Exhibit 10.1

STANDARD PACIFIC CORP.

2008 EQUITY INCENTIVE PLAN

(as amended August 18, 2008)

1. Purpose

The purpose of the Standard Pacific Corp. 2008 Equity Incentive Plan (the
“Plan”) is to enable Standard Pacific Corp., a Delaware corporation and its
Subsidiaries (collectively, the “Company”) to attract, retain and motivate is
non-employee directors, officers, employees and service providers, and to
further align the interests of such persons with those of Company stockholders
by providing for or increasing the proprietary interest of such persons in the
Company. The Plan provides for the grant of Incentive and Nonqualified Stock
Options, Stock Appreciation Rights, Restricted Stock and Restricted Stock Units,
any of which may be performance-based, and for Incentive Bonuses, which may be
paid in cash or stock or a combination thereof, as determined by the
Administrator.

2. Definitions

As used in the Plan, the following terms shall have the meanings set forth
below:

(a) “Administrator” means the Administrator of the Plan in accordance with
Section 18.

(b) “Award” means an Incentive Stock Option, Nonqualified Stock Option, Stock
Appreciation Right, Restricted Stock, Restricted Stock Unit or Incentive Bonus
granted to a Participant pursuant to the provisions of the Plan, any of which
the Administrator may structure to qualify in whole or in part as a Performance
Award.

(c) “Award Agreement” means a written agreement or other instrument as may be
approved from time to time by the Administrator implementing the grant of each
Award. An Agreement may be in the form of an agreement to be executed by both
the Participant and the Company (or an authorized representative of the
Company) or certificates, notices or similar instruments as approved by the
Administrator.

(d) “Board” means the board of directors of the Company.

(e) “Change in Control” shall mean:

(i) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) or group of persons acting in concert (other than the Company or
any subsidiary thereof or any employee benefit plan of the Company or any
subsidiary thereof, or any underwriter in connection with a firm commitment
public offering of the Company’s capital stock) becomes the “beneficial owner”
(as such term is defined in Rule 13d-3 of the Exchange Act except that a person
shall also be deemed the beneficial owner of all securities which such person
may have a right to acquire, whether or not such right is presently
exercisable), directly or indirectly, of securities of the Company representing
thirty percent (30%) or more of the combined voting power of the Company’s then
outstanding securities ordinarily having the right to vote in the election of
directors (“voting stock”);

(ii) during any period subsequent to the effective date of this Plan, a majority
of the members of the Board shall not for any reason be the individuals who at
the beginning of such period constitute the Board or those persons who are
nominated as new directors by a majority of the current directors or their
successors who have been so nominated;

(iii) there shall be consummated any merger, consolidation (including a series
of mergers or consolidations), or any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company (meaning assets representing
fifty percent (50%) or more of the net tangible assets of the Company or
generating fifty percent (50%) or more of the Company’s operating cash flow, in
each case measured over the Company’s last four full fiscal quarters), or any
other similar business combination or transaction, but excluding any business
combination or transaction which would result in the voting stock of the Company
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting

 

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stock of the surviving entity) more than seventy percent (70%) of the combined
voting power of the voting stock of the Company (or such surviving entity)
outstanding immediately after giving effect to such business combination or
transaction;

(iv) the adoption of any plan or proposal for the liquidation or dissolution of
the Company;

(v) the occurrence of any other event that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A of the Exchange Act as
in effect on the date hereof; or

(vi) any other event specified by the Administrator, regardless of whether at
the time an Award is granted or thereafter.

(f) “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and the rulings and regulations issues thereunder.

(g) “Fair Market Value” means, as of any date, the closing price per share at
which the Shares are sold in the regular way on the New York Stock Exchange or,
if no Shares are traded on the New York Stock Exchange on the date in question,
then for the next preceding date for which Shares are traded on the New York
Stock Exchange or, if the Shares are at any time no longer traded on the New
York Stock Exchange, the closing price per share at which the Shares are sold on
such other exchange, listing, quotation or similar service, or, if no such
closing price is available, such other method, consistent with Section 409A of
the Code, as the Administrator may determine.

(h) “Incentive Bonus” means a bonus opportunity awarded under Section 9 pursuant
to which a Participant may become entitled to receive an amount based on
satisfaction of such performance criteria as are specified in the Award
Agreement.

(i) “Incentive Stock Option” means a stock option that is intended to qualify as
an “incentive stock option” within the meaning of Section 422 of the Code.

(j) “Nonemployee Director” means each person who is, or is elected to be, a
member of the Board and who is not an employee of the Company or any Subsidiary.

(k) “Nonqualified Stock Option” means a stock option that is not intended to
qualify as an “incentive stock option” within the meaning of Section 422 of the
Code.

(l) “Option” means an Incentive Stock Option and/or a Nonqualified Stock Option
granted pursuant to Section 6 of the Plan.

(m) “Participant” means any individual described in Section 3 to whom Awards
have been granted from time to time by the Administrator and any authorized
transferee of such individual.

(n) “Performance Award” means an Award, the grant, issuance, retention, vesting
or settlement of which is subject to satisfaction of one or more Qualifying
Performance Criteria established pursuant to Section 13.

(o) “Prior Plans” means the Company’s 2000 Stock Incentive Plan, 2001
Non-Executive Officer Stock Incentive Plan and 2005 Stock Incentive Plan.

(p) “Qualifying Performance Criteria” has the meaning set forth in
Section 13(b).

(q) “Restricted Stock” means Shares granted pursuant to Section 8 of the Plan.

(r) “Restricted Stock Unit” means an Award granted to a Participant pursuant to
Section 8 pursuant to which Shares or cash in lieu thereof may be issued in the
future.

(s) “Share” means a share of the Company’s common stock, par value $.01, subject
to adjustment as provided in Section 12.

(t) “Stock Appreciation Right” means a right granted pursuant to Section 7 of
the Plan that entitles the Participant to receive, in cash or Shares or a
combination thereof, as determined by the Administrator, value

 

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equal to or otherwise based on the excess of (i) the market price of a specified
number of Shares at the time of exercise over (ii) the exercise price of the
right, as established by the Administrator on the date of grant.

(u) “Subsidiary” means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company where each of the corporations
in the unbroken chain other than the last corporation owns stock possessing at
least 50 percent or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain, and if specifically
determined by the Administrator in the context other than with respect to
Incentive Stock Options, may include an entity in which the Company has a
significant ownership interest or that is directly or indirectly controlled by
the Company.

(v) “Termination of Employment” means ceasing to serve as a full-time employee
of the Company and its Subsidiaries or, with respect to a Nonemployee Director
or other service provider, ceasing to serve as such for the Company, except that
with respect to all or any Awards held by a Participant (i) the Administrator
may determine, subject to Section 6(d), that an approved leave of absence or
approved employment on a less than full-time basis is not considered a
Termination of Employment, (ii) the Administrator may determine that a
transition of employment to service with a partnership, joint venture or
corporation not meeting the requirements of a Subsidiary in which the Company or
a Subsidiary is a party is not considered a Termination of Employment,
(iii) service as a member of the Board or other service provider shall
constitute continued employment with respect to Awards granted to a Participant
while he or she served as an employee and (iv) service as an employee of the
Company or a Subsidiary shall constitute continued employment with respect to
Awards granted to a Participant while he or she served as a member of the Board
or other service provider. The Administrator shall determine whether any
corporate transaction, such as a sale or spin-off of a division or subsidiary
that employs a Participant, shall be deemed to result in a Termination of
Employment with the Company and its Subsidiaries for purposes of any affected
Participant’s Options, and the Administrator’s decision shall be final and
binding.

(w) “Total and Permanent Disablement” has the meaning specified by the
Administrator in the terms of an Award Agreement or, in the absence of any such
term or in the case of an Option intending to qualify as an Incentive Stock
Option, the inability to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months. The determination of the
Administrator as to an individual’s Total and Permanent Disablement shall be
conclusive on all parties.

3. Eligibility

Any person who is a current or prospective officer or employee (within the
meaning of Section 303A.08 of the New York Stock Exchange Listed Company Manual)
of the Company or of any Subsidiary shall be eligible for selection by the
Administrator for the grant of Awards hereunder. In addition, Nonemployee
Directors and any other service providers who have been retained to provide
consulting, advisory or other services to the Company or to any Subsidiary shall
be eligible for the grant of Awards hereunder as determined by the
Administrator. Options intending to qualify as Incentive Stock Options may only
be granted to employees of the Company or any Subsidiary within the meaning of
the Code, as selected by the Administrator. For purposes of this Plan, the
Chairman of the Board’s status as an employee shall be determined by the
Administrator.

4. Effective Date and Termination of Plan

This Plan was adopted by the Board as of March 20, 2008, and it will become
effective (the “Effective Date”) when it is approved by the Company’s
stockholders. All Awards granted under this Plan are subject to, and may not be
exercised before, the approval of this Plan by the affirmative vote of the
holders of a majority of the outstanding Shares present, or represented by
proxy, and entitled to vote, at a meeting of the Company’s stockholders or by
written consent in accordance with the laws of the State of Delaware; provided
that if such

 

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approval by the stockholders of the Company does not occur within one year of
the date that this Plan was adopted by the Board, all Awards previously granted
under this Plan shall be void. The Plan shall remain available for the grant of
Awards until the tenth (10th) anniversary of the Effective Date. Notwithstanding
the foregoing, the Plan may be terminated at such earlier time as the Board may
determine. Termination of the Plan will not affect the rights and obligations of
the Participants and the Company arising under Awards theretofore granted and
then in effect.

5. Shares Subject to the Plan and to Awards

(a) Aggregate Limits. The aggregate number of Shares issuable pursuant to all
Awards shall not exceed 21,940,000, plus any Shares subject to outstanding
awards under the Prior Plans as of June 30, 2008 that on or after such date
cease for any reason to be subject to such awards (other than by reason of
exercise or settlement of the awards to the extent they are exercised for or
settled in vested and nonforfeitable shares); provided that any Shares granted
as Options or Stock Appreciation Rights shall be counted against this limit on a
one-for-one basis and any Shares granted as Awards other than Options or Stock
Appreciation Rights shall be counted against this limit as one and one-half
(1.5) Shares for every one (1) Share subject to such Award. The aggregate number
of Shares available for grant under this Plan and the number of Shares subject
to outstanding Awards shall be subject to adjustment as provided in Section 12.
The Shares issued pursuant to Awards granted under this Plan may be shares that
are authorized and unissued or shares that were reacquired by the Company,
including shares purchased in the open market.

(b) Issuance of Shares. For purposes of Section 5(a), the aggregate number of
Shares issued under this Plan at any time shall equal only the number of Shares
actually issued upon exercise or settlement of an Award. Notwithstanding the
foregoing, Shares subject to an Award under the Plan may not again be made
available for issuance under the Plan if such Shares are: (i) Shares that were
subject to a stock-settled Stock Appreciation Right and were not issued upon the
net settlement or net exercise of such Stock Appreciation Right, (ii) Shares
used to pay the exercise price of an Option, (iii) Shares delivered to or
withheld by the Company to pay the withholding taxes related an Award, or
(iv) Shares repurchased on the open market with the proceeds of an Option
exercise. Shares subject to Awards that have been canceled, expired, forfeited
or otherwise not issued under an Award and Shares subject to Awards settled in
cash shall not count as Shares issued under this Plan. Any Shares that again
become available for grant pursuant to Section 5(a) or this Section 5(b) shall
be added back as one (1) Share if such shares were subject to Options or Stock
Appreciation Rights granted under the Plan or options or stock appreciation
rights granted under a Prior Plan, and as one and one-half (1.5) Shares if such
shares were subject to Awards other than Options or Stock Appreciation Rights
granted under the Plan or subject to awards other than options or stock
appreciation rights granted under a Prior Plan.

(c) Tax Code Limits. The aggregate number of Shares subject to Awards granted
under this Plan during any calendar year to any one Participant shall not exceed
3,000,000, which number shall be calculated and adjusted pursuant to Section 12
only to the extent that such calculation or adjustment will not affect the
status of any Award intended to qualify as “performance-based compensation”
under Section 162(m) of the Code but which number shall not count any tandem
SARs (as defined in Section 7). The aggregate number of Shares that may be
issued pursuant to the exercise of Incentive Stock Options granted under this
Plan shall not exceed 28,000,000, which number shall be calculated and adjusted
pursuant to Section 12 only to the extent that such calculation or adjustment
will not affect the status of any option intended to qualify as an Incentive
Stock Option under Section 422 of the Code. The maximum cash amount payable
pursuant to that portion of an Incentive Bonus granted in any calendar year to
any Participant under this Plan that is intended to satisfy the requirements for
“performance-based compensation” under Section 162(m) of the Code shall not
exceed $10,000,000.

(d) Director Awards. The aggregate number of Shares subject to Options and Stock
Appreciation Rights granted under this Plan during any calendar year to any one
Nonemployee Director shall not exceed 250,000, and the aggregate number of
Shares issued or issuable under all Awards granted under this Plan other than
Options or

 

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Stock Appreciation Rights during any calendar year to any one Nonemployee
Director shall not exceed 250,000; provided, however, that in the calendar year
in which a Nonemployee Director first joins the Board of Directors or is first
designated as Chairman of the Board of Directors or Lead Director, the maximum
number of shares subject to Awards granted to the Participant may be up to two
hundred percent (200%) of the number of shares set forth in the foregoing limits
and the foregoing limits shall not count any tandem SARs (as defined in
Section 7).

6. Options

(a) Option Awards. Options may be granted at any time and from time to time
prior to the termination of the Plan to Participants as determined by the
Administrator. No Participant shall have any rights as a stockholder with
respect to any Shares subject to Option hereunder until said Shares have been
issued. Each Option shall be evidenced by an Award Agreement. Options granted
pursuant to the Plan need not be identical but each Option must contain and be
subject to the terms and conditions set forth below.

(b) Price. The Administrator will establish the exercise price per Share under
each Option, which, in no event will be less than the Fair Market Value of the
Shares on the date of grant; provided, however, that the exercise price per
Share with respect to an Option that is granted in connection with a merger or
other acquisition as a substitute or replacement award for options held by
optionees of the acquired entity may be less than 100% of the market price of
the Shares on the date such Option is granted if such exercise price is based on
a formula set forth in the terms of the options held by such optionees or in the
terms of the agreement providing for such merger or other acquisition. The
exercise price of any Option may be paid in Shares, cash or a combination
thereof, as determined by the Administrator, including an irrevocable commitment
by a broker to pay over such amount from a sale of the Shares issuable under an
Option, the delivery of previously owned Shares and withholding of Shares
otherwise deliverable upon exercise.

(c) No Repricing without Stockholder Approval. Other than in connection with a
change in the Company’s capitalization (as described in Section 12) the exercise
price of an Option may not be reduced without stockholder approval (including
canceling previously awarded Options in exchange for other Awards or Options or
Stock Appreciation Rights with an exercise price that is less than the exercise
price of the original Award).

(d) Provisions Applicable to Options. The date on which Options become
exercisable shall be determined at the sole discretion of the Administrator and
set forth in an Award Agreement. Unless provided otherwise in the applicable
Award Agreement, to the extent that the Administrator determines that an
approved leave of absence or employment on a less than full-time basis is not a
Termination of Employment, the vesting period and/or exercisability of an Option
shall be adjusted by the Administrator during or to reflect the effects of any
period during which the Participant is on an approved leave of absence or is
employed on a less than full-time basis.

(e) Term of Options and Termination of Employment: The Administrator shall
establish the term of each Option, which in no case shall exceed a period of
seven (7) years from the date of grant. Unless an Option earlier expires upon
the expiration date established pursuant to the foregoing sentence, upon the
termination of the Participant’s employment, his or her rights to exercise an
Option then held shall be only as follows, unless the Administrator specifies
otherwise:

(1) Death. Upon the death of a Participant while in the employ of the Company or
any Subsidiary or while serving as a member of the Board, all of the
Participant’s Options then held shall be exercisable by his or her estate, heir
or beneficiary at any time during the one (1) year period commencing on the date
of death. Any and all of the deceased Participant’s Options that are not
exercised during the one (1) year commencing on the date of death shall
terminate as of the end of such one (1) year period.

If a Participant should die within thirty (30) days of his or her Termination of
Employment with the Company and its Subsidiaries, an Option shall be exercisable
by his or her estate, heir or beneficiary at any

 

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time during the one (1) year period commencing on the date of termination, but
only to the extent of the number of Shares as to which such Option was
exercisable as of the date of such termination. Any and all of the deceased
Participant’s Options that are not exercised during the one (1) year period
commencing on the date of termination shall terminate as of the end of such one
(1) year period. A Participant’s estate shall mean his or her legal
representative or other person who so acquires the right to exercise the Option
by bequest or inheritance or by reason of the death of the Participant.

(2) Total and Permanent Disablement. Upon Termination of Employment as a result
of the Total and Permanent Disablement of any Participant, all of the
Participant’s Options then held shall be exercisable during the one (1) year
period commencing on the date of termination. Any and all Options that are not
exercised during the one (1) year period commencing on the date of termination
shall terminate as of the end of such one (1) year period.

(3) Other Reasons. Upon the date of a termination of a Participant’s employment
for any reason other than those stated above in Sections 6(e)(1) and (e)(2) or
as described in Section 15, (A) to the extent that any Option is not exercisable
as of such termination date, such portion of the Option shall remain
unexercisable and shall terminate as of such date, and (B) to the extent that
any Option is exercisable as of such termination date, such portion of the
Option shall expire on the earlier of (i) ninety (90) days following such date
and (ii) the expiration date of such Option.

(f) Incentive Stock Options. Notwithstanding anything to the contrary in this
Section 6, in the case of the grant of an Option intending to qualify as an
Incentive Stock Option: (i) if the Participant owns stock possessing more than
10 percent of the combined voting power of all classes of stock of the Company
(a “10% Shareholder”), the exercise price of such Option must be at least 110
percent of the Fair Market Value of the Shares on the date of grant and the
Option must expire within a period of not more than five (5) years from the date
of grant, and (ii) Termination of Employment will occur when the person to whom
an Award was granted ceases to be an employee (as determined in accordance with
Section 3401(c) of the Code and the regulations promulgated thereunder) of the
Company and its Subsidiaries. Notwithstanding anything in this Section 6 to the
contrary, options designated as Incentive Stock Options shall not be eligible
for treatment under the Code as Incentive Stock Options (and will be deemed to
be Nonqualified Stock Options) to the extent that either (a) the aggregate Fair
Market Value of Shares (determined as of the time of grant) with respect to
which such Options are exercisable for the first time by the Participant during
any calendar year (under all plans of the Company and any Subsidiary) exceeds
$100,000, taking Options into account in the order in which they were granted,
or (b) such Options otherwise remain exercisable but are not exercised within
three (3) months of Termination of Employment (or such other period of time
provided in Section 422 of the Code).

7. Stock Appreciation Rights

Stock Appreciation Rights may be granted to Participants from time to time
either in tandem with or as a component of other Awards granted under the Plan
(“tandem SARs”) or not in conjunction with other Awards (“freestanding
SARs”) and may, but need not, relate to a specific Option granted under
Section 6. The provisions of Stock Appreciation Rights need not be the same with
respect to each grant or each recipient. Any Stock Appreciation Right granted in
tandem with an Award may be granted at the same time such Award is granted or at
any time thereafter before exercise or expiration of such Award. All
freestanding SARs shall be granted subject to the same terms and conditions
applicable to Options as set forth in Section 6 and all tandem SARs shall have
the same exercise price, vesting, exercisability, forfeiture and termination
provisions as the Award to which they relate. Subject to the provisions of
Section 6 and the immediately preceding sentence, the Administrator may impose
such other conditions or restrictions on any Stock Appreciation Right as it
shall deem appropriate. Stock Appreciation Rights may be settled in Shares, cash
or a combination thereof, as determined by the Administrator and set forth in
the applicable Award Agreement. Other than in connection with a change in the
Company’s capitalization (as described in Section 12) the exercise price of
Stock Appreciation Rights may not be reduced without stockholder approval
(including canceling previously awarded Stock Appreciation Rights and regranting
them with a lower exercise price).

 

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8. Restricted Stock and Restricted Stock Units

(a) Restricted Stock and Restricted Stock Unit Awards. Restricted Stock and
Restricted Stock Units may be granted at any time and from time to time prior to
the termination of the Plan to Participants as determined by the Administrator.
Restricted Stock is an award or issuance of Shares the grant, issuance,
retention, vesting and/or transferability of which is subject during specified
periods of time to such conditions (including continued employment or
performance conditions) and terms as the Administrator deems appropriate.
Restricted Stock Units are Awards denominated in units of Shares under which the
issuance of Shares is subject to such conditions (including continued employment
or performance conditions) and terms as the Administrator deems appropriate.
Each grant of Restricted Stock and Restricted Stock Units shall be evidenced by
an Award Agreement. Unless determined otherwise by the Administrator, each
Restricted Stock Unit will be equal to one Share and will entitle a Participant
to either the issuance of Shares or payment of an amount of cash determined with
reference to the value of Shares. To the extent determined by the Administrator,
Restricted Stock and Restricted Stock Units may be satisfied or settled in
Shares, cash or a combination thereof. Restricted Stock and Restricted Stock
Units granted pursuant to the Plan need not be identical but each grant of
Restricted Stock and Restricted Stock Units must contain and be subject to the
terms and conditions set forth below.

(b) Contents of Agreement. Each Award Agreement shall contain provisions
regarding (i) the number of Shares or Restricted Stock Units subject to such
Award or a formula for determining such number, (ii) the purchase price of the
Shares, if any, and the means of payment, (iii) the performance criteria, if
any, and level of achievement versus these criteria that shall determine the
number of Shares or Restricted Stock Units granted, issued, retainable and/or
vested, (iv) such terms and conditions on the grant, issuance, vesting and/or
forfeiture of the Shares or Restricted Stock Units as may be determined from
time to time by the Administrator, (v) the term of the performance period, if
any, as to which performance will be measured for determining the number of such
Shares or Restricted Stock Units, and (vi) restrictions on the transferability
of the Shares or Restricted Stock Units. Shares issued under a Restricted Stock
Award may be issued in the name of the Participant and held by the Participant
or held by the Company, in each case as the Administrator may provide.

(c) Vesting and Performance Criteria. The grant, issuance, retention, vesting
and/or settlement of shares of Restricted Stock and Restricted Stock Units will
occur when and in such installments as the Administrator determines or under
criteria the Administrator establishes, which may include Qualifying Performance
Criteria. Other than with respect to Awards to Nonemployee Directors, the grant,
issuance, retention, vesting and/or settlement of Shares under any such Award
that is based on performance criteria and level of achievement versus such
criteria will be subject to a performance period of not less than twelve months,
and the grant, issuance, retention, vesting and/or settlement of Shares under
any Restricted Stock or Restricted Stock Unit Award that is based solely upon
continued employment and/or the passage of time may not vest or be settled in
full prior to the thirty-sixth month following its date of grant, but may be
subject to pro-rata vesting over such period, except that the Administrator may
provide for the satisfaction and/or lapse of all conditions under any such Award
in the event of the Participant’s death or disability or in connection with a
Change in Control, and the Administrator may provide that any such restriction
or limitation will not apply in the case of a Restricted Stock or Restricted
Stock Unit Award that is issued in payment or settlement of compensation that
has been earned by the Participant. Notwithstanding anything in this Plan to the
contrary, the performance criteria for any Restricted Stock or Restricted Stock
Unit that is intended to satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code will be a measure based on one or
more Qualifying Performance Criteria selected by the Administrator and specified
when the Award is granted.

(d) Discretionary Adjustments and Limits. Subject to the limits imposed under
Section 162(m) of the Code for Awards that are intended to qualify as
“performance-based compensation,” notwithstanding the satisfaction of any
performance goals, the number of Shares granted, issued, retainable and/or
vested under an Award of Restricted Stock or Restricted Stock Units on account
of either financial performance or personal performance evaluations may, to the
extent specified in the Award Agreement, be reduced, but not increased, by the
Administrator on the basis of such further considerations as the Administrator
shall determine.

 

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(e) Voting Rights. Unless otherwise determined by the Administrator,
Participants holding shares of Restricted Stock granted hereunder may exercise
full voting rights with respect to those shares during the period of
restriction. Participants shall have no voting rights with respect to Shares
underlying Restricted Stock Units unless and until such Shares are reflected as
issued and outstanding shares on the Company’s stock ledger.

(f) Dividends and Distributions. Participants in whose name Restricted Stock is
granted shall be entitled to receive all dividends and other distributions paid
with respect to those Shares, unless determined otherwise by the Administrator.
The Administrator will determine whether any such dividends or distributions
will be automatically reinvested in additional shares of Restricted Stock and
subject to the same restrictions on transferability as the Restricted Stock with
respect to which they were distributed or whether such dividends or
distributions will be paid in cash. Shares underlying Restricted Stock Units
shall be entitled to dividends or dividend equivalents only to the extent
provided by the Administrator.

9. Incentive Bonuses

(a) General. Each Incentive Bonus Award will confer upon the Participant the
opportunity to earn a future payment tied to the level of achievement with
respect to one or more performance criteria established for a performance period
of not less than one year or, for Incentive Bonus Awards settled solely in cash,
no less than one calendar quarter.

(b) Incentive Bonus Document. The terms of any Incentive Bonus will be set forth
in an Award Agreement. Each Award Agreement evidencing an Incentive Bonus shall
contain provisions regarding (i) the target and maximum amount payable to the
Participant as an Incentive Bonus, (ii) the performance criteria and level of
achievement versus these criteria that shall determine the amount of such
payment, (iii) the term of the performance period as to which performance shall
be measured for determining the amount of any payment, (iv) the timing of any
payment earned by virtue of performance, (v) restrictions on the alienation or
transfer of the Incentive Bonus prior to actual payment, (vi) forfeiture
provisions and (vii) such further terms and conditions, in each case not
inconsistent with this Plan as may be determined from time to time by the
Administrator.

(c) Performance Criteria. The Administrator shall establish the performance
criteria and level of achievement versus these criteria that shall determine the
target and maximum amount payable under an Incentive Bonus, which criteria may
be based on financial performance and/or personal performance evaluations. The
Administrator may specify the percentage of the target Incentive Bonus that is
intended to satisfy the requirements for “performance-based compensation” under
Section 162(m) of the Code. Notwithstanding anything to the contrary herein, the
performance criteria for any portion of an Incentive Bonus that is intended by
the Administrator to satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code shall be a measure based on one
or more Qualifying Performance Criteria (as defined in Section 13(b)) selected
by the Administrator and specified at the time the Incentive Bonus is granted.
The Administrator shall certify the extent to which any Qualifying Performance
Criteria has been satisfied, and the amount payable as a result thereof, prior
to payment of any Incentive Bonus that is intended to satisfy the requirements
for “performance-based compensation” under Section 162(m) of the Code.

(d) Timing and Form of Payment. The Administrator shall determine the timing of
payment of any Incentive Bonus. Payment of the amount due under an Incentive
Bonus may be made in cash or in Shares, as determined by the Administrator. The
Administrator may provide for or, subject to such terms and conditions as the
Administrator may specify, may permit a Participant to elect for the payment of
any Incentive Bonus to be deferred to a specified date or event.

(e) Discretionary Adjustments. Notwithstanding satisfaction of any performance
goals, the amount paid under an Incentive Bonus on account of either financial
performance or personal performance evaluations may, to the extent specified in
the Award Agreement, be reduced, but not increased, by the Administrator on the
basis of such further considerations as the Administrator shall determine.

 

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10. Deferral of Gains

The Administrator may, in an Award Agreement or otherwise, provide for the
deferred delivery of Shares upon settlement, vesting or other events with
respect to Restricted Stock or Restricted Stock Units, or in payment or
satisfaction of an Incentive Bonus. Notwithstanding anything herein to the
contrary, in no event will any deferral of the delivery of Shares or any other
payment with respect to any Award be allowed if the Administrator determines, in
its sole discretion, that the deferral would result in the imposition of the
additional tax under Section 409A(a)(1)(B) of the Code. No award shall provide
for deferral of compensation that does not comply with Section 409A of the Code,
unless the Board, at the time of grant, specifically provides that the Award is
not intended to comply with Section 409A of the Code.

The Company shall have no liability to a Participant, or any other party, if an
Award that is intended to be exempt from, or compliant with, Section 409A of the
Code is not so exempt or compliant or for any action taken by the Board.

11. Conditions and Restrictions Upon Securities Subject to Awards

The Administrator may provide that the Shares issued upon exercise of an Option
or Stock Appreciation Right or otherwise subject to or issued under an Award
shall be subject to such further agreements, restrictions, conditions or
limitations as the Administrator in its discretion may specify prior to the
exercise of such Option or Stock Appreciation Right or the grant, vesting or
settlement of such Award, including without limitation, conditions on vesting or
transferability, forfeiture or repurchase provisions and method of payment for
the Shares issued upon exercise, vesting or settlement of such Award (including
the actual or constructive surrender of Shares already owned by the
Participant) or payment of taxes arising in connection with an Award. Without
limiting the foregoing, such restrictions may address the timing and manner of
any resales by the Participant or other subsequent transfers by the Participant
of any Shares issued under an Award, including without limitation
(i) restrictions under an insider trading policy or pursuant to applicable law,
(ii) restrictions designed to delay and/or coordinate the timing and manner of
sales by Participant and holders of other Company equity compensation
arrangements, (iii) restrictions as to the use of a specified brokerage firm for
such resales or other transfers and (iv) provisions requiring Shares to be sold
on the open market or to the Company in order to satisfy tax withholding or
other obligations.

12. Adjustment of and Changes in the Stock

In the event that any dividend or other distribution (whether in the form of
cash, Shares, other securities or other property), stock split or a combination
or consolidation of the outstanding Shares into a lesser number of shares, is
declared with respect to the Shares, the authorization limits under
Sections 5(a) and 5(c) shall be increased or decreased proportionately, and the
Shares then subject to each Award shall be increased or decreased
proportionately without any change in the aggregate purchase price therefore. In
the event the Shares shall be changed into or exchanged for a different number
or class of shares of stock or securities of the Company or of another
corporation, whether through recapitalization, reorganization, reclassification,
merger, consolidation, split-up, spin-off, combination, repurchase or exchange
of Shares or other securities of the Company, issuance of warrants or other
rights to purchase Shares or other securities of the Company, or any other
similar corporate transaction or event affects the Shares such that an equitable
adjustment would be required in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan,
then the authorization limits under Sections 5(a) and 5(c) shall be adjusted
proportionately, and an equitable adjustment shall be made to each Share subject
to an Award such that no dilution or enlargement of the benefits or potential
benefits occurs. Each such Share then subject to each Award shall be adjusted to
the number and class of shares into which each outstanding Share shall be so
exchanged such that no dilution or enlargement of the benefits occurs, all
without change in the aggregate purchase price for the Shares then subject to
each Award. Action by the Administrator pursuant to this Section 12 may include
adjustment to any or all of: (i) the number and type of Shares (or other
securities or other property) that thereafter

 

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may be made the subject of Awards or be delivered under the Plan; (ii) the
number and type of Shares (or other securities or other property) subject to
outstanding Awards; (iii) the purchase price or exercise price of a Share under
any outstanding Award or the measure to be used to determine the amount of the
benefit payable on an Award; and (iv) any other adjustments the Administrator
determines to be equitable.

No right to purchase fractional shares shall result from any adjustment in
Awards pursuant to this Section 12. In case of any such adjustment, the Shares
subject to the Award shall be rounded down to the nearest whole share. The
Company shall notify Participants holding Awards subject to any adjustments
pursuant to this Section 12 of such adjustment, but (whether or not notice is
given) such adjustment shall be effective and binding for all purposes of the
Plan.

13. Qualifying Performance-Based Compensation

(a) General. The Administrator may establish performance criteria and level of
achievement versus such criteria that shall determine the number of Shares to be
granted, retained, vested, issued or issuable under or in settlement of or the
amount payable pursuant to an Award, which criteria may be based on Qualifying
Performance Criteria or other standards of financial performance and/or personal
performance evaluations. In addition, the Administrator may specify that an
Award or a portion of an Award is intended to satisfy the requirements for
“performance-based compensation” under Section 162(m) of the Code, provided that
the performance criteria for such Award or portion of an Award that is intended
by the Administrator to satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code shall be a measure based on one
or more Qualifying Performance Criteria selected by the Administrator and
specified at the time the Award is granted. The Administrator shall certify the
extent to which any Qualifying Performance Criteria has been satisfied, and the
amount payable as a result thereof, prior to payment, settlement or vesting of
any Award that is intended to satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code. Notwithstanding satisfaction of
any performance goals, the number of Shares issued under or the amount paid
under an award may, to the extent specified in the Award Agreement, be reduced,
but not increased, by the Administrator on the basis of such further
considerations as the Administrator in its sole discretion shall determine.

(b) Qualifying Performance Criteria. For purposes of this Plan, the term
“Qualifying Performance Criteria” shall mean any one or more of the following
performance criteria, or derivations of such performance criteria, either
individually, alternatively or in any combination, applied to either the Company
as a whole or to a business unit, Subsidiary or one of more joint ventures,
either individually, alternatively or in any combination, and measured either
annually or cumulatively over a period of years, on an absolute basis or
relative to a pre-established target, to previous years’ results or to a
designated comparison group, in each case as specified by the Administrator:
(1) revenue (including homebuilding and/or financial services revenue), (2) cash
balance or cash flow (including cash flow, before or after dividends, and cash
from operations), (3) returns (including return on equity, capital, inventory,
assets; operating revenue; stockholder return), (4) profit or earnings
(including net income; operating income; pretax income; income from joint
ventures and/or discontinued operations; earnings; earnings per share and
earnings before any one or more of interest, taxes, depreciation, amortization,
impairments and write-offs), (5) debt levels and leverage and liquidity
(including borrowing capacity; liquidity criteria; interest coverage ratio; debt
to capital; debt to equity or other leverage criteria) (6) operating measures
consisting of gross, operating or pretax margin; SG&A ratio; overhead or other
cost reduction; orders; backlog; deliveries; inventory turnover, increase or
reduction; completed and unsold inventory; homes under construction; speculative
homes under construction; cancellation or order rates; revenue or deliveries per
employee, homes under construction to backlog ratio; lot supply or land
position, (7) company fundamentals consisting of stock price; market
capitalization; shareholders’ equity or book value per share; economic value
added, (8) contractual compliance (including maintaining compliance, obtaining
waivers of non-compliance, or obtaining amendments of contractual covenants), or
(9) other measures consisting of market share; customer service; customer or
employee satisfaction; brand acceptance and recognition; product development,
release or innovation; and asset acquisitions or sales (including division
acquisitions or sales). To the extent consistent with Section 162(m) of

 

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the Code, the Administrator (A) may appropriately adjust any evaluation of
performance under a Qualifying Performance Criteria to eliminate the effects of
charges for restructurings, discontinued operations, extraordinary items and all
items of gain, loss or expense determined to be extraordinary or unusual in
nature or related to the disposal of a segment of a business or related to a
change in accounting principle all as determined in accordance with standards
established by opinion No. 30 of the Accounting Principles Board (APA Opinion
No. 30), Statement of Financial Accounting Standards No. 111, “Accounting for
the Impairment or Disposal of Long-Lived Assets,” or Statement of Financial
Accounting Standards No. 154, “Accounting Changes and Error Corrections,” or
other applicable or successor accounting provisions, as well as the cumulative
effect of accounting changes, in each case as determined in accordance with
generally accepted accounting principles or identified in the Company’s
financial statements or notes to the financial statements, and (B) may
appropriately adjust any evaluation of performance under a Qualifying
Performance Criteria to exclude any of the following events that occurs during a
performance period: (i) asset write-downs or impairments, (ii) litigation,
claims, judgments or settlements, (iii) the effect of changes in tax law or
other such laws or provisions affecting reported results, (iv) accruals for
reorganization and restructuring programs and (v) accruals of any amounts for
payment under this Plan or any other compensation arrangement maintained by the
Company.

14. Transferability

Each Award may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated by a Participant other than by will or the laws of
descent and distribution, and each Option or Stock Appreciation Right shall be
exercisable only by the Participant during his or her lifetime. Notwithstanding
the foregoing, to the extent permitted by the Administrator, the person to whom
an Award is initially granted (the “Grantee”) may transfer an Award to any
“family member” of the Grantee (as such term is defined in Section 1(a)(5) of
the General Instructions to Form S-8 under the Securities Act of 1933, as
amended (“Form S-8”)), to trusts solely for the benefit of such family members
and to partnerships in which such family members and/or trusts are the only
partners; provided that, (i) as a condition thereof, the transferor and the
transferee must execute a written agreement containing such terms as specified
by the Administrator, and (ii) the transfer is pursuant to a gift or a domestic
relations order to the extent permitted under the General Instructions to Form
S-8. Except to the extent specified otherwise in the agreement the Administrator
provides for the Grantee and transferee to execute, all vesting, exercisability
and forfeiture provisions that are conditioned on the Grantee’s continued
employment or service shall continue to be determined with reference to the
Grantee’s employment or service (and not to the status of the transferee) after
any transfer of an Award pursuant to this Section 14, and the responsibility to
pay any taxes in connection with an Award shall remain with the Grantee
notwithstanding any transfer other than by will or intestate succession.

15. Impact of Change in Control

The Administrator may provide, either at the time an Award is granted or
thereafter, that a Change in Control shall have such effect as specified by the
Administrator, or no effect, as the Administrator in its discretion may provide.
Without limiting the foregoing, the Administrator may but need not provide,
either at the time an Award is granted or thereafter, that if a Change in
Control occurs, then effective as of a date selected by the Administrator, the
Administrator (which for purposes of the Changes in Control described in (i),
(ii) and (iii) of the definition of Change in Control contained in Section 2
shall be the Compensation Committee of the Board as constituted prior to the
occurrence of such Change in Control) acting in its discretion without the
consent or approval of any Participant, may effect one or more of the following
alternatives or combination of alternatives with respect to all outstanding
Awards (which alternatives may be conditional on the occurrence of such of the
Changes in Control specified above and which may vary among individual
Participants):

(i) in the case of a Change in Control specified in clause (iii) of the
definition of Change in Control, accelerate the time at which Options or Stock
Appreciation Rights then outstanding may vest or be exercised in full for a
limited period of time on or before a specified date (which will permit the
Participant to participate with the common stock received upon exercise of such
Option or Stock Appreciation Right in

 

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the event of a Change in Control specified in clause (iii) of the definition of
Change in Control) fixed by the Administrator, after which specified date all
unexercised Options and Stock Appreciation Rights and all rights of Participants
thereunder shall terminate,

(ii) accelerate the time at which Options or Stock Appreciation Rights then
outstanding may be exercised so that such Options or Stock Appreciation Rights
may be exercised in full for their then remaining term (or such shorter period
as determined by the Administrator),

(iii) accelerate the vesting of Restricted Stock Awards or Restricted Stock
Units, or

(iv) require the mandatory surrender to the Company of outstanding Options or
Stock Appreciation Rights or unvested Restricted Stock or Restricted Stock Units
held by such Participant (irrespective of whether such Options or Stock
Appreciation Rights are then exercisable under the provisions of this Plan) as
of a date, before or not later than 60 days after such Change in Control,
specified by the Administrator, and in such event the Administrator shall
thereupon cancel such Options and Stock Appreciation Rights and unvested
Restricted Stock and Restricted Stock Units and the Company shall pay to each
Participant an amount of cash equal to the excess of the fair market value of
the aggregate Shares subject to such Option or Stock Appreciation Right over the
aggregate Option or Stock Appreciation Right exercise price of such Shares or
the fair market value of the aggregate unvested Shares of Restricted Stock or
Restricted Stock Units, as applicable; provided, however, the Administrator
shall not select an alternative (unless consented to by the Participant) that
would result in the Participant’s owing any money by virtue of operation of
Section 16(b) of the Exchange Act. If all such alternatives have such a result,
the Administrator shall take such action, which is hereby authorized, to put
such Participant in as close to the same position as such Participant would have
been in had the selected alternative been made but without resulting in any
payment by such Participant pursuant to Section 16(b) of the Exchange Act.
Notwithstanding the foregoing, with the consent of the Participant, the
Administrator may in lieu of the foregoing make such provision with respect of
any Change in Control as it deems appropriate.

16. Compliance with Laws and Regulations

This Plan, the grant, issuance, vesting, exercise and settlement of Awards
thereunder, and the obligation of the Company to sell, issue or deliver Shares
under such Awards, shall be subject to all applicable foreign, federal, state
and local laws, rules and regulations, stock exchange rules and regulations, and
to such approvals by any governmental or regulatory agency as may be required.
The Company shall not be required to register in a Participant’s name or deliver
any Shares prior to the completion of any registration or qualification of such
shares under any foreign, federal, state or local law or any ruling or
regulation of any government body which the Administrator shall determine to be
necessary or advisable. To the extent the Company is unable to or the
Administrator deems it infeasible 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, the Company
and its Subsidiaries shall be relieved of any liability with respect to the
failure to issue or sell such Shares as to which such requisite authority shall
not have been obtained. No Option shall be exercisable and no Shares shall be
issued and/or transferable under any other Award unless a registration statement
with respect to the Shares underlying such Option is effective and current or
the Company has determined that such registration is unnecessary.

In the event an Award is granted to or held by a Participant who is employed or
providing services outside the United States, the Administrator may, in its sole
discretion, modify the provisions of the Plan or of such Award as they pertain
to such individual to comply with applicable foreign law or to recognize
differences in local law, currency or tax policy. The Administrator may also
impose conditions on the grant, issuance, exercise, vesting, settlement or
retention of Awards in order to comply with such foreign law and/or to minimize
the Company’s obligations with respect to tax equalization for Participants
employed outside their home country.

 

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17. Withholding

To the extent required by applicable federal, state, local or foreign law, a
Participant shall be required to satisfy, in a manner satisfactory to the
Company, any withholding tax obligations that arise by reason of an Option
exercise, disposition of Shares issued under an Incentive Stock Option, the
vesting of or settlement of an Award, an election pursuant to Section 83(b) of
the Code or otherwise with respect to an Award. To the extent a Participant
makes an election under Section 83(b) of the Code, within ten days of filing
such election with the Internal Revenue Service, the Participant must notify the
Company in writing of such election. The Company and its Subsidiaries shall not
be required to issue Shares, make any payment or to recognize the transfer or
disposition of Shares until all such obligations are satisfied. The
Administrator may provide for or permit these obligations to be satisfied
through the mandatory or elective sale of Shares and/or by having the Company
withhold a portion of the Shares that otherwise would be issued to him or her
upon exercise of the Option or the vesting or settlement of an Award, or by
tendering Shares previously acquired. To the extent a Participant makes an
election under Section 83(b) of the Code, within ten days of filing such
election with the Internal Revenue Service, the Participant must notify the
Company in writing of such election.

18. Administration of the Plan

(a) Administrator of the Plan. The Plan shall be administered by the
Administrator who shall be the Compensation Committee of the Board or, in the
absence of a Compensation Committee, the Board itself. Any power of the
Administrator may also be exercised by the Board, except to the extent that the
grant or exercise of such authority would cause any Award or transaction to
become subject to (or lose an exemption under) the short-swing profit recovery
provisions of Section 16 of the Securities Exchange Act of 1934 or cause an
Award designated as a Performance Award not to qualify for treatment as
performance-based compensation under Section 162(m) of the Code. To the extent
that any permitted action taken by the Board conflicts with action taken by the
Administrator, the Board action shall control. The Compensation Committee may by
resolution authorize one or more officers of the Company to perform any or all
things that the Administrator is authorized and empowered to do or perform under
the Plan, and for all purposes under this Plan, such officer or officers shall
be treated as the Administrator; provided, however, that the resolution so
authorizing such officer or officers shall specify the total number of Awards
(if any) such officer or officers may award pursuant to such delegated
authority, and any such Award shall be subject to the form of Option agreement
theretofore approved by the Compensation Committee. No such officer shall
designate himself or herself as a recipient of any Awards granted under
authority delegated to such officer. The Compensation Committee hereby
designates the Secretary of the Company and the head of the Company’s human
resource function to assist the Administrator in the administration of the Plan
and execute agreements evidencing Awards made under this Plan or other documents
entered into under this Plan on behalf of the Administrator or the Company. In
addition, the Compensation Committee may delegate any or all aspects of the
day-to-day administration of the Plan to one or more officers or employees of
the Company or any Subsidiary, and/or to one or more agents.

(b) Powers of Administrator. Subject to the express provisions of this Plan, the
Administrator shall be authorized and empowered to do all things that it
determines to be necessary or appropriate in connection with the administration
of this Plan, including, without limitation: (i) to prescribe, amend and rescind
rules and regulations relating to this Plan and to define terms not otherwise
defined herein; (ii) to determine which persons are Participants, to which of
such Participants, if any, Awards shall be granted hereunder and the timing of
any such Awards; (iii) to grant Awards to Participants and determine the terms
and conditions thereof, including the number of Shares subject to Awards and the
exercise or purchase price of such Shares and the circumstances under which
Awards become exercisable or vested or are forfeited or expire, which terms may
but need not be conditioned upon the passage of time, continued employment, the
satisfaction of performance criteria, the occurrence of certain events
(including a Change in Control), or other factors; (iv) to establish and verify
the extent of satisfaction of any performance goals or other conditions
applicable to the grant, issuance, exercisability, vesting and/or ability to
retain any Award; (v) to prescribe and amend the terms of the agreements or
other documents evidencing Awards made under this Plan (which need not be
identical) and the terms of or form of any document or notice required to be
delivered to the Company by Participants under this Plan; (vi) to

 

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determine the extent to which adjustments are required pursuant to Section 12;
(vii) to interpret and construe this Plan, any rules and regulations under this
Plan and the terms and conditions of any Award granted hereunder, and to make
exceptions to any such provisions in if the Administrator, in good faith,
determines that it is necessary to do so in light of extraordinary circumstances
and for the benefit of the Company; (viii) to approve corrections in the
documentation or administration of any Award; and (ix) to make all other
determinations deemed necessary or advisable for the administration of this
Plan. The Administrator may, in its sole and absolute discretion, without
amendment to the Plan, waive or amend the operation of Plan provisions
respecting exercise after termination of employment or service to the Company or
an Affiliate and, except as otherwise provided herein, adjust any of the terms
of any Award. The Administrator may also (A) accelerate the date on which any
Award granted under the Plan becomes exercisable or (B) accelerate the vesting
date or waive or adjust any condition imposed hereunder with respect to the
vesting or exercisability of an Award, provided that the Administrator, in good
faith, determines that such acceleration, waiver or other adjustment is
necessary or desirable in light of extraordinary circumstances. Notwithstanding
anything in the Plan to the contrary, no Award outstanding under the Plan may be
repriced, regranted through cancellation, including cancellation in exchange for
other Awards or Options or Stock Appreciation Rights with an exercise price that
is less than the exercise price of the original Award, or otherwise amended to
reduce the exercise price applicable thereto (other than with respect to
adjustments made in connection with a transaction or other change in the
Company’s capitalization as described in Section 12) without the approval of the
Company’s stockholders.

(c) Determinations by the Administrator. All decisions, determinations and
interpretations by the Administrator regarding the Plan, any rules and
regulations under the Plan and the terms and conditions of or operation of any
Award granted hereunder, shall be final and binding on all Participants,
beneficiaries, heirs, assigns or other persons holding or claiming rights under
the Plan or any Award. The Administrator shall consider such factors as it deems
relevant, in its sole and absolute discretion, to making such decisions,
determinations and interpretations including, without limitation, the
recommendations or advice of any officer or other employee of the Company and
such attorneys, consultants and accountants as it may select.

(d) Subsidiary Awards. In the case of a grant of an Award to any Participant
employed by a Subsidiary, such grant may, if the Administrator so directs, be
implemented by the Company issuing any subject Shares to the Subsidiary, for
such lawful consideration as the Administrator may determine, upon the condition
or understanding that the Subsidiary will transfer the Shares to the Participant
in accordance with the terms of the Award specified by the Administrator
pursuant to the provisions of the Plan. Notwithstanding any other provision
hereof, such Award may be issued by and in the name of the Subsidiary and shall
be deemed granted on such date as the Administrator shall determine.

19. Amendment of the Plan or Awards

The Board may amend, alter or discontinue this Plan and the Administrator may
amend, or alter any agreement or other document evidencing an Award made under
this Plan but, except as provided pursuant to the provisions of Section 12, no
such amendment shall, without the approval of the stockholders of the Company:

(a) increase the maximum number of Shares for which Awards may be granted under
this Plan;

(b) reduce the price at which Options may be granted below the price provided
for in Section 6(a);

(c) reduce the exercise price of outstanding Options;

(d) extend the term of this Plan;

(e) change the class of persons eligible to be Participants;

(f) otherwise amend the Plan in any manner requiring stockholder approval by law
or under the New York Stock Exchange listing requirements; or

(g) increase the individual maximum limits in Sections 5(c) and (d).

 

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No amendment or alteration to the Plan or an Award or Award Agreement shall be
made which would impair the rights of the holder of an Award, without such
holder’s consent, provided that no such consent shall be required if the
Administrator determines in its sole discretion and prior to the date of any
Change in Control that such amendment or alteration either is required or
advisable in order for the Company, the Plan or the Award to satisfy any law or
regulation or to meet the requirements of or avoid adverse financial accounting
consequences under any accounting standard.

20. No Liability of Company

The Company and any Subsidiary or affiliate which is in existence or hereafter
comes into existence shall not be liable to a Participant or any other person as
to: (i) the non-issuance or sale of Shares as to which the Company has been
unable to obtain from any regulatory body having jurisdiction the authority
deemed by the Company’s counsel to be necessary to the lawful issuance and sale
of any Shares hereunder; and (ii) any tax consequence expected, but not
realized, by any Participant or other person due to the receipt, exercise or
settlement of any Award granted hereunder.

21. Non-Exclusivity of Plan

Neither the adoption of this Plan by the Board nor the submission of this Plan
to the stockholders of the Company for approval shall be construed as creating
any limitations on the power of the Board or the Administrator to adopt such
other incentive arrangements as either may deem desirable, including without
limitation, the granting of restricted stock or stock options otherwise than
under this Plan or an arrangement not intended to qualify under Code
Section 162(m), and such arrangements may be either generally applicable or
applicable only in specific cases.

22. Governing Law

This Plan and any agreements or other documents hereunder shall be interpreted
and construed in accordance with the laws of the Delaware and applicable federal
law. Any reference in this Plan or in the agreement or other document evidencing
any Awards to a provision of law or to a rule or regulation shall be deemed to
include any successor law, rule or regulation of similar effect or
applicability.

23. Arbitration of Disputes

In the event a Participant or other holder of an Award or person claiming a
right under an Award or the Plan believes that a decision by the Administrator
with respect to such person or Award was arbitrary or capricious, the person may
request arbitration with respect to such decision. The review by the arbitrator
shall be limited to determining whether the Participant or other Award holder
has proven that the Administrator’s decision was arbitrary or capricious. This
arbitration shall be the sole and exclusive review permitted of the
Administrator’s decision. Participants, Award holders and persons claiming
rights under an Award or the Plan explicitly waive any right to judicial review.

Notice of demand for arbitration shall be made in writing to the Administrator
within thirty (30) days after the applicable decision by the Administrator. The
arbitrator shall be selected by those members of the Board who are neither
members of the Compensation Committee of the Board nor employees of the Company
or any Subsidiary. If there are no such members of the Board, the arbitrator
shall be selected by the Board. The arbitrator shall be an individual who is an
attorney licensed to practice law in the jurisdiction in which the Company’s
headquarters are then located. Such arbitrator shall be neutral within the
meaning of the Commercial Rules of Dispute Resolution of the American
Arbitration Association; provided, however, that the arbitration shall not be
administered by the American Arbitration Association. Any challenge to the
neutrality of the arbitrator shall be resolved by the arbitrator whose decision
shall be final and conclusive. The arbitration shall be administered and
conducted by the arbitrator pursuant to the Commercial Rules of Dispute
Resolution of the

 

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American Arbitration Association. Each side shall bear its own fees and
expenses, including its own attorney’s fees, and each side shall bear one half
of the arbitrator’s fees and expenses. The decision of the arbitrator on the
issue(s) presented for arbitration shall be final and conclusive and may be
enforced in any court of competent jurisdiction.

24. No Right to Employment, Reelection or Continued Service

Nothing in this Plan or an Award Agreement shall interfere with or limit in any
way the right of the Company, its Subsidiaries and/or its affiliates to
terminate any Participant’s employment, service on the Board or service for the
Company at any time or for any reason not prohibited by law, nor shall this Plan
or an Award itself confer upon any Participant any right to continue his or her
employment or service for any specified period of time. Neither an Award nor any
benefits arising under this Plan shall constitute an employment contract with
the Company, any Subsidiary and/or its affiliates. Subject to Sections 4 and 19,
this Plan and the benefits hereunder may be terminated at any time in the sole
and exclusive discretion of the Board without giving rise to any liability on
the part of the Company, its Subsidiaries and/or its affiliates.

25. Unfunded Plan

The Plan is intended to be an unfunded plan. Participants are and shall at all
times be general creditors of the Company with respect to their Awards. If the
Administrator or the Company chooses to set aside funds in a trust or otherwise
for the payment of Awards under the Plan, such funds shall at all times be
subject to the claims of the creditors of the Company in the event of its
bankruptcy or insolvency.

 

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