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pursuant to an award shall reduce the Share Reserve by one share. To the extent that an award is settled in cash rather than in shares, the Share Reserve shall remain unchanged, provided, however, that the Share Reserve shall be reduced on a one-for-one basis by the number of shares with respect to which a stock appreciation right (or other stock-based award) is exercised if such exercise is settled in shares. If any shares subject to an award are forfeited, cancelled, exchanged, or surrendered, or if an award otherwise terminates or expires without a distribution of shares, such shares will, to the extent of any such forfeiture, cancellation, exchange, surrender, termination or expiration, again be available for awards under the 2008 Plan. The maximum number of shares of common stock subject to awards that may be granted during any calendar year under the 2008 Plan to any executive officer or other employee whose compensation is or may be subject to Section 162(m) is 2,000,000 shares, subject to adjustment as provided in the 2008 Plan.

 

Types of Awards.  The 2008 Plan provides for the grant of stock options (including options intended to be “incentive stock options” within the meaning of Section 422 of the Code), stock appreciation rights, restricted stock, restricted stock units and other stock-based and cash-based awards.

 

Options.  The Administrator will have the authority to determine the grantees to whom options will be granted under the 2008 Plan, the number of shares to be subject to options, and the terms and conditions of options (including whether the option is an incentive stock option), provided that the exercise price of each option may not be less than 100% of the fair market value (as defined in the 2008 Plan) of the common stock on the date of grant. The term of any option granted under the 2008 Plan may not exceed 10 years.

 

Stock Appreciation Rights.  The Administrator will have the authority to determine the grantees to whom awards of stock appreciation rights may be granted under the 2008 Plan. Stock appreciation rights entitle the holder upon exercise to receive an amount in any combination of cash or shares of common stock (as determined by the Administrator) equal in value to the excess of the fair market value of the shares covered by such right over the grant price. The exercise price for stock appreciation rights will not be less than the fair market value of common stock on the grant date.

 

Restricted Stock.  The Administrator will have the authority to determine the grantees to whom awards of restricted stock will be granted under the 2008 Plan, the number of shares to be subject to the awards, and the terms and conditions of the awards, including whether the vesting of such an award will be restricted by time or subject to the attainment of one or more performance goals (as described below). An award of restricted stock may provide that the recipient has the right to vote and receive dividends on the restricted stock granted under the 2008 Plan.

 

Restricted Stock Units.  The Administrator will have the authority to determine the grantees to whom awards of restricted stock units will be granted under the 2008 Plan. Restricted stock units represent the right to receive common stock, cash, or both (as determined by the Administrator) upon vesting. Restricted stock units will vest upon the satisfaction of conditions set forth in the applicable award agreements. Restricted stock units may be forfeited if, for example, the recipient’s employment terminates before the award vests. Except as specified in a restricted stock unit award agreement, the holder of a restricted stock unit award will have none of the rights of a holder of common stock unless and until shares of common stock are actually delivered in satisfaction of such units.

 

Other Stock-Based Awards.  The Administrator is authorized to grant other stock-based awards that are deemed by the Administrator to be consistent with the purposes of the 2008 Plan. The Administrator will have the authority to determine the terms and conditions of such awards, including applicable performance goals and performance periods.

 

Other Cash-Based Awards.  Cash-based awards may be granted under the 2008 Plan. The Administrator will have the authority to determine the grantees to whom the awards will be granted, the form of the award and all terms and conditions of the awards, including whether the vesting or payment of any portion of any such award will be subject to the attainment of one or more performance goals. With respect to an individual who is a “covered employee” as defined under Section 162(m), the maximum value of the aggregate payment that any grantee may receive with respect to other cash-based awards in respect of any annual performance period is $5 million and for any other performance period in excess of one year, such

amount multiplied by a fraction, the numerator of which is the number of months in the performance period and the denominator of which is twelve.

 

Performance Goals.  Under the 2008 Plan, the Administrator will have the authority to determine that vesting or payment of an award under the 2008 Plan will be subject to the attainment of one or more performance goals with respect to a performance period. The performance goals may include any or a combination of, or a specified increase or decrease in, the following: net income (before or after taxes); operating income; gross margin; earnings before all or any of interest, taxes, depreciation and/or amortization; revenue; unit sales; cash flow; return on equity; return on assets; return on capital; earnings from continuing operations; cost reduction goals or levels of expenses, costs or liabilities; market share; asset management (e.g., inventory and receivable levels); and customer satisfaction.

 

No Repricing.  Except in connection with certain corporate transactions (including any stock dividend, stock split, recapitalization, merger, spin-off, or other similar occurrence), the Administrator will not have the authority without first obtaining stockholder approval to (i) reprice (or cancel and regrant) any option, stock appreciation right or other stock-based award at a lower exercise price, (ii) take any other action (whether in the form of an amendment, cancellation or replacement grant) that has the effect of repricing an option, stock appreciation right or other stock-based award at a lower exercise price, or (iii) grant any option, stock appreciation right or other stock-based award that contains a so-called “reload” feature under which additional options, stock appreciation rights or other stock-based awards are granted automatically to the grantee upon exercise of the original option, stock appreciation right or other stock-based award.

 

Termination of Employment.  Unless otherwise provided by the Administrator in the award agreement or otherwise, upon termination of a grantee’s employment with or service to the Company or its affiliates, other than by reason of death, disability, or retirement, all unvested awards held by such grantee shall immediately terminate, provided, however, that, unless such termination is for Cause (as defined in the 2008 Plan), all options and stock appreciation rights, to the extent exercisable on the date of such termination, will remain exercisable until the earlier of (a) the expiration date of such option or stock appreciation right and (b) the 60th day following the date of such termination.

 

Except as otherwise provided by the Administrator in the award agreement or otherwise, in the event of a termination as a result of a grantee’s death, disability, or retirement, all awards held by such grantee at the time of such termination will immediately vest, and all options and stock appreciation rights held by such grantee will become exercisable and remain exercisable until the earlier of (a) the expiration date of such option or stock appreciation right and (b) the third anniversary of the date of such termination.

 

Effect of Change in Control.  In the event of a Change in Control (as defined in the 2008 Plan), unless otherwise provided by the Administrator in an award agreement, (i) all outstanding options and stock appreciation rights will become immediately exercisable, (ii) the restrictions, payment conditions, and forfeiture conditions applicable to any award other than an option or stock appreciation right will lapse, and such awards shall be deemed fully vested, and (iii) any performance conditions imposed with respect to Awards shall be deemed to be achieved at the target level for the applicable performance period.

 

Furthermore, unless waived in advance of such Change in Control by the Board, each grantee who is an employee of, or an independent contractor providing services to, the Company or its affiliates at the time of such Change in Control will have the right to require the Company to pay, in cancellation of any or all options and stock appreciation rights held by such grantee, an amount equal to the product of (i) the excess of (x) the fair market value per share of common stock over (y) the applicable exercise price, times (ii) the number of shares specified by the grantee in a written notice to the Company prior to or within 30 days after the Change in Control (up to the full number of shares then subject to such option or stock appreciation right).

 

Transferability of Awards.  No award granted under the 2008 Plan will be assignable or transferable by the grantee, other than by will or the laws of descent and distribution, except that, upon approval by the Board, the grantee may transfer an Award that is not intended to constitute an “incentive stock option” (a) pursuant to a qualified domestic relations order (as defined for purposes of the Employee Retirement Income Security Act of 1974, as amended), or (b) by gift: to a member of the Family (as defined in the 2008

Plan) of the grantee, to or for the benefit of one or more Charitable Organizations (as defined in the 2008 Plan), or to a trust for the exclusive benefit of the grantee, one or more members of the grantee’s Family, one or more Charitable Organizations, or any combination of the foregoing, provided that any such transferee will enter into a written agreement to be bound by the terms of the 2008 Plan.

 

Amendment or Termination of the 2008 Plan.  Subject to certain limitations, the Board of Directors may, at any time, suspend or terminate the 2008 Plan, or revise or amend it in any respect whatsoever, provided, however, that the Board of Directors will not have the authority to amend the 2008 Plan in such a way that would impair the rights of a grantee with respect to outstanding awards without such grantee’s consent. In addition, stockholder approval is required for any amendment that increases the total number of shares of stock reserved for grant under the 2008 Plan or the number of shares that may be issued with respect to Share Equivalent Awards.

 

Term of the 2008 Plan.  The Plan shall terminate on the date that is 10 years from the effective date.

 

participant. Subject to the discretion of the Executive Compensation Subcommittee, the performance measurement periods are typically the one-year periods commencing on January 1, 2007.

 

The Executive Compensation Subcommittee would have the discretion to make appropriate adjustments in performance factors to reflect the impact of extraordinary items, such as (1) profit or loss attributable to acquisitions or divestitures, (2) changes in accounting standards or treatments, (3) gain, loss or expense associated with restructuring charges, extraordinary, unusual or one-time matters or discontinued operations, (4) capital expenditures, and (5) share repurchases and changes in capitalization.

 

Awards Under the Plan.  Awards under the 2007 Bonus Plan will be payable in cash, unless otherwise determined by the Executive Compensation Subcommittee. Under the 2007 Bonus Plan, the maximum cash bonus for each fiscal year may not exceed $5 million for any particular participant. Notwithstanding this maximum, and even if the Performance Factors are met, the Executive Compensation Subcommittee has sole discretion, pursuant to the exercise of its “negative discretion,” to decrease the amount of any award payable or to pay no award at all. In no event may the Executive Compensation Subcommittee increase at its discretion the amount of an award payable upon attainment of the Performance Factors. Payment of any bonus under the 2007 Bonus Plan may be deferred, subject to the 2007 Bonus Plan’s terms and any other written commitment authorized by the Executive Compensation Subcommittee.

 

Amendment of the Plan.  The 2007 Bonus Plan may from time to time be altered, amended, suspended or terminated, in whole or in part, by our Board of Directors or the Executive Compensation Subcommittee, but no amendment will be effective without the requisite stockholder approval if such approval is required to satisfy the requirements of Section 162(m).

 

Where a Participant or other person is entitled to receive a payment pursuant to an Award hereunder, the Company shall have the right either to deduct from the payment, or to require the Participant or such other person to pay to the Company prior to delivery of such payment, an amount sufficient to satisfy any federal, state, local or other withholding tax requirements related thereto.

 

Certain Federal Income Tax Consequences.  A Participant will recognize ordinary income upon receipt of payment. As the Plan is intended to qualify as to deductibility under Section 162(m) of the Internal Revenue Code, the Company will be entitled to a tax deduction for the payments.

 

The estimated annual benefits that certain of our named executive officers, current executive officers (other than our named executive officers) and non-executive officers would have been eligible to receive for 2006 under the 2007 Bonus Plan had it been in effect in 2006 are as follows: