Exhibit 10.2

 

1993 Director Option Plan as Amended Through May 13, 2003.

 

MONACO COACH CORPORATION

 

DIRECTOR STOCK PLAN

 

1.                                       PURPOSES OF THE PLAN.  THE PURPOSES OF
THIS DIRECTOR STOCK PLAN ARE TO ATTRACT AND RETAIN THE BEST AVAILABLE PERSONNEL
FOR SERVICE AS OUTSIDE DIRECTORS (AS DEFINED HEREIN) OF THE COMPANY, TO PROVIDE
ADDITIONAL INCENTIVE TO THE OUTSIDE DIRECTORS OF THE COMPANY TO SERVE AS
DIRECTORS, AND TO ENCOURAGE THEIR CONTINUED SERVICE ON THE BOARD.  TO ACHIEVE
THESE OBJECTIVES, THE PLAN (I) PROVIDES FOR THE AUTOMATIC GRANT TO OUTSIDE
DIRECTORS OF OPTIONS TO PURCHASE THE COMPANY’S COMMON STOCK UPON THEIR BECOMING
DIRECTORS AND ANNUALLY THEREAFTER AND (II) PROVIDES A MEANS FOR OUTSIDE
DIRECTORS TO ELECT TO RECEIVE A PORTION OF THEIR FEES FOR SERVICE ON THE BOARD
IN THE FORM OF COMMON STOCK OR OPTIONS TO PURCHASE COMMON STOCK.

 

All options granted hereunder shall be “non-statutory stock options.”

 

2.                                       APPLICABILITY OF MAY 2002 AMENDMENTS. 
OPTIONS GRANTED ON OR PRIOR TO MAY 16, 2002 SHALL NOT BE SUBJECT TO SECTION
11(F) OF THE PLAN.  OPTIONS GRANTED SUBSEQUENT TO MAY 16, 2002 SHALL BE SUBJECT
TO SECTION 11(F) OF THE PLAN.

 

3.                                       DEFINITIONS.  AS USED HEREIN, THE
FOLLOWING DEFINITIONS SHALL APPLY:

 

(A)                                  “ANNUAL RETAINER” SHALL MEAN THE AMOUNT
WHICH AN OUTSIDE DIRECTOR WILL BE ENTITLED TO RECEIVE FOR SERVING AS A DIRECTOR
DURING A FISCAL YEAR, BUT SHALL NOT INCLUDE REIMBURSEMENT FOR EXPENSES OR FEES
WITH RESPECT TO ANY OTHER SERVICES PROVIDED TO THE COMPANY.

 

(B)                                 “BOARD” MEANS THE BOARD OF DIRECTORS OF THE
COMPANY.

 

(C)                                  “CODE” MEANS THE INTERNAL REVENUE CODE OF
1986, AS AMENDED.

 

(D)                                 “COMMON STOCK” MEANS THE COMMON STOCK OF THE
COMPANY.

 

(E)                                  “COMPANY” MEANS MONACO COACH CORPORATION, A
DELAWARE CORPORATION.

 

(F)                                    “CONTINUOUS STATUS AS A DIRECTOR” MEANS
THE ABSENCE OF ANY INTERRUPTION OR TERMINATION OF SERVICE AS A DIRECTOR.

 

(G)                                 “DIRECTOR” MEANS A MEMBER OF THE BOARD.

 

(H)                                 “EMPLOYEE” MEANS ANY PERSON, INCLUDING
OFFICERS AND DIRECTORS, EMPLOYED BY THE COMPANY OR ANY PARENT OR SUBSIDIARY OF
THE COMPANY.  THE PAYMENT OF A DIRECTOR’S FEE BY THE COMPANY SHALL NOT BE
SUFFICIENT IN AND OF ITSELF TO CONSTITUTE “EMPLOYMENT” BY THE COMPANY.

 

(I)                                     “EXCHANGE ACT” MEANS THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

 

(J)                                     “FAIR MARKET VALUE” MEANS, AS OF ANY
DATE, THE VALUE OF COMMON STOCK DETERMINED AS FOLLOWS:

 

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(I)                                     IF THE COMMON STOCK IS LISTED ON ANY
ESTABLISHED STOCK EXCHANGE OR A NATIONAL MARKET SYSTEM, INCLUDING WITHOUT
LIMITATION THE NATIONAL MARKET SYSTEM OF THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS, INC. AUTOMATED QUOTATION (“NASDAQ”) SYSTEM, THE FAIR MARKET VALUE OF A
SHARE OF COMMON STOCK SHALL BE THE CLOSING SALES PRICE FOR SUCH STOCK (OR THE
CLOSING BID, IF NO SALES WERE REPORTED) AS QUOTED ON SUCH SYSTEM OR EXCHANGE (OR
THE EXCHANGE WITH THE GREATEST VOLUME OF TRADING IN COMMON STOCK) ON THE DATE OF
GRANT, AS REPORTED IN THE WALL STREET JOURNAL OR SUCH OTHER SOURCE AS THE BOARD
DEEMS RELIABLE;

 

(II)                                  IF THE COMMON STOCK IS QUOTED ON THE
NASDAQ SYSTEM (BUT NOT ON THE NATIONAL MARKET SYSTEM THEREOF) OR REGULARLY
QUOTED BY A RECOGNIZED SECURITIES DEALER BUT SELLING PRICES ARE NOT REPORTED,
THE FAIR MARKET VALUE OF A SHARE OF COMMON STOCK SHALL BE THE MEAN BETWEEN THE
BID AND ASKED PRICES FOR THE COMMON STOCK ON THE DAY OF DETERMINATION, AS
REPORTED IN THE WALL STREET JOURNAL OR SUCH OTHER SOURCE AS THE BOARD DEEMS
RELIABLE, OR;

 

(III)                               IN THE ABSENCE OF AN ESTABLISHED MARKET FOR
THE COMMON STOCK, THE FAIR MARKET VALUE THEREOF SHALL BE DETERMINED IN GOOD
FAITH BY THE BOARD.

 

(K)                                  “FIXED OPTION” MEANS A STOCK OPTION GRANTED
PURSUANT TO SECTION 6 OF THE PLAN.

 

(L)                                     “OPTION” MEANS A FIXED OPTION OR A
RETAINER OPTION.

 

(M)                               “OPTIONED STOCK” MEANS THE COMMON STOCK
SUBJECT TO AN OPTION.

 

(N)                                 “OPTIONEE” MEANS AN OUTSIDE DIRECTOR WHO
RECEIVES AN OPTION.

 

(O)                                 “OUTSIDE DIRECTOR” MEANS A DIRECTOR WHO IS
NOT AN EMPLOYEE.

 

(P)                                 “PARENT” MEANS A “PARENT CORPORATION”,
WHETHER NOW OR HEREAFTER EXISTING, AS DEFINED IN SECTION 424(E) OF THE CODE.

 

(Q)                                 “PER SHARE OPTION VALUE” SHALL MEAN THE
VALUE OF ONE SHARE OF THE OPTIONED STOCK SUBJECT TO A RETAINER OPTION. FOR SO
LONG AS THE COMPANY ACCOUNTS FOR STOCK-BASED COMPENSATION USING THE INTRINSIC
VALUE METHOD PRESCRIBED IN ACCOUNTING PRINCIPLES BOARD OPINION NO. 25, THE PER
SHARE OPTION VALUE SHALL BE CALCULATED USING THE VALUATION METHOD PRESCRIBED BY
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 123, “ACCOUNTING FOR STOCK-BASED
COMPENSATION,” AND USED IN THE FOOTNOTES TO THE COMPANY’S AUDITED FINANCIAL
STATEMENTS THAT IT FILES WITH THE SECURITIES AND EXCHANGE COMMISSION.  HOWEVER,
IF THE COMPANY AT ANY TIME BEGINS TO TREAT STOCK OPTIONS AS AN EXPENSE ON ITS
BOOKS AND RECORDS, THE PER SHARE OPTION VALUE SHALL BE CALCULATED IN ACCORDANCE
WITH THE VALUATION METHOD USED BY THE COMPANY WHEN VALUING STOCK OPTIONS TO
DETERMINE THE COMPENSATION EXPENSE THAT IT RECORDS IN THE FINANCIAL STATEMENTS
THAT IT FILES WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

(R)                                    “PLAN” MEANS THIS DIRECTOR STOCK PLAN, AS
AMENDED.

 

(S)                                  “RETAINER OPTION” MEANS AN OPTION TO
PURCHASE COMMON STOCK GRANTED PURSUANT TO SECTION 7 OF THE PLAN.

 

(T)                                    “SHARE” MEANS A SHARE OF THE COMMON
STOCK, AS ADJUSTED IN ACCORDANCE WITH SECTION 13 OF THE PLAN.

 

(U)                                 “RETIREMENT” MEANS A DIRECTOR WHO
VOLUNTARILY RESIGNS FROM THE BOARD ON OR AFTER AGE SIXTY-TWO (62) AND SUCH
DIRECTOR HAS AT LEAST FIVE (5) YEARS OF SERVICE ON THE COMPANY’S BOARD OF

 

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DIRECTORS AT THE DATE OF RETIREMENT; PROVIDED, THAT, THE ADMINISTRATOR,
NOTWITHSTANDING THE FOREGOING, HAS THE DISCRETION TO DETERMINE WHEN A DIRECTOR
RETIRES SO LONG AS SUCH DETERMINATION IS NOT LESS FAVORABLE THAN PROVIDED FOR IN
THE FOREGOING DEFINITION.

 

(V)                                 “SUBSIDIARY” MEANS A “SUBSIDIARY
CORPORATION”, WHETHER NOW OR HEREAFTER EXISTING, AS DEFINED IN SECTION 424(F) OF
THE INTERNAL REVENUE CODE OF 1986.

 

4.                                       STOCK SUBJECT TO THE PLAN.  SUBJECT TO
THE PROVISIONS OF SECTION 13 OF THE PLAN, THE MAXIMUM AGGREGATE NUMBER OF SHARES
WHICH MAY BE OPTIONED AND/OR SOLD UNDER THE PLAN IS 352,500 SHARES (THE “POOL”)
OF COMMON STOCK.  THE SHARES MAY BE AUTHORIZED BUT UNISSUED, OR REACQUIRED
COMMON STOCK.

 

If an Option should expire or become unexercisable for any reason without having
been exercised in full, the unpurchased Shares which were subject thereto shall,
unless the Plan shall have been terminated, become available for future grant
under the Plan.

 

5.                                       ADMINISTRATION OF THE PLAN.

 

(A)                                  ADMINISTRATOR.  EXCEPT AS OTHERWISE
REQUIRED HEREIN, THE PLAN SHALL BE ADMINISTERED BY THE BOARD.

 

(B)                                 POWERS OF THE BOARD.  SUBJECT TO THE
PROVISIONS AND RESTRICTIONS OF THE PLAN, THE BOARD SHALL HAVE THE AUTHORITY, IN
ITS DISCRETION: (I) TO DETERMINE, UPON REVIEW OF RELEVANT INFORMATION AND IN
ACCORDANCE WITH SECTION 3(J) OF THE PLAN, THE FAIR MARKET VALUE OF THE COMMON
STOCK; (II) TO INTERPRET THE PLAN; (III) TO PRESCRIBE, AMEND AND RESCIND RULES
AND REGULATIONS RELATING TO THE PLAN; (IV) TO AUTHORIZE ANY PERSON TO EXECUTE ON
BEHALF OF THE COMPANY ANY INSTRUMENT REQUIRED TO EFFECTUATE THE GRANT OF AN
OPTION PREVIOUSLY GRANTED HEREUNDER; AND (V) TO MAKE ALL OTHER DETERMINATIONS
DEEMED NECESSARY OR ADVISABLE FOR THE ADMINISTRATION OF THE PLAN.

 

(C)                                  EFFECT OF BOARD’S DECISION.  ALL DECISIONS,
DETERMINATIONS AND INTERPRETATIONS OF THE BOARD SHALL BE FINAL.

 

6.                                       PROCEDURE FOR FIXED OPTION GRANTS.  ALL
GRANTS OF FIXED OPTIONS TO OUTSIDE DIRECTORS UNDER THIS PLAN SHALL BE AUTOMATIC
AND NON-DISCRETIONARY AND SHALL BE MADE STRICTLY IN ACCORDANCE WITH THE
FOLLOWING PROVISIONS:

 

(a)                                  No person shall have any discretion to
select which Outside Directors shall be granted Fixed Options or to determine
the number of Shares to be covered by Fixed Options granted to Outside
Directors.

 

(b)                                 Each Outside Director shall be automatically
granted an initial Fixed Option to purchase eight thousand (8,000) Shares (the
“First Option”) on the date which such person first becomes a Director, whether
through election by the stockholders of the Company or appointment by the Board
to fill a vacancy.

 

(c)                                  Each Outside Director shall be
automatically granted a subsequent Fixed Option to purchase four thousand
(4,000) Shares (a “Subsequent Option”) on September 30 of each year after the
date of the First Option grant, provided such Outside Director shall have served
on the Board for at least six months prior to the date of the Subsequent Option
grant and remains an Outside Director on such date.

 

(d)                                 The terms of a First Option granted
hereunder shall be as follows:

 

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(i)                                     the term of the First Option shall be
ten (10) years.

 

(ii)                                  the First Option shall be exercisable only
while the Outside Director remains a Director of the Company, except as set
forth in Section 11 hereof.

 

(iii)                               the exercise price per Share shall be 100%
of the Fair Market Value per Share on the date of grant of the First Option.

 

(iv)                              the First Option shall become exercisable in
installments cumulatively as to twenty percent (20%) of the Shares subject to
the First Option one (1) year from its date of grant and as to twenty percent
(20%) each year thereafter if, on each such date, the Optionee has maintained
his Continuous Status as a Director.

 

(e)                                  The terms of a Subsequent Option granted
hereunder shall be as follows:

 

(i)                                     the term of the Subsequent Option shall
be ten (10) years.

 

(ii)                                  the Subsequent Option shall be exercisable
only while the Outside Director remains a Director of the Company, except as set
forth in Section 11 hereof.

 

(iii)                               the exercise price per Share shall be 100%
of the Fair Market Value per Share on the date of grant of the Subsequent
Option.

 

(iv)                              the Subsequent Option shall become exercisable
as to one hundred percent (100%) of the Shares subject to the Subsequent Option
five (5) years from its date of grant if, on such date, the Optionee has
maintained his Continuous Status as a Director.

 

7.                                       PROCEDURE FOR ELECTION TO RECEIVE
SECURITIES IN LIEU OF CASH RETAINER.

 

(A)                               COMPENSATION ALTERNATIVES.

 

(i)                                     Each Outside Director who, in any fiscal
year of the Company, delivers to the Company written notice of an irrevocable
election concerning the Annual Retainer to be earned in the next fiscal year of
the Company, will be entitled to select one of the following alternative means
of payment for the value of his Annual Retainer in the next fiscal year of the
Company:

 

(1)                                  an amount between ten percent (10%) and
fifty percent (50%) of the value of his or her Annual Retainer (in increments of
10% of the Annual Retainer) in the form of Common Stock (a “Common Stock
Payment”) and the balance in cash (a “Cash Payment”); or

 

(2)                                  an amount between ten percent (10%) and
fifty percent (50%) of the value of his or her Annual Retainer (in increments of
10% of the Annual Retainer) in the form of an option to purchase shares of
Common Stock (a “Retainer Option”) and the balance in a Cash Payment.

 

(ii)                                  If any Outside Director fails to notify
the Secretary of the Company in writing prior to the beginning of the next
fiscal year of the Company of his desired means to receive payment of the Annual
Retainer for the next fiscal year, then he shall be deemed to have elected the
entire value of the Annual Retainer in cash.

 

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(B)                                 COMMON STOCK PAYMENT.

 

(i)                                     Date of Payment.  The Shares
constituting any Common Stock Payment shall be issued automatically on the first
business day following the last day of each fiscal quarter for the applicable
year (a “Stock Grant Date”).  Each award of a Common Stock Payment shall be
evidenced by an agreement which shall reflect the terms and conditions of the
Common Stock Payment and such additional terms and conditions as may be
determined by the Board of a committee thereof.

 

(ii)                                  Number of Shares Subject to Common Stock
Payment.  The total number of Shares included in each Common Stock Payment shall
be determined by dividing (A) the amount of the quarterly installment of the
Annual Retainer that is to be paid in stock by (B) the Fair Market Value of one
Share on the applicable Stock Grant Date.

 

Any payment for a fractional share automatically shall be paid in cash based
upon the Fair Market Value on the Grant Date of such fractional share.

 

(C)                                  OPTION PAYMENT.

 

(i)                                     Date of Payment.  The Retainer Option
shall be granted automatically on the first business day of the applicable
fiscal year in which an Outside Director has elected to receive a Retainer
Option (the “Option Grant Date”).

 

(ii)                                  Number of Shares Subject to Option.  The
number of Shares to be subject to any Retainer Option granted shall be equal to
that portion of the Annual Retainer that the Outside Director elected to receive
in the form of an Option divided by the Per Share Option Value on the Option
Grant Date.

 

(iii)                               Exercise Price.  The per Share exercise
price of a Retainer Option granted pursuant to this Section 7 shall equal the
Fair Market Value of one Share on the Option Grant Date.

 

(iv)                              Vesting.  A Retainer Option shall become
exercisable for one fourth (1/4th) of the Optioned Stock on the last day of each
quarter during the applicable year (a “Vesting Date”) so long as the Outside
Director is serving as a member of the Board on the Vesting Date.

 

(v)                                 Term.  The term of a Retainer Option shall
be ten (10) years.

 

(vi)                              Exercisability.  A Retainer Option shall be
exercisable only while the Outside Director remains a Director of the Company,
except as set forth in Section 11 hereof.

 

(D)                                 INTERIM PERIOD.  NOTWITHSTANDING ANY OTHER
PROVISION OF THE PLAN, AN OUTSIDE DIRECTOR MAY ELECT TO RECEIVE BETWEEN TEN
PERCENT (10%) AND FIFTY PERCENT (50%) OF THE VALUE OF HIS OR HER LAST TWO
QUARTERLY INSTALLMENTS OF THE ANNUAL RETAINER FOR 2003 (IN INCREMENTS OF 10% OF
THE ANNUAL RETAINER) IN THE FORM OF A COMMON STOCK PAYMENT OR A RETAINER OPTION
IF THE OUTSIDE DIRECTOR DELIVERS TO THE COMPANY WRITTEN NOTICE OF AN IRREVOCABLE
ELECTION CONCERNING SUCH PORTION OF THE 2003 ANNUAL RETAINER PRIOR TO JULY 1,
2003.

 

(i)                                     Interim Period Common Stock Payment.  If
an Outside Director elects to receive a Common Stock Payment pursuant to this
Section 7(d), a Common Stock Payment shall be made on the first business day
following the last day of the third and fourth quarters of 2003.  The number of
shares subject to such a Common Stock Payment shall be determined in accordance
with Section 7(b) hereof.

 

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(ii)                                  Interim Period Retainer Option.  If an
Outside Director elects to receive a Retainer Option pursuant to this Section
7(d), the Retainer Option shall be granted on July 1, 2003.  The number of
shares of Common Stock subject to such Retainer Option and the per Share
exercise price and other terms of such Retainer Option shall be determined in
accordance with Section 7(c), however, with respect to such Retainer Option, the
“Option Grant Date” shall be July 1, 2003.  In addition, a Retainer Option
granted pursuant to this Section 7(d) shall become exercisable for one half
(1/2) of the Optioned Stock on the last day of each of the last two quarters of
2003 so long as the Outside Director is serving as a member of the Board on such
dates.

 

8.                                       ELIGIBILITY.  OPTIONS AND COMMON STOCK
PAYMENTS MAY BE GRANTED ONLY TO OUTSIDE DIRECTORS.  ALL FIXED OPTIONS SHALL BE
AUTOMATICALLY GRANTED IN ACCORDANCE WITH THE TERMS SET FORTH IN SECTION 6
HEREOF.

 

The Plan shall not confer upon any Outside Director any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate his or her directorship at any time.

 

9.                                       TERM OF PLAN.  THE PLAN SHALL BECOME
EFFECTIVE UPON THE EARLIER TO OCCUR OF ITS ADOPTION BY THE BOARD OR ITS APPROVAL
BY THE STOCKHOLDERS OF THE COMPANY AS DESCRIBED IN SECTION 19 OF THE PLAN.  IT
SHALL CONTINUE IN EFFECT UNTIL MARCH 1, 2012 UNLESS SOONER TERMINATED UNDER
SECTION 14 OF THE PLAN.

 

10.                                 FORM OF CONSIDERATION.  THE CONSIDERATION TO
BE PAID FOR THE SHARES TO BE ISSUED UPON EXERCISE OF AN OPTION, INCLUDING THE
METHOD OF PAYMENT, SHALL BE DETERMINED BY THE BOARD AND MAY CONSIST ENTIRELY OF
(I) CASH, (II) CHECK, (III) PROMISSORY NOTE, (IV) OTHER SHARES WHICH (X) IN THE
CASE OF SHARES ACQUIRED UPON EXERCISE OF AN OPTION, HAVE BEEN OWNED BY THE
OPTIONEE FOR MORE THAN SIX (6) MONTHS ON THE DATE OF SURRENDER, AND (Y) HAVE A
FAIR MARKET VALUE ON THE DATE OF SURRENDER EQUAL TO THE AGGREGATE EXERCISE PRICE
OF THE SHARES AS TO WHICH SAID OPTION SHALL BE EXERCISED, (V) DELIVERY OF A
PROPERLY EXECUTED EXERCISE NOTICE TOGETHER WITH SUCH OTHER DOCUMENTATION AS THE
BOARD AND THE BROKER, IF APPLICABLE, SHALL REQUIRE TO EFFECT AN EXERCISE OF THE
OPTION AND DELIVERY TO THE COMPANY OF THE SALE OR LOAN PROCEEDS REQUIRED TO PAY
THE EXERCISE PRICE, (VI) ANY COMBINATION OF THE FOREGOING METHODS OF PAYMENT, OR
(VII) SUCH OTHER CONSIDERATION AND METHOD OF PAYMENT FOR THE ISSUANCE OF SHARES
TO THE EXTENT PERMITTED UNDER APPLICABLE LAW.

 

11.                                 EXERCISE OF OPTION.

 

(A)                                  PROCEDURE FOR EXERCISE; RIGHTS AS A
STOCKHOLDER.  ANY OPTION GRANTED HEREUNDER SHALL BE EXERCISABLE AT SUCH TIMES AS
ARE SET FORTH IN SECTIONS 6 AND 7 HEREOF.

 

An Option may not be exercised for a fraction of a Share.

 

An Option shall be deemed to be exercised when written notice of such exercise
has been given to the Company in accordance with the terms of the Option by the
person entitled to exercise the Option and full payment for the Shares with
respect to which the Option is exercised has been received by the Company.  Full
payment may consist of any consideration and method of payment allowable under
Section 10 of the Plan.  Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no right to vote or
receive dividends or any other rights as a stockholder shall exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option.  A share
certificate or electronic notification of share ownership for the number of
Shares so acquired shall be issued or provided to the Optionee as soon as
practicable after exercise of the Option.  No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 13 of the Plan.

 

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Exercise of an Option in any manner shall result in a decrease in the number of
Shares which thereafter may be available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.

 

(B)                                 RULE 16B-3.  OPTIONS GRANTED TO OUTSIDE
DIRECTORS MUST COMPLY WITH THE APPLICABLE PROVISIONS OF RULE 16B-3 PROMULGATED
UNDER THE EXCHANGE ACT OR ANY SUCCESSOR THERETO AND SHALL CONTAIN SUCH
ADDITIONAL CONDITIONS OR RESTRICTIONS AS MAY BE REQUIRED THEREUNDER TO QUALIFY
FOR THE MAXIMUM EXEMPTION FROM SECTION 16 OF THE EXCHANGE ACT WITH RESPECT TO
PLAN TRANSACTIONS.

 

(C)                                  TERMINATION OF CONTINUOUS STATUS AS A
DIRECTOR.  IN THE EVENT AN OPTIONEE’S CONTINUOUS STATUS AS A DIRECTOR TERMINATES
(OTHER THAN UPON THE OPTIONEE’S DEATH, TOTAL AND PERMANENT DISABILITY (AS
DEFINED IN SECTION 22(E)(3) OF THE CODE) OR RETIREMENT), THE OPTIONEE MAY
EXERCISE HIS OR HER OPTION, BUT ONLY WITHIN THREE (3) MONTHS FROM THE DATE OF
SUCH TERMINATION, AND ONLY TO THE EXTENT THAT THE OPTIONEE WAS ENTITLED TO
EXERCISE IT AT THE DATE OF SUCH TERMINATION (BUT IN NO EVENT LATER THAN THE
EXPIRATION OF ITS TEN (10) YEAR TERM).  TO THE EXTENT THAT THE OPTIONEE WAS NOT
ENTITLED TO EXERCISE AN OPTION AT THE DATE OF SUCH TERMINATION, AND TO THE
EXTENT THAT THE OPTIONEE DOES NOT EXERCISE SUCH OPTION (TO THE EXTENT OTHERWISE
SO ENTITLED) WITHIN THE TIME SPECIFIED HEREIN, THE OPTION SHALL TERMINATE.

 

(D)                                 DISABILITY OF OPTIONEE.  IN THE EVENT
OPTIONEE’S CONTINUOUS STATUS AS A DIRECTOR TERMINATES AS A RESULT OF TOTAL AND
PERMANENT DISABILITY (AS DEFINED IN SECTION 22(E)(3) OF THE CODE), ANY FIXED
OPTIONS GRANTED TO SUCH OPTIONEE SHALL BECOME VESTED AND EXERCISABLE FOR THE
FULL NUMBER OF SHARES COVERED BY THE FIXED OPTION AND ANY RETAINER OPTION SHALL
BE EXERCISABLE TO THE EXTENT THAT THE OPTIONEE WAS ENTITLED TO EXERCISE THE
RETAINER OPTION AT THE DATE OF DISABILITY.  THE OPTIONEE MAY EXERCISE HIS OR HER
OPTION, AT ANY TIME WITHIN TWELVE (12) MONTHS FROM THE DATE OF SUCH TERMINATION
(BUT IN NO EVENT LATER THAN THE EXPIRATION OF THE TERM OF SUCH OPTION AS SET
FORTH IN THE NOTICE OF GRANT).  IF, AFTER TERMINATION, THE OPTIONEE DOES NOT
EXERCISE HIS OR HER OPTION WITHIN THE TIME SPECIFIED HEREIN, THE OPTION SHALL
TERMINATE, AND THE SHARES COVERED BY SUCH OPTION SHALL REVERT TO THE PLAN.

 

(E)                                  DEATH OF OPTIONEE.  IN THE EVENT OF THE
DEATH OF AN OPTIONEE, ANY FIXED OPTION SHALL BECOME VESTED AND EXERCISABLE FOR
THE FULL NUMBER OF SHARES COVERED BY THE FIXED OPTION AND ANY RETAINER OPTION
SHALL BE EXERCISABLE TO THE EXTENT THAT THE OPTIONEE WAS ENTITLED TO EXERCISE
THE RETAINER OPTION AT THE TIME OF DEATH.  THE OPTION HELD BY THE OPTIONEE AT
THE TIME OF DEATH MAY BE EXERCISED AT ANY TIME WITHIN TWELVE (12) MONTHS
FOLLOWING THE DATE OF DEATH BY THE OPTIONEE’S ESTATE OR BY A PERSON WHO ACQUIRED
THE RIGHT TO EXERCISE THE OPTION BY BEQUEST OR INHERITANCE.  IN NO EVENT SHALL
AN OPTION BE EXERCISED LATER THAN THE EXPIRATION OF THE TERM OF THE OPTION, AS
SET FORTH IN THE OPTION AGREEMENT.  IF, AFTER DEATH, THE OPTIONEE’S ESTATE OR A
PERSON WHO ACQUIRED THE RIGHT TO EXERCISE THE OPTION BY BEQUEST OR INHERITANCE
DOES NOT EXERCISE THE OPTION WITHIN THE TIME SPECIFIED HEREIN, THE OPTION SHALL
TERMINATE, AND THE SHARES COVERED BY SUCH OPTION SHALL REVERT TO THE PLAN.

 

(F)                                    RETIREMENT OF OPTIONEE.  IN THE EVENT OF
AN OPTIONEE’S RETIREMENT WHILE A DIRECTOR, ANY FIXED OPTION SHALL BECOME VESTED
AND EXERCISABLE FOR THE FULL NUMBER OF SHARES COVERED BY THE FIXED OPTION AND
ANY RETAINER OPTION SHALL BE EXERCISABLE TO THE EXTENT THAT THE OPTIONEE WAS
ENTITLED TO EXERCISE THE RETAINER OPTION AT THE TIME OF RETIREMENT.  ANY OPTION
HELD BY THE OPTIONEE AT THE TIME OF RETIREMENT MAY BE EXERCISED AT ANY TIME
WITHIN TWELVE (12) MONTHS FOLLOWING THE DATE OF RETIREMENT.  IN NO EVENT SHALL
AN OPTION BE EXERCISED LATER THAN THE EXPIRATION OF THE TERM OF THE OPTION, AS
SET FORTH IN THE OPTION AGREEMENT; PROVIDED, HOWEVER, THAT (I) THIS SUBSECTION
(F) SHALL NOT APPLY TO GRANTS MADE ON OR BEFORE MAY 16, 2002, AND (II) THIS
SUBSECTION (F) SHALL APPLY TO GRANTS MADE ON OR AFTER MAY 17, 2002.  IF THE
OPTION IS NOT SO EXERCISED WITHIN THE TIME SPECIFIED HEREIN, THE OPTION SHALL
TERMINATE, AND THE SHARES COVERED BY SUCH OPTION SHALL REVERT TO THE PLAN.

 

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12.                                 NON-TRANSFERABILITY OF OPTIONS.  THE OPTION
MAY NOT BE SOLD, PLEDGED, ASSIGNED, HYPOTHECATED, TRANSFERRED, OR DISPOSED OF IN
ANY MANNER OTHER THAN BY WILL OR BY THE LAWS OF DESCENT OR DISTRIBUTION AND MAY
BE EXERCISED, DURING THE LIFETIME OF THE OPTIONEE, ONLY BY THE OPTIONEE.

 

13.                                 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION,
DISSOLUTION, MERGER, ASSET SALE OR CHANGE OF CONTROL.

 

(A)                                  CHANGES IN CAPITALIZATION.  SUBJECT TO ANY
REQUIRED ACTION BY THE STOCKHOLDERS OF THE COMPANY, THE NUMBER OF SHARES COVERED
BY EACH OUTSTANDING OPTION AND THE NUMBER OF SHARES WHICH HAVE BEEN AUTHORIZED
FOR ISSUANCE UNDER THE PLAN BUT AS TO WHICH NO OPTIONS HAVE YET BEEN GRANTED OR
WHICH HAVE BEEN RETURNED TO THE PLAN UPON CANCELLATION OR EXPIRATION OF AN
OPTION, AS WELL AS THE PRICE PER SHARE COVERED BY EACH SUCH OUTSTANDING OPTION,
SHALL BE PROPORTIONATELY ADJUSTED FOR ANY INCREASE OR DECREASE IN THE NUMBER OF
ISSUED SHARES RESULTING FROM A STOCK SPLIT, REVERSE STOCK SPLIT, STOCK DIVIDEND,
COMBINATION OR RECLASSIFICATION OF THE COMMON STOCK, OR ANY OTHER INCREASE OR
DECREASE IN THE NUMBER OF ISSUED SHARES EFFECTED WITHOUT RECEIPT OF
CONSIDERATION BY THE COMPANY; PROVIDED, HOWEVER, THAT CONVERSION OF ANY
CONVERTIBLE SECURITIES OF THE COMPANY SHALL NOT BE DEEMED TO HAVE BEEN “EFFECTED
WITHOUT RECEIPT OF CONSIDERATION.” SUCH ADJUSTMENT SHALL BE MADE BY THE BOARD,
WHOSE DETERMINATION IN THAT RESPECT SHALL BE FINAL, BINDING AND CONCLUSIVE. 
EXCEPT AS EXPRESSLY PROVIDED HEREIN, NO ISSUANCE BY THE COMPANY OF SHARES OF
STOCK OF ANY CLASS, OR SECURITIES CONVERTIBLE INTO SHARES OF STOCK OF ANY CLASS,
SHALL AFFECT, AND NO ADJUSTMENT BY REASON THEREOF SHALL BE MADE WITH RESPECT TO,
THE NUMBER OR PRICE OF SHARES SUBJECT TO AN OPTION.  IN ADDITION, A STOCK SPLIT,
REVERSE STOCK SPLIT, STOCK DIVIDEND, COMBINATION OR RECLASSIFICATION OF THE
COMMON STOCK, OR ANY OTHER INCREASE OR DECREASE IN THE NUMBER OF ISSUED SHARES
EFFECTED WITHOUT RECEIPT OF CONSIDERATION BY THE COMPANY SHALL NOT RESULT IN AN
ADJUSTMENT TO THE NUMBER OF SHARES GRANTED TO OUTSIDE DIRECTORS PURSUANT TO
SECTION 5(B)(II) AND SECTION 5(B)(III) OF THE PLAN SUBSEQUENT TO SUCH STOCK
SPLIT, REVERSE STOCK SPLIT, STOCK DIVIDEND, COMBINATION OR RECLASSIFICATION OF
THE COMMON STOCK, OR OTHER INCREASE OR DECREASE IN THE NUMBER OF ISSUED SHARES
EFFECTED WITHOUT RECEIPT OF CONSIDERATION BY THE COMPANY.

 

(B)                                 DISSOLUTION OR LIQUIDATION.  IN THE EVENT OF
THE PROPOSED DISSOLUTION OR LIQUIDATION OF THE COMPANY, TO THE EXTENT THAT AN
OPTION HAS NOT BEEN PREVIOUSLY EXERCISED, IT WILL TERMINATE IMMEDIATELY PRIOR TO
THE CONSUMMATION OF SUCH PROPOSED ACTION.  THE BOARD MAY, IN THE EXERCISE OF ITS
SOLE DISCRETION IN SUCH INSTANCES, DECLARE THAT ANY OPTION SHALL TERMINATE AS OF
A DATE FIXED BY THE BOARD AND GIVE EACH OPTIONEE THE RIGHT TO EXERCISE HIS OR
HER OPTION AS TO ALL OR ANY PART OF THE OPTIONED STOCK, INCLUDING SHARES AS TO
WHICH THE OPTION WOULD NOT OTHERWISE BE EXERCISABLE.

 

(C)                                  MERGER OR ASSET SALE.  IN THE EVENT OF A
MERGER OF THE COMPANY WITH OR INTO ANOTHER CORPORATION, OR THE SALE OF
SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY, EACH OUTSTANDING OPTION SHALL BE
ASSUMED OR AN EQUIVALENT OPTION SHALL BE SUBSTITUTED BY THE SUCCESSOR
CORPORATION OR A PARENT OR SUBSIDIARY OF THE SUCCESSOR CORPORATION.  IN THE
EVENT THAT THE SUCCESSOR CORPORATION DOES NOT AGREE TO ASSUME THE OPTION OR TO
SUBSTITUTE AN EQUIVALENT OPTION, THE BOARD SHALL, IN LIEU OF SUCH ASSUMPTION OR
SUBSTITUTION, PROVIDE FOR THE OPTIONEE TO HAVE THE RIGHT TO EXERCISE THE OPTION
AS TO ALL OF THE OPTIONED STOCK, INCLUDING SHARES AS TO WHICH IT WOULD NOT
OTHERWISE BE EXERCISABLE.  IF THE BOARD MAKES AN OPTION FULLY EXERCISABLE IN
LIEU OF ASSUMPTION OR SUBSTITUTION IN THE EVENT OF A MERGER OR SALE OF ASSETS,
THE BOARD SHALL NOTIFY THE OPTIONEE THAT THE OPTION SHALL BE FULLY EXERCISABLE
FOR A PERIOD OF THIRTY (30) DAYS FROM THE DATE OF SUCH NOTICE, AND THE OPTION
WILL TERMINATE UPON THE EXPIRATION OF SUCH PERIOD.  FOR THE PURPOSES OF THIS
PARAGRAPH, THE OPTION SHALL BE CONSIDERED ASSUMED IF, FOLLOWING THE MERGER OR
SALE OF ASSETS, THE OPTION OR RIGHT CONFERS THE RIGHT TO PURCHASE, FOR EACH
SHARE OF OPTIONED STOCK SUBJECT TO THE OPTION IMMEDIATELY PRIOR TO THE MERGER OR
SALE OF ASSETS, THE CONSIDERATION (WHETHER STOCK, CASH, OR OTHER SECURITIES OR
PROPERTY) RECEIVED IN THE MERGER OR SALE OF ASSETS BY HOLDERS OF COMMON STOCK
FOR EACH SHARE HELD ON THE EFFECTIVE DATE OF THE TRANSACTION (AND IF HOLDERS
WERE OFFERED A CHOICE OF CONSIDERATION, THE TYPE OF CONSIDERATION CHOSEN BY THE
HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES); PROVIDED, HOWEVER, THAT IF
SUCH CONSIDERATION RECEIVED IN THE MERGER OR SALE OF ASSETS WAS

 

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NOT SOLELY COMMON STOCK OF THE SUCCESSOR CORPORATION OR ITS PARENT, THE BOARD
MAY, WITH THE CONSENT OF THE SUCCESSOR CORPORATION AND THE PARTICIPANT, PROVIDE
FOR THE CONSIDERATION TO BE RECEIVED UPON THE EXERCISE OF THE OPTION, FOR EACH
SHARE OF OPTIONED STOCK SUBJECT TO THE OPTION, TO BE SOLELY COMMON STOCK OF THE
SUCCESSOR CORPORATION OR ITS PARENT EQUAL IN FAIR MARKET VALUE TO THE PER SHARE
CONSIDERATION RECEIVED BY HOLDERS OF COMMON STOCK IN THE MERGER OR SALE OF
ASSETS.

 

14.                                 AMENDMENT AND TERMINATION OF THE PLAN.

 

(A)                                  AMENDMENT AND TERMINATION.  EXCEPT AS SET
FORTH IN SECTION 5, THE BOARD MAY AT ANY TIME AMEND, ALTER, SUSPEND, OR
DISCONTINUE THE PLAN, BUT NO AMENDMENT, ALTERATION, SUSPENSION, OR
DISCONTINUATION SHALL BE MADE WHICH WOULD IMPAIR THE RIGHTS OF ANY OPTIONEE
UNDER ANY GRANT THERETOFORE MADE, WITHOUT HIS OR HER CONSENT.  IN ADDITION, TO
THE EXTENT NECESSARY AND DESIRABLE TO COMPLY WITH RULE 16B-3 UNDER THE EXCHANGE
ACT (OR ANY OTHER APPLICABLE LAW OR REGULATION), THE COMPANY SHALL OBTAIN
STOCKHOLDER APPROVAL OF ANY PLAN AMENDMENT IN SUCH A MANNER AND TO SUCH A DEGREE
AS REQUIRED.

 

(B)                                 EFFECT OF AMENDMENT OR TERMINATION.  ANY
SUCH AMENDMENT OR TERMINATION OF THE PLAN SHALL NOT AFFECT OPTIONS ALREADY
GRANTED AND SUCH OPTIONS SHALL REMAIN IN FULL FORCE AND EFFECT AS IF THIS PLAN
HAD NOT BEEN AMENDED OR TERMINATED.

 

15.                                 TIME OF GRANTING OPTIONS.  THE DATE OF GRANT
OF AN OPTION SHALL, FOR ALL PURPOSES, BE THE DATE DETERMINED IN ACCORDANCE WITH
SECTIONS 6 AND 7 HEREOF.  NOTICE OF THE DETERMINATION SHALL BE GIVEN TO EACH
OUTSIDE DIRECTOR TO WHOM AN OPTION IS SO GRANTED WITHIN A REASONABLE TIME AFTER
THE DATE OF SUCH GRANT.

 

16.                                 CONDITIONS UPON ISSUANCE OF SHARES.  SHARES
SHALL NOT BE ISSUED PURSUANT TO THE EXERCISE OF AN OPTION UNLESS THE EXERCISE OF
SUCH OPTION AND THE ISSUANCE AND DELIVERY OF SUCH SHARES PURSUANT THERETO SHALL
COMPLY WITH ALL RELEVANT PROVISIONS OF LAW, INCLUDING, WITHOUT LIMITATION, THE
SECURITIES ACT OF 1933, AS AMENDED, THE EXCHANGE ACT, THE RULES AND REGULATIONS
PROMULGATED THEREUNDER, STATE SECURITIES LAWS, AND THE REQUIREMENTS OF ANY STOCK
EXCHANGE UPON WHICH THE SHARES MAY THEN BE LISTED, AND SHALL BE FURTHER SUBJECT
TO THE APPROVAL OF COUNSEL FOR THE COMPANY WITH RESPECT TO SUCH COMPLIANCE.

 

As a condition to the exercise of an Option, the Company may require the person
exercising such Option to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares, if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
relevant provisions of law.

 

Inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares
as to which such requisite authority shall not have been obtained.

 

17.                                 RESERVATION OF SHARES.  THE COMPANY, DURING
THE TERM OF THIS PLAN, WILL AT ALL TIMES RESERVE AND KEEP AVAILABLE SUCH NUMBER
OF SHARES AS SHALL BE SUFFICIENT TO SATISFY THE REQUIREMENTS OF THE PLAN.

 

18.                                 OPTION AGREEMENTS.  OPTIONS SHALL BE
EVIDENCED BY WRITTEN OPTION AGREEMENTS IN SUCH FORM AS THE BOARD SHALL APPROVE.

 

19.                                 STOCKHOLDER APPROVAL.  CONTINUANCE OF THE
PLAN SHALL BE SUBJECT TO APPROVAL BY THE STOCKHOLDERS OF THE COMPANY AT OR PRIOR
TO THE FIRST ANNUAL MEETING OF STOCKHOLDERS HELD SUBSEQUENT TO THE

 

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GRANTING OF AN OPTION HEREUNDER.  SUCH STOCKHOLDER APPROVAL SHALL BE OBTAINED IN
THE DEGREE AND MANNER REQUIRED UNDER APPLICABLE STATE AND FEDERAL LAW.

 

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