2003 Annual Bonus : AWE
SHORT TERM INCENTIVE PLAN
Amended and Restated
Effective January 1, 2003
1. Purpose. The primary purpose of the Plan is to enhance the ability of the Company and its affiliates to attract, motivate and retain individuals of exceptional managerial talent on whom, in large measure, the sustained progress, growth and profitability of the Company depend. The bonus awards under the Plan are intended to qualify as "performance-based" compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended ("Section 162(m)").
2. Administration. The Plan shall be administered by the Compensation Committee, which shall have full power and authority to construe, interpret and administer the Plan. The Compensation Committee shall have full authority to make all eligibility, bonus and other determinations necessary or appropriate for the proper administration of the Plan.
(a) Eligible Employees. For each bonus measurement period, the CEO, four highest compensated officers (within the meaning of Section 162(m)) and any other employee who the Company has designated as a Section 16 officer at the beginning of the bonus measurement period shall be eligible to participate in the Plan, unless determined otherwise by the Compensation Committee in its discretion.
(b) Participation. In general, to participate in the Plan an eligible employee must be continuously employed by the Company or its affiliates for the entire bonus measurement period. However, for an eligible employee who is hired or terminates employment during a bonus measurement period, the Compensation Committee in its discretion may award such employee a pro rata bonus in accordance with Sections 4(c) and 5 and the performance-based compensation requirements of Section 162(m). An eligible employee under this Section 3(b) shall be referred to as a "Participant." A bonus measurement period shall equal a calendar year, unless determined otherwise by the Compensation Committee in its discretion.
(c) Change in Control. In the event of a Change in Control, a Participant shall be entitled to a minimum bonus award for the bonus measurement period that contains the effective time of the Change in Control. The minimum bonus award shall equal the product of (i) the Participant's target annual incentive award in effect as of the effective time of the Change in Control, (ii) a fraction, the numerator of which is the number of calendar days in the then-current bonus measurement period and the denominator of which is 365, and (iii) year-to-date actual performance with respect to the performance goals for such bonus measurement period, as reasonably determined by the Compensation Committee immediately prior to the effective time of the Change in Control. A "Change in Control" for purposes of this Section 3(c) shall have the meaning set forth in the Company's Long Term Incentive Plan, as may be amended from time to time. A "target annual incentive award" for purposes of this Section 3(c) shall mean, for each Participant, the target annual incentive award established by the Company's management and presented to the Compensation Committee in connection with establishing the maximum bonus award for the Participant under Section 4(a). The target annual incentive award shall be less than the maximum bonus award.
4. Bonus Awards. The following provisions shall apply to bonus awards under the Plan:
6. Payment of Bonus Awards. Payment of bonus awards shall be made in cash at such times and on such terms as are determined by the Compensation Committee in its discretion. Payment of bonus awards may be deferred by Participants in accordance with the terms of the Company's Deferred Compensation Plan.
7. Amendments. The Compensation Committee may amend the Plan at any time; provided, however, that to the extent it would cause the Plan to fail to qualify as "performance-based" compensation under Section 162(m) with respect to any Participant, the Compensation Committee shall not have the power to change the material terms of the performance goals unless (a) the modified performance goals are established by the Compensation Committee no later than the deadline established under Section 162(m) and (b) no bonuses are paid under the modified performance goals until after the material terms of the modified performance goals are disclosed to and approved by the Company's stockholders to the extent required by Section 162(m). No amendment that adversely affects a Participant's right to or interest in a bonus awarded by the Compensation Committee prior to the date of the amendment shall be effective unless the Participant agrees to the amendment in writing.
8. Termination. The Compensation Committee may terminate the Plan at any time and for any reason. The Compensation Committee shall provide Participants with written notice of the Plan's termination as soon as practicable following such termination.
9. Other Conditions.
(a) No Claims; No Assignment or Alienation. No person shall have any claim to a bonus award under the Plan, and there is no obligation for uniformity of treatment of Participants under the Plan. Bonus awards under the Plan may not be assigned, alienated, pledged, transferred, encumbered, attached, garnished or subjected to any other disposition.
(b) Unfunded Plan. The Company shall have no obligation to reserve or otherwise fund in advance any bonus awards that are or may in the future become payable under the Plan. Any funds that the Company, acting in its sole and absolute discretion, determines to reserve for future payments under the Plan may be commingled with other assets or funds of the Company and need not in any way be segregated from other assets or funds held by the Company. A Participant's rights to payment of a bonus award under the Plan shall be limited to those of a general creditor of the Company.
(c) No Right to Employment. Neither the Plan nor any action taken hereunder shall be construed as giving any Participant the right to be retained in the employ of the Company.
(d) Tax Withholding. The Company shall have the right to withhold from the payment of any bonus award under the Plan any federal, state or local taxes in accordance with applicable law.
(e) Other Plans. Bonus awards under the Plan shall not constitute compensation for the purpose of determining benefits under any other plan of the Company unless expressly included in compensation under the terms of such other plan.
(f) Governing Law. The Plan shall be governed by the laws of the State of Washington, other than its choice of law rules, and applicable federal law.
10. Effective Date; Stockholder Approval; Prior Plans Superseded. The Plan shall be effective for bonus measurement periods beginning on or after January 1, 2003, subject to approval of the Plan by the Company's stockholders in accordance with Section 162(m). The Plan shall replace and supersede all current and prior bonus plans, programs and arrangements of a similar annual incentive nature with respect to each Participant.