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EXHIBIT 10.22

TOWER FINANCIAL CORPORATION

2006 EQUITY INCENTIVE PLAN

 
1.
Purpose of the Plan and Available Awards.

1.1           Purpose.  The purpose of this Tower Financial Corporation 2006
Equity Incentive Plan (“Plan”), effective upon approval by the Company’s
Stockholders (the “Effective Date”), as contemplated by Section 1.2, is to
create incentives designed to motivate Participants to put forth maximum effort
toward the success and growth of the Company and to attract and retain qualified
persons who by their position, ability and diligence are able to make important
contributions to the Company’s success.  Toward these objectives, the Plan
provides for awards of equity based incentives through the grant of Options,
Restricted Stock Awards, Unrestricted Stock Awards, Stock Appreciation Rights
and Performance Awards to Eligible Employees and the grant of Nonstatutory Stock
Options, Restricted Stock Awards, Stock Appreciation Rights and Performance
Awards to Eligible Directors, all subject to the conditions described in the
Plan.

1.2           Establishment.  The Effective Date of the Plan is the later to
occur of January 1, 2006, or the date on which the holders of a majority of the
outstanding shares of the Company’s common stock present, or represented, and
entitled to vote at a meeting called for such purpose, approve the Plan, which
approval must occur within twelve months after January 1, 2006.  No Awards under
the Plan may be granted prior to the date of stockholder approval.

1.3           Prior Plans.  No options remain available for grant under the
Company’s 1998 and 2001 Stock Option and Incentive Plans (the “Prior Plans”) and
no further options will be authorized or issued under the Prior Plans.  The
Prior Plans will continue in effect, however, until all matters relating to the
exercise of existing options and the administration of the Prior Plans have been
settled.

 
2.
Definitions.

2.1           “409A Award” means an Award that is considered “nonqualified
deferred compensation” within the meaning of Section 409A of the Code and
Section 8 of this Plan.

2.2           “Administrator” means the Board or the Committee appointed by the
Board in accordance with Section 3.5.

2.3           “Affiliate” means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.

2.4           “Award” means any right granted under the Plan, including an
Incentive Stock Option, a Nonstatutory Stock Option, a Restricted Stock Award,
an Unrestricted Stock Award, a Performance Award, a Stock Appreciation Right and
a 409A Award.

2.5           “Award Agreement” means a written agreement between the Company
and a holder of an Award, evidencing the terms and conditions of an individual
Award grant. Each Award Agreement shall be subject to the terms and conditions
of the Plan.

2.6           “Beneficial Owner” has the meaning assigned to such term in Rule
13d-3 and Rule 13d-5 under the Exchange Act.

 
2.7
“Board” means the Board of Directors of the Company.

 
2.8
“Business Combination” has the meaning set forth in Section 2.11(e).

 
2.9
“Cashless Exercise” has the meaning set forth in Section 6.3.

2.10           “Cause” means if the Participant is a party to an employment or
service agreement with the Company or its Affiliates and such agreement provides
for a definition of Cause, the definition therein contained, or, if no such
agreement exists, it shall mean (a) the commission of, or plea of guilty or no
contest to, a felony or a crime involving moral turpitude or the commission of
any other act involving willful malfeasance or material fiduciary breach with
respect to the Company or an Affiliate, (b) conduct tending to bring the Company
into substantial public disgrace, or disrepute, or (c) gross negligence or
willful misconduct with respect to the Company or an Affiliate. The
Administrator, in its absolute discretion, shall determine the effect of all
matters and questions relating to whether a Participant has been discharged for
Cause.

 
2.11
“Change in Control” shall mean:

(a)           The direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a series
of related transactions, of all or substantially all of the properties or assets
of the Company to any “person” (as that term is used in Section 13(d)(3) of the
Exchange Act);

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(b)           The Incumbent Directors cease for any reason to constitute at
least a majority of the Board;

(c)           The adoption of a plan relating to the liquidation or dissolution
of the Company; or

(d)           Any “person” or “group” (as such terms are used in Section 13(d)
and 14(d) of the Exchange Act) becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing more than 50% of the
combined voting power of the Company’s then outstanding securities eligible to
vote for the election of the Board (the “Company Voting Securities”); or

(e)           The consummation of a merger, consolidation, statutory share
exchange or similar form of corporate transaction involving the Company or any
of its Subsidiaries that requires the approval of the Company’s stockholders,
whether for such transaction or the issuance of securities in the transaction (a
“Business Combination”), unless immediately following such Business Combination:
(1) 50% or more of the total voting power of (i) the Surviving Corporation, or
(ii) if applicable, the ultimate Parent Corporation that directly or indirectly
has beneficial ownership of 100% of the voting securities eligible to elect
directors of the Surviving Corporation, is represented by Company Voting
Securities that were outstanding immediately prior to such Business Combination
(or, if applicable, is represented by shares into which such Company Voting
Securities were converted pursuant to such Business Combination), and such
voting power among the holders thereof is in substantially the same proportion
as the voting power of such Company Voting Securities among the holders thereof
immediately prior to the Business Combination, (2) no person (other than any
employee benefit plan (or related trust) sponsored or maintained by the
Surviving Corporation or the Parent Corporation), is or becomes the beneficial
owner, directly or indirectly, of more than 50% of the total voting power of the
outstanding voting securities eligible to elect directors of the Parent
Corporation (or, if there is no Parent Corporation, the Surviving Corporation)
and (3) at least a majority of the members of the board of directors of the
Parent Corporation (or if there is no Parent Corporation, the Surviving
Corporation) following the consummation of the Business Combination were
Incumbent Directors at the time of the Board’s approval of the execution of the
initial agreement providing for such Business Combination (any Business
Combination which satisfies all of the criteria specified in (1), (2) and (3)
above shall be deemed to be a “Non-Qualifying Transaction”).

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

2.13          “Committee” means a committee of one or more members of the Board
appointed by the Board to administer the Plan in accordance with Section 3.5.

2.14          “Common Stock” means the common stock of the Company.

2.15          “Company” means Tower Financial Corporation, an Indiana
corporation.

2.16          “Company Voting Securities” has the meaning set forth in
Section 2.11(d).

2.17          “Continuous Service” means that the Participant’s service with the
Company or an Affiliate, whether as an Eligible Employee or an Eligible Director
is not interrupted or terminated. The Administrator or its delegate, in its sole
discretion, may determine whether Continuous Service shall be considered
interrupted in the case of any approved leave of absence.

2.18          “Covered Employee” means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to stockholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.

2.19          “Date of Grant” means the date on which the Administrator adopts a
resolution, or takes other appropriate action, expressly granting an Award to a
Participant that specifies the key terms and conditions of the Award and from
which the Participant begins to benefit from or be adversely affected by
subsequent changes in the Fair Market Value of the Company Common Stock or, if a
different date is set forth in such resolution, or determined by the
Administrator, as the Date of Grant, then such date as is set forth in such
resolution.

2.20          “Director” means a member of the Board of Directors of the
Company.

2.21          “Disability” means that the Optionholder is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment; provided, however, for purposes of determining
the term of an Incentive Stock Option pursuant to Section 6.4 hereof, the term
Disability shall have the meaning ascribed to it under Code Section 22(e)(3).
The determination of whether an individual has a Disability shall be determined
under procedures established by the Administrator. Except in situations where
the Administrator is determining Disability for purposes of the term of an
Incentive Stock Option pursuant to Section 6.4 hereof within the meaning of Code
Section 22(e)(3), the Administrator may rely on any determination that a
Participant is disabled for purposes of benefits under any long-term disability
plan maintained by the Company or any Affiliate in which a Participant
participates.

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2.22          “Eligible Director” means any member of the Board who is not an
Eligible Employee.

2.23          “Eligible Employee” means any person employed by the Company or an
Affiliate, as approved by the Committee.

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

2.25          “Fair Market Value” means, as of any date, the value of the Common
Stock determined in good faith by the Administrator. The “Fair Market Value” of
any share of Common Stock of the Company at any date shall be (a) if the Common
Stock is traded on the Nasdaq National Market or is listed on any established
stock exchange or exchanges, the last reported sale price per share on such date
on the Nasdaq National Market or the principal exchange on which it is traded,
or if no sale was made on such date on such principal exchange, at the closing
reported bid price on such date on such exchange, or (b) if the Common Stock is
not then listed on an exchange or quoted on Nasdaq, an amount determined in good
faith by the Administrator.

2.26          “Free Standing Rights” has the meaning set forth in
Section 7.5(a).

2.27          “Incentive Stock Option” means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

2.28          “Incumbent Directors” means individuals who, on the Effective
Date, constitute the Board, provided that any individual becoming a Director
subsequent to the Effective Date whose election or nomination for election to
the Board was approved by a vote of at least two-thirds of the Incumbent
Directors then on the Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named as a nominee for
Director without objection to such nomination) shall be an Incumbent Director.

2.29          “Net Exercise” the meaning set forth in Section 6.3.

2.30          “Non-Employee Director” means a Director who is a “non-employee
director” within the meaning of Rule 16b-3.

2.31          “Nonstatutory Stock Option” means an Option not intended to
qualify as an Incentive Stock Option.

2.32          “Non-Qualifying Transaction” has the meaning set forth in
Section 2.11(e).

2.33          “Officer” means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

2.34          “Option” means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan.

2.35          “Option Agreement” means a written agreement between the Company
and an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan and need not be identical.

2.36          “Optionholder” means a person to whom an Option is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.

2.37          “Outside Director” means a Director who is an “outside director”
within the meaning of Section 162(m) of the Code and Treasury Regulations
§ 1.162-27(e)(3).

2.38          “Participant” means a person to whom an Award is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding Award,
and includes an Eligible employee or an Eligible Director.

2.39          “Performance Award” means Awards granted pursuant to Section 7.3.

2.40          “Plan” means this Tower Financial Corporation 2006 Equity
Incentive Plan.

2.41          “Prior Outstanding Options” means an option or other award that
was granted under the Prior Plans and continued to be outstanding as of the
Effective Date. The number of Prior Outstanding Options as of the Effective Date
of this Plan is 352,296 shares.

2.42          “Prior Plans” means the Tower Financial Corporation 1998 and 2001
Stock Option and Incentive Plans.

2.43          “Related Rights” has the meaning set forth in Section 7.5(a).

2.44          “Restricted Period” has the meaning set forth in Section 7.1.

2.45          “Restricted Stock Award” means any Award granted pursuant to
Section 7.1.

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2.46          “Right of Repurchase” means the Company’s option to repurchase
Common Stock acquired under the Plan upon the Participant’s termination of
Continuous Service pursuant to Section 7.4.

2.47          “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act
or any successor to Rule 16b-3, as in effect from time to time.

2.48          “SAR Amount” has the meaning set forth in Section 7.5(h).

2.49          “SAR Exercise Price” has the meaning set forth in Section 7.5(b).

2.50          “SEC” means the Securities and Exchange Commission.

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

2.52          “Stock Appreciation Right” means the right pursuant to an award
granted under Section 7.5 to receive an amount equal to the excess, if any, of
(A) the Fair Market Value, as of the date such Stock Appreciation Right or
portion thereof is surrendered, of the shares of stock covered by such right or
such portion thereof, over (B) the aggregate SAR Exercise Price of such right or
such portion thereof.

2.53          “Surviving Entity” means the Company if immediately following any
merger, consolidation or similar transaction, the holders of outstanding voting
securities or securities or rights convertible into voting securities of the
Company immediately prior to the merger or consolidation own equity securities
possessing more than 50% of the voting power of the entity existing following
the merger, consolidation or similar transaction. In all other cases, the other
entity to the transaction and not the Company shall be the Surviving Entity.

2.54          “Ten Percent Stockholder” means a person who owns (or is deemed to
own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates.

2.55          “Unrestricted Stock” means any Award of Common Stock granted
pursuant to Section 7.2 that is not subject to restrictions on transfer or a
risk of forfeiture.

2.56          “Unrestricted Stock Award” means any Award granted pursuant to
Section 7.2.
 
 
3.
Administration.

3.1           Administration by Board.  The Plan shall be administered by the
Board unless and until the Board delegates administration to a Committee, as
provided in Section 3.5 (the group that administers the Plan is referred to as
the “Administrator”).

3.2           Powers of Administrator.  The Administrator shall have the power
and authority to select and grant Awards to Participants, pursuant to the terms
of the Plan.

3.3           Specific Powers.  In particular, the Administrator shall have the
authority: (a) to construe and interpret the Plan and apply its provisions; (b)
to promulgate, amend and rescind rules and regulations relating to the
administration of the Plan; (c) to authorize any person to execute, on behalf of
the Company, any instrument required to carry out the purposes of the Plan; (d)
to delegate its authority to one or more Officers of the Company with respect to
awards that do not involve Covered Employees or “insiders” within the meaning of
Section 16 of the Exchange Act; (e) to determine when Awards are to be granted
under the Plan; (f) from time to time to select, subject to the limitations set
forth in this Plan, those Participants to whom Awards shall be granted; (g) to
determine the number of shares of Common Stock to be made subject to each Award;
(h) to determine whether each Option is to be an Incentive Stock Option or a
Nonstatutory Stock Option; (i) to prescribe the terms and conditions of each
Award, including, without limitation, the purchase price or exercise price and
medium of payment, vesting provisions and Right of Repurchase provisions, and to
specify the provisions of the Award Agreement relating to such grant or sale;
(j) to amend any outstanding Awards, including for the purpose of modifying the
time or manner of vesting, the term of any Award, the purchase price or exercise
price, as the case may be, subject to applicable legal restrictions; provided,
however, that the Administrator may not, without the approval of the
stockholders of the Company, (A) reprice or otherwise reduce the exercise price
of unexercised Options, or (B) cancel previously granted Options and issue new
Options to the same Optionholder at a lower exercise price. In addition, if any
such amendment impairs a Participant’s rights or increases a Participant’s
obligations under his or her Award, such amendment shall also be subject to the
Participant’s consent (provided, however, a cancellation of an Award where the
Participant receives a payment equal in value to the Fair Market Value of the
vested Award or, in the case of vested Options, the difference between the Fair
Market Value of the Common Stock underlying the Options and the exercise price,
shall not constitute an impairment of the Participant’s rights that requires
consent); (k) to determine the duration and purpose of leaves of absences which
may be granted to a Participant without constituting termination of their
Continuous Service for purposes of the Plan, which periods shall be no shorter
than the periods generally applicable to Employees under the Company’s
employment policies; (l) to make decisions with respect to outstanding Options
that may become necessary upon a Change in Control or an event that triggers
anti-dilution adjustments; and (m) to exercise discretion to make any and all
other determinations which it determines to be necessary or advisable for
administration of the Plan.

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3.4           Decisions Final.  All decisions made by the Administrator pursuant
to the provisions of the Plan shall be final and binding on the Company and the
Participants, unless such decisions are determined by a court having
jurisdiction to be arbitrary and capricious.

3.5           The Committee.

(a)           General.  The Board may delegate administration of the Plan to a
Committee or Committees of two (2) or more members of the Board, including the
Compensation Committee, and the term “Committee” shall apply to any person or
persons to whom such authority has been delegated. If administration is
delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan. The members of the Committee shall be appointed by
and to serve at the pleasure of the Board. From time to time, the Board may
increase or decrease the size of the Committee, add additional members to,
remove members (with or without Cause) from, appoint new members in substitution
therefor, and fill vacancies, however caused, in the Committee. The Committee
shall act pursuant to a vote of the majority of its members or, in the case of a
committee comprised of only two members, the unanimous consent of its members,
whether present or not, or by the written consent of the majority of its members
and minutes shall be kept of all of its meetings and copies thereof shall be
provided to the Board. Subject to the limitations prescribed by the Plan and the
Board, the Committee may establish and follow such rules and regulations for the
conduct of its business as it may determine to be advisable.

(b)           Committee Composition.  The Committee shall consist solely of two
or more Non-Employee Directors who are also Outside Directors. Within the scope
of such authority, the Administrator may (i) delegate to a committee of two or
more members of the Board who are not Outside Directors the authority to grant
Awards to eligible persons who are either (A) not then Covered Employees and are
not expected to be Covered Employees at the time of recognition of income
resulting from such Award or (B) not persons with respect to whom the Company
wishes to comply with Section 162(m) of the Code or (ii) delegate to a committee
of two or more members of the Board who are not Non-Employee Directors the
authority to grant Stock Awards to eligible persons who are not then subject to
Section 16 of the Exchange Act. In addition, the Administrator may delegate its
authority within specified parameters to one or more Officers of the Company
with respect to awards that do not involve Covered Employees or “insiders”
within the meaning of Section 16 of the Exchange Act;

3.6           Indemnification.  In addition to such other rights of
indemnification as they may have as Directors or members of the Committee, and
to the extent allowed by applicable law, the Administrator and each of the
Administrator’s consultants shall be indemnified by the Company against the
reasonable expenses, including attorney’s fees, actually incurred in connection
with any action, suit or proceeding or in connection with any appeal therein, to
which the Administrator or any of its consultants may be party by reason of any
action taken or failure to act under or in connection with the Plan or any
Option granted under the Plan, and against all amounts paid by the Administrator
or any of its consultants in settlement thereof ( provided, however, that the
settlement has been approved by the Company, which approval shall not be
unreasonably withheld) or paid by the Administrator or any of its consultants in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such Administrator or any of its consultants did not act in good
faith and in a manner which such person reasonably believed to be in the best
interests of the Company, and in the case of a criminal proceeding, had no
reason to believe that the conduct complained of was unlawful; provided,
however, that within 60 days after institution of any such action, suit or
proceeding, such Administrator or any of its consultants shall, in writing,
offer the Company the opportunity at its own expense to handle and defend such
action, suit or proceeding.

 
4.
Eligibility.

 
4.1
Eligibility for Specific Awards.  Awards under the Plan may be granted to any
Participant  who is designated by the Administrator to receive an Award.

 
4.2
4.2
Ten Percent Stockholders.  A Ten Percent Stockholder shall not be granted an
Incentive Stock Option unless the exercise price of such Option is at least 110%
of the Fair Market Value of the Common Stock at the Date of Grant and the Option
is not exercisable after the expiration of five years from the Date of Grant.

5.             Shares Subject to Awards.  The stock available for grant of
Options and other Awards under the Plan shall be shares of the Company’s
authorized but unissued, or reacquired, Common Stock. The aggregate number of
shares which may be issued pursuant to exercise of Awards granted under the
Plan, including Incentive Stock Options, is one hundred fifty thousand (150,000)
shares of Common Stock, subject to adjustment as provided in Section 6.13.
Awards for fractional shares of Common Stock may not be issued under the terms
of the Plan.

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5.1           Section 162(m) Limitation.  The maximum number of shares with
respect to which Awards may be granted to any Employee in any one calendar year
shall be 50,000 shares.

5.2           Reversion of Shares to Share Reserve.  If any Award shall for any
reason expire or otherwise terminate, in whole or in part, without having been
exercised in full or being fully vested, the shares of Common Stock not acquired
under such Award shall revert to and again become available for issuance under
the Plan. If shares of Common Stock issued under the Plan are reacquired by the
Company pursuant to the terms of any forfeiture provision, including the Right
of Repurchase of unvested Common Stock under Section 7.4, except for shares
acquired pursuant to a Net Exercise transaction, such shares shall again be
available for purposes of the Plan.

6.             Terms and Conditions of Options.  Options granted under the Plan
shall be evidenced by Option Agreements (which need not be identical) in such
form and containing such provisions which are consistent with the Plan as the
Administrator shall from time to time approve. Each agreement shall specify
whether the Option granted thereby is an Incentive Stock Option or a
Nonstatutory Stock Option. Options granted to an Eligible Director may only be
Nonstatutory Stock Options. Such agreements may incorporate all or any of the
terms hereof by reference and shall comply with and be subject to the following
terms and conditions:

6.1           Number of Shares Subject to Option.  Each Option Agreement shall
specify the number of shares subject to the Option.

6.2           Option Price.  The purchase price for the shares subject to any
Option shall not be less than 100% of the Fair Market Value of the shares of
Common Stock of the Company on the date the Option is granted.

6.3           Medium and Time of Payment.  The purchase price of Common Stock
acquired pursuant to an Option shall be paid, to the extent permitted by
applicable statutes and regulations, either (a) in cash or by certified or bank
check at the time the Option is exercised or (b) in the discretion of the
Administrator and upon such terms as the Administrator shall approve, the
exercise price may be paid: (i) by delivery to the Company of other Common
Stock, duly endorsed for transfer to the Company, with a Fair Market Value on
the date of delivery equal to the exercise price (or portion thereof) due for
the number of shares being acquired, (ii) by the withholding of whole shares of
Common Stock which would otherwise be delivered, having an aggregate Fair Market
Value on the date of delivery equal to the exercise price (“Net Exercise”),
(iii) during any period for which the Common Stock is publicly traded, in cash
by a broker-dealer acceptable to the Company to whom the optionee has submitted
an irrevocable notice of exercise (a “Cashless Exercise”); (iv) by a combination
of any of such methods, or (v) in such other manner as the Administrator, in its
discretion, either at the time of grant or thereafter, may provide.  The
Administrator may also, in its discretion, require as a condition of exercise
that the optionee pay to the Company federal, state or local withholding or
employment tax required by law, which payment may be made by any of the
foregoing methods.

Unless otherwise specifically provided in the Option, the purchase price of
Common Stock acquired pursuant to an Option that is paid by delivery to the
Company of other Common Stock acquired, directly or indirectly from the Company,
shall be paid only by shares of the Common Stock of the Company that have been
held for more than six months (or such longer or shorter period of time required
to avoid a charge to earnings for financial accounting purposes).
Notwithstanding the foregoing, during any period for which the Common Stock is
publicly traded, a Cashless Exercise or a Net Exercise or other transaction by a
Director or executive officer that involves or may involve a direct or indirect
extension of credit or arrangement of an extension of credit by the Company, or
an Affiliate in violation of section 402(a) of the Sarbanes-Oxley Act (codified
as Section 13(k) of the Exchange Act) shall be prohibited with respect to any
Award under this Plan. Unless otherwise provided in the terms of an Option
Agreement, payment of the exercise price by a Participant who is an officer,
director or other “insider” subject to Section 16(b) of the Exchange Act through
a Net Exercise transaction is subject to pre-approval by the Administrator, in
its sole discretion, which pre-approval shall be documented in a manner that
complies with the specificity requirements of Rule 16b-3, including the name of
the Participant involved in the transaction, the nature of the transaction, the
number of shares to be acquired or disposed of by the Participant and the
material terms of the Options involved in the transaction.

6.4           Term of Option.  No Option granted to an Eligible Employee or an
Eligible Director shall be exercisable after the expiration of the earliest of
(a) six years after the date the Option is granted, (b) ninety days after the
date the Optionholder’s Continuous Service with the Company and its Affiliates
terminates if such termination is for any reason other than Disability, death,
or Cause, (c) the date the Optionholder’s Continuous Service with the Company
and its Affiliates terminates if such termination is for Cause, as determined by
the Board or by the Committee in its sole discretion, or (d) one year after the
date the Optionholder’s Continuous Service with the Company and its Affiliates
terminates if such termination is a result of death or Disability, or death
results within not more than ninety days of the date on which the Optionholder’s
Continuous Service terminates; provided, however, that the Option Agreement for
any Option may provide for shorter periods in each of the foregoing instances.

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6.5           Exercise of Option.  No Option shall be exercisable during the
lifetime of an Optionholder by any person other than the Optionholder. The
Administrator shall have the power to set the time or times within which each
Option shall be exercisable and to accelerate the time or times of exercise.

To the extent that an Optionholder has the right to exercise an Option and
purchase shares pursuant thereto, the Option may be exercised from time to time
by written notice to the Company, stating the number of shares being purchased
and accompanied by payment in full, in any ways permitted hereunder, of the
purchase price for such shares.

6.6           No Transfer of Option.  No Option shall be transferable by an
Optionholder otherwise than by will or the laws of descent and distribution.
Notwithstanding the foregoing, the Optionholder may, by delivering written
notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionholder, shall thereafter be
entitled to exercise the Option.

6.7           Limit on Incentive Stock Options.  To the extent that the
aggregate Fair Market Value (determined at the time the Option is granted) of
the stock with respect to which Incentive Stock Options are exercisable for the
first time by an Optionholder during any calendar year (under all Incentive
Stock Option plans of the Company and its subsidiaries) exceeds $100,000, the
Options or portions thereof which exceed such limit (according to the order in
which they were granted) shall be treated as Nonstatutory Stock Options.

6.8           Restriction on Issuance of Shares.  The issuance of Options and
shares shall be subject to compliance with all of the applicable requirements of
law with respect to the issuance and sale of securities.

6.9           Investment Representation.  Any Optionholder may be required, as a
condition of issuance of shares covered by his or her Option, to represent that
the shares to be acquired pursuant to exercise of the Option will be acquired
for investment and without a view to distribution thereof, and in such case, the
Company may place a legend on the certificate evidencing the shares reflecting
the fact that they were acquired for investment and cannot be sold or
transferred unless registered under the Securities Act of 1933, as amended, or
unless counsel for the Company is satisfied that the circumstances of the
proposed transfer do not require such registration.

6.10          Rights as a Stockholder or Employee.  An Optionholder or
transferee of an Option shall have no rights as a stockholder of the Company
with respect to any shares covered by any Option until the date of issuance of a
share certificate for such shares, or the shares have been duly transferred
electronically. No adjustment shall be made for dividends (ordinary or
extraordinary, whether cash, securities, or other property), distributions or
other rights for which the record date is prior to the date such share
certificate is issued or electronic transfer recorded, except as provided in
Section 6.13. Nothing in the Plan or in any Option Agreement shall confer upon
any Employee any right to continue in the employ of the Company or any of its
Affiliates or interfere in any way with any right of the Company or any
Affiliate to terminate the Optionholder’s Continuous Service at any time.

6.11          No Fractional Shares.  In no event shall the Company be required
to issue fractional shares upon the exercise of an Option.

6.12          Exercisability in the Event of Death.  In the event of the death
of the Optionholder while he or she is an Eligible Employee or an Eligible
Director of the Company or any of its Affiliates or within not more than ninety
days of the date on which he or she ceased to be an Eligible Employee or an
Eligible Director, any Option or unexercised portion thereof granted to the
Optionholder, to the extent exercisable by him or her on the date of death, may
be exercised by the Optionholder’s designated beneficiary, personal
representatives, heirs, or legatees, subject to the provisions of Section 6.4
hereof.

6.13          Recapitalization or Reorganization of Company.  Except as
otherwise provided herein, appropriate and proportionate adjustments shall be
made in the number and class of shares subject to the Plan and to the Option
rights granted under the Plan, and the exercise price of such Option rights, in
the event of a stock dividend (but only on Common Stock), stock split, reverse
stock split, recapitalization, reorganization, merger, consolidation,
separation, or like change in the capital structure of the Company.

6.14          Additional Requirements Under Section 409A.  Each Option Agreement
shall include or be deemed to include a provision whereby, notwithstanding any
provision of the Plan or the Option Agreement to the contrary, the Option shall
satisfy the additional conditions applicable to nonqualified deferred
compensation under Section 409A of the Code, in accordance with Section 8
hereof, in the event any Option under this Plan is granted with an exercise
price less than Fair Market Value of the Common Stock subject to the Option on
the date the Option is granted (regardless of whether or not such exercise price
is intentionally or unintentionally priced at less than Fair Market Value, or is
materially modified at a time when the Fair Market Value exceeds the exercise
price), or is otherwise determined to constitute “nonqualified deferred
compensation” within the meaning of Section 409A of the Code.

6.15          Other Provisions.  Each Option may contain such other terms,
provisions, and conditions not inconsistent with the Plan as may be determined
by the Administrator. Notwithstanding the foregoing, the Company shall have no
liability to any Participant or any other person if an Option designated as an
Incentive Stock Option fails to qualify as such at any time or if an Option is
determined to constitute “nonqualified deferred compensation” within the meaning
of Section 409A of the Code and the terms of such Option do not satisfy the
additional conditions applicable to nonqualified deferred compensation under
Section 409A of the Code and Section 8 of the Plan.

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7.
Provisions of Awards Other Than Options.

7.1           Restricted Stock Awards.  The Administrator may from time to time
award (or sell at a purchase price determined by the Administrator) restricted
Common Stock under the Plan to eligible Participants. Restricted Stock Awards
may not be sold, assigned, transferred or otherwise disposed of, pledged or
hypothecated as collateral for a loan or as security for the performance of any
obligation or for any other purpose for such period (the “Restricted Period”) as
the Administrator shall determine. Each Restricted Stock Award shall be in such
form and shall contain such terms, conditions and Restricted Periods, whether
time based, performance based or both, as the Administrator shall deem
appropriate, including the treatment of dividends or dividend equivalents, as
the case may be. The Administrator in its discretion may provide for an
acceleration of the end of the Restricted Period in the terms of any Restricted
Stock Award, at any time, including in the event a Change in Control occurs. The
terms and conditions of the restricted stock purchase agreements may change from
time to time, and the terms and conditions of separate Restricted Stock Awards
need not be identical, but each Restricted Stock Award shall include (through
incorporation of provisions hereof by reference in the Award Agreement or
otherwise) the substance of each of the following provisions:

(a)           Purchase Price.  The purchase price of Restricted Stock Awards
shall be determined by the Administrator, and may be stated as cash, property or
prior services.

(b)           Consideration.  The consideration for Common Stock acquired
pursuant to the Restricted Stock Award, if sold and not simply awarded, shall be
paid either: (i) in cash at the time of purchase; or (ii) in any other form of
legal consideration that may be acceptable to the Administrator in its
discretion including, without limitation, a full recourse secured promissory
note, property or prior services that the Administrator determines have a value
at least equal to the Fair Market Value of such Common Stock.

(c)           Vesting.  Shares of Common Stock acquired under the Restricted
Stock Award may, but need not be subject to a Restricted Period that specifies a
Right of Repurchase in favor of the Company in accordance with a vesting
schedule to be determined by the Administrator, or forfeiture in the event the
consideration was in the form of prior services.

(d)           Termination of Participant’s Continuous Service.  Unless otherwise
provided in a Restricted Stock Award or in an employment agreement the terms of
which have been approved by the Administrator, in the event a Participant’s
Continuous Service terminates for any reason, the Company may exercise its Right
of Repurchase or otherwise reacquire, or the Participant shall forfeit the
unvested portion of a Restricted Stock Award acquired in consideration of prior
or future services, and any or all of the shares of Common Stock held by the
Participant which have not vested as of the date of termination under the terms
of the Restricted Stock Award shall be forfeited and the Participant shall have
no rights with respect to the Award.

(e)           Transferability.  Rights to acquire shares of Common Stock under
the Restricted Stock Award shall be transferable by the Participant only upon
such terms and conditions as are set forth in the Award Agreement, as the
Administrator shall determine in its discretion, so long as Common Stock awarded
under the Restricted Stock Award remains subject to the terms of the Award
Agreement.

(f)           Concurrent Tax Payment.  The Administrator, in its sole
discretion, may also (but shall not be required to) provide for payment of a
concurrent cash award in an amount equal, in whole or in part, to the estimated
after tax amount required to satisfy applicable federal, state or local tax
withholding obligations arising from the receipt and deemed vesting of
restricted stock for which an election under Section 83(b) of the Code may be
required.

(g)           Lapse of Restrictions.  Upon the expiration or termination of the
Restricted Period and the satisfaction of any other conditions prescribed by the
Administrator, the restrictions applicable to the Restricted Stock Award shall
lapse and a stock certificate for the number of shares of Common Stock with
respect to which the restrictions have lapsed shall be delivered, free of any
restrictions except those that may be imposed by law, the terms of the Plan or
the terms of a Restricted Stock Award, to the Participant or the Participant’s
beneficiary or estate, as the case may be, unless such Restricted Stock Award is
subject to a deferral condition that complies with the 409A Award requirements
that may be allowed or required by the Administrator in its sole discretion. The
Company shall not be required to deliver any fractional share of Common Stock
but will pay, in lieu thereof, the Fair Market Value of such fractional share in
cash to the Participant or the Participant’s beneficiary or estate, as the case
may be. Unless otherwise subject to a deferral condition that complies with the
409A Award requirements, the Common Stock certificate shall be issued and
delivered and the Participant shall be entitled to the beneficial ownership
rights of such Common Stock not later than (i) the date that is 2-1/2 months
after the end of the Participant’s or the Company’s taxable year for which the
Restricted Period ends and the Participant has a legally binding right to such
amounts, whichever is later, or (ii) such earlier date as may be necessary to
avoid application of Code Section 409A to such Award.

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7.2           Unrestricted Stock Awards.  The Administrator may, in its sole
discretion, award (or sell at a purchase price determined by the Administrator)
an Unrestricted Stock Award to any Participant, pursuant to which such
individual may receive shares of Common Stock free of any vesting restriction
(“Unrestricted Stock”) under the Plan. Unrestricted Stock Awards may be granted
or sold as described in the preceding sentence in respect of past services or
other valid consideration, or in lieu of any cash compensation due to such
individual.

 
7.3
Performance Awards.

(a)           Nature of Performance Awards.  A Performance Award is an Award
entitling the recipient to acquire cash, actual shares of Common Stock or
hypothetical Common Stock units having a value equal to the Fair Market Value of
an identical number of shares of Common Stock upon the attainment of specified
performance goals. The Administrator may make Performance Awards independent of
or in connection with the granting of any other Award under the Plan.
Performance Awards may be granted under the Plan to any Participant. The
Administrator in its sole discretion shall determine whether and to whom
Performance Awards shall be made, the performance goals applicable under each
Award, the periods during which performance is to be measured, and all other
limitations and conditions applicable to the awarded cash or shares.

Performance goals shall be based on a pre-established objective formula or
standard, measured over one or more performance periods, that specifies the
manner of determining the amount of cash or the number of shares under the
Performance Award that will be granted or will vest if the performance goal is
attained. Performance goals will be determined by the Administrator prior to the
time 25% of the service period has elapsed and may be based on one or more
business criteria that apply to a Participant, a business unit or the Company
and its Affiliates. Such business criteria may include, by way of example and
without limitation, revenue, earnings before interest, taxes, depreciation and
amortization (“EBITDA”), operating, pre-tax or after-tax income (Company-wide or
by operating units or division), earnings per share, return on equity, return on
assets, return on capital, economic value added, share price performance,
improvements in the Company’s attainment of expense levels, and implementing or
completion of critical projects or improvement in cash-flow (before or after
tax). The level or levels of performance specified with respect to a performance
goal may be established in absolute terms, as objectives relative to performance
in prior periods, as an objective compared to the performance of one or more
comparable companies or an index covering multiple companies, or otherwise as
the Administrator may determine.

Performance goals shall be objective and shall otherwise meet the requirements
of Section 162(m) of the Code. Performance goals may differ for Performance
Awards granted to any one Participant or to different Participants. A
Performance Award to a Participant who is a Covered Employee shall (unless the
Administrator determines otherwise) provide that in the event of the
Participant’s termination of Continuous Service prior to the end of the
performance period for any reason, such Award will be payable only (i) if the
applicable performance objectives are achieved and (ii) to the extent, if any,
as the Administrator shall determine.

(b)           Restrictions on Transfer.  Performance Awards and all rights with
respect to such Performance Awards may not be sold, assigned, transferred,
pledged or otherwise encumbered.

(c)           Rights as a Stockholder.  A Participant receiving a Performance
Award shall have the rights of a stockholder only as to shares actually received
by the Participant under the Plan and not with respect to shares subject to the
Award but not actually received by the Participant. A Participant shall be
entitled to receive a stock certificate evidencing the acquisition of shares of
Common Stock under a Performance Award only upon satisfaction of all conditions
specified in the written instrument evidencing the Performance Award (or in a
performance plan adopted by the Administrator). The Common Stock certificate
shall be issued and delivered and the Participant shall be entitled to the
beneficial ownership rights of such Common Stock not later than (i) the date
that is 2-1/2 months after the end of the Participant’s or the Company’s taxable
year for which the Administrator certifies that the Performance Award conditions
have been satisfied and the Participant has a legally binding right to such
amounts, whichever is later, or (ii) such other date as may be necessary to
avoid application of Section 409A to such Awards.

(d)           Termination.  Except as may otherwise be provided by the
Administrator at any time, a Participant’s rights in all Performance Awards
shall automatically terminate upon the Participant’s termination of Continuous
Service (or business relationship) with the Company and its Affiliates for any
reason.

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(e)           Acceleration, Waiver, Etc.  At any time prior to the Participant’s
termination of Continuous Service (or other business relationship) by the
Company and its Affiliates, the Administrator may in its sole discretion
accelerate, waive or, subject to Section 8, amend any or all of the goals,
restrictions or conditions imposed under any Performance Award. The
Administrator in its discretion may provide for an acceleration of vesting in
the terms of any Performance Award at any time, including in the event a Change
in Control occurs.

(f)           Certification.  Following the completion of each performance
period, the Administrator shall certify in writing, in accordance with the
requirements of Section 162(m) of the Code, whether the performance objectives
and other material terms of a Performance Award have been achieved or met.
Unless the Administrator determines otherwise, Performance Awards shall not be
settled until the Administrator has made the certification specified under this
Section 7.3(f).

7.4           Right of Repurchase.  Each Award Agreement may provide that,
following a termination of the Participant’s Continuous Service, the Company may
repurchase the Participant’s unvested Common Stock acquired under the Plan as
provided in this Section 7.4 (the “Right of Repurchase”). The Right of
Repurchase shall be exercisable with respect to unvested stock at a price equal
to the lesser of the purchase price at which such Common Stock was acquired
under the Plan or the Fair Market Value of such Common Stock. The Award
Agreement may specify the period of time following a termination of the
Participant’s Continuous Service during which the Right of Repurchase may be
exercised, provided that such exercise may in any event be extended to a date
that is at least 60 days after the six months anniversary of the date the stock
was acquired from the Company.

 
7.5
Stock Appreciation Rights.

(a)           General.  Stock Appreciation Rights may be granted either alone
(“Free Standing Rights”) or, provided the requirements of Section 7.5(b) are
satisfied, in tandem with all or part of any Option granted under the Plan
(“Related Rights”). In the case of a Nonstatutory Stock Option, Related Rights
may be granted either at or after the time of the grant of such Option. In the
case of an Incentive Stock Option, Related Rights may be granted only at the
time of the grant of the Incentive Stock Option.

(b)           Grant Requirements.  A Stock Appreciation Right may only be
granted if the Stock Appreciation Right: (i) does not provide for the deferral
of compensation within the meaning of Section 409A of the Code; or (ii)
satisfies the requirements of Section 7.5(f) and Section 8 hereof. A Stock
Appreciation Right does not provide for a deferral of compensation if: (A) the
value of the Common Stock the excess over which the right provides for payment
upon exercise (the “SAR Exercise Price”) may never be less than the Fair Market
Value of the underlying Common Stock on the date the right is granted, (B) the
compensation payable under the Stock Appreciation Right can never be greater
than the difference between the SAR Exercise Price and the Fair Market Value of
the Common Stock on the date the Stock Appreciation Right is exercised, (C) the
number of shares of Common Stock subject to the Stock Appreciation Right is
fixed on the date of grant of the Stock Appreciation Right, and (D) the right
does not include any feature for the deferral of compensation other than the
deferral of recognition of income until the exercise of the right.

(c)           Exercise and Payment.  Upon exercise thereof, the holder of a
Stock Appreciation Right shall be entitled to receive from the Company, an
amount equal to the product of (i) the excess of the Fair Market Value, on the
date of such written request, of one share of Common Stock over the SAR Exercise
Price per share specified in such Stock Appreciation Right or its related
Option, multiplied by (ii) the number of shares for which such Stock
Appreciation Right shall be exercised. Payment with respect to the exercise of a
Stock Appreciation Right that satisfies the requirements of Section 7.5(b)(i)
shall be paid on the date of exercise and made in shares of Common Stock (with
or without restrictions as to substantial risk of forfeiture and
transferability, as determined by the Administrator in its sole discretion),
valued at Fair Market Value on the date of exercise. Payment with respect to the
exercise of a Stock Appreciation Right that does not satisfy the requirements of
Section 7.5(b)(i) shall be paid at the time specified in the Award in accordance
with the provisions of Section 7.5(f) and Section 8. Payment may be made in the
form of shares of Common Stock (with or without restrictions as to substantial
risk of forfeiture and transferability, as determined by the Administrator in
its sole discretion), cash or a combination thereof, as determined by the
Administrator.

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(d)           Exercise Price.  The exercise price of a Free Standing Stock
Appreciation Right shall be determined by the Administrator, but shall not be
less than 100% of the Fair Market Value of one share of Common Stock on the Date
of Grant of such Stock Appreciation Right. A Related Right granted
simultaneously with or subsequent to the grant of an Option and in conjunction
therewith or in the alternative thereto shall have the same exercise price as
the related Option, shall be transferable only upon the same terms and
conditions as the related Option, and shall be exercisable only to the same
extent as the related Option; provided, however, that a Stock Appreciation
Right, by its terms, shall be exercisable only when the Fair Market Value per
share of Common Stock subject to the Stock Appreciation Right and related Option
exceeds the exercise price per share thereof and no Stock Appreciation Rights
may be granted in tandem with an Option unless the Administrator determines that
the requirements of Section 7.5(b)(i) are satisfied.

(e)           Reduction in the Underlying Option Shares.  Upon any exercise of a
Stock Appreciation Right, the number of shares of Common Stock for which any
related Option shall be exercisable shall be reduced by the number of shares for
which the Stock Appreciation Right shall have been exercised. The number of
shares of Common Stock for which a Stock Appreciation Right shall be exercisable
shall be reduced upon any exercise of any related Option by the number of shares
of Common Stock for which such Option shall have been exercised.

(f)           Additional Requirements under Section 409A.  A Stock Appreciation
Right that is not intended to or fails to satisfy the requirements of Section
7.5(b)(i) shall satisfy the requirements of this Section 7.5 (f) and the
additional conditions applicable to nonqualified deferred compensation under
Section 409A of the Code, in accordance with Section 8 hereof. The requirements
herein shall apply in the event any Stock Appreciation Right under this Plan is
granted with an SAR Exercise Price less than Fair Market Value of the Common
Stock underlying the Award on the date the Stock Appreciation Right is granted
(regardless of whether or not such SAR Exercise Price is intentionally or
unintentionally priced at less than Fair Market Value, or is materially modified
at a time when the Fair Market Value exceeds the SAR Exercise Price), provides
that it is settled in cash, or is otherwise determined to constitute
“nonqualified deferred compensation” within the meaning of Section 409A of the
Code. Any such Stock Appreciation Right may provide that it is exercisable at
any time permitted under the governing written instrument, but such exercise
shall be limited to fixing the measurement of the amount, if any, by which the
Fair Market Value of a share of Common Stock on the date of exercise exceeds the
SAR Exercise Price (the “SAR Amount”). However, once the Stock Appreciation
Right is exercised, the SAR Amount may only be paid on the fixed time, payment
schedule or other event specified in the governing written instrument or in
Section 8.1 hereof.

8.             Additional Conditions Applicable to Nonqualified Deferred
Compensation Under Section 409A of the Code.

In the event any Award under this Plan is granted with an exercise price less
than Fair Market Value of the Common Stock subject to the Award on the Date of
Grant (regardless of whether or not such exercise price is intentionally or
unintentionally priced at less than Fair Market Value, or such Award is
materially modified and deemed a new Award at a time when the Fair Market Value
exceeds the exercise price), or is otherwise determined to constitute a 409A
Award, the following additional conditions shall apply and shall supersede any
contrary provisions of this Plan or the terms of any 409A Award agreement.

8.1           Exercise and Distribution.  No 409A Award shall be exercisable or
distributable earlier than upon one of the following:

(a)           Specified Time.  A specified time or a fixed schedule set forth in
the written instrument evidencing the 409A Award, but not later than after the
expiration of 10 years from the Date of Grant. If the written grant instrument
does not specify a fixed time or schedule, such time shall be the date that is
the fifth anniversary of the Date of Grant.

(b)           Separation from Service.  Separation from service (within the
meaning of Section 409A of the Code) by the 409A Award recipient; provided,
however, if the 409A Award recipient is a “key employee” (as defined in Section
416(i) of the Code without regard to paragraph (5) thereof) and any of the
Company’s stock is publicly traded on an established securities market or
otherwise, exercise or distribution under this Section 8.1(b) may not be made
before the date which is six months after the date of separation from service.

(c)           Death.  The date of death of the 409A Award recipient.

(d)           Disability.  The date the 409A Award recipient becomes disabled
(within the meaning of Section 8.4(b) hereof).

(e)           Unforeseeable Emergency.  The occurrence of an unforeseeable
emergency (within the meaning of Section 8.4(b) hereof), but only if the net
value (after payment of the exercise price) of the number of shares of Common
Stock that become issuable does not exceed the amounts necessary to satisfy such
emergency plus amounts necessary to pay taxes reasonably anticipated as a result
of the exercise, after taking into account the extent to which the emergency is
or may be relieved through reimbursement or compensation by insurance or
otherwise or by liquidation of the Participant’s other assets (to the extent
such liquidation would not itself cause severe financial hardship).

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(f)           Change in Control Event.  The occurrence of a Change in Control
Event (within the meaning of Section 8.4(a) hereof), including the Company’s
discretionary exercise of the right to accelerate vesting of such Award upon a
Change in Control Event or to terminate the Plan or any 409A Award granted
hereunder within 12 months of the Change in Control Event.

8.2           Term.  Notwithstanding anything to the contrary in this Plan or
the terms of any 409A Award agreement, the term of any 409A Award shall expire
and such Award shall no longer be exercisable on the date that is the later of:
(a) 2-1/2 months after the end of the Company’s taxable year in which the 409A
Award first becomes exercisable or distributable pursuant to Section 8 hereof
and is not subject to a substantial risk of forfeiture; or (b) 2-1/2 months
after the end of the 409A Award recipient’s taxable year in which the 409A Award
first becomes exercisable or distributable pursuant to Section 8 hereof and is
not subject to a substantial risk of forfeiture, but not later than the earlier
of (i) the expiration of 10 years from the date the 409A Award was granted, or
(ii) the term specified in the 409A Award agreement.

8.3           No Acceleration.  A 409A Award may not be accelerated or exercised
prior to the time specified in Section 8 hereof, except in the case of one of
the following events:

(a)           Domestic Relations Order.  The 409A Award may permit the
acceleration of the exercise or distribution time or schedule to an individual
other than the Participant as may be necessary to comply with the terms of a
domestic relations order (as defined in Section 414(p)(1)(B) of the Code).

(b)           Conflicts of Interest.  The 409A Award may permit the acceleration
of the exercise or distribution time or schedule as may be necessary to comply
with the terms of a certificate of divestiture (as defined in Section 1043(b)(2)
of the Code).

(c)           Change in Control Event.  The Administrator may exercise the
discretionary right to accelerate the vesting of such 409A Award upon a Change
in Control Event or to terminate the Plan or any 409A Award granted thereunder
within 12 months of the Change in Control Event and cancel the 409A Award for
compensation. In addition, the Administrator may exercise the discretionary
right to accelerate the vesting of such 409A Award provided that such
acceleration does not change the time or schedule of payment of such Award and
otherwise satisfies the requirements of this Section 8 and the requirements of
Section 409A of the Code.

8.4           Definitions.  Solely for purposes of this Section 8 and not for
other purposes of the Plan, the following terms shall be defined as set forth
below:

(a)           “Change in Control Event” means the occurrence of a change in the
ownership of the Company, a change in effective control of the Company, or a
change in the ownership of a substantial portion of the assets of the Company
(as defined in Proposed Regulations § 1.409A-3(g)(5) and any subsequent guidance
interpreting Code Section 409A).

(b)           “Disabled” means a Participant (i) is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, or (ii) is, by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement benefits for a period
of not less than three months under an accident and health plan covering
Employees.

(c)           “Unforeseeable Emergency” means a severe financial hardship to the
Participant resulting from an illness or accident of the Participant, the
Participant’s spouse, or a dependent (as defined in Section 152(a) of the Code)
of the Participant, loss of the Participant’s property due to casualty, or
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant.

9.             Termination or Amendment of Plan.  The Board may at any time
terminate or amend the Plan; provided that, without approval of the stockholders
of the Company, there shall be, except by operation of the equitable adjustment
provisions of Section 6.13, no increase in the total number of shares covered by
the Plan, no change in the class of persons eligible to receive Awards granted
under the Plan or other material modification of the requirements as to
eligibility for participation in the Plan, no material increase in the benefits
accruing to participants under the Plan, and no extension of the latest date
upon which Awards may be granted; and provided further that, without the consent
of the Participant, no amendment may adversely affect any then outstanding Award
or any unexercised portion thereof.

10.           General Provisions.

10.1          Other Compensation Arrangements.  Nothing contained in this Plan
shall prevent the Board from adopting other or additional compensation
arrangements, subject to stockholder approval if such approval is required; and
such arrangements may be either generally applicable or applicable only in
specific cases.

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10.2          Recapitalizations.  Each Option Agreement and Award Agreement
shall contain provisions required to reflect the equitable adjustment provisions
of Section 6.13 in the event of a corporate capital transaction.

10.3          Disqualifying Dispositions.  Any Participant who shall make a
“disposition” (as defined in Section 424 of the Code) of all or any portion of
shares of Common Stock acquired upon exercise of an Incentive Stock Option
within two (2) years from the Date of Grant of such Incentive Stock Option or
within one (1) year after the issuance of the shares of Common Stock acquired
upon exercise of such Incentive Stock Option shall be required to immediately
advise the Company in writing as to the occurrence of the sale and the price
realized upon the sale of such shares of Common Stock.

10.4          Withholding Obligations.  To the extent provided by the terms of
an Award Agreement and subject to the discretion of the Administrator, the
Participant may satisfy any federal, state or local tax withholding obligation
relating to the exercise or acquisition of Common Stock under an Award by any of
the following means (in addition to the Company’s right to withhold from any
compensation paid to the Participant by the Company) or by a combination of such
means: (a) tendering a cash payment; (b) authorizing the Company to withhold
shares of Common Stock from the shares of Common Stock otherwise issuable to the
Participant as a result of the exercise or acquisition of Common Stock under the
Award, provided, however, that no shares of Common Stock are withheld with a
value exceeding the minimum amount of tax required to be withheld by law or (c)
delivering to the Company previously owned and unencumbered shares of Common
Stock of the Company. Unless otherwise provided in the terms of an Option
Agreement, payment of the tax withholding by a Participant who is an officer,
director or other “insider” subject to Section 16(b) of the Exchange Act by
delivering previously owned and unencumbered shares of Common Stock of the
Company or in the form of share withholding is subject to pre-approval by the
Administrator, in its sole discretion. Any such pre-approval shall be documented
in a manner that complies with the specificity requirements of Rule 16b-3,
including the name of the Participant involved in the transaction, the nature of
the transaction, the number of shares to be acquired or disposed of by the
Participant and the material terms of the Options involved in the transaction.

11.           Termination or Suspension of the Plan.  The Plan shall terminate
automatically on the day before the 10th anniversary of the Effective Date. No
Award shall be granted pursuant to the Plan after such date, but Awards
theretofore granted may extend beyond that date. The Board may suspend or
terminate the Plan at any earlier date. No Awards may be granted under the Plan
while the Plan is suspended or after it is terminated.

12.           Choice of Law.  The law of the State of Indiana shall govern all
questions concerning the construction, validity and interpretation of this Plan,
without regard to such state’s conflict of law rules.
 
 
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