Exhibit 10.14

 

UTSTARCOM, INC.

 

2006 EQUITY INCENTIVE PLAN

 

(As Amended and Restated February 18, 2009)

 

1.                                       PURPOSES OF THE PLAN.  THE PURPOSES OF
THIS PLAN ARE:

 

·                                          to attract and retain the best
available personnel for positions of substantial responsibility,

 

·                                          to provide incentives to individuals
who perform services to the Company, and

 

·                                          to promote the success of the
Company’s business.

 

The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock
Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights,
Performance Units, Performance Shares and other stock or cash awards as the
Administrator may determine.

 

2.                                       DEFINITIONS.  AS USED HEREIN, THE
FOLLOWING DEFINITIONS WILL APPLY:

 

(A)                                  “ADMINISTRATOR” MEANS THE BOARD OR ANY OF
ITS COMMITTEES AS WILL BE ADMINISTERING THE PLAN, IN ACCORDANCE WITH SECTION 4
OF THE PLAN.

 

(B)                                 “AFFILIATE” MEANS ANY CORPORATION OR ANY
OTHER ENTITY (INCLUDING, BUT NOT LIMITED TO, PARTNERSHIPS AND JOINT VENTURES)
CONTROLLING, CONTROLLED BY, OR UNDER COMMON CONTROL WITH THE COMPANY.

 

(C)                                  “ANNUAL REVENUE” MEANS THE COMPANY’S OR A
BUSINESS UNIT’S NET SALES FOR THE PERFORMANCE PERIOD, DETERMINED IN ACCORDANCE
WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES; PROVIDED, HOWEVER, THAT PRIOR TO
THE PERFORMANCE PERIOD, THE ADMINISTRATOR SHALL DETERMINE WHETHER ANY
SIGNIFICANT ITEM(S) SHALL BE EXCLUDED OR INCLUDED FROM THE CALCULATION OF ANNUAL
REVENUE WITH RESPECT TO ONE OR MORE PARTICIPANTS.

 

(D)                                 “APPLICABLE LAWS” MEANS THE REQUIREMENTS
RELATING TO THE ADMINISTRATION OF EQUITY-BASED AWARDS UNDER U.S. STATE CORPORATE
LAWS, U.S. FEDERAL AND STATE SECURITIES LAWS, THE CODE, ANY STOCK EXCHANGE OR
QUOTATION SYSTEM ON WHICH THE COMMON STOCK IS LISTED OR QUOTED AND THE
APPLICABLE LAWS OF ANY FOREIGN COUNTRY OR JURISDICTION WHERE AWARDS ARE, OR WILL
BE, GRANTED UNDER THE PLAN.

 

(E)                                  “AWARD” MEANS, INDIVIDUALLY OR
COLLECTIVELY, A GRANT UNDER THE PLAN OF OPTIONS, RESTRICTED STOCK, RESTRICTED
STOCK UNITS, STOCK APPRECIATION RIGHTS, PERFORMANCE UNITS, PERFORMANCE SHARES
AND OTHER STOCK OR CASH AWARDS AS THE ADMINISTRATOR MAY DETERMINE.

 

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(F)                                    “AWARD AGREEMENT” MEANS THE WRITTEN OR
ELECTRONIC AGREEMENT SETTING FORTH THE TERMS AND PROVISIONS APPLICABLE TO EACH
AWARD GRANTED UNDER THE PLAN.  THE AWARD AGREEMENT IS SUBJECT TO THE TERMS AND
CONDITIONS OF THE PLAN.

 

(G)                                 “BOARD” MEANS THE BOARD OF DIRECTORS OF THE
COMPANY.

 

(H)                                 “CASH COLLECTIONS” MEANS THE ACTUAL CASH OR
OTHER FREELY NEGOTIABLE CONSIDERATION, IN ANY CURRENCY, RECEIVED IN SATISFACTION
OF ACCOUNTS RECEIVABLE CREATED BY THE SALE OF ANY COMPANY PRODUCTS OR SERVICES.

 

(I)                                     “CHANGE IN CONTROL”  BEFORE THE
FEBRUARY 18, 2009 AMENDMENT AND RESTATEMENT OF THE PLAN, CHANGE IN CONTROL MEANS
THE OCCURRENCE OF ANY OF THE FOLLOWING EVENTS MEANS THE OCCURRENCE OF ANY OF THE
FOLLOWING EVENTS:

 

(I)            ANY “PERSON” (AS SUCH TERM IS USED IN SECTIONS 13(D) AND 14(D) OF
THE EXCHANGE ACT) BECOMES THE “BENEFICIAL OWNER” (AS DEFINED IN RULE 13D-3 OF
THE EXCHANGE ACT), DIRECTLY OR INDIRECTLY, OF SECURITIES OF THE COMPANY
REPRESENTING FIFTY PERCENT (50%) OR MORE OF THE TOTAL VOTING POWER REPRESENTED
BY THE COMPANY’S THEN OUTSTANDING VOTING SECURITIES;

 

(II)           THE CONSUMMATION OF THE SALE OR DISPOSITION BY THE COMPANY OF ALL
OR SUBSTANTIALLY ALL OF THE COMPANY’S ASSETS;

 

(III)          A CHANGE IN THE COMPOSITION OF THE BOARD OCCURRING WITHIN A
TWO-YEAR PERIOD, AS A RESULT OF WHICH FEWER THAN A MAJORITY OF THE DIRECTORS ARE
INCUMBENT DIRECTORS.  “INCUMBENT DIRECTORS” MEANS DIRECTORS WHO EITHER (A) ARE
DIRECTORS AS OF THE EFFECTIVE DATE OF THE PLAN, OR (B) ARE 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 WILL NOT
INCLUDE AN INDIVIDUAL WHOSE ELECTION OR NOMINATION IS IN CONNECTION WITH AN
ACTUAL OR THREATENED PROXY CONTEST RELATING TO THE ELECTION OF DIRECTORS TO THE
COMPANY); OR

 

(IV)          THE CONSUMMATION OF A MERGER OR CONSOLIDATION OF THE COMPANY WITH
ANY OTHER CORPORATION, OTHER THAN A MERGER OR CONSOLIDATION WHICH WOULD RESULT
IN THE VOTING SECURITIES OF THE COMPANY OUTSTANDING IMMEDIATELY PRIOR THERETO
CONTINUING TO REPRESENT (EITHER BY REMAINING OUTSTANDING OR BY BEING CONVERTED
INTO VOTING SECURITIES OF THE SURVIVING ENTITY OR ITS PARENT) AT LEAST FIFTY
PERCENT (50%) OF THE TOTAL VOTING POWER REPRESENTED BY THE VOTING SECURITIES OF
THE COMPANY OR SUCH SURVIVING ENTITY OR ITS PARENT OUTSTANDING IMMEDIATELY AFTER
SUCH MERGER OR CONSOLIDATION.

 

On or after the February 18, 2009 amendment and restatement of the Plan, Change
in Control means the occurrence of any of the following events:

 

(I)            A CHANGE IN THE OWNERSHIP OF THE COMPANY WHICH OCCURS ON THE DATE
THAT ANY ONE PERSON, OR MORE THAN ONE PERSON ACTING AS A GROUP, (“PERSON”)
ACQUIRES OWNERSHIP OF THE STOCK OF THE COMPANY THAT, TOGETHER WITH THE STOCK
HELD BY SUCH PERSON, CONSTITUTES MORE THAN FIFTY PERCENT (50%) OF THE TOTAL
VOTING POWER OF THE STOCK OF THE COMPANY; PROVIDED, HOWEVER, THAT FOR PURPOSES
OF THIS SUBSECTION (I), THE ACQUISITION OF ADDITIONAL STOCK BY ANY ONE PERSON,
WHO IS CONSIDERED TO OWN MORE THAN FIFTY PERCENT (50%) OF THE TOTAL VOTING POWER
OF THE STOCK OF THE COMPANY WILL NOT BE CONSIDERED A CHANGE IN CONTROL; OR

 

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(II)           A CHANGE IN THE EFFECTIVE CONTROL OF THE COMPANY WHICH OCCURS ON
THE DATE THAT A MAJORITY OF MEMBERS OF THE BOARD IS REPLACED DURING ANY TWELVE
(12) MONTH PERIOD BY DIRECTORS WHOSE APPOINTMENT OR ELECTION IS NOT ENDORSED BY
A MAJORITY OF THE MEMBERS OF THE BOARD PRIOR TO THE DATE OF THE APPOINTMENT OR
ELECTION.  FOR PURPOSES OF THIS CLAUSE (II), IF ANY PERSON IS CONSIDERED TO
EFFECTIVELY CONTROL THE COMPANY, THE ACQUISITION OF ADDITIONAL CONTROL OF THE
COMPANY BY THE SAME PERSON WILL NOT BE CONSIDERED A CHANGE IN CONTROL; OR

 

(III)          A CHANGE IN THE OWNERSHIP OF A SUBSTANTIAL PORTION OF THE
COMPANY’S ASSETS WHICH OCCURS ON THE DATE THAT ANY PERSON ACQUIRES (OR HAS
ACQUIRED DURING THE TWELVE (12) MONTH PERIOD ENDING ON THE DATE OF THE MOST
RECENT ACQUISITION BY SUCH PERSON OR PERSONS) ASSETS FROM THE COMPANY THAT HAVE
A TOTAL GROSS FAIR MARKET VALUE EQUAL TO OR MORE THAN FIFTY PERCENT (50%) OF THE
TOTAL GROSS FAIR MARKET VALUE OF ALL OF THE ASSETS OF THE COMPANY IMMEDIATELY
PRIOR TO SUCH ACQUISITION OR ACQUISITIONS; PROVIDED, HOWEVER, THAT FOR PURPOSES
OF THIS SUBSECTION (III), THE FOLLOWING WILL NOT CONSTITUTE A CHANGE IN THE
OWNERSHIP OF A SUBSTANTIAL PORTION OF THE COMPANY’S ASSETS: (A) A TRANSFER TO AN
ENTITY THAT IS CONTROLLED BY THE COMPANY’S STOCKHOLDERS IMMEDIATELY AFTER THE
TRANSFER, OR (B) A TRANSFER OF ASSETS BY THE COMPANY TO: (1) A STOCKHOLDER OF
THE COMPANY (IMMEDIATELY BEFORE THE ASSET TRANSFER) IN EXCHANGE FOR OR WITH
RESPECT TO THE COMPANY’S STOCK, (2) AN ENTITY, FIFTY PERCENT (50%) OR MORE OF
THE TOTAL VALUE OR VOTING POWER OF WHICH IS OWNED, DIRECTLY OR INDIRECTLY, BY
THE COMPANY, (3) A PERSON, THAT OWNS, DIRECTLY OR INDIRECTLY, FIFTY PERCENT
(50%) OR MORE OF THE TOTAL VALUE OR VOTING POWER OF ALL THE OUTSTANDING STOCK OF
THE COMPANY, OR (4) AN ENTITY, AT LEAST FIFTY PERCENT (50%) OF THE TOTAL VALUE
OR VOTING POWER OF WHICH IS OWNED, DIRECTLY OR INDIRECTLY, BY A PERSON DESCRIBED
IN THIS SUBSECTION (III)(B)(3).  FOR PURPOSES OF THIS SUBSECTION (III), GROSS
FAIR MARKET VALUE MEANS THE VALUE OF THE ASSETS OF THE COMPANY, OR THE VALUE OF
THE ASSETS BEING DISPOSED OF, DETERMINED WITHOUT REGARD TO ANY LIABILITIES
ASSOCIATED WITH SUCH ASSETS.

 

For purposes of this Section 2(i), Persons will be considered to be acting as a
group if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock, or similar business transaction
with the Company.

 

Notwithstanding the foregoing provisions of this definition, a transaction shall
not be deemed a Change in Control unless the transaction qualifies as a change
in control event within the meaning of Code Section 409A.

 

(J)                                     “CODE” MEANS THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED.  ANY REFERENCE TO A SECTION OF THE CODE HEREIN WILL BE A
REFERENCE TO ANY SUCCESSOR OR AMENDED SECTION OF THE CODE.

 

(K)                                  “COMMITTEE” MEANS A COMMITTEE OF DIRECTORS
OR OF OTHER INDIVIDUALS SATISFYING APPLICABLE LAWS APPOINTED BY THE BOARD IN
ACCORDANCE WITH SECTION 4 HEREOF.

 

(L)                                     “COMMON STOCK” MEANS THE COMMON STOCK OF
THE COMPANY.

 

(M)                               “COMPANY” MEANS UTSTARCOM, INC., A DELAWARE
CORPORATION, OR ANY SUCCESSOR THERETO.

 

(N)                                 “CONSULTANT” MEANS ANY PERSON, INCLUDING AN
ADVISOR, ENGAGED BY THE COMPANY OR ITS AFFILIATES TO RENDER SERVICES TO SUCH
ENTITY.

 

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(O)           “CUSTOMER SATISFACTION MBOS” MEANS AS TO ANY PARTICIPANT, THE
OBJECTIVE AND MEASURABLE INDIVIDUAL GOALS SET BY A “MANAGEMENT BY OBJECTIVES”
PROCESS AND APPROVED BY THE ADMINISTRATOR, WHICH GOALS RELATE TO THE
SATISFACTION OF EXTERNAL OR INTERNAL CUSTOMER REQUIREMENTS.

 

(P)           “DETERMINATION DATE” MEANS THE LATEST POSSIBLE DATE THAT WILL NOT
JEOPARDIZE THE QUALIFICATION OF AN AWARD GRANTED UNDER THE PLAN AS
“PERFORMANCE-BASED COMPENSATION” UNDER SECTION 162(M) OF THE CODE.

 

(Q)           “DIRECTOR” MEANS A MEMBER OF THE BOARD.

 

(R)            “DISABILITY” MEANS TOTAL AND PERMANENT DISABILITY AS DEFINED IN
SECTION 22(E)(3) OF THE CODE, PROVIDED THAT IN THE CASE OF AWARDS OTHER THAN
INCENTIVE STOCK OPTIONS, THE ADMINISTRATOR IN ITS DISCRETION MAY DETERMINE
WHETHER A PERMANENT AND TOTAL DISABILITY EXISTS IN ACCORDANCE WITH UNIFORM AND
NON-DISCRIMINATORY STANDARDS ADOPTED BY THE ADMINISTRATOR FROM TIME TO TIME.

 

(S)           “EARNINGS PER SHARE” MEANS AS TO ANY PERFORMANCE PERIOD, THE
COMPANY’S NET INCOME OR A BUSINESS UNIT’S PRO FORMA NET INCOME, DIVIDED BY A
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING AND DILUTIVE COMMON EQUIVALENT
SHARES DEEMED OUTSTANDING.

 

(T)            “EMPLOYEE” MEANS ANY PERSON, INCLUDING OFFICERS AND DIRECTORS,
EMPLOYED BY THE COMPANY OR ITS AFFILIATES.  NEITHER SERVICE AS A DIRECTOR NOR
PAYMENT OF A DIRECTOR’S FEE BY THE COMPANY WILL BE SUFFICIENT TO CONSTITUTE
“EMPLOYMENT” BY THE COMPANY.

 

(U)           “EXCHANGE ACT” MEANS THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

(V)           “FAIR MARKET VALUE” MEANS, AS OF ANY DATE, THE VALUE OF COMMON
STOCK AS THE ADMINISTRATOR MAY DETERMINE IN GOOD FAITH BY REFERENCE TO THE PRICE
OF SUCH STOCK ON ANY ESTABLISHED STOCK EXCHANGE OR A NATIONAL MARKET SYSTEM ON
THE DAY OF DETERMINATION IF THE COMMON STOCK IS SO LISTED ON ANY ESTABLISHED
STOCK EXCHANGE OR A NATIONAL MARKET SYSTEM.  IF THE COMMON STOCK IS NOT LISTED
ON ANY ESTABLISHED STOCK EXCHANGE OR A NATIONAL MARKET SYSTEM, THE VALUE OF THE
COMMON STOCK WILL BE DETERMINED BY THE ADMINISTRATOR IN GOOD FAITH.

 

(W)          “FISCAL YEAR” MEANS THE FISCAL YEAR OF THE COMPANY.

 

(X)            “INCENTIVE STOCK OPTION” MEANS AN OPTION THAT BY ITS TERMS
QUALIFIES AND IS OTHERWISE INTENDED TO QUALIFY AS AN INCENTIVE STOCK OPTION
WITHIN THE MEANING OF SECTION 422 OF THE CODE AND THE REGULATIONS PROMULGATED
THEREUNDER.

 

(Y)           “NET INCOME” MEANS AS TO ANY PERFORMANCE PERIOD, THE INCOME AFTER
TAXES OF THE COMPANY DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES, PROVIDED THAT PRIOR TO THE PERFORMANCE PERIOD, THE ADMINISTRATOR
SHALL DETERMINE WHETHER ANY SIGNIFICANT ITEM(S) SHALL BE INCLUDED OR EXCLUDED
FROM THE CALCULATION OF NET INCOME WITH RESPECT TO ONE OR MORE PARTICIPANTS.

 

(Z)            “NEW ORDERS” MEANS AS TO ANY PERFORMANCE PERIOD, THE FIRM ORDERS
FOR A SYSTEM, PRODUCT, PART, OR SERVICE THAT ARE BEING RECORDED FOR THE FIRST
TIME AS DEFINED IN THE COMPANY’S ORDER RECOGNITION POLICY.

 

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(AA)         “NONSTATUTORY STOCK OPTION” MEANS AN OPTION THAT BY ITS TERMS DOES
NOT QUALIFY OR IS NOT INTENDED TO QUALIFY AS AN INCENTIVE STOCK OPTION.

 

(BB)         “OFFICER” MEANS A PERSON WHO IS AN OFFICER OF THE COMPANY WITHIN
THE MEANING OF SECTION 16 OF THE EXCHANGE ACT AND THE RULES AND REGULATIONS
PROMULGATED THEREUNDER.

 

(CC)         “OPERATING PROFIT” MEANS AS TO ANY PERFORMANCE PERIOD, THE
DIFFERENCE BETWEEN REVENUE AND RELATED COSTS AND EXPENSES, EXCLUDING INCOME
DERIVED FROM SOURCES OTHER THAN REGULAR ACTIVITIES AND BEFORE INCOME DEDUCTIONS.

 

(DD)         “OPTION” MEANS A STOCK OPTION GRANTED PURSUANT TO THE PLAN.

 

(EE)         “PARENT” MEANS A “PARENT CORPORATION,” WHETHER NOW OR HEREAFTER
EXISTING, AS DEFINED IN SECTION 424(E) OF THE CODE.

 

(FF)           “PARTICIPANT” MEANS THE HOLDER OF AN OUTSTANDING AWARD.

 

(GG)         “PERFORMANCE GOALS” WILL HAVE THE MEANING SET FORTH IN SECTION 11
OF THE PLAN.

 

(HH)         “PERFORMANCE PERIOD” MEANS ANY FISCAL YEAR OF THE COMPANY OR SUCH
OTHER PERIOD AS DETERMINED BY THE ADMINISTRATOR IN ITS SOLE DISCRETION.

 

(II)           “PERFORMANCE SHARE” MEANS AN AWARD DENOMINATED IN SHARES WHICH
MAY BE EARNED IN WHOLE OR IN PART UPON ATTAINMENT OF PERFORMANCE GOALS OR OTHER
VESTING CRITERIA AS THE ADMINISTRATOR MAY DETERMINE PURSUANT TO SECTION 10.

 

(JJ)           “PERFORMANCE UNIT” MEANS AN AWARD WHICH MAY BE EARNED IN WHOLE OR
IN PART UPON ATTAINMENT OF PERFORMANCE GOALS OR OTHER VESTING CRITERIA AS THE
ADMINISTRATOR MAY DETERMINE AND WHICH MAY BE SETTLED FOR CASH, SHARES OR OTHER
SECURITIES OR A COMBINATION OF THE FOREGOING PURSUANT TO SECTION 10.

 

(KK)         “PERIOD OF RESTRICTION” MEANS THE PERIOD DURING WHICH THE TRANSFER
OF SHARES OF RESTRICTED STOCK ARE SUBJECT TO RESTRICTIONS AND THEREFORE, THE
SHARES ARE SUBJECT TO A SUBSTANTIAL RISK OF FORFEITURE.  SUCH RESTRICTIONS MAY
BE BASED ON THE PASSAGE OF TIME, THE ACHIEVEMENT OF TARGET LEVELS OF
PERFORMANCE, OR THE OCCURRENCE OF OTHER EVENTS AS DETERMINED BY THE
ADMINISTRATOR.

 

(LL)           “PLAN” MEANS THIS 2006 EQUITY INCENTIVE PLAN.

 

(MM)       “PRO FORMA NET INCOME” MEANS AS TO ANY BUSINESS UNIT FOR ANY
PERFORMANCE PERIOD, THE NET INCOME OF SUCH BUSINESS UNIT, MINUS ALLOCATIONS OF
DESIGNATED CORPORATE EXPENSES.

 

(NN)         “PRODUCT SHIPMENTS” MEANS AS TO ANY PERFORMANCE PERIOD, THE
QUANTITATIVE AND MEASURABLE NUMBER OF UNITS OF A PARTICULAR PRODUCT THAT SHIPPED
DURING SUCH PERFORMANCE PERIOD.

 

(OO)         “RESTRICTED STOCK” MEANS SHARES ISSUED PURSUANT TO AN AWARD OF
RESTRICTED STOCK UNDER SECTION 8 OF THE PLAN, OR ISSUED PURSUANT TO THE EARLY
EXERCISE OF AN OPTION.

 

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(PP)         “RESTRICTED STOCK UNIT” MEANS A BOOKKEEPING ENTRY REPRESENTING AN
AMOUNT EQUAL TO THE FAIR MARKET VALUE OF ONE SHARE, GRANTED PURSUANT TO
SECTION 9.  EACH RESTRICTED STOCK UNIT REPRESENTS AN UNFUNDED AND UNSECURED
OBLIGATION OF THE COMPANY.

 

(QQ)         “RETURN ON DESIGNATED ASSETS” MEANS AS TO ANY PERFORMANCE PERIOD,
THE PRO FORMA NET INCOME OF A BUSINESS UNIT, DIVIDED BY THE AVERAGE OF BEGINNING
AND ENDING BUSINESS UNIT DESIGNATED ASSETS, OR NET INCOME OF THE COMPANY,
DIVIDED BY THE AVERAGE OF BEGINNING AND ENDING DESIGNATED CORPORATE ASSETS.

 

(RR)           “RETURN ON EQUITY” MEANS, AS TO ANY PERFORMANCE PERIOD, THE
PERCENTAGE EQUAL TO THE VALUE OF THE COMPANY’S OR ANY BUSINESS UNIT’S COMMON
STOCK INVESTMENTS AT THE END OF SUCH PERFORMANCE PERIOD, DIVIDED BY THE VALUE OF
SUCH COMMON STOCK INVESTMENTS AT THE START OF SUCH PERFORMANCE PERIOD, EXCLUDING
ANY COMMON STOCK INVESTMENTS SO DESIGNATED BY THE ADMINISTRATOR.

 

(SS)         “RETURN ON SALES” MEANS AS TO ANY PERFORMANCE PERIOD, THE
PERCENTAGE EQUAL TO THE COMPANY’S NET INCOME OR THE BUSINESS UNIT’S PRO FORMA
NET INCOME, DIVIDED BY THE COMPANY’S OR THE BUSINESS UNIT’S ANNUAL REVENUE.

 

(TT)           “RULE 16B-3” MEANS RULE 16B-3 OF THE EXCHANGE ACT OR ANY
SUCCESSOR TO RULE 16B-3, AS IN EFFECT WHEN DISCRETION IS BEING EXERCISED WITH
RESPECT TO THE PLAN.

 

(UU)         “SECTION 16(B)” MEANS SECTION 16(B) OF THE EXCHANGE ACT.

 

(VV)         “SERVICE PROVIDER” MEANS AN EMPLOYEE, DIRECTOR OR CONSULTANT.

 

(WW)       “SHARE” MEANS A SHARE OF THE COMMON STOCK, AS ADJUSTED IN ACCORDANCE
WITH SECTION 14 OF THE PLAN.

 

(XX)          “STOCK APPRECIATION RIGHT” MEANS AN AWARD, GRANTED ALONE OR IN
CONNECTION WITH AN OPTION, THAT PURSUANT TO SECTION 7 IS DESIGNATED AS A STOCK
APPRECIATION RIGHT.

 

(YY)         “SUBSIDIARY” MEANS A “SUBSIDIARY CORPORATION,” WHETHER NOW OR
HEREAFTER EXISTING, AS DEFINED IN SECTION 424(F) OF THE CODE.

 

(ZZ)          “SUCCESSOR CORPORATION” HAS THE MEANING GIVEN TO SUCH TERM IN
SECTION 14(C) OF THE PLAN.

 

3.                                       STOCK SUBJECT TO THE PLAN.

 

(A)           STOCK SUBJECT TO THE PLAN.  SUBJECT TO THE PROVISIONS OF
SECTION 14 OF THE PLAN, THE MAXIMUM AGGREGATE NUMBER OF SHARES THAT MAY BE
AWARDED AND SOLD UNDER THE PLAN IS 4,500,000 SHARES PLUS (I) ANY SHARES THAT, AS
OF THE DATE OF STOCKHOLDER APPROVAL OF THIS PLAN, HAVE BEEN RESERVED BUT NOT
ISSUED PURSUANT TO ANY AWARDS GRANTED UNDER THE COMPANY’S 1997 STOCK PLAN (THE
“1997 PLAN”), THE COMPANY’S AMENDED 2001 DIRECTOR OPTION PLAN (THE “2001 PLAN”),
AND THE COMPANY’S 2003 NON-STATUTORY STOCK OPTION PLAN (THE “2003 PLAN”) AND ARE
NOT SUBJECT TO ANY AWARDS GRANTED THEREUNDER, AND (II) ANY SHARES SUBJECT TO
STOCK OPTIONS OR SIMILAR AWARDS GRANTED UNDER THE 1997 PLAN, THE 2001 PLAN, AND
THE 2003 PLAN THAT EXPIRE OR OTHERWISE TERMINATE WITHOUT

 

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HAVING BEEN EXERCISED IN FULL AND SHARES ISSUED PURSUANT TO AWARDS GRANTED UNDER
THE 1997 PLAN, THE 2001 PLAN, AND THE 2003 PLAN THAT ARE FORFEITED TO OR
REPURCHASED BY THE COMPANY.  THE SHARES MAY BE AUTHORIZED, BUT UNISSUED, OR
REACQUIRED COMMON STOCK.

 

(B)           LAPSED AWARDS.  IF AN AWARD EXPIRES OR BECOMES UNEXERCISABLE
WITHOUT HAVING BEEN EXERCISED IN FULL, OR, WITH RESPECT TO RESTRICTED STOCK,
RESTRICTED STOCK UNITS, PERFORMANCE SHARES OR PERFORMANCE UNITS, IS FORFEITED TO
OR REPURCHASED BY THE COMPANY, THE UNPURCHASED SHARES (OR FOR AWARDS OTHER THAN
OPTIONS AND STOCK APPRECIATION RIGHTS, THE FORFEITED OR REPURCHASED SHARES)
WHICH WERE SUBJECT THERETO WILL BECOME AVAILABLE FOR FUTURE GRANT OR SALE UNDER
THE PLAN (UNLESS THE PLAN HAS TERMINATED).  WITH RESPECT TO STOCK APPRECIATION
RIGHTS, ALL OF THE SHARES COVERED BY THE AWARD (THAT IS, SHARES ACTUALLY ISSUED
PURSUANT TO A STOCK APPRECIATION RIGHT, AS WELL AS THE SHARES THAT REPRESENT
PAYMENT OF THE EXERCISE PRICE) WILL CEASE TO BE AVAILABLE UNDER THE PLAN. 
HOWEVER, SHARES THAT HAVE ACTUALLY BEEN ISSUED UNDER THE PLAN UNDER ANY AWARD
WILL NOT BE RETURNED TO THE PLAN AND WILL NOT BECOME AVAILABLE FOR FUTURE
DISTRIBUTION UNDER THE PLAN; PROVIDED, HOWEVER, THAT IF UNVESTED SHARES OF
RESTRICTED STOCK, RESTRICTED STOCK UNITS, PERFORMANCE SHARES OR PERFORMANCE
UNITS ARE REPURCHASED BY THE COMPANY OR ARE FORFEITED TO THE COMPANY, SUCH
SHARES WILL BECOME AVAILABLE FOR FUTURE GRANT UNDER THE PLAN.  SHARES USED TO
PAY THE TAX AND EXERCISE PRICE OF AN AWARD WILL NOT BECOME AVAILABLE FOR FUTURE
GRANT OR SALE UNDER THE PLAN.  TO THE EXTENT AN AWARD UNDER THE PLAN IS PAID OUT
IN CASH RATHER THAN SHARES, SUCH CASH PAYMENT WILL NOT RESULT IN REDUCING THE
NUMBER OF SHARES AVAILABLE FOR ISSUANCE UNDER THE PLAN.  NOTWITHSTANDING THE
FOREGOING AND, SUBJECT TO ADJUSTMENT PROVIDED IN SECTION 14, THE MAXIMUM NUMBER
OF SHARES THAT MAY BE ISSUED UPON THE EXERCISE OF INCENTIVE STOCK OPTIONS WILL
EQUAL THE AGGREGATE SHARE NUMBER STATED IN SECTION 3(A), PLUS, TO THE EXTENT
ALLOWABLE UNDER SECTION 422 OF THE CODE, ANY SHARES THAT BECOME AVAILABLE FOR
ISSUANCE UNDER THE PLAN UNDER THIS SECTION 3(B).

 

4.                                       ADMINISTRATION OF THE PLAN.

 

(A)                                  PROCEDURE.

 

(I)            MULTIPLE ADMINISTRATIVE BODIES.  DIFFERENT COMMITTEES WITH
RESPECT TO DIFFERENT GROUPS OF SERVICE PROVIDERS MAY ADMINISTER THE PLAN.

 

(II)           SECTION 162(M).  TO THE EXTENT THAT THE ADMINISTRATOR DETERMINES
IT TO BE DESIRABLE TO QUALIFY AWARDS GRANTED HEREUNDER AS “PERFORMANCE-BASED
COMPENSATION” WITHIN THE MEANING OF SECTION 162(M) OF THE CODE, THE PLAN WILL BE
ADMINISTERED BY A COMMITTEE OF TWO OR MORE “OUTSIDE DIRECTORS” WITHIN THE
MEANING OF SECTION 162(M) OF THE CODE.

 

(III)          RULE 16B-3.  TO THE EXTENT DESIRABLE TO QUALIFY TRANSACTIONS
HEREUNDER AS EXEMPT UNDER RULE 16B-3, THE TRANSACTIONS CONTEMPLATED HEREUNDER
WILL BE STRUCTURED TO SATISFY THE REQUIREMENTS FOR EXEMPTION UNDER RULE 16B-3.

 

(IV)          OTHER ADMINISTRATION.  OTHER THAN AS PROVIDED ABOVE, THE PLAN WILL
BE ADMINISTERED BY (A) THE BOARD OR (B) A COMMITTEE, WHICH COMMITTEE WILL BE
CONSTITUTED TO SATISFY APPLICABLE LAWS.

 

(B)                                 POWERS OF THE ADMINISTRATOR.  SUBJECT TO THE
PROVISIONS OF THE PLAN, AND IN THE CASE OF A COMMITTEE, SUBJECT TO THE SPECIFIC
DUTIES DELEGATED BY THE BOARD TO SUCH COMMITTEE, THE ADMINISTRATOR WILL HAVE THE
AUTHORITY, IN ITS DISCRETION:

 

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(I)            TO DETERMINE THE FAIR MARKET VALUE;

 

(II)           TO SELECT THE SERVICE PROVIDERS TO WHOM AWARDS MAY BE GRANTED
HEREUNDER;

 

(III)          TO DETERMINE THE TERMS AND CONDITIONS, NOT INCONSISTENT WITH THE
TERMS OF THE PLAN, OF ANY AWARD GRANTED HEREUNDER;

 

(IV)          TO CONSTRUE AND INTERPRET THE TERMS OF THE PLAN AND AWARDS GRANTED
PURSUANT TO THE PLAN;

 

(V)           TO PRESCRIBE, AMEND AND RESCIND RULES AND REGULATIONS RELATING TO
THE PLAN, INCLUDING RULES AND REGULATIONS RELATING TO SUB-PLANS ESTABLISHED FOR
THE PURPOSE OF SATISFYING APPLICABLE FOREIGN LAWS;

 

(VI)          TO MODIFY OR AMEND EACH AWARD (SUBJECT TO SECTION 19(C) OF THE
PLAN).  NOTWITHSTANDING THE PREVIOUS SENTENCE, THE ADMINISTRATOR MAY NOT MODIFY
OR AMEND AN OPTION OR STOCK APPRECIATION RIGHT TO REDUCE THE EXERCISE PRICE OF
SUCH OPTION OR STOCK APPRECIATION RIGHT AFTER IT HAS BEEN GRANTED (EXCEPT FOR
ADJUSTMENTS MADE PURSUANT TO SECTION 14), AND NEITHER MAY THE ADMINISTRATOR
CANCEL ANY OUTSTANDING OPTION OR STOCK APPRECIATION RIGHT AND IMMEDIATELY
REPLACE IT WITH A NEW OPTION OR STOCK APPRECIATION RIGHT WITH A LOWER EXERCISE
PRICE;

 

(VII)         TO AUTHORIZE ANY PERSON TO EXECUTE ON BEHALF OF THE COMPANY ANY
INSTRUMENT REQUIRED TO EFFECT THE GRANT OF AN AWARD PREVIOUSLY GRANTED BY THE
ADMINISTRATOR;

 

(VIII)        TO ALLOW A PARTICIPANT TO DEFER THE RECEIPT OF THE PAYMENT OF CASH
OR THE DELIVERY OF SHARES THAT WOULD OTHERWISE BE DUE TO SUCH PARTICIPANT UNDER
AN AWARD PURSUANT TO SUCH PROCEDURES AS THE ADMINISTRATOR MAY DETERMINE; AND

 

(IX)           TO MAKE ALL OTHER DETERMINATIONS DEEMED NECESSARY OR ADVISABLE
FOR ADMINISTERING THE PLAN.

 

(C)                                  EFFECT OF ADMINISTRATOR’S DECISION.  THE
ADMINISTRATOR’S DECISIONS, DETERMINATIONS AND INTERPRETATIONS WILL BE FINAL AND
BINDING ON ALL PARTICIPANTS AND ANY OTHER HOLDERS OF AWARDS.

 

5.                                       ELIGIBILITY.  NONSTATUTORY STOCK
OPTIONS, RESTRICTED STOCK, RESTRICTED STOCK UNITS, STOCK APPRECIATION RIGHTS,
PERFORMANCE UNITS, PERFORMANCE SHARES AND SUCH OTHER CASH OR STOCK AWARDS AS THE
ADMINISTRATOR DETERMINES MAY BE GRANTED TO SERVICE PROVIDERS.  INCENTIVE STOCK
OPTIONS MAY BE GRANTED ONLY TO EMPLOYEES OF THE COMPANY OR ANY PARENT OR
SUBSIDIARY OF THE COMPANY.

 

6.                                       STOCK OPTIONS.

 

(A)                                  LIMITATIONS.  EACH OPTION WILL BE
DESIGNATED IN THE AWARD AGREEMENT AS EITHER AN INCENTIVE STOCK OPTION OR A
NONSTATUTORY STOCK OPTION.  HOWEVER, NOTWITHSTANDING SUCH DESIGNATION, TO THE
EXTENT THAT THE AGGREGATE FAIR MARKET VALUE OF THE SHARES WITH RESPECT TO WHICH
INCENTIVE STOCK OPTIONS ARE EXERCISABLE FOR THE FIRST TIME BY THE PARTICIPANT
DURING ANY CALENDAR YEAR

 

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(UNDER ALL PLANS OF THE COMPANY AND ANY PARENT OR SUBSIDIARY) EXCEEDS $100,000,
SUCH OPTIONS WILL BE TREATED AS NONSTATUTORY STOCK OPTIONS.  FOR PURPOSES OF
THIS SECTION 6(A), INCENTIVE STOCK OPTIONS WILL BE TAKEN INTO ACCOUNT IN THE
ORDER IN WHICH THEY WERE GRANTED.  THE FAIR MARKET VALUE OF THE SHARES WILL BE
DETERMINED AS OF THE TIME THE OPTION WITH RESPECT TO SUCH SHARES IS GRANTED.

 

(B)                                 NUMBER OF SHARES.  THE ADMINISTRATOR WILL
HAVE COMPLETE DISCRETION TO DETERMINE THE NUMBER OF OPTIONS GRANTED TO ANY
PARTICIPANT, PROVIDED THAT DURING ANY FISCAL YEAR, NO PARTICIPANT WILL BE
GRANTED OPTIONS COVERING MORE THAN 1,000,000 SHARES.  NOTWITHSTANDING THE
FOREGOING LIMITATION, IN CONNECTION WITH A PARTICIPANT’S INITIAL SERVICE AS AN
EMPLOYEE, AN EMPLOYEE MAY BE GRANTED OPTIONS COVERING UP TO AN ADDITIONAL
2,000,000 SHARES.

 

(C)                                  TERM OF OPTION.  THE ADMINISTRATOR WILL
DETERMINE THE TERM OF EACH OPTION IN ITS SOLE DISCRETION.  ANY OPTION GRANTED
UNDER THE PLAN WILL NOT BE EXERCISABLE AFTER THE EXPIRATION OF SEVEN (7) YEARS
FROM THE DATE OF GRANT OR SUCH SHORTER TERM AS MAY BE PROVIDED IN THE AWARD
AGREEMENT.  MOREOVER, IN THE CASE OF AN INCENTIVE STOCK OPTION GRANTED TO A
PARTICIPANT WHO, AT THE TIME THE INCENTIVE STOCK OPTION IS GRANTED, OWNS STOCK
REPRESENTING MORE THAN TEN PERCENT (10%) OF THE TOTAL COMBINED VOTING POWER OF
ALL CLASSES OF STOCK OF THE COMPANY OR ANY PARENT OR SUBSIDIARY, THE TERM OF THE
INCENTIVE STOCK OPTION WILL BE FIVE (5) YEARS FROM THE DATE OF GRANT OR SUCH
SHORTER TERM AS MAY BE PROVIDED IN THE AWARD AGREEMENT.

 

(D)                                 OPTION EXERCISE PRICE AND CONSIDERATION.

 

(I)            EXERCISE PRICE.  THE PER SHARE EXERCISE PRICE FOR THE SHARES TO
BE ISSUED PURSUANT TO EXERCISE OF AN OPTION WILL BE DETERMINED BY THE
ADMINISTRATOR, BUT WILL BE NO LESS THAN 100% OF THE FAIR MARKET VALUE PER SHARE
ON THE DATE OF GRANT.  IN ADDITION, IN THE CASE OF AN INCENTIVE STOCK OPTION
GRANTED TO AN EMPLOYEE WHO, AT THE TIME THE INCENTIVE STOCK OPTION IS GRANTED,
OWNS STOCK REPRESENTING MORE THAN TEN PERCENT (10%) OF THE VOTING POWER OF ALL
CLASSES OF STOCK OF THE COMPANY OR ANY PARENT OR SUBSIDIARY, THE PER SHARE
EXERCISE PRICE WILL BE NO LESS THAN 110% OF THE FAIR MARKET VALUE PER SHARE ON
THE DATE OF GRANT.  NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS
SECTION 6(C), OPTIONS MAY BE GRANTED WITH A PER SHARE EXERCISE PRICE OF LESS
THAN 100% OF THE FAIR MARKET VALUE PER SHARE ON THE DATE OF GRANT PURSUANT TO A
TRANSACTION DESCRIBED IN, AND IN A MANNER CONSISTENT WITH, SECTION 424(A) OF THE
CODE.  THE ADMINISTRATOR MAY NOT MODIFY OR AMEND AN OPTION TO REDUCE THE
EXERCISE PRICE OF SUCH OPTION AFTER IT HAS BEEN GRANTED (EXCEPT FOR ADJUSTMENTS
MADE PURSUANT TO SECTION 14 OF THE PLAN) NOR MAY THE ADMINISTRATOR CANCEL ANY
OUTSTANDING OPTION AND REPLACE IT WITH A NEW OPTION, STOCK APPRECIATION RIGHT,
OR OTHER AWARD WITH A LOWER EXERCISE PRICE, UNLESS, IN EITHER CASE, SUCH ACTION
IS APPROVED BY THE COMPANY’S STOCKHOLDERS.

 

(II)           WAITING PERIOD AND EXERCISE DATES.  AT THE TIME AN OPTION IS
GRANTED, THE ADMINISTRATOR WILL FIX THE PERIOD WITHIN WHICH THE OPTION MAY BE
EXERCISED AND WILL DETERMINE ANY CONDITIONS THAT MUST BE SATISFIED BEFORE THE
OPTION MAY BE EXERCISED.

 

(III)          FORM OF CONSIDERATION.  THE ADMINISTRATOR WILL DETERMINE THE
ACCEPTABLE FORM(S) OF CONSIDERATION FOR EXERCISING AN OPTION, INCLUDING THE
METHOD OF PAYMENT, TO THE EXTENT PERMITTED BY APPLICABLE LAWS.

 

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(E)                                  EXERCISE OF OPTION.

 

(I)            PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER.  ANY OPTION
GRANTED HEREUNDER WILL BE EXERCISABLE ACCORDING TO THE TERMS OF THE PLAN AND AT
SUCH TIMES AND UNDER SUCH CONDITIONS AS DETERMINED BY THE ADMINISTRATOR AND SET
FORTH IN THE AWARD AGREEMENT.  AN OPTION MAY NOT BE EXERCISED FOR A FRACTION OF
A SHARE.

 

An Option will be deemed exercised when the Company receives: (i) notice of
exercise (in such form as the Administrator specify from time to time) from the
person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised (together with an applicable
withholding taxes).  No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 14 of the Plan.

 

(II)           TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER.  IF A
PARTICIPANT CEASES TO BE A SERVICE PROVIDER, OTHER THAN UPON THE PARTICIPANT’S
TERMINATION AS THE RESULT OF THE PARTICIPANT’S DEATH OR DISABILITY, THE
PARTICIPANT MAY EXERCISE HIS OR HER OPTION WITHIN SUCH PERIOD OF TIME AS IS
SPECIFIED IN THE AWARD AGREEMENT TO THE EXTENT THAT THE OPTION IS VESTED ON THE
DATE OF TERMINATION (BUT IN NO EVENT LATER THAN THE EXPIRATION OF THE TERM OF
SUCH OPTION AS SET FORTH IN THE AWARD AGREEMENT).  IN THE ABSENCE OF A SPECIFIED
TIME IN THE AWARD AGREEMENT, THE OPTION WILL REMAIN EXERCISABLE FOR THREE
(3) MONTHS FOLLOWING THE PARTICIPANT’S TERMINATION.  UNLESS OTHERWISE PROVIDED
BY THE ADMINISTRATOR, IF ON THE DATE OF TERMINATION THE PARTICIPANT IS NOT
VESTED AS TO HIS OR HER ENTIRE OPTION, THE SHARES COVERED BY THE UNVESTED
PORTION OF THE OPTION WILL REVERT TO THE PLAN.  IF AFTER TERMINATION THE
PARTICIPANT DOES NOT EXERCISE HIS OR HER OPTION WITHIN THE TIME SPECIFIED BY THE
ADMINISTRATOR, THE OPTION WILL TERMINATE, AND THE SHARES COVERED BY SUCH OPTION
WILL REVERT TO THE PLAN.

 

(III)          DISABILITY OF PARTICIPANT.  IF A PARTICIPANT CEASES TO BE A
SERVICE PROVIDER AS A RESULT OF THE PARTICIPANT’S DISABILITY, THE PARTICIPANT
MAY EXERCISE HIS OR HER OPTION WITHIN SUCH PERIOD OF TIME AS IS SPECIFIED IN THE
AWARD AGREEMENT TO THE EXTENT THE OPTION IS VESTED ON THE DATE OF TERMINATION
(BUT IN NO EVENT LATER THAN THE EXPIRATION OF THE TERM OF SUCH OPTION AS SET
FORTH IN THE AWARD AGREEMENT).  IN THE ABSENCE OF A SPECIFIED TIME IN THE AWARD
AGREEMENT, THE OPTION WILL REMAIN EXERCISABLE FOR TWELVE (12) MONTHS FOLLOWING
THE PARTICIPANT’S TERMINATION.  UNLESS OTHERWISE PROVIDED BY THE ADMINISTRATOR,
IF ON THE DATE OF TERMINATION THE PARTICIPANT IS NOT VESTED AS TO HIS OR HER
ENTIRE OPTION, THE SHARES COVERED BY THE UNVESTED PORTION OF THE OPTION WILL
REVERT TO THE PLAN.  IF AFTER TERMINATION THE PARTICIPANT DOES NOT EXERCISE HIS
OR HER OPTION WITHIN THE TIME SPECIFIED HEREIN, THE OPTION WILL TERMINATE, AND
THE SHARES COVERED BY SUCH OPTION WILL REVERT TO THE PLAN.

 

(IV)          DEATH OF PARTICIPANT.  IF A PARTICIPANT DIES WHILE A SERVICE
PROVIDER, THE OPTION MAY BE EXERCISED FOLLOWING THE PARTICIPANT’S DEATH WITHIN
SUCH PERIOD OF TIME AS IS SPECIFIED IN THE AWARD AGREEMENT TO THE EXTENT THAT
THE OPTION IS VESTED ON THE DATE OF DEATH (BUT IN NO EVENT MAY THE OPTION BE
EXERCISED LATER THAN THE EXPIRATION OF THE TERM OF SUCH OPTION AS SET FORTH IN
THE AWARD AGREEMENT), BY THE PARTICIPANT’S DESIGNATED BENEFICIARY, PROVIDED SUCH
BENEFICIARY HAS BEEN DESIGNATED PRIOR TO PARTICIPANT’S DEATH IN A FORM
ACCEPTABLE TO THE ADMINISTRATOR.  IF NO SUCH BENEFICIARY HAS BEEN DESIGNATED BY
THE PARTICIPANT, THEN SUCH OPTION MAY BE EXERCISED BY THE PERSONAL
REPRESENTATIVE OF THE PARTICIPANT’S ESTATE OR BY THE PERSON(S) TO WHOM THE
OPTION IS TRANSFERRED PURSUANT TO THE PARTICIPANT’S WILL OR IN ACCORDANCE WITH
THE LAWS OF DESCENT AND DISTRIBUTION.  IN THE ABSENCE OF A SPECIFIED TIME IN THE
AWARD AGREEMENT, THE OPTION WILL REMAIN

 

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EXERCISABLE FOR TWELVE (12) MONTHS FOLLOWING PARTICIPANT’S DEATH.  UNLESS
OTHERWISE PROVIDED BY THE ADMINISTRATOR, IF AT THE TIME OF DEATH PARTICIPANT IS
NOT VESTED AS TO HIS OR HER ENTIRE OPTION, THE SHARES COVERED BY THE UNVESTED
PORTION OF THE OPTION WILL IMMEDIATELY REVERT TO THE PLAN.  IF THE OPTION IS NOT
SO EXERCISED WITHIN THE TIME SPECIFIED HEREIN, THE OPTION WILL TERMINATE, AND
THE SHARES COVERED BY SUCH OPTION WILL REVERT TO THE PLAN.

 

(V)           OTHER TERMINATION.  A PARTICIPANT’S AWARD AGREEMENT MAY ALSO
PROVIDE THAT IF THE EXERCISE OF THE OPTION FOLLOWING THE TERMINATION OF
PARTICIPANT’S STATUS AS A SERVICE PROVIDER (OTHER THAN UPON THE PARTICIPANT’S
DEATH OR DISABILITY) WOULD RESULT IN LIABILITY UNDER SECTION 16(B), THEN THE
OPTION WILL TERMINATE ON THE EARLIER OF (A) THE EXPIRATION OF THE TERM OF THE
OPTION SET FORTH IN THE AWARD AGREEMENT, OR (B) THE 10TH DAY AFTER THE LAST DATE
ON WHICH SUCH EXERCISE WOULD RESULT IN SUCH LIABILITY UNDER SECTION 16(B). 
FINALLY, A PARTICIPANT’S AWARD AGREEMENT MAY ALSO PROVIDE THAT IF THE EXERCISE
OF THE OPTION FOLLOWING THE TERMINATION OF THE PARTICIPANT’S STATUS AS A SERVICE
PROVIDER (OTHER THAN UPON THE PARTICIPANT’S DEATH OR DISABILITY) WOULD BE
PROHIBITED AT ANY TIME SOLELY BECAUSE THE ISSUANCE OF SHARES WOULD VIOLATE THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, THEN THE OPTION WILL
TERMINATE ON THE EARLIER OF (A) THE EXPIRATION OF THE TERM OF THE OPTION, OR
(B) THE EXPIRATION OF A PERIOD OF THREE (3) MONTHS AFTER THE TERMINATION OF THE
PARTICIPANT’S STATUS AS A SERVICE PROVIDER DURING WHICH THE EXERCISE OF THE
OPTION WOULD NOT BE IN VIOLATION OF SUCH REGISTRATION REQUIREMENTS.

 

7.                                       STOCK APPRECIATION RIGHTS.

 

(A)                                  GRANT OF STOCK APPRECIATION RIGHTS. 
SUBJECT TO THE TERMS AND CONDITIONS OF THE PLAN, A STOCK APPRECIATION RIGHT MAY
BE GRANTED TO SERVICE PROVIDERS AT ANY TIME AND FROM TIME TO TIME AS WILL BE
DETERMINED BY THE ADMINISTRATOR, IN ITS SOLE DISCRETION.

 

(B)                                 NUMBER OF SHARES.  THE ADMINISTRATOR WILL
HAVE COMPLETE DISCRETION TO DETERMINE THE NUMBER OF STOCK APPRECIATION RIGHTS
GRANTED TO ANY PARTICIPANT, PROVIDED THAT DURING ANY FISCAL YEAR, NO PARTICIPANT
WILL BE GRANTED STOCK APPRECIATION RIGHTS COVERING MORE THAN 1,000,000 SHARES. 
NOTWITHSTANDING THE FOREGOING LIMITATION, IN CONNECTION WITH A PARTICIPANT’S
INITIAL SERVICE AS AN EMPLOYEE, AN EMPLOYEE MAY BE GRANTED STOCK APPRECIATION
RIGHTS COVERING UP TO AN ADDITIONAL 2,000,000 SHARES.

 

(C)                                  EXERCISE PRICE AND OTHER TERMS.  THE
ADMINISTRATOR, SUBJECT TO THE PROVISIONS OF THE PLAN, WILL HAVE COMPLETE
DISCRETION TO DETERMINE THE TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
GRANTED UNDER THE PLAN, PROVIDED, HOWEVER, THAT THE EXERCISE PRICE WILL BE NOT
LESS THAN 100% OF THE FAIR MARKET VALUE OF A SHARE ON THE DATE OF GRANT.  THE
ADMINISTRATOR MAY NOT MODIFY OR AMEND A STOCK APPRECIATION RIGHT TO REDUCE THE
EXERCISE PRICE OF SUCH STOCK APPRECIATION RIGHT AFTER IT HAS BEEN GRANTED
(EXCEPT FOR ADJUSTMENTS MADE PURSUANT TO SECTION 14 OF THE PLAN) NOR MAY THE
ADMINISTRATOR CANCEL ANY OUTSTANDING STOCK APPRECIATION RIGHT AND REPLACE IT
WITH A NEW STOCK APPRECIATION RIGHT, OPTION, OR OTHER AWARD WITH A LOWER
EXERCISE PRICE, UNLESS, IN EITHER CASE, SUCH ACTION IS APPROVED BY THE COMPANY’S
STOCKHOLDERS.

 

(D)                                 STOCK APPRECIATION RIGHT AGREEMENT.  EACH
STOCK APPRECIATION RIGHT GRANT WILL BE EVIDENCED BY AN AWARD AGREEMENT THAT WILL
SPECIFY THE EXERCISE PRICE, THE TERM OF THE STOCK APPRECIATION RIGHT, THE
CONDITIONS OF EXERCISE, AND SUCH OTHER TERMS AND CONDITIONS AS THE
ADMINISTRATOR, IN ITS SOLE DISCRETION, WILL DETERMINE.

 

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(E)                                  EXPIRATION OF STOCK APPRECIATION RIGHTS.  A
STOCK APPRECIATION RIGHT GRANTED UNDER THE PLAN WILL EXPIRE UPON THE DATE
DETERMINED BY THE ADMINISTRATOR, IN ITS SOLE DISCRETION, AND SET FORTH IN THE
AWARD AGREEMENT.  NOTWITHSTANDING THE FOREGOING, THE RULES OF SECTION 6(E) ALSO
WILL APPLY TO STOCK APPRECIATION RIGHTS.

 

(F)                                    PAYMENT OF STOCK APPRECIATION RIGHT
AMOUNT.  UPON EXERCISE OF A STOCK APPRECIATION RIGHT, A PARTICIPANT WILL BE
ENTITLED TO RECEIVE PAYMENT FROM THE COMPANY IN AN AMOUNT DETERMINED BY
MULTIPLYING:

 

(I)            THE DIFFERENCE BETWEEN THE FAIR MARKET VALUE OF A SHARE ON THE
DATE OF EXERCISE OVER THE EXERCISE PRICE; TIMES

 

(II)           THE NUMBER OF SHARES WITH RESPECT TO WHICH THE STOCK APPRECIATION
RIGHT IS EXERCISED.

 

At the discretion of the Administrator, the payment upon Stock Appreciation
Right exercise may be in cash, in Shares of equivalent value, or in some
combination thereof.

 

8.                                       RESTRICTED STOCK.

 

(A)                                  GRANT OF RESTRICTED STOCK.  SUBJECT TO THE
TERMS AND PROVISIONS OF THE PLAN, THE ADMINISTRATOR, AT ANY TIME AND FROM TIME
TO TIME, MAY GRANT SHARES OF RESTRICTED STOCK TO SERVICE PROVIDERS IN SUCH
AMOUNTS AS THE ADMINISTRATOR, IN ITS SOLE DISCRETION, WILL DETERMINE.

 

(B)                                 RESTRICTED STOCK AGREEMENT.  EACH AWARD OF
RESTRICTED STOCK WILL BE EVIDENCED BY AN AWARD AGREEMENT THAT WILL SPECIFY THE
PERIOD OF RESTRICTION, THE NUMBER OF SHARES GRANTED, AND SUCH OTHER TERMS AND
CONDITIONS AS THE ADMINISTRATOR, IN ITS SOLE DISCRETION, WILL DETERMINE. 
NOTWITHSTANDING THE FOREGOING SENTENCE, DURING ANY FISCAL YEAR NO PARTICIPANT
WILL RECEIVE MORE THAN AN AGGREGATE OF 300,000 SHARES OF RESTRICTED STOCK;
PROVIDED, HOWEVER, THAT IN CONNECTION WITH A PARTICIPANT’S INITIAL SERVICE AS AN
EMPLOYEE, AN EMPLOYEE MAY BE GRANTED AN AGGREGATE OF UP TO AN ADDITIONAL 600,000
SHARES OF RESTRICTED STOCK.  UNLESS THE ADMINISTRATOR DETERMINES OTHERWISE,
SHARES OF RESTRICTED STOCK WILL BE HELD BY THE COMPANY AS ESCROW AGENT UNTIL THE
RESTRICTIONS ON SUCH SHARES HAVE LAPSED.

 

(C)                                  TRANSFERABILITY.  EXCEPT AS PROVIDED IN
THIS SECTION 8, SHARES OF RESTRICTED STOCK MAY NOT BE SOLD, TRANSFERRED,
PLEDGED, ASSIGNED, OR OTHERWISE ALIENATED OR HYPOTHECATED UNTIL THE END OF THE
APPLICABLE PERIOD OF RESTRICTION.

 

(D)                                 OTHER RESTRICTIONS.  THE ADMINISTRATOR, IN
ITS SOLE DISCRETION, MAY IMPOSE SUCH OTHER RESTRICTIONS ON SHARES OF RESTRICTED
STOCK AS IT MAY DEEM ADVISABLE OR APPROPRIATE.

 

(E)                                  REMOVAL OF RESTRICTIONS.  EXCEPT AS
OTHERWISE PROVIDED IN THIS SECTION 8, SHARES OF RESTRICTED STOCK COVERED BY EACH
RESTRICTED STOCK GRANT MADE UNDER THE PLAN WILL BE RELEASED FROM ESCROW AS SOON
AS PRACTICABLE AFTER THE LAST DAY OF THE PERIOD OF RESTRICTION.  THE
ADMINISTRATOR, IN ITS DISCRETION, MAY ACCELERATE THE TIME AT WHICH ANY
RESTRICTIONS WILL LAPSE OR BE REMOVED.

 

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(F)            VOTING RIGHTS.  DURING THE PERIOD OF RESTRICTION, SERVICE
PROVIDERS HOLDING SHARES OF RESTRICTED STOCK GRANTED HEREUNDER MAY EXERCISE FULL
VOTING RIGHTS WITH RESPECT TO THOSE SHARES, UNLESS THE ADMINISTRATOR DETERMINES
OTHERWISE.

 

(G)           DIVIDENDS AND OTHER DISTRIBUTIONS.  DURING THE PERIOD OF
RESTRICTION, SERVICE PROVIDERS HOLDING SHARES OF RESTRICTED STOCK WILL BE
ENTITLED TO RECEIVE ALL DIVIDENDS AND OTHER DISTRIBUTIONS PAID WITH RESPECT TO
SUCH SHARES UNLESS OTHERWISE PROVIDED IN THE AWARD AGREEMENT.  IF ANY SUCH
DIVIDENDS OR DISTRIBUTIONS ARE PAID IN SHARES, THE SHARES WILL BE SUBJECT TO THE
SAME RESTRICTIONS ON TRANSFERABILITY AND FORFEITABILITY AS THE SHARES OF
RESTRICTED STOCK WITH RESPECT TO WHICH THEY WERE PAID.

 

(H)           RETURN OF RESTRICTED STOCK TO COMPANY.  ON THE DATE SET FORTH IN
THE AWARD AGREEMENT, THE RESTRICTED STOCK FOR WHICH RESTRICTIONS HAVE NOT LAPSED
WILL REVERT TO THE COMPANY AND AGAIN WILL BECOME AVAILABLE FOR GRANT UNDER THE
PLAN.

 

9.                                       RESTRICTED STOCK UNITS.

 

(A)           GRANT.  RESTRICTED STOCK UNITS MAY BE GRANTED AT ANY TIME AND FROM
TIME TO TIME AS DETERMINED BY THE ADMINISTRATOR.  EACH RESTRICTED STOCK UNIT
GRANT WILL BE EVIDENCED BY AN AWARD AGREEMENT THAT WILL SPECIFY SUCH OTHER TERMS
AND CONDITIONS AS THE ADMINISTRATOR, IN ITS SOLE DISCRETION, WILL DETERMINE,
INCLUDING ALL TERMS, CONDITIONS, AND RESTRICTIONS RELATED TO THE GRANT, THE
NUMBER OF RESTRICTED STOCK UNITS AND THE FORM OF PAYOUT, WHICH, SUBJECT TO
SECTION 9(D), MAY BE LEFT TO THE DISCRETION OF THE ADMINISTRATOR. 
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SUBSECTION (A), DURING ANY
FISCAL YEAR OF THE COMPANY, NO PARTICIPANT WILL RECEIVE MORE THAN AN AGGREGATE
OF 300,000 RESTRICTED STOCK UNITS; PROVIDED, HOWEVER, THAT IN CONNECTION WITH A
PARTICIPANT’S INITIAL SERVICE AS AN EMPLOYEE, AN EMPLOYEE MAY BE GRANTED AN
AGGREGATE OF UP TO AN ADDITIONAL 600,000 RESTRICTED STOCK UNITS.

 

(B)           VESTING CRITERIA AND OTHER TERMS.  THE ADMINISTRATOR WILL SET
VESTING CRITERIA IN ITS DISCRETION, WHICH, DEPENDING ON THE EXTENT TO WHICH THE
CRITERIA ARE MET, WILL DETERMINE THE NUMBER OF RESTRICTED STOCK UNITS THAT WILL
BE PAID OUT TO THE PARTICIPANT.  AFTER THE GRANT OF RESTRICTED STOCK UNITS, THE
ADMINISTRATOR, IN ITS SOLE DISCRETION, MAY REDUCE OR WAIVE ANY RESTRICTIONS FOR
SUCH RESTRICTED STOCK UNITS.  EACH AWARD OF RESTRICTED STOCK UNITS WILL BE
EVIDENCED BY AN AWARD AGREEMENT THAT WILL SPECIFY THE VESTING CRITERIA, AND SUCH
OTHER TERMS AND CONDITIONS AS THE ADMINISTRATOR, IN ITS SOLE DISCRETION, WILL
DETERMINE.

 

(C)           EARNING RESTRICTED STOCK UNITS.  UPON MEETING THE APPLICABLE
VESTING CRITERIA, THE PARTICIPANT WILL BE ENTITLED TO RECEIVE A PAYOUT AS
SPECIFIED IN THE AWARD AGREEMENT.  NOTWITHSTANDING THE FOREGOING, AT ANY TIME
AFTER THE GRANT OF RESTRICTED STOCK UNITS, THE ADMINISTRATOR, IN ITS SOLE
DISCRETION, MAY REDUCE OR WAIVE ANY VESTING CRITERIA THAT MUST BE MET TO RECEIVE
A PAYOUT.

 

(D)           FORM AND TIMING OF PAYMENT.  PAYMENT OF EARNED RESTRICTED STOCK
UNITS WILL BE MADE AS SOON AS PRACTICABLE AFTER THE DATE(S) SET FORTH IN THE
AWARD AGREEMENT.  THE ADMINISTRATOR, IN ITS SOLE DISCRETION, MAY PAY EARNED
RESTRICTED STOCK UNITS IN CASH, SHARES, OR A COMBINATION THEREOF.  SHARES
REPRESENTED BY RESTRICTED STOCK UNITS THAT ARE FULLY PAID IN CASH AGAIN WILL BE
AVAILABLE FOR GRANT UNDER THE PLAN.

 

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(E)           CANCELLATION.  ON THE DATE SET FORTH IN THE AWARD AGREEMENT, ALL
UNEARNED RESTRICTED STOCK UNITS WILL BE FORFEITED TO THE COMPANY.

 

10.                                 PERFORMANCE UNITS AND PERFORMANCE SHARES.

 

(A)           GRANT OF PERFORMANCE UNITS/SHARES.  PERFORMANCE UNITS AND
PERFORMANCE SHARES MAY BE GRANTED TO SERVICE PROVIDERS AT ANY TIME AND FROM TIME
TO TIME, AS WILL BE DETERMINED BY THE ADMINISTRATOR, IN ITS SOLE DISCRETION. 
THE ADMINISTRATOR WILL HAVE COMPLETE DISCRETION IN DETERMINING THE NUMBER OF
PERFORMANCE UNITS/SHARES GRANTED TO EACH PARTICIPANT PROVIDED THAT DURING ANY
FISCAL YEAR, (A) NO PARTICIPANT WILL RECEIVE PERFORMANCE UNITS HAVING AN INITIAL
VALUE GREATER THAN $2,000,000, AND (B) NO PARTICIPANT WILL RECEIVE MORE THAN
300,000 PERFORMANCE SHARES.  NOTWITHSTANDING THE FOREGOING LIMITATION, IN
CONNECTION WITH A PARTICIPANT’S INITIAL SERVICE AS AN EMPLOYEE, AN EMPLOYEE MAY
BE GRANTED UP TO AN ADDITIONAL 600,000 PERFORMANCE SHARES AND ADDITIONAL
PERFORMANCE UNITS HAVING AN INITIAL VALUE UP TO $2,000,000.

 

(B)           VALUE OF PERFORMANCE UNITS/SHARES.  EACH PERFORMANCE UNIT WILL
HAVE AN INITIAL VALUE THAT IS ESTABLISHED BY THE ADMINISTRATOR ON OR BEFORE THE
DATE OF GRANT.  EACH PERFORMANCE SHARE WILL HAVE AN INITIAL VALUE EQUAL TO THE
FAIR MARKET VALUE OF A SHARE ON THE DATE OF GRANT.

 

(C)           PERFORMANCE OBJECTIVES AND OTHER TERMS.  THE ADMINISTRATOR WILL
SET PERFORMANCE OBJECTIVES OR OTHER VESTING PROVISIONS (INCLUDING, WITHOUT
LIMITATION, CONTINUED STATUS AS A SERVICE PROVIDER) IN ITS DISCRETION WHICH,
DEPENDING ON THE EXTENT TO WHICH THEY ARE MET, WILL DETERMINE THE NUMBER OR
VALUE OF PERFORMANCE UNITS/SHARES THAT WILL BE PAID OUT TO THE PARTICIPANT.  THE
ADMINISTRATOR MAY SET PERFORMANCE OBJECTIVES BASED UPON THE ACHIEVEMENT OF
COMPANY-WIDE, DIVISIONAL, OR INDIVIDUAL GOALS, OR ANY OTHER BASIS DETERMINED BY
THE ADMINISTRATOR IN ITS DISCRETION.  EACH AWARD OF PERFORMANCE UNITS/SHARES
WILL BE EVIDENCED BY AN AWARD AGREEMENT THAT WILL SPECIFY THE PERFORMANCE
PERIOD, AND SUCH OTHER TERMS AND CONDITIONS AS THE ADMINISTRATOR, IN ITS SOLE
DISCRETION, WILL DETERMINE.

 

(D)           EARNING OF PERFORMANCE UNITS/SHARES.  AFTER THE APPLICABLE
PERFORMANCE PERIOD HAS ENDED, THE HOLDER OF PERFORMANCE UNITS/SHARES WILL BE
ENTITLED TO RECEIVE A PAYOUT OF THE NUMBER OF PERFORMANCE UNITS/SHARES EARNED BY
THE PARTICIPANT OVER THE PERFORMANCE PERIOD, TO BE DETERMINED AS A FUNCTION OF
THE EXTENT TO WHICH THE CORRESPONDING PERFORMANCE OBJECTIVES OR OTHER VESTING
PROVISIONS HAVE BEEN ACHIEVED.  AFTER THE GRANT OF A PERFORMANCE UNIT/SHARE, THE
ADMINISTRATOR, IN ITS SOLE DISCRETION, MAY REDUCE OR WAIVE ANY PERFORMANCE
OBJECTIVES OR OTHER VESTING PROVISIONS FOR SUCH PERFORMANCE UNIT/SHARE.

 

(E)           FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES.  PAYMENT
OF EARNED PERFORMANCE UNITS/SHARES WILL BE MADE AS SOON AS PRACTICABLE AFTER THE
EXPIRATION OF THE APPLICABLE PERFORMANCE PERIOD.  THE ADMINISTRATOR, IN ITS SOLE
DISCRETION, MAY PAY EARNED PERFORMANCE UNITS/SHARES IN THE FORM OF CASH, IN
SHARES (WHICH HAVE AN AGGREGATE FAIR MARKET VALUE EQUAL TO THE VALUE OF THE
EARNED PERFORMANCE UNITS/SHARES AT THE CLOSE OF THE APPLICABLE PERFORMANCE
PERIOD) OR IN A COMBINATION THEREOF.

 

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(F)            CANCELLATION OF PERFORMANCE UNITS/SHARES.  ON THE DATE SET FORTH
IN THE AWARD AGREEMENT, ALL UNEARNED OR UNVESTED PERFORMANCE UNITS/SHARES WILL
BE FORFEITED TO THE COMPANY, AND AGAIN WILL BE AVAILABLE FOR GRANT UNDER THE
PLAN.

 

11.                                 PERFORMANCE GOALS.  THE GRANTING AND/OR
VESTING OF AWARDS OF RESTRICTED STOCK, RESTRICTED STOCK UNITS, PERFORMANCE
SHARES AND PERFORMANCE UNITS AND OTHER INCENTIVES UNDER THE PLAN MAY BE MADE
SUBJECT TO THE ATTAINMENT OF PERFORMANCE GOALS RELATING TO ONE OR MORE BUSINESS
CRITERIA WITHIN THE MEANING OF SECTION 162(M) OF THE CODE AND MAY PROVIDE FOR A
TARGETED LEVEL OR LEVELS OF ACHIEVEMENT (“PERFORMANCE GOALS”) INCLUDING ONE OR
MORE OF THE FOLLOWING MEASURES: (A) ANNUAL REVENUE, (B) CASH COLLECTIONS,
(C) CUSTOMER SATISFACTION MBOS, (D) EARNINGS PER SHARE, (E) NET INCOME, (F) NEW
ORDERS, (G) OPERATING PROFIT, (H) PRO FORMA NET INCOME, (I) RETURN ON DESIGNATED
ASSETS, (J) RETURN ON EQUITY, (K) RETURN ON SALES, AND (L) PRODUCT SHIPMENTS. 
ANY PERFORMANCE GOALS MAY BE USED TO MEASURE THE PERFORMANCE OF THE COMPANY AS A
WHOLE OR A BUSINESS UNIT OF THE COMPANY AND MAY BE MEASURED RELATIVE TO A PEER
GROUP OR INDEX.  THE PERFORMANCE GOALS MAY DIFFER FROM PARTICIPANT TO
PARTICIPANT AND FROM AWARD TO AWARD.  ANY CRITERIA USED MAY BE (I) MEASURED IN
ABSOLUTE TERMS, (II) COMPARED TO ANOTHER COMPANY OR COMPANIES, (III) MEASURED
AGAINST THE PERFORMANCE OF THE COMPANY AS A WHOLE OR A SEGMENT OF THE COMPANY
AND/OR (IV) MEASURED ON A PRE-TAX OR POST-TAX BASIS (IF APPLICABLE).  PRIOR TO
THE DETERMINATION DATE, THE ADMINISTRATOR WILL DETERMINE WHETHER ANY SIGNIFICANT
ELEMENT(S) WILL BE INCLUDED IN OR EXCLUDED FROM THE CALCULATION OF ANY
PERFORMANCE GOAL WITH RESPECT TO ANY PARTICIPANT.

 

12.                                 LEAVES OF ABSENCE/TRANSFER BETWEEN
LOCATIONS.  UNLESS THE ADMINISTRATOR PROVIDES OTHERWISE, VESTING OF AWARDS
GRANTED HEREUNDER WILL BE SUSPENDED DURING ANY UNPAID LEAVE OF ABSENCE.  A
SERVICE PROVIDER WILL NOT CEASE TO BE AN EMPLOYEE IN THE CASE OF (I) ANY LEAVE
OF ABSENCE APPROVED BY THE COMPANY OR (II) TRANSFERS BETWEEN LOCATIONS OF THE
COMPANY OR BETWEEN THE COMPANY AND ITS AFFILIATES.  FOR PURPOSES OF INCENTIVE
STOCK OPTIONS, NO SUCH LEAVE MAY EXCEED NINETY (90) DAYS, UNLESS REEMPLOYMENT
UPON EXPIRATION OF SUCH LEAVE IS GUARANTEED BY STATUTE OR CONTRACT.  IF
REEMPLOYMENT UPON EXPIRATION OF A LEAVE OF ABSENCE APPROVED BY THE COMPANY IS
NOT SO GUARANTEED, THEN THREE (3) MONTHS FOLLOWING THE NINETY-FIRST (91ST) DAY
OF SUCH LEAVE ANY INCENTIVE STOCK OPTION HELD BY THE PARTICIPANT WILL CEASE TO
BE TREATED AS AN INCENTIVE STOCK OPTION AND WILL BE TREATED FOR TAX PURPOSES AS
A NONSTATUTORY STOCK OPTION.

 

13.                                 TRANSFERABILITY OF AWARDS.  UNLESS
DETERMINED OTHERWISE BY THE ADMINISTRATOR, AN AWARD MAY NOT BE SOLD, PLEDGED,
ASSIGNED, HYPOTHECATED, TRANSFERRED, OR DISPOSED OF IN ANY MANNER OTHER THAN BY
WILL OR BY THE LAWS OF DESCENT OR DISTRIBUTION AND MAY BE EXERCISED, DURING THE
LIFETIME OF THE PARTICIPANT, ONLY BY THE PARTICIPANT.  WITH THE APPROVAL OF THE
ADMINISTRATOR, A PARTICIPANT MAY, IN A MANNER SPECIFIED BY THE ADMINISTRATOR,
(A) TRANSFER AN AWARD TO A PARTICIPANT’S SPOUSE OR FORMER SPOUSE PURSUANT TO A
COURT-APPROVED DOMESTIC RELATIONS ORDER WHICH RELATES TO THE PROVISION OF CHILD
SUPPORT, ALIMONY PAYMENTS OR MARITAL PROPERTY RIGHTS, AND (B) TRANSFER AN OPTION
BY BONA FIDE GIFT AND NOT FOR ANY CONSIDERATION, TO (I) A MEMBER OR MEMBERS OF
THE PARTICIPANT’S IMMEDIATE FAMILY, (II) A TRUST ESTABLISHED FOR THE EXCLUSIVE
BENEFIT OF THE PARTICIPANT AND/OR MEMBER(S) OF THE PARTICIPANT’S IMMEDIATE
FAMILY, (III) A PARTNERSHIP, LIMITED LIABILITY COMPANY OF OTHER ENTITY WHOSE
ONLY PARTNERS OR MEMBERS ARE THE PARTICIPANT AND/OR MEMBER(S) OF THE
PARTICIPANT’S IMMEDIATE FAMILY, OR (IV) A FOUNDATION IN WHICH THE PARTICIPANT
AND/OR MEMBER(S) OF THE PARTICIPANT’S IMMEDIATE FAMILY CONTROL THE MANAGEMENT OF
THE FOUNDATION’S ASSETS.  FOR PURPOSES OF THIS SECTION 13, “IMMEDIATE FAMILY”
SHALL MEAN THE PARTICIPANT’S SPOUSE, FORMER SPOUSE, CHILDREN, GRANDCHILDREN,
PARENTS, GRANDPARENTS, SIBLINGS, NIECES, NEPHEWS, PARENTS-IN-LAW, SONS-IN-LAW,
DAUGHTERS-IN-LAW,

 

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BROTHERS-IN-LAW, SISTERS-IN-LAW, INCLUDING ADOPTIVE OR STEP RELATIONSHIPS AND
ANY PERSON SHARING THE PARTICIPANT’S HOUSEHOLD (OTHER THAN AS A TENANT OR
EMPLOYEE).

 

14.                                 ADJUSTMENTS; DISSOLUTION OR LIQUIDATION;
MERGER OR CHANGE IN CONTROL.

 

(A)           ADJUSTMENTS.  IN THE EVENT THAT ANY DIVIDEND OR OTHER DISTRIBUTION
(WHETHER IN THE FORM OF CASH, SHARES, OTHER SECURITIES, OR OTHER PROPERTY),
RECAPITALIZATION, STOCK SPLIT, REVERSE STOCK SPLIT, REORGANIZATION, MERGER,
CONSOLIDATION, SPLIT-UP, SPIN-OFF, COMBINATION, REPURCHASE, OR EXCHANGE OF
SHARES OR OTHER SECURITIES OF THE COMPANY, OR OTHER CHANGE IN THE CORPORATE
STRUCTURE OF THE COMPANY AFFECTING THE SHARES OCCURS, THE ADMINISTRATOR, IN
ORDER TO PREVENT DIMINUTION OR ENLARGEMENT OF THE BENEFITS OR POTENTIAL BENEFITS
INTENDED TO BE MADE AVAILABLE UNDER THE PLAN, SHALL ADJUST THE NUMBER AND CLASS
OF SHARES THAT MAY BE DELIVERED UNDER THE PLAN AND/OR THE NUMBER, CLASS, AND
PRICE OF SHARES COVERED BY EACH OUTSTANDING AWARD, AND THE NUMERICAL SHARE
LIMITS SET FORTH IN SECTIONS 3, 6, 7, 8, 9 AND 10.

 

(B)           DISSOLUTION OR LIQUIDATION.  IN THE EVENT OF THE PROPOSED
DISSOLUTION OR LIQUIDATION OF THE COMPANY, THE ADMINISTRATOR WILL NOTIFY EACH
PARTICIPANT AS SOON AS PRACTICABLE PRIOR TO THE EFFECTIVE DATE OF SUCH PROPOSED
TRANSACTION.  TO THE EXTENT IT HAS NOT BEEN PREVIOUSLY EXERCISED, AN AWARD WILL
TERMINATE IMMEDIATELY PRIOR TO THE CONSUMMATION OF SUCH PROPOSED ACTION.

 

(C)           CHANGE IN CONTROL.  IN THE EVENT OF A CHANGE IN CONTROL, EACH
OUTSTANDING AWARD WILL BE ASSUMED OR AN EQUIVALENT OPTION OR RIGHT SUBSTITUTED
BY THE SUCCESSOR CORPORATION OR A PARENT OR SUBSIDIARY OF THE SUCCESSOR
CORPORATION (THE “SUCCESSOR CORPORATION”).  IN THE EVENT THAT THE SUCCESSOR
CORPORATION REFUSES TO ASSUME OR SUBSTITUTE FOR THE AWARD, THE PARTICIPANT WILL
FULLY VEST IN AND HAVE THE RIGHT TO EXERCISE ALL OF HIS OR HER OUTSTANDING
OPTIONS AND STOCK APPRECIATION RIGHTS, INCLUDING SHARES AS TO WHICH SUCH AWARDS
WOULD NOT OTHERWISE BE VESTED OR EXERCISABLE, ALL RESTRICTIONS ON RESTRICTED
STOCK WILL LAPSE, AND, WITH RESPECT TO RESTRICTED STOCK UNITS, PERFORMANCE
SHARES AND PERFORMANCE UNITS, ALL PERFORMANCE GOALS OR OTHER VESTING CRITERIA
WILL BE DEEMED ACHIEVED AT TARGET LEVELS AND ALL OTHER TERMS AND CONDITIONS
MET.  IN ADDITION, IF THE SUCCESSOR CORPORATION REFUSES TO ASSUME OR SUBSTITUTE
AN OPTION OR STOCK APPRECIATION RIGHT IN THE EVENT OF A CHANGE IN CONTROL, THE
ADMINISTRATOR WILL NOTIFY THE PARTICIPANT IN WRITING OR ELECTRONICALLY THAT THE
OPTION OR STOCK APPRECIATION RIGHT WILL BE FULLY VESTED AND EXERCISABLE FOR A
PERIOD OF TIME DETERMINED BY THE ADMINISTRATOR IN ITS SOLE DISCRETION, AND THE
OPTION OR STOCK APPRECIATION RIGHT WILL TERMINATE UPON THE EXPIRATION OF SUCH
PERIOD.

 

For the purposes of this subsection (c), an Award will be considered assumed if,
following the Change in Control, the Award confers the right to purchase or
receive, for each Share subject to the Award immediately prior to the Change in
Control, the consideration (whether stock, cash, or other securities or
property) or, in the case of a Stock Appreciation Right upon the exercise of
which the Administrator determines to pay cash or a Performance Share or
Performance Unit which the Administrator can determine to pay in cash, the fair
market value of the consideration received in the merger or Change in Control by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the Change in Control
is not solely common stock of the Successor Corporation, the Administrator may,
with the consent of the Successor Corporation, provide for the consideration to
be received upon the exercise of an Option or Stock Appreciation Right or upon
the

 

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payout of a Restricted Stock Unit, Performance Share or Performance Unit, for
each Share subject to such Award (or in the case of an Award settled in cash,
the number of implied shares determined by dividing the value of the Award by
the per share consideration received by holders of Common Stock in the Change in
Control), to be solely common stock of the Successor Corporation equal in fair
market value to the per share consideration received by holders of Common Stock
in the Change in Control.

 

Notwithstanding anything in this Section 14(c) to the contrary, an Award that
vests, is earned or paid-out upon the satisfaction of one or more Performance
Goals will not be considered assumed if the Company or its successor modifies
any of such Performance Goals without the Participant’s consent; provided,
however, a modification to such Performance Goals only to reflect the Successor
Corporation’s post-Change in Control corporate structure will not be deemed to
invalidate an otherwise valid Award assumption.

 

15.                                 TAX WITHHOLDING

 

(A)           WITHHOLDING REQUIREMENTS.  PRIOR TO THE DELIVERY OF ANY SHARES OR
CASH PURSUANT TO AN AWARD (OR EXERCISE THEREOF), THE COMPANY WILL HAVE THE POWER
AND THE RIGHT TO DEDUCT OR WITHHOLD, OR REQUIRE A PARTICIPANT TO REMIT TO THE
COMPANY, AN AMOUNT SUFFICIENT TO SATISFY FEDERAL, STATE, LOCAL, FOREIGN OR OTHER
TAXES REQUIRED TO BE WITHHELD WITH RESPECT TO SUCH AWARD (OR EXERCISE THEREOF).

 

(B)           WITHHOLDING ARRANGEMENTS.  THE ADMINISTRATOR, IN ITS SOLE
DISCRETION AND PURSUANT TO SUCH PROCEDURES AS IT MAY SPECIFY FROM TIME TO TIME,
MAY PERMIT A PARTICIPANT TO SATISFY SUCH TAX WITHHOLDING OBLIGATION, IN WHOLE OR
IN PART BY (WITHOUT LIMITATION) (A) PAYING CASH, (B) ELECTING TO HAVE THE
COMPANY WITHHOLD OTHERWISE DELIVERABLE CASH OR SHARES HAVING A FAIR MARKET VALUE
EQUAL TO THE MINIMUM AMOUNT REQUIRED TO BE WITHHELD, (C) DELIVERING TO THE
COMPANY ALREADY-OWNED SHARES HAVING A FAIR MARKET VALUE EQUAL TO THE AMOUNT
REQUIRED TO BE WITHHELD, OR (D) SELLING A SUFFICIENT NUMBER OF SHARES OTHERWISE
DELIVERABLE TO THE PARTICIPANT THROUGH SUCH MEANS AS THE ADMINISTRATOR MAY
DETERMINE IN ITS SOLE DISCRETION (WHETHER THROUGH A BROKER OR OTHERWISE) EQUAL
TO THE AMOUNT REQUIRED TO BE WITHHELD.  THE AMOUNT OF THE WITHHOLDING
REQUIREMENT WILL BE DEEMED TO INCLUDE ANY AMOUNT WHICH THE ADMINISTRATOR AGREES
MAY BE WITHHELD AT THE TIME THE ELECTION IS MADE, NOT TO EXCEED THE AMOUNT
DETERMINED BY USING THE MAXIMUM FEDERAL, STATE OR LOCAL MARGINAL INCOME TAX
RATES APPLICABLE TO THE PARTICIPANT WITH RESPECT TO THE AWARD ON THE DATE THAT
THE AMOUNT OF TAX TO BE WITHHELD IS TO BE DETERMINED.  THE FAIR MARKET VALUE OF
THE SHARES TO BE WITHHELD OR DELIVERED WILL BE DETERMINED AS OF THE DATE THAT
THE TAXES ARE REQUIRED TO BE WITHHELD.

 

16.                                 NO EFFECT ON EMPLOYMENT OR SERVICE.  NEITHER
THE PLAN NOR ANY AWARD WILL CONFER UPON A PARTICIPANT ANY RIGHT WITH RESPECT TO
CONTINUING THE PARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER WITH THE
COMPANY, NOR WILL THEY INTERFERE IN ANY WAY WITH THE PARTICIPANT’S RIGHT OR THE
COMPANY’S RIGHT TO TERMINATE SUCH RELATIONSHIP AT ANY TIME, WITH OR WITHOUT
CAUSE, TO THE EXTENT PERMITTED BY APPLICABLE LAWS.

 

17.                                 DATE OF GRANT.  THE DATE OF GRANT OF AN
AWARD WILL BE, FOR ALL PURPOSES, THE DATE ON WHICH THE ADMINISTRATOR MAKES THE
DETERMINATION GRANTING SUCH AWARD, OR SUCH OTHER LATER DATE AS IS DETERMINED BY
THE ADMINISTRATOR.  NOTICE OF THE DETERMINATION WILL BE PROVIDED TO EACH
PARTICIPANT WITHIN A REASONABLE TIME AFTER THE DATE OF SUCH GRANT.

 

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18.                                 TERM OF PLAN.  SUBJECT TO SECTION 22 OF THE
PLAN, THE PLAN WILL BECOME EFFECTIVE UPON ITS ADOPTION BY THE BOARD.  IT WILL
CONTINUE IN EFFECT FOR A TERM OF TEN (10) YEARS UNLESS TERMINATED EARLIER UNDER
SECTION 19 OF THE PLAN.

 

19.                                 AMENDMENT AND TERMINATION OF THE PLAN.

 

(A)           AMENDMENT AND TERMINATION.  THE ADMINISTRATOR MAY AT ANY TIME
AMEND, ALTER, SUSPEND OR TERMINATE THE PLAN.

 

(B)           STOCKHOLDER APPROVAL.  THE COMPANY WILL OBTAIN STOCKHOLDER
APPROVAL OF ANY PLAN AMENDMENT TO THE EXTENT NECESSARY AND DESIRABLE TO COMPLY
WITH APPLICABLE LAWS.

 

(C)           EFFECT OF AMENDMENT OR TERMINATION.  NO AMENDMENT, ALTERATION,
SUSPENSION OR TERMINATION OF THE PLAN WILL IMPAIR THE RIGHTS OF ANY PARTICIPANT,
UNLESS MUTUALLY AGREED OTHERWISE BETWEEN THE PARTICIPANT AND THE ADMINISTRATOR,
WHICH AGREEMENT MUST BE IN WRITING AND SIGNED BY THE PARTICIPANT AND THE
COMPANY.  TERMINATION OF THE PLAN WILL NOT AFFECT THE ADMINISTRATOR’S ABILITY TO
EXERCISE THE POWERS GRANTED TO IT HEREUNDER WITH RESPECT TO AWARDS GRANTED UNDER
THE PLAN PRIOR TO THE DATE OF SUCH TERMINATION.

 

20.                                 CONDITIONS UPON ISSUANCE OF SHARES.

 

(A)           LEGAL COMPLIANCE.  SHARES WILL NOT BE ISSUED PURSUANT TO THE
EXERCISE OF AN AWARD UNLESS THE EXERCISE OF SUCH AWARD AND THE ISSUANCE AND
DELIVERY OF SUCH SHARES WILL COMPLY WITH APPLICABLE LAWS AND WILL BE FURTHER
SUBJECT TO THE APPROVAL OF COUNSEL FOR THE COMPANY WITH RESPECT TO SUCH
COMPLIANCE.

 

(B)           INVESTMENT REPRESENTATIONS.  AS A CONDITION TO THE EXERCISE OF AN
AWARD, THE COMPANY MAY REQUIRE THE PERSON EXERCISING SUCH AWARD TO REPRESENT AND
WARRANT AT THE TIME OF ANY SUCH EXERCISE THAT THE SHARES ARE BEING PURCHASED
ONLY FOR INVESTMENT AND WITHOUT ANY PRESENT INTENTION TO SELL OR DISTRIBUTE SUCH
SHARES IF, IN THE OPINION OF COUNSEL FOR THE COMPANY, SUCH A REPRESENTATION IS
REQUIRED.

 

21.                                 INABILITY TO OBTAIN AUTHORITY.  THE
INABILITY OF THE COMPANY TO OBTAIN AUTHORITY FROM ANY REGULATORY BODY HAVING
JURISDICTION, WHICH AUTHORITY IS DEEMED BY THE COMPANY’S COUNSEL TO BE NECESSARY
TO THE LAWFUL ISSUANCE AND SALE OF ANY SHARES HEREUNDER, WILL RELIEVE THE
COMPANY OF ANY LIABILITY IN RESPECT OF THE FAILURE TO ISSUE OR SELL SUCH SHARES
AS TO WHICH SUCH REQUISITE AUTHORITY WILL NOT HAVE BEEN OBTAINED.

 

22.                                 STOCKHOLDER APPROVAL.  THE PLAN WILL BE
SUBJECT TO APPROVAL BY THE STOCKHOLDERS OF THE COMPANY WITHIN TWELVE (12) MONTHS
AFTER THE DATE THE PLAN IS ADOPTED.  SUCH STOCKHOLDER APPROVAL WILL BE OBTAINED
IN THE MANNER AND TO THE DEGREE REQUIRED UNDER APPLICABLE LAWS.

 

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