EXHIBIT 10.31

 

AFTERMARKET TECHNOLOGY CORP.
2002 STOCK INCENTIVE PLAN

 

SECTION 1.                            PURPOSE OF PLAN

 

The purpose of this 2002 Stock Incentive Plan (this “Plan”) of Aftermarket
Technology Corp., a Delaware corporation (the “Company”), is to enable the
Company to attract, retain and motivate its employees, non-employee directors
and independent contractors, and to further align the interests of such
employees, non-employee directors and independent contractors with those of the
stockholders of the Company by providing for or increasing the proprietary
interest of such employees, non-employee directors and independent contractors
in the Company.

 

SECTION 2.                            ADMINISTRATION OF PLAN

 

2.1                               Composition of Committee.  Subject to
Section 2.04, this Plan shall be administered by the Compensation and Human
Resources Committee of the Board of Directors (the “Committee”), as appointed
from time to time by the Board of Directors, provided, however, that with
respect to any Award  (as defined in Section 5.1) intended to qualify as
“performance-based compensation” within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the “Code”), the term “Committee”
shall refer to a committee of two or more “outside directors” as determined for
purposes of applying Code Section 162(m).  The Board of Directors shall fill
vacancies on, and from time to time may remove or add members to, the Committee.
The Committee shall act pursuant to a majority vote or unanimous written
consent.  The Committee may designate the Secretary of the Company or other
Company employees to assist the Committee in the administration of this Plan and
may grant authority to such persons to execute agreements or other documents
evidencing Awards made under this Plan or other documents entered into under
this Plan on behalf of the Committee or the Company.

 

2.2                               Powers of the Committee.  Subject to the
express provisions of this Plan, the Committee shall be authorized and empowered
to do all things necessary or desirable, in its sole discretion, in connection
with the administration of this Plan, including, without limitation, the
following:

 

(a)                                  to prescribe, amend and rescind rules and
regulations relating to this Plan and to define terms not otherwise defined
herein; provided that, unless the Committee shall specify otherwise, for
purposes of this Plan (i) the term “fair market value” shall mean, as of any
date, the closing price for a Share (as defined in Section 3.1) reported for
that date by the Nasdaq National Market System (or such other stock exchange or
quotation system on which Shares are then listed or quoted) or, if no Shares are
traded on the Nasdaq National Market System (or such other stock exchange or
quotation system) on the date in question, then for the next preceding date for
which Shares are traded on the Nasdaq National Market System (or such other
stock exchange or quotation system); and (ii) the term “Company” shall mean the
Company and its subsidiaries and affiliates unless the context otherwise
requires;

 

(b)                                 to determine which persons are Eligible
Persons (as defined in Section 4), to which of Eligible Persons, if any, Awards
shall be granted hereunder and the timing of any such Awards;

 

(c)                                  to determine the number of Shares subject
to Awards and the exercise or purchase price of such Shares;

 

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(d)                                 to establish and verify the extent of
satisfaction of any performance goals applicable to Awards;

 

(e)                                  to prescribe and amend the terms of the
agreements or other documents evidencing Awards made under this Plan (which need
not be identical);

 

(f)                                    to determine whether, and the extent to
which, adjustments are required pursuant to Section 10;

 

(g)                                 to interpret and construe this Plan, any
rules and regulations under this Plan and the terms and conditions of any Award
granted hereunder and to make exceptions to any such provisions in good faith
and for the benefit of the Company; and

 

(h)                                 to make all other determinations deemed
necessary or advisable for the administration of this Plan.

 

2.3                               Determinations of the Committee.  All
decisions, determinations and interpretations by the Committee regarding this
Plan shall be final and binding on all Eligible Persons and Participants (as
defined in Section 4).  The Committee shall consider such factors as it deems
relevant to making such decisions, determinations and interpretations including,
without limitation, the recommendations or advice of any director, officer or
employee of the Company and such attorneys, consultants and accountants as it
may select.

 

2.4.                            Authority of the Board of Directors.  The Board
of Directors, in its sole discretion, may exercise any authority of the
Committee under this Plan in lieu of the Committee’s exercise thereof.

 

SECTION 3.                            STOCK SUBJECT TO PLAN

 

3.1                               Aggregate Limits.  At any time, the aggregate
number of shares of the Company’s Common Stock, $.01 par value (“Shares”),
issued and issuable pursuant to all Awards (including all ISOs (as defined in
Section 5.1)) granted under this Plan shall not exceed 1,000,000; provided that,
notwithstanding Section 3.3, the aggregate number of Shares that may be issued
pursuant to the exercise of ISOs (as defined in Section 5.1(a)) granted under
this Plan shall not exceed 1,000,000.  The Shares subject to this Plan may be
either Shares reacquired by the Company, including Shares purchased in the open
market, or authorized but unissued Shares.  Such limits shall be subject to
adjustment as provided in Section 10.

 

3.2                               Code Section 162(m) Limits.  The aggregate
number of Shares subject to Options (as defined in Section 5.1(a)) granted under
this Plan during any calendar year to any one employee of the Company (an
“Employee)” shall not exceed 400,000.  The aggregate number of Shares issued or
issuable under all Awards granted under this Plan, other than Options, during
any calendar year to any one Employee shall not exceed 400,000.  Notwithstanding
anything to the contrary in this Plan, the foregoing limitations shall be
subject to adjustment under Section 10 only to the extent that such adjustment
will not affect the status of any Award intended to qualify as
“performance-based compensation” under Code Section 162(m).

 

3.3                               Issuance of Shares.  For purposes of Section
3.1, the aggregate number of Shares issued under this Plan at any time shall
equal only the number of Shares actually issued upon exercise or settlement of
an Award and not returned to the Company upon cancellation, expiration or
forfeiture of an Award or in payment or satisfaction of the purchase price,
exercise price or tax withholding obligation of an Award.

 

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SECTION 4.                            PERSONS ELIGIBLE UNDER PLAN

 

Any person who is an employee, prospective employee, consultant, director or
advisor of the Company (an “Eligible Person”) shall be eligible to be considered
for the grant of Awards hereunder.  A “Participant” is any current or former
Eligible Person to whom an Award has been made and any person (including any
estate) to whom an Award has been assigned or transferred pursuant to
Section 9.1.

 

SECTION 5.                            PLAN AWARDS

 

5.1                               Award Types.  The Committee, on behalf of the
Company, is authorized under this Plan to grant certain types of arrangements to
Eligible Persons and to confer certain benefits on them.  The following
arrangements or benefits are authorized under this Plan if their terms and
conditions are not inconsistent with the provisions of this Plan:  Options,
Incentive Bonuses and Incentive Stock.  Such arrangements and benefits are
sometimes referred to herein as “Awards.”  The authorized types of arrangements
and benefits for which Awards may be granted are defined as follows:

 

(a)                                  Options:  An Option is a right granted
under Section 6 to purchase a number of Shares at such exercise price, at such
times and on such other terms and conditions as are specified in the agreement
or other document evidencing the Award (the “Option Document “).  Options
intended to qualify as Incentive Stock Options (“ISOs”) pursuant to Code
Section 422 and Options not intended to qualify as ISOs (“Nonqualified Options”)
may be granted under Section 6.

 

(b)                                 Incentive Bonus:  An Incentive Bonus is a
bonus opportunity awarded under Section 7 pursuant to which a Participant may
become entitled to receive an amount based on satisfaction of such performance
criteria as are specified in the agreement or other document evidencing the
Award (the “Incentive Bonus Document”).

 

(c)                                  Incentive Stock:  Incentive Stock is an
award or issuance of Shares made under Section 8, the grant, issuance,
retention, vesting and/or transferability of which is subject during specified
periods of time to such conditions (including performance conditions) and terms
as are expressed in the agreement or other document evidencing the Award (the
“Incentive Stock Document”).

 

5.2                               Grants of Awards.  An Award may consist of one
such arrangement or benefit or two or more of them in tandem or in the
alternative.

 

SECTION 6.                            OPTIONS

 

The Committee may grant an Option or provide for the grant of an Option, either
from time to time in the discretion of the Committee or automatically upon the
occurrence of specified events, including, without limitation, the achievement
of performance goals, the satisfaction of an event or condition within the
control of the recipient of the Award or within the control of others.

 

6.1                               Option Document.  Each Option Document shall
contain provisions regarding (a) the number of Shares that may be issued upon
exercise of the Option, (b) the purchase price of the Shares and the means of
payment for the Shares, (c) the term of the Option, (d) such terms and
conditions of exercisability as may be determined from time to time by the
Committee, (e) restrictions on the transfer of the Option and forfeiture
provisions, and (f) such further terms and conditions, in each case not
inconsistent with this Plan, as may be determined from time to time by the
Committee.  Option Documents evidencing ISOs shall contain such terms and
conditions as may be necessary to comply with the applicable provisions of
Section 422 of the Code.

 

6.2                               Option Price.  The purchase price per share of
the Shares subject to each Option granted under this Plan shall equal or exceed
100% of the fair market value of such Shares on the date the Option is granted
except that (i) the exercise price of an Option may be higher or lower in the
case of Options granted

 

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to employees of a company acquired by the Company in assumption and substitution
of options held by such employees at the time such company is acquired, (ii) in
the event an Employee is required to pay or forego the receipt of any cash
amount in consideration of receipt of an Option, the exercise price plus such
cash amount shall equal or exceed 100% of the fair market value of such Stock on
the date the Option is granted, and (iii) the exercise price of an Option
granted to a director who is not an Employee may be lower.

 

6.3                               Option Term.  The “Term” of each Option
granted under this Plan, including any ISOs, shall be ten (10) years from the
date of its grant unless the Committee shall provide otherwise.

 

6.4                               Option Vesting.  Options granted under this
Plan shall be exercisable at such time and in such installments during the
period prior to the expiration of the Option’s Term as determined by the
Committee.  The Committee shall have the right to make the timing of the ability
to exercise any Option granted under this Plan subject to such performance
requirements as deemed appropriate by the Committee.  At any time after the
grant of an Option the Committee may reduce or eliminate any restrictions
surrounding any Participant’s right to exercise all or part of the Option.

 

6.5                               Termination of Employment.  Subject to
Section 11, upon a termination of employment by a Participant prior to the full
exercise of an Option, the unexercised portion of the Option shall be subject to
such procedures as the Committee may establish except, in the case of an ISO, if
and to the extent that other procedures are necessary to comply with the
provisions of Section 421, 422 or 424 of the Code.

 

6.6                               Payment of Exercise Price.  The exercise price
of an Option shall be paid in the form of one of more of the following, as the
Committee shall specify, either through the terms of the Option Document or at
the time of exercise of an Option:  (a) cash or certified or cashiers’ check,
(b) shares of capital stock of the Company that have been held by the
Participant for such period of time as the Committee may specify, (c) other
property deemed acceptable by the Committee, (d) a reduction in the number of
Shares or other property otherwise issuable pursuant to such Option, (e) a
promissory note of or other commitment to pay by the Participant or of a third
party, the terms and conditions of which shall be determined by the Committee,
or (f) any combination of (a) through (e).

 

SECTION 7.                            INCENTIVE BONUSES

 

Each Incentive Bonus Award will confer upon the Employee the opportunity to earn
a future payment tied to the level of achievement with respect to one or more
performance criteria established for a performance period.

 

7.1                               Incentive Bonus Document. Each Incentive Bonus
Document shall contain provisions regarding (a) the target and maximum amount
payable to the Participant as an Incentive Bonus, (b) the performance criteria
and level of achievement versus these criteria that shall determine the amount
of such payment, (c) the term of the performance period as to which performance
shall be measured for determining the amount of any payment, (d) the timing of
any payment earned by virtue of performance, (e) restrictions on the alienation
or transfer of the Incentive Bonus prior to actual payment, (f) forfeiture
provisions, and (g) such further terms and conditions, in each case not
inconsistent with this Plan as may be determined from time to time by the
Committee.  The maximum amount payable as an Incentive Bonus may be a multiple
of the target amount payable, but the maximum amount payable pursuant to that
portion of an Incentive Bonus Award granted under this Plan for any fiscal year
to any Participant that is intended to satisfy the requirements for
“performance-based compensation” under Code Section 162(m) shall not exceed
$3,000,000 in the case of any Award payable in cash.

 

7.2                               Performance Criteria.  The Committee shall
establish the performance criteria and level of achievement versus these
criteria that shall determine the target and maximum amount payable under an
Incentive Bonus Award, which criteria may be based on financial performance
and/or personal performance evaluations.  The Committee may specify the
percentage of the target Incentive Bonus that is intended to satisfy the
requirements for “performance-based compensation” under Code Section 162(m).

 

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Notwithstanding anything to the contrary herein, the performance criteria for
any portion of an Incentive Bonus that is intended by the Committee to satisfy
the requirements for “performance-based compensation” under Code Section 162(m)
shall be a measure based on one or more Qualifying Performance Criteria (as
defined in Section 9.2) selected by the Committee and specified within the time
period required under Code Section 162(m).  The Committee shall certify the
extent to which any Qualifying Performance Criteria has been satisfied and the
amount payable as a result thereof prior to payment of any Incentive Bonus that
is intended to satisfy the requirements for “performance-based compensation”
under Code Section 162(m).

 

7.3                               Timing and Form of Payment. The Committee
shall determine the timing of payment of any Incentive Bonus.  The Committee may
provide for or, subject to such terms and conditions as the Committee may
specify, may permit a Participant to elect the payment of any Incentive Bonus to
be deferred to a specified date or event.

 

7.4                               Discretionary Adjustments.  Notwithstanding
satisfaction of any performance goals, the amount paid under an Incentive Bonus
Award on account of either financial performance or personal performance
evaluations may be reduced by the Committee on the basis of such further
considerations as the Committee shall determine.

 

SECTION 8.                            INCENTIVE STOCK

 

Incentive Stock is an award or issuance of Shares the grant, issuance,
retention, vesting and/or transferability of which is subject during specified
periods of time to such conditions (including performance conditions) and terms
as the Committee deems appropriate.

 

8.1                               Incentive Stock Document.  Each Incentive
Stock Document shall contain provisions regarding (a) the number of Shares
subject to such Award or a formula for determining such, (b) the performance
criteria, if any, and level of achievement versus these criteria that shall
determine the number of Shares granted, issued, retainable and/or vested,
(c) the period, if any, as to which performance shall be measured for
determining achievement of performance, (d) forfeiture, (e) transferability and
(f) such further terms and conditions, not inconsistent with this Plan as may be
determined from time to time by the Committee.

 

8.2                               Sale Price.  Subject to the requirements of
applicable law, the Committee shall determine the price, if any, at which Shares
of Incentive Stock shall be sold or awarded to an Eligible Person, which may
vary from time to time and among Eligible Persons and which may be below the
fair market value of such Shares at the date of grant or issuance.

 

8.3                               Performance Criteria.  The grant, issuance,
retention and/or vesting of Incentive Stock may but need not be subject to such
performance criteria and level of achievement versus these criteria as the
Committee shall determine, which criteria may be based on financial performance
and/or personal performance evaluations.  Notwithstanding anything to the
contrary herein, the performance criteria for any Incentive Stock that is
intended to satisfy the requirements for “performance-based compensation” under
Code Section 162(m) shall be a measure based on one or more Qualifying
Performance Criteria selected by the Committee and specified within the time
period required under Code Section 162(m).

 

8.4                               Discretionary Adjustments.  Notwithstanding
satisfaction of any performance goals, the number of Shares granted, issued,
retainable and/or vested under an Incentive Stock Award on account of either
financial performance or personal performance evaluations may be reduced by the
Committee on the basis of such further considerations as the Committee shall
determine.

 

8.5                               Termination of Employment.  Subject to
Section 11, upon a termination of employment by a Participant prior to the
vesting of or the lapsing of restrictions on Incentive Stock, the Incentive
Stock Awards granted to such Participant shall be subject to such procedures as
determined by the Committee.

 

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SECTION 9.                            OTHER PROVISIONS APPLICABLE TO AWARDS

 

9.1                               Transferability.  Unless the agreement or
other document evidencing an Award (or an amendment thereto authorized by the
Committee) expressly states that the Award is transferable as provided
hereunder, no Award granted under this Plan (nor any interest in such Award) may
be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise
transferred in any manner prior to the vesting or lapse of any and all
restrictions applicable thereto, other than by will or the laws of descent and
distribution.  The Committee may grant an Award or amend an outstanding Award to
provide that the Award is transferable or assignable to a member or members of
the Participant’s “immediate family,” as such term is defined in Rule 16a-1(e)
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or
to a trust for the benefit solely of a member or members of the Participant’s
immediate family or to a partnership or other entity whose only owners are
members of the Participant’s immediate family, provided that (i) no
consideration is given in connection with the transfer of such Award, and (ii)
following any such transfer or assignment the Award will remain subject to
substantially the same terms applicable to the Award while held by the
Participant, as modified as the Committee shall deem appropriate, and the
transferee shall execute an agreement agreeing to be bound by such terms.

 

9.2                               Qualifying Performance Criteria.  For purposes
of this Plan, the term “Qualifying Performance Criteria” shall mean any one or
more of the following performance criteria, either individually, alternatively
or in any combination, applied to either the Company as a whole or to a business
unit or subsidiary, either individually, alternatively or in any combination,
and measured either annually or cumulatively over a period of years, on an
absolute basis or relative to a pre-established target, previous years’ results
or a designated comparison group, in each case as specified by the Committee in
the Award:  (a) cash flow, (b) earnings per share, (c) earnings before interest,
taxes, depreciation and amortization, (d) earnings before interest, taxes and
amortization, (e) earnings before interest and taxes, (f) return on equity,
(g) total stockholder return, (h) return on capital, (i) return on assets or net
assets, (j) revenue, (k) income or net income, (l) operating income or net
operating income, (m) operating profit or net operating profit, (n) operating
margin, (o) return on operating revenue, (p) market share, and (q) overhead or
other expense reduction.  The Committee shall appropriately adjust any
evaluation of performance under a Qualifying Performance Criteria to exclude any
of the following events that occurs during a performance period:  (i) asset
write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect
of changes in tax law, accounting principles or other such laws or provisions
affecting reported results, (iv) accruals for reorganization and restructuring
programs, (v) divestitures, and (vi) any extraordinary non-recurring items as
described in Accounting Principles Board Opinion No. 30 and/or in management’s
discussion and analysis of financial condition and results of operations
appearing in the Company’s annual report to stockholders for the applicable
year.

 

9.3                               Dividends.  Unless otherwise provided by the
Committee, no adjustment shall be made in Shares issuable under Awards on
account of cash dividends that may be paid or other rights that may be issued to
the holders of Shares prior to their issuance under any Award.  The Committee
shall specify whether dividends or dividend equivalent amounts shall be paid to
any Participant with respect to the Shares subject to any Award that have not
vested or been issued or that are subject to any restrictions or conditions on
the record date for dividends.

 

9.4                               Documents Evidencing Awards.  The Committee
shall, subject to applicable law, determine the date an Award is deemed to be
granted, which, for purposes of this Plan, shall not be affected by the fact
that an Award is contingent on subsequent stockholder approval of this Plan. 
The Committee or, except to the extent prohibited under applicable law, its
delegate(s) may establish the terms of agreements or other documents evidencing
Awards under this Plan and may, but need not, require as a condition to any such
agreement’s or document’s effectiveness that such agreement or document be
executed by the Participant and that such Participant agree to such further
terms and conditions as specified in such agreement or document.  The grant of
an Award under this Plan shall not confer any rights upon the Participant
holding such Award other than such terms, and subject to such conditions, as are
specified in this Plan as being applicable to such type of Award (or to all
Awards) or as are expressly set forth in the agreement or other document
evidencing such Award.

 

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9.5                               Tandem Stock or Cash Rights.  Either at the
time an Award is granted or by subsequent action, the Committee may, but need
not, provide that an Award shall contain as a term thereof, a right, either in
tandem with the other rights under the Award or as an alternative thereto, of
the Participant to receive, without payment to the Company, a number of Shares,
cash or a combination thereof, the amount of which is determined by reference to
the value of the Award.

 

9.6                               Financing.  The Committee may provide
financing to a Participant in a principal amount sufficient to pay the purchase
price of any Award and/or to pay the amount of taxes required by law to be
withheld with respect to any Award.  Any such loan shall be subject to all
applicable legal requirements and restrictions pertinent thereto, including
Regulation U promulgated by the Federal Reserve Board.  The grant of an Award
shall in no way obligate the Company or the Committee to provide any financing
whatsoever in connection therewith.

 

SECTION 10.                     CHANGES IN CAPITAL STRUCTURE

 

If the outstanding securities of the class then subject to this Plan are
increased, decreased or exchanged for or converted into cash, property or a
different number or kind of shares or securities, or if cash, property or shares
or securities are distributed in respect of such outstanding securities, in
either case as a result of a reorganization, merger, consolidation,
recapitalization, restructuring, reclassification, dividend (other than a
regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split, spin-off or the like, or if substantially all of the property and
assets of the Company are sold, then, unless the terms of such transaction shall
provide otherwise, the Committee shall make appropriate and proportionate
adjustments in (i) the number and type of shares or other securities or cash or
other property that may be acquired pursuant to Awards theretofore granted under
this Plan and the exercise or settlement price of such Awards, provided,
however, that such adjustment shall be made in such a manner that will not
affect the status of any Award intended to qualify as an ISO under Code
Section 422 or as “performance-based compensation” under Code Section 162(m),
and (ii) the maximum number and type of shares or other securities that may be
issued pursuant to such Awards thereafter granted under this Plan.

 

SECTION 11.                     CHANGE OF CONTROL

 

11.1                        Effect of Change of Control.  The Committee may,
through the terms of the Award or otherwise, provide that any or all of the
following shall occur in connection with a Change of Control or a Change of
Control Transaction (as those terms are defined in Section 11.2) or upon
termination of the Participant’s employment following a Change of Control or a
Change of Control Transaction:  (a) in the case of an Option, the acceleration
of the Participant’s ability to exercise any portion of the Option not
previously exercisable, (b) in the case of an Incentive Bonus, the acceleration
of the Participant’s right to receive a payment equal to the target amount
payable or, if greater, a payment based on performance through a date determined
by the Committee prior to the Change of Control, and (c) in the case of Shares
issued in payment of any Incentive Bonus and/or in the case of Incentive Stock,
the lapse and expiration of any conditions to the grant, issuance, retention,
vesting or transferability of, or any other restrictions applicable to, such
Award.  The Committee also may, through the terms of the Award or otherwise,
provide for an absolute or conditional exercise, payment or lapse of conditions
or restrictions on an Award that shall only be effective if, upon the
announcement of a Change of Control Transaction, no provision is made in such
Change of Control Transaction for the exercise, payment or lapse of conditions
or restrictions on the Award or other procedure whereby the Participant may
realize the full benefit of the Award.

 

11.2                        Definitions.  Unless the Committee shall provide
otherwise,

 

“Change of Control” shall mean an occurrence of any of the following events:

 

(a)                                  an acquisition (other than directly from
the Company) of any voting securities of the Company (the “Voting Securities”)
by any “person or group” (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act) immediately after which such person or group has “Beneficial
Ownership” (within the meaning of Rule 13d-3 under the Exchange Act) of more
than 50% of the combined voting power of the Company’s then outstanding Voting
Securities, except

 

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in the case of an acquisition by any person or group that immediately prior to
such acquisition already had Beneficial Ownership of more than 50% of the
combined voting power of the Company’s then outstanding Voting Securities;

 

(b)                                 consummation of (i) a merger, consolidation
or reorganization involving the Company unless the company resulting from such
merger, consolidation or reorganization (the “Surviving Corporation”) shall
adopt or assume this Plan and all Participants’ Awards under this Plan and
either (A) the stockholders of the Company immediately before such merger,
consolidation or reorganization own, directly or indirectly immediately
following such merger, consolidation or reorganization, more than 50% of the
combined voting power of the Surviving Corporation in substantially the same
proportion as their ownership immediately before such merger, consolidation or
reorganization, or (B) at least a majority of the members of the Board of
Directors of the Surviving Corporation were directors of the Company immediately
prior to the execution of the agreement providing for such merger, consolidation
or reorganization, or (ii) a complete liquidation or dissolution of the Company;
or

 

(c)                                  such other events as the Committee from
time to time may specify.

 

“Change of Control Transaction” shall mean any tender offer, offer, exchange
offer, solicitation, merger, consolidation, reorganization or other transaction
that is intended to or reasonably expected to result in a Change of Control.

 

SECTION 12.                     TAXES

 

12.1                        Withholding Requirements.  The Committee may make
such provisions or impose such conditions as it may deem appropriate for the
withholding or payment by a Participant of any taxes that the Committee
determines are required in connection with any Award granted under this Plan,
and a Participant’s rights in any Award are subject to satisfaction of such
conditions.

 

12.2                        Payment of Withholding Taxes.  Notwithstanding the
terms of Section 12.1, the Committee may provide in the agreement or other
document evidencing an Award or otherwise that all or any portion of the taxes
required to be withheld by the Company or, if permitted by the Committee,
desired to be paid by the Participant, in connection with the exercise of a
Nonqualified Option or the exercise, vesting, settlement or transfer of any
other Award shall be paid or, at the election of the Participant, may be paid by
the Company by withholding shares of the Company’s capital stock otherwise
issuable or subject to such Award or by the Participant delivering previously
owned shares of the Company’s capital stock, in each case having a fair market
value equal to the amount required or elected to be withheld or paid.  Any such
election is subject to such conditions or procedures as may be established by
the Committee and may be subject to disapproval by the Committee.

 

SECTION 13.                     AMENDMENTS OR TERMINATION

 

The Board may amend, alter or discontinue this Plan or any agreement or other
document evidencing an Award made under this Plan, but no such amendment shall
be made which (i) would materially impair the rights of any Award holder,
without such holder’s consent, under any Award theretofore granted, provided
that no such consent shall be required if the Committee determines in its sole
discretion and prior to the date of any Change of Control that such amendment or
alteration is not reasonably likely to significantly diminish the benefits
provided under such Award, or that any such diminution has been adequately
compensated, or (ii) would have any of the following effects, unless approved by
the stockholders of the Company:

 

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

 

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(b)                                 reduce the price at which Options may be
granted below the price provided for in Section 6.2;

 

(c)                                  reduce the exercise price of outstanding
Options;

 

(d)                                 extend the term of this Plan; or

 

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

 

SECTION 14.                     COMPLIANCE WITH OTHER LAWS AND REGULATIONS.

 

This Plan, the grant and exercise of Awards thereunder, and the obligation of
the Company to sell, issue or deliver Shares under such Awards, shall be subject
to all applicable federal, state and foreign laws, rules and regulations and to
such approvals by any governmental or regulatory agency as may be required.  The
Company shall not be required to register in a Participant’s name or deliver any
Shares prior to the completion of any registration or qualification of such
Shares under any federal, state or foreign law or any ruling or regulation of
any government body which the Committee shall determine to be necessary or
advisable.  This Plan is intended to constitute an unfunded arrangement for a
select group of management or other key employees, directors and consultants.

 

No Option shall be exercisable unless a registration statement with respect to
the Option is effective or the Company has determined that such registration is
unnecessary.  Unless the Awards and Shares covered by this Plan have been
registered under the Securities Act of 1933, as amended, or the Company has
determined that such registration is unnecessary, each person receiving an Award
and/or Shares pursuant to any Award may be required by the Company to give a
representation in writing that such person is acquiring such Shares for his or
her own account for investment and not with a view to, or for sale in connection
with, the distribution of any part thereof.

 

SECTION 15.                     OPTION GRANTS BY SUBSIDIARIES

 

In the case of a grant of an option to any Eligible Person employed by a
subsidiary of the Company, such grant may, if the Committee so directs, be
implemented by the Company issuing any subject shares to the subsidiary for such
lawful consideration as the Committee may determine, upon the condition or
understanding that the subsidiary will transfer the shares to the optionholder
in accordance with the terms of the option specified by the Committee pursuant
to the provisions of this Plan.  Notwithstanding any other provision hereof,
such option may be issued by and in the name of the subsidiary and shall be
deemed granted on such date as the Committee shall determine.

 

SECTION 16.                     NO RIGHT TO COMPANY EMPLOYMENT

 

Nothing in this Plan or as a result of any Award granted pursuant to this Plan
shall confer on any individual any right to continue in the employ of the
Company or interfere in any way with the right of the Company to terminate an
individual’s employment at any time.  The agreements or other documents
evidencing Awards may contain such provisions as the Committee may approve with
reference to the effect of approved leaves of absence.

 

SECTION 17.                     EFFECTIVENESS AND EXPIRATION OF PLAN

 

This Plan shall be effective on the date the Board adopts this Plan.  All Awards
granted under this Plan are subject to, and may not be exercised before, the
approval of this Plan by the stockholders prior to the first anniversary date of
the effective date of this Plan, by the affirmative vote of the holders of a
majority of the outstanding shares of the Company present, or represented by
proxy, and entitled to vote at a meeting of the Company’s stockholders or by
written consent in accordance with the laws of the State of Delaware; provided
that if such approval by the stockholders of the Company is not forthcoming, all

 

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Awards previously granted under this Plan shall be void.  No Awards shall be
granted pursuant to this Plan more than ten (10) years after the effective date
of this Plan.

 

SECTION 18.                     NON-EXCLUSIVITY OF PLAN

 

Neither the adoption of this Plan by the Board nor the submission of this Plan
to the stockholders of the Company for approval shall be construed as creating
any limitations on the power of the Board or the Committee to adopt such other
incentive arrangements as either may deem desirable, including without
limitation, the granting of restricted stock or stock options otherwise than
under this Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.

 

SECTION 19.                     GOVERNING LAW

 

This Plan and any agreements or other documents hereunder shall be interpreted
and construed in accordance with the laws of the State of Delaware and
applicable federal law.  The Committee may provide that any dispute as to any
Award shall be presented and determined in such forum as the Committee may
specify, including through binding arbitration.  Any reference in this Plan or
in the agreement or other document evidencing any Award to a provision of law or
to a rule or regulation shall be deemed to include any successor law, rule or
regulation of similar effect or applicability.

 

SECTION 20.                     SUCCESSORS

 

Upon a reorganization, merger or consolidation of the Company as a result of
which the outstanding securities of the class then subject to Awards hereunder
are changed into or exchanged for securities issued by an entity (a “Surviving
Corporation”) other than the Company or as a result of which the Company becomes
a direct or indirect subsidiary of another entity whose equity securities are
publicly traded (similarly, a “Surviving Corporation”) and the class of
securities subject to Awards under this Plan cease to be publicly traded, then
unless the Company specifies otherwise in the agreement providing for such
transaction, either (a) this Plan and the Awards then outstanding under this
Plan shall be assumed by the Surviving Corporation and the equity securities of
the Surviving Corporation substituted for Shares issuable under this Plan and
such Awards, provided that the number of shares subject to the Plan and such
Awards and the terms of such Awards shall be adjusted in accordance with Section
10 hereof, or (b) the Surviving Corporation shall substitute equivalent awards
for the Awards then outstanding under this Plan, provided that the number of
shares subject to and the terms of such Awards shall be adjusted in accordance
with Section 10 hereof, or shall provide substantially similar consideration to
Participants for their Awards as was provided to stockholders of the Company
(after taking into account the existing provisions of the Awards).

 

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