Exhibit 10.3

 

TREX COMPANY, INC.

AMENDED AND RESTATED 1999 STOCK OPTION AND INCENTIVE PLAN

 

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TABLE OF CONTENTS

 

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1.    PURPOSE    1 2.    DEFINITIONS    1 3.    ADMINISTRATION OF THE PLAN    4
     3.1.    Board    4      3.2.    Committee    5      3.3.    Grants    5  
   3.4.    No Liability    6      3.5.    Applicability of Rule 16b-3    6 4.   
STOCK SUBJECT TO THE PLAN    6      4.1.    Aggregate Limitation    6      4.2.
   Other Plan Limits    7      4.3.    Payment Shares    7      4.4.   
Application of Aggregate Limitation    7      4.5.    Per-Grantee Limitation   
8 5.    EFFECTIVE DATE AND TERM OF THE PLAN    8      5.1.    Effective Date   
8      5.2.    Term    8 6.    PERMISSIBLE GRANTEES    8      6.1.    Employees
and Service Providers    8      6.2.    Multiple Grants    9 7.    LIMITATIONS
ON GRANTS OF INCENTIVE STOCK OPTIONS    9 8.    AWARD AGREEMENT    9 9.   
OPTION PRICE    9 10.    VESTING, TERM AND EXERCISE OF OPTIONS    10      10.1.
   Vesting and Option Period    10      10.2.    Term    10      10.3.   
Acceleration           10.4.    Termination of Employment or Other Relationship
for a Reason Other than Retirement, Death or Disability    10      10.5.   
Rights in the Event of Death    11      10.6.    Rights in the Event of
Disability    11      10.7.    Rights in the Event of Retirement    12     
10.8.    Limitations on Exercise of Option    12      10.9.    Method of
Exercise    12      10.10.    Rights as a Stockholder; Dividend Equivalents   
13      10.11.    Delivery of Stock Certificates    13 11.    TRANSFERABILITY OF
OPTIONS    13      11.1.    General Rule    13      11.2.    Family Transfers   
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12.    RESTRICTED STOCK    14      12.1.    Grant of Restricted Stock or
Restricted Stock Units    14      12.2.    Restrictions    14      12.3.   
Restricted Stock Certificates    15      12.4.    Rights of Holders of
Restricted Stock    15      12.5.    Rights of Holders of Restricted Stock Units
   16      12.6.    Termination of Employment or Other Relationship for a Reason
Other than Death or Disability    16      12.7.    Rights in the Event of Death
   17      12.8.    Rights in the Event of Disability    17      12.9.   
Delivery of Shares and Payment Therefor    17 13.    STOCK APPRECIATION RIGHTS
   17      13.1.    Grant of Stock Appreciation Rights    17      13.2.   
Nature of a Stock Appreciation Right    18      13.3.    Terms and Conditions
Governing SARs    18 14.    UNRESTRICTED STOCK    18 15.    PARACHUTE
LIMITATIONS    18 16.    REQUIREMENTS OF LAW    19      16.1.    General    19  
   16.2.    Rule 16b-3    20 17.    AMENDMENT AND TERMINATION OF THE PLAN    20
18.    EFFECT OF CHANGES IN CAPITALIZATION    20      18.1.    Changes in Stock
   20      18.2.    Reorganization, Sale of Assets or Sale of Stock    21     
18.3.    Adjustments    22      18.4.    No Limitations on Company    22 19.   
DISCLAIMER OF RIGHTS    22 20.    NONEXCLUSIVITY OF THE PLAN    23 21.   
WITHHOLDING TAXES    23 22.    CAPTIONS    24 23.    OTHER PROVISIONS    24 24.
   NUMBER AND GENDER    24 25.    SEVERABILITY    24 26.    GOVERNING LAW    24

 

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TREX COMPANY, INC.

AMENDED AND RESTATED 1999 STOCK OPTION AND INCENTIVE PLAN

 

Trex Company, Inc., a Delaware corporation (the “Company”), sets forth herein
the terms of its Amended and Restated 1999 Stock Option and Incentive Plan (the
“Plan”) as follows:

 

1. PURPOSE

 

The Plan is intended to enhance the Company’s ability to attract and retain
highly qualified officers, key employees, outside directors and other persons,
and to motivate such officers, key employees, outside directors and other
persons to serve the Company and its affiliates (as defined herein) and to
expend maximum effort to improve the business results and earnings of the
Company, by providing to such officers, key employees, outside directors and
other persons an opportunity to acquire or increase a direct proprietary
interest in the operations and future success of the Company. To this end, the
Plan provides for the grant of stock options, restricted stock, restricted stock
units, unrestricted stock and stock appreciation rights in accordance with the
terms hereof. Stock options granted under the Plan may be non-qualified stock
options or incentive stock options, as provided herein, except that stock
options granted to outside directors and all Service Providers shall in all
cases be non-qualified stock options.

 

2. DEFINITIONS

 

For purposes of interpreting the Plan and related documents (including Award
Agreements), the following definitions shall apply:

 

2.1. “Affiliate” of, or person “affiliated” with, a person means any company or
other trade or business that controls, is controlled by or is under common
control with such person within the meaning of Rule 405 of Regulation C under
the Securities Act.

 

2.2. “Award Agreement” means the stock option agreement, restricted stock
agreement, restricted stock unit agreement, stock appreciation right agreement
or other written agreement between the Company and a Grantee that evidences and
sets out the terms and conditions of a Grant.

 

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

 

2.4. “Code” means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended.

 

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2.5. “Committee” means a committee of, and designated from time to time by
resolution of, the Board, which shall consist of no fewer than two members of
the Board, none of whom shall be an officer or other salaried employee of the
Company or any affiliate of the Company.

 

2.6. “Company” means Trex Company, Inc., a Delaware corporation and any entity
which is treated as a “disregarded entity” pursuant to Section 7701 of the Code.

 

2.7. “Effective Date” means the date designated by the Board in its resolution
adopting the Plan.

 

2.8. “Exchange Act” means the Securities Exchange Act of 1934, as now in effect
or as hereafter amended.

 

2.9. “Fair Market Value” means the closing price of a share of Stock reported on
the New York Stock Exchange (“NYSE”) on the date Fair Market Value is being
determined, provided that if there should be no closing price reported on such
date, the Fair Market Value of a share of Stock on such date shall be deemed
equal to the closing price as reported by the NYSE for the last preceding date
on which sales of shares were reported. Notwithstanding the foregoing, in the
event that the shares of Stock are listed upon more than one established stock
exchange, Fair Market Value means the closing price of a share of Stock reported
on the exchange that trades the largest volume of shares on such date. If the
Stock is not at the time listed or admitted to trading on a stock exchange, Fair
Market Value means the mean between the lowest reported bid price and highest
reported asked price of the Stock on the date in question in the
over-the-counter market, as such prices are reported in a publication of general
circulation selected by the Board and regularly reporting the market price of
Stock in such market. If the Stock is not listed or admitted to trading on any
stock exchange or traded in the over-the-counter market, Fair Market Value shall
be as determined in good faith by the Board.

 

2.10. “Grant” means an award of an Option, Restricted Stock, Restricted Stock
Unit, Unrestricted Stock, or Stock Appreciation Right under the Plan.

 

2.11. “Grant Date” means, as determined by the Board or authorized Committee,
(i) the date as of which the Board or such Committee approves a Grant or (ii)
such other date as may be specified by the Board or such Committee.

 

2.12. “Grantee” means a person who receives or holds an Option, Restricted
Stock, Restricted Stock Unit, Stock Appreciation Right or Unrestricted Stock
under the Plan.

 

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2.13. “Immediate Family Members” means the spouse, children, grandchildren,
parents and siblings of the Grantee.

 

2.14. “Incentive Stock Option” means an “incentive stock option” within the
meaning of Section 422 of the Code.

 

2.15. “Option” means an option to purchase one or more shares of Stock pursuant
to the Plan.

 

2.16. “Option Period” means the period during which Options may be exercised as
set forth in Section 10 hereof.

 

2.17. “Option Price” means the purchase price for each share of Stock subject to
an Option.

 

2.18. “Outside Director” means a member of the Board who is not an officer or
employee of the Company or any Subsidiary.

 

2.19. “Plan” means this Trex Company, Inc. Amended and Restated 1999 Stock
Option and Incentive Plan, as amended from time to time.

 

2.20. “Reporting Person” means a person who is required to file reports under
Section 16(a) of the Exchange Act.

 

2.21. “Restricted Period” means the period during which Restricted Stock or
Restricted Stock Units are subject to restrictions or conditions pursuant to
Section 12.2 hereof.

 

2.22. “Restricted Stock” means shares of Stock, awarded to a Grantee pursuant to
Section 12 hereof, that are subject to restrictions and to a risk of forfeiture.

 

2.23. “Restricted Stock Unit” means a unit awarded to a Grantee pursuant to
Section 12 hereof, which represents a conditional right to receive a share of
Stock in the future, and which is subject to restrictions and to a risk of
forfeiture.

 

2.24. “Securities Act” means the Securities Act of 1933, as now in effect or as
hereafter amended.

 

2.25.

“Service Provider” means a consultant or adviser to the Company, a manager of
the Company’s properties or affairs, or other similar service provider or
Affiliate of the Company, and employees of any of the foregoing, as such

 

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persons may be designated from time to time by the Board pursuant to Section 6
hereof.

 

2.26. “Stock” means the common stock, par value $0.01 per share, of the Company.

 

2.27. “Stock Appreciation Right” or “SAR” means a right granted to a Grantee
pursuant to Section 13 hereof.

 

2.28. “Subsidiary” means any “subsidiary corporation” of the Company within the
meaning of Section 424(f) of the Code.

 

2.29. “Termination Date” means the date upon which an Option shall terminate or
expire, as set forth in Section 10.2 hereof.

 

2.30. “Unrestricted Stock” means an award of Stock granted to a Grantee pursuant
to Section 14 hereof.

 

3. ADMINISTRATION OF THE PLAN

 

  3.1. Board

 

The Board shall have such powers and authorities related to the administration
of the Plan as are consistent with the Company’s certificate of incorporation,
bylaws and applicable law. The Board shall have full power and authority to take
all actions and to make all determinations required or provided for under the
Plan, any Grant or any Award Agreement, and shall have full power and authority
to take all such other actions and make all such other determinations not
inconsistent with the specific terms and provisions of the Plan that the Board
deems to be necessary or appropriate to the administration of the Plan, any
Grant or any Award Agreement. All such actions and determinations shall be by
the affirmative vote of a majority of the members of the Board present at a
meeting or by unanimous consent of the Board executed in writing in accordance
with the Company’s certificate of incorporation, bylaws and applicable law. The
interpretation and construction by the Board of any provision of the Plan, any
Grant or any Award Agreement shall be final and conclusive. As permitted by law,
the Board may delegate its authority under the Plan to a member of the Board or
an executive officer of the Company; provided, however, that, unless otherwise
provided by resolution of the Board, only the Board or the Committee may make a
Grant to an executive officer of the Company and establish the number of shares
of Stock that may be subject to Grants with respect to any fiscal period.

 

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  3.2. Committee.

 

The Board from time to time may delegate to a Committee such powers and
authorities related to the administration and implementation of the Plan, as set
forth in Section 3.1 hereof and in other applicable provisions of the Plan, as
the Board shall determine, consistent with the Company’s certificate of
incorporation, bylaws and applicable law. In the event that the Plan, any Grant
or any Award Agreement provides for any action to be taken or determination to
be made by the Board, such action may be taken by or such determination may be
made by the Committee if the power and authority to do so has been delegated to
the Committee by the Board as provided for in this Section 3.2. Unless otherwise
expressly determined by the Board, any such action or determination by the
Committee shall be final, binding and conclusive. As permitted by law, the
Committee may delegate the authority delegated to it under the Plan to a member
of the Board of Directors or an executive officer of the Company; provided,
however, that, unless otherwise provided by the Board, only the Board or the
Committee may make a Grant to a Reporting Person of the Company and establish
the number of shares of Stock that may be subject to Grants during any fiscal
period.

 

  3.3. Grants.

 

Subject to the other terms and conditions of the Plan, the Board shall have full
and final authority (i) to designate Grantees, (ii) to determine the types of
Grants to be made to a Grantee, (iii) to determine the number of shares of Stock
to be subject to a Grant, (iv) to establish the terms and conditions of each
Grant, including, but not limited to, the Option Price of any Option, the nature
and duration of any restriction or condition (or provision for lapse thereof,
including lapse relating to a change in control of the Company) relating to the
vesting, exercise, transfer or forfeiture of a Grant or the shares of Stock
subject thereto, and any terms or conditions that may be necessary to qualify
Options as Incentive Stock Options, (v) to prescribe the form of each Award
Agreement evidencing a Grant, (vi) to make Grants alone, in addition to, in
tandem with, or in substitution or exchange for any other Grant or any other
award granted under another plan of the Company or a Subsidiary, and (vii) to
amend, modify or supplement the terms of any outstanding Grant. Such authority
specifically includes the authority, in order to effectuate the purposes of the
Plan but without amending the Plan, to modify Grants to eligible individuals who
are foreign nationals or are individuals who are employed outside the United
States to recognize differences in local law, tax policy or custom. As a
condition to any subsequent Grant, the Board shall have the right, at its
discretion, to require Grantees to return to the Company any Grants previously
awarded under the Plan. Subject to the terms and conditions of the Plan, any
such subsequent Grant shall be upon such terms and conditions as are specified
by the Board at the time the subsequent Grant is made.

 

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The Company may retain the right in an Award Agreement to cause a forfeiture of
the gain realized by a Grantee on account of actions taken by the Grantee in
violation or breach of or in conflict with any non-competition agreement, any
agreement prohibiting solicitation of employees or clients of the Company or any
affiliate thereof or any confidentiality obligation with respect to the Company
or any affiliate thereof or otherwise in competition with the Company, to the
extent specified in such Award Agreement applicable to the Grantee. Furthermore,
the Company may annul a Grant if the Grantee is an employee of the Company or an
affiliate thereof and is terminated “for cause” as defined in the applicable
Award Agreement. The Board may permit or require the deferral of any award
payment, subject to such rules and procedures as it may establish, which may
include provisions for the payment or crediting of interest or dividend
equivalents, including converting such credits into deferred Stock equivalents.

 

  3.4. No Liability.

 

No member of the Board or of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Grant or Award
Agreement.

 

  3.5. Applicability of Rule 16b-3.

 

Those provisions of the Plan that make express reference to Rule 16b-3 under the
Exchange Act shall apply only to Reporting Persons.

 

4. STOCK SUBJECT TO THE PLAN

 

  4.1. Aggregate Limitation.

 

Subject to adjustment as provided in Section 18 hereof, the aggregate number of
shares of Stock available for issuance under the Plan pursuant to Options or
other Grants shall be one million four hundred thousand (1,400,000) shares and
shares may be authorized but unissued shares, treasury shares or issued and
outstanding shares that are purchased in the open market. Any shares of Stock
granted under the Plan which are forfeited to the Company because of the failure
to meet an award contingency or condition shall again be available for issuance
pursuant to new awards granted under the Plan. Any shares of Stock covered by an
award (or portion of an award) granted under the Plan which is forfeited or
canceled, expires or is settled in cash shall be deemed not to have been issued
for purposes of determining the maximum number of shares of Stock available for
issuance under the Plan. If any stock option is exercised by tendering shares of
Stock, either actually or by attestation, to the Company as full or partial
payment in connection with the exercise of a stock option under the Plan or any

 

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prior plan of the Company as hereinabove described, only the number of shares of
Stock issued net of the shares of Stock tendered shall be deemed issued for
purposes of determining the maximum number of shares of Stock available for
issuance under the Plan. Shares of Stock issued under the Plan through the
settlement, assumption or substitution of outstanding awards or obligations to
grant future awards resulting from the acquisition of another entity shall not
reduce the maximum number of shares available for issuance under the Plan.

 

  4.2. Other Plan Limits.

 

Subject to adjustment as provided in Section 18 hereof, the following additional
limitations are imposed under the Plan. The maximum number of shares of Stock
that may be delivered through stock options intended to be Incentive Stock
Options shall be one million four hundred thousand (1,400,000). Subject to
adjustment as provided in Section 19 hereof, the maximum number of shares of
Stock that may be issued in conjunction with awards granted pursuant to Section
12 and 14 hereof shall be two hundred fifty thousand (250,000); provided,
however, that shares issued in satisfaction of other compensation obligations of
the Company shall not count against this maximum number.

 

  4.3. Payment Shares.

 

Subject to the overall limitation on the number of shares of Stock that may be
delivered under the Plan, the Board may use available shares of Stock as the
form of payment for compensation, grants or rights earned or due under any other
compensation plans or arrangements of the Company, including the plan of any
entity acquired by the Company, and such payment shares shall not count against
the limitation on the maximum number of shares specified in Section 4.2.

 

  4.4. Application of Aggregate Limitation.

 

The Board may adopt reasonable counting procedures to ensure appropriate
counting, avoid double counting (as, for example, in the case of tandem or
substitute awards) and make adjustments if the number of shares of Stock
actually delivered differs from the number of shares of Stock previously counted
in connection with a Grant.

 

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  4.5. Per-Grantee Limitation.

 

During any time when the Company has a class of equity security registered under
Section 12 of the Exchange Act:

 

(i) no person eligible for a Grant under Section 6 hereof may be awarded Options
for purposes of the Plan exercisable for greater than five hundred thousand
(500,000) shares of Stock (subject to adjustment as provided in Section 18
hereof);

 

(ii) the maximum number of shares of Unrestricted Stock and Restricted Stock
that may be awarded under the Plan (including for this purpose any shares of
Stock represented by Restricted Stock Units) to any person eligible for a Grant
under Section 12 and 14 hereof is two hundred fifty thousand (250,000) for
purposes of the Plan (subject to adjustment as provided in Section 18 hereof);

 

(iii) the maximum number of shares of Stock that may be the subject of SARs
awarded to any Grantee under Section 13 hereof is two hundred fifty thousand
(250,000) for purposes of the Plan (subject to adjustment as provided in Section
18 hereof).

 

5. EFFECTIVE DATE AND TERM OF THE PLAN

 

  5.1. Effective Date.

 

The Plan shall be effective as of the Effective Date, subject to approval of the
Plan by the stockholders of the Company, within one year before or after the
date upon which the Plan was adopted by the Board. Such approval shall be by a
majority of the votes cast on the proposal at a meeting of stockholders,
provided that a quorum is present. Upon approval of the Plan by the stockholders
of the Company as set forth above, all Grants made under the Plan on or after
the Effective Date shall be fully effective as if the stockholders of the
Company had approved the Plan on the Effective Date. If the stockholders fail to
approve the Plan within the time period set forth above, any Grants made
hereunder shall be null and void and of no effect.

 

  5.2. Term.

 

The Plan has no termination date; however, no Incentive Stock Option may be
granted under the Plan on or after April 7, 2009.

 

6. PERMISSIBLE GRANTEES

 

  6.1. Employees and Service Providers.

 

Subject to the provisions of Section 7 hereof, Grants may be made under the Plan
to any employee of the Company or any Subsidiary, including any such

 

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employee who is an officer or director of the Company, to an Outside Director,
to a Service Provider or employee of a Service Provider providing, or who has
provided, services to the Company or any Subsidiary, and to any other individual
whose participation in the Plan is determined by the Board to be in the best
interests of the Company, as the Board shall determine and designate from time
to time.

 

  6.2. Multiple Grants.

 

An eligible person may receive more than one Grant, subject to such restrictions
as are provided herein.

 

7. LIMITATIONS ON GRANTS OF INCENTIVE STOCK OPTIONS

 

An Option shall constitute an Incentive Stock Option only (i) if the Grantee of
such Option is an employee of the Company or any Subsidiary of the Company; (ii)
to the extent specifically provided in the related Award Agreement; and (iii) to
the extent that the aggregate Fair Market Value (determined at the time the
Option is granted) of the shares of Stock with respect to which all Incentive
Stock Options held by such Grantee become exercisable for the first time during
any calendar year (under the Plan and all other plans of the Grantee’s employer
and its affiliates) does not exceed $100,000. This limitation shall be applied
by taking Options into account in the order in which they were granted.

 

8. AWARD AGREEMENT

 

Each Grant pursuant to the Plan shall be evidenced by an Award Agreement, in
such form or forms as the Board shall from time to time determine. Award
Agreements issued from time to time or at the same time need not contain similar
provisions but shall be consistent with the terms of the Plan. Each Award
Agreement evidencing a Grant of Options shall specify whether such Options are
intended to be non-qualified stock options or Incentive Stock Options, and in
the absence of such specification such options shall be deemed non-qualified
stock options.

 

9. OPTION PRICE

 

The Option Price of each Option shall be no less than the Fair Market Value of a
share of Stock on the date of grant and stated in the Award Agreement evidencing
such Option; provided, however, that in the event that a Grantee would otherwise
be ineligible to receive an Incentive Stock Option by reason of the provisions
of Sections 422(b)(6) and 424(d) of the Code (relating to ownership of more than
ten percent (10%) of the Company’s outstanding shares of Stock), the Option
Price of an Option granted to such Grantee that is intended to be an Incentive
Stock Option shall be not less than one hundred ten percent (110%) of the

 

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Fair Market Value of a share of Stock on the Grant Date. In no case shall the
Option Price of any Option be less than the par value of a share of Stock.

 

10. VESTING, TERM AND EXERCISE OF OPTIONS

 

  10.1. Vesting and Option Period.

 

Subject to Sections 10.2 and 18 hereof, each Option granted under the Plan shall
become exercisable at such times and under such conditions as shall be
determined by the Board and stated in the Award Agreement. For purposes of this
Section 10.1, fractional numbers of shares of Stock subject to an Option shall
be rounded down to the next nearest whole number. The period during which any
Option shall be exercisable shall constitute the “Option Period” with respect to
such Option.

 

  10.2. Term.

 

Each Option granted under the Plan shall terminate, and all rights to purchase
shares of Stock thereunder shall cease, upon the expiration of ten years from
the date such Option is granted, or under such circumstances and on such date
prior thereto as is set forth in the Plan or as may be fixed by the Board and
thereafter stated in the Award Agreement relating to such Option; provided,
however, that in the event that the Grantee would otherwise be ineligible to
receive an Incentive Stock Option by reason of the provisions of Sections
422(b)(6) and 424(d) of the Code (relating to ownership of more than ten percent
(10%) of the outstanding shares of Stock), an Option granted to such Grantee
that is intended to be an Incentive Stock Option shall not be exercisable after
the expiration of five years from its date of grant.

 

  10.3. Acceleration.

 

Any limitation on the exercise of an Option contained in any Award Agreement may
be rescinded, modified or waived by the Board, in its sole discretion, at any
time and from time to time after the Grant Date of such Option, so as to
accelerate the time at which the Option may be exercised.

 

  10.4. Termination of Employment or Other Relationship for a Reason Other than
Retirement, Death or Disability.

 

Unless otherwise provided by the Board or in the Option Agreement, upon the
termination of a Grantee’s employment or other relationship with the Company and
its Subsidiaries other than by reason of death, “permanent and total disability”
(within the meaning of Section 22(e)(3) of the Code) or retirement, any Option
or

 

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portion thereof held by such Grantee that has not vested in accordance with the
provisions of Section 10.1 hereof shall terminate immediately, and any Option or
portion thereof that has vested in accordance with the provisions of Section
10.1 hereof but has not been exercised shall terminate at the close of business
on the 90th day following the Grantee’s termination of employment or other
relationship (or, if such 90th day is a Saturday, Sunday or holiday, at the
close of business on the next preceding day that is not a Saturday, Sunday or
holiday). Upon termination of an Option or portion thereof, the Grantee shall
have no further right to purchase shares of Stock pursuant to such Option or
portion thereof. Whether a leave of absence or leave on military or government
service shall constitute a termination of employment or other relationship for
purposes of the Plan shall be determined by the Board, whose determination shall
be final and conclusive. For purposes of the Plan, a termination of employment,
service or other relationship shall not be deemed to occur if the Grantee is
immediately thereafter employed with the Company, a Subsidiary or a Service
Provider, or is engaged as a Service Provider or an Outside Director. Whether a
termination of a Grantee’s employment or other relationship with the Company and
its Subsidiaries shall have occurred shall be determined by the Board, whose
determination shall be final and conclusive.

 

  10.5. Rights in the Event of Death.

 

Unless otherwise provided by the Board, if a Grantee dies while employed by or
providing services to the Company, all Options granted to such Grantee that have
not previously terminated shall fully vest on the date of death, and the
executors or administrators or legatees or distributees of such Grantee’s estate
shall have the right, at any time within five years after the date of such
Grantee’s death and prior to termination of the Option pursuant to Section 10.2
hereof, to exercise any Option held by such Grantee at the date of such
Grantee’s death.

 

  10.6. Rights in the Event of Disability.

 

Unless otherwise provided by the Board, if a Grantee’s employment or other
relationship with the Company is terminated by reason of the “permanent and
total disability” (within the meaning of Section 22(e)(3) of the Code) of such
Grantee, such Grantee’s Options that have not previously terminated shall fully
vest, and shall be exercisable for a period of five years after such termination
of employment or other relationship, subject to earlier termination of the
Option as provided in Section 10.2 hereof. Whether a termination of employment
or other relationship is considered to be by reason of “permanent and total
disability” for purposes of the Plan shall be determined by the Board, whose
determination shall be final and conclusive.

 

 

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  10.7. Rights in the Event of Retirement.

 

Unless otherwise provided by the Board, if a Grantee retires under the terms of
any Company retirement plan applicable to the Grantee or as determined by the
Board, the Grantee shall be considered retired and all Options granted to such
Grantee that have not previously terminated shall fully vest on the date of
retirement, and the Grantee shall have the right, at any time within five years
after the date of such Grantee’s retirement and prior to termination of the
Option pursuant to Section 10.2 hereof, to exercise any Option held by such
Grantee at the date of such Grantee’s retirement.

 

  10.8. Limitations on Exercise of Option.

 

Notwithstanding any other provision of the Plan, in no event may any Option be
exercised, in whole or in part, prior to the date the Plan is approved by the
stockholders of the Company as provided herein, or after ten years following the
date upon which the Option is granted, or after the occurrence of an event
referred to in Section 18 hereof which results in termination of the Option.

 

  10.9. Method of Exercise.

 

An Option that is exercisable may be exercised by the Grantee’s delivery to the
Company of written notice of exercise on any business day, at the Company’s
principal office, addressed to the attention of the Board. Such notice shall
specify the number of shares of Stock with respect to which the Option is being
exercised and shall be accompanied by payment in full of the Option Price of the
shares of Stock for which the Option is being exercised. The minimum number of
shares of Stock with respect to which an Option may be exercised, in whole or in
part, at any time shall be the lesser of (i) 100 shares or such lesser number
set forth in the applicable Award Agreement and (ii) the maximum number of
shares of Stock available for purchase under the Option at the time of exercise.
Payment of the Option Price for the shares of Stock purchased pursuant to the
exercise of an Option shall be made (i) in cash or in cash equivalents
acceptable to the Company; (ii) to the extent permitted by law and at the
Board’s discretion, through the actual or constructive tender to the Company of
shares of Stock, which shares of Stock, if acquired from the Company, shall have
been held for at least six months prior to such tender and which shall be
valued, for purposes of determining the extent to which the Option Price has
been paid thereby, at their Fair Market Value on the date of exercise; or (iii)
to the extent permitted by law and at the Board’s discretion, by a combination
of the methods described in clauses (i) and (ii). The Board may provide, by
inclusion of appropriate language in an Award Agreement, that payment in full of
the Option Price need not accompany the written notice of exercise, provided
that the notice is accompanied by delivery of an unconditional

 

12

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and irrevocable undertaking by a licensed broker acceptable to the Company as
the agent for the individual exercising the Option to deliver promptly to the
Company sufficient funds to pay the Option Price and directs that the
certificate or certificates for the shares of Stock for which the Option is
exercised be delivered to a licensed broker acceptable to the Company as the
agent for the individual exercising the Option and, at the time such certificate
or certificates are delivered, the broker tenders to the Company cash (or cash
equivalents acceptable to the Company) equal to the Option Price for the shares
of Stock purchased pursuant to the exercise of the Option plus the amount (if
any) of federal or other taxes which the Company may in its judgment be required
to withhold with respect to the exercise of the Option. An attempt to exercise
any Option granted hereunder other than as set forth above shall be invalid and
of no force and effect.

 

  10.10.  Rights as a Stockholder; Dividend Equivalents.

 

Unless otherwise stated in the applicable Award Agreement, an individual holding
or exercising an Option shall have none of the rights of a stockholder (for
example, the right to receive cash or dividend payments or distributions
attributable to the subject shares of Stock or to direct the voting of the
subject shares of Stock) until the shares of Stock covered thereby are fully
paid and issued to such individual. Except as provided in Section 18 hereof, no
adjustment shall be made for dividends, distributions or other rights for which
the record date is prior to the date of such issuance. However, the Board may,
on such conditions as it deems appropriate, provide that a Grantee will receive
a benefit in lieu of cash dividends that would have been payable on any or all
shares of Stock subject to the Grant if such shares of Stock had been
outstanding. Without limitation, the Board may provide for payment to the
Grantee of amounts representing such dividends, either currently or in the
future, or for the investment of such amounts on behalf of the Grantee.

 

  10.11.  Delivery of Stock Certificates.

 

Promptly after the exercise of an Option by a Grantee and the payment in full of
the Option Price, such Grantee shall be entitled to the issuance of a Stock
certificate or certificates evidencing such Grantee’s ownership of the shares of
Stock subject to the Option.

 

11. TRANSFERABILITY OF OPTIONS

 

  11.1.  General Rule

 

Except as provided in Section 11.2 hereof, during the lifetime of a Grantee,
only the Grantee (or, in the event of legal incapacity or incompetency, the
Grantee’s

 

13

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guardian or legal representative) may exercise an Option. Except as provided in
Section 11.2 hereof, no Option shall be assignable or transferable by the
Grantee to whom it is granted, other than by will or the laws of descent and
distribution.

 

  11.2. Family Transfers.

 

To the extent permitted by the Board and under such rules and conditions as
imposed by the Board, a Grantee may transfer all or part of an Option that is
not an Incentive Stock Option to (i) any Immediate Family Member, (ii) a trust
or trusts for the exclusive benefit of any Immediate Family Member or (iii) a
partnership or limited liability company in which Immediate Family Members are
the only partners or members, provided that (x) there may be no consideration
for any such transfer, and (y) subsequent transfers of transferred Options or
transfers of an interest in a trust, partnership, or limited liability company
to which an Option has been transferred are prohibited except those in
accordance with this Section 11.2 or by will or the laws of descent and
distribution. Following such transfer, any such Option shall continue to be
subject to the same terms and conditions as were applicable immediately prior to
the transfer, provided that, for purposes of this Section 11.2, the term
“Grantee” shall be deemed to refer to the transferee. The events of termination
of employment or other relationship referred to in Section 10.4 hereof shall
continue to be applied with respect to the original Grantee, following which the
Option shall be exercisable by the transferee only to the extent and for the
periods specified in Section 10.4, 10.5, 10.6 or 10.7 hereof.

 

12. RESTRICTED STOCK

 

  12.1. Grant of Restricted Stock or Restricted Stock Units.

 

The Board from time to time may grant Restricted Stock or Restricted Stock Units
to persons eligible to receive Grants under Section 6 hereof, subject to such
restrictions, conditions and other terms as the Board may determine.

 

  12.2. Restrictions.

 

At the time a Grant of Restricted Stock or Restricted Stock Units is made, the
Board shall establish a period of time (the “Restricted Period”) applicable to
such Restricted Stock or Restricted Stock Units. Unless otherwise determined by
the Board, unless the Grant is being made in consideration of compensation due
under another plan, or unless vesting is subject to performance, the Restricted
Period will be a minimum of three years. Each Grant of Restricted Stock or
Restricted Stock Units may be subject to a different Restricted Period. At the
time a Grant of Restricted Stock or Restricted Stock Units is made, the Board
may, in its sole discretion, prescribe restrictions in addition to or other than
the expiration of the

 

14

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Restricted Period, including the satisfaction of corporate or individual
performance objectives, which may be applicable to all or any portion of the
Restricted Stock or Restricted Stock Units. Such performance objectives shall be
established in writing by the Board by not later than the 90th day of the period
of service to which such performance objectives relate and while the outcome is
substantially uncertain. Performance objectives may be stated either on an
absolute or relative basis and may be based on any of the following criteria:
earnings per share, total stockholder return, operating earnings, growth in
assets, return on equity, return on capital, market share, stock price, net
income, cash flow, sales growth (in general, by type of product and by type of
customer), retained earnings, completion of acquisitions, completion of
divestitures and asset sales, cost or expense reductions, introduction or
conversion of product brands and achievement of specified management information
systems objectives. Performance objectives may include positive results,
maintaining the status quo or limiting economic losses. Subject to the fifth
sentence of this Section 12.2, the Board also may, in its sole discretion,
shorten or terminate the Restricted Period or waive any other restrictions
applicable to all or a portion of the Restricted Stock or Restricted Stock
Units. Neither Restricted Stock nor Restricted Stock Units may be sold,
transferred, assigned, pledged or otherwise encumbered or disposed of during the
Restricted Period or prior to the satisfaction of any other restrictions
prescribed by the Board with respect to such Restricted Stock or Restricted
Stock Units.

 

  12.3. Restricted Stock Certificates.

 

The Company shall issue, in the name of each Grantee to whom Restricted Stock
has been granted, Stock certificates representing the total number of shares of
Restricted Stock granted to the Grantee, as soon as reasonably practicable after
the Grant Date. The Board may provide in an Award Agreement that either (i) the
Secretary of the Company shall hold such certificates for the Grantee’s benefit
until such time as the Restricted Stock is forfeited to the Company or the
restrictions lapse, or (ii) such certificates shall be delivered to the Grantee,
provided, however, that such certificates shall bear a legend or legends
complying with the applicable securities laws and regulations and making
appropriate reference to the restrictions imposed under the Plan and the Award
Agreement.

 

  12.4. Rights of Holders of Restricted Stock.

 

Unless the Board otherwise provides in an Award Agreement, holders of Restricted
Stock shall have the right to vote such shares of Stock and the right to receive
any dividends declared or paid with respect to such shares of Stock. The Board
may provide that any dividends paid on Restricted Stock must be reinvested in
shares of Stock, which may or may not be subject to the same vesting conditions
and restrictions applicable to such Restricted Stock. All distributions, if any,

 

15

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received by a Grantee with respect to Restricted Stock as a result of any stock
split, stock dividend, combination of shares or other similar transaction shall
be subject to the restrictions applicable to the original Grant.

 

  12.5. Rights of Holders of Restricted Stock Units.

 

Unless the Board otherwise provides in an Award Agreement, holders of Restricted
Stock Units shall have no rights as stockholders of the Company. The Board may
provide in an Award Agreement evidencing a Grant of Restricted Stock Units that
the holder of such Restricted Stock Units shall be entitled to receive, upon the
Company’s payment of a cash dividend on its outstanding shares of Stock, a cash
payment for each Restricted Stock Unit held equal to the per-share dividend paid
on the shares of Stock. Such Award Agreement may also provide that such cash
payment will be deemed reinvested in additional Restricted Stock Units at a
price per unit equal to the Fair Market Value of a share on the date that such
dividend is paid.

 

  12.6. Termination of Employment or Other Relationship for a Reason Other than
Death or Disability.

 

Unless otherwise provided by the Board, upon the termination of a Grantee’s
employment or other relationship with the Company and its Subsidiaries, in
either case other than, in the case of individuals, by reason of death or
“permanent and total disability” (within the meaning of Section 22(e)(3) of the
Code), any Restricted Stock or Restricted Stock Units held by such Grantee that
have not vested, or with respect to which all applicable restrictions and
conditions have not lapsed, shall immediately be deemed forfeited. Upon
forfeiture of Restricted Stock or Restricted Stock Units, the Grantee shall have
no further rights with respect to such Grant, including, but not limited to, any
right to vote Restricted Stock or any right to receive dividends with respect to
Restricted Stock or Restricted Stock Units. Whether a leave of absence or leave
on military or government service shall constitute a termination of employment
or other relationship for purposes of the Plan shall be determined by the Board,
whose determination shall be final and conclusive. For purposes of the Plan, a
termination of employment, service or other relationship shall not be deemed to
occur if the Grantee is immediately thereafter employed with the Company or any
other Service Provider, or is engaged as a Service Provider or an Outside
Director. Whether a termination of a Grantee’s employment or other relationship
with the Company and its Subsidiaries shall have occurred shall be determined by
the Board, whose determination shall be final and conclusive.

 

 

16

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  12.7. Rights in the Event of Death.

 

Unless otherwise provided by the Board, if a Grantee dies while employed by the
Company or a Service Provider, or while serving as a Service Provider, all
Restricted Stock or Restricted Stock Units granted to such Grantee shall fully
vest on the date of death unless the Board provided otherwise in the Award
Agreement relating to such Restricted Stock or Restricted Stock Units. Upon such
vesting, the shares of Stock represented thereby shall be deliverable in
accordance with the terms of the Plan to the executors, administrators, legatees
or distributees of the Grantee’s estate.

 

  12.8. Rights in the Event of Disability.

 

Unless otherwise provided by the Board, if a Grantee’s employment or other
relationship with the Company or a Service Provider, or service as a Service
Provider, is terminated by reason of the “permanent and total disability”
(within the meaning of Section 22(e)(3) of the Code) of such Grantee, such
Grantee’s then unvested Restricted Stock or Restricted Stock Units shall be
fully vested. Whether a termination of employment, service or other relationship
is to be considered by reason of “permanent and total disability” for purposes
of the Plan shall be determined by the Board, whose determination shall be final
and conclusive.

 

  12.9. Delivery of Shares and Payment Therefor.

 

Upon the expiration or termination of the Restricted Period and the satisfaction
of any other conditions prescribed by the Board, the restrictions applicable to
Restricted Stock or Restricted Stock Units shall lapse, and, unless otherwise
provided in the Award Agreement, upon payment by the Grantee to the Company, in
cash or by check, of the greater of (i) the aggregate par value of the shares of
Stock represented by such Restricted Stock or Restricted Stock Units or (ii) the
purchase price, if any, specified in the Award Agreement relating to such
Restricted Stock or Restricted Stock Units, a certificate for such shares shall
be delivered, free of all such restrictions, to the Grantee or the Grantee’s
beneficiary or estate, as the case may be.

 

13. STOCK APPRECIATION RIGHTS

 

  13.1. Grant of Stock Appreciation Rights.

 

The Board may from time to time grant SARs to persons eligible to receive grants
under Section 6 hereof, subject to the provisions of this Section 13 and to such
restrictions, conditions and other terms as the Board may determine.

 

 

17

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  13.2. Nature of a Stock Appreciation Right.

 

An SAR shall confer on the Grantee a right to receive, upon exercise thereof,
the excess of (A) the Fair Market Value of one share of Stock on the date of
exercise over (B) the grant price of the SAR, as determined by the Board. Unless
the Board provides otherwise in the Award Agreement, the grant price of an SAR
shall not be less than the Fair Market Value of a share of Stock on the Grant
Date.

 

  13.3. Terms and Conditions Governing SARs.

 

The Board shall determine at the Grant Date or thereafter the time or times at
which and the circumstances under which an SAR may be exercised in whole or in
part (including exercise based on achievement of performance objectives or
future service requirements), the time or times at which and the circumstances
under which an SAR shall cease to be exercisable, the method of exercise, the
method of settlement, form of consideration payable in settlement, whether or
not an SAR shall be in tandem or in combination with any other Grant, and any
other terms and conditions of any SAR.

 

14. UNRESTRICTED STOCK

 

The Board may, in its sole discretion, grant Stock (or sell Stock at par value
or such other higher purchase price determined by the Board) free of
restrictions other than those required under federal or state securities laws
(“Unrestricted Stock”) to persons eligible to receive grants under Section 6
hereof. Unrestricted Stock may be granted or sold as described in the preceding
sentence in respect of past services or other valid consideration, or in lieu of
any cash compensation due to such Grantee.

 

15. PARACHUTE LIMITATIONS

 

If the Grantee is a “disqualified individual” (as defined in Section 280G(c) of
the Code), any Option, Restricted Stock, Restricted Stock Unit or SAR and any
other right to receive any payment or benefit under the Plan shall not vest or
become exercisable (i) to the extent that the right to vest or any other right
to any payment or benefit, taking into account all other rights, payments or
benefits to or for the Grantee, would cause any payment or benefit to the
Grantee under the Plan to be considered a “parachute payment” within the meaning
of Section 280G(b)(2) of the Code as then in effect (a “Parachute Payment”) and
(ii) if, as a result of receiving a Parachute Payment, the aggregate after-tax
amounts received by the Grantee from the Company under any Award Agreements, the
Plan, and all other rights, payments or benefits to or for the Grantee would be
less than the maximum after-tax amount that could be received by the Grantee
without causing the payment or benefit to be considered a Parachute Payment. In
the event that, but for the

 

18

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provisions of this Section 15, the Grantee would be considered to have received
a Parachute Payment under any Award Agreements that would have the effect of
decreasing the after-tax amount received by the Grantee as described in clause
(ii) of the preceding sentence, then the Grantee shall have the right, in the
Grantee’s sole discretion, to designate any rights, payments or benefits under
any Award Agreements, the Plan, any other agreements and any benefit
arrangements to be reduced or eliminated so as to avoid having the payment or
benefit to the Grantee under any Award Agreements be deemed to be a Parachute
Payment.

 

16. REQUIREMENTS OF LAW

 

  16.1. General.

 

The Company shall not be required to sell or issue any shares of Stock under any
Grant if the sale or issuance of such shares of Stock would constitute a
violation by the Grantee, any other person exercising a right emanating from
such Grant, or the Company of any provision of any law or regulation of any
governmental authority, including, without limitation, any federal or state
securities laws or regulations. If at any time the Company shall determine, in
its discretion, that the listing, registration or qualification of any shares of
Stock subject to a Grant upon any securities exchange or under any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the issuance or purchase of shares of Stock hereunder, no shares of Stock
may be issued or sold to the Grantee or any other person exercising a right
emanating from such Grant unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Company, and any delay caused thereby shall in no way
affect the date of termination of the Grant. Without limiting the generality of
the foregoing, upon the exercise of any Option or any SAR that may be settled in
shares of Stock or the delivery of any Restricted Stock or shares of Stock
underlying Restricted Stock Units, unless a registration statement under the
Securities Act is in effect with respect to the shares of Stock covered by such
Grant, the Company shall not be required to sell or issue such shares of Stock
unless the Board has received evidence satisfactory to it that the Grantee or
any other person exercising a right emanating from such Grant may acquire such
shares of Stock pursuant to an exemption from registration under the Securities
Act. Any such determination by the Board shall be final, binding and conclusive.
The Company may, but shall in no event be obligated to, register any securities
covered hereby pursuant to the Securities Act. The Company shall not be
obligated to take any affirmative action in order to cause the exercise of an
Option or an SAR or the issuance of shares of Stock pursuant to the Plan to
comply with any law or regulation of any governmental authority. As to any
jurisdiction that expressly imposes the requirement that an Option (or SAR that
may be settled in shares of Stock) shall not be exercisable until the shares of
Stock covered by such Option (or SAR) are registered or are exempt from

 

19

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registration, the exercise of such Option (or SAR) under circumstances in which
the laws of such jurisdiction apply shall be deemed conditioned upon the
effectiveness of such registration or the availability of such an exemption.

 

  16.2. Rule 16b-3.

 

During any time when the Company has a class of equity security registered under
Section 12 of the Exchange Act, it is the intent of the Company that Grants
pursuant to the Plan and the exercise of Options and SARs granted hereunder will
qualify for the exemption provided by Rule 16b-3 under the Exchange Act. To the
extent that any provision of the Plan or action by the Board does not comply
with the requirements of Rule 16b-3, such provision or action shall be deemed
inoperative to the extent permitted by law and deemed advisable by the Board,
and shall not affect the validity of the Plan. In the event that Rule 16b-3 is
revised or replaced, the Board may exercise its discretion to modify the Plan in
any respect necessary to satisfy the requirements of, or to take advantage of
any features of, the revised exemption or its replacement.

 

17. AMENDMENT AND TERMINATION OF THE PLAN

 

The Board may, at any time and from time to time, amend, suspend or terminate
the Plan as to any shares of Stock as to which Grants have not been made. Except
as permitted under this Section 17 or Section 18 hereof, no amendment,
suspension or termination of the Plan shall, without the consent of the Grantee,
alter or impair rights or obligations under any Grant theretofore awarded under
the Plan.

 

18. EFFECT OF CHANGES IN CAPITALIZATION

 

  18.1. Changes in Stock.

 

Subject to Section 18.2 hereof, in the event of any merger, reorganization,
consolidation, recapitalization, separation, liquidation, stock dividend,
spin-off, split-up, share combination or other change in the corporate structure
of the Company affecting the shares of Stock, (a) such adjustment may be made in
the number and class of shares which may be delivered under Section 4 hereof and
the Grant limits under Section 4 hereof, and in the number and class of or price
of shares subject to outstanding Grants as may be determined to be appropriate
and equitable by the Board, in its sole discretion, to prevent dilution or
enlargement of existing rights; and (b) the Board or, if another legal entity
assumes the obligations of the Company hereunder, the board of directors,
compensation committee or similar body of such other legal entity shall either
(i) make appropriate provision for the protection of outstanding Grants by the
substitution on an equitable basis of appropriate equity interests or awards
similar to the Grants, provided that the

 

20

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substitution neither enlarges nor diminishes the value and rights under the
Grants, or (ii) upon written notice to the Grantees, provide that Grants shall
be exercised distributed, canceled or exchanged for value pursuant to such terms
and conditions (including the waiver of any existing terms or conditions) as
shall be specified in the notice. Any adjustment of an Incentive Stock Option
under this Section 18.1 shall be made in such a manner so as not to constitute a
“modification” within the meaning of Section 424(h)(3) of the Code. The
conversion of any convertible securities of the Company shall not be treated as
a change in the corporate structure of the Company affecting the shares of
Stock. Subject to any contrary language in an Award Agreement evidencing a Grant
of Restricted Stock, any restrictions applicable to such Restricted Stock shall
apply as well to any replacement shares received by the Grantee as a result of
the merger, reorganization or other transaction referred to in this Section
18.1.

 

  18.2. Reorganization, Sale of Assets or Sale of Stock.

 

Upon the dissolution or liquidation of the Company or upon a merger,
consolidation or reorganization of the Company with one or more other entities
in which the Company is not the surviving entity, or upon a sale of
substantially all of the assets of the Company to another entity, or upon any
transaction (including, without limitation, a merger or reorganization in which
the Company is the surviving entity) approved by the Board that results in any
person or entity (or person or entities acting as a group or otherwise in
concert) owning eighty percent (80%) or more of the combined voting power of all
classes of securities of the Company, (i) all outstanding Restricted Stock and
Restricted Stock Units shall be deemed to have vested, and all restrictions and
conditions applicable to such Restricted Stock and Restricted Stock Units shall
be deemed to have lapsed, immediately prior to the occurrence of such
transaction, and (ii) all Options and SARs outstanding hereunder shall become
immediately exercisable for a period of fifteen days immediately prior to the
scheduled consummation of such transaction. Any exercise of an Option or SAR
during such fifteen-day period shall be conditioned upon the consummation of the
transaction and shall be effective only immediately before the consummation of
the transaction.

 

This Section 18.2 shall not apply to any transaction to the extent that (A)
provision is made in writing in connection with such transaction for the
continuation of the Plan or the assumption of the Options, SARs, Restricted
Stock and Restricted Stock Units theretofore granted, or for the substitution
for such Options, SARs, Restricted Stock and Restricted Stock Units of new
options, stock appreciation rights, restricted stock and restricted stock units
covering the stock of a successor entity, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kinds of shares or units and
exercise prices, in which event the Plan and Options, SARs, Restricted Stock and
Restricted Stock Units

 

21

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theretofore granted shall continue in the manner and under the terms so provided
or (B) a majority of the full Board determines that such transaction shall not
trigger application of the provisions of this Section 18.2 and limited by any
“change in control” provision in any employment agreement or Award Agreement
applicable to the Grantee. Upon consummation of any such transaction, the Plan
and all outstanding but unexercised Options and SARs shall terminate, except to
the extent provision is made in writing in connection with such transaction for
the continuation of the Plan or the assumption of such Options and SARs
theretofore granted, or for the substitution for such Options and SARs of new
options and stock appreciation rights covering the shares of a successor entity,
or a parent or subsidiary thereof, with appropriate adjustments as to the number
and kinds of shares or units and exercise prices, in which event the Plan and
Options and SARs theretofore granted shall continue in the manner and under the
terms so provided. The Board shall send written notice of an event that will
result in such a termination to all individuals who hold Options and SARs not
later than the time at which the Company gives notice thereof to its
stockholders.

 

  18.3. Adjustments.

 

Adjustments under this Section 18 related to shares of Stock or securities of
the Company shall be made by the Board, whose determination in that respect
shall be final and conclusive. No fractional shares or other securities shall be
issued pursuant to any such adjustment, and any fractions resulting from any
such adjustment shall be eliminated in each case by rounding downward to the
nearest whole share.

 

  18.4. No Limitations on Company.

 

The making of Grants pursuant to the Plan shall not affect or limit in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge,
consolidate, dissolve or liquidate, or to sell or transfer all or any part of
its business or assets.

 

19. DISCLAIMER OF RIGHTS

 

No provision in the Plan or in any Grant or Award Agreement shall be construed
to confer upon any individual the right to remain in the employ or service of
the Company or any affiliate thereof, or to interfere in any way with any
contractual or other right or authority of the Company or Service Provider
either to increase or decrease the compensation or other payments to any
individual at any time, or to terminate any employment or other relationship
between any individual and the Company or any affiliate thereof. In addition,
notwithstanding anything contained in the Plan to the contrary, unless otherwise
stated in the applicable

 

22

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Award Agreement or employment agreement, no Grant awarded under the Plan shall
be affected by any change of duties or position of the Grantee, so long as such
Grantee continues to be a director, officer, consultant or employee of the
Company. The obligation of the Company to pay any benefits pursuant to the Plan
shall be interpreted as a contractual obligation to pay only those amounts
described herein, in the manner and under the conditions prescribed herein. The
Plan shall in no way be interpreted to require the Company to transfer any
amounts to a third party trustee or otherwise hold any amounts in trust or
escrow for payment to any participant or beneficiary under the terms of the
Plan. No Grantee shall have any of the rights of a stockholder with respect to
the shares of Stock subject to an Option or SAR except to the extent such shares
of Stock shall have been issued upon the exercise of the Option or SAR.

 

20. NONEXCLUSIVITY OF THE PLAN

 

Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or particular individuals) as the Board in its discretion determines
desirable, including, without limitation, the granting of Stock options
otherwise than under the Plan.

 

21. WITHHOLDING TAXES

 

The Company or a Subsidiary, as the case may be, shall have the right to deduct
from payments of any kind otherwise due to a Grantee any federal, state or local
taxes of any kind required by law to be withheld with respect to the vesting of
or other lapse of restrictions applicable to Restricted Stock or Restricted
Stock Units or upon the exercise of an Option or SAR or the grant of
Unrestricted Stock. At the time of such vesting, lapse or exercise, the Grantee
shall pay to the Company or the Subsidiary, as the case may be, any amount that
the Company or the Subsidiary may reasonably determine to be necessary to
satisfy such withholding obligation. Subject to the prior approval of the
Company or the Subsidiary, which may be withheld by the Company or the
Subsidiary, as the case may be, in its sole discretion, the Grantee may elect to
satisfy such obligations, in whole or in part, (i) by causing the Company or the
Subsidiary to withhold shares of Stock otherwise issuable to the Grantee or (ii)
by delivering to the Company or the Subsidiary shares of Stock already owned by
the Grantee. The shares of Stock so delivered or withheld shall have an
aggregate Fair Market Value equal to such withholding obligations. The Fair
Market Value of the shares of Stock used to satisfy such withholding obligation
shall be determined by the Company or the Subsidiary as of the date that the
amount of tax to be withheld is to be determined. A Grantee who

 

23

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has made an election pursuant to this Section 21 may satisfy such Grantee’s
withholding obligation only with shares of Stock that are not subject to any
repurchase, forfeiture, unfulfilled vesting or other similar requirement.

 

22. CAPTIONS

 

The use of captions in the Plan or any Award Agreement is for convenience of
reference only and shall not affect the meaning of any provision of the Plan or
such Award Agreement.

 

23. OTHER PROVISIONS

 

Each Grant awarded under the Plan may contain such other terms and conditions
not inconsistent with the Plan as may be determined by the Board, in its sole
discretion.

 

24. NUMBER AND GENDER

 

With respect to words used in this Plan, the singular form shall include the
plural form and, the masculine gender shall include the feminine gender, as the
context requires.

 

25. SEVERABILITY

 

If any provision of the Plan or any Award Agreement shall be finally determined
to be illegal or unenforceable by any court of law in any jurisdiction, the
remaining provisions hereof and thereof shall be severable and enforceable in
accordance with their terms, and all provisions shall remain enforceable in any
other jurisdiction.

 

26. GOVERNING LAW

 

The validity and construction of this Plan and the instruments evidencing the
Grants awarded hereunder shall be governed by the laws of the State of Delaware
(without giving effect to the choice of law provisions thereof).

 

* * * *

 

24

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The Plan was duly adopted and approved by the Board of Directors of the Company
as of the 12th day of March, 1999. The Plan was amended and restated effective
May 14, 2002.

 

The Plan was duly approved by the stockholders of the Company on the 7th day of
April, 1999.

 

25