Tandem SAR shall expire no later
than the expiration of the underlying ISO; (ii) the value of the payout with
respect to the Tandem SAR may be for no more than one hundred percent (100%) of
the difference between the Exercise Price of the underlying ISO and the Fair
Market Value of the Shares subject to the underlying ISO at the time the Tandem
SAR is exercised; and (iii) the Tandem SAR may be exercised only when the Fair
Market Value of the Shares subject to the ISO exceeds the Exercise Price of the
ISO.

f)                Exercise of Freestanding SARs.  Freestanding SARs
may be exercised upon whatever terms and conditions the Committee, in its sole
discretion, imposes upon them and sets forth in the Award Agreement; provided,
however, that except as otherwise provided in a Participant’s Award Agreement
upon a termination of employment or pursuant to Section 19 in the event of a
Change in Control or Subsidiary Disposition, no Freestanding SARs may be
exercisable prior to one (1) year from the date of grant.

g)             Payment of SAR Amount.  Upon exercise of an
SAR, a Participant shall be entitled to receive payment from the Company in an
amount determined by multiplying:

i)                 the
difference between the Fair Market Value of a Share on the date of exercise
over the grant price; by

ii)              the
number of Shares with respect to which the SAR is exercised.

At the discretion
of the Committee, the payment upon SAR exercise may be in cash, in Shares of
equivalent value, or in some combination thereof.

h)             Termination of Employment or Service.  Each SAR Award
Agreement shall set forth the extent to which the Participant shall have the
right to exercise the SAR following termination of the Participant’s employment
or, if the Participant is a Director or Consultant, service with the Company
and its Subsidiaries.  Such provisions
shall be determined in the sole discretion of the Committee, need not be uniform
among all SARs, and may reflect distinctions based on the reasons for
termination of employment or service.

 5
 

 

8)              RESTRICTED STOCK.

a)              Grant of Restricted Stock.  Subject to the terms
and provisions of the Plan, Restricted Stock may be granted to Participants in
such amounts and upon such terms, and at any time and from time to time, as
shall be determined by the Committee.

b)             Award Agreement.  Each Restricted
Stock grant shall be evidenced by an Award Agreement that shall specify the
Period(s) of Restriction, the number of Shares of Restricted Stock granted, and
such other provisions as the Committee shall determine.

c)              Period of Restriction and Other
Restrictions.  Except as otherwise provided in a Participant’s Award Agreement upon a
termination of employment or pursuant to Section 19 in the event of a Change in
Control or Subsidiary Disposition, an Award of Restricted Stock shall have a
minimum Period of Restriction of three (3) years, which period may, at the
discretion of the Committee, lapse on a pro-rated, graded, or cliff basis (as
specified in an Award Agreement); provided, however, that in the Committee’s
sole discretion, up to five percent (5%) of the Shares available for issuance
as Full-Value Awards under the Plan may have a shorter Period of Restriction,
but in no case less than one (1) year.  The
Committee shall impose such other conditions and/or restrictions on any Shares
of Restricted Stock granted pursuant to the Plan as it may deem advisable
including, without limitation, a requirement that Participants pay a stipulated
purchase price for each Share of Restricted Stock, a requirement that the
issuance of Shares of Restricted Stock be delayed, restrictions based upon the
achievement of specific performance goals, additional time-based restrictions,
and/or restrictions under Applicable Laws or under the requirements of any
stock exchange or market upon which such Shares are listed or traded, or
holding requirements or sale restrictions placed on the Shares by the Company
upon vesting of such Restricted Stock. 
The Company may retain in its custody any certificate evidencing the
Shares of Restricted Stock and place thereon a legend and institute
stop-transfer orders on such Shares, and the Participant shall be obligated to
sign any stock power requested by the Company relating to the Shares to give
effect to the forfeiture provisions of the Restricted Stock.

d)             Removal of Restrictions. 
Subject to Applicable Laws, Restricted Stock shall become freely
transferable by the Participant after the last day of the Period of Restriction
applicable thereto.  Once Restricted
Stock is released from the restrictions, the Participant shall be entitled to
receive a certificate evidencing the Shares.

e)              Voting Rights.  Unless otherwise determined
by the Committee and set forth in a Participant’s Award Agreement, to the
extent permitted or required by Applicable Laws, as determined by the
Committee, Participants holding Shares of Restricted Stock granted hereunder
may exercise full voting rights with respect to those Shares during the Period
of Restriction.

f)                Dividends and Other Distributions.  Except as otherwise
provided in a Participant’s Award Agreement, during the Period of Restriction,
Participants holding Shares of Restricted Stock shall receive all regular cash
Dividends paid with respect to all Shares while they are so held, and, except
as otherwise determined by the Committee, all other distributions paid with
respect to such Restricted Stock shall be credited to Participants subject to
the same restrictions on transferability and forfeitability as the Restricted
Stock with respect to which they were paid and paid at such time following full
vesting as are paid the Shares of Restricted Stock with respect to which such
distributions were made.

g)             Termination of Employment or Service.  Each Award Agreement
shall set forth the extent to which the Participant shall have the right to
retain unvested Restricted Stock following termination of the Participant’s
employment or, if the Participant is a Director or Consultant, service with the
Company and its Subsidiaries. Such provisions shall be determined in the sole
discretion of the Committee, need not be uniform among all Awards of Restricted
Stock, and may reflect distinctions based on the reasons for termination of
employment or service.

 6
 

 

9)              RESTRICTED STOCK UNITS.

a)              Grant
of Restricted Stock Units.  Subject to the terms and provisions of
the Plan, Restricted Stock Units may be granted to Participants in such amounts
and upon such terms, and at any time and from time to time, as shall be
determined by the Committee.

b)             Award Agreement.  Each grant of
Restricted Stock Units shall be evidenced by an Award Agreement that shall
specify the applicable Period of Restriction, the number of Restricted Stock
Units granted, and such other provisions as the Committee shall determine.

c)              Value of Restricted Stock Units.  The initial value of a Restricted Stock Unit
shall equal the Fair Market Value of a Share on the date of grant; provided,
however, that this restriction shall not apply to Awards that are adjusted
pursuant to Section 18 herein.

d)             Period
of Restriction.  Except as otherwise
provided in a Participant’s Award Agreement upon a termination of employment or
pursuant to Section 19 in the event of a Change in Control or Subsidiary
Disposition, an Award of Restricted
Stock Units shall have a minimum Period of Restriction of three (3) years,
which period may, at the discretion of the Committee, lapse on a pro-rated,
graded, or cliff basis; provided, however, that in the Committee’s sole
discretion, up to five percent (5%) of the Shares available for issuance as
Full-Value Awards under the Plan may have a shorter Period of Restriction, but
in no case less than one (1) year.

e)              Form and Timing of Payment. 
Except as otherwise provided in Section 19 herein or a Participant’s
Award Agreement, payment of Restricted Stock Units shall be made at a specified
settlement date that shall not be earlier than the last day of the Period of
Restriction.  The Committee, in its sole
discretion, may pay earned Restricted Stock Units by delivery of Shares or by
payment in cash of an amount equal to the Fair Market Value of such Shares (or
a combination thereof).  The Committee
may provide that settlement of Restricted Stock Units shall be deferred, on a
mandatory basis or at the election of the Participant.

f)                Voting Rights. 
A Participant shall have no voting rights with respect to any Restricted
Stock Units granted hereunder.

g)             Termination of Employment or Service.  Each Award Agreement shall set forth the
extent to which the Participant shall have the right to receive a payout
respecting an Award of Restricted Stock Units following termination of the
Participant’s employment or, if the Participant is a Director or Consultant,
service with the Company and its Subsidiaries. 
Such provisions shall be determined in the sole discretion of the
Committee, need not be uniform among all Restricted Stock Units, and may
reflect distinctions based on the reasons for termination of employment or
service.

10)        PERFORMANCE SHARES.

a)              Grant
of Performance Shares.  Subject to the terms and provisions of
the Plan, Performance Shares may be granted to Participants in such amounts and
upon such terms, and at any time and from time to time, as shall be determined
by the Committee.

b)             Award Agreement.  Each grant of
Performance Shares shall be evidenced by an Award Agreement that shall specify
the applicable Performance Period(s) and Performance Measure(s), the number of
Performance Shares granted, and such other provisions as the Committee shall
determine; provided, however, that except as otherwise provided in a
Participant’s Award Agreement upon a termination of employment or pursuant to
Section 19 in the event of a Change in Control or Subsidiary Disposition, in no
case shall a Performance Period be for a period of less than one (1) year.

c)              Value of Performance Shares.  The initial value of a Performance Share
shall equal the Fair Market Value of a Share on the date of grant; provided,
however, that this restriction shall not apply to Awards that are adjusted
pursuant to Section 18 herein.

 7
 

 

d)             Form and Timing of Payment. 
Except as otherwise provided in Section 19 herein or a Participant’s
Award Agreement, payment of Performance Shares shall be made at a specified
settlement date that shall not be earlier than the last day of the Performance
Period.  The Committee, in its sole
discretion, may pay earned Performance Shares by delivery of Shares or by
payment in cash of an amount equal to the Fair Market Value of such Shares (or
a combination thereof).  The Committee
may provide that settlement of Performance Shares shall be deferred, on a
mandatory basis or at the election of the Participant.

e)              Voting Rights. 
A Participant shall have no voting rights with respect to any
Performance Shares granted hereunder.

f)                Termination of Employment or Service.  Each Award Agreement shall set forth the
extent to which the Participant shall have the right to receive a payout
respecting an Award of Performance Shares following termination of the
Participant’s employment or, if the Participant is a Consultant, service with
the Company and its Subsidiaries.  Such
provisions shall be determined in the sole discretion of the Committee, need
not be uniform among all Participants, and may reflect distinctions based on
the reasons for termination of employment or service

11)        PERFORMANCE UNITS.

a)              Grant of Performance Units.  Subject to the terms and conditions of the
Plan, Performance Units may be granted to Participants in such amounts and upon
such terms, and at any time and from time to time, as shall be determined by
the Committee.

b)             Award Agreement.  Each grant of Performance Units shall be
evidenced by an Award Agreement that shall specify the number of Performance
Units granted, the Performance Period(s) and Performance Measure(s), the
performance goals and such other provisions as the Committee shall determine;
provided, however, that except as otherwise provided in a Participant’s Award
Agreement upon a termination of employment or pursuant to Section 19 in the
event of a Change in Control or Subsidiary Disposition, in no case shall a
Performance Period be for a period of less than one (1) year.

c)              Value of Performance Units.  The Committee shall set performance goals in
its discretion that, depending on the extent to which they are met, will
determine the number and/or value of Performance Units that will be paid out to
the Participants.

d)             Form and Timing of Payment.  Except as otherwise provided in Section 19
herein or a Participant’s Award Agreement, payment of earned Performance Units
shall be made following the close of the applicable Performance Period.  The Committee, in its sole discretion, may
pay earned Performance Units in cash or in Shares that have an aggregate Fair
Market Value equal to the value of the earned Performance Units (or a
combination thereof).  The Committee may
provide that settlement of Performance Units shall be deferred, on a mandatory
basis or at the election of the Participant.

e)              Voting
Rights.  A Participant shall have no
voting rights with respect to any Performance Units granted hereunder.

f)                Termination of Employment or Service.  Each Award Agreement shall set forth the
extent to which the Participant shall have the right to receive a payout
respecting an Award of Performance Units following termination of the
Participant’s employment or, if the Participant is a Consultant, service with
the Company and its Subsidiaries.  Such
provisions shall be determined in the sole discretion of the Committee, need
not be uniform among all Performance Units and may reflect distinctions based
on reasons for termination of employment or service.

 8
 

 

12)        OTHER STOCK-BASED AWARDS.

a)              Grant.  The Committee shall
have the right to grant other Awards that may include, without limitation, the
grant of Shares based on attainment of performance goals established by the
Committee, the payment of Shares as a bonus or in lieu of cash based on
attainment of performance goals established by the Committee, and the payment
of Shares in lieu of cash under other Company incentive or bonus programs.

b)             Period
of Restriction.  Except as otherwise
provided in a Participant’s Award Agreement upon a termination of employment or
pursuant to Section 19 in the event of a Change in Control or Subsidiary
Disposition, Awards granted pursuant to this Section 12 shall have a minimum Period of Restriction of three (3) years, which
period may, at the discretion of the Committee, lapse on a pro-rated, graded,
or cliff basis (as specified in an Award Agreement); provided, however, that in
the Committee’s sole discretion, up to five percent (5%) of the Shares
available for issuance as Full-Value Awards under the Plan may have a shorter
Period of Restriction, but in no case less than one (1) year.  Notwithstanding the above, an Award of
payment Shares in lieu of cash under other Company incentive or bonus programs
shall not be subject to the minimum Period of Restriction limitations described
above.

c)              Payment of Other Stock-Based Awards. 
Subject to Section 12(b) hereof, payment under or settlement of any such
Awards shall be made in such manner and at such times as the Committee may
determine.  The Committee may provide
that settlement of Other Stock-Based Awards shall be deferred, on a mandatory
basis or at the election of the Participant.

d)             Termination of Employment or Service.  The Committee shall determine the extent to
which the Participant shall have the right to receive Other Stock-Based Awards
following termination of the Participant’s employment or, if the Participant is
a Director or Consultant, service with the Company and its Subsidiaries.  Such provisions shall be determined in the
sole discretion of the Committee, such provisions may be included in an agreement
entered into with each Participant, but need not be uniform among all Other
Stock-Based Awards, and may reflect distinctions based on the reasons for
termination of employment or service.

13)        DIVIDEND EQUIVALENTS. 
At the discretion of the Committee, Awards granted pursuant to the Plan
may provide Participants with the right to receive Dividend Equivalents, which
may be paid currently or credited to an account for the Participants, and may
be settled in cash and/or Shares, as determined by the Committee in its sole
discretion, subject in each case to such terms and conditions as the Committee
shall establish.

 9
 

 

14)        PERFORMANCE-BASED EXCEPTION.

a)              The
Committee may specify that the attainment of one or more of the Performance
Measures set forth in this Section 14 shall determine the degree of granting,
vesting and/or payout with respect to Awards that the Committee intends will
qualify for the Performance-Based Exception. 
The performance goals to be used for such Awards shall be chosen from
among the following performance measures (the “Performance Measures”): total
shareholder return, stock price, net customer sales, volume, gross profit,
gross margin, operating profit, operating margin, management profit, earnings
from continuing operations before income taxes, earnings from continuing
operations, earnings per share from continuing operations, net operating profit
after tax, net earnings, net earnings per share, return on assets, return on
investment, return on equity, return on invested capital, cost of capital,
average capital employed, cash value added, economic value added, cash flow,
cash flow from operations, working capital, working capital as a percentage of
net customer sales, asset growth, asset turnover, market share, customer
satisfaction, and employee satisfaction. 
The targeted level or levels of performance with respect to such
Performance Measures may be established at such levels and on such terms as the
Committee may determine, in its discretion, on a corporate-wide basis or with
respect to one or more business units, divisions, subsidiaries, business
segments or functions, and in either absolute terms or relative to the
performance of one or more comparable companies or an index covering multiple
companies.  Awards that are not intended
to qualify for the Performance-Based Exception may be based on these or such
other performance measures as the Committee may determine.

b)             Unless
otherwise determined by the Committee, measurement of performance goals with
respect to the Performance Measures above shall exclude the impact of charges
for restructurings, discontinued operations, extraordinary items, and other
unusual or non-recurring items, as well as the cumulative effects of tax or
accounting changes, each as determined in accordance with generally accepted
accounting principles or identified in the Company’s financial statements,
notes to the financial statements, management’s discussion and analysis or
other filings with the SEC.

c)              Performance
goals may differ for Awards granted to any one Participant or to different
Participants.

d)             Achievement
of performance goals in respect of Awards intended to qualify under the
Performance-Based Exception shall be measured over a Performance Period
specified in the Award Agreement, and the goals shall be established not later
than ninety (90) days after the beginning of the Performance Period or, if less
than ninety (90) days, the number of days which is equal to twenty-five percent
(25%) of the relevant Performance Period applicable to the Award.

e)              The
Committee shall have the discretion to adjust the determinations of the degree
of attainment of the pre-established performance goals; provided, however, that
Awards that are designed to qualify for the Performance-Based Exception may not
be adjusted upward (the Committee may, in its discretion, adjust such Awards
downward).

15)        TRANSFERABILITY OF AWARDS. 
Incentive Stock Options may not be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution, and shall be exercisable during a Participant's
lifetime only by such Participant.  Other
Awards shall be transferable to the extent provided in the Award Agreement,
except that no Award may be transferred for consideration.

16)        TAXES.  The Company
shall have the power and right, prior to the delivery of Shares pursuant to an
Award, to deduct or withhold, or require a participant to remit to the Company
(or a Subsidiary), an amount (in cash or Shares) sufficient to satisfy any
applicable tax withholding requirements applicable to an Award.  Whenever under the Plan payments are to be
made in cash, such payments shall be net of an amount sufficient to satisfy any
applicable tax withholding requirements. 
Subject to such restrictions as the Committee may prescribe, a Participant
may satisfy all or a portion of any tax withholding requirements by electing to
have the Company withhold Shares having a Fair Market Value equal to the amount
to be withheld up to the minimum statutory tax withholding rate (or such other
rate that will not result in a negative accounting impact). 

 10
 

 

17)        CONDITIONS UPON ISSUANCE OF SHARES.

a)              Shares shall not be
issued pursuant to the exercise of an Award unless the exercise of such Award
and the issuance and delivery of such Shares pursuant thereto shall comply with
all Applicable Laws, and shall be further subject to the approval of counsel
for the Company with respect to such compliance.

b)             As
a condition to the exercise of an Award, the Company may require the person
exercising such Award to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required by any Applicable Laws.

18)        ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.  In the event of any non reciprocal
transaction between the Company and the shareholders of the Company that causes
the per share value of shares underlying an Award to change, such as a stock
dividend, stock split, spin off, rights offering, or recapitalization through a
large, nonrecurring cash dividend, and in the event of any other change in
corporate capitalization, such as a merger, consolidation, any reorganization
(whether or not such reorganization comes within the definition of such term in
Section 368 of the Code) or any partial or complete liquidation of the Company,
in its sole discretion, may cause there to be made an equitable adjustment to
the number and kind shares that may be issued under the Plan, or to any
individual under the Plan, and to the number and kind of shares or other
property subject to and the exercise price (if applicable) of any then
outstanding Awards, and such adjustment shall be conclusive and binding for all
purposes of the Plan.

19)        CHANGE IN CONTROL, CASH-OUT AND TERMINATION OF UNDERWATER OPTIONS/SARS,
AND SUBSIDIARY DISPOSITION.

a)              Change
in Control.  Except as otherwise
provided in a Participant’s Award Agreement or pursuant to Section 19(b)
hereof, upon the occurrence of a Change in Control, unless otherwise
specifically prohibited under Applicable Laws, or by the rules and regulations
of any governing governmental agencies or national securities exchanges:

i)                 any
and all outstanding Options and SARs granted hereunder shall become immediately
exercisable unless such Awards are assumed, converted or replaced by the
continuing entity; provided, however, that in the event of a Participant’s
termination of employment without Cause within twenty-four (24) months
following consummation of a Change in Control, any replacement awards shall
become immediately exercisable;

ii)              any
Period of Restriction or other restriction imposed on Restricted Stock,
Restricted Stock Units, and Other Stock-Based Awards shall lapse unless such
Awards are assumed, converted or replaced by the continuing entity; provided,
however, that in the event of a Participant’s termination of employment without
Cause within twenty-four (24) months following consummation of a Change in
Control, the Period of Restriction on any replacement awards shall lapse; and

iii)           any
and all Performance Shares, Performance Units and other Awards (if
performance-based) shall vest on a pro rata monthly basis, including full
credit for partial months elapsed, and will be paid (A) based on the level of
performance achieved as of the date of the Change in Control, if determinable,
or (B) at the target level, if not determinable.  The amount of the vested Award may be
computed under the following formula: 
total Award number of Shares times (number of full months elapsed in
shortest possible vesting period divided by number of full months in shortest
possible vesting period) times percent performance level achieved immediately
prior to the specified effective date of the Change in Control.

With respect to paragraphs (i) and (ii) of
Section 19(a) above, the Award Agreement may provide that any replacement
awards will become immediately exercisable or any Period of Restriction shall
lapse in the event of 

 11
 

 

a termination of employment by the
Participant for “good reason” as such term is defined in any employment
agreement or severance agreement or policy applicable to such Participant.

b)             Cash-Out
and Termination of Underwater Options/SARs. 
The Committee may, in its sole discretion, provide that (i) all
outstanding Options and SARs shall be terminated upon the occurrence of a
Change in Control and that each Participant shall receive, with respect to each
Share subject to such Options or SARs, an amount in cash equal to the excess of
the Fair Market Value of a Share immediately prior to the occurrence of the
Change in Control over the Option Exercise Price or the SAR grant price; and
(ii) Options and SARs outstanding as of the date of the Change in Control may
be cancelled and terminated without payment therefore if the Fair Market Value
of a Share as of the date of the Change in Control is less than the Option
Exercise Price or the SAR grant price.

c)              Subsidiary
Disposition.  The Committee shall
have the authority, exercisable either in advance of any actual or anticipated
Subsidiary Disposition or at the time of an actual Subsidiary Disposition and
either at the time of the grant of an Award or at any time while an Award
remains outstanding, to provide for the automatic full vesting and
exercisability of one or more outstanding unvested Awards under the Plan and
the termination of restrictions on transfer and repurchase or forfeiture rights
on such Awards, in connection with a Subsidiary Disposition, but only with
respect to those Participants who are at the time engaged primarily in
Continuous Service with the Subsidiary involved in such Subsidiary
Disposition.  The Committee also shall
have the authority to condition any such Award vesting and exercisability or
release from such limitations upon the subsequent termination of the affected
Participant’s Continuous Service with that Subsidiary within a specified period
following the effective date of the Subsidiary Disposition.  The Committee may provide that any Awards so
vested or released from such limitations in connection with a Subsidiary
Disposition, shall remain fully exercisable until the expiration or sooner
termination of the Award.

20)        AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN.

a)              Amendment,
Modification and Termination.  The
Board may at any time and from time to time, alter, amend, suspend or terminate
the Plan in whole or in part; provided, however, that no amendment that
requires stockholder approval in order for the Plan to continue to comply with
the NASDAQ listing standards or any rule promulgated by the SEC or any
securities exchange on which Shares are listed or any other Applicable Laws
shall be effective unless such amendment shall be approved by the requisite
vote of stockholders of the Company entitled to vote thereon within the time
period required under such applicable listing standard or rule.

b)             Adjustment
of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events.  The Committee may make adjustments in the
terms and conditions of, and the criteria included in, Awards in recognition of
unusual or nonrecurring events (including, without limitation, the events
described in Section 18 hereof) affecting the Company or the financial
statements of the Company or of changes in Applicable Laws, regulations, or
accounting principles, whenever the Committee determines that such adjustments
are appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan.  With respect to any Awards intended to comply
with the Performance-Based Exception, unless otherwise determined by the
Committee, any such exception shall be specified at such times and in such
manner as will not cause such Awards to fail to qualify under the Performance-Based
Exception.

c)              Awards
Previously Granted.  No termination,
amendment or modification of the Plan or of any Award shall adversely affect in
any material way any Award previously granted under the Plan without the
written consent of the participant holding such Award, unless such termination,
modification or amendment is required by Applicable Laws and except as
otherwise provided herein.

d)             No
Repricing. Except for adjustments made pursuant to Section 18, no amendment
shall reduce the Exercise Price of outstanding Options or the grant price of
outstanding SARs, nor may any outstanding 

 12
 

 

Options or outstanding SARs be surrendered to
the Company as consideration for the grant of new Options or SARs with a lower
Exercise Price or grant price, without the approval of the stockholders of the
Company.

e)              Compliance
with the Performance-Based Exception. 
If it is intended that an Award comply with the requirements of the
Performance-Based Exception, the Committee may apply any restrictions it deems
appropriate such that the Awards maintain eligibility for the Performance-Based
Exception.  If changes are made to Code
Section 162(m) or regulations promulgated thereunder to permit greater
flexibility with respect to any Award or Awards available under the Plan, the
Committee may, subject to this Section 20, make any adjustments to the Plan
and/or Award Agreements it deems appropriate.

21)        RESERVATION OF SHARES.

a)              The Company, during
the term of the Plan, will at all times reserve and keep available such number
of Shares as shall be sufficient to satisfy the requirements of the Plan.

b)             The
inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.

22)        RIGHTS OF PARTICIPANTS. 

a)              Continued Service.  The Plan shall not confer upon any
Participant any right with respect to continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with his or
her right or the Company’s right to terminate his or her employment or
consulting relationship at any time, with or without cause.

b)             Participant.  No Employee, Director or Consultant shall
have the right to be selected to receive an Award under the Plan, or, having
been so selected, to be selected to receive future Awards.

23)        SUCCESSORS.  All
obligations of the Company under the Plan and with respect to Awards shall be
binding on any successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger,
consolidation, or other event, or a sale or disposition of all or substantially
all of the business and/or assets of the Company and references to the
"Company" herein and in any Award agreements shall be deemed to refer
to such successors.

24)        LEGAL CONSTRUCTION.

a)              Gender, Number and References.  Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine, the
plural shall include the singular and the singular shall include the plural.  Any reference in the Plan to a Section of the
Plan either in the Plan or any Award agreement or to an act or code or to any
section thereof or rule or regulation thereunder shall be deemed to refer to
such Section of the Plan, act, code, section, rule or regulation, as may be
amended from time to time, or to any successor Section of the Plan, act, code,
section, rule or regulation.

b)             Severability.  In the event any provision of the Plan shall
be held illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.

c)              Requirements of Law.  The granting of Awards and the issuance of
Shares or cash under the Plan shall be subject to all Applicable Laws and to
such approvals by any governmental agencies or national securities exchanges as
may be required.

 13
 

 

d)             Governing Law.  To the extent not preempted by federal law,
the Plan, and all agreements hereunder, shall be construed in accordance with
and governed by the laws of the State of Delaware, excluding any conflicts or
choice of law rule or principle that might otherwise refer construction or
interpretation of this Plan to the substantive law of another jurisdiction.

e)              Non-Exclusive
Plan.  Neither the adoption of the
Plan by the Board nor its submission to the stockholders of the Company for
approval shall be construed as creating any limitations on the power of the
Board or a committee thereof to adopt such other incentive arrangements as it
may deem desirable.

f)                Code Section 409A Compliance.  To the extent applicable, it is intended that
this Plan and any Awards granted hereunder comply with the requirements of
Section 409A of the Code and any related regulations or other guidance
promulgated with respect to such Section by the U.S. Department of the Treasury
or the Internal Revenue Service (“Section 409A”).  Any provision that would cause the Plan or
any Award granted hereunder to fail to satisfy Section 409A shall have no force
or effect until amended to comply with Section 409A, which amendment may be
retroactive to the extent permitted by Section 409A.

 14

 

GLOSSARY
OF DEFINED TERMS

1.               Definitions. As used in the Plan, the following definitions
shall apply:

“Applicable Laws”
means the legal requirements relating to the administration of stock incentive
plans, if any, under applicable provisions of federal securities laws, state
corporate and securities laws, the Code, and the rules of any applicable stock
exchange or national market system.

“Award” means,
individually or collectively, Nonqualified Stock Options, Incentive Stock
Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units,
Performance Shares, Performance Units and Other Stock-Based Awards granted
under the Plan.

“Award Agreement”
means an agreement entered into by the Company and a Participant setting forth
the terms and provisions applicable to an Award.

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

[“Cause” means (i)
the willful and continued failure of the Participant substantially to perform
the Participant’s duties with the Company (other than any such failure resulting
from incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to the Participant by the Chief Executive
Officer of the Company, a member of the Committee, or another authorized
officer of the Company, which specifically identifies the manner in which the
sender believes that the Participant has not substantially performed the
Participant’s duties; or (ii) the willful engaging by the Participant in
illegal conduct or gross misconduct which is materially and demonstrably
injurious to the Company.]

“Change in Control” means

a)              The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act ) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 25% of either (i) the then outstanding shares of common stock
of the Company (the “Outstanding Company Common Stock”) or (ii) the combined
voting power of the then outstanding voting securities of the Company entitled
to vote generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change in Control:  (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, including any acquisition which,
by reducing the number of shares outstanding, is the sole cause for increasing
the percentage of shares beneficially owned by any such Person to more than the
applicable percentage set forth above, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i), (ii) and
(iii) of subsection (c) of this definition; or

b)             Individuals who, as of the date hereof, constitute the
Board (the “Incumbent Board”) cease for any reason within any period of 24
months to constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board, shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board; or

c)              Consummation by the Company of a reorganization,
merger or consolidation or sale or other disposition of all or substantially
all of the assets 

 

of the Company or the acquisition of assets of another
corporation (a “Business Combination”), in each case, unless, following such
Business Combination, (i) more than 50% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination
(including without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) is represented by
Outstanding Company Common Stock and Outstanding Company Voting Securities,
respectively, that were outstanding immediately prior to such Business
Combination (or, if applicable, is represented by shares into which such
Outstanding Company Common Stock and Outstanding Company Voting Securities were
converted pursuant to such Business Combination) and such ownership of common
stock and voting power among the holders thereof is in substantially the same
proportions as their ownership, immediately prior to such Business Combination
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person (excluding any employee benefit
plan (or related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or more
of, respectively, the then outstanding shares of the corporation resulting from
such Business Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (iii) at least a majority of the
members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing
for such Business Combination; or

d)             Approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company.

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

“Committee” means the Committee, as specified
in Section 2(a), appointed by the Board to administer the Plan.

“Company” means Dynamic Materials Corporation
and any successor thereto as provided in Section 23 herein.

“Consultant” means any consultant or advisor to
the Company or a Subsidiary.

“Continuous Service” means that the provision
of services to the Company or any Subsidiary in any capacity of Employee or
Consultant is not interrupted or terminated. Continuous Service shall not be
considered interrupted in the case of (i) any leave of absence approved by the
Company or (ii) transfers between locations of the Company or between the
Company, any Subsidiary, or any successor. 
A leave of absence approved by the Company shall include sick leave,
military leave, or any other personal leave approved by an authorized
representative of the Company.  For
purposes of Incentive Stock Options, no such leave may exceed ninety (90) days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract.

“Director” means any individual who is a member
of the Board of Directors of the Company or a Subsidiary who is not an
Employee.

“Dividend” means the dividends declared and
paid on Shares subject to an Award.

“Dividend Equivalent” means, with respect to
Shares subject to an Award, a right to be paid an amount equal to the Dividends
declared and paid on an equal number of outstanding Shares.

“Employee” means any employee of the Company or
a Subsidiary.

 

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

“Exercise Price” means the price at which a
Share may be purchased by a Participant pursuant to an Option.

“Fair Market Value”
means, as of any date, the value of a Share determined as follows:

a.               Where there exists
a public market for the Share, the Fair Market Value shall be (A) the closing
sales price for a Share for the last market trading day prior to the time of
the determination (or, if no sales were reported on that date, on the last
trading date on which sales were reported) on the New York Stock Exchange, the
NASDAQ National Market or the principal securities exchange on which the Share
is listed for trading, whichever is applicable, or (B) if the Share is not
traded on any such exchange or national market system, the average of the
closing bid and asked prices of a Share on the NASDAQ Small Cap Market, in each
case, as reported in The Wall Street Journal or such other source as the
Committee deems reliable; or

b.              In the absence of an
established market of the type described above, for the Share, the Fair Market
Value thereof shall be determined by the Committee in good faith, and such
determination shall be conclusive and binding on all persons.

“Freestanding SAR” means an SAR that is granted
independently of any Options, as described in Section 7 herein.

“Full-Value Award” means Awards other than
Options, SARs, or other Awards for which the Participant pays the grant date
intrinsic value directly or by forgoing a right to receive a cash payment from
the Company.

“Incentive Stock Option” or “ISO” means
an Option intended to qualify as an incentive stock option within the meaning
of Section 422 of the Code.

“Nonqualified Stock Option” means an Option
that is not intended to meet the requirement of Section 422 of the Code.

“Option” means an Incentive Stock Option or a
Nonqualified Stock Option granted under the Plan, as described in Section 6
herein.

“Option Proceeds” means the cash received by
the Company as payment of the Exercise Price upon exercise of an Option or a
Prior Plan option plus the federal tax benefit that could be realized by the
Company as a result of the Option of Prior Plan option exercise, which shall be
determined by multiplying the amount that is deductible as a result of the
Option or Prior Plan option exercise (currently equal to the amount upon which
the Participant’s withholding tax obligation is calculated) by the maximum
federal corporate income tax rate for the year of exercise.  To the extent that a Participant pays the
Exercise Price and/or withholding taxes with Shares, Option Proceeds shall not
be calculated with respect to the amount paid in such manner.

“Other Stock-Based Award” means a Share-based
or Share-related Award granted pursuant to Section 12 herein.

“Participant” means a current or former
Employee, Director or Consultant who has rights relating to an outstanding
Award.

“Performance-Based Exception” means the
performance-based exception from the tax deductibility limitations of Code
Section 162(m).

“Performance Measures” shall have the meaning
set forth in Section 14(a).

 

“Performance Period” means the period during
which a performance measure must be met.

“Performance Share” means an Award granted to a
Participant, as described in Section 10 herein.

“Performance Unit” means an Award granted to a
Participant, as described in Section 11 herein.

“Period of Restriction” means the period
Restricted Stock, Restricted Stock Units or Other Stock-Based Awards are
subject to a substantial risk of forfeiture and are not transferable, as
provided in Sections 8, 9 and 12 herein.

“Plan” means the Dynamic Materials Corporation
2006 Stock Incentive Plan.

“Prior Plan” means the Dynamic Materials
Corporation 1997 Equity Incentive Plan.

“Restricted Stock” means an Award granted to a
Participant, as described in Section 8 herein.

“Restricted Stock Units” means an Award granted
to a Participant, as described in Section 9 herein.

“SEC” means the United States Securities and
Exchange Commission.

“Share” means a share of common stock of the Company,
par value $1.00 per share, subject to adjustment pursuant to Section 18 herein.

“Stock Appreciation Right” or “SAR”
means an Award granted to a Participant, either alone or in connection with a
related Option, as described in Section 7 herein.

“Subsidiary” means any corporation in which the
Company owns, directly or indirectly, at least fifty percent (50%) of the total
combined voting power of all classes of stock, or any other entity (including,
but not limited to, partnerships and joint ventures) in which the Company owns,
directly or indirectly, at least fifty percent (50%) of the combined equity
thereof.  Notwithstanding the foregoing,
for purposes of determining whether any individual may be a Participant for
purposes of any grant of Incentive Stock Options, the term “Subsidiary” shall
have the meaning ascribed to such term in Code Section 424(f).

“Subsidiary Disposition” means the disposition
by the Company of its equity holdings in any Subsidiary effected by a merger or
consolidation involving that Subsidiary, the sale of all or substantially all
of the assets of that Subsidiary or the Company’s sale or distribution of
substantially all of the outstanding capital stock of such Subsidiary.

“Tandem SAR” means a SAR that is granted in
connection with a related Option, as described in Section 7 herein.

“Voting Securities” means voting securities of
the Company entitled to vote generally in the election of Directors.

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