Exhibit 10

 

The Insight Communications Company, Inc.

 

1999 Equity Incentive Plan

(formerly the “1999 Stock Option Plan”)

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Table of Contents

 

                  Page

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Article 1. Effective Date, Objectives and Duration

   1         1.1    Effective Date of the Plan    1         1.2    Objectives of
the Plan    1         1.3    Duration of the Plan    1    

Article 2. Definitions

   1         2.1    “Affiliate”.    1         2.2    “Award”    1         2.3   
“Award Agreement”    1         2.4    “CEO”.    1         2.5    “COO”.    1    
    2.6    “Code”    2         2.7    “Committee” or “Stock Option Committee”.
   2         2.8    “Common Stock”    2         2.9    “Covered Employee”    2  
      2.10    “Deferred Stock”    2         2.11    “Director Option”    2      
  2.12    “Disability”.    2         2.13    “Dividend Equivalent”.    2        
2.14    “Eligible Person”.    2         2.15    “Exchange Act”    2         2.16
   “Fair Market Value”.    2         2.17    “Grant Date”.    2         2.18   
“Grantee”.    2         2.19    “Incentive Stock Option”    3         2.20   
“including” or “includes”    3         2.21    “Management Committee”    3      
  2.22    “Mature Shares”    3         2.23    “Non-Employee Director”    3    
    2.24    “Other Stock-Based Award”    3         2.25    “Option”    3        
2.26    “Option Price”    3         2.27    “Option Term”.    3         2.28   
“Performance-Based Exception”    3         2.29    “Performance Measures”    3  
      2.30    “Performance Period”.    3         2.31    “Performance Share” and
“Performance Unit”    3         2.32    “Period of Restriction”    3        
2.33    “Person”    3         2.34    “Restricted Shares”.    3         2.35   
“Rule 16b-3”.    3         2.36    “SEC”.    3         2.37    “Section 16
Non-Employee Director”.    3         2.38    “Section 16 Person”.    4        
2.39    “Share”.    4         2.40    “Termination of Affiliation”    4    

Article 3. Administration

   4         3.1    Committee.    4         3.2    Powers of Committee.    4

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Article 4. Shares Subject to the Plan, Maximum Awards, and 162(m) Compliance

   6     4.1   

Number of Shares Available for Grants

   6     4.2   

Adjustments in Authorized Shares and Awards

   6     4.3   

Compliance with Section 162(m) of the Code

   7     4.4   

Performance-Based Exception Under Section 162(m)

   7

Article 5. Eligibility and General Conditions of Awards

   9     5.1   

Eligibility

   9     5.2   

Award Agreement

   9     5.3   

General Terms and Termination of Affiliation

   9     5.4   

Nontransferability of Awards

   9     5.5   

Cancellation and Rescission of Awards

   10     5.6   

Stand-Alone, Tandem and Substitute Awards.

   10     5.7   

Compliance with Rule 16b-3

   10     5.8   

Deferral of Award Payouts

   11

Article 6. Stock Options

   11     6.1   

Grant of Options

   11     6.2   

Award Agreement

   11     6.3   

Option Price

   11     6.4   

Grant of Incentive Stock Options

   11     6.5   

Payment

   12

Article 7. Restricted Shares

   13     7.1   

Grant of Restricted Shares

   13     7.2   

Award Agreement

   13     7.3   

Consideration for Restricted Shares

   13     7.4   

Effect of Forfeiture

   13     7.5   

Escrow; Legends

   13

Article 8. Performance Units and Performance Shares

   14     8.1   

Grant of Performance Units and Performance Shares

   14     8.2   

Value/Performance Goals

   14     8.3   

Earning of Performance Units and Performance Shares

   14

Article 9. Deferred Stock

   14     9.1   

Grant of Deferred Stock

   14     9.2   

Delivery and Limitations

   14     9.3   

Forfeiture

   15

Article 10. Dividend Equivalents

   15

Article 11. Other Stock-Based Awards

   15

Article 12. Non-Employee Director Awards

   15     12.1   

Exclusive Means for Non-Employee Director Awards

   15     12.2   

Director Option

   15     12.3   

Election to Receive Director Fees in Shares or Deferred Stock in Lieu of Cash

   16     12.4   

Deferral Elections

   17     12.5   

Insufficient Number of Shares

   18     12.6   

Non-Forfeitability

   18

Article 13. Amendment, Modification, and Termination

   18     13.1   

Amendment, Modification, and Termination

   18     13.2   

Awards Previously Granted

   18

 

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Article 14. Withholding

   18     14.1   

Required Withholding

   18     14.2   

Notification under Code Section 83(b)

   19

Article 15. Additional Provisions

   19     15.1   

Successors

   19     15.2   

Gender and Number

   19     15.3   

Severability

   19     15.4   

Requirements of Law

   19     15.5   

Securities Law Compliance.

   20     15.6   

No Rights as a Stockholder

   20     15.7   

Nature of Payments

   20     15.8   

Non-Exclusivity of Plan

   20     15.9   

Governing Law

   20     15.10   

Share Certificates

   20     15.11   

Unfunded Status of Awards; Creation of Trusts

   21     15.12   

Affiliation

   21     15.13   

Participation

   21     15.14   

Military Service

   21     15.15   

Construction

   21     15.16   

Headings

   21     15.17   

Obligations

   21     15.18   

No Right to Continue as Director

   21     15.19   

Stockholder Approval

   21

 

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INSIGHT COMMUNICATIONS COMPANY, INC.

1999 EQUITY INCENTIVE PLAN

 

Article 1.

Effective Date, Objectives and Duration

 

1.1 Effective Date of the Plan. Insight Communications Company, Inc., a Delaware
corporation (the “Company”), established a stock option plan known as the
Insight Communications Company, Inc. 1999 Stock Option Plan. Effective December
9, 2002 (the “Effective Date”), the Company amended and restated and renamed
such plan the 1999 Equity Incentive Plan (the “Plan”). The Company further
amended the Plan effective December 7, 2004, subject to approval by the
Company’s stockholders. The terms of the Plan, as so amended, are set forth
herein.

 

1.2 Objectives of the Plan. The Plan is intended (a) to allow selected employees
and officers of and consultants to the Company and its Affiliates to acquire or
increase equity ownership in the Company, thereby strengthening their commitment
to the success of the Company and stimulating their efforts on behalf of the
Company, and to assist the Company and its Affiliates in attracting new
employees, officers and consultants and retaining existing employees, officers
and consultants, (b) to provide annual cash incentive compensation opportunities
that are competitive with those of other peer corporations, (c) to optimize the
profitability and growth of the Company and its Affiliates through incentives
which are consistent with the Company’s goals, (d) to provide Grantees with an
incentive for excellence in individual performance, and (e) to promote teamwork
among employees, officers, consultants and Non-Employee Directors, and (f) to
attract and retain highly qualified persons to serve as Non-Employee Directors
and to promote ownership by such Non-Employee Directors of a greater proprietary
interest in the Company, thereby aligning such Non-Employee Directors’ interests
more closely with the interests of the Company’s stockholders.

 

1.3 Duration of the Plan. The Plan shall commence on the Effective Date and
shall remain in effect, subject to the right of the Board of Directors of the
Company (“Board”) to amend or terminate the Plan at any time pursuant to Article
13 hereof, until the earlier of December 8, 2012, or the date all Shares subject
to the Plan shall have been purchased or acquired and the restrictions on all
Restricted Stock granted under the Plan shall have lapsed, according to the
Plan’s provisions.

 

Article 2.

Definitions

 

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

 

2.1 “Affiliate” means any Person that directly or indirectly, through one or
more intermediaries, controls, or is controlled by or is under common control
with the Company.

 

2.2 “Award” means Options (including non-qualified options and Incentive Stock
Options and Director Options), Restricted Shares, Performance Units (which may
be paid in cash), Performance Shares, Deferred Stock, Dividend Equivalents, or
Other Stock-Based Awards granted under the Plan.

 

2.3 “Award Agreement” means the written agreement by which an Award shall be
evidenced.

 

2.4 “CEO” means the Chief Executive Officer of the Company.

 

2.5 “COO” means the Chief Operating Officer of the Company.

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2.6 “Code” means the Internal Revenue Code of 1986, as amended from time to
time. References to a particular section of the Code include references to
regulations and rulings thereunder and to successor provisions.

 

2.7 “Committee” or “Stock Option Committee” has the meaning set forth in Section
3.1.

 

2.8 “Common Stock” means the Class A and/or Class B common stock, $0.01 par
value, of the Company.

 

2.9 “Covered Employee” means a Grantee who, as of the last day of the fiscal
year in which the value of an Award is recognizable as income for federal income
tax purposes, is one of the group of “covered employees,” within the meaning of
Code Section 162(m), with respect to the Company.

 

2.10 “Deferred Stock” means a right, granted under Section 9.1 or Article 12, to
receive Shares at the end of a specified deferral period.

 

2.11 “Director Option” means a non-qualified Option granted to a Non-Employee
Director under Article 12.

 

2.12 “Disability” means, unless otherwise defined in an Award Agreement, or as
otherwise determined under procedures established by the Committee for purposes
of the Plan, a disability within the meaning of Section 22(e)(3) of the Code.

 

2.13 “Dividend Equivalent” means a right to receive payments equal to dividends
or property, if and when paid or distributed, on a specified number of Shares.

 

2.14 “Eligible Person” means any employee (including any officer) of, or
non-employee consultant to, or Non-Employee Director of, the Company or any
Affiliate, or potential employee (including a potential officer) of, or
non-employee consultant to, the Company or an Affiliate. In addition, a former
employee of the company will be considered an Eligible Person if the former
employee (i) had an outstanding loan from the Company as of December 31, 2004,
and (ii) accepted an offer from the Company made between December 8, 2004 and
December 31, 2004 to cancel such outstanding loan (including accrued interest)
and surrender to the Company all Shares then pledged to the Company as security
for such loan in exchange for the issuance of Shares granted under the Plan in
accordance with the terms of such offer.

 

2.15 “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time. References to a particular section of the Exchange Act include
references to successor provisions.

 

2.16 “Fair Market Value” means (a) with respect to any property other than
Shares, the fair market value of such property determined by such methods or
procedures as shall be established from time to time by the Committee, and (b)
with respect to Shares, unless otherwise determined in the good faith discretion
of the Committee, as of any date, (i) the closing price on the date of
determination reported in the table entitled “New York Stock Exchange Composite
Transactions” contained in The Wall Street Journal (or an equivalent successor
table) (or, if no sale of Shares was reported for such date, on the most recent
trading day prior to such date on which a sale of Shares was reported); (ii) if
the Shares are not listed on the New York Stock Exchange, the closing sales
price of the Shares on such other national exchange on which the Shares are
principally traded, or as reported by the National Market System, or similar
organization, as reported in the appropriate table or listing contained in The
Wall Street Journal, or if no such quotations are available, the average of the
high bid and low asked quotations in the over-the-counter market as reported by
the National Quotation Bureau Incorporated or similar organizations; or (iii) in
the event that there shall be no public market for the Shares, the fair market
value of the Shares as determined (which determination shall be conclusive) in
good faith by the Committee.

 

2.17 “Grant Date” means the date on which an Award is granted or, in the case of
a grant to an Eligible Person, such later date as specified in advance by the
Committee.

 

2.18 “Grantee” means a person who has been granted an Award.

 

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2.19 “Incentive Stock Option” means an Option that is intended to meet the
requirements of Section 422 of the Code.

 

2.20 “including” or “includes” means “including, without limitation,” or
“includes, without limitation,” respectively.

 

2.21 “Management Committee” has the meaning set forth in Section 3.1(b).

 

2.22 “Mature Shares” means Shares for which the holder thereof has good title,
free and clear of all liens and encumbrances, and which such holder either (i)
has held for at least six months or (ii) has purchased on the open market.

 

2.23 “Non-Employee Director” means a member of the Board who is not an employee
of the Company or any Affiliate.

 

2.24 “Other Stock-Based Award” means a right, granted under Article 11 hereof,
that relates to or is valued by reference to Shares or other Awards relating to
Shares.

 

2.25 “Option” means an option granted under Article 6 or Article 12 of the Plan.

 

2.26 “Option Price” means the price at which a Share may be purchased by a
Grantee pursuant to an Option.

 

2.27 “Option Term” means the period beginning on the Grant Date of an Option and
ending on the date such Option expires, terminates or is cancelled.

 

2.28 “Performance-Based Exception” means the performance-based exception from
the tax deductibility limitations of Code Section 162(m) contained in Code
Section 162(m)(4)(C) (including the special provisions for options thereunder).

 

2.29 “Performance Measures” has the meaning set forth in Section 4.4.

 

2.30 “Performance Period” means the time period during which performance goals
must be met.

 

2.31 “Performance Share” and “Performance Unit” have the respective meanings set
forth in Article 8.

 

2.32 “Period of Restriction” means the period during which Restricted Shares are
subject to forfeiture if the conditions specified in the Award Agreement are not
satisfied.

 

2.33 “Person” means any individual, sole proprietorship, partnership, joint
venture, limited liability company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, entity or
government instrumentality, division, agency, body or department.

 

2.34 “Restricted Shares” means Shares that are both subject to forfeiture and
are nontransferable if the Grantee does not satisfy the conditions specified in
the Award Agreement applicable to such Shares.

 

2.35 “Rule 16b-3” means Rule 16b-3 promulgated by the SEC under the Exchange
Act, as amended from time to time, together with any successor rule.

 

2.36 “SEC” means the United States Securities and Exchange Commission, or any
successor thereto.

 

2.37 “Section 16 Non-Employee Director” means a member of the Board who
satisfies the requirements to qualify as a “non-employee director” under Rule
16b-3.

 

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2.38 “Section 16 Person” means a person who is subject to potential liability
under Section 16(b) of the 1934 Act with respect to transactions involving
equity securities of the Company.

 

2.39 “Share” means a share of Common Stock, and such other securities of the
Company as may be substituted or resubstituted for Shares pursuant to Section
4.2 hereof.

 

2.40 “Termination of Affiliation” occurs on the first day on which an individual
is for any reason no longer providing services to the Company or an Affiliate in
the capacity of an employee, officer or consultant or with respect to an
individual who is an employee or officer of or a consultant to an Affiliate, the
first day on which such entity ceases to be an Affiliate of the Company.

 

Article 3.

Administration

 

3.1 Committee.

 

(a) Subject to Articles 12 and 13, and to Section 3.2, the Plan shall be
administered by a Committee (the “Stock Option Committee” or the “Committee”)
appointed by the Board from time to time. Notwithstanding the foregoing, either
the Board or the compensation committee of the Board (the “Compensation
Committee”) may at any time and in one or more instances reserve administrative
powers to itself as the Committee or exercise any of the administrative powers
of the Committee. To the extent the Board or Compensation Committee considers it
desirable to comply with Rule 16b-3 or meet the Performance-Based Exception, the
Committee shall consist of two or more directors of the Company, all of whom
qualify as “outside directors” within the meaning of Code Section 162(m) and
Section 16 Non-Employee Directors. The number of members of the Committee shall
from time to time be increased or decreased, and shall be subject to such
conditions, in each case if and to the extent the Board deems it appropriate to
permit transactions in Shares pursuant to the Plan to satisfy such conditions of
Rule 16b-3 and the Performance-Based Exception as then in effect.

 

(b) The Board or the Compensation Committee may appoint and delegate to another
committee (“Management Committee”), to the CEO, or to the COO, any or all of the
authority of the Board or the Committee, as applicable, with respect to Awards
to Grantees other than Grantees who are executive officers, Non-Employee
Directors, or are (or are expected to be) Covered Employees and/or are Section
16 Persons at the time any such delegated authority is exercised. As of the
Effective Date, the authority of the Committee with respect to Awards to
Grantees other than Non-Employee Directors and senior vice presidents or higher
ranking officers of the Company or any Affiliate shall be delegated to the CEO
and the COO. This delegation shall remain in effect until such time as the Board
or the Compensation Committee rescinds or modifies such delegation.

 

(c) Unless the context requires otherwise, any references herein to “Committee”
include references to the Stock Option Committee, to the Board or Compensation
Committee to the extent either has assumed or exercises administrative powers
itself as the Committee pursuant to subsection (a), and the Management
Committee, the CEO or the COO to the extent they have been delegated authority
pursuant to subsection (b), as applicable; provided that (i) for purposes of
Awards to Non-Employee Directors under Article 12, “Committee” shall include
only the full Board, and (ii) for purposes of Awards intended to comply with
Rule 16b-3 or meet the Performance-Based Exception, “Committee” shall include
only the Stock Option Committee or the Compensation Committee.

 

3.2 Powers of Committee. Subject to and consistent with the provisions of the
Plan (including Article 12), the Committee has full and final authority and sole
discretion as follows; provided that any such authority or discretion exercised
with respect to a specific Non-Employee Director shall be approved by the
affirmative vote of a majority of the members of the Board, even if not a
quorum, but excluding the Non-Employee Director with respect to whom such
authority or discretion is exercised:

 

(a) to determine when, to whom and in what types and amounts Awards should be
granted; provided that grants to Non-Employee Directors shall be made solely
pursuant to Article 12;

 

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(b) to grant Awards to Eligible Persons in any number, and to determine the
terms and conditions applicable to each Award (including the number of Shares or
the amount of cash or other property to which an Award will relate, any exercise
price, grant price or purchase price, any limitation or restriction, any
schedule for or performance conditions relating to the earning of the Award or
the lapse of limitations, forfeiture restrictions, restrictions on
exercisability or transferability, any performance goals including those
relating to the Company and/or an Affiliate and/or any division thereof and/or
an individual, and/or vesting based on the passage of time, based in each case
on such considerations as the Committee shall determine);

 

(c) to determine the benefit payable under any Performance Unit, Performance
Share, Dividend Equivalent, or Other Stock-Based Award and to determine whether
any performance or vesting conditions have been satisfied;

 

(d) to determine whether or not specific Awards shall be granted in connection
with other specific Awards, and if so, whether they shall be exercisable
cumulatively with, or alternatively to, such other specific Awards and all other
matters to be determined in connection with an Award;

 

(e) to determine the Option Term;

 

(f) to determine the amount, if any, that a Grantee shall pay for Restricted
Shares, whether to permit or require the payment of cash dividends thereon to be
deferred and the terms related thereto, when Restricted Shares (including
Restricted Shares acquired upon the exercise of an Option) shall be forfeited
and whether such shares shall be held in escrow;

 

(g) to determine whether, to what extent and under what circumstances an Award
may be settled in, or the exercise price of an Award may be paid in, cash,
Shares, other Awards or other property, or an Award may be accelerated, vested,
canceled, forfeited or surrendered or any terms of the Award may be waived, and
to accelerate the exercisability of, and to accelerate or waive any or all of
the terms and conditions applicable to, any Award or any group of Awards for any
reason and at any time;

 

(h) to determine with respect to Awards granted to Eligible Persons whether, to
what extent and under what circumstances cash, Shares, other Awards, other
property and other amounts payable with respect to an Award will be deferred,
either at the election of the Grantee or if and to the extent specified in the
Award Agreement automatically or at the election of the Committee (whether to
limit loss of deductions pursuant to Code Section 162(m) or otherwise);

 

(i) to offer to exchange or buy out any previously granted Award for a payment
in cash, Shares or other Award;

 

(j) to construe and interpret the Plan and to make all determinations, including
factual determinations, necessary or advisable for the administration of the
Plan;

 

(k) to make, amend, suspend, waive and rescind rules and regulations relating to
the Plan;

 

(l) to appoint such agents as the Committee may deem necessary or advisable to
administer the Plan;

 

(m) to determine the terms and conditions of all Award Agreements applicable to
Eligible Persons (which need not be identical) and, with the consent of the
Grantee, to amend any such Award Agreement at any time, among other things, to
permit transfers of such Awards to the extent permitted by the Plan; provided
that the consent of the Grantee shall not be required for any amendment (i)
which does not adversely affect the rights of the Grantee, or (ii) which is
necessary or advisable (as determined by the Committee) to carry out the purpose
of the Award as a result of any new applicable law or change in an existing
applicable law, or (iii) to the extent the Award Agreement specifically permits
amendment without consent;

 

(n) to cancel, with the consent of the Grantee, outstanding Awards and to grant
new Awards in substitution therefor;

 

5

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(o) to impose such additional terms and conditions upon the grant, exercise or
retention of Awards as the Committee may, before or concurrently with the grant
thereof, deem appropriate, including limiting the percentage of Awards which may
from time to time be exercised by a Grantee;

 

(p) to make adjustments in the terms and conditions of, and the criteria in,
Awards in recognition of unusual or nonrecurring events (including events
described in Section 4.2) affecting the Company or an Affiliate or the financial
statements of the Company or an Affiliate, or, except with respect to Awards
granted pursuant to Article 12, in response to changes in applicable laws,
regulations or accounting principles; provided, however, that in no event shall
such adjustment increase the value of an Award for a person expected to be a
Covered Employee for whom the Committee desires to have the Performance-Based
Exception apply;

 

(q) to correct any defect or supply any omission or reconcile any inconsistency,
and to construe and interpret the Plan, the rules and regulations, and Award
Agreement or any other instrument entered into or relating to an Award under the
Plan; and

 

(r) to take any other action with respect to any matters relating to the Plan
for which it is responsible and to make all other decisions and determinations
as may be required under the terms of the Plan or as the Committee may deem
necessary or advisable for the administration of the Plan.

 

Any action of the Committee with respect to the Plan shall be final, conclusive
and binding on all persons, including the Company, its Affiliates, any Grantee,
any person claiming any rights under the Plan from or through any Grantee, and
stockholders, except to the extent the Committee may subsequently modify, or
take further action not consistent with, its prior action. If not specified in
the Plan, the time at which the Committee must or may make any determination
shall be determined by the Committee, and any such determination may thereafter
be modified by the Committee. The express grant of any specific power to the
Committee, and the taking of any action by the Committee, shall not be construed
as limiting any power or authority of the Committee. The Committee may delegate
to officers or managers of the Company or any Affiliate the authority, subject
to such terms as the Committee shall determine, to perform specified functions
under the Plan (subject to Sections 4.3 and 5.7(c)).

 

Article 4.

Shares Subject to the Plan, Maximum Awards, and 162(m) Compliance

 

4.1 Number of Shares Available for Grants. Subject to adjustment as provided in
Section 4.2, and except as provided in Section 5.6(b) the number of Shares
hereby reserved for delivery under the Plan shall be 9,000,000, of which
2,000,000 Shares shall be available for delivery as Restricted Shares.
Immediately prior to the Effective Date, 5,000,000 Shares were available for
delivery under the terms of the Insight Communications Company, Inc. 1999 Stock
Option Plan, as in effect immediately prior to its amendment to become the Plan
(the “Prior Plan”).

 

If any Shares subject to an Award granted hereunder (or under the Prior Plan)
are forfeited or such Award otherwise terminates without the delivery of such
Shares, the Shares subject to such Award, to the extent of any such forfeiture
or termination, shall again be available for grant under the Plan. If any Shares
subject to an Award granted hereunder (or under the Prior Plan) are withheld or
applied as payment in connection with the exercise of an Award or the
withholding or payment of taxes related thereto (“Returned Shares”), such
Returned Shares shall again be available for grant under the Plan.

 

The Committee shall from time to time determine the appropriate methodology for
calculating the number of Shares to which an Award relates pursuant to the Plan.

 

Shares delivered pursuant to the Plan may be, in whole or in part, authorized
and unissued Shares, or treasury Shares, including Shares repurchased by the
Company for purposes of the Plan.

 

4.2 Adjustments in Authorized Shares and Awards. In the event that the Committee
determines that any dividend or other distribution (whether in the form of cash,
Shares, or other property), recapitalization, forward

 

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or reverse stock split, subdivision, consolidation or reduction of capital,
reorganization, merger, consolidation, scheme of arrangement, split-up, spin-off
or combination involving the Company or repurchase or exchange of Shares or
other securities of the Company or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Shares such that any adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(a) the number and type of Shares (or other securities or property) with respect
to which Awards may be granted, (b) the number and type of Shares (or other
securities or property) subject to outstanding Awards, (c) the grant or exercise
price with respect to any Award or, if deemed appropriate, make provision for a
cash payment to the holder of an outstanding Award, (d) the number and kind of
Shares of outstanding Restricted Shares or relating to any other outstanding
Award in connection with which Shares are subject, and (e) the number of Shares
with respect to which Awards may be granted to a Grantee, as set forth in
Section 4.3; provided, in each case, that with respect to Awards of Incentive
Stock Options intended to continue to qualify as Incentive Stock Options after
such adjustment, no such adjustment shall be authorized to the extent that such
adjustment would cause the Incentive Stock Option to violate Section 424(a) of
the Code; and provided further that the number of Shares subject to any Award
denominated in Shares shall always be a whole number.

 

4.3 Compliance with Section 162(m) of the Code. To the extent the Committee
determines that compliance with the Performance-Based Exception is desirable,
the following shall apply:

 

(a) Section 162(m) Compliance. All Awards granted to persons the Committee
believes likely to be Covered Employees shall comply with the requirements of
the Performance-Based Exception; provided, however, that to the extent Code
Section 162(m) requires periodic shareholder approval of performance measures,
such approval shall not be required for the continuation of the Plan or as a
condition to grant any Award hereunder after such approval is required. In
addition, in the event that changes are made to Code Section 162(m) to permit
flexibility with respect to the Award or Awards available under the Plan, the
Committee may, subject to this Section 4.3, make any adjustments to such Awards
as it deems appropriate.

 

(b) Annual Individual Limitations. During the 2002 calendar year, no Grantee may
be granted Awards (other than Awards that cannot be satisfied in Shares) with
respect to more than 1,450,000 Shares, subject to adjustment as provided in
Section 4.2, and for any calendar year commencing after 2002, no Grantee may be
granted Awards (other than Awards that cannot be satisfied in Shares) with
respect to more than 850,000 Shares, subject to adjustment as provided in
Section 4.2 and except as otherwise provided in Section 5.6(b). The maximum
potential value of Awards to be settled in cash or property (other than Shares)
that may be granted with respect to any calendar year to any Grantee expected to
be a Covered Employee (regardless of when such Award is settled) shall not
exceed $5,000,000. (Thus, Awards that accrue over more than one calendar year
(or fiscal year) may exceed the one-year grant limit in the prior sentence at
the time of payment or settlement.)

 

4.4 Performance-Based Exception Under Section 162(m). Unless and until the
Committee proposes for stockholder vote and stockholders approve a change in the
general performance measures set forth in this Section 4.4, for Awards (other
than Options) designed to qualify for the Performance-Based Exception, the
objective Performance Measure(s) shall be chosen from among the following:

 

(a) Earnings (either in the aggregate or on a per-share basis);

 

(b) Net income or loss;

 

(c) Operating income or loss;

 

(d) Operating profit;

 

(e) Cash flow (as modified or adjusted for purposes of reporting cash flow in
accordance with industry practice);

 

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(f) Stockholder returns (including return on assets, investments, equity, or
gross sales) (including income applicable to common stockholders or other class
of stockholders);

 

(g) Return measures (including return on assets, equity, or sales);

 

(h) Earnings before or after either, or any combination of, interest, taxes,
depreciation or amortization (EBITDA) (as modified or adjusted for purposes of
reporting EBITDA in accordance with industry practice);

 

(i) Gross revenues;

 

(j) Share price (including growth measures and total stockholder return or
attainment by the Shares of a specified value for a specified period of time);

 

(k) Reductions in expense levels in each case, where applicable, determined
either on a Company-wide basis or in respect of any one or more business units;

 

(l) Net economic value;

 

(m) Market share;

 

(n) Annual net income to common stock;

 

(o) Annual cash flow provided by operations;

 

(p) Changes in annual revenues;

 

(q) Strategic business criteria, consisting of one or more objectives based on
meeting specified revenue, market penetration, geographic business expansion
goals, objectively identified project milestones, production volume levels, cost
targets, and goals relating to acquisitions or divestitures;

 

(r) Economic value added;

 

(s) Sales;

 

(t) Costs;

 

(u) Results of customer satisfaction surveys;

 

(v) Aggregate product price and other product price measures;

 

(w) Safety record;

 

(x) Service reliability;

 

(y) Operating and maintenance cost management;

 

(z) Debt rating; and/or

 

(aa) Achievement of business or operational goals such as market share and/or
business development;

 

provided that applicable performance measures may be applied on a pre- or
post-tax basis; and provided further that the Committee may, on the Grant Date
of an Award intended to comply with the Performance-Based Exception, and in the
case of other grants, at any time, provide that the formula for such Award may
include or exclude items to measure specific objectives, such as losses from
discontinued operations, extraordinary gains or losses, the cumulative effect of
accounting changes, acquisitions or divestitures, foreign exchange impacts and
any unusual,

 

8

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nonrecurring gain or loss. For Awards intended to comply with the
Performance-Based Exception, the Committee shall set the Performance Measures
within the time period prescribed by Section 162(m) of the Code. The levels of
performance required with respect to Performance Measures may be expressed in
absolute or relative levels and may be based upon a set increase, set positive
result, maintenance of the status quo, set decrease or set negative result.
Performance Measures may differ for Awards to different Grantees. The Committee
shall specify the weighting (which may be the same or different for multiple
objectives) to be given to each performance objective for purposes of
determining the final amount payable with respect to any such Award. Any one or
more of the Performance Measures may apply to the Grantee, a department, unit,
division or function within the Company or any one or more Affiliates; and may
apply either alone or relative to the performance of other businesses or
individuals (including industry or general market indices).

 

The Committee shall have the discretion to adjust the determinations of the
degree of attainment of the pre-established performance goals; provided,
however, that Awards which are designed to qualify for the Performance-Based
Exception may not (unless the Committee determines to amend the Award so that it
no longer qualified for the Performance-Based Exception) be adjusted upward (the
Committee shall retain the discretion to adjust such Awards downward). The
Committee may not, unless the Committee determines to amend the Award so that it
no longer qualifies for the Performance-Based Exception, delegate any
responsibility with respect to Awards intended to qualify for the
Performance-Based Exception. All determinations by the Committee as to the
achievement of the Performance Measure(s) shall be in writing prior to payment
of the Award.

 

In the event that applicable laws change to permit Committee discretion to alter
the governing performance measures without obtaining stockholder approval of
such changes, and still qualify for the Performance-Based Exception, the
Committee shall have sole discretion to make such changes without obtaining
stockholder approval.

 

Article 5.

Eligibility and General Conditions of Awards

 

5.1 Eligibility. The Committee may in its discretion grant Awards to any
Eligible Person, whether or not he or she has previously received an Award. Each
Person who, on any date on which an Award is to be granted pursuant to Article
12, is a Non-Employee Director eligible to be granted an Award pursuant to
Article 12 automatically shall be granted an Award pursuant to Article 12 on
such date.

 

5.2 Award Agreement. To the extent not set forth in the Plan, the terms and
conditions of each Award shall be set forth in an Award Agreement.

 

5.3 General Terms and Termination of Affiliation. The Committee may impose on
any Award or the exercise or settlement thereof, at the date of grant or,
subject to the provisions of Section 13.2, thereafter, such additional terms and
conditions not inconsistent with the provisions of the Plan as the Committee
shall determine, including terms requiring forfeiture, acceleration or pro-rata
acceleration of Awards in the event of a Termination of Affiliation by the
Grantee. Except as may be required under the Delaware General Corporation Law,
Awards may be granted for no consideration other than prior and future services.
Except as otherwise determined by the Committee pursuant to this Section 5.3,
all Options that have not been exercised, or any other Awards that remain
subject to a risk of forfeiture or which are not otherwise vested, or which have
outstanding Performance Periods, at the time of a Termination of Affiliation
shall be forfeited to the Company.

 

5.4 Nontransferability of Awards.

 

(a) Each Award and each right under any Award shall be exercisable only by the
Grantee during the Grantee’s lifetime, or, if permissible under applicable law,
by the Grantee’s guardian or legal representative or by a transferee receiving
such Award pursuant to a qualified domestic relations order (a “QDRO”) as
defined in the Code or Title I of the Employee Retirement Income Security Act of
1974 as amended, or the rules thereunder.

 

(b) No Award (prior to the time, if applicable, Shares are delivered in respect
of such Award), and no right under any Award, may be assigned, alienated,
pledged, attached, sold or otherwise transferred or encumbered

 

9

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by a Grantee otherwise than by will or by the laws of descent and distribution
(or in the case of Restricted Shares, to the Company) or pursuant to a QDRO, and
any such purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the Company or any
Affiliate; provided that the designation of a beneficiary to receive benefits in
the event of the Grantee’s death shall not constitute an assignment, alienation,
pledge, attachment, sale, transfer or encumbrance.

 

(c) Notwithstanding subsections (a) and (b) above, to the extent provided in the
Award Agreement, Director Options, Deferred Stock, and Awards other than
Incentive Stock Options, may be transferred, without consideration, to a
Permitted Transferee. For this purpose, a “Permitted Transferee” in respect of
any Grantee means any member of the Immediate Family of such Grantee, any trust
of which all of the primary beneficiaries are such Grantee or members of his or
her Immediate Family, or any partnership (including limited liability companies
and similar entities) of which all of the partners or members are such Grantee
or members of his or her Immediate Family; and the “Immediate Family” of a
Grantee means the Grantee’s spouse, children, stepchildren, grandchildren,
parents, stepparents, siblings, grandparents, nieces and nephews. Such Award may
be exercised by such transferee in accordance with the terms of such Award. If
so determined by the Committee, a Grantee may, in the manner established by the
Committee, designate a beneficiary or beneficiaries to exercise the rights of
the Grantee, and to receive any distribution with respect to any Award upon the
death of the Grantee. A transferee, beneficiary, guardian, legal representative
or other person claiming any rights under the Plan from or through any Grantee
shall be subject to and consistent with the provisions of the Plan and any
applicable Award Agreement, except to the extent the Plan and Award Agreement
otherwise provide with respect to such persons, and to any additional
restrictions or limitations deemed necessary or appropriate by the Committee.

 

(d) Nothing herein shall be construed as requiring the Committee to honor a QDRO
except to the extent required under applicable law.

 

5.5 Cancellation and Rescission of Awards. Unless the Award Agreement specifies
otherwise, the Committee may cancel, rescind, suspend, withhold, or otherwise
limit or restrict any unexercised Award at any time if the Grantee is not in
compliance with all applicable provisions of the Award Agreement and the Plan or
if the Grantee has a Termination of Affiliation.

 

5.6 Stand-Alone, Tandem and Substitute Awards.

 

(a) Awards granted under the Plan may, in the discretion of the Committee, be
granted either alone or in addition to, in tandem with, or in substitution for,
any other Award granted under the Plan; provided that if the stand-alone, tandem
or substitute Award is intended to qualify for the Performance-Based Exception,
it must separately satisfy the requirements of the Performance-Based Exception.
If an Award is granted in substitution for another Award or any non-Plan award
or benefit, the Committee shall require the surrender of such other Award or
non-Plan award or benefit in consideration for the grant of the new Award.
Awards granted in addition to or in tandem with other Awards or non-Plan awards
or benefits may be granted either at the same time as or at a different time
from the grant of such other Awards or non-Plan awards or benefits.

 

(b) The Committee may, in its discretion and on such terms and conditions as the
Committee considers appropriate in the circumstances, grant Awards under the
Plan (“Substitute Awards”) in substitution for stock and stock-based awards
(“Acquired Entity Awards”) held by employees of or consultants to another
corporation or entity who become Eligible Persons as the result of a merger or
consolidation of the employing corporation or other entity (the “Acquired
Entity”) with the Company or an Affiliate or the acquisition by the Company or
an Affiliate of property or stock of the Acquired Entity immediately prior to
such merger, consolidation or acquisition in order to preserve for the Grantee
the economic value of all or a portion of such Acquired Entity Award at such
price as the Committee determines necessary to achieve preservation of economic
value. The limitations of Sections 4.1 and 4.3 on the number of Shares reserved
or available for grants shall not apply to Substitute Awards granted under this
subsection (b).

 

5.7 Compliance with Rule 16b-3.

 

(a) Six-Month Holding Period Advice. Unless a Grantee could otherwise dispose of
or exercise a derivative security or dispose of Shares delivered under the Plan
without incurring liability under Section 16(b) of the

 

10

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Exchange Act, the Committee may advise or require a Grantee to comply with the
following in order to avoid incurring liability under Section 16(b): (i) at
least six months must elapse from the date of acquisition of a derivative
security under the Plan to the date of disposition of the derivative security
(other than upon exercise or conversion) or its underlying equity security, and
(ii) Shares granted or awarded under the Plan other than upon exercise or
conversion of a derivative security must be held for at least six months from
the date of grant of an Award.

 

(b) Reformation to Comply with Exchange Act Rules. To the extent the Committee
determines that a grant or other transaction by a Section 16 Person should
comply with applicable provisions of Rule 16b-3 (except for transactions
exempted under alternative Exchange Act rules), the Committee shall take such
actions as necessary to make such grant or other transaction so comply, and if
any provision of this Plan or any Award Agreement relating to a given Award does
not comply with the requirements of Rule 16b-3 as then applicable to any such
grant or transaction, such provision will be construed or deemed amended, if the
Committee so determines, to the extent necessary to conform to the then
applicable requirements of Rule 16b-3.

 

(c) Rule 16b-3 Administration. Any function relating to a Section 16 Person
shall be performed solely by the Committee or the Board if necessary to ensure
compliance with applicable requirements of Rule 16b-3, to the extent the
Committee determines that such compliance is desired. Each member of the
Committee or person acting on behalf of the Committee shall be entitled to, in
good faith, rely or act upon any report or other information furnished to him by
any officer, manager or other employee of the Company or any Affiliate, the
Company’s independent certified public accountants or any executive compensation
consultant or attorney or other professional retained by the Company to assist
in the administration of the Plan.

 

5.8 Deferral of Award Payouts. The Committee may permit a Grantee to defer, or
if and to the extent specified in an Award Agreement require the Grantee to
defer, receipt of the payment of cash or the delivery of Shares that would
otherwise be due by virtue of the exercise of an Option, the lapse or waiver of
restrictions with respect to Restricted Shares, the satisfaction of any
requirements or goals with respect to Performance Units or Performance Shares,
the lapse or waiver of the deferral period for Deferred Stock, or the lapse or
waiver of restrictions with respect to Other Stock-Based Awards. If any such
deferral is required or permitted, the Committee shall, in its sole discretion,
establish rules and procedures for such payment deferrals. Except as otherwise
provided in an Award Agreement, any payment or any Shares that are subject to
such deferral shall be made or delivered to the Grantee as specified in the
Award Agreement or pursuant to the Grantee’s deferral election.

 

Article 6.

Stock Options

 

6.1 Grant of Options. Subject to and consistent with the provisions of the Plan,
Options may be granted to any Eligible Person in such number, and upon such
terms, and at any time and from time to time as shall be determined by the
Committee.

 

6.2 Award Agreement. Each Option grant shall be evidenced by an Award Agreement
that shall specify the Option Price, the Option Term, the number of Shares to
which the Option pertains, the time or times at which such Option shall be
exercisable and such other provisions as the Committee shall determine.

 

6.3 Option Price. The Option Price of an Option under this Plan shall be
determined in the sole discretion of the Committee. Subject to the adjustment
allowed under Section 4.2, neither the Committee nor the Board shall have the
authority or discretion to change the Option Price of any outstanding Option.

 

6.4 Grant of Incentive Stock Options. At the time of the grant of any Option,
the Committee may in its discretion designate that such Option shall be made
subject to additional restrictions to permit it to qualify as an Incentive Stock
Option. Any Option designated as an Incentive Stock Option:

 

(a) shall be granted only to an employee of the Company or a Subsidiary
Corporation (as defined below);

 

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(b) shall have an Option Price of not less than 100% of the Fair Market Value of
a Share on the Grant Date, and, if granted to a person who owns capital stock
(including stock treated as owned under Section 424(d) of the Code) possessing
more than 10% of the total combined voting power of all classes of capital stock
of the Company or any Subsidiary Corporation (a “10% Owner”), have an Option
Price not less than 110% of the Fair Market Value of a Share on its Grant Date;

 

(c) shall be for a period of not more than 10 years (five years if the Grantee
is a 10% Owner) from its Grant Date, and shall be subject to earlier termination
as provided herein or in the applicable Award Agreement;

 

(d) shall not have an aggregate Fair Market Value (as of the Grant Date) of the
Shares with respect to which Incentive Stock Options (whether granted under the
Plan or any other stock option plan of the Grantee’s employer or any parent or
Subsidiary Corporation (“Other Plans”)) are exercisable for the first time by
such Grantee during any calendar year (“Current Grant”), determined in
accordance with the provisions of Section 422 of the Code, which exceeds
$100,000 (the “$100,000 Limit”);

 

(e) shall, if the aggregate Fair Market Value of the Shares (determined on the
Grant Date) with respect to the Current Grant and all Incentive Stock Options
previously granted under the Plan and any Other Plans which are exercisable for
the first time during a calendar year (“Prior Grants”) would exceed the $100,000
Limit, be, as to the portion in excess of the $100,000 Limit, exercisable as a
separate option that is not an Incentive Stock Option at such date or dates as
are provided in the Current Grant;

 

(f) shall require the Grantee to notify the Committee of any disposition of any
Shares delivered pursuant to the exercise of the Incentive Stock Option under
the circumstances described in Section 421(b) of the Code (relating to holding
periods and certain disqualifying dispositions) (“Disqualifying Disposition”),
within 10 days of such a Disqualifying Disposition;

 

(g) shall by its terms not be assignable or transferable other than by will or
the laws of descent and distribution and may be exercised, during the Grantee’s
lifetime, only by the Grantee; provided, however, that the Grantee may, to the
extent provided in the Plan in any manner specified by the Committee, designate
in writing a beneficiary to exercise his or her Incentive Stock Option after the
Grantee’s death; and

 

(h) shall, if such Option nevertheless fails to meet the foregoing requirements,
or otherwise fails to meet the requirements of Section 422 of the Code for an
Incentive Stock Option, be treated for all purposes of this Plan, except as
otherwise provided in subsections (d) and (e) above, as an Option that is not an
Incentive Stock Option.

 

For purposes of this Section 6.4, “Subsidiary Corporation” means a corporation
other than the Company in an unbroken chain of corporations beginning with the
Company if, at the time of granting the Option, each of the corporations other
than the last corporation in the unbroken chain owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. Notwithstanding the foregoing and Section 3.2,
the Committee may, without the consent of the Grantee, at any time before the
exercise of an Option (whether or not an Incentive Stock Option), take any
action necessary to prevent such Option from being treated as an Incentive Stock
Option.

 

6.5 Payment. Except as otherwise provided by the Committee in an Award
Agreement, Options shall be exercised by the delivery of a written notice of
exercise to the Company, setting forth the number of Shares with respect to
which the Option is to be exercised, accompanied by full payment for the Shares
made by any one or more of the following means:

 

(a) cash, personal check or wire transfer;

 

(b) Mature Shares, valued at their Fair Market Value on the date of exercise;

 

12

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(c) with the approval of the Committee, Restricted Shares held by the Grantee
for at least six months prior to the exercise of the Option, each such share
valued at the Fair Market Value of a Share on the date of exercise; or

 

(d) subject to applicable law (including the prohibited loan provisions of
Section 402 of the Sarbanes-Oxley Act of 2002), through the sale of the Shares
acquired on exercise of the Option through a broker-dealer to whom the Grantee
has submitted an irrevocable notice of exercise and irrevocable instructions to
deliver promptly to the Company the amount of sale or loan proceeds sufficient
to pay for such Shares, together with, if requested by the Company, the amount
of federal, state, local or foreign withholding taxes payable by Grantee by
reason of such exercise.

 

The Committee may in its discretion specify that, if any Restricted Shares
(“Tendered Restricted Shares”) are used to pay the Option Price, (x) all the
Shares acquired on exercise of the Option shall be subject to the same
restrictions as the Tendered Restricted Shares, determined as of the date of
exercise of the Option, or (y) a number of Shares acquired on exercise of the
Option equal to the number of Tendered Restricted Shares shall be subject to the
same restrictions as the Tendered Restricted Shares, determined as of the date
of exercise of the Option.

 

Article 7.

Restricted Shares

 

7.1 Grant of Restricted Shares. Subject to and consistent with the provisions of
the Plan, the Committee, at any time and from time to time, may grant Restricted
Shares to any Eligible Person in such amounts as the Committee shall determine.

 

7.2 Award Agreement. Each grant of Restricted Shares shall be evidenced by an
Award Agreement that shall specify the Period(s) of Restriction, the number of
Restricted Shares granted, and such other provisions as the Committee shall
determine. The Committee may impose such conditions and/or restrictions on any
Restricted Shares granted pursuant to the Plan as it may deem advisable,
including restrictions based upon the achievement of specific performance goals,
time-based restrictions on vesting following the attainment of the performance
goals, and/or restrictions under applicable securities laws; provided that such
conditions and/or restrictions may lapse, if so determined by the Committee, in
the event of the Grantee’s Termination of Affiliation due to death, disability,
normal or approved early retirement, or involuntary termination by the Company
or an Affiliate without “cause”.

 

7.3 Consideration for Restricted Shares. The Committee shall determine the
amount, if any, that a Grantee shall pay for Restricted Shares.

 

7.4 Effect of Forfeiture. If Restricted Shares are forfeited, and if the Grantee
was required to pay for such shares or acquired such Restricted Shares upon the
exercise of an Option, the Grantee shall be deemed to have resold such
Restricted Shares to the Company at a price equal to the lesser of (x) the
amount paid by the Grantee for such Restricted Shares, or (y) the Fair Market
Value of a Share on the date of such forfeiture. The Company shall pay to the
Grantee the deemed sale price as soon as is administratively practical. Such
Restricted Shares shall cease to be outstanding, and shall no longer confer on
the Grantee thereof any rights as a stockholder of the Company, from and after
the date of the event causing the forfeiture, whether or not the Grantee accepts
the Company’s tender of payment for such Restricted Shares.

 

7.5 Escrow; Legends. The Committee may provide that the certificates for any
Restricted Shares (x) shall be held (together with a stock power executed in
blank by the Grantee) in escrow by the Secretary of the Company until such
Restricted Shares become nonforfeitable or are forfeited and/or (y) shall bear
an appropriate legend restricting the transfer of such Restricted Shares under
the Plan. If any Restricted Shares become nonforfeitable, the Company shall
cause certificates for such shares to be delivered without such legend.

 

13

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Article 8.

Performance Units and Performance Shares

 

8.1 Grant of Performance Units and Performance Shares. Subject to and consistent
with the provisions of the Plan, Performance Units or Performance Shares may be
granted to any Eligible Person in such amounts and upon such terms, and at any
time and from time to time, as shall be determined by the Committee.

 

8.2 Value/Performance Goals. The Committee shall set performance goals in its
discretion which, depending on the extent to which they are met, will determine
the number or value of Performance Units or Performance Shares that will be paid
to the Grantee. With respect to Covered Employees and to the extent the
Committee deems it appropriate to comply with Section 162(m) of the Code, all
performance goals shall be objective Performance Measures satisfying the
requirements for the Performance-Based Exception, and shall be set by the
Committee within the time period prescribed by Section 162(m) of the Code and
related regulations.

 

(a) Performance Unit. Each Performance Unit shall have an initial value that is
established by the Committee at the time of grant.

 

(b) Performance Share. Each Performance Share shall have an initial value equal
to the Fair Market Value of a Share on the date of grant.

 

8.3 Earning of Performance Units and Performance Shares. After the applicable
Performance Period has ended, the holder of Performance Units or Performance
Shares shall be entitled to payment based on the level of achievement of
performance goals set by the Committee. If a Performance Unit or Performance
Share Award is intended to comply with the Performance-Based Exception, the
Committee shall certify the level of achievement of the performance goals in
writing before the Award is settled.

 

At the discretion of the Committee, the settlement of Performance Units or
Performance Shares may be in cash, Shares of equivalent value, or in some
combination thereof, as set forth in the Award Agreement.

 

If a Grantee is promoted, demoted or transferred to a different business unit of
the Company during a Performance Period, then, to the extent the Committee
determines that the Award, the performance goals, or the Performance Period are
no longer appropriate, the Committee may adjust, change, eliminate or cancel the
Award, the performance goals, or the applicable Performance Period, as it deems
appropriate in order to make them appropriate and comparable to the initial
Award, the performance goals, or the Performance Period.

 

At the discretion of the Committee, a Grantee may be entitled to receive any
dividends or Dividend Equivalents declared with respect to Shares deliverable in
connection with grants of Performance Units or Performance Shares which have
been earned, but not yet delivered to the Grantee.

 

Article 9.

Deferred Stock

 

9.1 Grant of Deferred Stock. Subject to and consistent with the provisions of
the Plan, the Committee, at any time and from time to time, may grant Deferred
Stock to any Eligible Person, in such amount and upon such terms as the
Committee shall determine, including grants at the election of a Grantee to
convert Shares to be acquired upon Option exercise, upon lapse of restrictions
on Restricted Shares, or vesting of Performance Shares, into such Deferred
Stock.

 

9.2 Delivery and Limitations. Delivery of Shares will occur upon expiration of
the deferral period specified for the Award of Deferred Stock by the Committee.
In addition, an Award of Deferred Stock shall be subject to such limitations as
the Committee may impose, which limitations may lapse at the expiration of the
deferral period or at other specified times, separately or in combination, in
installments or otherwise, as the Committee shall determine at the time of grant
or thereafter. Unless and only to the extent that the Committee shall provide
otherwise in the Award Agreement, a Grantee awarded Deferred Stock will have no
voting rights but will have the rights to receive Dividend Equivalents in
respect of Deferred Stock, which Dividend Equivalents shall be deemed reinvested
in additional Shares of Deferred Stock.

 

14

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9.3 Forfeiture. Upon Termination of Affiliation during the applicable deferral
period, Deferred Stock that is at that time subject to deferral shall be
forfeited to the extent provided in the Award Agreement.

 

Article 10.

Dividend Equivalents

 

The Committee is authorized to grant Awards of Dividend Equivalents alone or in
conjunction with other Awards. The Committee may provide that Dividend
Equivalents shall be paid or distributed when accrued or shall be deemed to have
been reinvested in additional Shares or additional Awards or otherwise
reinvested.

 

Article 11.

Other Stock-Based Awards

 

The Committee is authorized, subject to limitations under applicable law, to
grant such other Awards that are denominated or payable in, valued in whole or
in part by reference to, or otherwise based on, or related to, Shares, as deemed
by the Committee to be consistent with the purposes of the Plan including Shares
awarded which are not subject to any restrictions or conditions, convertible or
exchangeable debt securities or other rights convertible or exchangeable into
Shares, and Awards valued by reference to the value of securities of or the
performance of specified Affiliates. Subject to and consistent with the
provisions of the Plan, the Committee shall determine the terms and conditions
of such Awards. Except as provided by the Committee, Shares delivered pursuant
to a purchase right granted under this Article 11 shall be purchased for such
consideration, paid for by such methods and in such forms, including cash,
Shares, outstanding Awards or other property, as the Committee shall determine.

 

Article 12.

Non-Employee Director Awards

 

12.1 Exclusive Means for Non-Employee Director Awards. Awards to Non-Employee
Directors shall be made solely pursuant to this Article 12.

 

12.2 Director Option. Each Non-Employee Director may elect (an “Option
Election”) to have all or any portion of his or her annual retainer fee (as in
effect from time to time) be paid as an Award of a Director Option. An Option
Election may be made at any time prior to the date annual retainer fees or any
portion thereof would otherwise have been paid in cash, subject to such
restrictions and advance written filing requirements as the Company may impose.
Each Option Election shall specify the portion of the annual retainer fee to be
paid as an Award of a Director Option and shall remain in effect with respect to
future annual retainer fees until the Non-Employee Director revokes or changes
such Option Election. Any such revocation or change shall have prospective
application only. Each Director Option and Award thereof shall be subject to the
following terms and conditions:

 

(a) Non-Employee Director Status. A person must be a Non-Employee Director on
the Grant Date of a Director Option in order to be granted such Director Option.

 

(b) The Grant Date for each such Director Option shall be the date the annual
retainer fee or portion thereof would otherwise have been paid in cash.

 

(c) The number of Shares subject to each such Director Option shall be the
amount of the annual retainer fee or portion thereof that would otherwise have
been paid in cash on the Grant Date, divided by the per-Share Modified
Black-Scholes Value of the Director Option as of the Grant Date, rounding up to
the next higher whole number of Shares any fractional portion of a Share equal
to or in excess of one-half Share (and otherwise rounding

 

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down to the next lower whole number of Shares). For purposes of this Article 12
“Modified Black-Scholes Value” means the per share fair value of the Director
Option determined using the modified Black-Scholes option pricing model or
similar option pricing model, and applied on the basis of such risk-free
interest rate, expected option life, volatility, average stock price, and other
applicable parameters, or formula therefor, as the Company in its sole
discretion approves.

 

(d) Option Price. The Option Price for each Director Option shall be 100 percent
of the Fair Market Value of a Share on the Grant Date.

 

(e) Director Option Term. The Option Term of each Director Option shall expire
on the earlier of (i) an anniversary of the Grant Date determined by the Board
and uniformly applied to all Director Options granted on a single Grant Date,
not later than the tenth anniversary of the Grant Date, or (ii) five years, or
such shorter period as the Board may determine, after the date the Grantee
ceases to serve as a Non-Employee Director.

 

(f) Vesting and Exercisability. Each Director Option shall be fully vested and
exercisable at any time, or from time to time, throughout the Option Term.

 

(g) Method of Exercise. A Grantee may exercise a Director Option, in whole or in
part, during the Option Term, by giving written notice of exercise to the Human
Resources Department of the Company, specifying the Director Option to be
exercised and the number of Shares to be purchased, and paying in full the
exercise price by any one or any combination of the following means:

 

(i) in cash, personal check or wire transfer;

 

(ii) by surrendering Mature Shares having a Fair Market Value at the time of
exercise equal to the Option Price for Shares being acquired; or

 

(iii) subject to applicable law (including the prohibited loan provisions of
Section 402 of the Sarbanes-Oxley Act of 2002), through the sale of the Shares
acquired on exercise of the Option through a broker-dealer to whom the Grantee
has submitted an irrevocable notice of exercise and irrevocable instructions to
deliver promptly to the Company the amount of sale or loan proceeds sufficient
to pay for such Shares.

 

(h) Exercise of Director Option for Deferred Stock. A Non-Employee Director who
is entitled to make and makes a Deferral Election in accordance with Section
12.4 and who pays the Option Price with Mature Shares may exercise his or her
option for an equal number of shares of Deferred Stock in lieu of Shares.

 

12.3 Election to Receive Director Fees in Shares or Deferred Stock in Lieu of
Cash.

 

(a) Payment of Director Fees in Shares. Pursuant to procedures approved by the
Board to implement this Section 12.3 and subject to the approval of the Board in
its sole discretion, a Non-Employee Director may elect (“Share Election”) to be
paid all or a portion of the cash fees earned in his or her capacity as a
Non-Employee Director (including annual retainer fees, meeting fees, fees for
service on a Board committee, fees for service as chairman of a Board committee,
and any other fees paid to directors) (“Director Fees”) in the form of Shares in
lieu of cash. A Share Election may be made at any time prior to the date
Director Fees would otherwise have been paid in cash, subject to such
restrictions and advance filing requirements as the Company may impose. Each
Share Election shall specify the portion of the Director Fees to be paid in the
form of Shares and shall remain in effect with respect to future Director Fees
until the Non-Employee Director revokes or changes such Share Election. Any such
revocation or change shall have prospective application only. Shares delivered
pursuant to a Share Election shall be the whole number of Shares determined by
dividing the amount of Director Fees to be paid in Shares by the Fair Market
Value of a Share on the date such Director Fees would otherwise be paid
(rounding up to the next higher whole number of Shares any fractional portion of
a Share equal to or in excess of one-half Share, and otherwise rounding down to
the next lower whole number of Shares).

 

 

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(b) Payment of Director Fees in Deferred Stock. A Non-Employee Director who
makes a Deferral Election in accordance with Section 12.4 shall receive all or
part (as he or she elects) of his or her Director Fees in the form of a number
of shares of Deferred Stock equal to the quotient (rounding up to the next
higher whole number of shares, any fractional portion of a Share equal to or in
excess of one-half Share, and otherwise rounding down to the next lower whole
number of Shares) of the amount of Director Fees to be paid in the form of
Deferred Stock divided by the Fair Market Value of a Share on the date such
Director Fees would otherwise be paid in cash.

 

12.4 Deferral Elections. Pursuant to procedures approved by the Board to
implement this Section 12.4 and subject to the approval of the Board in its sole
discretion, a Non-Employee Director may elect (“Deferral Election”) to be paid
any or all of the following (“Deferrable Amounts”) in the form of Deferred Stock
in lieu of cash or Shares, as applicable: (i) shares to be delivered on exercise
of a Director Option as provided in Section 12.2(e); (ii) Director Fees as
provided in 12.3(a); and (iii) Dividend Equivalents on Deferred Stock, as
provided in Section 12.4(d).

 

(a) Timing of Deferral Elections. An initial Deferral Election must be filed
with the Human Resources Department of the Company no later than December 31 of
the year preceding the calendar year in which the Deferrable Amounts to which
the Deferral Election applies would otherwise be paid or delivered, subject to
such restrictions and advance filing requirements as the Company may impose;
provided that any newly elected or appointed Non-Employee Director may file a
Deferral Election not later than 30 days after the date such person first became
a Non-Employee Director (or at such later time in the year of such election or
appointment as the Company shall permit). A Deferral Election shall be
irrevocable as of the filing deadline and shall only apply with respect to
Deferrable Amounts otherwise payable after the filing of such election. Each
Deferral Election shall remain in effect with respect to subsequently earned
Deferrable Amounts unless the Non-Employee Director revokes or changes such
Deferral Election. Any such revocation or change shall have prospective
application only.

 

(b) Content of Deferral Elections. A Deferral Election must specify the
following:

 

(i) The number of Shares acquired on exercise of a Director Option or under a
Director Stock Grant to be paid in Deferred Stock, or the dollar amount or
percentage of Director Fees to be paid in Deferred Stock;

 

(ii) the date such Deferred Stock shall be paid (subject to such limitations as
may be specified by counsel to the Company); and

 

(iii) whether Dividend Equivalents on Deferred Stock are to be paid in cash or
deposited in the form of Deferred Stock to the Non-Employee Director’s Deferral
Account (as defined in Section 12.4(c)), to be paid at the time the Deferred
Stock to which they relate are paid.

 

(c) Deferral Account. The Company shall establish an account (“Deferral
Account”) on its books for each Non-Employee Director who makes a Deferral
Election. A number of shares of Deferred Stock (determined in the case of a
Deferrable Amount otherwise payable in cash, by dividing the amount of cash to
be deferred by the Fair Market Value of a Share on the date such cash would
otherwise be paid, and rounding up to the next higher whole number of Shares any
fractional portion of a Share equal to or in excess of one-half Share, and
otherwise rounding down to the next lower whole number of Shares) shall be
credited to the Non-Employee Director’s Deferral Account as of each date a
Deferrable Amount subject to a Deferral Election would otherwise be paid.
Deferral Accounts shall be maintained for recordkeeping purposes only and the
Company shall not be obligated to segregate or set aside assets representing
securities or other amounts credited to Deferral Accounts. The obligation to
make distributions of securities or other amounts credited to Deferral Accounts
shall be an unfunded unsecured obligation of the Company.

 

(d) Crediting of Dividend Equivalents. Whenever dividends are paid or
distributions made with respect to Shares, Dividend Equivalents shall be
credited to Deferral Accounts on all Deferred Stock credited thereto as of the
record date for such dividend or distribution. If the Non-Employee Director has
elected cash payment of Dividend Equivalents pursuant to Section 12.4(b), such
Dividend Equivalents shall be paid in cash on the payment date of the dividend
or distribution. Otherwise, such Dividend Equivalents shall be credited to the
Deferral Account in the form of additional Deferred Stock in a number determined
by dividing the aggregate value of such Dividend

 

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Equivalents by the Fair Market Value of a Share at the payment date of the
dividend or distribution (rounding up to the next higher whole number of Shares
any fractional portion of a Share equal to or in excess of one-half Share, and
otherwise rounding down to the next lower whole number of Shares).

 

(e) Settlement of Deferral Accounts. The Company shall settle a Non-Employee
Director’s Deferral Account by delivering to the holder thereof (which may be
the Non-Employee Director or his or her beneficiary) a number of Shares equal to
the whole number of Deferred Stock then credited to such Deferral Account (or a
specified portion in the event of any partial settlement); provided that if less
than the value of a whole Share remains in the Deferral Account at the time of
any such distribution, the number of Shares distributed shall be rounded up to
the next higher whole number of Shares if the fractional portion of a Share
remaining is equal to or in excess of one-half Share, and otherwise shall be
rounded down to the next lower whole number of Shares. Such settlement shall be
made at the time or times specified in the applicable Deferral Election;
provided that a Non-Employee Director may further defer settlement of the
Deferral Account by filing a new Deferral Election if the new Deferral Election
is filed in the calendar year preceding the calendar year in which the Deferred
Shares would be payable under the then-current Deferral Election and at least
six months before such Deferred Shares would be payable under the then-current
Deferral Election.

 

12.5 Insufficient Number of Shares. If at any date insufficient Shares are
available under the Plan for the automatic grant of Director Options or Director
Stock Grants, or the delivery of Shares in lieu of cash payment of Director
Fees, or crediting Deferred Stock pursuant to a Deferral Election, (a) Director
Options under Section 12.2 automatically shall be granted proportionately to
each Non-Employee Director eligible for such a grant to the extent Shares are
then available (provided that no Director Option shall be granted with respect
to a fractional number of Shares), and (b) then, if any Shares remain available,
Director Fees elected to be received in Shares shall be paid in the form of
Shares or deferred in the form of Deferred Stock proportionately among
Non-Employee Directors then eligible to participate to the extent Shares are
then available.

 

12.6 Non-Forfeitability. The interest of each Non-Employee Director in Director
Options or Deferred Stock (and any Deferral Account relating thereto) granted or
delivered under the Plan at all times shall be non-forfeitable.

 

Article 13.

Amendment, Modification, and Termination

 

13.1 Amendment, Modification, and Termination. Subject to Section 13.2, the
Board may, at any time and from time to time, alter, amend, suspend, discontinue
or terminate the Plan in whole or in part without the approval of the Company’s
stockholders, except that (a) any amendment or alteration shall be subject to
the approval of the Company’s stockholders if such stockholder approval is
required by any federal or state law or regulation or the rules of any stock
exchange or automated quotation system on which the Shares may then be listed or
quoted, and (b) the Board may otherwise, in its discretion, determine to submit
other such amendments or alterations to stockholders for approval.

 

13.2 Awards Previously Granted. Except as otherwise specifically permitted in
the Plan or an Award Agreement, no termination, amendment, or modification of
the Plan shall adversely affect in any material way any Award previously granted
under the Plan, without the written consent of the Grantee of such Award.

 

Article 14.

Withholding

 

14.1 Required Withholding

 

(a) The Committee in its sole discretion may provide that when taxes are to be
withheld in connection with the exercise of an Option, or upon the lapse of
restrictions on Restricted Shares, or upon the transfer of Deferred Stock, or
upon payment of any other benefit or right under this Plan (the date on which
such exercise

 

18

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occurs or such restrictions lapse or such payment of any other benefit or right
occurs hereinafter referred to as the “Tax Date”), the Grantee may elect to make
payment for the withholding of federal, state and local taxes, including Social
Security and Medicare (“FICA”) taxes by one or a combination of the following
methods:

 

(i) payment of an amount in cash equal to the amount to be withheld;

 

(ii) delivering part or all of the amount to be withheld in the form of Mature
Shares valued at their Fair Market Value on the Tax Date;

 

(iii) requesting the Company to withhold from those Shares that would otherwise
be received upon exercise of the Option, upon the lapse of restrictions on
Restricted Stock, or upon the transfer of Deferred Stock, a number of Shares
having a Fair Market Value on the Tax Date equal to the amount to be withheld;
or

 

(iv) withholding from any compensation otherwise due to the Grantee.

 

The Committee in its sole discretion may provide that the maximum amount of tax
withholding upon exercise of an Option to be satisfied by withholding Shares
upon exercise of such Option pursuant to clause (iii) above shall not exceed the
minimum amount of taxes, including FICA taxes, required to be withheld under
federal, state and local law. An election by Grantee under this subsection is
irrevocable. Any fractional share amount and any additional withholding not paid
by the withholding or surrender of Shares or delivery of Mature Shares must be
paid in cash. If no timely election is made, the Grantee must deliver cash to
satisfy all tax withholding requirements.

 

(b) Any Grantee who makes a Disqualifying Disposition (as defined in Section
6.4(f)) or an election under Section 83(b) of the Code shall remit to the
Company an amount sufficient to satisfy all resulting tax withholding
requirements in the same manner as set forth in subsection (a).

 

14.2 Notification under Code Section 83(b). If the Grantee, in connection with
the exercise of any Option, or the grant of Restricted Shares, makes the
election permitted under Section 83(b) of the Code to include in such Grantee’s
gross income in the year of transfer the amounts specified in Section 83(b) of
the Code, then such Grantee shall notify the Company of such election within 10
days of filing the notice of the election with the Internal Revenue Service, in
addition to any filing and notification required pursuant to regulations issued
under Section 83(b) of the Code. The Committee may, in connection with the grant
of an Award or at any time thereafter, prohibit a Grantee from making the
election described above.

 

Article 15.

Additional Provisions

 

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

 

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

 

15.3 Severability. If any part of the Plan is declared by any court or
governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not invalidate any other part of the Plan. Any Section or part
of a Section so declared to be unlawful or invalid shall, if possible, be
construed in a manner which will give effect to the terms of such Section or
part of a Section to the fullest extent possible while remaining lawful and
valid.

 

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

 

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not be entitled to exercise, or receive benefits under, any Award, and the
Company (and any Affiliate) shall not be obligated to deliver any Shares or
deliver benefits to a Grantee, if such exercise or delivery would constitute a
violation by the Grantee or the Company of any applicable law or regulation.

 

15.5 Securities Law Compliance.

 

(a) If the Committee deems it necessary to comply with any applicable securities
law, or the requirements of any stock exchange upon which Shares may be listed,
the Committee may impose any restriction on Awards or Shares acquired pursuant
to Awards under the Plan as it may deem advisable. All certificates for Shares
delivered under the Plan pursuant to any Award or the exercise thereof shall be
subject to such stop transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations and other requirements of the SEC,
any stock exchange upon which Shares are then listed, any applicable securities
law, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions. If so requested
by the Company, the Grantee shall make a written representation to the Company
that he or she will not sell or offer to sell any Shares unless a registration
statement shall be in effect with respect to such Shares under the Securities
Act of 1993, as amended, and any applicable state securities law or unless he or
she shall have furnished to the Company, in form and substance satisfactory to
the Company, that such registration is not required.

 

(b) If the Committee determines that the exercise or nonforfeitability of, or
delivery of benefits pursuant to, any Award would violate any applicable
provision of securities laws or the listing requirements of any national
securities exchange or national market system on which are listed any of the
Company’s equity securities, then the Committee may postpone any such exercise,
nonforfeitability or delivery, as applicable, but the Company shall use all
reasonable efforts to cause such exercise, nonforfeitability or delivery to
comply with all such provisions at the earliest practicable date.

 

15.6 No Rights as a Stockholder. No Grantee shall have any rights as a
stockholder of the Company with respect to the Shares (other than Restricted
Shares) which may be deliverable upon exercise or payment of such Award until
such Shares have been delivered to him or her. Restricted Shares, whether held
by a Grantee or in escrow by the Secretary of the Company, shall confer on the
Grantee all rights of a stockholder of the Company, except as otherwise provided
in the Plan or Award Agreement. At the time of a grant of Restricted Shares, the
Committee may require the payment of cash dividends thereon to be deferred and,
if the Committee so determines, reinvested in additional Restricted Shares.
Stock dividends and deferred cash dividends issued with respect to Restricted
Shares shall be subject to the same restrictions and other terms as apply to the
Restricted Shares with respect to which such dividends are issued. The Committee
may in its discretion provide for payment of interest on deferred cash
dividends.

 

15.7 Nature of Payments. Unless otherwise specified in the Award Agreement,
Awards shall be special incentive payments to the Grantee and shall not be taken
into account in computing the amount of salary or compensation of the Grantee
for purposes of determining any pension, retirement, death or other benefit
under (a) any pension, retirement, profit-sharing, bonus, insurance or other
employee benefit plan of the Company or any Affiliate, except as such plan shall
otherwise expressly provide, or (b) any agreement between (i) the Company or any
Affiliate and (ii) the Grantee, except as such agreement shall otherwise
expressly provide.

 

15.8 Non-Exclusivity of Plan. Neither the adoption of the Plan by the Board nor
its submission to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board to adopt such
other compensatory arrangements for employees or Non-Employee Directors as it
may deem desirable.

 

15.9 Governing Law. The Plan, and all agreements hereunder, shall be construed
in accordance with and governed by the laws of the State of Delaware, other than
its laws respecting choice of law.

 

15.10 Share Certificates. All certificates for Shares delivered under the terms
of the Plan shall be subject to such stop-transfer orders and other restrictions
as the Committee may deem advisable under federal or state securities laws,
rules and regulations thereunder, and the rules of any national securities laws,
rules and regulations thereunder, and the rules of any national securities
exchange or automated quotation system on which Shares are listed or quoted. The
Committee may cause a legend or legends to be placed on any such certificates to
make

 

20

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appropriate reference to such restrictions or any other restrictions or
limitations that may be applicable to Shares. In addition, during any period in
which Awards or Shares are subject to restrictions or limitations under the
terms of the Plan or any Award Agreement, or during any period during which
delivery or receipt of an Award or Shares has been deferred by the Committee or
a Grantee, the Committee may require any Grantee to enter into an agreement
providing that certificates representing Shares deliverable or delivered
pursuant to an Award shall remain in the physical custody of the Company or such
other person as the Committee may designate.

 

15.11 Unfunded Status of Awards; Creation of Trusts. The Plan is intended to
constitute an “unfunded” plan for incentive and deferred compensation. With
respect to any payments not yet made to a Grantee pursuant to an Award, nothing
contained in the Plan or any Award Agreement shall give any such Grantee any
rights that are greater than those of a general creditor of the Company;
provided, however, that the Committee may authorize the creation of trusts or
make other arrangements to meet the Company’s obligations under the Plan to
deliver cash, Shares or other property pursuant to any Award which trusts or
other arrangements shall be consistent with the “unfunded” status of the Plan
unless the Committee otherwise determines.

 

15.12 Affiliation. Nothing in the Plan or an Award Agreement shall interfere
with or limit in any way the right of the Company or any Affiliate to terminate
any Grantee’s employment or consulting contract at any time, nor confer upon any
Grantee the right to continue in the employ of or as an officer of or as a
consultant to the Company or any Affiliate.

 

15.13 Participation. No employee or officer shall have the right to be selected
to receive an Award under this Plan or, having been so selected, to be selected
to receive a future Award.

 

15.14 Military Service. Awards shall be administered in accordance with Section
414(u) of the Code and the Uniformed Services Employment and Reemployment Rights
Act of 1994.

 

15.15 Construction. The following rules of construction will apply to the Plan:
(a) the word “or” is disjunctive but not necessarily exclusive, and (b) words in
the singular include the plural, words in the plural include the singular, and
words in the neuter gender include the masculine and feminine genders and words
in the masculine or feminine gender include the other neuter genders.

 

15.16 Headings. The headings of articles and sections are included solely for
convenience of reference, and if there is any conflict between such headings and
the text of this Plan, the text shall control.

 

15.17 Obligations. Unless otherwise specified in the Award Agreement, the
obligation to deliver, pay or transfer any amount of money or other property
pursuant to Awards under this Plan shall be the sole obligation of a Grantee’s
employer; provided that the obligation to deliver or transfer any Shares
pursuant to Awards under this Plan shall be the sole obligation of the Company.

 

15.18 No Right to Continue as Director. Nothing in the Plan or any Award
Agreement shall confer upon any Non-Employee Director the right to continue to
serve as a director of the Company.

 

15.19 Stockholder Approval. All Awards granted on or after the Effective Date
and prior to the date the Company’s stockholders approve the amended and
restated Plan are expressly conditioned upon and subject to approval of the
amended and restated Plan by the Company’s stockholders.

 

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