EXHIBIT 10.1

 

 

 

J.D. EDWARDS & COMPANY

 

EQUITY INCENTIVE PLAN

 

(Effective March 26, 2003)

 

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TABLE OF CONTENTS

 

             

Page

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J.D. EDWARDS & COMPANY

  

i

EQUITY INCENTIVE PLAN

  

i

SECTION 1 BACKGROUND AND PURPOSE

  

1

   

1.1

  

Background and Effective Date

  

1

   

1.2

  

Purpose of the Plan

  

1

SECTION 2 DEFINITIONS

  

1

   

2.1

  

“1934 Act”

  

1

   

2.2

  

“Affiliate”

  

1

   

2.3

  

“Award”

  

1

   

2.4

  

“Award Agreement”

  

1

   

2.5

  

“Board” or “Board of Directors”

  

1

   

2.6

  

“Cash Flow”

  

1

   

2.7

  

“Change in Control”

  

2

   

2.8

  

“Code”

  

2

   

2.9

  

“Committee”

  

2

   

2.10

  

“Company”

  

2

   

2.11

  

“Consultant”

  

2

   

2.12

  

“Director”

  

2

   

2.13

  

“Disability”

  

2

   

2.14

  

“Earnings Per Share”

  

2

   

2.15

  

“Employee”

  

3

   

2.16

  

“Exchange Program”

  

3

   

2.17

  

“Exercise Price”

  

3

   

2.18

  

“Fair Market Value”

  

3

   

2.19

  

“Fiscal Year”

  

3

   

2.20

  

“Grant Date”

  

3

   

2.21

  

“Incentive Stock Option”

  

3

   

2.22

  

“Individual Objectives”

  

3

   

2.23

  

“Market Share”

  

3

   

2.24

  

“Misconduct”

  

3

   

2.25

  

“Nonemployee Director”

  

4

   

2.26

  

“Nonqualified Stock Option”

  

4

   

2.27

  

“Operating Margin”

  

4

   

2.28

  

“Option”

  

4

   

2.29

  

“Participant”

  

4

   

2.30

  

“Performance Goals”

  

4

   

2.31

  

“Performance Share”

  

4

   

2.32

  

“Performance Unit”

  

4

   

2.33

  

“Period of Restriction”

  

4

   

2.34

  

“Plan”

  

4

 

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TABLE OF CONTENTS

(Continued)

 

             

Page

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2.35

  

“Profit After Tax”

  

5

   

2.36

  

“Profit Before Tax”

  

5

   

2.37

  

“Restricted Stock”

  

5

   

2.38

  

“Retirement”

  

5

   

2.39

  

“Return on Capital”

  

5

   

2.40

  

“Return on Equity”

  

5

   

2.41

  

“Return on Sales”

  

5

   

2.42

  

“Revenue”

  

5

   

2.43

  

“Rule 16b-3”

  

5

   

2.44

  

“Section 16 Person”

  

5

   

2.45

  

“Shares”

  

5

   

2.46

  

“Stock Appreciation Right” or “SAR”

  

5

   

2.47

  

“Subsidiary”

  

5

   

2.48

  

“Target Award”

  

5

   

2.49

  

“Termination of Service”

  

6

   

2.50

  

“Total Shareholder Return”

  

6

SECTION 3    ADMINISTRATION

  

6

   

3.1

  

The Committee

  

6

   

3.2

  

Authority of the Committee

  

6

   

3.3

  

Delegation by the Committee

  

6

   

3.4

  

Decisions Binding

  

6

SECTION 4    SHARES SUBJECT TO THE PLAN

  

7

   

4.1

  

Number of Shares

  

7

   

4.2

  

Limitations.

  

7

   

4.3

  

Lapsed Awards

  

7

   

4.4

  

Adjustments in Awards and Authorized Shares

  

7

SECTION 5    STOCK OPTIONS

  

7

   

5.1

  

Grant of Options

  

7

   

5.2

  

Award Agreement

  

8

   

5.3

  

Exercise Price

  

8

   

5.4

  

Expiration of Options

  

8

   

5.5

  

Exercisability of Options

  

9

   

5.6

  

Payment

  

9

   

5.7

  

Restrictions on Share Transferability

  

9

   

5.8

  

Certain Additional Provisions for Incentive Stock Options

  

9

SECTION 6    STOCK APPRECIATION RIGHTS

  

10

   

6.1

  

Grant of SARs

  

10

   

6.2

  

SAR Agreement

  

10

   

6.3

  

Expiration of SARs

  

10

   

6.4

  

Payment of SAR Amount

  

10

 

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TABLE OF CONTENTS

(Continued)

 

             

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SECTION 7    RESTRICTED STOCK

        

7.1

  

Grant of Restricted Stock

  

11

   

7.2

  

Restricted Stock Agreement

  

11

   

7.3

  

Transferability

  

11

   

7.4

  

Other Restrictions

  

11

   

7.5

  

Removal of Restrictions

  

11

   

7.6

  

Voting Rights

  

12

   

7.7

  

Dividends and Other Distributions

  

12

   

7.8

  

Return of Restricted Stock to Company

  

12

SECTION 8    PERFORMANCE UNITS AND PERFORMANCE SHARES

  

12

   

8.1

  

Grant of Performance Units/Shares

  

12

   

8.2

  

Value of Performance Units/Shares

  

12

   

8.3

  

Performance Objectives and Other Terms

  

12

   

8.4

  

Earning of Performance Units/Shares

  

13

   

8.5

  

Form and Timing of Payment of Performance Units/Shares

  

13

   

8.6

  

Cancellation of Performance Units/Shares

  

13

SECTION 9    NONEMPLOYEE DIRECTOR OPTIONS

  

13

   

9.1

  

Granting of Options

  

13

   

9.2

  

Terms of Options

  

14

   

9.3

  

Elections by Nonemployee Directors.

  

15

SECTION 10    MISCELLANEOUS

  

15

   

10.1

  

Change in Control.

  

15

   

10.2

  

Deferrals

  

16

   

10.3

  

No Effect on Employment or Service

  

17

   

10.4

  

Participation

  

17

   

10.5

  

Indemnification

  

17

   

10.6

  

Successors

  

17

   

10.7

  

Beneficiary Designations

  

17

   

10.8

  

Limited Transferability of Awards

  

17

   

10.9

  

No Rights as Stockholder

  

18

SECTION 11    AMENDMENT, TERMINATION, AND DURATION

  

18

   

11.1

  

Amendment, Suspension, or Termination

  

18

   

11.2

  

Duration of the Plan

  

18

SECTION 12    TAX WITHHOLDING

  

18

   

12.1

  

Withholding Requirements

  

18

   

12.2

  

Withholding Arrangements

  

18

SECTION 13    LEGAL CONSTRUCTION

  

19

 

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TABLE OF CONTENTS

(Continued)

 

             

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13.1

  

Gender and Number

  

19

   

13.2

  

Severability

  

19

   

13.3

  

Requirements of Law

  

19

   

13.4

  

Securities Law Compliance

  

19

   

13.5

  

Governing Law

  

19

   

13.6

  

Captions

  

19

EXECUTION

  

19

 

 

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J.D. EDWARDS & COMPANY EQUITY INCENTIVE PLAN

 

SECTION 1

BACKGROUND AND PURPOSE

 

1.1    Background and Effective Date.    The Plan permits the grant of
Nonqualified Stock Options, Incentive Stock Options, SARs, Restricted Stock,
Performance Units, and Performance Shares. The Plan is effective as of March 26,
2003, subject to ratification by an affirmative vote of the holders of a
majority of the Shares that are present in person or by proxy and entitled to
vote at the 2003 Annual Meeting of Stockholders of the Company.

 

1.2    Purpose of the Plan.    The Plan is intended to attract, motivate, and
retain (a) employees of the Company and its Affiliates, (b) consultants who
provide significant services to the Company and its Affiliates, and (c)
directors of the Company who are employees of neither the Company nor any
Affiliate. The Plan also is designed to encourage stock ownership by
Participants, thereby aligning their interests with those of the Company’s
shareholders and to permit the payment of compensation that qualifies as
performance-based compensation under section 162(m) of the Code.

 

SECTION 2

DEFINITIONS

 

The following words and phrases shall have the following meanings unless a
different meaning is plainly required by the context:

 

2.1    “1934 Act” means the Securities Exchange Act of 1934, as amended.
Reference to a specific section of the 1934 Act or regulation thereunder shall
include such section or regulation, any valid regulation promulgated under such
section, and any comparable provision of any future legislation or regulation
amending, supplementing or superseding such section or regulation.

 

2.2    “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.

 

2.3    “Award” means, individually or collectively, a grant under the Plan of
Nonqualified Stock Options, Incentive Stock Options, SARs, Restricted Stock,
Performance Units, or Performance Shares.

 

2.4    “Award Agreement” means the written agreement setting forth the terms and
provisions applicable to each Award granted under the Plan.

 

2.5    “Board” or “Board of Directors” means the Board of Directors of the
Company.

 

2.6    “Cash Flow” means as to any Performance Period, the Company’s or a
business unit’s cash generated from operating activities, determined in
accordance with generally accepted accounting principles.

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2.7    “Change in Control” means the occurrence of any of the following events:

 

(a)  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;

 

(b)  The consummation of the sale or disposition by the Company of all or
substantially all of the Company’s assets;

 

(c)  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 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

 

(d)  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.

 

2.8    “Code” means the Internal Revenue Code of 1986, as amended. Reference to
a specific section of the Code or regulation thereunder shall include such
section or regulation, any valid regulation promulgated under such section, and
any comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.

 

2.9    “Committee” means the committee appointed by the Board (pursuant to
Section 3.1) to administer the Plan.

 

2.10    “Company” means J.D. Edwards & Company, a Delaware corporation, or any
successor thereto.

 

2.11    “Consultant” means any consultant, independent contractor, or other
person who provides significant services to the Company or its Affiliates, but
who is neither an Employee nor a Director.

 

2.12    “Director” means any individual who is a member of the Board of
Directors of the Company.

 

2.13    “Disability” means a permanent and total disability determined in
accordance with uniform and nondiscriminatory standards adopted by the Committee
from time to time.

 

2.14    Earnings Per Share” means as to any Performance Period, the Company’s or
a business unit’s Profit After Tax, divided by a weighted average number of
common shares

 

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outstanding and dilutive common equivalent shares deemed outstanding, determined
in accordance with generally accepted accounting principles.

 

2.15    “Employee” means any employee of the Company or of an Affiliate, whether
such employee is so employed at the time the Plan is adopted or becomes so
employed subsequent to the adoption of the Plan.

 

2.16    “Exchange Program” means a program established by the Committee whereby
outstanding Awards are amended to provide for a lower Exercise Price or
surrendered or cancelled in exchange for (a) Awards with a lower Exercise Price,
(b) a different type of Award, (c) cash, or (d) a combination of (a), (b) and/or
(c).

 

2.17    “Exercise Price” means the price at which a Share may be purchased by a
Participant pursuant to the exercise of an Option.

 

2.18    “Fair Market Value” means the last quoted per share selling price for
Shares on the relevant date, or if there were no sales on such date, the closing
bid on the relevant date. If there are neither bids nor sales on the relevant
date then Fair Market Value shall mean the arithmetic mean of the highest and
lowest quoted selling prices on the nearest day before and the nearest day after
the relevant date, as determined by the Committee. Notwithstanding the
preceding, for federal, state, and local income tax reporting purposes, fair
market value shall be determined by the Committee (or its delegate) in
accordance with uniform and nondiscriminatory standards adopted by it from time
to time.

 

2.19    “Fiscal Year” means the fiscal year of the Company.

 

2.20    “Grant Date” means, with respect to an Award, the date that the Award
was approved by the Committee or a later date specified by the Committee.

 

2.21    “Incentive Stock Option” means an Option to purchase Shares which is
designated as an Incentive Stock Option and is intended to meet the requirements
of Section 422 of the Code.

 

2.22    “Individual Objectives” means quantifiable objectives determined by the
Committee that will measure the individual’s performance of his or her overall
duties to the Company which may include the level of voluntary Employee
turnover, the release of software products, the number of customer escalations,
measures related to long-term strategic plans, and measures related to
succession plans.

 

2.23    “Market Share” means as to any Performance Period, the Company’s or a
business unit’s percentage of a market segment with respect to a product.

 

2.24    “Misconduct” means, at any time within (a) the term of an Option granted
hereunder, (b) within one (1) year after a Participant’s Termination of Service,
or (c) within one (1) year after exercise of any portion of an Option granted
hereunder, whichever is the latest, the commission of any act in competition
with any activity of the Company (or any Affiliate) or any act contrary or
harmful to the interests of the Company (or any Affiliate), including, but not
limited to: (a) conviction of a felony or crime involving moral turpitude or
dishonesty, (b) violation of Company (or any Affiliate) policies, (c) accepting
employment with or serving as a consultant,

 

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advisor or in any other capacity to an entity that is in competition with or
acting against the interests of the Company (or any Affiliate), including
employing or recruiting any present, former or future employee of the Company
(or any Affiliate), (d) misuse of any trade or business secrets or confidential,
secret, privileged, or non-public information relating to the Company’s (or any
Affiliate’s) business or breach of the Company’s Confidentiality Agreement, or
(e) participating in a hostile takeover attempt of the Company. The foregoing
definition shall not be deemed to be inclusive of all acts or omissions that the
Company (or any Affiliate) may consider as Misconduct for purposes of the Plan.

 

2.25    “Nonemployee Director” means a Director who is an employee of neither
the Company nor of any Affiliate.

 

2.26    “Nonqualified Stock Option” means an option to purchase Shares which is
not intended to be an Incentive Stock Option.

 

2.27    “Operating Margin” means as to any Performance Period, the Company’s or
a business unit’s revenue less operating expenses, divided by revenue determined
in accordance with generally accepted accounting principles.

 

2.28    “Option” means an Incentive Stock Option or a Nonqualified Stock Option.

 

2.29    “Participant” means an Employee, Consultant, or Nonemployee Director who
has an outstanding Award.

 

2.30    “Performance Goals” means the goal(s) (or combined goal(s)) determined
by the Committee (in its discretion) to be applicable to a Participant with
respect to an Award. As determined by the Committee, the Performance Goals
applicable to an Award may provide for a targeted level or levels of achievement
using one or more of the following measures: (a) Earnings per Share, (b) Profit
After Tax, (c) Profit Before Tax, (d) Return on Capital, (e) Return on Equity,
(f) Return on Sales, (g) Revenue, (h) Total Shareholder Return, (i) Market
Share, (j) Cash Flow, (k) Operating Margin, and (l) Individual Objectives. The
Performance Goals may differ from Participant to Participant and from Award to
Award. Prior to the Determination Date, the Committee shall determine whether
any significant element(s) shall be included in or excluded from the calculation
of any Performance Goal with respect to any Participants.

 

2.31    “Performance Share” means an Award granted to a Participant pursuant to
Section 8.

 

2.32    “Performance Unit” means an Award granted to a Participant pursuant to
Section 8.

 

2.33    “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. As provided in Section 7, 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
Committee, in its discretion.

 

2.34    “Plan” means the J.D. Edwards & Company Equity Incentive Plan, as set
forth in this instrument and as hereafter amended from time to time.

 

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2.35    “Profit After Tax” means as to any Performance Period, the Company’s or
a business unit’s net income after taxes, determined in accordance with
generally accepted accounting principles.

 

2.36    ”Profit Before Tax” means as to any Performance Period, the Company’s or
a business unit’s net income before taxes, determined in accordance with
generally accepted accounting principles.

 

2.37    “Restricted Stock” means an Award granted to a Participant pursuant to
Section 7.

 

2.38    “Retirement” means, in the case of an Employee or a Nonemployee Director
a Termination of Service occurring on or after age sixty-five (65). With respect
to a Consultant, no Termination of Service shall be deemed to be on account of
“Retirement.”

 

2.39    “Return on Capital” means as to any Performance Period, the Company’s or
a business unit’s Profit After Tax divided by Company’s or business unit’s, as
applicable, average invested capital, determined in accordance with generally
accepted accounting principles.

 

2.40    “Return on Equity” means as to any Performance Period, the percentage
equal to the Company’s Profit After Tax divided by average stockholder’s equity,
determined in accordance with generally accepted accounting principles.

 

2.41    “Return on Sales” means as to any Performance Period, the percentage
equal to the Company’s or a business unit’s Profit After Tax, divided by the
Company’s or the business unit’s, as applicable, Revenue, determined in
accordance with generally accepted accounting principles.

 

2.42    “Revenue” means as to any Performance Period, the Company’s or business
unit’s net fees generated from third parties and recognized as revenue in
accordance with generally accepted accounting principles.

 

2.43    “Rule 16b-3” means Rule 16b-3 promulgated under the 1934 Act, and any
future regulation amending, supplementing or superseding such regulation.

 

2.44    “Section 16 Person” means a person who, with respect to the Shares, is
subject to Section 16 of the 1934 Act.

 

2.45    “Shares” means the shares of common stock of the Company.

 

2.46    “Stock Appreciation Right” or “SAR” means an Award, granted alone or in
connection with a related Option, that pursuant to Section 6 is designated as an
SAR.

 

2.47    “Subsidiary” means any corporation in an unbroken chain of corporations
beginning with the Company if each of the corporations other than the last
corporation in the unbroken chain then owns stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

 

2.48    “Target Award” means the target award payable under the Plan to a
Participant for the Performance Period, expressed as a percentage of his or her
Base Salary or a specific dollar amount, as determined by the Committee in
accordance with Section 3.

 

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2.49    “Termination of Service” means (a) in the case of an Employee, a
cessation of the employee-employer relationship between the Employee and the
Company or an Affiliate for any reason, including, but not by way of limitation,
a termination by resignation, discharge, death, Disability, Retirement, or the
disaffiliation of an Affiliate, but excluding any such termination where there
is a simultaneous reemployment by the Company or an Affiliate; (b) in the case
of a Consultant, a cessation of the service relationship between the Consultant
and the Company or an Affiliate for any reason, including, but not by way of
limitation, a termination by resignation, discharge, death, Disability, or the
disaffiliation of an Affiliate, but excluding any such termination where there
is a simultaneous re-engagement of the consultant by the Company or an
Affiliate; and (c) in the case of a Nonemployee Director, a cessation of the
Director’s service on the Board for any reason, including, but not by way of
limitation, a termination by resignation, death, Disability, Retirement or
non-reelection to the Board.

 

2.50    “Total Shareholder Return” means as to any Performance Period, the total
return (change in share price plus reinvestment of any dividends) of a Share.

 

SECTION 3

ADMINISTRATION

 

3.1    The Committee.    The Plan shall be administered by the Committee. The
Committee shall consist of not less than two (2) Directors who shall be
appointed from time to time by, and shall serve at the pleasure of, the Board of
Directors. The Committee shall be comprised solely of Directors who both are (a)
”non-employee directors” under Rule 16b-3, and (b) ”outside directors” under
Section 162(m) of the Code.

 

3.2    Authority of the Committee.    It shall be the duty of the Committee to
administer the Plan in accordance with the Plan’s provisions. The Committee
shall have all powers and discretion necessary or appropriate to administer the
Plan and to control its operation, including, but not limited to, the power to
(a) determine which Employees and Consultants shall be granted Awards, (b)
prescribe the terms and conditions of the Awards, (c) interpret the Plan and the
Awards, (d) adopt such procedures and subplans as are necessary or appropriate
to permit participation in the Plan by Employees, Consultants and Directors who
are foreign nationals or employed outside of the United States, (e) adopt rules
for the administration, interpretation and application of the Plan as are
consistent therewith, (f) effect, at any time and from time to time, an Exchange
Program, and (g) interpret, amend or revoke any such rules.

 

3.3    Delegation by the Committee.    The Committee, in its sole discretion and
on such terms and conditions as it may provide, may delegate all or any part of
its authority and powers under the Plan to one or more Directors or officers of
the Company; provided, however, that the Committee may not delegate its
authority and powers (a) with respect to Section 16 Persons, or (b) in any way
which would jeopardize the Plan’s qualification under Section 162(m) of the Code
or Rule 16b-3.

 

3.4    Decisions Binding.    All determinations and decisions made by the
Committee, the Board, and any delegate of the Committee pursuant to the
provisions of the Plan shall be final, conclusive, and binding on all persons,
and shall be given the maximum deference permitted by law.

 

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SECTION 4

SHARES SUBJECT TO THE PLAN

 

4.1    Number of Shares.    Subject to adjustment as provided in Section 4.3,
the total number of Shares available for grant under the Plan shall not exceed
10,000,000, plus an annual increase to be added on the first day of the
Company’s fiscal year (beginning on the first day of the Company’s 2004 fiscal
year and ending on the first day of the Company’s 2012 fiscal year, equal to the
lesser of (i) 9,000,000 Shares, (ii) 5% of the outstanding Shares on the
immediately preceding date, or (iii) an amount determined by the Board. Shares
granted under the Plan may be either authorized but unissued Shares or treasury
Shares.

 

4.2    Limitations.

 

4.2.1    Nonqualified Stock Options.    In no event shall more than twenty
percent (20%) of the Shares reserved under the Plan be granted pursuant to
Nonqualified Stock Options with Exercise Prices less than one hundred percent
(100%) of the Fair Market Value of a Share on the Grant Date.

 

4.2.2    Restricted Stock.    In no event shall more than twenty percent (20%)
of the Shares reserved under the Plan be granted as Shares of Restricted Stock
pursuant to Section 7.

 

4.3    Lapsed Awards.    If an Award is settled in cash, or is cancelled,
terminates, expires, or lapses for any reason (with the exception of the
termination of a tandem SAR upon exercise of the related Option, or the
termination of a related Option upon exercise of the corresponding tandem SAR),
any Shares subject to such Award again shall be available to be the subject of
an Award.

 

4.4    Adjustments in Awards and Authorized Shares.    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 such that
an adjustment is determined by the Committee (in its sole discretion) to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust the number and
class of Shares which may be delivered under the Plan, the number and class of
Shares which may be added annually to the Shares reserved under the Plan, the
number, class, and price of Shares subject to outstanding Awards, and the
numerical limits of Sections 5.1, 6.1, 7.1, 8.1 and 9.1. Notwithstanding the
preceding, the number of Shares subject to any Award always shall be a whole
number.

 

SECTION 5

STOCK OPTIONS

 

5.1    Grant of Options.    Subject to the terms and provisions of the Plan,
Options may be granted to Employees and Consultants at any time and from time to
time as determined by the Committee in its sole discretion. The Committee, in
its sole discretion, shall determine the number of Shares subject to each
Option, provided that during any Fiscal Year, no Participant shall be granted
Options covering more than 2,000,000 Shares. Notwithstanding the foregoing
limitation, in connection with a Participant’s initial service as an Employee,
an Employee may be granted Options

 

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to purchase up to an additional 1,000,000 Shares. The Committee may grant
Incentive Stock Options, Nonqualified Stock Options, or a combination thereof.

 

5.2    Award Agreement.    Each Option shall be evidenced by an Award Agreement
that shall specify the Exercise Price, the expiration date of the Option, the
number of Shares to which the Option pertains, any conditions to exercise of the
Option, and such other terms and conditions as the Committee, in its discretion,
shall determine. The Award Agreement shall also specify whether the Option is
intended to be an Incentive Stock Option or a Nonqualified Stock Option.

 

5.3    Exercise Price.    Subject to the provisions of this Section 5.3, the
Exercise Price for each Option shall be determined by the Committee in its sole
discretion.

 

5.3.1    Nonqualified Stock Options.    Unless otherwise qualified under 162(m)
of the Code as “performance based compensation,” in the case of a Nonqualified
Stock Option intended to qualify as “performance based compensation” within the
meaning of Section 162(m) of the Code, the Exercise Price shall be not less than
one hundred percent (100%) of the Fair Market Value of a Share on the Grant
Date.

 

5.3.2    Incentive Stock Options.    In the case of an Incentive Stock Option,
the Exercise Price shall be not less than one hundred percent (100%) of the Fair
Market Value of a Share on the Grant Date; provided, however, that if on the
Grant Date, the Employee (together with persons whose stock ownership is
attributed to the Employee pursuant to Section 424(d) of the Code) owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or any of its Subsidiaries, the Exercise Price shall be not
less than one hundred and ten percent (110%) of the Fair Market Value of a Share
on the Grant Date.

 

5.3.3    Substitute Options.    Notwithstanding the provisions of Sections 5.3.1
and 5.3.2, in the event that the Company or an Affiliate consummates a
transaction described in Section 424(a) of the Code (e.g., the acquisition of
property or stock from an unrelated corporation), persons who become Employees
or Consultants on account of such transaction may be granted Options in
substitution for options granted by their former employer. If such substitute
Options are granted, the Committee, in its sole discretion and consistent with
Section 424(a) of the Code, may determine that such substitute Options shall
have an exercise price less than one hundred percent (100%) of the Fair Market
Value of the Shares on the Grant Date.

 

5.4    Expiration of Options.

 

5.4.1    Expiration Dates.    Each Option shall terminate no later than the
first to occur of the following events:

 

(a)  The date for termination of the Option set forth in the written Award
Agreement; or

 

(b)  The expiration of eight (8) years from the Grant Date.

 

5.4.2    Death of Participant.    Notwithstanding Section 5.4.1, if a
Participant dies prior to the expiration of his or her Options, the Committee,
in its discretion, may provide that his or her Options shall be exercisable for
up to three (3) years after the date of death.

 

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5.4.3    Committee Discretion.    Subject to the limits of Sections 5.4.1 and
5.4.2, the Committee, in its sole discretion, (a) shall provide in each Award
Agreement when each Option expires and becomes unexercisable, and (b) may, after
an Option is granted, extend the maximum term of the Option (subject to Section
5.8.4 regarding Incentive Stock Options).

 

5.5    Exercisability of Options.    Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall determine in its sole discretion. After an Option is
granted, the Committee, in its sole discretion, may accelerate the
exercisability of the Option.

 

5.6    Payment.    Options shall be exercised by the Participant’s delivery of a
written notice of exercise to the Secretary of the Company (or its designee),
setting forth the number of Shares with respect to which the Option is to be
exercised, accompanied by full payment for the Shares.

 

Upon the exercise of any Option, the Exercise Price shall be payable to the
Company in full in cash or its equivalent. The Committee, in its sole
discretion, also may permit exercise (a) by tendering previously acquired Shares
having an aggregate Fair Market Value at the time of exercise equal to the total
Exercise Price (such previously acquired Shares must have been held for the
requisite period necessary to avoid a charge to the Company’s earnings for
financial reporting purposes, unless otherwise determined by the Committee), or
(b) by any other means which the Committee, in its sole discretion, determines
to both provide legal consideration for the Shares, and to be consistent with
the purposes of the Plan. As soon as practicable after receipt of a written
notification of exercise and full payment for the Shares purchased, the Company
shall deliver to the Participant (or the Participant’s designated broker), Share
certificates (which may be in book entry form) representing such Shares.

 

5.7    Restrictions on Share Transferability.    The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option as it
may deem advisable, including, but not limited to, restrictions related to
applicable federal securities laws, the requirements of any national securities
exchange or system upon which Shares are then listed or traded, or any blue sky
or state securities laws.

 

5.8    Certain Additional Provisions for Incentive Stock Options.

 

5.8.1    Exercisability.    The aggregate Fair Market Value (determined on the
Grant Date(s)) of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by any Employee during any calendar year (under
all plans of the Company and its Subsidiaries) shall not exceed $100,000.

 

5.8.2    Termination of Service.    No Incentive Stock Option may be exercised
more than three (3) months after the Participant’s Termination of Service for
any reason other than Disability or death, unless (a) the Participant dies
during such three-month period, and/or (b) the Award Agreement or the Committee
permits later exercise. No Incentive Stock Option may be exercised more than one
(1) year after the Participant’s Termination of Service on account of
Disability, unless (a) the Participant dies during such one-year period, and/or
(b) the Award Agreement or the Committee permit later exercise.

 

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5.8.3    Company and Subsidiaries Only.    Incentive Stock Options may be
granted only to persons who are employees of the Company or a Subsidiary on the
Grant Date.

 

5.8.4    Expiration.    No Incentive Stock Option may be exercised after the
expiration of eight (8) years from the Grant Date; provided, however, that if
the Option is granted to an Employee who, together with persons whose stock
ownership is attributed to the Employee pursuant to Section 424(d) of the Code,
owns stock possessing more than 10% of the total combined voting power of all
classes of the stock of the Company or any of its Subsidiaries, the Option may
not be exercised after the expiration of five (5) years from the Grant Date.

 

SECTION 6

STOCK APPRECIATION RIGHTS

 

6.1    Grant of SARs.    Subject to the terms and conditions of the Plan, an SAR
may be granted to Employees and Consultants at any time and from time to time as
shall be determined by the Committee, in its sole discretion. The Committee may
grant Affiliated SARs, Freestanding SARs, Tandem SARs, or any combination
thereof.

 

6.1.1    Number of Shares.    The Committee shall have complete discretion to
determine the number of SARs granted to any Participant, provided that during
any Fiscal Year, no Participant shall be granted SARs covering more than
2,000,000 Shares.

 

6.1.2    Exercise Price and Other Terms.    The Committee, subject to the
provisions of the Plan, shall have complete discretion to determine the terms
and conditions of SARs granted under the Plan. However, the exercise price of an
SAR shall be not less than one hundred percent (100%) of the Fair Market Value
of a Share on the Grant Date.

 

6.2    SAR Agreement.    Each SAR grant shall be evidenced by an Award Agreement
that shall specify the exercise price, the term of the SAR, the conditions of
exercise, and such other terms and conditions as the Committee, in its sole
discretion, shall determine.

 

6.3    Expiration of SARs.    An SAR granted under the Plan shall expire upon
the date determined by the Committee, in its sole discretion, and set forth in
the Award Agreement. Notwithstanding the foregoing, the rules of Section 5.4
also shall apply to SARs.

 

6.4    Payment of SAR Amount.    Upon exercise of an SAR, a Participant shall be
entitled to receive payment from the Company an amount determined by
multiplying:

 

(a)  The difference between the Fair Market Value of a Share on the date of
exercise over the exercise price; times

 

(b)  The number of Shares with respect to which the SAR is exercised. At the
discretion of the Committee, the payment upon SAR exercise may be in cash, in
Shares of equivalent value, or in some combination thereof.

 

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SECTION 7

RESTRICTED STOCK

 

7.1    Grant of Restricted Stock.    Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to Employees and Consultants in such amounts as the Committee,
in its sole discretion, shall determine. The Committee, in its sole discretion,
shall determine the number of Shares to be granted to each Participant, provided
that during any Fiscal Year, no Participant shall receive more than 300,000
Shares of Restricted Stock.

 

7.2    Restricted Stock Agreement.    Each Award of Restricted Stock shall be
evidenced by an Award Agreement that shall specify the Period of Restriction,
the number of Shares granted, and such other terms and conditions as the
Committee, in its sole discretion, shall determine. Unless the Committee
determines otherwise, Shares of Restricted Stock shall be held by the Company as
escrow agent until the restrictions on such Shares have lapsed.

 

7.3    Transferability.    Except as provided in this Section 7, 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.

 

7.4    Other Restrictions.    The Committee, in its sole discretion, may impose
such other restrictions on Shares of Restricted Stock as it may deem advisable
or appropriate, in accordance with this Section 7.4.

 

7.4.1    General Restrictions.    The Committee may set restrictions based upon
the achievement of specific performance objectives (Company-wide, divisional, or
individual), applicable federal or state securities laws, or any other basis
determined by the Committee in its discretion.

 

7.4.2    Section 162(m) Performance Restrictions.    For purposes of qualifying
grants of Restricted Stock as “performance-based compensation” under Section
162(m) of the Code, the Committee, in its discretion, may set restrictions based
upon the achievement of Performance Goals. The Performance Goals shall be set by
the Committee on or before the latest date permissible to enable the Restricted
Stock to qualify as “performance-based compensation” under Section 162(m) of the
Code. In granting Restricted Stock which is intended to qualify under Section
162(m) of the Code, the Committee shall follow any procedures determined by it
from time to time to be necessary or appropriate to ensure qualification of the
Restricted Stock under Section 162(m) of the Code (e.g., in determining the
Performance Goals).

 

7.4.3    Legend on Certificates.    The Committee, in its discretion, may legend
the certificates representing Restricted Stock to give appropriate notice of
such restrictions.

 

7.5    Removal of Restrictions.    Except as otherwise provided in this Section
7, Shares of Restricted Stock covered by each Restricted Stock grant made under
the Plan shall be released from escrow as soon as practicable after the last day
of the Period of Restriction. The Committee, in its discretion, may accelerate
the time at which any restrictions shall lapse or be removed. After the
restrictions have lapsed, the Participant shall be entitled to have any legend
or legends under

 

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Section 7.4.3 removed from his or her Share certificate, and the Shares shall be
freely transferable by the Participant.

 

7.6    Voting Rights.    During the Period of Restriction, Participants holding
Shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those Shares, unless the Committee determines otherwise.

 

7.7    Dividends and Other Distributions.    During the Period of Restriction,
Participants holding Shares of Restricted Stock shall 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 shall be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted
Stock with respect to which they were paid.

 

7.8    Return of Restricted Stock to Company.    On the date set forth in the
Award Agreement, the Restricted Stock for which restrictions have not lapsed
shall revert to the Company and again shall become available for grant under the
Plan.

 

SECTION 8

PERFORMANCE UNITS AND PERFORMANCE SHARES

 

8.1    Grant of Performance Units/Shares.    Performance Units and Performance
Shares may be granted to Employees and Consultants at any time and from time to
time, as shall be determined by the Committee, in its sole discretion. The
Committee shall have complete discretion in determining the number of
Performance Units and Performance Shares granted to each Participant provided
that during any Fiscal Year, (a) no Participant shall receive Performance Units
having an initial value greater than $2,000,000, and (b) no Participant shall
receive more than 300,000 Performance Shares.

 

8.2    Value of Performance Units/Shares.    Each Performance Unit shall have an
initial value that is established by the Committee on or before the Grant Date.
Each Performance Share shall have an initial value equal to the Fair Market
Value of a Share on the Grant Date.

 

8.3    Performance Objectives and Other Terms.    The Committee shall set
performance objectives 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 Participants. The time period during which the
performance objectives must be met shall be called the “Performance Period.”
Each Award of Performance Units/Shares shall be evidenced by an Award Agreement
that shall specify the Performance Period, and such other terms and conditions
as the Committee, in its sole discretion, shall determine.

 

8.3.1    General Performance Objectives.    The Committee may set performance
objectives based upon the achievement of Company-wide, divisional, or individual
goals, applicable federal or state securities laws, or any other basis
determined by the Committee in its discretion.

 

8.3.2    Section 162(m) Performance Objectives.    For purposes of qualifying
grants of Performance Units/Shares as “performance-based compensation” under
Section 162(m) of the Code, the Committee, in its discretion, may determine that
the performance objectives applicable to Performance Units/Shares shall be based
on the achievement of Performance Goals. The Performance Goals shall be set by
the Committee on or before the latest date permissible to enable

 

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the Performance Units/Shares to qualify as “performance-based compensation”
under Section 162(m) of the Code. In granting Performance Units/Shares which are
intended to qualify under Section 162(m) of the Code, the Committee shall follow
any procedures determined by it from time to time to be necessary or appropriate
to ensure qualification of the Performance Units/Shares under Section 162(m) of
the Code (e.g., in determining the Performance Goals).

 

8.4    Earning of Performance Units/Shares.    After the applicable Performance
Period has ended, the holder of Performance Units/Shares shall 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 have been achieved.
After the grant of a Performance Unit/Share, the Committee, in its sole
discretion, may reduce or waive any performance objectives for such Performance
Unit/Share.

 

8.5    Form and Timing of Payment of Performance Units/Shares.    Payment of
earned Performance Units/Shares shall be made as soon as practicable after the
expiration of the applicable Performance Period. The Committee, 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.

 

8.6    Cancellation of Performance Units/Shares.    On the date set forth in the
Award Agreement, all unearned or unvested Performance Units/Shares shall be
forfeited to the Company, and again shall be available for grant under the Plan.

 

SECTION 9

NONEMPLOYEE DIRECTOR OPTIONS

 

The provisions of this Section 9 are applicable only to Options granted to
Nonemployee Directors. The provisions of Section 5 are applicable to Options
granted to Employees and Consultants (and to the extent provided in Section
9.2.7, to Options granted to Nonemployee Directors).

 

9.1    Granting of Options.

 

9.1.1    Initial Grants.    Each Nonemployee Director who first becomes a
Nonemployee Director on or after the effective date of this Plan, automatically
shall receive, as of the date that the individual first is appointed or elected
as a Nonemployee Director, an Option to purchase 35,000 Shares.

 

9.1.2    Ongoing Grants.    Each Nonemployee Director who both (a) is a
Nonemployee Director on the last business day of a Fiscal Year, and (b) has
served as a Nonemployee Director for at least six months (which includes such
last business day), automatically shall receive, as of such last business day
only, an Option to purchase 10,000 Shares.

 

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9.2    Terms of Options.

 

9.2.1    Option Agreement.    Each Option granted pursuant to this Section 9
shall be evidenced by a written Award Agreement between the Participant and the
Company.

 

9.2.2    Exercise Price.    The Exercise Price for the Shares subject to each
Option granted pursuant to this Section 9 shall be 100% of the Fair Market Value
of such Shares on the Grant Date.

 

9.2.3    Exercisability.

 

(a)  Each Option granted pursuant to Section 9.1.1 shall become exercisable as
to 1/3rd of the Shares on the first anniversary of the Grant Date, and as to
1/36th of the Shares each month thereafter, so that the Option shall be 100%
vested on the third anniversary of the Grant Date.

 

(b)  Each Option granted pursuant to Section 9.1.2 shall be fully exercisable on
the Grant Date.

 

(c)  Notwithstanding any contrary provision of this Section 9.2.3, the Committee
or the Board, in their sole discretion, may accelerate the exercisability of the
Options granted pursuant to this Section 9.

 

(d)  Notwithstanding any contrary provision of this Section 9.2.3, once a
Participant ceases to be a Director, his or her Options which are not then
exercisable shall never become exercisable and shall be immediately forfeited,
except to the limited extent provided in Section 9.2.5.

 

9.2.4    Expiration of Options. Each Option granted pursuant to this Section 9
shall terminate upon the first to occur of the following events:

 

(a)  The expiration of eight (8) years from the Grant Date; or

 

(b)  The expiration of three (3) months from the date of the Participant’s
Termination of Service for any reason other than the Participant’s death,
Disability or Retirement; or

 

(c)  The expiration of one (1) year from the date of the Participant’s
Termination of Service by reason of Disability or Retirement.

 

9.2.5    Death of Participant.    Notwithstanding the provisions of Section
9.2.4, if a Participant dies prior to the expiration of his or her Options in
accordance with Section 9.2.4, then (a) one hundred percent (100%) of the Shares
covered by his or her Options shall immediately become one hundred percent
(100%) exercisable, and (b) his or her Options shall terminate one (1) year
after the date of his or her death.

 

9.2.6    Not Incentive Stock Options.    Options granted pursuant to this
Section 9 shall not be designated as Incentive Stock Options.

 

9.2.7    Other Terms.    All provisions of the Plan not inconsistent with this
Section 9 shall apply to Options granted to Nonemployee Directors.

 

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9.2.8    Substitute Options.    Notwithstanding the provisions of Section 9.2.2,
in the event that the Company or an Affiliate consummates a transaction
described in section 424(a) of the Code (e.g., the acquisition of property or
stock from an unrelated corporation), persons who become Non-employee Directors
on account of such transaction may be granted Options in substitution for
options granted by their former employer. If such substitute Options are
granted, the Committee, in its sole discretion and consistent with section
424(a) of the Code, shall determine the exercise price of such substitute
Options.

 

9.3    Elections by Nonemployee Directors.    Pursuant to such procedures as the
Committee (in its discretion) may adopt from time to time, each Nonemployee
Director may elect to forego receipt of all or a portion of the annual retainer,
committee fees and meeting fees otherwise due to the Nonemployee Director in
exchange for Restricted Stock or Options. The number of Shares of Restricted
Stock received by any Nonemployee Director shall equal the amount of foregone
compensation divided by the Fair Market Value of a Share on the date the
compensation otherwise would have been paid to the Nonemployee Director, rounded
up to the nearest whole number of Shares. The number of Options granted shall be
determined by dividing the cash amount foregone by an option pricing model
determined by the Committee (e.g., Black-Scholes), rounded up to the nearest
whole number of Shares. The procedures adopted by the Committee for elections
under this Section 9.3 shall be designed to ensure that any such election by a
Nonemployee Director will not disqualify him or her as a “non-employee director”
under Rule 16b-3.

 

SECTION 10

MISCELLANEOUS

 

10.1    Change in Control.

 

10.1.1    Options and SARs.

 

(a)  In the event of a Change in Control, each outstanding Option and SAR shall
be assumed or an equivalent option or right substituted by the successor
corporation or a parent or Subsidiary of the successor corporation.

 

(b)  In the event that the successor corporation refuses to assume or substitute
for the Option or SAR, then the Options and SARs held by such Participant shall
become one hundred percent (100%) exercisable. If an Option or SAR becomes fully
vested and exercisable in lieu of assumption or substitution in the event of a
Change in Control, the Company shall notify the Participant in writing or
electronically that the Option or SAR shall be fully vested and exercisable
(subject to the consummation of the Change in Control) for a period of fifteen
(15) days from the date of such notice, and the Option or SAR shall terminate
upon the expiration of such period.

 

(c)  For the purposes of this Section 10.1.1, the Option or SAR shall be
considered assumed if, following the Change in Control, the option or right
confers the right to purchase or receive, for each Share subject to the Option
or SAR immediately prior to the Change in Control, the consideration (whether
stock, cash, or other securities or property) received in the Change in Control
by holders of Shares 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

 

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received in the Change in Control is not solely common stock of the successor
corporation or its parent, the Committee or the Board may, with the consent of
the successor corporation, provide for the consideration to be received upon the
exercise of the Option or SAR, for each Share subject to the Option or SAR, to
be solely common stock of the successor corporation or its parent equal in fair
market value to the per share consideration received by holders of Shares in the
Change in Control, as determined on the date of the Change in Control.

 

(d)  With respect to Options and SARs that are assumed or substituted for, if
within eighteen (18) months following the Change in Control the Participant
incurs a Termination of Service due to involuntary termination by the successor
corporation or one of its affiliates for a reason other than Misconduct, then
the Options and SARs held by such Participant shall become one hundred percent
(100%) exercisable.

 

10.1.2    Restricted Stock.

 

(a)  In the event of a Change in Control, any Company repurchase or
reacquisition right with respect to outstanding Shares of Restricted Stock held
by the Participant will be assigned to the successor corporation. In the event
that the successor corporation refuses to accept the assignment of any such
Company repurchase or reacquisition right, such Company repurchase or
reacquisition right will lapse and the Participant will become one hundred
percent (100%) vested in such Shares of Restricted Stock immediately prior to
the Change in Control.

 

(b)  If the Company repurchase or reacquisition right with respect to a Share of
Restricted Stock is assigned to the successor corporation and, within eighteen
(18) months following the Change in Control, the Participant incurs a
Termination of Service due to involuntary termination by the successor
corporation or one of its affiliates for a reason other than Misconduct, then
such Participant’s Shares of Restricted Stock (or the property for which the
Restricted Stock was converted upon the Change in Control) will immediately have
any Company repurchase or reacquisition right lapse and the Participant will
become one hundred percent (100%) vested in such Shares of Restricted Stock (or
the property for which the Restricted Stock was converted upon the Change in
Control).

 

10.1.3    Performance Shares and Performance Units.    In the event of a Change
in Control, the Committee or the Board, in its discretion, may provide for any
one or more of the following with respect to the Performance Shares and Units:
(a) any outstanding Performance Shares and Units shall be assumed by the
successor corporation or a parent or Subsidiary of the successor corporation,
(b) any outstanding Performance Shares and Units shall be terminated immediately
prior to the Change in Control, or (c) with respect to a Change in Control that
occurs prior to a Participant’s Termination of Service, one hundred percent
(100%) of any outstanding Performance Shares or Units shall be deemed to be
earned and shall be immediately payable to the Participant, or, in cases where a
Participant has received a target award of Performance Units or Shares, one
hundred percent (100%) of the target amount shall vest. In the event any
outstanding Performance Shares and Units are assumed, the successor corporation
shall have the ability to reasonably and equitably adjust the Performance Goals.

 

10.2    Deferrals.    The Committee, in its sole discretion, may permit a
Participant to defer receipt of the payment of cash or the delivery of Shares
that would otherwise be due to such

 

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Participant under an Award. Any such deferral elections shall be subject to such
rules and procedures as shall be determined by the Committee in its sole
discretion.

 

10.3    No Effect on Employment or Service.    Nothing in the Plan shall
interfere with or limit in any way the right of the Company to terminate any
Participant’s employment or service at any time, with or without cause. For
purposes of the Plan, transfer of employment of a Participant between the
Company and any one of its Affiliates (or between Affiliates) shall not be
deemed a Termination of Service. Employment with the Company and its Affiliates
is on an at-will basis only.

 

10.4    Participation.    No Employee or Consultant shall have the right to be
selected to receive an Award under this Plan, or, having been so selected, to be
selected to receive a future Award.

 

10.5    Indemnification.    Each person who is or shall have been a member of
the Committee, or of the Board, shall be indemnified and held harmless by the
Company against and from (a) any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action taken or
failure to act under the Plan or any Award Agreement, and (b) from any and all
amounts paid by him or her in settlement thereof, with the Company’s approval,
or paid by him or her in satisfaction of any judgment in any such claim, action,
suit, or proceeding against him or her, provided he or she shall give the
Company an opportunity, at its own expense, to handle and defend the same before
he or she undertakes to handle and defend it on his or her own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company’s
Certificate of Incorporation or Bylaws, by contract, as a matter of law, or
otherwise, or under any power that the Company may have to indemnify them or
hold them harmless.

 

10.6    Successors.    All obligations of the Company under the Plan, with
respect to Awards granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business or assets of the Company.

 

10.7    Beneficiary Designations.    If permitted by the Committee, a
Participant under the Plan may name a beneficiary or beneficiaries to whom any
vested but unpaid Award shall be paid in the event of the Participant’s death.
Each such designation shall revoke all prior designations by the Participant and
shall be effective only if given in a form and manner acceptable to the
Committee. In the absence of any such designation, any vested benefits remaining
unpaid at the Participant’s death shall be paid to the Participant’s estate and,
subject to the terms of the Plan and of the applicable Award Agreement, any
unexercised vested Award may be exercised by the administrator or executor of
the Participant’s estate.

 

10.8    Limited Transferability of Awards.    No Award granted under the Plan
may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will, by the laws of descent and distribution, or to
the limited extent provided in Section 10.7. All rights with respect to an Award
granted to a Participant shall be available during his or her lifetime only to
the Participant. Notwithstanding the foregoing, the Participant may, in a manner
specified by the Committee, (a) transfer a Nonqualified Stock Option to a
Participant’s spouse, former spouse or dependent pursuant to a court-approved
domestic relations order which relates to the provision of

 

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child support, alimony payments or marital property rights, and (b) transfer a
Nonqualified Stock 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 an/or member(s) of the Participant’s immediate family control
the management of the foundation’s assets.

 

10.9    No Rights as Stockholder.    Except to the limited extent provided in
Sections 7.6 and 7.7, no Participant (nor any beneficiary) shall have any of the
rights or privileges of a stockholder of the Company with respect to any Shares
issuable pursuant to an Award (or exercise thereof), unless and until
certificates representing such Shares shall have been issued, recorded on the
records of the Company or its transfer agents or registrars, and delivered to
the Participant (or beneficiary).

 

SECTION 11

AMENDMENT, TERMINATION, AND DURATION

 

11.1    Amendment, Suspension, or Termination.    The Board, in its sole
discretion, may amend, suspend or terminate the Plan, or any part thereof, at
any time and for any reason. The amendment, suspension, or termination of the
Plan shall not, without the consent of the Participant, alter or impair any
rights or obligations under any Award theretofore granted to such Participant.
No Award may be granted during any period of suspension or after termination of
the Plan.

 

11.2    Duration of the Plan.    The Plan shall be effective as of March 26,
2003, and subject to Section 11.1 (regarding the Board’s right to amend or
terminate the Plan), shall remain in effect thereafter. However, without further
stockholder approval, no Incentive Stock Option may be granted under the Plan
after March 26, 2013.

 

SECTION 12

TAX WITHHOLDING

 

12.1    Withholding Requirements.    Prior to the delivery of any Shares or cash
pursuant to an Award (or exercise thereof), the Company shall 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, and local taxes
(including the Participant’s FICA obligation) required to be withheld with
respect to such Award (or exercise thereof).

 

12.2    Withholding Arrangements.    The Committee, 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
(a) electing to have the Company withhold otherwise deliverable Shares, or (b)
delivering to the Company already-owned Shares having a Fair Market Value equal
to the minimum amount required to be withheld.

 

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SECTION 13

LEGAL CONSTRUCTION

 

13.1    Gender and Number.    Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

 

13.2    Severability.    In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.

 

13.3    Requirements of Law.    The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

 

13.4    Securities Law Compliance.    With respect to Section 16 Persons,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3. To the extent any provision of the Plan, Award
Agreement or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.

 

13.5    Governing Law.    The Plan and all Award Agreements shall be construed
in accordance with and governed by the laws of the State of Colorado.

 

13.6    Captions.    Captions are provided herein for convenience only, and
shall not serve as a basis for interpretation or construction of the Plan.

 

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EXECUTION

 

IN WITNESS WHEREOF, the Company, by its duly authorized officer, has executed
this restated Plan on the date indicated below.

 

       

J.D. EDWARDS & COMPANY

Dated:                                         , 2003

     

By:

 

 

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Title: