Exhibit 10.1

 

UNITED ONLINE,  INC.

2010 INCENTIVE COMPENSATION PLAN

 

ARTICLE ONE

 

GENERAL PROVISIONS

 

I.              PURPOSE OF THE PLAN

 

This 2010 Incentive Compensation Plan is intended to promote the interests of
United Online, Inc., a Delaware corporation, by providing eligible persons in
the Corporation’s service with the opportunity to participate in one or more
cash or equity incentive compensation programs designed to encourage them to
continue their service relationship with the Corporation.

 

Capitalized terms shall have the meanings assigned to such terms in the attached
Appendix.

 

II.            STRUCTURE OF THE PLAN

 

A.            The Plan shall be divided into a series of separate incentive
compensation programs:

 

·              the Discretionary Grant Program under which eligible persons may,
at the discretion of the Plan Administrator, be granted options to purchase
shares of Common Stock or stock appreciation rights tied to the value of such
Common Stock,

 

·              the Stock Issuance Program under which eligible persons may, at
the discretion of the Plan Administrator, be issued shares of Common Stock
pursuant to restricted stock awards, restricted stock units, performance shares
or other stock-based awards which vest upon the completion of a designated
service period or the attainment of pre-established performance milestones, or
such shares of Common Stock may be issued through direct purchase or as a bonus
for services rendered the Corporation (or any Parent or Subsidiary),  and

 

·              the Incentive Bonus Program under which eligible persons may, at
the discretion of the Plan Administrator, be provided with incentive bonus
opportunities through performance unit awards and special cash incentive
programs tied to the attainment of pre-established performance milestones or the
appreciation in the Fair Market Value of the Common Stock.

 

B.            The provisions of Articles One and Five shall apply to all
incentive compensation programs under the Plan and shall govern the interests of
all persons under the Plan.

 

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III.           ADMINISTRATION OF THE PLAN

 

A.            The Compensation Committee (whether acting directly or through a
subcommittee of two or more members thereof) shall have sole and exclusive
authority to administer the Discretionary Grant, Stock Issuance and Incentive
Bonus Programs with respect to Section 16 Insiders.  Administration of the
Discretionary Grant, Stock Issuance and Incentive Bonus Programs with respect to
all other persons eligible to participate in those programs may, at the Board’s
discretion, be vested in the Compensation Committee or a Secondary Board
Committee, or the Board may retain the power to administer those programs with
respect to all such persons.  All Awards to non-employee Board members shall be
made by the Board on the basis of the recommendations of the Compensation
Committee or by the Compensation Committee (or subcommittee thereof) which shall
at the time of any such Award be comprised solely of two or more independent
Board members, as determined in accordance with the independence standards
established by the Stock Exchange on which the Common Stock is at the time
primarily traded.

 

B.            Members of the Compensation Committee or any Secondary Board
Committee shall serve for such period of time as the Board may determine and may
be removed by the Board at any time.  The Board may also at any time terminate
the functions of any Secondary Board Committee and reassume all powers and
authority previously delegated to such committee.

 

C.            Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority (subject
to the provisions of the Plan) to establish such rules and regulations as it may
deem appropriate for proper administration of the Discretionary Grant, Stock
Issuance and Incentive Bonus Programs and to make such determinations under, and
issue such interpretations of, the provisions of those programs and any
outstanding Awards thereunder as it may deem necessary or advisable.  Decisions
of the Plan Administrator within the scope of its administrative functions under
the Plan shall be final and binding on all parties who have an interest in the
Discretionary Grant, Stock Issuance and Incentive Bonus Programs under its
jurisdiction or any Award thereunder.

 

D.            Service as a Plan Administrator by the members of the Compensation
Committee or the Secondary Board Committee shall constitute service as Board
members, and the members of each such committee shall accordingly be entitled to
full indemnification and reimbursement as Board members for their service on
such committee.  No member of the Compensation Committee or the Secondary Board
Committee shall be liable for any act or omission made in good faith with
respect to the Plan or any Award thereunder.

 

IV.           ELIGIBILITY

 

A.            The persons eligible to participate in the Plan are as follows:

 

(i)            Employees,

 

(ii)           non-employee members of the Board or the board of directors of
any Parent or Subsidiary, and

 

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(iii)          consultants and other independent advisors who provide services
to the Corporation (or any Parent or Subsidiary).

 

B.            The Plan Administrator shall have full authority to determine,
(i) with respect to Awards made under the Discretionary Grant Program, which
eligible persons are to receive such Awards, the time or times when those Awards
are to be made, the number of shares to be covered by each such Award, the time
or times when the Award is to become exercisable, the vesting schedule (if any)
applicable to the Award, the maximum term for which such Award is to remain
outstanding and the status of a granted option as either an Incentive Option or
a Non-Statutory Option; (ii) with respect to Awards under the Stock Issuance
Program, which eligible persons are to receive such Awards, the time or times
when the Awards are to be made, the number of shares subject to each such Award,
the vesting and issuance schedules applicable to the shares which are the
subject of such Award, the cash consideration (if any) payable for those shares
and the form (cash or shares of Common Stock) in which the Award is to be
settled; and (iii) with respect to Awards under the Incentive Bonus Program,
which eligible persons are to receive such Awards, the time or times when the
Awards are to be made, the performance objectives for each such Award, the
amounts payable at designated levels of attained performance, any applicable
service vesting requirements, the payout schedule for each such Award and the
form (cash or shares of Common Stock) in which the Award is to be settled.

 

C.            The Plan Administrator shall have the absolute discretion to grant
options or stock appreciation rights in accordance with the Discretionary Grant
Program, to effect stock issuances and other stock-based awards in accordance
with the Stock Issuance Program and to grant incentive bonus awards in
accordance with the Incentive Bonus Program.

 

V.            STOCK SUBJECT TO THE PLAN

 

A.            The stock issuable under the Plan shall be shares of authorized
but unissued or reacquired Common Stock. The number of shares of Common Stock
initially reserved for issuance over the term of the Plan shall be limited to
Twenty Three Million Six Hundred Thousand (23,600,000) shares, subject to
adjustment from time to time pursuant to the provisions of Section V.I of this
Article One.   However, such share reserve shall be reduced for the shares
subject to any awards made under the Predecessor Plans during the period
commencing January 1, 2010 and continuing through the date the new Plan is
approved by the Corporation’s stockholders at the 2010 Annual Meeting. The
actual number of shares by which the share reserve under the Plan shall be
reduced for such awards under the Predecessor Plans shall be determined in
accordance with the parameters of Section V.D of this Article One, as if those
awards had in fact been made under the Plan.

 

B.            The Plan shall serve as the successor to the various Predecessor
Plans, and no further stock option grants, restricted stock unit awards or other
stock-based awards shall be made under any of the Predecessor Plans on or after
the date the Plan is approved by the Corporation’s stockholders at the 2010
Annual Meeting. However, all option grants and restricted stock unit awards
outstanding under the Predecessor Plans on the date of the 2010 Annual Meeting
shall continue in full force and effect in accordance with their terms, and no
provision of this Plan shall be deemed to affect or otherwise modify the rights
or obligations of

 

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the holders of those awards with respect to their acquisition of shares of
Common Stock thereunder.

 

C.            To the extent any options that are outstanding under the
Predecessor Plans on or after December 31, 2009 expire, are forfeited or
cancelled or terminate unexercised or any unvested restricted stock unit awards
outstanding under the Predecessor Plans on or after December 31, 2009 are
forfeited or cancelled, the number of shares of Common Stock at the time subject
to those expired, forfeited, cancelled or terminated options and the number of
shares of Common Stock at the time subject to those forfeited or cancelled
restricted stock unit awards shall be added to the share reserve under this Plan
and shall accordingly be available for award and issuance hereunder in
accordance with the following parameters:

 

(i)            for each share of Common Stock subject to such expired,
forfeited, cancelled or unexercised option grant, the share reserve shall be
increased by one share; and

 

(ii)           for each share of Common Stock subject to such forfeited or
cancelled restricted stock unit award, the share reserve shall be increased by
2.5 shares.

 

D.            The number of shares of Common Stock reserved for award and
issuance under this Plan pursuant to Section V.A of this Article One shall be
reduced on a one-for-one basis for each share of Common Stock subject to an
Award made under the Discretionary Grant Program and by a fixed ratio of 2.5
shares of Common Stock for each share of Common Stock subject to a Full Value
Award made under the Stock Issuance or Incentive Bonus Program.

 

E.             The maximum number of shares of Common Stock which may be issued
pursuant to Incentive Options granted under the Plan shall not exceed 23,600,000
shares in the aggregate, subject to adjustment from time to time under
Section V.I of this Article One.

 

F.             Each person participating in the Plan other than a non-employee
Board member shall be subject to the following limitations:

 

·              for Awards denominated in terms of shares of Common Stock
(whether payable in Common Stock, cash or a combination of both), the maximum
number of shares of Common Stock for which such Awards may be made to such
person in any calendar year shall not exceed in the aggregate Five Million
(5,000,000) shares of Common Stock under the Discretionary Grant Program and an
additional Three Million (3,000,000) shares of Common Stock in the aggregate
under the Stock Issuance and Incentive Bonus Programs; and

 

·              for Awards denominated in cash (whether payable in cash, Common
Stock or a combination of both) and subject to one or more performance-vesting
conditions, the maximum dollar amount for which such Awards may be made in the
aggregate to such person shall not exceed Seven Million Five Hundred Thousand
dollars ($7,500,000.00) for each calendar year within the applicable performance
measurement period, with any such performance period not to exceed

 

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five (5) years and with pro-ration based on the foregoing dollar amount in the
event of any fractional calendar year included within such performance period.

 

G.            Shares of Common Stock subject to outstanding Awards made under
the Plan shall be available for subsequent award and issuance under the Plan to
the extent those Awards expire, are forfeited or cancelled or terminate for any
reason prior to the issuance of the shares of Common Stock subject to those
Awards.  Such shares shall be added back to the number of shares of Common Stock
reserved for award and issuance under the Plan as follows:

 

(i)            for each share of Common Stock subject to such an expired,
forfeited, cancelled or terminated Award made under the Discretionary Grant
Program, one share of Common Stock shall become available for subsequent award
and issuance under the Plan,

 

(ii)           for each share subject to a forfeited or cancelled Full Value
Award made under the Stock Issuance or Incentive Bonus Program, 2.5 shares shall
become available for subsequent award and issuance, and

 

(iii)          for each unvested share issued under the Discretionary Grant or
Stock Issuance Program for cash consideration not less than the Fair Market
Value per share of Common Stock on the Award date and subsequently repurchased
by the Corporation, at a price per share not greater than the original issue
price paid per share, pursuant to the Corporation’s repurchase rights under the
Plan, one share shall become available for subsequent award and issuance under
the Plan.

 

H.            Should the exercise price of an option under the Plan be paid with
shares of Common Stock (whether through the withholding of a portion of the
otherwise issuable shares or through the tender of actual outstanding shares),
then the authorized reserve of Common Stock under the Plan shall be reduced by
the gross number of shares for which that option is exercised, and not by the
net number of shares issued under the exercised stock option.  Upon the exercise
of any stock appreciation right under the Plan, the share reserve shall be
reduced by the gross number of shares as to which such right is exercised, and
not by the net number of shares actually issued by the Corporation upon such
exercise. If shares of Common Stock otherwise issuable under the Plan are
withheld by the Corporation in satisfaction of the withholding taxes incurred in
connection with the issuance, vesting or settlement of an Award, then the number
of shares of Common Stock available for issuance under the Plan shall be reduced
on the basis of the gross number of shares issued, vested or settled under such
Award, calculated in each instance prior to any such share withholding.

 

I.              Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares, spin-off transaction or other change affecting the outstanding Common
Stock as a class without the Corporation’s receipt of consideration, or should
the value of outstanding shares of Common Stock be substantially reduced as a
result of a spin-off transaction or an extraordinary dividend or distribution,
or should there occur any merger, consolidation or other reorganization
(including, without limitation, a Change in Control transaction), then equitable
adjustments shall

 

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be made by the Plan Administrator to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the maximum number and/or class of
securities that may be issued under the Plan pursuant to Incentive Options,
(iii) the maximum number and/or class of securities for which any one person may
be granted Common Stock-denominated Awards under the Discretionary Grant Program
or under the Stock Issuance and Incentive Bonus Programs per calendar year,
(iv) the number and/or class of securities and the exercise or base price per
share in effect under each outstanding Award under the Discretionary Grant
Program, (v) the number and/or class of securities subject to each outstanding
Award under the Stock Issuance Program and the cash consideration (if any)
payable per share, (vi) the number and/or class of securities subject to each
outstanding Award under the Incentive Bonus Program denominated in shares of
Common Stock and (vii) the number and/or class of securities subject to the
Corporation’s outstanding repurchase rights under the Plan and the repurchase
price payable per share.  The adjustments shall be made in such manner as the
Plan Administrator deems appropriate and such adjustments shall be final,
binding and conclusive.

 

J.             Outstanding Awards granted pursuant to the Plan shall in no way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.

 

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ARTICLE TWO

 

DISCRETIONARY GRANT PROGRAM

 

I.              OPTION TERMS

 

Each option shall be evidenced by one or more documents in the form approved by
the Plan Administrator; provided, however, that each such document shall comply
with the terms specified below.  Each document evidencing an Incentive Option
shall, in addition, be subject to the provisions of the Plan applicable to such
options.

 

A.            Exercise Price.

 

1.             The exercise price per share shall be fixed by the Plan
Administrator; provided, however, that such exercise price shall not be less
than one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the grant date.

 

2.             The exercise price shall become immediately due upon exercise of
the option and shall, subject to the provisions of the documents evidencing the
option, be payable in one or more of the forms specified below:

 

(i)            cash or check made payable to the Corporation,

 

(ii)           shares of Common Stock (whether delivered in the form of actual
stock certificates or through attestation of ownership) held for the requisite
period (if any) necessary to avoid any resulting charge to the Corporation’s
earnings for financial reporting purposes and valued at Fair Market Value on the
Exercise Date,

 

(iii)          shares of Common Stock otherwise issuable under the option but
withheld by the Corporation in satisfaction of the exercise price, with such
withheld shares to be valued at Fair Market Value on the exercise date, and

 

(iv)          to the extent the option is exercised for vested shares, through a
special sale and remittance procedure pursuant to which the Optionee shall
concurrently provide instructions to (a) a brokerage firm (reasonably
satisfactory to the Corporation for purposes of administering such procedure in
compliance with the Corporation’s pre-clearance/pre-notification policies) to
effect the immediate sale of the purchased shares and remit to the Corporation,
out of the sale proceeds available on the settlement date, sufficient funds to
cover the aggregate exercise price payable for the purchased shares plus all
applicable income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (b) the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm on such
settlement date in order to complete the sale.

 

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Except to the extent such sale and remittance procedure is utilized, payment of
the exercise price for the purchased shares must be made on the Exercise Date.

 

B.            Exercise and Term of Options.

 

1.             Each option shall be exercisable at such time or times, during
such period and for such number of shares as shall be determined by the Plan
Administrator and set forth in the documents evidencing the option.  However, no
option shall have a term in excess of ten (10) years measured from the option
grant date.

 

2.             The Plan Administrator shall also have the discretionary
authority to structure one or more Awards under the Discretionary Grant Program
so that those Awards shall vest and become exercisable only after the
achievement of pre-established corporate performance objectives based on one or
more Performance Goals and measured over the performance period specified by the
Plan Administrator at the time of the Award.

 

C.            Effect of Termination of Service.

 

1.             The following provisions shall govern the exercise of any options
granted pursuant to the Discretionary Grant Program that are outstanding at the
time of the Optionee’s cessation of Service or death:

 

(i)            Any option outstanding at the time of the Optionee’s cessation of
Service for any reason shall remain exercisable for such period of time
thereafter as shall be determined by the Plan Administrator and set forth in the
documents evidencing the option, but no such option shall be exercisable after
the expiration of the option term.

 

(ii)           Any option held by the Optionee at the time of the Optionee’s
death and exercisable in whole or in part at that time may be subsequently
exercised by the personal representative of the Optionee’s estate or by the
person or persons to whom the option is transferred pursuant to the Optionee’s
will or the laws of inheritance or by the Optionee’s designated beneficiary or
beneficiaries of that option.

 

(iii)          Should the Optionee’s Service be terminated for Cause or should
the Optionee otherwise engage in conduct constituting grounds for a termination
for Cause while holding one or more outstanding options granted under this
Article Two, then all of those options shall terminate immediately and cease to
be outstanding.

 

(iv)          During the applicable post-Service exercise period, the option may
not be exercised for more than the number of vested shares for which the option
is at the time exercisable; provided, however, that one or more options under
the Discretionary Grant Program may be structured so that those options will
continue to vest in whole or part during the applicable post-Service exercise
period. Upon the expiration of the applicable exercise period or (if earlier)
upon the expiration of the option term, the option shall terminate and

 

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cease to be outstanding for any shares for which the option has not been
exercised.

 

2.             The Plan Administrator shall have complete discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:

 

(i)            extend the period of time for which the option is to remain
exercisable following the Optionee’s cessation of Service from the limited
exercise period otherwise in effect for that option to such greater period of
time as the Plan Administrator shall deem appropriate, but in no event beyond
the expiration of the option term,

 

(ii)           include an automatic extension provision whereby the specified
post-Service exercise period in effect for any option granted under the
Discretionary Grant Program shall automatically be extended by an additional
period of time equal in duration to any interval within the specified
post-Service exercise period during which the exercise of that option or the
immediate sale of the shares acquired under such option could not be effected in
compliance with applicable federal and state securities laws, but in no event
shall such an extension result in the continuation of such option beyond the
expiration date of the term of that option, and/or

 

(iii)          permit the option to be exercised, during the applicable
post-Service exercise period, not only with respect to the number of vested
shares of Common Stock for which such option is exercisable at the time of the
Optionee’s cessation of Service but also with respect to one or more additional
installments in which the Optionee would have vested had the Optionee continued
in Service.

 

D.            Stockholder Rights.  The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.

 

E.             Repurchase Rights.  The Plan Administrator shall have the
discretion to grant options which are exercisable for unvested shares of Common
Stock.  Should the Optionee cease Service while such shares are unvested, the
Corporation shall have the right to repurchase any or all of those unvested
shares at a price per share equal to the lower of (i) the exercise price paid
per share or (ii) the Fair Market Value per share of Common Stock at the time of
repurchase.  The terms upon which such repurchase right shall be exercisable
(including the period and procedure for exercise and the appropriate vesting
schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the document evidencing such repurchase right.

 

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F.             Transferability of Options. The transferability of options
granted under the Plan shall be governed by the following provisions:

 

(i)            Incentive Options.   During the lifetime of the
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or the laws of inheritance
following the Optionee’s death.

 

(ii)           Non-Statutory Options.  Non-Statutory Options shall be subject to
the same limitation on transfer as Incentive Options, except that the Plan
Administrator may structure one or more Non-Statutory Options so that the option
may be transferred gratuitously in whole or in part during the Optionee’s
lifetime to one or more Family Members of the Optionee or to a trust established
exclusively for the Optionee and/or such Family Members or may be transferred to
one or more Family Member pursuant to a domestic relations order. The
transferred portion may only be exercised by the person or persons who acquire a
proprietary interest in the option pursuant to the transfer.  The terms
applicable to the transferred portion shall be the same as those in effect for
the option immediately prior to such transfer and shall be set forth in such
documents issued to the transferee as the Plan Administrator may deem
appropriate.

 

(iii)          Beneficiary Designations.  Notwithstanding the foregoing, the
Optionee may designate one or more persons as the beneficiary or beneficiaries
of his or her outstanding options under the Discretionary Grant Program (whether
Incentive Options or Non-Statutory Options), and those options shall, in
accordance with such designation, automatically be transferred to such
beneficiary or beneficiaries upon the Optionee’s death while holding those
options.  Such beneficiary or beneficiaries shall take the transferred options
subject to all the terms and conditions of the applicable agreement evidencing
each such transferred option, including (without limitation) the limited time
period during which the option may be exercised following the Optionee’s death.

 

II.            INCENTIVE OPTIONS

 

The terms specified below shall be applicable to all Incentive Options.  Except
as modified by the provisions of this Section II, all the provisions of Articles
One, Two and Six shall be applicable to Incentive Options.  Options which are
specifically designated as Non-Statutory Options when issued under the Plan
shall not be subject to the terms of this Section II.

 

A.            Eligibility.  Incentive Options may only be granted to Employees.

 

B.            Dollar Limitation.  The aggregate Fair Market Value of the shares
of Common Stock (determined as of the respective date or dates of grant) for
which one or more options granted to any Employee under the Plan (or any other
option plan of the Corporation or any Parent or Subsidiary) may for the first
time become exercisable as Incentive Options during any one calendar year shall
not exceed the sum of One Hundred Thousand Dollars ($100,000).

 

To the extent the Employee holds two (2) or more such options which become
exercisable for the first time in the same calendar year, then for purposes of
the foregoing limitations on the exercisability of those options as Incentive
Options, such options shall be deemed to become first exercisable in that
calendar year on the basis of the

 

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chronological order in which they were granted, except to the extent otherwise
provided under applicable law or regulation.

 

C.            10% Stockholder.  If any Employee to whom an Incentive Option is
granted is a 10% Stockholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the option grant date, and the option term shall not exceed five
(5) years measured from the option grant date.

 

III.           STOCK APPRECIATION RIGHTS

 

A.            Authority.  The Plan Administrator shall have full power and
authority, exercisable in its sole discretion, to grant stock appreciation
rights in accordance with this Section III to selected Optionees or other
individuals eligible to receive option grants under the Discretionary Grant
Program.

 

B.            Types.  Two types of stock appreciation rights shall be authorized
for issuance under this Section III: (i) tandem stock appreciation rights
(“Tandem Rights”) and (ii) stand-alone stock appreciation rights (“Stand-alone
Rights”).

 

C.            Tandem Rights.  The following terms and conditions shall govern
the grant and exercise of Tandem Rights.

 

1.             One or more Optionees may be granted a Tandem Right, exercisable
upon such terms and conditions as the Plan Administrator may establish, to elect
between the exercise of the underlying option for shares of Common Stock or the
surrender of that option in exchange for a distribution from the Corporation in
an amount equal to the excess of (i) the Fair Market Value (on the option
surrender date) of the number of shares in which the Optionee is at the time
vested under the surrendered option (or surrendered portion thereof) over
(ii) the aggregate exercise price payable for such vested shares.

 

2.             Any distribution to which the Optionee becomes entitled upon the
exercise of a Tandem Right may be made in (i) shares of Common Stock valued at
Fair Market Value on the option surrender date, (ii) cash or (iii) a combination
of cash and shares of Common Stock, as specified in the applicable Award
agreement.

 

D.            Stand-Alone Rights.  The following terms and conditions shall
govern the grant and exercise of Stand-alone Rights:

 

1.             One or more individuals eligible to participate in the
Discretionary Grant Program may be granted a Stand-alone Right not tied to any
underlying option. The Stand-alone Right shall relate to a specified number of
shares of Common Stock and shall be exercisable upon such terms and conditions
as the Plan Administrator may establish.  In no event, however, may the
Stand-alone Right have a maximum term in excess of ten (10) years measured from
the grant date.  The provisions and limitations of Paragraphs C.1 and C.2 of
Section I of this Article Two shall also be applicable to any Stand-Alone Right
awarded under the Plan.

 

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2.             Upon exercise of the Stand-alone Right, the holder shall be
entitled to receive a distribution from the Corporation in an amount equal to
the excess of (i) the aggregate Fair Market Value (on the exercise date) of the
shares of Common Stock underlying the exercised right over (ii) the aggregate
base price in effect for those shares.

 

3.             The number of shares of Common Stock underlying each Stand-alone
Right and the base price in effect for those shares shall be determined by the
Plan Administrator in its sole discretion at the time the Stand-alone Right is
granted.  In no event, however, may the base price per share be less than the
Fair Market Value per underlying share of Common Stock on the grant date.

 

4.             Stand-alone Rights shall be subject to the same transferability
restrictions applicable to Non-Statutory Options and may not be transferred
during the holder’s lifetime, except for a gratuitous transfer to one or more
Family Members of the holder or to a trust established for the holder and/or one
or more such Family Members or a transfer to one or more such Family Members
pursuant to a domestic relations order covering the Stand-alone Right as marital
property.  In addition, one or more beneficiaries may be designated for an
outstanding Stand-alone Right in accordance with substantially the same terms
and provisions as set forth in Section I.F of this Article Two.

 

5.             The distribution with respect to an exercised Stand-alone Right
may be made in (i) shares of Common Stock valued at Fair Market Value on the
exercise date, (ii) cash or (iii) a combination of cash and shares of Common
Stock, as specified in the applicable Award agreement.

 

6.             The holder of a Stand-alone Right shall have no stockholder
rights with respect to the shares subject to the Stand-alone Right unless and
until such person shall have exercised the Stand-alone Right and become a holder
of record of the shares of Common Stock issued upon the exercise of such
Stand-alone Right.

 

E.             Post-Service Exercise.  The provisions governing the exercise of
Tandem and Stand-alone Rights following the cessation of the recipient’s Service
shall be substantially the same as those set forth in Section I.C.1 of this
Article Two for the options granted under the Discretionary Grant Program, and
the Plan Administrator’s discretionary authority under Section I.C.2 of this
Article Two shall also extend to any outstanding Tandem or Stand-alone
Appreciation Rights.

 

IV.           CHANGE IN CONTROL

 

A.            In the event of an actual Change in Control transaction, each
outstanding Award under the Discretionary Grant Program may be (i) assumed by
the successor corporation (or parent thereof) or otherwise continued in full
force and effect pursuant to the terms of the Change in Control transaction or
(ii) replaced with a cash incentive program of the successor corporation which
preserves the spread existing at the time of the Change in Control on any shares
as to which the Award is not otherwise at that time exercisable and provides for
the subsequent vesting and concurrent payment of that spread in accordance with
the same exercise/vesting schedule in effect for that Award, but only if such
replacement cash program

 

12

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would not result in the treatment of the Award as an item of deferred
compensation subject to Code Section 409A. However, to the extent the Award is
not to be so assumed, continued or replaced, that Award shall immediately prior
to the effective date of the Change in Control transaction, become exercisable
as to all the shares of Common Stock at the time subject to that Award and may
be exercised as to any or all of those shares as fully vested shares of Common
Stock, except to the extent the acceleration of such Award is subject to other
limitations imposed by the Plan Administrator. Notwithstanding the foregoing,
any Award outstanding under the Discretionary Grant Program on the date of such
Change in Control shall be subject to cancellation and termination, without cash
payment or other consideration due the Award holder, if the Fair Market Value
per share of Common Stock on such date of the Change in Control (or any earlier
date specified in the definitive agreement for the Change in Control
transaction) is less than the per share exercise or base price in effect for
such Award.

 

B.            All repurchase rights outstanding under the Discretionary Grant
Program shall automatically terminate, and the shares of Common Stock subject to
those terminated rights shall immediately vest in full, immediately prior to the
effective date of an actual Change in Control transaction, except to the extent:
(i) those repurchase rights are to be assigned to the successor corporation (or
parent thereof) or are otherwise to continue in full force and effect pursuant
to the terms of the Change in Control transaction or (ii) such accelerated
vesting is precluded by other limitations imposed by the Plan Administrator.

 

C.            Immediately following the consummation of the Change in Control,
all outstanding Awards under the Discretionary Grant Program shall terminate and
cease to be outstanding, except to the extent assumed by the successor
corporation (or parent thereof) or otherwise continued in full force and effect
pursuant to the terms of the Change in Control transaction.

 

D.            Each Award under the Discretionary Grant Program that is assumed
in connection with a Change in Control or otherwise continued in effect shall be
appropriately adjusted, immediately after such Change in Control, to apply to
the number and class of securities into which the shares of Common Stock subject
to that Award would have been converted in consummation of such Change in
Control had those shares actually been outstanding at that time.  Appropriate
adjustments to reflect such Change in Control shall also be made to the exercise
or base price per share in effect under each outstanding Award, provided the
aggregate exercise or base price in effect for such securities shall remain the
same. To the extent the actual holders of the Corporation’s outstanding Common
Stock receive cash consideration for their Common Stock in consummation of the
Change in Control, the successor corporation may, in connection with the
assumption or continuation of the outstanding Awards under the Discretionary
Grant Program and with the consent of the Plan Administrator obtained prior to
the Change in Control, substitute, for the securities underlying those assumed
rights, one or more shares of its own common stock with a fair market value
equivalent to the cash consideration paid per share of Common Stock in such
Change in Control transaction, provided such common stock is readily traded on
an established U.S. securities exchange or market.

 

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E.             The Plan Administrator shall have the discretionary authority to
structure one or more outstanding Awards under the Discretionary Grant Program
so that those Awards shall, immediately prior to the effective date of an actual
Change in Control transaction, become exercisable as to all the shares of Common
Stock at the time subject to those Awards and may be exercised as to any or all
of those shares as fully vested shares of Common Stock, whether or not those
Awards are to be assumed in the Change in Control transaction or otherwise
continued in effect.  In addition, the Plan Administrator shall have the
discretionary authority to structure one or more of the Corporation’s repurchase
rights under the Discretionary Grant Program so that those rights shall
terminate immediately prior to the effective date of an actual Change in Control
transaction, and the shares subject to those terminated rights shall thereupon
vest in full.

 

F.             The Plan Administrator shall have full power and authority to
structure one or more outstanding Awards under the Discretionary Grant Program
so that those Awards shall become exercisable as to all the shares of Common
Stock at the time subject to those Awards in the event the Optionee’s Service is
subsequently terminated by reason of an Involuntary Termination within a
designated period (not to exceed twenty-four (24) months) following the
effective date of any Change in Control transaction in which those Awards do not
otherwise fully accelerate.  In addition, the Plan Administrator may structure
one or more of the Corporation’s repurchase rights so that those rights shall
immediately terminate with respect to any shares held by the Optionee at the
time of such Involuntary Termination, and the shares subject to those terminated
repurchase rights shall accordingly vest in full at that time.

 

G.            The portion of any Incentive Option accelerated in connection with
a Change in Control shall remain exercisable as an Incentive Option only to the
extent the applicable One Hundred Thousand Dollar ($100,000) limitation is not
exceeded.  To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a Non-statutory Option under the
Federal tax laws.

 

V.            PROHIBITION ON REPRICING PROGRAMS

 

The Plan Administrator shall not (i) implement any cancellation/regrant program
pursuant to which outstanding options or stock appreciation rights under the
Plan are cancelled and new options or stock appreciation rights are granted in
replacement with a lower exercise price per share, (ii) cancel outstanding
options or stock appreciation rights under the Plan with exercise or base prices
per share in excess of the then current Fair Market Value per share of Common
Stock for consideration payable in cash, equity securities of the Corporation or
in the form of any other Award under the Plan, except in connection with a
Change in Control transaction, or (iii) otherwise directly reduce the exercise
price in effect for outstanding options or stock appreciation rights under the
Plan, without in each such instance obtaining stockholder approval.

 

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ARTICLE THREE

 

STOCK ISSUANCE PROGRAM

 

I.              STOCK ISSUANCE TERMS

 

Shares of Common Stock may be issued under the Stock Issuance Program, either as
vested or unvested shares, through direct and immediate issuances.  Each such
stock issuance shall be evidenced by a Stock Issuance Agreement which complies
with the terms specified below.  Shares of Common Stock may also be issued under
the Stock Issuance Program pursuant to performance shares or restricted stock
units which entitle the recipients to receive the shares underlying those Awards
upon the attainment of designated performance goals or the satisfaction of
specified Service requirements or upon the expiration of a designated time
period following the vesting of those Awards.

 

A.            Issue Price.

 

1.             Shares of Common Stock may be issued under the Stock Issuance
Program for any of the following items of consideration which the Plan
Administrator may deem appropriate in each individual instance:

 

(i)            cash or check made payable to the Corporation;

 

(ii)           past services rendered to the Corporation (or any Parent or
Subsidiary); or

 

(iii)          any other valid consideration under the State in which the
Corporation is at the time incorporated.

 

However, if the consideration for the shares is to be paid in the form of a cash
purchase price, then the cash consideration payable per share shall not be less
than one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the issuance date.

 

B.            Vesting Provisions.

 

1.             Shares of Common Stock issued under the Stock Issuance Program
may, in the discretion of the Plan Administrator, be fully and immediately
vested upon issuance as a bonus for Service rendered or may vest in one or more
installments over the Participant’s period of Service or upon the attainment of
specified performance objectives.  The elements of the vesting schedule
applicable to any unvested shares of Common Stock issued under the Stock
Issuance Program shall be determined by the Plan Administrator and incorporated
into the Stock Issuance Agreement.  Shares of Common Stock may also be issued
under the Stock Issuance Program pursuant to performance shares or restricted
stock units which entitle the recipients to

 

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receive the shares underlying those Awards upon the attainment of designated
performance goals or the satisfaction of specified Service requirements or upon
the expiration of a designated time period following the vesting of those
Awards, including (without limitation) a deferred distribution date following
the termination of the Participant’s Service.

 

2.             The Plan Administrator shall also have the discretionary
authority, consistent with Code Section 162(m), to structure one or more Awards
under the Stock Issuance Program so that the shares of Common Stock subject to
those Awards shall vest (or vest and become issuable) upon the achievement of
pre-established corporate performance objectives based on one or more
Performance Goals and measured over the performance period (not to exceed five
(5) years) specified by the Plan Administrator at the time of the Award.

 

3.             Any new, substituted or additional securities or other property
(including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant’s
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares, spin-off
transaction, extraordinary dividend or distribution or other change affecting
the outstanding Common Stock as a class without the Corporation’s receipt of
consideration shall be issued subject to (i) the same vesting requirements
applicable to the Participant’s unvested shares of Common Stock and (ii) such
escrow arrangements as the Plan Administrator shall deem appropriate.  Equitable
adjustments to reflect each such transaction shall also be made by the Plan
Administrator to the repurchase price payable per share by the Corporation for
any unvested securities subject to its existing repurchase rights under the
Plan; provided the aggregate repurchase price shall in each instance remain the
same.

 

4.             The Participant shall have full stockholder rights with respect
to any shares of Common Stock issued to the Participant under the Stock Issuance
Program, whether or not the Participant’s interest in those shares is vested. 
Accordingly, the Participant shall have the right to vote such shares and to
receive any dividends paid on such shares, subject to any applicable vesting
requirements.  The Participant shall not have any stockholder rights with
respect to the shares of Common Stock subject to a performance share or
restricted stock unit Award until that Award vests and the shares of Common
Stock are actually issued thereunder.  However, dividend-equivalent units may be
paid or credited, either in cash or in actual or phantom shares of Common Stock,
on outstanding Awards of performance shares or restricted stock units, subject
to such terms and conditions as the Plan Administrator may deem appropriate.  In
no event, however, shall any dividends or dividend-equivalent units relating to
Awards subject to performance-vesting conditions vest or otherwise become
payable prior to the time the underlying Award (or portion thereof to which such
dividend or dividend-equivalents units relate) vests and shall accordingly be
subject to cancellation and forfeiture to the same extent as the underlying
Award in the event those performance conditions are not attained.

 

5.             Should the Participant cease to remain in Service while holding
one or more unvested shares of Common Stock issued under the Stock Issuance
Program or should the performance objectives not be attained with respect to one
or more such unvested shares of Common Stock, then those shares shall be
immediately surrendered to the Corporation for cancellation, and the Participant
shall have no further stockholder rights with respect to those shares.  To the
extent the surrendered shares were previously issued to the Participant for

 

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consideration paid in cash or cash equivalent, the Corporation shall repay to
the Participant the lower of (i) the cash consideration paid for the surrendered
shares or (ii) the Fair Market Value of those shares at the time of
cancellation.

 

6.             The Plan Administrator may in its discretion waive the surrender
and cancellation of one or more unvested shares of Common Stock which would
otherwise occur upon the cessation of the Participant’s Service or the
non-attainment of the performance objectives applicable to those shares.  Any
such waiver shall result in the immediate vesting of the Participant’s interest
in the shares of Common Stock as to which the waiver applies. However, no
vesting requirements tied to the attainment of performance objectives may be
waived with respect to Awards which were intended at the time of grant to
qualify as performance-based compensation under Code Section 162(m), except in
the event of the Participant’s cessation of Service by reason of death or
Permanent Disability or as otherwise provided in Section II of this
Article Three.

 

7.             Outstanding Awards of performance shares or restricted stock
units under the Stock Issuance Program shall automatically terminate, and no
shares of Common Stock shall actually be issued in satisfaction of those Awards,
if the performance goals or Service requirements established for those Awards
are not attained or satisfied.  The Plan Administrator, however, shall have the
discretionary authority to issue vested shares of Common Stock under one or more
outstanding Awards of performance shares or restricted stock units as to which
the designated performance goals or Service requirements have not been attained
or satisfied.  Any such waiver shall result in the immediate vesting of the
Participant’s interest in the shares of Common Stock as to which the waiver
applies. However, no vesting requirements tied to the attainment of performance
objectives may be waived with respect to Awards which were intended at the time
of grant to qualify as performance-based compensation under Code Section 162(m),
except in the event of the Participant’s cessation of Service by reason of death
or Permanent Disability or as otherwise provided in Section II of this
Article Three.

 

8.             The following additional requirements shall be in effect for any
performance shares awarded under this Article Three:

 

(i)            At the end of the performance period, the Plan Administrator
shall determine the actual level of attainment for each performance objective
and the extent to which the performance shares awarded for that period are to
vest and become payable based on the attained performance levels.

 

(ii)           The performance shares which so vest shall be paid as soon as
practicable following the end of the performance period, unless such payment is
to be deferred for the period specified by the Plan Administrator at the time
the performance shares are awarded or the period selected by the Participant in
accordance with the applicable requirements of Code Section 409A.

 

(iii)          Performance shares may be paid in (i) cash, (ii) shares of Common
Stock or (iii) any combination of cash and shares of Common Stock, as set forth
in the applicable Award Agreement.

 

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(iv)          Performance shares may also be structured so that the shares are
convertible into shares of Common Stock, but the rate at which each performance
share is to so convert shall be based on the attained level of performance for
each applicable performance objective.

 

II.            CHANGE IN CONTROL

 

A.            Each Award outstanding under the Stock Issuance Program on the
effective date of an actual Change in Control transaction may be (i) assumed by
the successor corporation (or parent thereof) or otherwise continued in full
force and effect pursuant to the terms of the Change in Control transaction or
(ii) replaced with a cash incentive program of the successor corporation which
preserves the Fair Market Value of the underlying shares of Common Stock at the
time of the Change in Control and provides for the subsequent vesting and
payment of that value in accordance with the same vesting schedule in effect for
those shares at the time of such Change in Control.  If any such Award is
subject to a performance-vesting condition tied to the attainment of one or more
specified performance goals, then upon the assumption, continuation or
replacement of that Award, the performance vesting condition shall automatically
be cancelled, and such Award shall thereupon be converted into a Service-vesting
Award that will vest upon the completion of a Service period co-terminous with
the portion of the performance period (and any subsequent Service vesting
component that was originally part of that Award) remaining at the time of the
Change in Control. However, to the extent any Award outstanding under the Stock
Issuance Program on the effective date of such Change in Control Transaction is
not to be so assumed, continued or replaced, that Award shall vest in full
immediately prior to the effective date of the actual Change in Control
transaction and the shares of Common Stock underlying the portion of the Award
that vests on such accelerated basis shall be issued in accordance with the
applicable Award Agreement, unless such accelerated vesting is precluded by
other limitations imposed in the Stock Issuance Agreement.

 

B.            Each outstanding Award under the Stock Issuance Program which is
assumed in connection with a Change in Control or otherwise continued in effect
shall be adjusted immediately after the consummation of that Change in Control
so as to apply to the number and class of securities into which the shares of
Common Stock subject to that Award immediately prior to the Change in Control
would have been converted in consummation of such Change in Control had those
shares actually been outstanding at that time, and appropriate adjustments shall
also be made to the cash consideration (if any) payable per share thereunder,
provided the aggregate amount of such cash consideration shall remain the same. 
To the extent the actual holders of the Corporation’s outstanding Common Stock
receive cash consideration for their Common Stock in consummation of the Change
in Control, the successor corporation may, in connection with the assumption or
continuation of the outstanding Awards and with the consent of the Plan
Administrator obtained prior to the Change in Control, substitute one or more
shares of its own common stock with a fair market value equivalent to the cash
consideration paid per share of Common Stock in such Change in Control
transaction, provided such common stock is readily traded on an established U.S.
securities exchange or market.

 

C.            The Plan Administrator shall have the discretionary authority to
structure one or more unvested Awards under the Stock Issuance Program so that
the shares of Common Stock subject to those Awards shall automatically vest (or
vest and become issuable) in whole or

 

18

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in part immediately prior to the effective date of an actual Change in Control
transaction or upon the subsequent termination of the Participant’s Service by
reason of an Involuntary Termination within a designated period (not to exceed
twenty-four (24) months) following the effective date of that Change in Control
transaction. The Plan Administrator’s authority under this Section II.C shall
also extend to any Awards intended to qualify as performance-based compensation
under Code Section 162(m), even though the actual vesting of those Awards
pursuant to this Section II.C may result in their loss of performance-based
status under Code Section 162(m).

 

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ARTICLE FOUR

 

INCENTIVE BONUS PROGRAM

 

I.              INCENTIVE BONUS TERMS

 

The Plan Administrator shall have full power and authority to implement one or
more of the following incentive bonus programs under the Plan:

 

(i)            cash bonus awards (“Cash Awards”),

 

(ii)           performance unit awards (“Performance Unit Awards”), and

 

(iii)          dividend equivalent rights (“DER Awards”).

 

A.            Cash Awards.  The Plan Administrator shall have the discretionary
authority under the Plan to make Cash Awards which are to vest in one or more
installments over the Participant’s continued Service with the Corporation or
upon the attainment of specified performance goals.  Each such Cash Award shall
be evidenced by one or more documents in the form approved by the Plan
Administrator; provided however, that each such document shall comply with the
terms specified below.

 

1.             The elements of the vesting schedule applicable to each Cash
Award shall be determined by the Plan Administrator and incorporated into the
Incentive Bonus Award Agreement.

 

2.             The Plan Administrator shall also have the discretionary
authority, consistent with Code Section 162(m), to structure one or more Cash
Awards so that those Awards shall vest upon the achievement of pre-established
corporate performance objectives based upon one or more Performance Goals
measured over the performance period (not to exceed five (5) years) specified by
the Plan Administrator at the time of the Award.

 

3.             Outstanding Cash Awards shall automatically terminate, and no
cash payment or other consideration shall be due the holders of those Awards, if
the performance goals or Service requirements established for those Awards are
not attained or satisfied. The Plan Administrator may in its discretion waive
the cancellation and termination of one or more unvested Cash Awards which would
otherwise occur upon the cessation of the Participant’s Service or the
non-attainment of the performance objectives applicable to those Awards. Any
such waiver shall result in the immediate vesting of the Participant’s interest
in the Cash Award as to which the waiver applies.  However, no vesting
requirements tied to the attainment of Performance Goals may be waived with
respect to Awards which were intended, at the time those Awards were made, to
qualify as performance-based compensation under Code Section 162(m), except in
the event of the Participant’s cessation of Service by reason of death or
Permanent Disability or as otherwise provided in Section II of this
Article Four.

 

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4.             Cash Awards which become due and payable following the attainment
of the applicable performance goals or satisfaction of the applicable Service
requirement (or the waiver of such goals or Service requirement) may be paid in
(i) cash, (ii) shares of Common Stock valued at Fair Market Value on the payment
date or (iii) a combination of cash and shares of Common Stock,  as set forth in
the applicable Award Agreement.

 

B.            Performance Unit Awards.  The Plan Administrator shall have the
discretionary authority to make Performance Unit Awards in accordance with the
terms of the Incentive Bonus Program.  Each such Performance Unit Award shall be
evidenced by one or more documents in the form approved by the Plan
Administrator; provided however, that each such document shall comply with the
terms specified below.

 

1.             A Performance Unit shall represent either (i) a unit with a
dollar value tied to the level at which pre-established corporate performance
objectives based on one or more Performance Goals are attained or (ii) a
participating interest in a special bonus pool tied to the attainment of
pre-established corporate performance objectives based on one or more
Performance Goals. The amount of the bonus pool may vary with the level at which
the applicable performance objectives are attained, and the value of each
Performance Unit which becomes due and payable upon the attained level of
performance shall be determined by dividing the amount of the resulting bonus
pool (if any) by the total number of Performance Units issued and outstanding at
the completion of the applicable performance period.

 

2.             Performance Units may also be structured to include a Service
requirement which the Participant must satisfy following the completion of the
performance period in order to vest in the Performance Units awarded with
respect to that performance period.

 

3.             Performance Units which become due and payable following the
attainment of the applicable performance objectives and the satisfaction of any
applicable Service requirement may be paid in (i) cash, (ii) shares of Common
Stock valued at Fair Market Value on the payment date or (iii) a combination of
cash and shares of Common Stock, as set forth in the applicable Award Agreement.

 

C.            DER Awards.  The Plan Administrator shall have the discretionary
authority to make DER Awards in accordance with the terms of the Incentive Bonus
Program.  Each such DER Award shall be evidenced by one or more documents in the
form approved by the Plan Administrator; provided however, that each such
document shall comply with the terms specified below.

 

1.             The DER Awards may be made as stand-alone awards or in tandem
with other Awards made under the Plan.  The term of each such DER Award shall be
established by the Plan Administrator at the time of grant, but no DER Award
shall have a term in excess of ten (10) years.

 

2.             Each DER shall represent the right to receive the economic
equivalent of each dividend or distribution, whether paid in cash, securities or
other property (other than shares of Common Stock), which is made per issued and
outstanding share of Common Stock during the term the DER remains outstanding. A
special account on the books of

 

21

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the Corporation shall be maintained for each Participant to whom a DER Award is
made, and that account shall, for each DER subject to the Award, be credited
with each dividend or distribution made per issued and outstanding share of
Common Stock during the term that DER remains outstanding.

 

3.             Payment of the amounts credited to such book account may be made
to the Participant either concurrently with the actual dividend or distribution
made per issued and outstanding share of Common Stock or upon the satisfaction
of any applicable vesting schedule in effect for the DER Award, or such payment
may be deferred beyond the vesting date for a period specified by the Plan
Administrator at the time the DER Award is made or selected by the Participant
in accordance with the requirements of Code Section 409A.  In no event, however,
shall any DER Award made with respect to an Award subject to performance-vesting
conditions under the Stock Issuance or Incentive Bonus Program vest or become
payable prior to the vesting of that Award (or the portion thereof to which the
DER Award relates) and shall accordingly be subject to cancellation and
forfeiture to the same extent as the underlying Award in the event those
performance conditions are not attained.

 

4.             Payment may be paid in (i) cash, (ii) shares of Common Stock or
(iii) a combination of cash and shares of Common Stock, as set forth in the
applicable Award Agreement. If payment is to be made in the form of Common
Stock, the number of shares of Common Stock into which the cash dividend or
distribution amounts are to be converted for purposes of the Participant’s book
account may be based on the Fair Market Value per share of Common Stock on the
date of conversion, a prior date or an average of the Fair Market Value per
share of Common Stock over a designated period, as set forth in the applicable
Award Agreement.

 

5.             The Plan Administrator shall also have the discretionary
authority, consistent with Code Section 162(m), to structure one or more DER
Awards so that those Awards shall vest only after the achievement of
pre-established corporate performance objectives based upon one or more
Performance Goals measured over the performance period (not to exceed five
(5) years) specified by the Plan Administrator at the time the Award is made.

 

II.            CHANGE IN CONTROL

 

A.            The Plan Administrator shall have the discretionary authority to
structure one or more Awards under the Incentive Bonus Program so that those
Awards shall automatically vest in whole or in part immediately prior to the
effective date of an actual Change in Control transaction or upon the subsequent
termination of the Participant’s Service by reason of an Involuntary Termination
within a designated period (not to exceed twenty-four (24) months) following the
effective date of such Change in Control.  To the extent any such Award is, at
the time of such Change in Control, subject to a performance-vesting condition
tied to the attainment of one or more specified performance goals, then that
performance vesting condition shall automatically be cancelled on the effective
date of such Change in Control, and such Award shall thereupon be converted into
a Service-vesting Award that will vest upon the completion of a Service period
co-terminous with the portion of the performance period (and any subsequent
Service vesting component that was originally part of that Award) remaining at
the time of the Change in Control.

 

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B.            The Plan Administrator’s authority under Paragraph A of this
Section II shall also extend to any Award under the Incentive Bonus Program
intended to qualify as performance-based compensation under Code Section 162(m),
even though the actual vesting of that Award may result in the loss of
performance-based status under Code Section 162(m).

 

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ARTICLE FIVE

 

MISCELLANEOUS

 

I.              DEFERRED COMPENSATION

 

A.            The Plan Administrator may, in its sole discretion,  structure one
or more Awards under the Stock Issuance or Incentive Bonus Programs so that the
Participants may be provided with an election to defer the compensation
associated with those Awards for federal income tax purposes. Any such deferral
opportunity shall comply with all applicable requirements of Code Section 409A.

 

B.            The Plan Administrator may implement a non-employee Board member
retainer fee deferral program under the Plan so as to allow the non-employee
Board members the opportunity to elect, prior to the start of each calendar
year, to convert the Board and Board committee retainer fees to be earned for
such year into restricted stock units under the Stock Issuance Program that will
defer the issuance of the shares of Common Stock that vest under those
restricted stock units until a permissible date or event under Code
Section 409A.  If such program is implemented, the Plan Administrator shall have
the authority to establish such rules and procedures as it deems appropriate for
the filing of such deferral elections and the designation of the permissible
distribution events under Code Section 409A.

 

C.            To the extent the Corporation maintains one or more separate
non-qualified deferred compensation arrangements which allow the participants
the opportunity to make notional investments of their deferred account balances
in shares of Common Stock, the Plan Administrator may authorize the share
reserve under the Plan to serve as the source of any shares of Common Stock that
become payable under those deferred compensation arrangements.  In such event,
the share reserve under the Plan shall be reduced on a share-for-share basis for
each share of Common Stock issued under the Plan in settlement of the deferred
compensation owed under those separate arrangements.

 

II.            TAX WITHHOLDING

 

A.            The Corporation’s obligation to deliver shares of Common Stock
upon the exercise, issuance or vesting of an Award under the Plan shall be
subject to the satisfaction of all applicable income and employment tax
withholding requirements.

 

B.            The Plan Administrator may, in its discretion, structure one or
more Awards so that shares of Common Stock may be used as follows to satisfy all
or part of the Withholding Taxes to which such holders of those Awards may
become subject in connection with the issuance, exercise, vesting or settlement
of those Awards:

 

1.             Stock Withholding:  The Corporation may be given the right to
withhold, from the shares of Common Stock otherwise issuable upon the issuance,
exercise, vesting or settlement of such Award, a portion of those shares with an
aggregate Fair Market

 

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Value equal to the applicable Withholding Taxes. The shares of Common Stock so
withheld shall reduce the number of shares of Common Stock authorized for
issuance under the Plan.

 

2.             Stock Delivery:  The holder of the Award may be given the right
to deliver to the Corporation, at the time of the issuance, exercise, vesting or
settlement of such Award, one or more shares of Common Stock previously acquired
by such individual with an aggregate Fair Market Value at the time of delivery
equal to the percentage of the Withholding Taxes (not to exceed one hundred
percent (100%)) designated by the individual.  The shares of Common Stock so
delivered shall neither reduce the number of shares of Common Stock authorized
for issuance under the Plan nor be added to the number of shares of Common Stock
authorized for issuance under the Plan.

 

III.           SHARE ESCROW/LEGENDS

 

Unvested shares may, in the Plan Administrator’s discretion, be held in escrow
by the Corporation until the Participant’s interest in such shares vests or may
be issued directly to the Participant with restrictive legends on the
certificates evidencing those unvested shares.

 

IV.           EFFECTIVE DATE AND TERM OF THE PLAN

 

A.            The Plan shall become effective on the Plan Effective Date,
subject to the approval of the Corporation’s stockholders at the 2010 Annual
Meeting.

 

B.            The Plan shall serve as the successor to each of the Predecessor
Plans, and no further option grants or restricted stock unit awards shall be
made under any of the Predecessor Plans if this Plan is approved by the
stockholders at the 2010 Annual Meeting. Such stockholder approval shall not
affect the option grants and restricted stock unit awards outstanding under the
Predecessor Plans at the time of the 2010 Annual Meeting, and those option
grants and restricted stock unit awards shall continue in full force and effect
in accordance with their terms.  However, should any of those options expire or
terminate unexercised or any unvested restricted stock units be forfeited, the
shares of Common Stock subject to those options at the time of expiration or
termination and the shares subject to those forfeited restricted stock units
shall be added to the share reserve of this Plan in accordance with the
provisions of Section V.B of Article I.

 

C.            The Plan shall terminate upon the earliest to occur of (i) the
tenth anniversary of the Plan Effective Date, (ii) the date on which all shares
available for issuance under the Plan shall have been issued as fully vested
shares or (iii) the termination of all outstanding Awards in connection with a
Change in Control.  Should the Plan terminate on the tenth anniversary of the
Plan Effective Date, then all Awards outstanding at that time shall continue to
have force and effect in accordance with the provisions of the documents
evidencing those Awards.

 

V.            AMENDMENT OF THE PLAN

 

A.            The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects; provided, however, that
stockholder approval shall be required for any amendment to the Plan which
(i) materially increases the number of

 

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shares of Common Stock authorized for issuance under the Plan (other than
pursuant to Section V.I of Article One), (ii) materially increases the benefits
accruing to Optionees or Participants, (iii) materially expands the class of
individuals eligible to participate in the Plan, (iv) expands the types of
awards which may be made under the Plan or extends the term of the Plan or
(v) would reduce or limit the scope of the prohibition on repricing programs set
forth in Section V of Article Two or otherwise eliminate such prohibition, or
(vi) effect any other change or modification to the Plan for which stockholder
approval is required under applicable law or regulation or pursuant to the
listing standards of the Stock Exchange on which the Common Stock is at the time
primarily traded. However, no such amendment or modification shall adversely
affect the rights and obligations with respect to Awards at the time outstanding
under the Plan unless the Optionee or the Participant consents to such amendment
or modification.

 

B.            The Compensation Committee shall have the discretionary authority
to adopt and implement from time to time such addenda or subplans to the Plan as
it may deem necessary in order to bring the Plan into compliance with applicable
laws and regulations of any foreign jurisdictions in which Awards are to be made
under the Plan and/or to obtain favorable tax treatment in those foreign
jurisdictions for the individuals to whom the Awards are made.

 

C.            Awards may be made under the Plan that involve shares of Common
Stock in excess of the number of shares then available for issuance under the
Plan, provided no shares shall actually be issued pursuant to those Awards until
the number of shares of Common Stock available for issuance under the Plan is
sufficiently increased by stockholder approval of an amendment of the Plan
authorizing such increase.  If such stockholder approval is not obtained within
twelve (12) months after the date the first excess Award is made, then all
Awards granted on the basis of such excess shares shall terminate and cease to
be outstanding.

 

D.            The provisions of the Plan and the outstanding Awards under the
Plan shall, in the event of any ambiguity, be construed, applied and interpreted
in a manner so as to ensure that all Awards and Award Agreements provided to
Optionees or Participants who are subject to U.S. income taxation either qualify
for an exemption from the requirements of Section 409A of the Code or comply
with those requirements; provided, however, that the Corporation shall not make
any representations that any Awards made under the Plan will in fact be exempt
from the requirements of Section 409A of the Code or otherwise comply with those
requirements, and each Optionee and Participant shall accordingly be solely
responsible for any taxes, penalties or other amounts which may become payable
with respect to his or her Awards by reason of Section 409A of the Code.

 

VI.           USE OF PROCEEDS

 

Any cash proceeds received by the Corporation from the sale of shares of Common
Stock under the Plan shall be used for general corporate purposes.

 

VII.         REGULATORY APPROVALS

 

A.            The implementation of the Plan, the granting of any Award under
the Plan and the issuance of any shares of Common Stock in connection with the
issuance, exercise,  vesting or settlement of any Award under the Plan shall be
subject to the Corporation’s

 

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procurement of all approvals and permits required by regulatory authorities
having jurisdiction over the Plan, the Awards made under the Plan and the shares
of Common Stock issuable pursuant to those Awards.

 

B.            No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance with
all applicable requirements of applicable securities laws, including the filing
and effectiveness of the Form S-8 registration statement for the shares of
Common Stock issuable under the Plan, and all applicable listing requirements of
any Stock Exchange on which Common Stock is then listed for trading.

 

VIII.        NO EMPLOYMENT/SERVICE RIGHTS

 

Nothing in the Plan shall confer upon the Optionee or the Participant any right
to continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) or of the Optionee or the
Participant, which rights are hereby expressly reserved by each, to terminate
such person’s Service at any time for any reason, with or without cause.

 

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APPENDIX

 

The following definitions shall be in effect under the Plan:

 

A.            Award shall mean any of the following awards authorized for
issuance or grant under the Plan: stock options, stock appreciation rights,
direct stock issuances, restricted stock or restricted stock unit awards,
performance shares, performance units, dividend-equivalent rights and cash
incentive awards.

 

B.            Award Agreement shall mean the agreement(s) between the
Corporation and the Optionee or Participant evidencing a particular Award made
to that individual under the Plan, as such agreement(s) may be in effect from
time to time

 

C.            Board shall mean the Corporation’s Board of Directors.

 

D.            Cause shall, with respect to each Award made under the Plan, be
defined in accordance with the following provisions:

 

·              Cause shall have the meaning assigned to such term in the Award
Agreement for the particular Award or in any other agreement incorporated by
reference into the Award Agreement for purposes of defining such term.

 

·              In the absence of any other Cause definition in the Award
Agreement for a particular Award (or in any other agreement incorporated by
reference into the Award Agreement), an individual’s termination of Service
shall be deemed to be for Cause if such termination occurs by reason his or her
commission of any act of fraud, embezzlement or dishonesty, any unauthorized use
or disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional misconduct
by such person adversely affecting the business or affairs of the Corporation
(or any Parent or Subsidiary) in a material manner.

 

E.             Change in Control shall, with respect to each Award made under
the Plan, be defined in accordance with the following provisions:

 

·              Change in Control shall have the meaning assigned to such term in
the Award Agreement for the particular Award or in any other agreement
incorporated by reference into the Award Agreement for purposes of defining such
term.

 

·              In the absence of any other Change in Control definition in the
Award Agreement (or in any other agreement incorporated by reference into the
Award Agreement), Change in Control shall mean a change in ownership or control
of the Corporation effected through any of the following transactions:

 

(i)            the closing of a merger, consolidation or other reorganization
approved by the Corporation’s stockholders in which a change in ownership or
control of the Corporation is effected through the acquisition by any person or
group of persons comprising a “group” within the meaning of Rule 13d-

 

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5(b)(1) of the 1934 Act (other than the Corporation or a person that, prior to
such transaction, directly or indirectly controls, is controlled by or is under
common control with, the Corporation) of beneficial ownership (within the
meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation’s
outstanding securities (as measured in terms of the power to vote with respect
to the election of Board members),

 

(ii)           the closing of a sale, transfer or other disposition of all or
substantially all of the Corporation’s assets,

 

(iii)          the closing of any transaction or series of related transactions
pursuant to which any person or any group of persons comprising a “group” within
the meaning of Rule 13d-5(b)(1) of the 1934 Act (other than the Corporation or a
person that, prior to such transaction or series of related transactions,
directly or indirectly controls, is controlled by or is under common control
with, the Corporation) acquires directly or indirectly (whether as a result of a
single acquisition or by reason of one or more acquisitions within the twelve
(12)-month period ending with the most recent acquisition) beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the Corporation’s
securities (as measured in terms of the power to vote with respect to the
election of Board members) outstanding immediately after the consummation of
such transaction or series of related transactions, whether such transaction
involves a direct issuance from the Corporation or the acquisition of
outstanding securities held by one or more of the Corporation’s existing
stockholders,

 

(iv)          a merger, recapitalization, consolidation, or other transaction to
which the Corporation is a party or the sale, transfer or other disposition of
all or substantially all of the Corporation’s assets if, in either case, the
members of the Board immediately prior to consummation of the transaction do
not, upon consummation of the transaction, constitute at least a majority of the
board of directors of the surviving entity or the entity acquiring the
Corporation’s assets, as the case may be, or a parent thereof, or

 

(v)           a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the Board
members ceases for any reason to be comprised of individuals who either (A) have
been Board members continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during such period by at
least a majority of the Board members described in clause (A) who were still in
office at the time the Board approved such election or nomination, but excluding
for purposes of both clauses (A) and (B) any person appointed or elected to the
Board in connection with an actual or threatened proxy contest for Board
membership or any other actual or threatened solicitation of proxies for the
election of Board members.

 

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F.             Code shall mean the Internal Revenue Code of 1986, as amended.

 

G.            Common Stock shall mean the Corporation’s common stock.

 

H.            Compensation Committee shall mean the Compensation Committee of
the Board comprised of two (2) or more non-employee Board members.

 

I.              Corporation shall mean United Online, Inc., a Delaware
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of United Online, Inc. which has by appropriate action
assumed the Plan.

 

J.             Discretionary Grant Program shall mean the discretionary grant
program in effect under Article Two of the Plan pursuant to which stock options
and stock appreciation rights may be granted to one or more eligible
individuals.

 

K.            Employee shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary, whether now existing or subsequently
established), subject to the control and direction of the employer entity as to
both the work to be performed and the manner and method of performance.

 

L.             Exercise Date shall mean the date on which the Corporation shall
have received written notice of the option exercise.

 

M.           Fair Market Value per share of Common Stock on any relevant date
shall be the closing price per share of Common Stock at the close of regular
trading hours (i.e., before after-hours trading begins) on the date in question
on the Stock Exchange serving as the primary market for the Common Stock, as
such price is reported by the National Association of Securities Dealers (if
primarily traded on the Nasdaq Global or Global Select Market) or as officially
quoted in the composite tape of transactions on any other Stock Exchange on
which the Common Stock is then primarily traded.  If there is no closing selling
price for the Common Stock on the date in question, then the Fair Market Value
shall be the closing selling price on the last preceding date for which such
quotation exists.

 

N.            Family Member means, with respect to a particular Optionee or
Participant, any child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law.

 

O.            Full Value Award means any of the following Awards made under the
Stock Issuance or Incentive Bonus Programs that are settled in shares of Common
Stock: restricted stock awards (unless issued for cash consideration equal to
the Fair Market Value of the shares of Common Stock on the award date),
restricted stock unit awards, performance shares, performance units, cash
incentive awards and any other Awards under the Plan other than stock options
and stock appreciation rights issued under the Discretionary Grant Program and
dividend equivalent rights under the Incentive Bonus Program.

 

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P.             Good Reason shall, with respect to each Award made under the
Plan, be defined in accordance with the following provisions:

 

·              Good Reason shall have the meaning assigned to such term in the
Award Agreement for the particular Award or in any other agreement incorporated
by reference into the Award Agreement for purposes of defining such term.

 

·              In the absence of any other Good Reason definition in the Award
Agreement (or in any other agreement incorporated by reference into the Award
Agreement), Good Reason shall mean an individual’s voluntary resignation
following

 

(A)         a material reduction in the scope of the duties, responsibilities
and authority of his or her position with the Corporation (or any Parent or
Subsidiary), it being understood that a change in such individual’s title shall
not, in and of itself, be deemed a material reduction,

 

(B)           a materially adverse change in his or her reporting requirements
so that such individual is required to report to a person whose duties,
responsibilities and authority are materially less than the person to whom he or
she previously reported,

 

(C)           a material reduction in such individual’s base salary or the
aggregate of his or her base salary and target bonus under any
corporate-performance based bonus or incentive programs, with a reduction of
fifteen percent (15%) or more to the his or her base salary or aggregate base
salary and target bonus to be deemed a material, or

 

(D)          a relocation of such individual’s place of employment by more than
fifty (50) miles;

 

provided and only if such change, reduction or relocation is effected by the
Corporation (or any Parent or Subsidiary) without the individual’s consent.

 

Q.            Incentive Bonus Program shall mean the incentive bonus program in
effect under Article Four of the Plan.

 

R.            Incentive Option shall mean an option which satisfies the
requirements of Code Section 422.

 

S.             Involuntary Termination shall mean the termination of the Service
of any individual which occurs by reason of:

 

(i)            such individual’s involuntary dismissal or discharge by the
Corporation (or any Parent or Subsidiary) for reasons other than for Cause, or

 

(ii)           such individual’s voluntary resignation for Good Reason.

 

T.            1934 Act shall mean the Securities Exchange Act of 1934, as
amended.

 

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U.            Non-Statutory Option shall mean an option not intended to satisfy
the requirements of Code Section 422.

 

V.            Optionee shall mean any person to whom an option is granted under
the Discretionary Grant Program.

 

W.           Parent shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, 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.

 

X.            Participant shall mean any person who is issued (i) shares of
Common Stock, restricted stock units, performance shares, performance units or
other stock-based awards under the Stock Issuance Program or (ii) an incentive
bonus award under the Incentive Bonus Program.

 

Y.            Permanent Disability or Permanently Disabled shall mean the
inability of the Optionee or the Participant to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of twelve
(12) months or more..

 

Z.            Performance Goals shall mean any of the following performance
criteria upon which the vesting of one or more Awards under the Plan may be
based: (i) earnings or operating income before interest, taxes, depreciation,
amortization and/or charges for stock-based compensation; (ii) earnings per
share; (iii) growth in earnings or earnings per share; (iv) market price of the
Common Stock; (v) return on equity or average stockholder equity; (vi) total
stockholder return or growth in total stockholder return, either directly or in
relation to a comparative group; (vii) return on capital; (viii) return on
assets or net assets; (ix) invested capital, rate of return on capital or return
on invested capital; (x) revenue, growth in revenue or return on sales;
(xi) income or net income; (xii) operating income or net operating income;
(xiii) operating profit or net operating profit; (xiv) operating margin;
(xvi) return on operating revenue or return on operating profit; (xvi) cash flow
or cash flow per share (before or after dividends); (xvii) market share;
(xviii) collections and recoveries; (xix) debt reduction; (xx) litigation and
regulatory resolution goals; (xxi) expense control goals; (xxii) budget
comparisons; (xxiii) development and implementation of strategic plans and/or
organizational restructuring goals; (xxiv) productivity goals; (xxv) workforce
management and succession planning goals; (xxvi) economic value added;
(xxvii) measures of customer satisfaction; (xxviii) formation of joint ventures
or marketing or customer service collaborations or the completion of other
corporate transactions intended to enhance the Corporation’s revenue or
profitability or enhance its customer base;  and (xxix) merger and acquisitions.
In addition, such performance criteria may be based upon the attainment of
specified levels of the Corporation’s performance under one or more of the
measures described above relative to the performance of other entities and may
also be based on the performance of any of the Corporation’s business units or
divisions or any Parent or Subsidiary.  Each applicable Performance Goal may
include a minimum threshold

 

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level of performance below which no Award will be earned, levels of performance
at which specified portions of an Award will be earned and a maximum level of
performance at which an Award will be fully earned. Each applicable performance
goal may be structured at the time of the Award to provide for appropriate
adjustments or exclusions for one or more of the following items: (A) asset
impairments or write-downs; (B) litigation or governmental investigation
expenses and judgments, verdicts and settlements in connection therewith;
(C) the effect of changes in tax law, accounting principles or other such laws
or provisions affecting reported results; (D) accruals for reorganization and
restructuring programs; (E) costs and expenses incurred in connection with
mergers and acquisitions; (F) costs and expenses incurred in connection with the
relocation of the principal offices of the Corporation or any Parent or
Subsidiary; (G) any extraordinary or nonrecurring items; (H) bonus or incentive
compensation costs and expenses associated with cash-based awards made under the
Plan or other bonus or incentive compensation plans of the Corporation or any
Parent or Subsidiary; (I) items of income, gain, loss or expense attributable to
the operations of any business acquired by the Corporation or any Parent or
Subsidiary; (J) items of income, gain, loss or expense attributable to one or
more business operations divested by the Corporation or any Parent or Subsidiary
or the gain or loss realized upon the sale of any such business or assets
thereof and (K) the impact of foreign currency fluctuations or changes in
exchange rates.

 

AA.        Plan shall mean the Corporation’s 2010 Incentive Compensation Plan,
as set forth in this document and as subsequently amended or modified from time
to time.

 

BB.          Plan Administrator shall mean the particular entity, whether the
Compensation Committee, the Board or the Secondary Board Committee, which is
authorized to administer the Discretionary Grant, Stock Issuance and Incentive
Bonus Programs with respect to one or more classes of eligible persons, to the
extent such entity is carrying out its administrative functions under the Plan
with respect to the persons under its jurisdiction.

 

CC.          Plan Effective Date shall mean the April 9, 2010, date on which the
Plan is approved by the Board.

 

DD.         Predecessor Plans shall mean (i) the Corporation’s 2001 Stock
Incentive Plan, (ii) the Corporation’s 2001 Supplemental Stock Incentive Plan,
(iii) the Classmates Online, Inc. 2004 Plan, and (iv) the FTD Group, Inc. 2005
Equity Incentive Plan

 

EE.          Secondary Board Committee shall mean a committee of one or more
Board members appointed by the Board to administer the Plan with respect to
eligible persons other than Section 16 Insiders.

 

FF.          Section 16 Insider shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.

 

GG.          Service shall mean the performance of services for the Corporation
(or any Parent or Subsidiary, whether now existing or subsequently established)
by a person in the capacity of an Employee, a non-employee member of the board
of directors or a consultant or independent advisor, except to the extent
otherwise specifically provided in the documents evidencing the option grant or
stock issuance.  For purposes of the Plan, an Optionee or

 

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Participant shall be deemed to cease Service immediately upon the occurrence of
the either of the following events: (i) the Optionee or Participant no longer
performs services in any of the foregoing capacities for the Corporation or any
Parent or Subsidiary or (ii) the entity for which the Optionee or Participant is
performing such services ceases to remain a Parent or Subsidiary of the
Corporation, even though the Optionee or Participant may subsequently continue
to perform services for that entity.  Service shall not be deemed to cease
during a period of military leave, sick leave or other personal leave approved
by the Corporation; provided, however, that should such leave of absence exceed
three (3) months, then for purposes of determining the period within which an
Incentive Option may be exercised as such under the federal tax laws, the
Optionee’s Service shall be deemed to cease on the first day immediately
following the expiration of such three (3)-month period, unless Optionee is
provided with the right to return to Service following such leave either by
statute or by written contract.  Except to the extent otherwise required by law
or expressly authorized by the Plan Administrator or by the Corporation’s
written policy on leaves of absence, no Service credit shall be given for
vesting purposes for any period the Optionee or Participant is on a leave of
absence.

 

HH.         Stock Exchange shall mean the American Stock Exchange, the Nasdaq
Global or Global Select Market or the New York Stock Exchange.

 

II.            Stock Issuance Agreement shall mean the agreement entered into by
the Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.

 

JJ.            Stock Issuance Program shall mean the stock issuance program in
effect under Article Three of the Plan.

 

KK.         Subsidiary shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, 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.

 

LL.          10% Stockholder shall mean the owner of stock (as determined under
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).

 

MM.       Withholding Taxes shall mean the applicable federal and state income
and employment withholding taxes to which the holder of an Award under the Plan
may become subject in connection with the issuance, exercise, vesting or
settlement of that Award.

 

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