Exhibit 10.6

 

GLOBAL CASH ACCESS HOLDINGS, INC.

 

2014 EQUITY INCENTIVE PLAN

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

1.

Establishment, Purpose and Term of Plan

1

 

1.1

Establishment

1

 

1.2

Purpose

1

 

1.3

Term of Plan

1

2.

Definitions and Construction

1

 

2.1

Definitions

1

 

2.2

Construction

8

3.

Administration

9

 

3.1

Administration by the Committee

9

 

3.2

Authority of Officers

9

 

3.3

Administration with Respect to Insiders

9

 

3.4

Committee Complying with Section 162(m)

9

 

3.5

Powers of the Committee

9

 

3.6

Option or SAR Repricing

10

 

3.7

Indemnification

11

4.

Shares Subject to Plan

11

 

4.1

Maximum Number of Shares Issuable

11

 

4.2

Adjustment for Unissued or Forfeited Predecessor Plan Shares

11

 

4.3

Share Counting

12

 

4.4

Adjustments for Changes in Capital Structure

12

 

4.5

Assumption or Substitution of Awards

13

5.

Eligibility, Participation and Award Limitations

13

 

5.1

Persons Eligible for Awards

13

 

5.2

Participation in the Plan

13

 

5.3

Incentive Stock Option Limitations

13

 

5.4

Section 162(m) Award Limits

14

 

5.5

Nonemployee Director Award Limits

14

6.

Stock Options

14

 

6.1

Exercise Price

14

 

6.2

Exercisability and Term of Options

15

 

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TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

 

6.3

Payment of Exercise Price

15

 

6.4

Effect of Termination of Service

16

 

6.5

Transferability of Options

17

7.

Stock Appreciation Rights

17

 

7.1

Types of SARs Authorized

17

 

7.2

Exercise Price

17

 

7.3

Exercisability and Term of SARs

18

 

7.4

Exercise of SARs

18

 

7.5

Deemed Exercise of SARs

19

 

7.6

Effect of Termination of Service

19

 

7.7

Transferability of SARs

19

8.

Restricted Stock Awards

19

 

8.1

Types of Restricted Stock Awards Authorized

19

 

8.2

Purchase Price

19

 

8.3

Purchase Period

20

 

8.4

Payment of Purchase Price

20

 

8.5

Vesting and Restrictions on Transfer

20

 

8.6

Voting Rights; Dividends and Distributions

20

 

8.7

Effect of Termination of Service

21

 

8.8

Nontransferability of Restricted Stock Award Rights

21

9.

Restricted Stock Units

21

 

9.1

Grant of Restricted Stock Unit Awards

21

 

9.2

Purchase Price

21

 

9.3

Vesting

22

 

9.4

Voting Rights, Dividend Equivalent Rights and Distributions

22

 

9.5

Effect of Termination of Service

23

 

9.6

Settlement of Restricted Stock Unit Awards

23

 

9.7

Nontransferability of Restricted Stock Unit Awards

23

10.

Performance Awards

23

 

10.1

Types of Performance Awards Authorized

23

 

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TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

 

10.2

Initial Value of Performance Shares and Performance Units

23

 

10.3

Establishment of Performance Period, Performance Goals and Performance Award
Formula

24

 

10.4

Measurement of Performance Goals

24

 

10.5

Settlement of Performance Awards

26

 

10.6

Voting Rights; Dividend Equivalent Rights and Distributions

27

 

10.7

Effect of Termination of Service

28

 

10.8

Nontransferability of Performance Awards

28

11.

Cash-Based Awards and Other Stock-Based Awards

29

 

11.1

Grant of Cash-Based Awards

29

 

11.2

Grant of Other Stock-Based Awards

29

 

11.3

Value of Cash-Based and Other Stock-Based Awards

29

 

11.4

Payment or Settlement of Cash-Based Awards and Other Stock-Based Awards

29

 

11.5

Voting Rights; Dividend Equivalent Rights and Distributions

30

 

11.6

Effect of Termination of Service

30

 

11.7

Nontransferability of Cash-Based Awards and Other Stock-Based Awards

30

12.

Standard Forms of Award Agreement

31

 

12.1

Award Agreements

31

 

12.2

Authority to Vary Terms

31

13.

Change in Control

31

 

13.1

Effect of Change in Control on Awards

31

 

13.2

Effect of Change in Control on Nonemployee Director Awards

32

 

13.3

Federal Excise Tax Under Section 4999 of the Code

32

14.

Compliance with Securities Law

33

15.

Compliance with Section 409A

33

 

15.1

Awards Subject to Section 409A

33

 

15.2

Deferral and/or Distribution Elections

34

 

15.3

Subsequent Elections

34

 

15.4

Payment of Section 409A Deferred Compensation

35

16.

Tax Withholding

37

 

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TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

 

16.1

Tax Withholding in General

37

 

16.2

Withholding in or Directed Sale of Shares

37

17.

Amendment, Suspension or Termination of Plan

37

18.

Miscellaneous Provisions

38

 

18.1

Repurchase Rights

38

 

18.2

Forfeiture Events

38

 

18.3

Provision of Information

38

 

18.4

Rights as Employee, Consultant or Director

39

 

18.5

Rights as a Stockholder

39

 

18.6

Delivery of Title to Shares

39

 

18.7

Fractional Shares

39

 

18.8

Retirement and Welfare Plans

39

 

18.9

Beneficiary Designation

39

 

18.10

Severability

40

 

18.11

No Constraint on Corporate Action

40

 

18.12

Unfunded Obligation

40

 

18.13

Choice of Law

40

 

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Global Cash Access Holdings, Inc.

2014 Equity Incentive Plan

 

1.         ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

 

1.1       Establishment.  The Global Cash Access Holdings, Inc. 2014 Equity
Incentive Plan (the “Plan”) is hereby established effective as of May 15, 2014,
the date of its approval by the stockholders of the Company (the “Effective
Date”).

 

1.2       Purpose.  The purpose of the Plan is to advance the interests of the
Participating Company Group and its stockholders by providing an incentive to
attract, retain and reward persons performing services for the Participating
Company Group and by motivating such persons to contribute to the growth and
profitability of the Participating Company Group.  The Plan seeks to achieve
this purpose by providing for Awards in the form of Options, Stock Appreciation
Rights, Restricted Stock Awards, Restricted Stock Units, Performance Shares,
Performance Units, Cash-Based Awards and Other Stock-Based Awards.

 

1.3       Term of Plan.  The Plan shall continue in effect until its termination
by the Committee; provided, however, that all Awards shall be granted, if at
all, within ten (10) years from the Effective Date.

 

2.         DEFINITIONS AND CONSTRUCTION.

 

2.1       Definitions.  Whenever used herein, the following terms shall have
their respective meanings set forth below:

 

(a)        “Affiliate” means (i) a parent entity, other than a Parent
Corporation, that directly, or indirectly through one or more intermediary
entities, controls the Company or (ii) a subsidiary entity, other than a
Subsidiary Corporation, that is controlled by the Company directly or indirectly
through one or more intermediary entities.  For this purpose, the terms
“parent,” “subsidiary,” “control” and “controlled by” shall have the meanings
assigned such terms for the purposes of registration of securities on Form S-8
under the Securities Act.

 

(b)       “Award” means any Option, Stock Appreciation Right, Restricted Stock
Purchase Right, Restricted Stock Bonus, Restricted Stock Unit, Performance
Share, Performance Unit, Cash-Based Award or Other Stock-Based Award granted
under the Plan.

 

(c)        “Award Agreement” means a written or electronic agreement between the
Company and a Participant setting forth the terms, conditions and restrictions
applicable to an Award.

 

(d)       “Board” means the Board of Directors of the Company.

 

(e)        “Cash-Based Award” means an Award denominated in cash and granted
pursuant to Section 11.

 

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(f)        “Cashless Exercise” means a Cashless Exercise as defined in
Section 6.3(b)(i).

 

(g)        “Cause” means, unless such term or an equivalent term is otherwise
defined by the applicable Award Agreement or other written agreement between a
Participant and a Participating Company applicable to an Award, any of the
following: (i) the Participant’s theft, dishonesty, willful misconduct, breach
of fiduciary duty for personal profit, or falsification of any Participating
Company documents or records; (ii) the Participant’s material failure to abide
by a Participating Company’s code of conduct or other policies (including,
without limitation, policies relating to confidentiality and reasonable
workplace conduct); (iii) the Participant’s unauthorized use, misappropriation,
destruction or diversion of any tangible or intangible asset or corporate
opportunity of a Participating Company (including, without limitation, the
Participant’s improper use or disclosure of a Participating Company’s
confidential or proprietary information); (iv) any intentional act by the
Participant which has a material detrimental effect on a Participating Company’s
reputation or business; (v) the Participant’s repeated failure to perform any
reasonable assigned duties after written notice from a Participating Company of,
and a reasonable opportunity to cure, such failure; (vi) any material breach by
the Participant of any employment, service, non-disclosure, non-competition,
non-solicitation or other similar agreement between the Participant and a
Participating Company, which breach is not cured pursuant to the terms of such
agreement; or (vii) the Participant’s conviction (including any plea of guilty
or nolo contendere) of any criminal act involving fraud, dishonesty,
misappropriation or moral turpitude, or which impairs the Participant’s ability
to perform his or her duties with a Participating Company.

 

(h)       “Change in Control” means, unless such term or an equivalent term is
otherwise defined by the applicable Award Agreement or other written agreement
between the Participant and a Participating Company applicable to an Award, the
occurrence of any one or a combination of the following:

 

(i)         any “person” (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act) becomes the “beneficial owner” (as such term is defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing more than fifty percent (50%) of the total Fair Market
Value or total combined voting power of the Company’s then-outstanding
securities entitled to vote generally in the election of Directors; provided,
however, that a Change in Control shall not be deemed to have occurred if such
degree of beneficial ownership results from any of the following: (A) an
acquisition by any person who on the Effective Date is the beneficial owner of
more than fifty percent (50%) of such voting power, (B) any acquisition directly
from the Company, including, without limitation, pursuant to or in connection
with a public offering of securities, (C) any acquisition by the Company,
(D) any acquisition by a trustee or other fiduciary under an employee benefit
plan of a Participating Company or (E) any acquisition by an entity owned
directly or indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of the voting securities of the Company; or

 

(ii)        an Ownership Change Event or series of related Ownership Change
Events (collectively, a “Transaction”) in which the stockholders of the Company
immediately before the Transaction do not retain immediately after the
Transaction direct or

 

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indirect beneficial ownership of more than fifty percent (50%) of the total
combined voting power of the outstanding securities entitled to vote generally
in the election of Directors or, in the case of an Ownership Change Event
described in Section 2.1(ee)(iii), the entity to which the assets of the Company
were transferred (the “Transferee”), as the case may be; or

 

(iii)       a date specified by the Committee following approval by the
stockholders of a plan of complete liquidation or dissolution of the Company;

 

provided, however, that a Change in Control shall be deemed not to include a
transaction described in subsections (i) or (ii) of this Section 2.1(h) in which
a majority of the members of the board of directors of the continuing, surviving
or successor entity, or parent thereof, immediately after such transaction is
comprised of Incumbent Directors.

 

For purposes of the preceding sentence, indirect beneficial ownership shall
include, without limitation, an interest resulting from ownership of the voting
securities of one or more corporations or other business entities which own the
Company or the Transferee, as the case may be, either directly or through one or
more subsidiary corporations or other business entities.  The Committee shall
determine whether multiple events described in subsections (i), (ii) and
(iii) of this Section 2.1(h) are related and to be treated in the aggregate as a
single Change in Control, and its determination shall be final, binding and
conclusive.

 

(i)         “Code” means the Internal Revenue Code of 1986, as amended, and any
applicable regulations and administrative guidelines promulgated thereunder.

 

(j)        “Committee” means the Compensation Committee and such other committee
or subcommittee of the Board, if any, duly appointed to administer the Plan and
having such powers in each instance as shall be specified by the Board.  If, at
any time, there is no committee of the Board then authorized or properly
constituted to administer the Plan, the Board shall exercise all of the powers
of the Committee granted herein, and, in any event, the Board may in its
discretion exercise any or all of such powers.

 

(k)       “Company” means Global Cash Access Holdings, Inc., a Delaware
corporation, and any successor corporation thereto.

 

(l)         “Consultant” means a person engaged to provide consulting or
advisory services (other than as an Employee or a Director) to a Participating
Company, provided that the identity of such person, the nature of such services
or the entity to which such services are provided would not preclude the Company
from offering or selling securities to such person pursuant to the Plan in
reliance on registration on Form S-8 under the Securities Act.

 

(m)      “Covered Employee” means, at any time the Plan is subject to
Section 162(m), any Employee who is or may reasonably be expected to become a
“covered employee” as defined in Section 162(m), or any successor statute, and
who is designated, either as an individual Employee or a member of a class of
Employees, by the Committee no later than the earlier of (i) the date that is
ninety (90) days after the beginning of the Performance Period, or (ii) the date
on which twenty-five percent (25%) of the Performance Period has elapsed, as a
“Covered Employee” under this Plan for such applicable Performance Period.

 

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(n)       “Director” means a member of the Board.

 

(o)        “Disability” means, unless such term or an equivalent term is
otherwise defined by the applicable Award Agreement or other written agreement
between the Participant and a Participating Company applicable to an Award, the
permanent and total disability of the Participant, within the meaning of
Section 22(e)(3) of the Code.

 

(p)       “Dividend Equivalent Right” means the right of a Participant, granted
at the discretion of the Committee or as otherwise provided by the Plan, to
receive a credit for the account of such Participant in an amount equal to the
cash dividends paid on one share of Stock for each share of Stock represented by
an Award held by such Participant.

 

(q)       “Employee” means any person treated as an employee (including an
Officer or a Director who is also treated as an employee) in the records of a
Participating Company and, with respect to any Incentive Stock Option granted to
such person, who is an employee for purposes of Section 422 of the Code;
provided, however, that neither service as a Director nor payment of a
Director’s fee shall be sufficient to constitute employment for purposes of the
Plan.  The Company shall determine in good faith and in the exercise of its
discretion whether an individual has become or has ceased to be an Employee and
the effective date of such individual’s employment or termination of employment,
as the case may be.  For purposes of an individual’s rights, if any, under the
terms of the Plan as of the time of the Company’s determination of whether or
not the individual is an Employee, all such determinations by the Company shall
be final, binding and conclusive as to such rights, if any, notwithstanding that
the Company or any court of law or governmental agency subsequently makes a
contrary determination as to such individual’s status as an Employee.

 

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

 

(s)        “Fair Market Value” means, as of any date, the value of a share of
Stock or other property as determined by the Committee, in its discretion, or by
the Company, in its discretion, if such determination is expressly allocated to
the Company herein, subject to the following:

 

(i)         Except as otherwise determined by the Committee, if, on such date,
the Stock is listed or quoted on a national or regional securities exchange or
quotation system, the Fair Market Value of a share of Stock shall be the closing
price of a share of Stock as quoted on the national or regional securities
exchange or quotation system constituting the primary market for the Stock, as
reported in The Wall Street Journal or such other source as the Company deems
reliable.  If the relevant date does not fall on a day on which the Stock has
traded on such securities exchange or quotation system, the date on which the
Fair Market Value shall be established shall be the last day on which the Stock
was so traded or quoted prior to the relevant date, or such other appropriate
day as shall be determined by the Committee, in its discretion.

 

(ii)        Notwithstanding the foregoing, the Committee may, in its discretion,
determine the Fair Market Value of a share of Stock on the basis of the opening,

 

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closing, or average of the high and low sale prices of a share of Stock on such
date or the preceding trading day, the actual sale price of a share of Stock
received by a Participant, any other reasonable basis using actual transactions
in the Stock as reported on a national or regional securities exchange or
quotation system, or on any other basis consistent with the requirements of
Section 409A.  The Committee may vary its method of determination of the Fair
Market Value as provided in this Section for different purposes under the Plan
to the extent consistent with the requirements of Section 409A.

 

(iii)       If, on such date, the Stock is not listed or quoted on a national or
regional securities exchange or quotation system, the Fair Market Value of a
share of Stock shall be as determined by the Committee in good faith without
regard to any restriction other than a restriction which, by its terms, will
never lapse, and in a manner consistent with the requirements of Section 409A.

 

(t)        “Full Value Award” means any Award settled in Stock, other than
(i) an Option, (ii) a Stock Appreciation Right, or (iii) a Restricted Stock
Purchase Right or an Other Stock-Based Award under which the Company will
receive monetary consideration equal to the Fair Market Value (determined on the
effective date of grant) of the shares subject to such Award.

 

(u)       “Incentive Stock Option” means an Option intended to be (as set forth
in the Award Agreement) and which qualifies as an incentive stock option within
the meaning of Section 422(b) of the Code.

 

(v)        “Incumbent Director” means a director who either (i) is a member of
the Board as of the Effective Date or (ii) is elected, or nominated for
election, to the Board with the affirmative votes of at least a majority of the
Incumbent Directors at the time of such election or nomination (but excluding a
director who was elected or nominated in connection with an actual or threatened
proxy contest relating to the election of directors of the Company).

 

(w)       “Insider” means an Officer, a Director or other person whose
transactions in Stock are subject to Section 16 of the Exchange Act.

 

(x)        “Net Exercise” means a Net Exercise as defined in
Section 6.3(b)(iii).

 

(y)        “Nonemployee Director” means a Director who is not an Employee.

 

(z)        “Nonemployee Director Award” means any Award granted to a Nonemployee
Director.

 

(aa)      “Nonstatutory Stock Option” means an Option not intended to be (as set
forth in the Award Agreement) or which does not qualify as an incentive stock
option within the meaning of Section 422(b) of the Code.

 

(bb)     “Officer” means any person designated by the Board as an officer of the
Company.

 

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

 

(dd)     “Other Stock-Based Award” means an Award denominated in shares of Stock
and granted pursuant to Section 11.

 

(ee)      “Ownership Change Event” means the occurrence of any of the following
with respect to the Company:  (i) the direct or indirect sale or exchange in a
single or series of related transactions by the stockholders of the Company of
securities of the Company representing more than fifty percent (50%) of the
total combined voting power of the Company’s then outstanding securities
entitled to vote generally in the election of Directors; (ii) a merger or
consolidation in which the Company is a party; or (iii) the sale, exchange, or
transfer of all or substantially all of the assets of the Company (other than a
sale, exchange or transfer to one or more subsidiaries of the Company).

 

(ff)       “Parent Corporation” means any present or future “parent corporation”
of the Company, as defined in Section 424(e) of the Code.

 

(gg)      “Participant” means any eligible person who has been granted one or
more Awards.

 

(hh)     “Participating Company” means the Company or any Parent Corporation,
Subsidiary Corporation or Affiliate.

 

(ii)        “Participating Company Group” means, at any point in time, the
Company and all other entities collectively which are then Participating
Companies.

 

(jj)       “Performance Award” means an Award of Performance Shares or
Performance Units.

 

(kk)     “Performance Award Formula” means, for any Performance Award, a formula
or table established by the Committee pursuant to Section 10.3 which provides
the basis for computing the value of a Performance Award at one or more levels
of attainment of the applicable Performance Goal(s) measured as of the end of
the applicable Performance Period.

 

(ll)        “Performance-Based Compensation” means compensation under an Award
that satisfies the requirements of Section 162(m) for certain performance-based
compensation paid to Covered Employees.

 

(mm)   “Performance Goal” means a performance goal established by the Committee
pursuant to Section 10.3.

 

(nn)     “Performance Period” means a period established by the Committee
pursuant to Section 10.3 at the end of which one or more Performance Goals are
to be measured.

 

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(oo)      “Performance Share” means a right granted to a Participant pursuant to
Section 10 to receive a payment equal to the value of a Performance Share, as
determined by the Committee, based upon attainment of applicable Performance
Goal(s).

 

(pp)     “Performance Unit” means a right granted to a Participant pursuant to
Section 10 to receive a payment equal to the value of a Performance Unit, as
determined by the Committee, based upon attainment of applicable Performance
Goal(s).

 

(qq)     “Predecessor Plan” means the Company’s 2005 Stock Incentive Plan.

 

(rr)      “Restricted Stock Award” means an Award of a Restricted Stock Bonus or
a Restricted Stock Purchase Right.

 

(ss)       “Restricted Stock Bonus” means Stock granted to a Participant
pursuant to Section 8.

 

(tt)       “Restricted Stock Purchase Right” means a right to purchase Stock
granted to a Participant pursuant to Section 8.

 

(uu)     “Restricted Stock Unit” means a right granted to a Participant pursuant
to Section 9 to receive on a future date or occurrence of a future event a share
of Stock or cash in lieu thereof, as determined by the Committee.

 

(vv)      “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended from
time to time, or any successor rule or regulation.

 

(ww)    “SAR” or “Stock Appreciation Right” means a right granted to a
Participant pursuant to Section 7 to receive payment, for each share of Stock
subject to such Award, of an amount equal to the excess, if any, of the Fair
Market Value of a share of Stock on the date of exercise of the Award over the
exercise price thereof.

 

(xx)      “Section 162(m)” means Section 162(m) of the Code.

 

(yy)      “Section 409A” means Section 409A of the Code.

 

(zz)      “Section 409A Deferred Compensation” means compensation provided
pursuant to an Award that constitutes nonqualified deferred compensation within
the meaning of Section 409A.

 

(aaa)    “Securities Act” means the Securities Act of 1933, as amended.

 

(bbb)   “Service” means a Participant’s employment or service with the
Participating Company Group, whether as an Employee, a Director or a
Consultant.  Unless otherwise provided by the Committee, a Participant’s Service
shall not be deemed to have terminated merely because of a change in the
capacity in which the Participant renders Service or a change in the
Participating Company for which the Participant renders Service, provided that
there is no interruption or termination of the Participant’s Service. 
Furthermore, a Participant’s

 

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Service shall not be deemed to have been interrupted or terminated if the
Participant takes any military leave, sick leave, or other bona fide leave of
absence approved by the Company.  However, unless otherwise provided by the
Committee, if any such leave taken by a Participant exceeds ninety (90) days,
then on the ninety-first (91st) day following the commencement of such leave the
Participant’s Service shall be deemed to have terminated, unless the
Participant’s right to return to Service is guaranteed by statute or contract. 
Notwithstanding the foregoing, unless otherwise designated by the Company or
required by law, an unpaid leave of absence shall not be treated as Service for
purposes of determining vesting under the Participant’s Award Agreement.  A
Participant’s Service shall be deemed to have terminated either upon an actual
termination of Service or upon the business entity for which the Participant
performs Service ceasing to be a Participating Company.  Subject to the
foregoing, the Company, in its discretion, shall determine whether the
Participant’s Service has terminated and the effective date of and reason for
such termination.

 

(ccc)    “Stock” means the Common Stock, par value $0.001 per share, of the
Company, as adjusted from time to time in accordance with Section 4.4.

 

(ddd)   “Stock Tender Exercise” means a Stock Tender Exercise as defined in
Section 6.3(b)(ii).

 

(eee)    “Subsidiary Corporation” means any present or future “subsidiary
corporation” of the Company, as defined in Section 424(f) of the Code.

 

(fff)     “Ten Percent Owner” means a Participant who, at the time an Option is
granted to the Participant, owns stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of a Participating
Company (other than an Affiliate) within the meaning of Section 422(b)(6) of the
Code.

 

(ggg)    “Trading Compliance Policy” means the written policy of the Company
pertaining to the purchase, sale, transfer or other disposition of the Company’s
equity securities by Directors, Officers, Employees or other service providers
who may possess material, nonpublic information regarding the Company or its
securities.

 

(hhh)   “Vesting Conditions” mean those conditions established in accordance
with the Plan prior to the satisfaction of which an Award or shares subject to
an Award remain subject to forfeiture or a repurchase option in favor of the
Company exercisable for the Participant’s monetary purchase price, if any, for
such shares upon the Participant’s termination of Service or failure of a
performance condition to be satisfied.

 

2.2       Construction.  Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan.  Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular. 
Use of the term “or” is not intended to be exclusive, unless the context clearly
requires otherwise.

 

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3.         ADMINISTRATION.

 

3.1       Administration by the Committee.  The Plan shall be administered by
the Committee.  All questions of interpretation of the Plan, of any Award
Agreement or of any other form of agreement or other document employed by the
Company in the administration of the Plan or of any Award shall be determined by
the Committee, and such determinations shall be final, binding and conclusive
upon all persons having an interest in the Plan or such Award, unless fraudulent
or made in bad faith.  Any and all actions, decisions and determinations taken
or made by the Committee in the exercise of its discretion pursuant to the Plan
or Award Agreement or other agreement thereunder (other than determining
questions of interpretation pursuant to the preceding sentence) shall be final,
binding and conclusive upon all persons having an interest therein.  All
expenses incurred in connection with the administration of the Plan shall be
paid by the Company.

 

3.2       Authority of Officers.  Any Officer shall have the authority to act on
behalf of the Company with respect to any matter, right, obligation,
determination or election that is the responsibility of or that is allocated to
the Company herein, provided that the Officer has apparent authority with
respect to such matter, right, obligation, determination or election.

 

3.3       Administration with Respect to Insiders.  With respect to
participation by Insiders in the Plan, at any time that any class of equity
security of the Company is registered pursuant to Section 12 of the Exchange
Act, the Plan shall be administered in compliance with the requirements, if any,
of Rule 16b-3.

 

3.4       Committee Complying with Section 162(m).  If the Company is a
“publicly held corporation” within the meaning of Section 162(m), the Board may
establish a Committee of “outside directors” within the meaning of
Section 162(m) to approve the grant of any Award intended to result in the
payment of Performance-Based Compensation.

 

3.5       Powers of the Committee.  In addition to any other powers set forth in
the Plan and subject to the provisions of the Plan, the Committee shall have the
full and final power and authority, in its discretion:

 

(a)        to determine the persons to whom, and the time or times at which,
Awards shall be granted and the number of shares of Stock, units or monetary
value to be subject to each Award;

 

(b)       to determine the type of Award granted;

 

(c)        to determine whether an Award granted to a Covered Employee shall be
intended to result in Performance-Based Compensation;

 

(d)       to determine the Fair Market Value of shares of Stock or other
property;

 

(e)        to determine the terms, conditions and restrictions applicable to
each Award (which need not be identical) and any shares acquired pursuant
thereto, including, without limitation, (i) the exercise or purchase price of
shares pursuant to any Award, (ii) the

 

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method of payment for shares purchased pursuant to any Award, (iii) the method
for satisfaction of any tax withholding obligation arising in connection with
any Award, including by the withholding or delivery of shares of Stock, (iv) the
timing, terms and conditions of the exercisability or vesting of any Award or
any shares acquired pursuant thereto, (v) the Performance Measures, Performance
Period, Performance Award Formula and Performance Goals applicable to any Award
and the extent to which such Performance Goals have been attained, (vi) the time
of expiration of any Award, (vii) the effect of any Participant’s termination of
Service on any of the foregoing, and (viii) all other terms, conditions and
restrictions applicable to any Award or shares acquired pursuant thereto not
inconsistent with the terms of the Plan;

 

(f)        to determine whether an Award will be settled in shares of Stock,
cash, other property or in any combination thereof;

 

(g)        to approve one or more forms of Award Agreement;

 

(h)       to amend, modify, extend, cancel or renew any Award or to waive any
restrictions or conditions applicable to any Award or any shares acquired
pursuant thereto;

 

(i)         to accelerate, continue, extend or defer the exercisability or
vesting of any Award or any shares acquired pursuant thereto, including with
respect to the period following a Participant’s termination of Service;

 

(j)        to prescribe, amend or rescind rules, guidelines and policies
relating to the Plan, or to adopt sub-plans or supplements to, or alternative
versions of, the Plan, including, without limitation, as the Committee deems
necessary or desirable to comply with the laws of, or to accommodate the tax
policy, accounting principles or custom of, foreign jurisdictions whose
residents may be granted Awards; and

 

(k)       to correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award Agreement and to make all other
determinations and take such other actions with respect to the Plan or any Award
as the Committee may deem advisable to the extent not inconsistent with the
provisions of the Plan or applicable law.

 

3.6       Option or SAR Repricing.  Without the affirmative vote of holders of a
majority of the shares of Stock cast in person or by proxy at a meeting of the
stockholders of the Company at which a quorum representing a majority of all
outstanding shares of Stock is present or represented by proxy, the Committee
shall not approve a program providing for either (a) the cancellation of
outstanding Options or SARs having exercise prices per share greater than the
then Fair Market Value of a share of Stock (“Underwater Awards”) and the grant
in substitution therefore of new Options or SARs having a lower exercise price,
Full Value Awards or payments in cash, or (b) the amendment of outstanding
Underwater Awards to reduce the exercise price thereof.  This Section shall not
be construed to apply to (i) “issuing or assuming a stock option in a
transaction to which Section 424(a) applies,” within the meaning of Section 424
of the Code, (ii) adjustments pursuant to the assumption of or substitution for
an Option or SAR in a manner that would comply with Section 409A, or (iii) an
adjustment pursuant to Section 4.4.

 

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3.7       Indemnification.  In addition to such other rights of indemnification
as they may have as members of the Board or the Committee or as officers or
employees of the Participating Company Group, to the extent permitted by
applicable law, members of the Board or the Committee and any officers or
employees of the Participating Company Group to whom authority to act for the
Board, the Committee or the Company is delegated shall be indemnified by the
Company against all reasonable expenses, including attorneys’ fees, actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan, or any right granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them 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 person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle
and defend the same.

 

4.         SHARES SUBJECT TO PLAN.

 

4.1       Maximum Number of Shares Issuable.  Subject to adjustment as provided
in Sections 4.2, 4.3 and 4.4, the maximum aggregate number of shares of Stock
that may be issued under the Plan shall be equal to Eight Million Three Hundred
Seventy Five Thousand (8,375,000) shares and shall consist of authorized but
unissued or reacquired shares of Stock or any combination thereof.

 

4.2       Adjustment for Unissued or Forfeited Predecessor Plan Shares.  The
maximum aggregate number of shares of Stock that may be issued under the Plan as
set forth in Section 4.1 shall be cumulatively increased from time to time by:

 

(a)        the aggregate number of shares of Stock that remain available for the
future grant of awards under the Predecessor Plan immediately prior to its
termination as of the Effective Date;

 

(b)       the number of shares of Stock subject to that portion of any option or
other award outstanding pusuant to the Predecessor Plan as of the Effective Date
which, on or after the Effective Date, expires or is terminated or canceled for
any reason without having been exercised or settled in full; and

 

(c)        the number of shares of Stock acquired pursuant to the Predecessor
Plan subject to forfeiture or repurchase by the Company for an amount not
greater than the Participant’s purchase price which, on or after the Effective
Date, is so forfeited or repurchased;

 

provided, however, that the aggregate number of shares of Stock authorized for
issuance under the Predecessor Plan that may become authorized for issuance
under the Plan pursuant to this Section 4.2 shall not exceed One Million Nine
Hundred Thousand (1,900,000) shares.

 

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4.3       Share Counting.

 

(a)        Each share of Stock subject to an Award other than a Full Value Award
shall be counted against the limit set forth in Section 4.1 as one (1) share. 
Each one (1) share of Stock subject to a Full Value Award granted pursuant to
the Plan or forfeited or repurchased pursuant to Section 4.3(b) shall be counted
for purposes of the limit set forth in Section 4.1 as two and one-half (2.5)
shares.

 

(b)       If an outstanding Award for any reason expires or is terminated or
canceled without having been exercised or settled in full, or if shares of Stock
acquired pursuant to an Award subject to forfeiture or repurchase are forfeited
or repurchased by the Company for an amount not greater than the Participant’s
purchase price, the shares of Stock allocable to the terminated portion of such
Award or such forfeited or repurchased shares of Stock shall again be available
for issuance under the Plan.  Shares of Stock shall not be deemed to have been
issued pursuant to the Plan with respect to any portion of an Award that is
settled in cash.  Upon payment in shares of Stock pursuant to the exercise of an
SAR, the number of shares available for issuance under the Plan shall be reduced
by the gross number of shares for which the SAR is exercised.  If the exercise
price of an Option is paid by tender to the Company, or attestation to the
ownership, of shares of Stock owned by the Participant, or by means of a
Net-Exercise, the number of shares available for issuance under the Plan shall
be reduced by the gross number of shares for which the Option is exercised. 
Shares withheld or reacquired by the Company in satisfaction of tax withholding
obligations pursuant to the exercise or settlement of Options or SARs pursuant
to Section 16.2 shall not again be available for issuance under the Plan. 
Shares withheld or reacquired by the Company in satisfaction of tax withholding
obligations pursuant to the vesting or settlement of Full Value Awards pursuant
to Section 16.2 shall again become available for issuance under the Plan.

 

4.4       Adjustments for Changes in Capital Structure.  Subject to any required
action by the stockholders of the Company and the requirements of Sections 409A
and 424 of the Code to the extent applicable, in the event of any change in the
Stock effected without receipt of consideration by the Company, whether through
merger, consolidation, reorganization, reincorporation, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, split-up,
split-off, spin-off, combination of shares, exchange of shares, or similar
change in the capital structure of the Company, or in the event of payment of a
dividend or distribution to the stockholders of the Company in a form other than
Stock (excepting regular, periodic cash dividends) that has a material effect on
the Fair Market Value of shares of Stock, appropriate and proportionate
adjustments shall be made in the number and kind of shares subject to the Plan
and to any outstanding Awards, the Award limits set forth in Section 5.3 and
Section 5.4, and in the exercise or purchase price per share under any
outstanding Award in order to prevent dilution or enlargement of Participants’
rights under the Plan.  For purposes of the foregoing, conversion of any
convertible securities of the Company shall not be treated as “effected without
receipt of consideration by the Company.”  If a majority of the shares which are
of the same class as the shares that are subject to outstanding Awards are
exchanged for, converted into, or otherwise become (whether or not pursuant to
an Ownership Change Event) shares of another corporation (the “New Shares”), the
Committee may unilaterally amend the outstanding Awards to provide that such
Awards are for New Shares.  In the event of any such amendment, the number of
shares

 

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subject to, and the exercise or purchase price per share of, the outstanding
Awards shall be adjusted in a fair and equitable manner as determined by the
Committee, in its discretion.  Any fractional share resulting from an adjustment
pursuant to this Section shall be rounded down to the nearest whole number and
the exercise or purchase price per share shall be rounded up to the nearest
whole cent.  In no event may the exercise or purchase price, if any, under any
Award be decreased to an amount less than the par value, if any, of the stock
subject to such Award.  The Committee in its discretion, may also make such
adjustments in the terms of any Award to reflect, or related to, such changes in
the capital structure of the Company or distributions as it deems appropriate,
including modification of Performance Goals, Performance Award Formulas and
Performance Periods.  The adjustments determined by the Committee pursuant to
this Section shall be final, binding and conclusive.

 

4.5       Assumption or Substitution of Awards.  The Committee may, without
affecting the number of shares of Stock reserved or available hereunder,
authorize the issuance or assumption of benefits under this Plan in connection
with any merger, consolidation, acquisition of property or stock, or
reorganization upon such terms and conditions as it may deem appropriate,
subject to compliance with Section 409A and any other applicable provisions of
the Code.

 

5.         ELIGIBILITY, PARTICIPATION AND AWARD LIMITATIONS.

 

5.1       Persons Eligible for Awards.  Awards may be granted only to Employees,
Consultants and Directors.

 

5.2       Participation in the Plan.  Awards are granted solely at the
discretion of the Committee.  Eligible persons may be granted more than one
Award.  However, eligibility in accordance with this Section shall not entitle
any person to be granted an Award, or, having been granted an Award, to be
granted an additional Award.

 

5.3       Incentive Stock Option Limitations.

 

(a)        Maximum Number of Shares Issuable Pursuant to Incentive Stock
Options.  Subject to adjustment as provided in Section 4.4, the maximum
aggregate number of shares of Stock that may be issued under the Plan pursuant
to the exercise of Incentive Stock Options shall not exceed Ten Million Two
Hundred Seventy Five Thousand (10,275,000) shares.  The maximum aggregate number
of shares of Stock that may be issued under the Plan pursuant to all Awards
other than Incentive Stock Options shall be the number of shares determined in
accordance with Section 4.1, subject to adjustment as provided in Sections 4.2,
4.3 and 4.4.

 

(b)       Persons Eligible.  An Incentive Stock Option may be granted only to a
person who, on the effective date of grant, is an Employee of the Company, a
Parent Corporation or a Subsidiary Corporation (each being an “ISO-Qualifying
Corporation”).  Any person who is not an Employee of an ISO-Qualifying
Corporation on the effective date of the grant of an Option to such person may
be granted only a Nonstatutory Stock Option.

 

(c)        Fair Market Value Limitation.  To the extent that options designated
as Incentive Stock Options (granted under all stock plans of the Participating

 

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Company Group, including the Plan) become exercisable by a Participant for the
first time during any calendar year for stock having a Fair Market Value greater
than One Hundred Thousand Dollars ($100,000), the portion of such options which
exceeds such amount shall be treated as Nonstatutory Stock Options.  For
purposes of this Section, options designated as Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of stock shall be determined as of the time the option with respect to
such stock is granted.  If the Code is amended to provide for a limitation
different from that set forth in this Section, such different limitation shall
be deemed incorporated herein effective as of the date and with respect to such
Options as required or permitted by such amendment to the Code.  If an Option is
treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option
in part by reason of the limitation set forth in this Section, the Participant
may designate which portion of such Option the Participant is exercising.  In
the absence of such designation, the Participant shall be deemed to have
exercised the Incentive Stock Option portion of the Option first.  Upon exercise
the Option, shares issued pursuant to each such portion shall be separately
identified.

 

5.4       Section 162(m) Award Limits.  Subject to adjustment as provided in
Section 4.4, no Covered Employee shall be granted within any fiscal year of the
Company one or more Awards intended to qualify for treatment as
Performance-Based Compensation which in the aggregate are for more than Four
Million (4,000,000) shares or, if applicable, which could result in such Covered
Employee receiving more than Three Million Dollars ($3,000,000.00) for each full
fiscal year of the Company contained in the Performance Period for such Award.

 

5.5       Nonemployee Director Award Limits.  Subject to adjustment as provided
in Section 4.4, no Nonemployee Director shall be granted within any fiscal year
of the Company one or more Nonemployee Director Awards which in the aggregate
are for more than Three Hundred Thousand (300,000) shares.

 

6.         STOCK OPTIONS.

 

Options shall be evidenced by Award Agreements specifying the number of shares
of Stock covered thereby, in such form as the Committee shall establish.  Such
Award Agreements may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and
conditions:

 

6.1       Exercise Price.  The exercise price for each Option shall be
established in the discretion of the Committee; provided, however, that (a) the
exercise price per share shall be not less than the Fair Market Value of a share
of Stock on the effective date of grant of the Option and (b) no Incentive Stock
Option granted to a Ten Percent Owner shall have an exercise price per share
less than one hundred ten percent (110%) of the Fair Market Value of a share of
Stock on the effective date of grant of the Option.  Notwithstanding the
foregoing, an Option (whether an Incentive Stock Option or a Nonstatutory Stock
Option) may be granted with an exercise price lower than the minimum exercise
price set forth above if such Option is granted pursuant to an assumption or
substitution for another option in a manner that would qualify under the
provisions of Section 409A or Section 424(a) of the Code.

 

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6.2       Exercisability and Term of Options.  Options shall be exercisable at
such time or times, or upon such event or events, and subject to such terms,
conditions, performance criteria and restrictions as shall be determined by the
Committee and set forth in the Award Agreement evidencing such Option; provided,
however, that (a) no Option shall be exercisable after the expiration of ten
(10) years after the effective date of grant of such Option, (b) no Incentive
Stock Option granted to a Ten Percent Owner shall be exercisable after the
expiration of five (5) years after the effective date of grant of such Option
and (c) no Option granted to an Employee who is a non-exempt employee for
purposes of the Fair Labor Standards Act of 1938, as amended, shall be first
exercisable until at least six (6) months following the date of grant of such
Option (except in the event of such Employee’s death, disability or retirement,
upon a Change in Control, or as otherwise permitted by the Worker Economic
Opportunity Act).  Subject to the foregoing, unless otherwise specified by the
Committee in the grant of an Option, each Option shall terminate ten (10) years
after the effective date of grant of the Option, unless earlier terminated in
accordance with its provisions.

 

6.3       Payment of Exercise Price.

 

(a)        Forms of Consideration Authorized.  Except as otherwise provided
below, payment of the exercise price for the number of shares of Stock being
purchased pursuant to any Option shall be made (i) in cash, by check or in cash
equivalent; (ii) if permitted by the Committee and subject to the limitations
contained in Section 6.3(b), by means of (1) a Cashless Exercise, (2) a Stock
Tender Exercise or (3) a Net Exercise; (iii) by such other consideration as may
be approved by the Committee from time to time to the extent permitted by
applicable law, or (iv) by any combination thereof.  The Committee may at any
time or from time to time grant Options which do not permit all of the foregoing
forms of consideration to be used in payment of the exercise price or which
otherwise restrict one or more forms of consideration.

 

(b)       Limitations on Forms of Consideration.

 

(i)         Cashless Exercise.  A “Cashless Exercise” means the delivery of a
properly executed notice of exercise together with irrevocable instructions to a
broker providing for the assignment to the Company of the proceeds of a sale or
loan with respect to some or all of the shares being acquired upon the exercise
of the Option (including, without limitation, through an exercise complying with
the provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System).  The Company reserves, at any and all
times, the right, in the Company’s sole and absolute discretion, to establish,
decline to approve or terminate any program or procedures for the exercise of
Options by means of a Cashless Exercise, including with respect to one or more
Participants specified by the Company notwithstanding that such program or
procedures may be available to other Participants.

 

(ii)        Stock Tender Exercise.  A “Stock Tender Exercise” means the delivery
of a properly executed exercise notice accompanied by a Participant’s tender to
the Company, or attestation to the ownership, in a form acceptable to the
Company of whole shares of Stock owned by the Participant having a Fair Market
Value that does not exceed the aggregate exercise price for the shares with
respect to which the Option is exercised.  A Stock

 

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Tender Exercise shall not be permitted if it would constitute a violation of the
provisions of any law, regulation or agreement restricting the redemption of the
Company’s stock.  If required by the Company, an Option may not be exercised by
tender to the Company, or attestation to the ownership, of shares of Stock
unless such shares either have been owned by the Participant for a period of
time required by the Company (and not used for another option exercise by
attestation during such period) or were not acquired, directly or indirectly,
from the Company.

 

(iii)       Net Exercise.  A “Net Exercise” means the delivery of a properly
executed exercise notice followed by a procedure pursuant to which (1) the
Company will reduce the number of shares otherwise issuable to a Participant
upon the exercise of an Option by the largest whole number of shares having a
Fair Market Value that does not exceed the aggregate exercise price for the
shares with respect to which the Option is exercised, and (2) the Participant
shall pay to the Company in cash the remaining balance of such aggregate
exercise price not satisfied by such reduction in the number of whole shares to
be issued.

 

6.4       Effect of Termination of Service.

 

(a)        Option Exercisability.  Subject to earlier termination of the Option
as otherwise provided by this Plan and unless otherwise provided by the
Committee, an Option shall terminate immediately upon the Participant’s
termination of Service to the extent that it is then unvested and shall be
exercisable after the Participant’s termination of Service to the extent it is
then vested only during the applicable time period determined in accordance with
this Section and thereafter shall terminate.

 

(i)         Disability.  If the Participant’s Service terminates because of the
Disability of the Participant, the Option, to the extent unexercised and
exercisable for vested shares on the date on which the Participant’s Service
terminated, may be exercised by the Participant (or the Participant’s guardian
or legal representative) at any time prior to the expiration of twelve (12)
months (or such longer or shorter period provided by the Award Agreement) after
the date on which the Participant’s Service terminated, but in any event no
later than the date of expiration of the Option’s term as set forth in the Award
Agreement evidencing such Option (the “Option Expiration Date”).

 

(ii)        Death.  If the Participant’s Service terminates because of the death
of the Participant, the Option, to the extent unexercised and exercisable for
vested shares on the date on which the Participant’s Service terminated, may be
exercised by the Participant’s legal representative or other person who acquired
the right to exercise the Option by reason of the Participant’s death at any
time prior to the expiration of twelve (12) months (or such longer or shorter
period provided by the Award Agreement) after the date on which the
Participant’s Service terminated, but in any event no later than the Option
Expiration Date.  The Participant’s Service shall be deemed to have terminated
on account of death if the Participant dies within three (3) months (or such
longer or shorter period provided by the Award Agreement) after the
Participant’s termination of Service.

 

(iii)       Termination for Cause.  Notwithstanding any other provision of the
Plan to the contrary, if the Participant’s Service is terminated for Cause or
if, following the Participant’s termination of Service and during any period in
which the Option

 

16

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otherwise would remain exercisable, the Participant engages in any act that
would constitute Cause, the Option shall terminate in its entirety and cease to
be exercisable immediately upon such termination of Service or act.

 

(iv)       Other Termination of Service.  If the Participant’s Service
terminates for any reason, except Disability, death or Cause, the Option, to the
extent unexercised and exercisable for vested shares on the date on which the
Participant’s Service terminated, may be exercised by the Participant at any
time prior to the expiration of three (3) months (or such longer or shorter
period provided by the Award Agreement) after the date on which the
Participant’s Service terminated, but in any event no later than the Option
Expiration Date.

 

(b)       Extension if Exercise Prevented by Law.  Notwithstanding the
foregoing, other than termination of Service for Cause, if the exercise of an
Option within the applicable time periods set forth in Section 6.4(a) is
prevented by the provisions of Section 14 below, the Option shall remain
exercisable until the later of (i) thirty (30) days after the date such exercise
first would no longer be prevented by such provisions or (ii) the end of the
applicable time period under Section 6.4(a), but in any event no later than the
Option Expiration Date.

 

6.5       Transferability of Options.  During the lifetime of the Participant,
an Option shall be exercisable only by the Participant or the Participant’s
guardian or legal representative.  An Option shall not be subject in any manner
to anticipation, alienation, sale, exchange, transfer, assignment, pledge,
encumbrance, or garnishment by creditors of the Participant or the Participant’s
beneficiary, except transfer by will or by the laws of descent and
distribution.  Notwithstanding the foregoing, to the extent permitted by the
Committee, in its discretion, and set forth in the Award Agreement evidencing
such Option, an Option shall be assignable or transferable subject to the
applicable limitations, if any, described in the General Instructions to
Form S-8 under the Securities Act or, in the case of an Incentive Stock Option,
only as permitted by applicable regulations under Section 421 of the Code in a
manner that does not disqualify such Option as an Incentive Stock Option.

 

7.         STOCK APPRECIATION RIGHTS.

 

Stock Appreciation Rights shall be evidenced by Award Agreements specifying the
number of shares of Stock subject to the Award, in such form as the Committee
shall establish.  Such Award Agreements may incorporate all or any of the terms
of the Plan by reference and shall comply with and be subject to the following
terms and conditions:

 

7.1       Types of SARs Authorized.  SARs may be granted in tandem with all or
any portion of a related Option (a “Tandem SAR”) or may be granted independently
of any Option (a “Freestanding SAR”).  A Tandem SAR may only be granted
concurrently with the grant of the related Option.

 

7.2       Exercise Price.  The exercise price for each SAR shall be established
in the discretion of the Committee; provided, however, that (a) the exercise
price per share subject to a Tandem SAR shall be the exercise price per share
under the related Option and (b) the exercise price per share subject to a
Freestanding SAR shall be not less than the Fair Market

 

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Value of a share of Stock on the effective date of grant of the SAR. 
Notwithstanding the foregoing, an SAR may be granted with an exercise price
lower than the minimum exercise price set forth above if such SAR is granted
pursuant to an assumption or substitution for another stock appreciation right
in a manner that would qualify under the provisions of Section 409A of the Code.

 

7.3       Exercisability and Term of SARs.

 

(a)        Tandem SARs.  Tandem SARs shall be exercisable only at the time and
to the extent, and only to the extent, that the related Option is exercisable,
subject to such provisions as the Committee may specify where the Tandem SAR is
granted with respect to less than the full number of shares of Stock subject to
the related Option.  The Committee may, in its discretion, provide in any Award
Agreement evidencing a Tandem SAR that such SAR may not be exercised without the
advance approval of the Company and, if such approval is not given, then the
Option shall nevertheless remain exercisable in accordance with its terms.  A
Tandem SAR shall terminate and cease to be exercisable no later than the date on
which the related Option expires or is terminated or canceled.  Upon the
exercise of a Tandem SAR with respect to some or all of the shares subject to
such SAR, the related Option shall be canceled automatically as to the number of
shares with respect to which the Tandem SAR was exercised.  Upon the exercise of
an Option related to a Tandem SAR as to some or all of the shares subject to
such Option, the related Tandem SAR shall be canceled automatically as to the
number of shares with respect to which the related Option was exercised.

 

(b)       Freestanding SARs.  Freestanding SARs shall be exercisable at such
time or times, or upon such event or events, and subject to such terms,
conditions, performance criteria and restrictions as shall be determined by the
Committee and set forth in the Award Agreement evidencing such SAR; provided,
however, that (i) no Freestanding SAR shall be exercisable after the expiration
of ten (10) years after the effective date of grant of such SAR and (ii) no
Freestanding SAR granted to an Employee who is a non-exempt employee for
purposes of the Fair Labor Standards Act of 1938, as amended, shall be first
exercisable until at least six (6) months following the date of grant of such
SAR (except in the event of such Employee’s death, disability or retirement,
upon a Change in Control, or as otherwise permitted by the Worker Economic
Opportunity Act).  Subject to the foregoing, unless otherwise specified by the
Committee in the grant of a Freestanding SAR, each Freestanding SAR shall
terminate ten (10) years after the effective date of grant of the SAR, unless
earlier terminated in accordance with its provisions.

 

7.4       Exercise of SARs.  Upon the exercise (or deemed exercise pursuant to
Section 7.5) of an SAR, the Participant (or the Participant’s legal
representative or other person who acquired the right to exercise the SAR by
reason of the Participant’s death) shall be entitled to receive payment of an
amount for each share with respect to which the SAR is exercised equal to the
excess, if any, of the Fair Market Value of a share of Stock on the date of
exercise of the SAR over the exercise price.  Payment of such amount shall be
made (a) in the case of a Tandem SAR, solely in shares of Stock in a lump sum
upon the date of exercise of the SAR and (b) in the case of a Freestanding SAR,
in cash, shares of Stock, or any combination thereof as determined by the
Committee, in a lump sum upon the date of exercise of the SAR.  When payment is
to be made in shares of Stock, the number of shares to be issued shall be
determined on the basis of the

 

18

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Fair Market Value of a share of Stock on the date of exercise of the SAR.  For
purposes of Section 7, an SAR shall be deemed exercised on the date on which the
Company receives notice of exercise from the Participant or as otherwise
provided in Section 7.5.

 

7.5       Deemed Exercise of SARs.  If, on the date on which an SAR would
otherwise terminate or expire, the SAR by its terms remains exercisable
immediately prior to such termination or expiration and, if so exercised, would
result in a payment to the holder of such SAR, then any portion of such SAR
which has not previously been exercised shall automatically be deemed to be
exercised as of such date with respect to such portion.

 

7.6       Effect of Termination of Service.  Subject to earlier termination of
the SAR as otherwise provided herein and unless otherwise provided by the
Committee, an SAR shall be exercisable after a Participant’s termination of
Service only to the extent and during the applicable time period determined in
accordance with Section 6.4 (treating the SAR as if it were an Option) and
thereafter shall terminate.

 

7.7       Transferability of SARs.  During the lifetime of the Participant, an
SAR shall be exercisable only by the Participant or the Participant’s guardian
or legal representative.  An SAR shall not be subject in any manner to
anticipation, alienation, sale, exchange, transfer, assignment, pledge,
encumbrance, or garnishment by creditors of the Participant or the Participant’s
beneficiary, except transfer by will or by the laws of descent and
distribution.  Notwithstanding the foregoing, to the extent permitted by the
Committee, in its discretion, and set forth in the Award Agreement evidencing
such Award, a Tandem SAR related to a Nonstatutory Stock Option or a
Freestanding SAR shall be assignable or transferable subject to the applicable
limitations, if any, described in the General Instructions to Form S-8 under the
Securities Act.

 

8.         RESTRICTED STOCK AWARDS.

 

Restricted Stock Awards shall be evidenced by Award Agreements specifying
whether the Award is a Restricted Stock Bonus or a Restricted Stock Purchase
Right and the number of shares of Stock subject to the Award, in such form as
the Committee shall establish.  Such Award Agreements may incorporate all or any
of the terms of the Plan by reference and shall comply with and be subject to
the following terms and conditions:

 

8.1       Types of Restricted Stock Awards Authorized.  Restricted Stock Awards
may be granted in the form of either a Restricted Stock Bonus or a Restricted
Stock Purchase Right.  Restricted Stock Awards may be granted upon such
conditions as the Committee shall determine, including, without limitation, upon
the attainment of one or more Performance Goals described in Section 10.4.  If
either the grant of or satisfaction of Vesting Conditions applicable to a
Restricted Stock Award is to be contingent upon the attainment of one or more
Performance Goals, the Committee shall follow procedures substantially
equivalent to those set forth in Sections 10.3 through 10.5(a).

 

8.2       Purchase Price.  The purchase price for shares of Stock issuable under
each Restricted Stock Purchase Right shall be established by the Committee in
its discretion.  No monetary payment (other than applicable tax withholding)
shall be required as a condition of

 

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receiving shares of Stock pursuant to a Restricted Stock Bonus, the
consideration for which shall be services actually rendered to a Participating
Company or for its benefit.  Notwithstanding the foregoing, if required by
applicable state corporate law, the Participant shall furnish consideration in
the form of cash or past services rendered to a Participating Company or for its
benefit having a value not less than the par value of the shares of Stock
subject to a Restricted Stock Award.

 

8.3       Purchase Period.  A Restricted Stock Purchase Right shall be
exercisable within a period established by the Committee, which shall in no
event exceed thirty (30) days from the effective date of the grant of the
Restricted Stock Purchase Right.

 

8.4       Payment of Purchase Price.  Except as otherwise provided below,
payment of the purchase price for the number of shares of Stock being purchased
pursuant to any Restricted Stock Purchase Right shall be made (a) in cash, by
check or in cash equivalent, (b) by such other consideration as may be approved
by the Committee from time to time to the extent permitted by applicable law, or
(c) by any combination thereof.

 

8.5       Vesting and Restrictions on Transfer.  Shares issued pursuant to any
Restricted Stock Award may (but need not) be made subject to Vesting Conditions
based upon the satisfaction of such Service requirements, conditions,
restrictions or performance criteria, including, without limitation, Performance
Goals as described in Section 10.4, as shall be established by the Committee and
set forth in the Award Agreement evidencing such Award.  During any period in
which shares acquired pursuant to a Restricted Stock Award remain subject to
Vesting Conditions, such shares may not be sold, exchanged, transferred,
pledged, assigned or otherwise disposed of other than pursuant to an Ownership
Change Event or as provided in Section 8.8.  The Committee, in its discretion,
may provide in any Award Agreement evidencing a Restricted Stock Award that, if
the satisfaction of Vesting Conditions with respect to any shares subject to
such Restricted Stock Award would otherwise occur on a day on which the sale of
such shares would violate the provisions of the Trading Compliance Policy, then
satisfaction of the Vesting Conditions automatically shall be determined on the
next trading day on which the sale of such shares would not violate the Trading
Compliance Policy.  Upon request by the Company, each Participant shall execute
any agreement evidencing such transfer restrictions prior to the receipt of
shares of Stock hereunder and shall promptly present to the Company any and all
certificates representing shares of Stock acquired hereunder for the placement
on such certificates of appropriate legends evidencing any such transfer
restrictions.

 

8.6       Voting Rights; Dividends and Distributions.  Except as provided in
this Section, Section 8.5 and any Award Agreement, during any period in which
shares acquired pursuant to a Restricted Stock Award remain subject to Vesting
Conditions, the Participant shall have all of the rights of a stockholder of the
Company holding shares of Stock, including the right to vote such shares and to
receive all dividends and other distributions paid with respect to such shares;
provided, however, that if so determined by the Committee and provided by the
Award Agreement, such dividends and distributions shall be subject to the same
Vesting Conditions as the shares subject to the Restricted Stock Award with
respect to which such dividends or distributions were paid, and otherwise shall
be paid no later than the end of the calendar year in which such dividends or
distributions are paid to stockholders (or, if later, the 15th day of the third
month following the date such dividends or distributions are paid to

 

20

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stockholders).  In the event of a dividend or distribution paid in shares of
Stock or other property or any other adjustment made upon a change in the
capital structure of the Company as described in Section 4.4, any and all new,
substituted or additional securities or other property (other than regular,
periodic cash dividends) to which the Participant is entitled by reason of the
Participant’s Restricted Stock Award shall be immediately subject to the same
Vesting Conditions as the shares subject to the Restricted Stock Award with
respect to which such dividends or distributions were paid or adjustments were
made.

 

8.7       Effect of Termination of Service.  Unless otherwise provided by the
Committee in the Award Agreement evidencing a Restricted Stock Award, if a
Participant’s Service terminates for any reason, whether voluntary or
involuntary (including the Participant’s death or disability), then (a) the
Company shall have the option to repurchase for the purchase price paid by the
Participant any shares acquired by the Participant pursuant to a Restricted
Stock Purchase Right which remain subject to Vesting Conditions as of the date
of the Participant’s termination of Service and (b) the Participant shall
forfeit to the Company any shares acquired by the Participant pursuant to a
Restricted Stock Bonus which remain subject to Vesting Conditions as of the date
of the Participant’s termination of Service.  The Company shall have the right
to assign at any time any repurchase right it may have, whether or not such
right is then exercisable, to one or more persons as may be selected by the
Company.

 

8.8       Nontransferability of Restricted Stock Award Rights.  Rights to
acquire shares of Stock pursuant to a Restricted Stock Award shall not be
subject in any manner to anticipation, alienation, sale, exchange, transfer,
assignment, pledge, encumbrance or garnishment by creditors of the Participant
or the Participant’s beneficiary, except transfer by will or the laws of descent
and distribution.  All rights with respect to a Restricted Stock Award granted
to a Participant hereunder shall be exercisable during his or her lifetime only
by such Participant or the Participant’s guardian or legal representative.

 

9.         RESTRICTED STOCK UNITS.

 

Restricted Stock Unit Awards shall be evidenced by Award Agreements specifying
the number of Restricted Stock Units subject to the Award, in such form as the
Committee shall establish.  Such Award Agreements may incorporate all or any of
the terms of the Plan by reference and shall comply with and be subject to the
following terms and conditions:

 

9.1       Grant of Restricted Stock Unit Awards.  Restricted Stock Unit Awards
may be granted upon such conditions as the Committee shall determine, including,
without limitation, upon the attainment of one or more Performance Goals
described in Section 10.4.  If either the grant of a Restricted Stock Unit Award
or the Vesting Conditions with respect to such Award is to be contingent upon
the attainment of one or more Performance Goals, the Committee shall follow
procedures substantially equivalent to those set forth in Sections 10.3
through 10.5(a).

 

9.2       Purchase Price.  No monetary payment (other than applicable tax
withholding, if any) shall be required as a condition of receiving a Restricted
Stock Unit Award, the consideration for which shall be services actually
rendered to a Participating Company or for

 

21

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its benefit.  Notwithstanding the foregoing, if required by applicable state
corporate law, the Participant shall furnish consideration in the form of cash
or past services rendered to a Participating Company or for its benefit having a
value not less than the par value of the shares of Stock issued upon settlement
of the Restricted Stock Unit Award.

 

9.3       Vesting.  Restricted Stock Unit Awards may (but need not) be made
subject to Vesting Conditions based upon the satisfaction of such Service
requirements, conditions, restrictions or performance criteria, including,
without limitation, Performance Goals as described in Section 10.4, as shall be
established by the Committee and set forth in the Award Agreement evidencing
such Award.  The Committee, in its discretion, may provide in any Award
Agreement evidencing a Restricted Stock Unit Award that, if the satisfaction of
Vesting Conditions with respect to any shares subject to the Award would
otherwise occur on a day on which the sale of such shares would violate the
provisions of the Trading Compliance Policy, then the satisfaction of the
Vesting Conditions automatically shall be determined on the first to occur of
(a) the next trading day on which the sale of such shares would not violate the
Trading Compliance Policy or (b) the last day of the calendar year in which the
original vesting date occurred.

 

9.4       Voting Rights, Dividend Equivalent Rights and Distributions. 
Participants shall have no voting rights with respect to shares of Stock
represented by Restricted Stock Units until the date of the issuance of such
shares (as evidenced by the appropriate entry on the books of the Company or of
a duly authorized transfer agent of the Company).  However, the Committee, in
its discretion, may provide in the Award Agreement evidencing any Restricted
Stock Unit Award that the Participant shall be entitled to Dividend Equivalent
Rights with respect to the payment of cash dividends on Stock during the period
beginning on the date such Award is granted and ending, with respect to each
share subject to the Award, on the earlier of the date the Award is settled or
the date on which it is terminated.  Dividend Equivalent Rights, if any, shall
be paid by crediting the Participant with a cash amount or with additional whole
Restricted Stock Units as of the date of payment of such cash dividends on
Stock, as determined by the Committee.  The number of additional Restricted
Stock Units (rounded to the nearest whole number), if any, to be credited shall
be determined by dividing (a) the amount of cash dividends paid on the dividend
payment date with respect to the number of shares of Stock represented by the
Restricted Stock Units previously credited to the Participant by (b) the Fair
Market Value per share of Stock on such date.  If so determined by the Committee
and provided by the Award Agreement, such cash amount or additional Restricted
Stock Units shall be subject to the same terms and conditions and shall be
settled in the same manner and at the same time as the Restricted Stock Units
originally subject to the Restricted Stock Unit Award.  In the event of a
dividend or distribution paid in shares of Stock or other property or any other
adjustment made upon a change in the capital structure of the Company as
described in Section 4.4, appropriate adjustments shall be made in the
Participant’s Restricted Stock Unit Award so that it represents the right to
receive upon settlement any and all new, substituted or additional securities or
other property (other than regular, periodic cash dividends) to which the
Participant would be entitled by reason of the shares of Stock issuable upon
settlement of the Award, and all such new, substituted or additional securities
or other property shall be immediately subject to the same Vesting Conditions as
are applicable to the Award.

 

22

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9.5       Effect of Termination of Service.  Unless otherwise provided by the
Committee and set forth in the Award Agreement evidencing a Restricted Stock
Unit Award, if a Participant’s Service terminates for any reason, whether
voluntary or involuntary (including the Participant’s death or disability), then
the Participant shall forfeit to the Company any Restricted Stock Units pursuant
to the Award which remain subject to Vesting Conditions as of the date of the
Participant’s termination of Service.

 

9.6       Settlement of Restricted Stock Unit Awards.  The Company shall issue
to a Participant on the date on which Restricted Stock Units subject to the
Participant’s Restricted Stock Unit Award vest or on such other date determined
by the Committee in compliance with Section 409A, if applicable, and set forth
in the Award Agreement one (1) share of Stock (and/or any other new, substituted
or additional securities or other property pursuant to an adjustment described
in Section 9.4) for each Restricted Stock Unit then becoming vested or otherwise
to be settled on such date, subject to the withholding of applicable taxes, if
any.  If permitted by the Committee, the Participant may elect, consistent with
the requirements of Section 409A, to defer receipt of all or any portion of the
shares of Stock or other property otherwise issuable to the Participant pursuant
to this Section, and such deferred issuance date(s) and amount(s) elected by the
Participant shall be set forth in the Award Agreement.  Notwithstanding the
foregoing, the Committee, in its discretion, may provide for settlement of any
Restricted Stock Unit Award by payment to the Participant in cash of an amount
equal to the Fair Market Value on the payment date of the shares of Stock or
other property otherwise issuable to the Participant pursuant to this Section.

 

9.7       Nontransferability of Restricted Stock Unit Awards.  The right to
receive shares pursuant to a Restricted Stock Unit Award shall not be subject in
any manner to anticipation, alienation, sale, exchange, transfer, assignment,
pledge, encumbrance, or garnishment by creditors of the Participant or the
Participant’s beneficiary, except transfer by will or by the laws of descent and
distribution.  All rights with respect to a Restricted Stock Unit Award granted
to a Participant hereunder shall be exercisable during his or her lifetime only
by such Participant or the Participant’s guardian or legal representative.

 

10.       PERFORMANCE AWARDS.

 

Performance Awards shall be evidenced by Award Agreements in such form as the
Committee shall establish.  Such Award Agreements may incorporate all or any of
the terms of the Plan by reference and shall comply with and be subject to the
following terms and conditions:

 

10.1     Types of Performance Awards Authorized.  Performance Awards may be
granted in the form of either Performance Shares or Performance Units.  Each
Award Agreement evidencing a Performance Award shall specify the number of
Performance Shares or Performance Units subject thereto, the Performance Award
Formula, the Performance Goal(s) and Performance Period applicable to the Award,
and the other terms, conditions and restrictions of the Award.

 

10.2     Initial Value of Performance Shares and Performance Units.  Unless
otherwise provided by the Committee in granting a Performance Award, each
Performance Share

 

23

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shall have an initial monetary value equal to the Fair Market Value of one
(1) share of Stock, subject to adjustment as provided in Section 4.4, on the
effective date of grant of the Performance Share, and each Performance Unit
shall have an initial monetary value established by the Committee at the time of
grant.  The final value payable to the Participant in settlement of a
Performance Award determined on the basis of the applicable Performance Award
Formula will depend on the extent to which Performance Goals established by the
Committee are attained within the applicable Performance Period established by
the Committee.

 

10.3     Establishment of Performance Period, Performance Goals and Performance
Award Formula.  In granting each Performance Award, the Committee shall
establish in writing the applicable Performance Period, Performance Award
Formula and one or more Performance Goals which, when measured at the end of the
Performance Period, shall determine on the basis of the Performance Award
Formula the final value of the Performance Award to be paid to the Participant. 
Unless otherwise permitted in compliance with the requirements under
Section 162(m) with respect to each Performance Award intended to result in the
payment of Performance-Based Compensation, the Committee shall establish the
Performance Goal(s) and Performance Award Formula applicable to each Performance
Award no later than the earlier of (a) the date ninety (90) days after the
commencement of the applicable Performance Period or (b) the date on which 25%
of the Performance Period has elapsed, and, in any event, at a time when the
outcome of the Performance Goals remains substantially uncertain.  Once
established, the Performance Goals and Performance Award Formula applicable to a
Performance Award intended to result in the payment of Performance-Based
Compensation to a Covered Employee shall not be changed during the Performance
Period.  The Company shall notify each Participant granted a Performance Award
of the terms of such Award, including the Performance Period, Performance
Goal(s) and Performance Award Formula.

 

10.4     Measurement of Performance Goals.  Performance Goals shall be
established by the Committee on the basis of targets to be attained
(“Performance Targets”) with respect to one or more measures of business or
financial performance (each, a “Performance Measure”), subject to the following:

 

(a)        Performance Measures.  Performance Measures shall be calculated in
accordance with the Company’s financial statements, or, if such measures are not
reported in the Company’s financial statements, they shall be calculated in
accordance with generally accepted accounting principles, a method used
generally in the Company’s industry, or in accordance with a methodology
established by the Committee prior to the grant of the Performance Award.  As
specified by the Committee, Performance Measures may be calculated with respect
to the Company and each Subsidiary Corporation consolidated therewith for
financial reporting purposes, one or more Subsidiary Corporations or such
division or other business unit of any of them selected by the Committee. 
Unless otherwise determined by the Committee prior to the grant of the
Performance Award, the Performance Measures applicable to the Performance Award
shall be calculated prior to the accrual of expense for any Performance Award
for the same Performance Period and excluding the effect (whether positive or
negative) on the Performance Measures of any change in accounting standards or
any extraordinary, unusual or nonrecurring item, as determined by the Committee,
occurring after the establishment of the Performance Goals applicable to the
Performance Award.  Each such adjustment, if any, shall be made solely for the
purpose of providing a consistent basis from period to period for the

 

24

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calculation of Performance Measures in order to prevent the dilution or
enlargement of the Participant’s rights with respect to a Performance Award. 
Performance Measures may be based upon one or more of the following, as
determined by the Committee:

 

(i)           revenue;

 

(ii)          sales;

 

(iii)         expenses;

 

(iv)         operating income;

 

(v)          gross margin;

 

(vi)         operating margin;

 

(vii)        earnings before any one or more of: stock-based compensation
expense, interest, taxes, depreciation and amortization;

 

(viii)       pre-tax profit;

 

(ix)         net operating income;

 

(x)          net income;

 

(xi)         economic value added;

 

(xii)        free cash flow;

 

(xiii)       operating cash flow;

 

(xiv)       balance of cash, cash equivalents and marketable securities;

 

(xv)        stock price;

 

(xvi)       earnings per share;

 

(xvii)      return on stockholder equity;

 

(xviii)     return on capital;

 

(xix)       return on assets;

 

(xx)        return on investment;

 

(xxi)       total stockholder return;

 

(xxii)      employee satisfaction;

 

25

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(xxiii)     employee retention;

 

(xxiv)     market share;

 

(xxv)      customer satisfaction;

 

(xxvi)     product development;

 

(xxvii)    research and development expenses;

 

(xxviii)   completion of an identified special project; and

 

(xxix)     completion of a joint venture or other corporate transaction.

 

(b)       Performance Targets.  Performance Targets may include a minimum,
maximum, target level and intermediate levels of performance, with the final
value of a Performance Award determined under the applicable Performance Award
Formula by the Performance Target level attained during the applicable
Performance Period.  A Performance Target may be stated as an absolute value, an
increase or decrease in a value, or as a value determined relative to an index,
budget or other standard selected by the Committee.

 

10.5     Settlement of Performance Awards.

 

(a)        Determination of Final Value.  As soon as practicable following the
completion of the Performance Period applicable to a Performance Award, the
Committee shall certify in writing the extent to which the applicable
Performance Goals have been attained and the resulting final value of the Award
earned by the Participant and to be paid upon its settlement in accordance with
the applicable Performance Award Formula.

 

(b)       Discretionary Adjustment of Award Formula.  In its discretion, the
Committee may, either at the time it grants a Performance Award or at any time
thereafter, provide for the positive or negative adjustment of the Performance
Award Formula applicable to a Performance Award granted to any Participant who
is not a Covered Employee to reflect such Participant’s individual performance
in his or her position with the Company or such other factors as the Committee
may determine.  If permitted under a Covered Employee’s Award Agreement, the
Committee shall have the discretion, on the basis of such criteria as may be
established by the Committee, to reduce some or all of the value of the
Performance Award that would otherwise be paid to the Covered Employee upon its
settlement notwithstanding the attainment of any Performance Goal and the
resulting value of the Performance Award determined in accordance with the
Performance Award Formula.  No such reduction may result in an increase in the
amount payable upon settlement of another Participant’s Performance Award that
is intended to result in Performance-Based Compensation.

 

(c)        Effect of Leaves of Absence.  Unless otherwise required by law or a
Participant’s Award Agreement, payment of the final value, if any, of a
Performance Award held by a Participant who has taken in excess of thirty (30)
days in unpaid leaves of absence during a Performance Period shall be prorated
on the basis of the number of days of the

 

26

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Participant’s Service during the Performance Period during which the Participant
was not on an unpaid leave of absence.

 

(d)       Notice to Participants.  As soon as practicable following the
Committee’s determination and certification in accordance with
Sections 10.5(a) and (b), the Company shall notify each Participant of the
determination of the Committee.

 

(e)        Payment in Settlement of Performance Awards.  As soon as practicable
following the Committee’s determination and certification in accordance with
Sections 10.5(a) and (b), but in any event within the Short-Term Deferral Period
described in Section 15.1 (except as otherwise provided below or consistent with
the requirements of Section 409A), payment shall be made to each eligible
Participant (or such Participant’s legal representative or other person who
acquired the right to receive such payment by reason of the Participant’s death)
of the final value of the Participant’s Performance Award.  Payment of such
amount shall be made in cash, shares of Stock, or a combination thereof as
determined by the Committee.  Unless otherwise provided in the Award Agreement
evidencing a Performance Award, payment shall be made in a lump sum.  If
permitted by the Committee, the Participant may elect, consistent with the
requirements of Section 409A, to defer receipt of all or any portion of the
payment to be made to the Participant pursuant to this Section, and such
deferred payment date(s) elected by the Participant shall be set forth in the
Award Agreement.  If any payment is to be made on a deferred basis, the
Committee may, but shall not be obligated to, provide for the payment during the
deferral period of Dividend Equivalent Rights or interest.

 

(f)        Provisions Applicable to Payment in Shares.  If payment is to be made
in shares of Stock, the number of such shares shall be determined by dividing
the final value of the Performance Award by the Fair Market Value of a share of
Stock determined by the method specified in the Award Agreement.  Shares of
Stock issued in payment of any Performance Award may be fully vested and freely
transferable shares or may be shares of Stock subject to Vesting Conditions as
provided in Section 8.5.  Any shares subject to Vesting Conditions shall be
evidenced by an appropriate Award Agreement and shall be subject to the
provisions of Sections 8.5 through 8.8 above.

 

10.6     Voting Rights; Dividend Equivalent Rights and Distributions. 
Participants shall have no voting rights with respect to shares of Stock
represented by Performance Share Awards until the date of the issuance of such
shares, if any (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company).  However, the
Committee, in its discretion, may provide in the Award Agreement evidencing any
Performance Share Award that the Participant shall be entitled to Dividend
Equivalent Rights with respect to the payment of cash dividends on Stock during
the period beginning on the date the Award is granted and ending, with respect
to each share subject to the Award, on the earlier of the date on which the
Performance Shares are settled or the date on which they are forfeited.  Such
Dividend Equivalent Rights, if any, shall be credited to the Participant either
in cash or in the form of additional whole Performance Shares as of the date of
payment of such cash dividends on Stock, as determined by the Committee.  The
number of additional Performance Shares (rounded to the nearest whole number),
if any, to be so credited shall be determined by dividing (a) the amount of cash
dividends paid on the dividend payment date with respect to the number of shares
of Stock represented by the Performance Shares

 

27

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previously credited to the Participant by (b) the Fair Market Value per share of
Stock on such date.  Dividend Equivalent Rights, if any, shall be accumulated
and paid to the extent that the related Performance Shares become
nonforfeitable.  Settlement of Dividend Equivalent Rights may be made in cash,
shares of Stock, or a combination thereof as determined by the Committee, and
may be paid on the same basis as settlement of the related Performance Share as
provided in Section 10.5.  Dividend Equivalent Rights shall not be paid with
respect to Performance Units.  In the event of a dividend or distribution paid
in shares of Stock or other property or any other adjustment made upon a change
in the capital structure of the Company as described in Section 4.4, appropriate
adjustments shall be made in the Participant’s Performance Share Award so that
it represents the right to receive upon settlement any and all new, substituted
or additional securities or other property (other than regular, periodic cash
dividends) to which the Participant would be entitled by reason of the shares of
Stock issuable upon settlement of the Performance Share Award, and all such new,
substituted or additional securities or other property shall be immediately
subject to the same Performance Goals as are applicable to the Award.

 

10.7     Effect of Termination of Service.  Unless otherwise provided by the
Committee and set forth in the Award Agreement evidencing a Performance Award,
the effect of a Participant’s termination of Service on the Performance Award
shall be as follows:

 

(a)        Death or Disability.  If the Participant’s Service terminates because
of the death or Disability of the Participant before the completion of the
Performance Period applicable to the Performance Award, the final value of the
Participant’s Performance Award shall be determined by the extent to which the
applicable Performance Goals have been attained with respect to the entire
Performance Period and shall be prorated based on the number of months of the
Participant’s Service during the Performance Period.  Payment shall be made
following the end of the Performance Period in any manner permitted by
Section 10.5.

 

(b)       Other Termination of Service.  If the Participant’s Service terminates
for any reason except death or Disability before the completion of the
Performance Period applicable to the Performance Award, such Award shall be
forfeited in its entirety; provided, however, that in the event of an
involuntary termination of the Participant’s Service, the Committee, in its
discretion, may waive the automatic forfeiture of all or any portion of any such
Award and determine the final value of the Performance Award in the manner
provided by Section 10.7(a).  Payment of any amount pursuant to this
Section shall be made following the end of the Performance Period in any manner
permitted by Section 10.5.

 

10.8     Nontransferability of Performance Awards.  Prior to settlement in
accordance with the provisions of the Plan, no Performance Award shall be
subject in any manner to anticipation, alienation, sale, exchange, transfer,
assignment, pledge, encumbrance, or garnishment by creditors of the Participant
or the Participant’s beneficiary, except transfer by will or by the laws of
descent and distribution.  All rights with respect to a Performance Award
granted to a Participant hereunder shall be exercisable during his or her
lifetime only by such Participant or the Participant’s guardian or legal
representative.

 

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11.       CASH-BASED AWARDS AND OTHER STOCK-BASED AWARDS.

 

Cash-Based Awards and Other Stock-Based Awards shall be evidenced by Award
Agreements in such form as the Committee shall establish.  Such Award Agreements
may incorporate all or any of the terms of the Plan by reference and shall
comply with and be subject to the following terms and conditions:

 

11.1     Grant of Cash-Based Awards.  Subject to the provisions of the Plan, the
Committee, at any time and from time to time, may grant Cash-Based Awards to
Participants in such amounts and upon such terms and conditions, including the
achievement of performance criteria, as the Committee may determine.

 

11.2     Grant of Other 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 securities,
stock-equivalent units, stock appreciation units, securities or debentures
convertible into common stock or other forms determined by the Committee) in
such amounts and subject to such terms and conditions as the Committee shall
determine.  Other Stock-Based Awards may be made available as a form of payment
in the settlement of other Awards or as payment in lieu of compensation to which
a Participant is otherwise entitled.  Other Stock-Based Awards may involve the
transfer of actual shares of Stock to Participants, or payment in cash or
otherwise of amounts based on the value of Stock 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.

 

11.3     Value of Cash-Based and Other Stock-Based Awards.  Each Cash-Based
Award shall specify a monetary payment amount or payment range as determined by
the Committee.  Each Other Stock-Based Award shall be expressed in terms of
shares of Stock or units based on such shares of Stock, as determined by the
Committee.  The Committee may require the satisfaction of such Service
requirements, conditions, restrictions or performance criteria, including,
without limitation, Performance Goals as described in Section 10.4, as shall be
established by the Committee and set forth in the Award Agreement evidencing
such Award.  If the Committee exercises its discretion to establish performance
criteria, the final value of Cash-Based Awards or Other Stock-Based Awards that
will be paid to the Participant will depend on the extent to which the
performance criteria are met.  The establishment of performance criteria with
respect to the grant or vesting of any Cash-Based Award or Other Stock-Based
Award intended to result in Performance-Based Compensation shall follow
procedures substantially equivalent to those applicable to Performance Awards
set forth in Section 10.

 

11.4     Payment or Settlement of Cash-Based Awards and Other Stock-Based
Awards.  Payment or settlement, if any, with respect to a Cash-Based Award or an
Other Stock-Based Award shall be made in accordance with the terms of the Award,
in cash, shares of Stock or other securities or any combination thereof as the
Committee determines.  The determination and certification of the final value
with respect to any Cash-Based Award or Other Stock-Based Award intended to
result in Performance-Based Compensation shall comply with the requirements
applicable to Performance Awards set forth in Section 10.  To the extent

 

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applicable, payment or settlement with respect to each Cash-Based Award and
Other Stock-Based Award shall be made in compliance with the requirements of
Section 409A.

 

11.5     Voting Rights; Dividend Equivalent Rights and Distributions. 
Participants shall have no voting rights with respect to shares of Stock
represented by Other Stock-Based Awards until the date of the issuance of such
shares of Stock (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), if any, in
settlement of such Award.  However, the Committee, in its discretion, may
provide in the Award Agreement evidencing any Other Stock-Based Award that the
Participant shall be entitled to Dividend Equivalent Rights with respect to the
payment of cash dividends on Stock during the period beginning on the date such
Award is granted and ending, with respect to each share subject to the Award, on
the earlier of the date the Award is settled or the date on which it is
terminated.  Such Dividend Equivalent Rights, if any, shall be paid in
accordance with the provisions set forth in Section 9.4.  Dividend Equivalent
Rights shall not be granted with respect to Cash-Based Awards.  In the event of
a dividend or distribution paid in shares of Stock or other property or any
other adjustment made upon a change in the capital structure of the Company as
described in Section 4.4, appropriate adjustments shall be made in the
Participant’s Other Stock-Based Award so that it represents the right to receive
upon settlement any and all new, substituted or additional securities or other
property (other than regular, periodic cash dividends) to which the Participant
would be entitled by reason of the shares of Stock issuable upon settlement of
such Award, and all such new, substituted or additional securities or other
property shall be immediately subject to the same Vesting Conditions and
performance criteria, if any, as are applicable to the Award.

 

11.6     Effect of Termination of Service.  Each Award Agreement evidencing a
Cash-Based Award or Other Stock-Based Award shall set forth the extent to which
the Participant shall have the right to retain such Award following termination
of the Participant’s Service.  Such provisions shall be determined in the
discretion of the Committee, need not be uniform among all Cash-Based Awards or
Other Stock-Based Awards, and may reflect distinctions based on the reasons for
termination, subject to the requirements of Section 409A, if applicable.

 

11.7     Nontransferability of Cash-Based Awards and Other Stock-Based Awards. 
Prior to the payment or settlement of a Cash-Based Award or Other Stock-Based
Award, the Award shall not be subject in any manner to anticipation, alienation,
sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by
creditors of the Participant or the Participant’s beneficiary, except transfer
by will or by the laws of descent and distribution.  The Committee may impose
such additional restrictions on any shares of Stock issued in settlement of
Cash-Based Awards and Other Stock-Based Awards as it may deem advisable,
including, without limitation, minimum holding period requirements, restrictions
under applicable federal securities laws, under the requirements of any stock
exchange or market upon which such shares of Stock are then listed and/or
traded, or under any state securities laws or foreign law applicable to such
shares of Stock.

 

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12.       STANDARD FORMS OF AWARD AGREEMENT.

 

12.1     Award Agreements.  Each Award shall comply with and be subject to the
terms and conditions set forth in the appropriate form of Award Agreement
approved by the Committee and as amended from time to time.  No Award or
purported Award shall be a valid and binding obligation of the Company unless
evidenced by a fully executed Award Agreement, which execution may be evidenced
by electronic means.

 

12.2     Authority to Vary Terms.  The Committee shall have the authority from
time to time to vary the terms of any standard form of Award Agreement either in
connection with the grant or amendment of an individual Award or in connection
with the authorization of a new standard form or forms; provided, however, that
the terms and conditions of any such new, revised or amended standard form or
forms of Award Agreement are not inconsistent with the terms of the Plan.

 

13.       CHANGE IN CONTROL.

 

13.1     Effect of Change in Control on Awards.  Subject to the requirements and
limitations of Section 409A, if applicable, the Committee may provide for any
one or more of the following:

 

(a)        Accelerated Vesting.  In its discretion, the Committee may provide in
the grant of any Award or at any other time may take such action as it deems
appropriate to provide for acceleration of the exercisability, vesting and/or
settlement in connection with a Change in Control of each or any outstanding
Award or portion thereof and shares acquired pursuant thereto upon such
conditions, including termination of the Participant’s Service prior to, upon,
or following the Change in Control, and to such extent as the Committee
determines.

 

(b)       Assumption, Continuation or Substitution.  In the event of a Change in
Control, the surviving, continuing, successor, or purchasing corporation or
other business entity or parent thereof, as the case may be (the “Acquiror”),
may, without the consent of any Participant, assume or continue the Company’s
rights and obligations under each or any Award or portion thereof outstanding
immediately prior to the Change in Control or substitute for each or any such
outstanding Award or portion thereof a substantially equivalent award with
respect to the Acquiror’s stock, as applicable.  For purposes of this Section,
if so determined by the Committee in its discretion, an Award denominated in
shares of Stock shall be deemed assumed if, following the Change in Control, the
Award confers the right to receive, subject to the terms and conditions of the
Plan and the applicable Award Agreement, for each share of Stock subject to the
Award immediately prior to the Change in Control, the consideration (whether
stock, cash, other securities or property or a combination thereof) to which a
holder of a share of Stock on the effective date of the Change in Control was
entitled (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares of
Stock); provided, however, that if such consideration is not solely common stock
of the Acquiror, the Committee may, with the consent of the Acquiror, provide
for the consideration to be received upon the exercise or settlement of the
Award, for each share of Stock subject to the Award, to consist solely of common
stock of the Acquiror equal in Fair Market Value to the per share consideration
received by holders of Stock pursuant to the Change

 

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in Control.  Any Award or portion thereof which is neither assumed or continued
by the Acquiror in connection with the Change in Control nor exercised or
settled as of the time of consummation of the Change in Control shall terminate
and cease to be outstanding effective as of the time of consummation of the
Change in Control.

 

(c)        Cash-Out of Outstanding Stock-Based Awards.  The Committee may, in
its discretion and without the consent of any Participant, determine that, upon
the occurrence of a Change in Control, each or any Award denominated in shares
of Stock or portion thereof outstanding immediately prior to the Change in
Control and not previously exercised or settled shall be canceled in exchange
for a payment with respect to each vested share (and each unvested share, if so
determined by the Committee) of Stock subject to such canceled Award in
(i) cash, (ii) stock of the Company or of a corporation or other business entity
a party to the Change in Control, or (iii) other property which, in any such
case, shall be in an amount having a Fair Market Value equal to the Fair Market
Value of the consideration to be paid per share of Stock in the Change in
Control, reduced (but not below zero) by the exercise or purchase price per
share, if any, under such Award.  In the event such determination is made by the
Committee, an Award having an exercise or purchase price per share equal to or
greater than the Fair Market Value of the consideration to be paid per share of
Stock in the Change in Control may be canceled without payment of consideration
to the holder thereof.  Payment pursuant to this Section (reduced by applicable
withholding taxes, if any) shall be made to Participants in respect of the
vested portions of their canceled Awards as soon as practicable following the
date of the Change in Control and in respect of the unvested portions of their
canceled Awards in accordance with the vesting schedules applicable to such
Awards.

 

13.2     Effect of Change in Control on Nonemployee Director Awards.  Subject to
the requirements and limitations of Section 409A, if applicable, including as
provided by Section 15.4(f), in the event of a Change in Control, each
outstanding Nonemployee Director Award shall become immediately exercisable and
vested in full and, except to the extent assumed, continued or substituted for
pursuant to Section 13.1(b), shall be settled effective immediately prior to the
time of consummation of the Change in Control.

 

13.3     Federal Excise Tax Under Section 4999 of the Code.

 

(a)        Excess Parachute Payment.  If any acceleration of vesting pursuant to
an Award and any other payment or benefit received or to be received by a
Participant would subject the Participant to any excise tax pursuant to
Section 4999 of the Code due to the characterization of such acceleration of
vesting, payment or benefit as an “excess parachute payment” under Section 280G
of the Code, then, provided such election would not subject the Participant to
taxation under Section 409A, the Participant may elect to reduce the amount of
any acceleration of vesting called for under the Award in order to avoid such
characterization.

 

(b)       Determination by Independent Accountants.  To aid the Participant in
making any election called for under Section 13.3(a), no later than the date of
the occurrence of any event that might reasonably be anticipated to result in an
“excess parachute payment” to the Participant as described in Section 13.3(a),
the Company shall request a determination in writing by the professional firm
engaged by the Company for general tax

 

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purposes, or, if the tax firm so engaged by the Company is serving as accountant
or auditor for the Acquiror, the Company will appoint a nationally recognized
tax firm to make the determinations required by this Section. (the “Tax Firm”). 
As soon as practicable thereafter, the Tax Firm shall determine and report to
the Company and the Participant the amount of such acceleration of vesting,
payments and benefits which would produce the greatest after-tax benefit to the
Participant.  For the purposes of such determination, the Tax Firm may rely on
reasonable, good faith interpretations concerning the application of Sections
280G and 4999 of the Code.  The Company and the Participant shall furnish to the
Tax Firm such information and documents as the Tax Firm may reasonably request
in order to make its required determination.  The Company shall bear all fees
and expenses the Tax Firm charge in connection with its services contemplated by
this Section.

 

14.       COMPLIANCE WITH SECURITIES LAW.

 

The grant of Awards and the issuance of shares of Stock pursuant to any Award
shall be subject to compliance with all applicable requirements of federal,
state and foreign law with respect to such securities and the requirements of
any stock exchange or market system upon which the Stock may then be listed.  In
addition, no Award may be exercised or shares issued pursuant to an Award unless
(a) a registration statement under the Securities Act shall at the time of such
exercise or issuance be in effect with respect to the shares issuable pursuant
to the Award, or (b) in the opinion of legal counsel to the Company, the shares
issuable pursuant to the Award may be issued in accordance with the terms of an
applicable exemption from the registration requirements of the Securities Act. 
The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company’s legal counsel to be
necessary to the lawful issuance and sale of any shares under the Plan shall
relieve the Company of any liability in respect of the failure to issue or sell
such shares as to which such requisite authority shall not have been obtained. 
As a condition to issuance of any Stock, the Company may require the Participant
to satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation and to make any representation
or warranty with respect thereto as may be requested by the Company.

 

15.       COMPLIANCE WITH SECTION 409A.

 

15.1     Awards Subject to Section 409A.  The Company intends that Awards
granted pursuant to the Plan shall either be exempt from or comply with
Section 409A, and the Plan shall be so construed.  The provisions of this
Section 15 shall apply to any Award or portion thereof that constitutes or
provides for payment of Section 409A Deferred Compensation.  Such Awards may
include, without limitation:

 

(a)        A Nonstatutory Stock Option or SAR that includes any feature for the
deferral of compensation other than the deferral of recognition of income until
the later of (i) the exercise or disposition of the Award or (ii) the time the
stock acquired pursuant to the exercise of the Award first becomes substantially
vested.

 

(b)       Any Restricted Stock Unit Award, Performance Award, Cash-Based Award
or Other Stock-Based Award that either (i) provides by its terms for settlement
of all or any portion of the Award at a time or upon an event that will or may
occur later than the

 

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end of the Short-Term Deferral Period (as defined below) or (ii) permits the
Participant granted the Award to elect one or more dates or events upon which
the Award will be settled after the end of the Short-Term Deferral Period.

 

Subject to the provisions of Section 409A, the term “Short-Term Deferral Period”
means the 2½ month period ending on the later of (i) the 15th day of the third
month following the end of the Participant’s taxable year in which the right to
payment under the applicable portion of the Award is no longer subject to a
substantial risk of forfeiture or (ii) the 15th day of the third month following
the end of the Company’s taxable year in which the right to payment under the
applicable portion of the Award is no longer subject to a substantial risk of
forfeiture.  For this purpose, the term “substantial risk of forfeiture” shall
have the meaning provided by Section 409A.

 

15.2     Deferral and/or Distribution Elections.  Except as otherwise permitted
or required by Section 409A, the following rules shall apply to any compensation
deferral and/or payment elections (each, an “Election”) that may be permitted or
required by the Committee pursuant to an Award providing Section 409A Deferred
Compensation:

 

(a)        Elections must be in writing and specify the amount of the payment in
settlement of an Award being deferred, as well as the time and form of payment
as permitted by this Plan.

 

(b)       Elections shall be made by the end of the Participant’s taxable year
prior to the year in which services commence for which an Award may be granted
to the Participant.

 

(c)        Elections shall continue in effect until a written revocation or
change in Election is received by the Company, except that a written revocation
or change in Election must be received by the Company prior to the last day for
making the Election determined in accordance with paragraph (b) above or as
permitted by Section 15.3.

 

15.3     Subsequent Elections.  Except as otherwise permitted or required by
Section 409A, any Award providing Section 409A Deferred Compensation which
permits a subsequent Election to delay the payment or change the form of payment
in settlement of such Award shall comply with the following requirements:

 

(a)        No subsequent Election may take effect until at least twelve (12)
months after the date on which the subsequent Election is made.

 

(b)       Each subsequent Election related to a payment in settlement of an
Award not described in Section 15.4(a)(ii), 15.4(a)(iii) or 15.4(a)(vi) must
result in a delay of the payment for a period of not less than five (5) years
from the date on which such payment would otherwise have been made.

 

(c)        No subsequent Election related to a payment pursuant to
Section 15.4(a)(iv) shall be made less than twelve (12) months before the date
on which such payment would otherwise have been made.

 

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(d)       Subsequent Elections shall continue in effect until a written
revocation or change in the subsequent Election is received by the Company,
except that a written revocation or change in a subsequent Election must be
received by the Company prior to the last day for making the subsequent Election
determined in accordance the preceding paragraphs of this Section 15.3.

 

15.4     Payment of Section 409A Deferred Compensation.

 

(a)        Permissible Payments.  Except as otherwise permitted or required by
Section 409A, an Award providing Section 409A Deferred Compensation must provide
for payment in settlement of the Award only upon one or more of the following:

 

(i)         The Participant’s “separation from service” (as defined by
Section 409A);

 

(ii)        The Participant’s becoming “disabled” (as defined by Section 409A);

 

(iii)       The Participant’s death;

 

(iv)       A time or fixed schedule that is either (i) specified by the
Committee upon the grant of an Award and set forth in the Award Agreement
evidencing such Award or (ii) specified by the Participant in an Election
complying with the requirements of Section 15.2 or 15.3, as applicable;

 

(v)        A change in the ownership or effective control or the Company or in
the ownership of a substantial portion of the assets of the Company determined
in accordance with Section 409A; or

 

(vi)       The occurrence of an “unforeseeable emergency” (as defined by
Section 409A).

 

(b)       Installment Payments.  It is the intent of this Plan that any right of
a Participant to receive installment payments (within the meaning of
Section 409A) shall, for all purposes of Section 409A, be treated as a right to
a series of separate payments.

 

(c)        Required Delay in Payment to Specified Employee Pursuant to
Separation from Service.  Notwithstanding any provision of the Plan or an Award
Agreement to the contrary, except as otherwise permitted by Section 409A, no
payment pursuant to Section 15.4(a)(i) in settlement of an Award providing for
Section 409A Deferred Compensation may be made to a Participant who is a
“specified employee” (as defined by Section 409A) as of the date of the
Participant’s separation from service before the date (the “Delayed Payment
Date”) that is six (6) months after the date of such Participant’s separation
from service, or, if earlier, the date of the Participant’s death.  All such
amounts that would, but for this paragraph, become payable prior to the Delayed
Payment Date shall be accumulated and paid on the Delayed Payment Date.

 

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(d)       Payment Upon Disability.  All distributions of Section 409A Deferred
Compensation payable pursuant to Section 15.4(a)(ii) by reason of a Participant
becoming disabled shall be paid in a lump sum or in periodic installments as
established by the Participant’s Election.  If the Participant has made no
Election with respect to distributions of Section 409A Deferred Compensation
upon becoming disabled, all such distributions shall be paid in a lump sum upon
the determination that the Participant has become disabled.

 

(e)        Payment Upon Death.  If a Participant dies before complete
distribution of amounts payable upon settlement of an Award subject to
Section 409A, such undistributed amounts shall be distributed to his or her
beneficiary under the distribution method for death established by the
Participant’s Election upon receipt by the Committee of satisfactory notice and
confirmation of the Participant’s death.  If the Participant has made no
Election with respect to distributions of Section 409A Deferred Compensation
upon death, all such distributions shall be paid in a lump sum upon receipt by
the Committee of satisfactory notice and confirmation of the Participant’s
death.

 

(f)        Payment Upon Change in Control.  Notwithstanding any provision of the
Plan or an Award Agreement to the contrary, to the extent that any amount
constituting Section 409A Deferred Compensation would become payable under this
Plan by reason of a Change in Control, such amount shall become payable only if
the event constituting a Change in Control would also constitute a change in
ownership or effective control of the Company or a change in the ownership of a
substantial portion of the assets of the Company within the meaning of
Section 409A.  Any Award which constitutes Section 409A Deferred Compensation
and which would vest and otherwise become payable upon a Change in Control as a
result of the failure of the Acquiror to assume, continue or substitute for such
Award in accordance with Section 13.1(b) shall vest to the extent provided by
such Award but shall be converted automatically at the effective time of such
Change in Control into a right to receive, in cash on the date or dates such
award would have been settled in accordance with its then existing settlement
schedule (or as required by Section 15.4(c)), an amount or amounts equal in the
aggregate to the intrinsic value of the Award at the time of the Change in
Control.

 

(g)        Payment Upon Unforeseeable Emergency.  The Committee shall have the
authority to provide in the Award Agreement evidencing any Award providing for
Section 409A Deferred Compensation for payment pursuant to
Section 15.4(a)(vi) in settlement of all or a portion of such Award in the event
that a Participant establishes, to the satisfaction of the Committee, the
occurrence of an unforeseeable emergency.  In such event, the
amount(s) distributed with respect to such unforeseeable emergency cannot exceed
the amounts reasonably necessary to satisfy the emergency need plus amounts
necessary to pay taxes reasonably anticipated as a result of such
distribution(s), after taking into account the extent to which such emergency
need is or may be relieved through reimbursement or compensation by insurance or
otherwise, by liquidation of the Participant’s assets (to the extent the
liquidation of such assets would not itself cause severe financial hardship) or
by cessation of deferrals under the Award.  All distributions with respect to an
unforeseeable emergency shall be made in a lump sum upon the Committee’s
determination that an unforeseeable emergency has occurred.  The Committee’s
decision with respect to whether an unforeseeable emergency has occurred and the
manner in which, if at all, the payment in settlement of an Award shall be
altered or modified, shall be final, conclusive, and not subject to approval or
appeal.

 

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(h)       Prohibition of Acceleration of Payments.  Notwithstanding any
provision of the Plan or an Award Agreement to the contrary, this Plan does not
permit the acceleration of the time or schedule of any payment under an Award
providing Section 409A Deferred Compensation, except as permitted by
Section 409A.

 

(i)         No Representation Regarding Section 409A Compliance. 
Notwithstanding any other provision of the Plan, the Company makes no
representation that Awards shall be exempt from or comply with Section 409A.  No
Participating Company shall be liable for any tax, penalty or interest imposed
on a Participant by Section 409A.

 

16.       TAX WITHHOLDING.

 

16.1     Tax Withholding in General.  The Company shall have the right to deduct
from any and all payments made under the Plan, or to require the Participant,
through payroll withholding, cash payment or otherwise, to make adequate
provision for, the federal, state, local and foreign taxes (including social
insurance), if any, required by law to be withheld by any Participating Company
with respect to an Award or the shares acquired pursuant thereto.  The Company
shall have no obligation to deliver shares of Stock, to release shares of Stock
from an escrow established pursuant to an Award Agreement, or to make any
payment in cash under the Plan until the Participating Company Group’s tax
withholding obligations have been satisfied by the Participant.

 

16.2     Withholding in or Directed Sale of Shares.  The Company shall have the
right, but not the obligation, to deduct from the shares of Stock issuable to a
Participant upon the exercise or settlement of an Award, or to accept from the
Participant the tender of, a number of whole shares of Stock having a Fair
Market Value, as determined by the Company, equal to all or any part of the tax
withholding obligations of any Participating Company.  The Fair Market Value of
any shares of Stock withheld or tendered to satisfy any such tax withholding
obligations shall not exceed the amount determined by the applicable minimum
statutory withholding rates.  The Company may require a Participant to direct a
broker, upon the vesting, exercise or settlement of an Award, to sell a portion
of the shares subject to the Award determined by the Company in its discretion
to be sufficient to cover the tax withholding obligations of any Participating
Company and to remit an amount equal to such tax withholding obligations to such
Participating Company in cash.

 

17.       AMENDMENT, SUSPENSION OR TERMINATION OF PLAN.

 

The Committee may amend, suspend or terminate the Plan at any time.  However,
without the approval of the Company’s stockholders, there shall be (a) no
increase in the maximum aggregate number of shares of Stock that may be issued
under the Plan (except by operation of the provisions of Sections 4.2, 4.3 and
4.4), (b) no change in the class of persons eligible to receive Incentive Stock
Options, and (c) no other amendment of the Plan that would require approval of
the Company’s stockholders under any applicable law, regulation or rule,
including the rules of any stock exchange or quotation system upon which the
Stock may then be listed or quoted.  No amendment, suspension or termination of
the Plan shall affect any then outstanding Award unless expressly provided by
the Committee.  Except as provided by the next sentence, no amendment,
suspension or termination of the Plan may have a materially adverse

 

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effect on any then outstanding Award without the consent of the Participant. 
Notwithstanding any other provision of the Plan or any Award Agreement to the
contrary, the Committee may, in its sole and absolute discretion and without the
consent of any Participant, amend the Plan or any Award Agreement, to take
effect retroactively or otherwise, as it deems necessary or advisable for the
purpose of conforming the Plan or such Award Agreement to any present or future
law, regulation or rule applicable to the Plan, including, but not limited to,
Section 409A.

 

18.       MISCELLANEOUS PROVISIONS.

 

18.1     Repurchase Rights.  Shares issued under the Plan may be subject to one
or more repurchase options, or other conditions and restrictions as determined
by the Committee in its discretion at the time the Award is granted.  The
Company shall have the right to assign at any time any repurchase right it may
have, whether or not such right is then exercisable, to one or more persons as
may be selected by the Company.  Upon request by the Company, each Participant
shall execute any agreement evidencing such transfer restrictions prior to the
receipt of shares of Stock hereunder and shall promptly present to the Company
any and all certificates representing shares of Stock acquired hereunder for the
placement on such certificates of appropriate legends evidencing any such
transfer restrictions.

 

18.2     Forfeiture Events.

 

(a)        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 specified events, in addition to any otherwise applicable vesting
or performance conditions of an Award.  Such events may include, but shall not
be limited to, termination of Service for Cause or any act by a Participant,
whether before or after termination of Service, that would constitute Cause for
termination of Service, or any accounting restatement due to material
noncompliance of the Company with any financial reporting requirements of
securities laws as a result of which, and to the extent that, such reduction,
cancellation, forfeiture, or recoupment is required by applicable securities
laws.

 

(b)       If the Company is required to prepare an accounting restatement due to
the material noncompliance of the Company, as a result of misconduct, with any
financial reporting requirement under the securities laws, any Participant who
knowingly or through gross negligence engaged in the misconduct, or who
knowingly or through gross negligence failed to prevent the misconduct, and any
Participant who is one of the individuals subject to automatic forfeiture under
Section 304 of the Sarbanes-Oxley Act of 2002, shall reimburse the Company for
(i) the amount of any payment in settlement of an Award received by such
Participant during the twelve- (12-) month period following the first public
issuance or filing with the United States Securities and Exchange Commission
(whichever first occurred) of the financial document embodying such financial
reporting requirement, and (ii) any profits realized by such Participant from
the sale of securities of the Company during such twelve- (12-) month period.

 

18.3     Provision of Information.  Each Participant shall be given access to
information concerning the Company equivalent to that information generally made
available to the Company’s common stockholders.

 

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18.4     Rights as Employee, Consultant or Director.  No person, even though
eligible pursuant to Section 5, shall have a right to be selected as a
Participant, or, having been so selected, to be selected again as a
Participant.  Nothing in the Plan or any Award granted under the Plan shall
confer on any Participant a right to remain an Employee, Consultant or Director
or interfere with or limit in any way any right of a Participating Company to
terminate the Participant’s Service at any time.  To the extent that an Employee
of a Participating Company other than the Company receives an Award under the
Plan, that Award shall in no event be understood or interpreted to mean that the
Company is the Employee’s employer or that the Employee has an employment
relationship with the Company.

 

18.5     Rights as a Stockholder.  A Participant shall have no rights as a
stockholder with respect to any shares covered by an Award until the date of the
issuance of such shares (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company).  No
adjustment shall be made for dividends, distributions or other rights for which
the record date is prior to the date such shares are issued, except as provided
in Section 4.4 or another provision of the Plan.

 

18.6     Delivery of Title to Shares.  Subject to any governing rules or
regulations, the Company shall issue or cause to be issued the shares of Stock
acquired pursuant to an Award and shall deliver such shares to or for the
benefit of the Participant by means of one or more of the following: (a) by
delivering to the Participant evidence of book entry shares of Stock credited to
the account of the Participant, (b) by depositing such shares of Stock for the
benefit of the Participant with any broker with which the Participant has an
account relationship, or (c) by delivering such shares of Stock to the
Participant in certificate form.

 

18.7     Fractional Shares.  The Company shall not be required to issue
fractional shares upon the exercise or settlement of any Award.

 

18.8     Retirement and Welfare Plans.  Neither Awards made under this Plan nor
shares of Stock or cash paid pursuant to such Awards may be included as
“compensation” for purposes of computing the benefits payable to any Participant
under any Participating Company’s retirement plans (both qualified and
non-qualified) or welfare benefit plans unless such other plan expressly
provides that such compensation shall be taken into account in computing a
Participant’s benefit.

 

18.9     Beneficiary Designation.  Subject to local laws and procedures, each
Participant may file with the Company a written designation of a beneficiary who
is to receive any benefit under the Plan to which the Participant is entitled in
the event of such Participant’s death before he or she receives any or all of
such benefit.  Each designation will revoke all prior designations by the same
Participant, shall be in a form prescribed by the Company, and will be effective
only when filed by the Participant in writing with the Company during the
Participant’s lifetime.  If a married Participant designates a beneficiary other
than the Participant’s spouse, the effectiveness of such designation may be
subject to the consent of the Participant’s spouse.  If a Participant dies
without an effective designation of a beneficiary who is living at the time of
the Participant’s death, the Company will pay any remaining unpaid benefits to
the Participant’s legal representative.

 

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18.10   Severability.  If any one or more of the provisions (or any part
thereof) of this Plan shall be held invalid, illegal or unenforceable in any
respect, such provision shall be modified so as to make it valid, legal and
enforceable, and the validity, legality and enforceability of the remaining
provisions (or any part thereof) of the Plan shall not in any way be affected or
impaired thereby.

 

18.11   No Constraint on Corporate Action.  Nothing in this Plan shall be
construed to: (a) limit, impair, or otherwise affect the Company’s or another
Participating Company’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 (b) limit the right or power of the Company or another
Participating Company to take any action which such entity deems to be necessary
or appropriate.

 

18.12   Unfunded Obligation.  Participants shall have the status of general
unsecured creditors of the Company.  Any amounts payable to Participants
pursuant to the Plan shall be considered unfunded and unsecured obligations for
all purposes, including, without limitation, Title I of the Employee Retirement
Income Security Act of 1974.  No Participating Company shall be required to
segregate any monies from its general funds, or to create any trusts, or
establish any special accounts with respect to such obligations.  The Company
shall retain at all times beneficial ownership of any investments, including
trust investments, which the Company may make to fulfill its payment obligations
hereunder.  Any investments or the creation or maintenance of any trust or any
Participant account shall not create or constitute a trust or fiduciary
relationship between the Committee or any Participating Company and a
Participant, or otherwise create any vested or beneficial interest in any
Participant or the Participant’s creditors in any assets of any Participating
Company.  The Participants shall have no claim against any Participating Company
for any changes in the value of any assets which may be invested or reinvested
by the Company with respect to the Plan.

 

18.13   Choice of Law.  Except to the extent governed by applicable federal law,
the validity, interpretation, construction and performance of the Plan and each
Award Agreement shall be governed by the laws of the State of [Nevada], without
regard to its conflict of law rules.

 

IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the
foregoing sets forth the Global Cash Access Holdings, Inc. 2014 Equity Incentive
Plan as duly adopted by the Board on February 25, 2014, amended by the Board on
May 5, 2014, and approved by the stockholders of the Company on May 15, 2014.

 

 

 

 

/s/

 

Juliet A. Lim, Secretary

 

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PLAN HISTORY AND NOTES TO COMPANY1

 

February 25, 2014

Board adopts Plan with a reserve of 15,000,000 shares (subject to increases and
other adjustments as provided by the Plan), subject to approval by the
stockholders of the Company.

 

 

May 5, 2014

Board amends Plan to reduce share reserve from 15,000,000 shares to 8,375,000
(subject to increases and other adjustments as provided by the Plan), subject to
approval by the stockholders of the Company.

 

 

May 15, 2014

Plan approved by the stockholders of the Company.

 

 

 

 

 

 

 

 

 

 

 

IMPORTANT NOTE - IRC 162(m) 5 year reapproval of performance goals:

Because the Committee may change the targets under performance goals,
Section 162(m) requires stockholder reapproval of the material terms of
performance goals no later than the annual meeting in the 5th year following the
year in which the public company stockholders initially approved such material
terms.  See Treas. Reg. 1.162-27(e)(4)(vi).

 

 

 

 

 

 

 

 

 

 

 

 

 

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1      These notes are for the Company’s information.  They are not part of the
Plan and should not be publicly filed.

 

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