METLIFE, INC. 2005 STOCK AND INCENTIVE COMPENSATION PLAN

 

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ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION

 

1.1  ESTABLISHMENT OF THE PLAN.  MetLife, Inc., a Delaware corporation

(hereinafter referred to as the "Company"), establishes an incentive

compensation plan to be known as the MetLife, Inc. 2005 Stock and Incentive

Compensation Plan (hereinafter referred to as the "Plan"), as set forth in this

document.

 

The Plan permits the grant of Nonqualified Stock Options, Incentive Stock

Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units,

Performance Shares, Performance Units, Cash-Based Awards, and Stock-Based

Awards.

 

The Plan shall become effective, if approved by the Board and shareholders, on

April 15, 2005 (the "Effective Date") and shall remain in effect as provided in

Section 1.3 hereof.

 

1.2  PURPOSE OF THE PLAN.  The purpose of the Plan is to promote the success and

enhance the value of the Company and Affiliates by linking the personal

interests of the Participants to those of the Company's shareholders, and by

providing Participants with an incentive for outstanding performance.

 

The Plan is further intended to provide flexibility to the Company in its

ability to motivate, attract, and retain the services of Participants upon whose

judgment, interest, and special effort the successful conduct of its operation

largely is dependent.

 

1.3  DURATION OF THE PLAN.  The Plan shall commence as of the Effective Date, as

described in Section 1.1 herein, and shall remain in effect, subject to the

right of the Committee or the Board to amend or terminate the Plan at any time

pursuant to Article 16 herein, until the earlier of (i) the tenth anniversary of

the Effective Date, or (ii) all Shares subject to the Plan have been purchased

or acquired according to the Plan's provisions.

 

1.4  SUCCESSOR PLAN.  This Plan shall serve as the successor to the MetLife,

Inc. 2000 Stock Incentive Plan (the "Predecessor Plan"), and no further grants

shall be made under the Predecessor Plan from and after the Effective Date of

this Plan. All outstanding awards under the Predecessor Plan immediately prior

to the Effective Date of this Plan are hereby incorporated into this Plan and

shall accordingly be treated as Awards under this Plan. However, each such award

shall continue to be governed solely by the terms and conditions of the

instrument evidencing such grant or issuance, and, except as otherwise expressly

provided herein or by the Committee, no provision of this Plan shall affect or

otherwise modify the rights or obligations of holders of such incorporated

awards.

 

Any Shares of common stock reserved for issuance under the Predecessor Plan in

excess of the number of Shares as to which awards have been awarded thereunder

shall be transferred into this Plan upon the Effective Date and shall become

available for grant under this Plan. Any Shares related to awards granted or

issued under the Predecessor Plan that after the Effective Date may lapse,

expire, terminate, or are cancelled, are settled in cash in lieu of common

stock, are tendered (either by actual delivery or attestation) to pay the option

price, or are used to satisfy any tax withholding requirements shall be deemed

available for issuance or reissuance under Section 4.1 of this Plan.

 

ARTICLE 2. DEFINITIONS

 

Whenever used in the Plan, the following terms shall have the meaning set forth

below, and when the meaning is intended, the initial letter of the word shall be

capitalized.

 

2.1  "AFFILIATE" shall have the meaning ascribed to such term in Rule 12b-2 of

the General Rules and Regulations of the Exchange Act, with reference to the

Company, and shall also include any corporation, partnership, joint venture,

limited liability company, or other entity in which the Company

 

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owns, directly or indirectly, at least fifty percent (50%) of the total combined

Voting Power of such corporation or of the capital interest or profits interest

of such partnership or other entity.

 

2.2  "AGENCY" means the active relationship between an Agent and an insurance

company for which the Agent is licensed.

 

2.3  "AGENT" means a natural person licensed or otherwise authorized under

applicable law to represent the Company or an Affiliate in the sale of insurance

or other financial products or services.

 

2.4  "AWARD" means, individually or collectively, a grant under this Plan of

NQSOs, ISOs, SARs, Restricted Stock, Restricted Stock Units, Performance Shares,

Performance Units, Cash-Based Awards, or Stock-Based Awards, in each case

subject to the terms of this Plan.

 

2.5  "AWARD AGREEMENT" means either (i) a written agreement entered into by the

Company or an Affiliate and a Participant setting forth the terms and provisions

applicable to Awards granted under this Plan; or (ii) a written statement issued

by the Company or an Affiliate to a Participant describing the terms and

provisions of such Award.

 

2.6  "BENEFICIAL OWNER" OR "BENEFICIAL OWNERSHIP" shall have the meaning

ascribed to such term in rule 13d-3 of the General Rules and Regulations under

the Exchange Act.

 

2.7  "BOARD" OR "BOARD OF DIRECTORS" means the Board of Directors of the

Company.

 

2.8  "CASH-BASED AWARD" means an Award granted under Article 10 herein, the

value of which is denominated in cash as determined by the Committee and which

is not any other form of Award described in this Plan.

 

2.9  "CAUSE" means (i) the willful failure by the Participant to perform

substantially the Participant's duties as an Employee or Agent (other than due

to physical or mental illness) after reasonable notice to the Participant of

such failure, (ii) the Participant's engaging in serious misconduct that is

injurious to the Company or any Affiliate in any way, including, but not limited

to, by way of damage to their respective reputations or standings in their

respective industries, (iii) the Participant's having been convicted of, or

having entered a plea of nolo contendere to, a crime that constitutes a felony

or (iv) the breach by the Participant of any written covenant or agreement with

the Company or any Affiliate not to disclose or misuse any information

pertaining to, or misuse any property of, the Company or any Affiliate or not to

compete or interfere with the Company or any Affiliate.

 

2.10  "CHANGE OF CONTROL" shall occur if any of the following events occur:

 

     (i)  Any Person acquires Beneficial Ownership, directly or indirectly, of

     securities of the Company representing twenty-five percent (25%) or more of

     the combined Voting Power of the Company's securities;

 

     (ii)  Within any twenty-four (24) month period, the individuals who were

     Directors of the Company at the beginning of such period (the "Incumbent

     Directors") shall cease to constitute at least a majority of the Board of

     Directors or the Board of Directors of any successor to the Company;

     provided, however, that any Director elected or nominated for election to

     the Board by a majority of the Incumbent Directors then still in office

     shall be deemed to be an Incumbent Director for purposes of this Section

     2.10(ii);

 

     (iii)  The shareholders of the Company approve a merger, consolidation,

     share exchange, division, sale or other disposition of all or substantially

     all of the assets of the Company which is consummated (a "Corporate

     Event"), and immediately following the consummation of which the

     shareholders of the Company immediately prior to such Corporate Event do

     not hold, directly or indirectly, a majority of the Voting Power of (i) in

     the case of a merger or consolidation, the surviving or resulting

     corporation, (ii) in the case of a share exchange, the acquiring

     corporation, or (iii) in the case of a division or a sale or other

     disposition of assets, each surviving, resulting or acquiring corporation

     which, immediately following the relevant Corporate Event, holds more than

 

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     twenty-five percent (25%) of the consolidated assets of the Company

     immediately prior to such Corporate Event; or

 

     (iv)  Any other event occurs which the Board declares to be a Change of

     Control.

 

2.11  "CHANGE OF CONTROL PRICE" means the highest price per share of Shares

offered in conjunction with any transaction resulting in a Change of Control (as

determined in good faith by the Committee if any part of the offered price is

payable other than in cash) or, in the case of a Change of Control occurring

solely by reason of a change in the composition of the Board, the highest Fair

Market Value of the common stock on any of the thirty (30) trading days

immediately preceding the date on which a Change of Control occurs.

 

2.12  "CODE" means the U.S. Internal Revenue Code of 1986, as amended from time

to time, or any successor thereto.

 

2.13  "COMMITTEE" means the Compensation Committee of the Board of Directors, or

any other duly authorized committee of the Board appointed by the Board to

administer the Plan.

 

2.14  "COMPANY" means MetLife, Inc., a Delaware corporation, and any successor

thereto as provided in Article 18 herein.

 

2.15  "CONSTRUCTIVELY TERMINATED" means, unless otherwise specified by the

Committee in the Award Agreement, a voluntary termination of employment by an

Employee or of a relationship as an Agent by an Agent within ten (10) business

days after any of the following actions by the Company, Affiliate, or person

acting on behalf of either:

 

     (i)  Requiring the Employee or Agent to be based as his/her regular or

     customary place of employment or Agency at any office or location more than

     fifty (50) miles from the location at which the Employee performed his/her

     duties immediately prior to the Change of Control, or in a state other than

     the one in which the Employee or Agent performed his/her duties immediately

     prior to the Change of Control, in each case except for travel reasonably

     required in the performance of the individual's responsibilities;

 

     (ii)  In the case of an Employee, reducing the Employee's base salary below

     the rate in effect at the time of a Change of Control;

 

     (iii)  In the case of an Employee, failing to pay the Employee's base

     salary, other wages, or employment-related benefits as required by law; or

 

     (iv)  In the case of an Agent, failing to pay the Agent's compensation or

     benefits as required by law.

 

2.16  "DIRECTOR" means any individual who is a member of the Board of Directors

of the Company.

 

2.17  "EMPLOYEE" means any employee of the Company or an Affiliate. Directors

who are not otherwise employed by the Company or an Affiliate shall not be

considered Employees under this Plan. For greater clarity, and without limiting

the generality of the foregoing, individuals described in the first sentence of

this definition who are foreign nationals or are employed outside of the United

States, or both, are Employees and may be granted Awards on the terms and

conditions set forth in the Plan, or on such other terms and conditions as may,

in the judgment of the Committee, be necessary or desirable to further the

purposes of the Plan.

 

2.18  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from

time to time, or any successor act thereto.

 

2.19  "FAIR MARKET VALUE" or "FMV" means a price that is based on the opening,

closing, actual, high, low, or average selling prices of a Share on the New York

Stock Exchange ("NYSE") or other established stock exchange (or exchanges) on

the applicable date, the preceding trading day, the next succeeding trading day,

or an average of trading days, as determined by the Committee in its discretion.

Such definition(s) of FMV shall be specified in each Award Agreement and may

differ depending on whether FMV is in reference to the grant, exercise, vesting,

settlement, or payout of an

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Award. If, however, the accounting standards used to account for equity awards

granted to Participants are substantially modified subsequent to the Effective

Date of the Plan, the Committee shall have the ability to determine an Award's

FMV based on the relevant facts and circumstances. If Shares are not traded on

an established stock exchange, FMV shall be determined by the Committee based on

objective criteria.

 

2.20  "FISCAL YEAR" means the year commencing on January 1 and ending December

31 or other time period as approved by the Board.

 

2.21  "FREESTANDING SAR" means an SAR that is not a Tandem SAR, as described in

Article 7 herein.

 

2.22  "GRANT PRICE" means the price against which the amount payable is

determined upon exercise of an SAR.

 

2.23  "INCENTIVE STOCK OPTION" or "ISO" means an Option to purchase Shares

granted under Article 6 herein and that is designated as an Incentive Stock

Option and is intended to meet the requirements of Section 422 of the Code, or

any successor provision.

 

2.24  "INSIDER" shall mean an individual who is, on the relevant date, subject

to the reporting requirements of Section 16 of the Exchange Act, as determined

by the Board.

 

2.25  "NONQUALIFIED STOCK OPTION" or "NQSO" means an Option to purchase Shares,

granted under Article 6 herein, which is not intended to be an Incentive Stock

Option or that otherwise does not meet such requirements.

 

2.26  "OPTION" means the conditional right to purchase Shares at a stated Option

Price for a specified period of time in the form of an Incentive Stock Option or

a Nonqualified Stock Option subject to the terms of this Plan.

 

2.27  "OPTION PRICE" means the price at which a Share may be purchased by a

Participant pursuant to an Option, as determined by the Committee.

 

2.28  "PARTICIPANT" means an Employee or an Agent who has been selected to

receive an Award, or who has an outstanding Award granted under the Plan.

 

2.29  "PERFORMANCE-BASED COMPENSATION" means compensation under an Award that is

granted in order to provide remuneration solely on account of the attainment of

one or more Performance Goals under circumstances that satisfy the requirements

of Section 162(m) of the Code.

 

2.30  "PERFORMANCE GOAL" means a performance criterion selected by the Committee

for a given Award for purposes of Article 11 based on one or more of the

Performance Measures.

 

2.31  "PERFORMANCE MEASURES" means measures as described in Article 11, the

attainment of one or more of which shall, as determined by the Committee,

determine the vesting, payability, or value of an Award to an Insider that are

designated to qualify as Performance-Based Compensation.

 

2.32  "PERFORMANCE PERIOD" means the period of time during which the assigned

performance criteria must be met in order to determine the degree of payout

and/or vesting with respect to an Award.

 

2.33  "PERFORMANCE SHARE" means an Award granted under Article 9 herein and

subject to the terms of this Plan, denominated in Shares, the value of which at

the time it is payable is determined as a function of the extent to which

corresponding performance criteria have been achieved.

 

2.34  "PERFORMANCE UNIT" means an Award granted under Article 9 herein and

subject to the terms of this Plan, denominated in units, the value of which at

the time it is payable is determined as a function of the extent to which

corresponding performance criteria have been achieved.

 

2.35  "PERIOD OF RESTRICTION" means the period when an Award of Restricted Stock

or Restricted Stock Unit is subject to forfeiture based on the passage of time,

the achievement of performance criteria, and/or upon the occurrence of other

events as determined by the Committee, in its discretion.

 

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2.36  "PERSON" shall have the meaning ascribed to such term in Section 3(a)(9)

of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a

"group" as defined in Section 13(d) thereof; provided, however, that "Person"

shall not include (i) the Company or any Affiliate, (ii) the MetLife

Policyholder Trust (or any person(s) who would otherwise be described herein

solely by reason of having the power to control the voting of the shares held by

that trust), or (iii) any employee benefit plan (including an employee stock

ownership plan) sponsored by the Company or any Affiliate.

 

2.37  "RESTRICTED STOCK" means an Award of Shares subject to a Period of

Restriction, granted under Article 8 herein and subject to the terms of this

Plan.

 

2.38  "RESTRICTED STOCK UNIT" means an Award denominated in units subject to a

Period of Restriction, granted under Article 8 herein and subject to the terms

of this Plan.

 

2.39  "SHARES" means the shares of common stock of the Company, $.01 par value

per Share.

 

2.40  "STOCK APPRECIATION RIGHT" or "SAR" means the conditional right to receive

the difference between the FMV of a Share on the date of exercise over the Grant

Price, pursuant to the terms of Article 7 herein and subject to the terms of

this Plan.

 

2.41  "STOCK-BASED AWARD" means an equity-based or equity-related Award granted

under Article 10 herein and subject to the terms of this Plan, and not otherwise

described by the terms of this Plan.

 

2.42  "TANDEM SAR" means an SAR that the Committee specifies is granted in

connection with a related Option pursuant to Article 7 herein and subject to the

terms of this Plan, the exercise of which shall require forfeiture of the right

to purchase a Share under the related Option (and when a Share is purchased

under the Option, the Tandem SAR shall similarly be cancelled) or an SAR that is

granted in tandem with an Option but the exercise of such Option does not cancel

the SAR, but rather results in the exercise of the related SAR. Regardless of

whether an Option is granted coincident with an SAR, an SAR is not a Tandem SAR

unless so specified by the Committee at time of grant.

 

2.43  "VOTING POWER" shall mean such number of Voting Securities as shall enable

the holders thereof to cast all the votes which could be cast in an annual

election of directors of a company.

 

2.44  "VOTING SECURITIES" shall mean all securities entitling the holders

thereof to vote in an annual election of directors of a company.

 

ARTICLE 3. ADMINISTRATION

 

3.1  GENERAL.  The Committee shall be responsible for administering the Plan.

The Committee may employ attorneys, consultants, accountants, agents, and other

individuals, any of whom may be an Employee or Agent, and the Committee, the

Company, and its officers and Directors shall be entitled to rely upon the

advice, opinions, or valuations of any such persons. All actions taken and all

interpretations and determinations made by the Committee shall be final,

conclusive, and binding upon the Participants, the Company, and all other

interested parties.

 

3.2  AUTHORITY OF THE COMMITTEE.  The Committee shall have full and exclusive

discretionary power to interpret the terms and the intent of the Plan and any

Award Agreement or other agreement ancillary to or in connection with the Plan,

to determine eligibility for Awards, and to adopt such rules, regulations, and

guidelines for administering the Plan as the Committee may deem necessary or

proper. Such authority shall include, but not be limited to, selecting Award

recipients, establishing all Award terms and conditions and, subject to Article

16, adopting modifications and amendments, or subplans to the Plan or any Award

Agreement, including, without limitation, any that are necessary or appropriate

to comply with the laws or compensation practices of the countries and other

jurisdictions in which the Company and Affiliates operate.

 

3.3  DELEGATION.  The Committee may delegate to one or more of its members or to

one or more officers of the Company or its Affiliates, any of its duties or

powers as it may deem advisable; provided, however, that the Committee may not

delegate any of its non-administrative powers with respect to

 

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Awards intended to be Performance-Based Compensation; and provided further, that

the member(s) or officer(s) shall report periodically to the Committee regarding

the nature and scope of the Awards granted pursuant to the authority delegated

pursuant to this Section 3.3. Subject to the terms of the previous sentence, the

Committee may delegate to any individual(s) such administrative duties or powers

as it may deem advisable

 

ARTICLE 4. SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS

 

4.1  NUMBER OF SHARES AVAILABLE FOR AWARDS.  Subject to adjustment as provided

in Section 4.2 herein, the number of Shares hereby reserved for issuance to

Participants under the Plan shall be sixty-eight million (68,000,000) plus any

remaining Shares available for grant under the Predecessor Plan as set forth in

Section 1.4 (such total number of Shares, including such adjustment and

remaining Shares, the "Total Share Authorization"). Any Shares issued in

connection with an Option or SAR shall be counted against the limit as one (1)

Share for every one (1) Share issued; for Awards other than Options and SARs,

any Shares issued shall be counted against this limit as one and one-hundred

seventy-nine thousandths (1.179) Shares for every one (1) Share issued. The

maximum aggregate number of Shares that may be granted in the form of

Nonqualified Stock Options shall be equal to the Total Authorization. The

maximum aggregate number of Shares that may be granted in the form of Incentive

Stock Options shall be sixty-eight million (68,000,000).

 

For greater clarity, any Awards that are not settled in Shares shall not reduce

any of these reserves. Any Shares related to Awards (or after the Effective

Date, awards granted under the Predecessor Plan) which (i) terminate by

expiration, forfeiture, cancellation, or otherwise without the issuance of such

Shares, (ii) are settled in cash either in lieu of Shares or otherwise, or (iii)

are exchanged with the Committee's permission for Awards not involving Shares,

shall be available again for grant under the Plan. Moreover, if the Option Price

of any Option granted under the Plan or the tax withholding requirements with

respect to any Award granted under the Plan are satisfied by tendering Shares to

the Company (by either actual delivery or by attestation), or if an SAR is

exercised, only the number of Shares issued, net of the Shares tendered, if any,

will be deemed delivered for purposes of determining the maximum number of

Shares available for issuance under the Plan. The maximum number of Shares

available for issuance under the Plan shall not be reduced to reflect any

dividends or dividend equivalents that are reinvested into additional Shares or

credited as additional Restricted Stock, Restricted Stock Units, Performance

Shares, or Stock-Based Awards. The Shares available for issuance under the Plan

may be authorized and unissued Shares or treasury Shares.

 

Unless and until the Committee determines that an Award to an Insider shall not

be designed to qualify as Performance-Based Compensation, the following limits

("Award Limits") shall apply to grants of Awards to Insiders under the Plan:

 

     (a)  OPTIONS AND SARS:  The maximum aggregate number of Shares that may be

     granted in the form of Options or Stock Appreciation Rights, pursuant to

     any Award granted in any one Fiscal Year to any one Participant, shall be

     two million (2,000,000).

 

     (b)  RESTRICTED STOCK/RESTRICTED STOCK UNITS:  The maximum aggregate grant

     with respect to Awards of Restricted Stock/Restricted Stock Units granted

     in any one Fiscal Year to any one Participant shall be one million

     (1,000,000).

 

     (c)  PERFORMANCE SHARES/PERFORMANCE UNITS:  The maximum aggregate Award of

     Performance Shares or Performance Units that a Participant may receive in

     any one Fiscal Year shall be one million (1,000,000) Shares, or equal to

     the value of one million (1,000,000) Shares determined as of the date of

     vesting or payout, as applicable.

 

     (d)  CASH-BASED AWARDS:  The maximum aggregate amount awarded or credited

     with respect to Cash-Based Awards to any one Participant in any one Fiscal

     Year may not exceed ten million dollars ($10,000,000) determined as of the

     date of vesting or payout, as applicable.

 

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     (e)  STOCK AWARDS:  The maximum aggregate grant with respect to Awards of

     Stock-Based Awards in any one Fiscal Year to any one Participant shall be

     one million (1,000,000).

 

4.2  ADJUSTMENTS IN AUTHORIZED SHARES.  In the event of any corporate event or

transaction (including, but not limited to, a change in the Shares of the

Company or the capitalization of the Company) such as a merger, consolidation,

reorganization, recapitalization, separation, stock dividend, extraordinary

dividend, stock split, reverse stock split, split up, spin-off, or other

distribution of stock or property of the Company, combination of securities,

exchange of securities, dividend in kind, or other like change in capital

structure or distribution (other than normal cash dividends) to shareholders of

the Company, or any similar corporate event or transaction, the Committee, in

its sole discretion, in order to prevent dilution or enlargement of

Participants' rights under the Plan, shall substitute or adjust, as applicable,

the number and kind of Shares that may be issued under the Plan, the number and

kind of Shares subject to outstanding Awards, the Option Price or Grant Price

applicable to outstanding Awards, the Award Limits, the limit on issuing Awards

other than Options granted with an Option Price equal to at least the FMV of a

Share on the date of grant or Stock Appreciation Rights with a Grant Price equal

to at least the FMV of a Share on the date of grant, and any other value

determinations applicable to outstanding Awards or to this Plan.

 

The Committee, in its sole discretion, may also make appropriate adjustments in

the terms of any Awards under the Plan to reflect, or related to, such changes

or distributions and may modify any other terms of outstanding Awards, including

modifications of performance criteria and changes in the length of Performance

Periods. The determination of the Committee as to the foregoing adjustments, if

any, shall be conclusive and binding on Participants under the Plan.

 

Subject to the provisions of Article 15 and any applicable law or regulatory

requirement, without affecting the number of Shares reserved or available

hereunder, the Committee may authorize the issuance, assumption, substitution,

or conversion of Awards under this Plan in connection with any such corporate

event or transaction upon such terms and conditions as it may deem appropriate.

Additionally, the Committee may amend the Plan, or adopt supplements to the

Plan, in such manner as it deems appropriate to provide for such issuance,

assumption, substitution, or conversion as provided in the previous sentence.

 

ARTICLE 5. ELIGIBILITY AND PARTICIPATION

 

5.1  ELIGIBILITY.  Individuals eligible to participate in the Plan include all

Employees and Agents.

 

5.2  ACTUAL PARTICIPATION.  Subject to the provisions of the Plan, the Committee

may from time to time, select from all eligible Employees and Agents, those to

whom Awards shall be granted and shall determine in its discretion, the nature,

terms, and amount of each Award.

 

ARTICLE 6. STOCK OPTIONS

 

6.1  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 in its

discretion. Notwithstanding the foregoing, no ISOs may be granted more than ten

(10) years after the earlier of (a) adoption of the Plan by the Board, and (b)

the Effective Date.

 

6.2  AWARD AGREEMENT.  Each Option grant shall be evidenced by an Award

Agreement that shall specify the Option Price, the duration of the Option, the

number of Shares to which the Option pertains, the conditions upon which an

Option shall become vested and exercisable, and any such other provisions as the

Committee shall determine. The Award Agreement also shall specify whether the

Option is intended to be an ISO or a NQSO.

 

6.3  OPTION PRICE.  The Option Price for each grant of an Option under this Plan

shall be determined by the Committee and shall be specified in the Award

Agreement. The Option Price may include an Option Price based on one hundred

percent (100%) of the FMV of the Shares on the date of grant, an

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Option Price that is set at a premium to the FMV of the Shares on the date of

grant, or an Option Price that is indexed to the FMV of the Shares on the date

of grant, with the index determined by the Committee in its discretion.

 

6.4  DURATION OF OPTIONS.  Each Option granted to a Participant shall expire at

such time as the Committee shall determine at the time of grant; provided,

however, no Option shall be exercisable later than the tenth (10th) anniversary

date of its grant. Notwithstanding the foregoing, for Options granted to

Participants outside the United States, the Committee has the authority to grant

Options that have a term greater than ten (10) years.

 

6.5  EXERCISE OF OPTIONS.  Options granted under this Article 6 shall be

exercisable at such times and on the occurrence of such events, and be subject

to such restrictions and conditions, as the Committee shall in each instance

approve, which need not be the same for each grant or for each Participant.

 

6.6  PAYMENT.  Options granted under this Article 6 shall be exercised by the

delivery of a notice of exercise to the Company or an agent designated by the

Company in a form specified or accepted by the Committee, or by complying with

any alternative procedures which may be authorized by the Committee, setting

forth the number of Shares with respect to which the Option is to be exercised,

accompanied by full payment for the Shares.

 

The Option Price upon exercise of any Option shall be payable to the Company in

full either: (a) in cash or its equivalent; (b) by tendering (either by actual

delivery or attestation) previously acquired Shares having an aggregate FMV at

the time of exercise equal to the total Option Price; (c) by a combination of

(a) and (b); or (d) any other method approved or accepted by the Committee in

its sole discretion subject to such rules and regulations as the Committee may

establish.

 

Subject to Section 6.7 and any governing rules or regulations, as soon as

practicable after receipt of a notification of exercise and full payment, the

Committee shall cause to be delivered to the Participant Share certificates or

evidence of book entry Shares in an appropriate amount based upon the number of

Shares purchased under the Option(s). Unless otherwise determined or accepted by

the Committee, all payments in cash shall be paid in United States dollars.

 

6.7  RESTRICTIONS ON SHARE TRANSFERABILITY.  The Committee may impose such

restrictions on any Shares acquired pursuant to the exercise of an Option

granted pursuant to this Plan as it may deem advisable, including, without

limitation, requiring the Participant to hold the Shares acquired pursuant to

exercise for a specified period of time, or restrictions under applicable laws

or under the requirements of any stock exchange or market upon which such Shares

are listed and/or traded.

 

6.8  TERMINATION OF EMPLOYMENT OR AGENCY.  Each Participant's 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

Agency with the Company or Affiliates. Such provisions shall be determined in

the sole discretion of the Committee, shall be included in the Award Agreement

entered into with each Participant, need not be uniform among all Options issued

pursuant to this Article 6, and may reflect distinctions based on the reasons

for termination.

 

6.9  NONTRANSFERABILITY OF OPTIONS.

 

     (a)  INCENTIVE STOCK OPTIONS.  No ISO granted under the Plan may be sold,

     transferred, pledged, assigned, or otherwise alienated or hypothecated,

     other than by will or by the laws of descent and distribution. Further, all

     ISOs granted to a Participant under this Article 6 shall be exercisable

     during his or her lifetime only by such Participant.

 

     (b)  NONQUALIFIED STOCK OPTIONS.  Except as otherwise provided in a

     Participant's Award Agreement at the time of grant, or thereafter by the

     Committee, NQSO granted under this Article 6 may not be sold, transferred,

     pledged, assigned, or otherwise alienated or hypothecated, other than by

     will or by the laws of descent and distribution. Further, except as

     otherwise provided in a Participant's Award Agreement at the time of grant

     or thereafter by the Committee, all NQSOs

 

                                       A-8

<PAGE>

 

     granted to a Participant under this Article 6 shall be exercisable during

     the Participant's lifetime only by such Participant.

 

6.10  NOTIFICATION OF DISQUALIFYING DISPOSITION.  The Participant will notify

the Company upon the disposition of Shares issued pursuant to the exercise of an

ISO or Shares received as a dividend on ISO stock. The Company will use such

information to determine whether a disqualifying disposition as described in

Section 421(b) of the Code has occurred.

 

6.11  SUBSTITUTING SARS.  Regardless of the terms of the Award Agreement, the

Committee, at any time when the Company is not subject accounting for

equity-based compensation granted to its Employees under APB Opinion 25 (or a

successor standard), shall have the right to substitute SARs for outstanding

Options granted to any Participant, provided that (i) the substituted SARs call

for settlement by the issuance of Shares or by the issuance of Shares or cash as

determined by the Committee in its discretion, and (ii) the terms of the

substituted SARs and economic benefit of such substituted SARs (including the

difference between the Grant Price and Fair Market Value of the Shares

associated with the SARs compared to the difference between the Option Price and

Fair Market Value of the Shares underlying the Options) are equivalent to the

terms and economic benefit of the Options being replaced, as determined by the

Committee. The Committee may, based on a determination that this Section 6.11

creates adverse accounting consequences for the Company or otherwise, nullify

this Section 6.11.

 

ARTICLE 7. STOCK APPRECIATION RIGHTS

 

7.1  GRANT OF SARS.  Subject to the terms and conditions of the Plan, SARs may

be granted to Participants at any time and from time to time and upon such terms

as shall be determined by the Committee in its discretion. The Committee may

grant Freestanding SARs, Tandem SARs, or any combination of these forms of SARs.

 

The SAR Grant Price for each grant of a Freestanding SAR shall be determined by

the Committee and shall be specified in the Award Agreement. The SAR Grant Price

may include a Grant Price based on one hundred percent (100%) of the FMV of the

Shares on the date of grant, a Grant Price that is set at a premium to the FMV

of the Shares on the date of grant, or is indexed to the FMV of the Shares on

the date of grant, with the index determined by the Committee, in its

discretion. The Grant Price of Tandem SARs shall be equal to the Option Price of

the related Option.

 

7.2  SAR AGREEMENT.  Each SAR Award shall be evidenced by an Award Agreement

that shall specify the Grant Price, the term of the SAR, and any such other

provisions as the Committee shall determine.

 

7.3  TERM OF SAR.  The term of an SAR granted under the Plan shall be determined

by the Committee, in its sole discretion, and except as determined otherwise by

the Committee and specified in the SAR Award Agreement, no SAR shall be

exercisable later than the tenth (10th) anniversary date of its grant.

Notwithstanding the foregoing, for SARs granted to Participants outside the

United States, the Committee has the authority to grant SARs that have a term

greater than ten (10) years.

 

7.4  EXERCISE OF FREESTANDING SARS.  Freestanding SARs may be exercised upon

whatever terms and conditions the Committee, in its sole discretion, imposes.

 

7.5.  EXERCISE OF TANDEM SARS.  Tandem SARs may be exercised for all or part of

the Shares subject to the related Option upon the surrender of the right to

exercise the equivalent portion of the related Option. A Tandem SAR may be

exercised only with respect to the Shares for which its related Option is then

exercisable.

 

Notwithstanding any other provision of this Plan to the contrary, with respect

to a Tandem SAR granted in connection with an ISO: (a) the Tandem SAR will

expire no later than the expiration of the underlying ISO; (b) 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 Option Price of the underlying ISO

and the FMV of the Shares subject to the underlying ISO at the time the Tandem

SAR is exercised; and (c) the

 

                                       A-9

<PAGE>

 

Tandem SAR may be exercised only when the FMV of the Shares subject to the ISO

exceeds the Option Price of the ISO.

 

7.6  PAYMENT OF SAR AMOUNT.  Upon the exercise of an SAR, a Participant shall be

entitled to receive payment from the Company in an amount determined by

multiplying:

 

     (a)  The difference between the FMV of a Share on the date of exercise over

the Grant Price; by

 

     (b)  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, Shares of equivalent value (based on the FMV on the date of exercise of

the SAR, as defined in the Award Agreement or otherwise defined by the Committee

thereafter), in some combination thereof, or in any other form approved by the

Committee at its sole discretion. The Committee's determination regarding the

form of SAR payout shall be set forth or reserved for later determination in the

Award Agreement pertaining to the grant of the SAR.

 

7.7  TERMINATION OF EMPLOYMENT OR AGENCY.  Each 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 Agency with the Company

or Affiliates. Such provisions shall be determined in the sole discretion of the

Committee, shall be included in the Award Agreement entered into with

Participants, need not be uniform among all SARs issued pursuant to the Plan,

and may reflect distinctions based on the reasons for termination.

 

7.8  NONTRANSFERABILITY OF SARS.  Except as otherwise provided in a

Participant's Award Agreement at the time of grant or thereafter by the

Committee, an SAR granted under the Plan may not be sold, transferred, pledged,

assigned, or otherwise alienated or hypothecated, other than by will or by the

laws of descent and distribution. Further, except as otherwise provided in a

Participant's Award Agreement at the time of grant or thereafter by the

Committee, all SARs granted to a Participant under the Plan shall be exercisable

during his or her lifetime only by such Participant.

 

7.9  OTHER RESTRICTIONS.  Without limiting the generality of any other provision

of this Plan, the Committee may impose such other conditions and/or restrictions

on any Shares received upon exercise of an SAR granted pursuant to the Plan as

it may deem advisable. This includes, but is not limited to, requiring the

Participant to hold the Shares received upon exercise of an SAR for a specified

period of time.

 

ARTICLE 8. RESTRICTED STOCK AND RESTRICTED STOCK UNITS

 

8.1  GRANT OF RESTRICTED STOCK OR RESTRICTED STOCK UNITS.  Subject to the terms

and provisions of the Plan, the Committee, at any time and from time to time,

may grant Shares of Restricted Stock and/or Restricted Stock Units to

Participants in such amounts and upon such terms as the Committee shall

determine.

 

8.2  RESTRICTED STOCK OR RESTRICTED STOCK UNIT AGREEMENT.  Each Restricted Stock

and/or Restricted Stock Unit grant shall be evidenced by an Award Agreement that

shall specify the Period(s) of Restriction, the number of Shares of Restricted

Stock or the number of Restricted Stock Units granted, and any such other

provisions as the Committee shall determine.

 

8.3  NONTRANSFERABILITY OF RESTRICTED STOCK AND RESTRICTED STOCK UNITS.  Except

as otherwise provided in this Plan or the Award Agreement, the Shares of

Restricted Stock and/or Restricted Stock Units granted herein may not be sold,

transferred, pledged, assigned, or otherwise alienated or hypothecated until the

end of the applicable Period of Restriction specified in the Award Agreement

(and in the case of Restricted Stock Units until the date of delivery or other

payment), or upon earlier satisfaction of any other conditions, as specified by

the Committee in its sole discretion and set forth in the Award Agreement at the

time of grant or thereafter by the Committee. All rights with respect to the

Restricted Stock and/or Restricted Stock Units granted to a Participant under

the Plan shall be available during his

 

                                       A-10

<PAGE>

 

or her lifetime only to such Participant, except as otherwise provided in the

Award Agreement at the time of grant or thereafter by the Committee.

 

8.4  OTHER RESTRICTIONS.  The Committee shall impose, in the Award Agreement at

the time of grant or anytime thereafter, such other conditions and/or

restrictions on any Shares of Restricted Stock or Restricted Stock Units granted

pursuant to this Plan as it may deem advisable including, without limitation, a

requirement that Participants pay a stipulated purchase price for each Share of

Restricted Stock or each Restricted Stock Unit, restrictions based upon the

achievement of specific performance criteria, time-based restrictions on vesting

following the attainment of the performance criteria, time-based restrictions,

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 or Restricted Stock Units.

 

To the extent deemed appropriate by the Committee subject to Section 19.6, the

Company may retain the certificates representing Shares of Restricted Stock, or

Shares delivered in consideration of Restricted Stock Units, in the Company's

possession until such time as all conditions and/or restrictions applicable to

such Shares have been satisfied or lapse.

 

Except as otherwise provided in this Article 8, Shares of Restricted Stock

covered by each Restricted Stock Award shall become freely transferable by the

Participant after all conditions and restrictions applicable to such Shares have

been satisfied or lapse, and Restricted Stock Units shall be paid in cash,

Shares, or a combination of cash and Shares as the Committee, in its sole

discretion shall determine.

 

8.5  CERTIFICATE LEGEND.  In addition to any legends placed on certificates

pursuant to Section 8.4 herein, each certificate representing Shares of

Restricted Stock granted pursuant to the Plan may bear a legend such as the

following:

 

     The sale or other transfer of the Shares of stock represented by this

     certificate, whether voluntary, involuntary, or by operation of law, is

     subject to certain restrictions on transfer as set forth in the MetLife,

     Inc. 2005 Stock and Incentive Compensation Plan, and in the associated

     Award Agreement. A copy of the Plan and such Award Agreement may be

     obtained from MetLife, Inc.

 

8.6  VOTING RIGHTS.  To the extent required by law, Participants holding Shares

of Restricted Stock granted hereunder shall be granted the right to exercise

full voting rights with respect to those Shares during the Period of

Restriction. A Participant shall have no voting rights with respect to any

Restricted Stock Units granted hereunder.

 

8.7  DIVIDENDS AND OTHER DISTRIBUTIONS.  During the Period of Restriction,

Participants holding Shares of Restricted Stock or Restricted Stock Units

granted hereunder may, if the Committee so determines, be credited with

dividends paid with respect to the underlying Shares or dividend equivalents

while they are so held in a manner determined by the Committee in its sole

discretion. The Committee may apply any restrictions to the dividends or

dividend equivalents that the Committee deems appropriate. The Committee, in its

sole discretion, may determine the form of payment of dividends or dividend

equivalents, including cash, Shares, Restricted Stock, or Restricted Stock

Units.

 

8.8  TERMINATION OF EMPLOYMENT AND AGENCY.  Each Award Agreement shall set forth

the extent to which the Participant shall have the right to retain Restricted

Stock and/or Restricted Stock Units following termination of the Participant's

employment or Agency with the Company or Affiliates. Such provisions shall be

determined in the sole discretion of the Committee, shall be included in the

Award Agreement entered into with each Participant, need not be uniform among

all Shares of Restricted Stock or Restricted Stock Units issued pursuant to the

Plan, and may reflect distinctions based on the reasons for termination.

 

8.9  PAYMENT IN CONSIDERATION OF RESTRICTED STOCK UNITS.  When and if Restricted

Stock Units become payable, a Participant having received the grant of such

units shall be entitled to receive payment from the Company in cash, Shares of

equivalent value (based on the FMV, as defined in the Award Agreement at the

time of grant or thereafter by the Committee), in some combination thereof, or

in any

 

                                       A-11

<PAGE>

 

other form determined by the Committee at its sole discretion. The Committee's

determination regarding the form of payout shall be set forth or reserved for

later determination in the Award Agreement pertaining to the grant of the

Restricted Stock Unit.

 

ARTICLE 9. PERFORMANCE SHARES AND PERFORMANCE UNITS

 

9.1  GRANT OF PERFORMANCE SHARES AND PERFORMANCE UNITS.  Subject to the terms

and provisions of the Plan, the Committee, at any time and from time to time,

may grant Performance Shares and/or Performance Units to Participants in such

amounts and upon such terms as the Committee shall determine.

 

9.2  VALUE OF PERFORMANCE SHARES AND PERFORMANCE UNITS.  Each Performance Share

shall have an initial value equal to the FMV of a Share on the date of grant.

Each Performance Unit shall have an initial value that is established by the

Committee at the time of grant which may be less than, equal to, or greater than

the FMV of a Share. The Committee shall set performance criteria for a

Performance Period in its discretion which, depending on the extent to which

they are met, will determine, in the manner determined by the Committee and

documented in the Award Agreement the value and/or number of each Performance

Share or Performance Unit that will be paid to the Participant.

 

9.3  EARNING OF PERFORMANCE SHARES AND PERFORMANCE UNITS.  Subject to the terms

of this Plan, after the applicable Performance Period has ended, the holder of

Performance Shares/Performance Units shall be entitled to receive payout on the

value and number of Performance Shares/Performance Units determined as a

function of the extent to which the corresponding performance criteria have been

achieved. Notwithstanding the foregoing, the Company has the ability to require

the Participant to hold the Shares received pursuant to such Award for a

specified period of time.

 

9.4  FORM AND TIMING OF PAYMENT OF PERFORMANCE SHARES AND PERFORMANCE

UNITS.  Payment of earned Performance Shares/Performance Units shall be as

determined by the Committee and as evidenced in the Award Agreement. Subject to

the terms of the Plan, the Committee, in its sole discretion, may pay earned

Performance Shares/Performance Units in the form of cash or in Shares (or in a

combination thereof) equal to the value of the earned Performance

Shares/Performance Units at the close of the applicable Performance Period. Any

Shares may be granted subject to any restrictions deemed appropriate by the

Committee. The determination of the Committee with respect to the form of payout

of such Awards shall be set forth in the Award Agreement pertaining to the grant

of the Award or reserved for later determination.

 

9.5  DIVIDENDS AND OTHER DISTRIBUTIONS.  The Committee will decide if

Participants holding Performance Shares will receive dividend equivalents with

respect to dividends declared with respect to the Shares. Such dividends may be

subject to the accrual, forfeiture, or payout restrictions as determined by the

Committee in its sole discretion.

 

9.6  TERMINATION OF EMPLOYMENT OR AGENCY.  Each Award Agreement shall set forth

the extent to which the Participant shall have the right to retain Performance

Shares/Performance Units following termination of the Participant's employment

or Agency with the Company or an Affiliate. Such provisions shall be determined

in the sole discretion of the Committee, shall be included in the Award

Agreement entered into with each Participant, need not be uniform among all

Awards of Performance Shares/Performance Units issued pursuant to the Plan, and

may reflect distinctions based on the reasons for termination.

 

9.7  NONTRANSFERABILITY OF PERFORMANCE SHARES AND PERFORMANCE UNITS.  Except as

otherwise provided in a Participant's Award Agreement at the time of grant or

thereafter by the Committee, Performance Shares/Performance Units may not be

sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,

other than by will or by the laws of descent and distribution. Further, except

as otherwise provided in a Participant's Award Agreement or otherwise by the

Committee at any time, a Participant's rights under the Plan shall inure during

his or her lifetime only to such Participant.

 

                                       A-12

<PAGE>

 

ARTICLE 10. CASH-BASED AWARDS AND STOCK-BASED AWARDS

 

10.1  GRANT OF CASH-BASED AWARDS.  Subject to the terms and provisions of this

Plan, the Committee, at any time and from time and time, may grant Cash-Based

Awards to Participants in such amounts and upon such terms as the Committee may

determine.

 

10.2  VALUE OF CASH-BASED AWARDS.  Each Cash-Based Award shall have a value as

may be determined by the Committee. For each Cash-Based Award, the Committee may

establish performance criteria in its discretion. If the Committee exercises its

discretion to establish such performance criteria, the number and/or value of

Cash-Based Awards that will be paid out to the Participant will be determined,

in the manner determined by the Committee, the extent to which the performance

criteria are met.

 

10.3  PAYMENT IN CONSIDERATION OF CASH-BASED AWARDS.  Subject to the terms of

this Plan, the holder of a Cash-Based Award shall be entitled to receive payout

on the value of Cash-Based Award determined as a function of the extent to which

the corresponding performance criteria, if any, have been achieved.

 

10.4  FORM AND TIMING OF PAYMENT OF CASH-BASED AWARDS.  Payment of earned

Cash-Based Awards shall be as determined by the Committee and evidenced in the

Award Agreement. Subject to the terms of the Plan, the Committee, in its sole

discretion, may pay earned Cash-Based Awards in the form of cash or in Shares

(or in a combination thereof) that have an aggregate FMV equal to the value of

the earned Cash-Based Awards (the applicable date regarding which aggregate FMV

shall be determined by the Committee). Such Shares may be granted subject to any

restrictions deemed appropriate by the Committee. The determination of the

Committee with respect to the form of payout of such Awards shall be set forth

in the Award Agreement pertaining to the grant of the Award.

 

10.5  STOCK-BASED AWARDS.  The Committee may grant other types of equity-based

or equity-related Awards not otherwise described by the terms of this Plan

(including the grant or offer for sale of unrestricted Shares) in such amounts

and subject to such terms and conditions including, but not limited to being

subject to performance criteria, or in satisfaction of such obligations, as the

Committee shall determine. Such Awards may entail the transfer of actual Shares

to Participants, or payment in cash or otherwise of amounts based on the value

of Shares and may include, without limitation, Awards designed to comply with or

take advantage of the applicable local laws of jurisdictions other than the

United States.

 

10.6  TERMINATION OF EMPLOYMENT OR AGENCY.  Each Award Agreement shall set forth

the extent to which the Participant shall have the right to receive Cash-Based

Awards and Stock-Based Awards following termination of the Participant's

employment or Agency with the Company or Affiliates. Such provisions shall be

determined in the sole discretion of the Committee, shall be included in the

applicable Award Agreement, need not be uniform among all Awards of Cash-Based

Awards and Stock-Based Awards issued pursuant to the Plan, and may reflect

distinctions based on the reasons for termination.

 

10.7  NONTRANSFERABILITY OF CASH-BASED AWARDS AND STOCK-BASED AWARDS.  Except as

otherwise provided in a Participant's Award Agreement at the time of grant or

thereafter by the Committee, Cash-Based Awards and Stock-Based Awards may not be

sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,

other than by will or by the laws of descent and distribution. Further, except

as otherwise provided in a Participant's Award Agreement at the time of grant or

thereafter by the Committee, a Participant's rights under the Plan shall be

exercisable during the Participant's lifetime only by the Participant.

 

ARTICLE 11. PERFORMANCE MEASURES

 

Notwithstanding any other terms of this Plan, the vesting, payability, or value

(as determined by the Committee) of each Award other than an Option or SAR that,

at the time of grant, the Committee intends to be Performance-Based Compensation

to an Insider shall be determined by the attainment of one or more Performance

Goals as determined by the Committee in conformity with Code

                                       A-13

<PAGE>

 

Section 162(m). The Committee shall specify in writing, by resolution or

otherwise, the Participants eligible to receive such an Award (which may be

expressed in terms of a class of individuals) and the Performance Goal(s)

applicable to such Awards within ninety (90) days after the commencement of the

period to which the Performance Goal(s) relate(s) or such earlier time as

required to comply with Code Section 162(m). No such Award shall be payable

unless the Committee certifies in writing, by resolution or otherwise, that the

Performance Goal(s) applicable to the Award were satisfied. In no case may the

Committee increase the value of an Award of Performance-Based Compensation above

the maximum value determined under the performance formula by the attainment of

the applicable Performance Goal(s), but the Committee may retain the discretion

to reduce the value below such maximum.

 

Unless and until the Committee proposes for shareholder vote and the

shareholders approve a change in the general Performance Measures set forth in

this Article 11, the Performance Goal(s) upon which the payment or vesting of an

Award to an Insider that is intended to qualify as Performance-Based

Compensation shall be limited to the following Performance Measures:

 

     (a)  Net earnings or net income (before or after taxes);

 

     (b)  Earnings per share;

 

     (c)  Net sales growth;

 

     (d)  Net operating profit;

 

     (e)  Operating earnings;

 

     (f)  Operating earnings per share;

 

     (g)  Return measures (including, but not limited to, return on assets,

     capital, equity, or sales);

 

     (h)  Cash flow (including, but not limited to, operating cash flow, free

     cash flow, and cash flow return on capital);

 

     (i)  Earnings before or after taxes, interest, depreciation, and/or

     amortization and including/ excluding capital gains and losses;

 

     (j)  Gross or operating margins;

 

     (k)  Productivity ratios;

 

     (l)  Share price (including, but not limited to, growth measures and total

     shareholder return);

 

     (m)  Expense targets;

 

     (n)  Margins;

 

     (o)  Operating efficiency;

 

     (p)  Customer satisfaction;

 

     (q)  Employee and/or Agent satisfaction;

 

     (r)  Working capital targets; and

 

     (s)  Economic Value Added;

 

     (t)  Revenue growth;

 

     (u)  Assets under management growth; and

 

     (v)  Rating Agencies' ratings.

 

Any Performance Measure(s) may be used to measure the performance of the Company

as a whole or any business unit of the Company or any combination thereof, as

the Committee may deem appropriate, or any of the above Performance Measures as

compared to the performance of a group of

                                       A-14

<PAGE>

 

comparator companies, or published or special index that the Committee, in its

sole discretion, deems appropriate. In the Award Agreement, the Committee also

has the authority to provide for accelerated vesting of any Award based on the

achievement of Performance Goal(s).

 

The Committee may provide in any Award Agreement that any evaluation of

attainment of a Performance Goal may include or exclude any of the following

events that occurs during the relevant period: (a) asset write-downs; (b)

litigation or claim judgments or settlements; (c) the effect of changes in tax

laws, accounting principles, or other laws or provisions affecting reported

results; (d) any reorganization and restructuring programs; (e) extraordinary

nonrecurring items as described in Accounting Principles Board Opinion No. 30

and/or in management's discussion and analysis of financial condition and

results of operations appearing in the Company's annual report to shareholders

for the applicable year; (f) acquisitions or divestitures; and (g) foreign

exchange gains and losses. To the extent such inclusions or exclusions affect

Awards to Insiders, they shall be prescribed in a form that meets the

requirements of Code Section 162(m) for deductibility.

 

In the event that applicable tax and/or securities laws change to permit

Committee discretion to alter the governing Performance Measures without

obtaining shareholder approval of such changes, the Committee shall have sole

discretion to make such changes without obtaining shareholder approval. In

addition, in the event that the Committee determines that it is advisable to

grant Awards to Insiders that shall not qualify as Performance-Based

Compensation, the Committee may make such grants without satisfying the

requirements of Code Section 162(m).

 

ARTICLE 12. BENEFICIARY DESIGNATION

 

A Participant's "beneficiary" is the person or persons entitled to receive

payments or other benefits or exercise rights that are available under the Plan

in the event of the Participant's death. A Participant may designate a

beneficiary or change a previous beneficiary designation at such times

prescribed by the Committee by using forms and following procedures approved or

accepted by the Committee for that purpose. If no beneficiary designated by the

Participant is eligible to receive payments or other benefits or exercise rights

that are available under the Plan at the Participant's death the beneficiary

shall be the Participant's estate.

 

Notwithstanding the provisions above, the Committee may in its discretion, after

notifying the affected Participants, modify the foregoing requirements,

institute additional requirements for beneficiary designations, or suspend the

existing beneficiary designations of living Participants or the process of

determining beneficiaries under this Article 12, or both, in favor of another

method of determining beneficiaries.

 

ARTICLE 13. DEFERRALS AND SHARE SETTLEMENTS

 

Notwithstanding any other provision under the Plan, the Committee may permit or

require a Participant to defer such Participant's receipt of any Award, or

payment in consideration of any Award, under the terms of this Plan or another

Plan. To the extent such deferral is permitted by the Committee under the terms

of this Plan rather than another Plan, the Committee shall establish rules and

procedures for such deferrals as it sees fit.

 

ARTICLE 14. RIGHTS OF EMPLOYEES AND AGENTS

 

14.1  EMPLOYMENT.  Nothing in the Plan or an Award Agreement shall interfere

with or limit in any way the right of the Company or an Affiliate to terminate

any Participant's employment, Agency or other service relationship at any time,

nor confer upon any Participant any right to continue in the capacity in which

he or she is employed or otherwise serves the Company or an Affiliate.

 

Neither an Award nor any benefits arising under this Plan shall constitute part

of an employment or Agency contract with the Company or an Affiliate and,

accordingly, subject to the terms of this Plan, this Plan may be terminated or

modified at any time in the sole and exclusive discretion of the

 

                                       A-15

<PAGE>

 

Committee without giving rise to liability on the part of the Company or an

Affiliate for severance payments or otherwise except as provided in this Plan.

 

For purposes of the Plan, unless otherwise provided by the Committee, transfer

of employment or Agency of a Participant between the Company and an Affiliate or

among Affiliates, shall not be deemed a termination of employment or Agency. The

Committee may stipulate in a Participant's Award Agreement or otherwise the

conditions under which a transfer of employment or Agency to an entity that is

spun-off from the Company or an Affiliate or a vendor to the Company or an

Affiliate, if any, shall not be deemed a termination of employment or Agency for

purposes of an Award.

 

14.2  PARTICIPATION.  No Employee or Agent shall have the right to be selected

to receive an Award. No Employee or Agent, having been selected to receive an

Award, shall have the right to be selected to receive a future Award or (if

selected to receive such a future Award) the right to receive such a future

Award on terms and conditions identical or in proportion in any way to any prior

Award.

 

14.3  RIGHTS AS A SHAREHOLDER.  A Participant shall have none of the rights of a

shareholder with respect to Shares covered by any Award until the Participant

becomes the record holder of such Shares.

 

ARTICLE 15. CHANGE OF CONTROL

 

15.1  ACCELERATED VESTING AND PAYMENT.  Subject to the provisions of Section

15.2 or as otherwise provided in the Award Agreement, in the event of a Change

of Control, unless otherwise specifically prohibited under law or by the rules

and regulations of a national security exchange:

 

     (a)  Any and all Options and SARs granted hereunder shall become

     immediately exercisable; additionally, if a Participant's employment or

     Agency is involuntarily terminated for any reason except Cause within

     twelve (12) months of such Change in Control, the Participant shall have

     until the earlier of (i) twelve (12) months following such termination date

     , or (ii) the term of the Option or SAR, to exercise such Options or SARs;

 

     (b)  Any Period of Restriction and other restrictions imposed on Restricted

     Stock or Restricted Stock Units shall lapse, and Restricted Stock Units

     shall be immediately payable;

 

     (c)  The target payout opportunities attainable under all outstanding

     Awards of performance-based Restricted Stock, performance-based Restricted

     Stock Units, Performance Units, and Performance Shares (including but not

     limited to Awards intended to be Performance-Based Compensation) shall be

     deemed to have been fully earned based on targeted performance being

     attained as of the effective date of the Change of Control:

 

        (i)  The vesting of all Awards denominated in Shares shall be

        accelerated as of the effective date of the Change of Control, and shall

        be paid out to Participants within thirty (30) days following the

        effective date of the Change of Control; and

 

        (ii)  Awards denominated in cash shall be paid to Participants in cash

        within thirty (30) days following the effective date of the Change of

        Control;

 

     (d)  Upon a Change of Control, unless otherwise specifically provided in a

     written agreement entered into between the Participant and the Company or

     an Affiliate, the Committee shall immediately vest and pay out all

     Cash-Based Awards and Other Stock-Based Awards as determined by the

     Committee; and

 

     (e)  The Committee shall have the ability to unilaterally determine that

     all outstanding Awards are cancelled upon a Change in Control, and the

     value of such Awards, as determined by the Committee in accordance with the

     terms of the Plan and the Award Agreement, be paid out in cash in an amount

     based on the Change of Control Price within a reasonable time subsequent to

     the Change in Control; provided, however, that no such payment shall be

     made on account of an ISO using a value higher than the FMV on the date of

     settlement.

 

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<PAGE>

 

15.2  ALTERNATIVE AWARDS.  Notwithstanding Section 15.1, no cancellation,

acceleration of vesting, lapsing of restrictions, payment of Award, cash

settlement or other payment shall occur with respect to any Award if the

Committee reasonably determines in good faith prior to the occurrence of a

Change of Control that such Award shall be honored or assumed, or new rights

substituted therefor (such honored, assumed or substituted Award hereinafter

called an "Alternative Award") by any successor as described in Article 18;

provided that any such Alternative Award must:

 

     (a)  Be based on stock which is traded on an established U.S. securities

     market, or that the Committee reasonably believes will be so traded within

     sixty (60) days after the Change of Control;

 

     (b)  Provide such Participant with rights and entitlements substantially

     equivalent to or better than the rights, terms and conditions applicable

     under such Award, including, but not limited to, an identical or better

     exercise or vesting schedule and identical or better timing and methods of

     payment;

 

     (c)  Have substantially equivalent economic value to such Award (determined

     at the time of the Change of Control); and

 

     (d)  Have terms and conditions which provide that in the event that the

     Participant's employment or Agency is involuntarily terminated or

     Constructively Terminated, any conditions on a Participant's rights under,

     or any restrictions on transfer or exercisability applicable to, each such

     Alternative Award shall be waived or shall lapse, as the case may be.

 

ARTICLE 16. AMENDMENT, MODIFICATION, SUSPENSION, AND TERMINATION

 

16.1  AMENDMENT, MODIFICATION, SUSPENSION, AND TERMINATION.  The Committee or

Board may, at any time and from time to time, alter, amend, modify, suspend, or

terminate the Plan in whole or in part; provided however, that:

 

     (a)  Without the prior approval of the Company's shareholders, Options and

     SARs issued under the Plan will not be repriced, replaced, or regranted

     through cancellation or by lowering the exercise price of a previously

     granted Option.

 

     (b)  To the extent necessary under any applicable law, regulation or

     exchange requirement, no amendment shall be effective unless approved by

     the shareholders of the Company in accordance with applicable law,

     regulation, or exchange requirement.

 

16.2  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 4.2 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 unintended dilution or enlargement of the benefits or potential

benefits intended to be made available under the Plan. The determination of the

Committee as to the foregoing adjustments, if any, shall be conclusive and

binding on Participants under the Plan. To the extent such adjustment affects

Awards to Insiders intended to be Performance-Based Compensation, they shall be

prescribed in a form that meets the requirements of Code Section 162(m) for

deductibility.

 

16.3  AWARDS PREVIOUSLY GRANTED.  Notwithstanding any other provision of the

Plan to the contrary, no termination, amendment, suspension, or modification of

the Plan shall adversely affect in any material way any Award previously granted

under the Plan, without the written consent of the Participant holding such

Award.

 

ARTICLE 17. WITHHOLDING

 

The Company or any Affiliate shall have the power and the right to deduct or

withhold, or require a Participant to remit to the Company or any Affiliate, an

amount sufficient to satisfy federal, state, and

                                       A-17

<PAGE>

 

local taxes, domestic or foreign (including the Participant's FICA obligation),

required by law or regulation to be withheld with respect to any taxable event

arising or as a result of this Plan. The Committee may provide for Participants

to satisfy withholding requirements by having the Company withhold Shares or the

Participant making such other arrangements, in either case on such conditions as

the Committee specifies.

 

ARTICLE 18. SUCCESSORS

 

Any obligations of the Company or an Affiliate under the Plan with respect to

Awards granted hereunder, shall be binding on any successor to the Company or

Affiliate, respectively, whether the existence of such successor is the result

of a direct or indirect purchase, merger, consolidation, or otherwise, of all or

substantially all of the business and/or assets of the Company or Affiliate, as

applicable.

 

ARTICLE 19. GENERAL PROVISIONS

 

19.1  FORFEITURE EVENTS.  Without limiting in any way the generality of the

Committee's power to specify any terms and conditions of an Award consistent

with law, and for greater clarity, the Committee may specify in an Award

Agreement that the Participant's rights, payments, and benefits with respect to

an Award shall be subject to reduction, cancellation, forfeiture, or recoupment

upon the occurrence of certain specified events, in addition to any otherwise

applicable vesting or performance conditions of an Award. Such events shall

include, but shall not be limited to, failure to accept the terms of the Award

Agreement, termination of employment or Agency under certain or all

circumstances, violation of material Company and Affiliate policies, breach of

noncompetition, confidentiality, nonsolicitation, noninterference, corporate

property protection, or other agreement that may apply to the Participant, or

other conduct by the Participant that is detrimental to the business or

reputation of the Company and Affiliates.

 

19.2  LEGEND.  The certificates for Shares may include any legend that the

Committee deems appropriate to reflect any restrictions on transfer of such

Shares.

 

19.3  DELIVERY OF TITLE.  The Company shall have no obligation to issue or

deliver evidence of title for Shares issued under the Plan prior to:

 

     (a)  Obtaining any approvals from governmental agencies that the Company

     determines are necessary or advisable; and

 

     (b)  Completion of any registration or other qualification of the Shares

     under any applicable national or foreign law or ruling of any governmental

     body that the Company determines to be necessary or advisable.

 

19.4  INVESTMENT REPRESENTATIONS.  The Committee may require each Participant

receiving Shares pursuant to an Award under this Plan to represent and warrant

in writing that the Participant is acquiring the Shares for investment and

without any present intention to sell or distribute such Shares.

 

19.5  EMPLOYEES AND AGENTS BASED OUTSIDE OF THE UNITED STATES.  Without limiting

in any way the generality of the Committee's powers under this Plan, including

but not limited to the power to specify any terms and conditions of an Award

consistent with law, in order to comply with the laws in other countries in

which the Company or an Affiliate operates or has Employees or Agents, the

Committee, in its sole discretion, shall have the power and authority,

notwithstanding any provision of the Plan to the contrary, to:

 

     (a)  Determine which Affiliates shall be covered by the Plan;

 

     (b)  Determine which Employees and Agents outside the United States are

     eligible to participate in the Plan;

 

                                       A-18

<PAGE>

 

     (c)  Modify the terms and conditions of any Award granted to Employees or

     Agents outside the United States to comply with applicable foreign laws;

 

     (d)  Establish subplans and modify exercise procedures and other terms and

     procedures, to the extent such actions may be necessary or advisable. Any

     subplans and modifications to Plan terms and procedures established under

     this Section 19.5 by the Committee shall be attached to this Plan document

     as appendices; and

 

     (e)  Take any action, before or after an Award is made, that it deems

     advisable to obtain approval or comply with any necessary local government

     regulatory exemptions or approvals.

 

Notwithstanding the above, the Committee may not take any actions hereunder and

no Awards shall be granted that would violate the Exchange Act, the Code, any

securities law, or governing statute or any other applicable law.

 

19.6  UNCERTIFICATED SHARES.  To the extent that the Plan provides for issuance

of certificates to reflect the transfer of Shares, the transfer of such Shares

may be effected on a noncertificated basis to the extent not prohibited by

applicable law or the rules of any stock exchange.

 

19.7  UNFUNDED PLAN.  Participants shall have no right, title, or interest

whatsoever in or to any investments that the Company or an Affiliate may make to

aid it in meeting its obligations under the Plan. Nothing contained in the Plan,

and no action taken pursuant to its provisions, shall create or be construed to

create a trust of any kind, or a fiduciary relationship between the Company or

an Affiliate and any Participant, beneficiary, legal representative, or any

other person. Awards shall be general, unsecured obligations of the Company,

except that if an Affiliate executes an Award Agreement instead of the Company

the Award shall be a general, unsecured obligation of the Affiliate and not any

obligation of the Company. To the extent that any individual acquires a right to

receive payments from the Company or an Affiliate, such right shall be no

greater than the right of an unsecured general creditor of the Company or

Affiliate, as applicable. All payments to be made hereunder shall be paid from

the general funds of the Company or Affiliate, as applicable, and no special or

separate fund shall be established and no segregation of assets shall be made to

assure payment of such amounts except as expressly set forth in the Plan. The

Plan is not intended to be subject to ERISA.

 

19.8  NO FRACTIONAL SHARES.  No fractional Shares shall be issued or delivered

pursuant to the Plan or any Award Agreement. In such an instance, unless the

Committee determines otherwise, fractional Shares and any rights thereto shall

be forfeited or otherwise eliminated.

 

19.9  OTHER COMPENSATION AND BENEFIT PLANS.  Nothing in this Plan shall be

construed to limit the right of the Company or an Affiliate to establish other

compensation or benefit plans, programs, policies, or arrangements. Except as

may be otherwise specifically stated in any other benefit plan, policy, program,

or arrangement, no Award shall be treated as compensation for purposes of

calculating a Participant's rights under any such other plan, policy, program,

or arrangement.

 

19.10  NO CONSTRAINT ON CORPORATE ACTION.  Nothing in this Plan shall be

construed (i) to limit, impair or otherwise affect the Company's or an

Affiliate's right or power to make adjustments, reclassifications,

reorganizations or changes of its capital or business structure, or to merge or

consolidate, or dissolve, liquidate, sell, or transfer all or any part of its

business or assets, or (ii) to limit the right or power of the Company or an

Affiliate to take any action which such entity deems to be necessary or

appropriate.

 

ARTICLE 20. LEGAL CONSTRUCTION

 

20.1  GENDER AND NUMBER.  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.

 

                                       A-19

<PAGE>

 

20.2  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.

 

20.3  REQUIREMENTS OF LAW.  The granting of Awards and the issuance of Shares

under the Plan shall be subject to all applicable laws, rules, and regulations,

and to such approvals by any governmental agencies or national securities

exchanges as may be required. The Company or an Affiliate shall receive the

consideration required by law for the issuance of Awards under the Plan.

 

The inability of the Company or an Affiliate to obtain authority from any

regulatory body having jurisdiction, which authority is deemed by the Company's

or the Affiliate's counsel to be necessary to the lawful issuance and sale of

any Shares hereunder, shall relieve the Company or Affiliate 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.

 

20.4  GOVERNING LAW.  The Plan and each Award Agreement shall be 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 the Plan

to the substantive law of another jurisdiction.

 

                                       A-20