Exhibit 10.60

DREAMWORKS ANIMATION SKG, INC.

2008 OMNIBUS INCENTIVE COMPENSATION PLAN

SECTION 1. Purpose. The purpose of this DreamWorks Animation SKG, Inc.
2008 Omnibus Incentive Compensation Plan (the “Plan”) is to promote the
interests of DreamWorks Animation SKG, Inc. and its stockholders by
(a) attracting and retaining exceptional directors, officers, employees and
consultants (including prospective directors, officers, employees and
consultants) of the Company (as defined below) and its Affiliates (as defined
below) and (b) enabling such individuals to participate in the long-term growth
and financial success of the Company. This Plan is intended to replace the
DreamWorks Animation SKG, Inc. 2004 Omnibus Incentive Compensation Plan, as
amended (the “Prior Plan”), which Prior Plan shall be automatically terminated
and replaced and superseded by this Plan on the date on which this Plan is
approved by the Company’s stockholders, except that any awards granted under the
Prior Plan shall remain in effect pursuant to their terms.

SECTION 2. Definitions. As used herein, the following terms shall have the
meanings set forth below:

“Affiliate” means (a) any entity that, directly or indirectly, is controlled by,
controls or is under common control with, the Company and/or (b) any entity in
which the Company has a significant equity interest, in either case as
determined by the Committee.

“Award” means any award that is permitted under Section 6 and granted under the
Plan.

“Award Agreement” means any written agreement, contract or other instrument or
document evidencing any Award, which may (but need not) require execution or
acknowledgment by a Participant.

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

“Cash Incentive Award” means an Award granted pursuant to Section 6(g).

“Change of Control” shall (a) have the meaning set forth in an Award Agreement
or (b) if there is no definition set forth in an Award Agreement, mean the
occurrence of any of the following events:

(i) during any period of 14 consecutive calendar months, individuals who were
directors of the Company on the first day of such period (the “Incumbent
Directors”) cease for any reason to constitute a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
first day of such period whose election, or nomination for election, by the
Company’s stockholders was approved by a vote of at least a majority of the
Incumbent Directors shall be considered as though such individual were an
Incumbent Director, but excluding, for purposes of this proviso, any such
individual whose

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initial assumption of office occurs as a result of an actual or threatened proxy
contest with respect to election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a “person” (as
such term is used in Section 13(d) of the Exchange Act) (each, a “Person”), in
each case other than the management of the Company, the Board or the holders of
the Company’s Class B common stock, $0.01 par value;

(ii) the consummation of (A) a merger, consolidation, statutory share exchange
or similar form of corporate transaction involving (x) the Company or (y) any of
its Subsidiaries, but in the case of this clause (y) only if Company Voting
Securities (as defined below) are issued or issuable (each of the events
referred to in this clause (A) being hereinafter referred to as a
“Reorganization”) or (B) the sale or other disposition of all or substantially
all the assets of the Company to an entity that is not an Affiliate (a “Sale”),
in each case, if such Reorganization or Sale requires the approval of the
Company’s stockholders under the law of the Company’s jurisdiction of
organization (whether such approval is required for such Reorganization or Sale
or for the issuance of securities of the Company in such Reorganization or
Sale), unless, immediately following such Reorganization or Sale, (1) all or
substantially all the individuals and entities who were the “beneficial owners”
(as such term is defined in Rule 13d-3 under the Exchange Act (or a successor
rule thereto)) of the securities eligible to vote for the election of the Board
(“Company Voting Securities”) outstanding immediately prior to the consummation
of such Reorganization or Sale beneficially own, directly or indirectly, more
than 50% of the combined voting power of the then outstanding voting securities
of the corporation resulting from such Reorganization or Sale (including,
without limitation, a corporation that, as a result of such transaction, owns
the Company or all or substantially all the Company’s assets either directly or
through one or more subsidiaries) (the “Continuing Corporation”) in
substantially the same proportions as their ownership, immediately prior to the
consummation of such Reorganization or Sale, of the outstanding Company Voting
Securities (excluding any outstanding voting securities of the Continuing
Corporation that such beneficial owners hold immediately following the
consummation of the Reorganization or Sale as a result of their ownership prior
to such consummation of voting securities of any company or other entity
involved in or forming part of such Reorganization or Sale other than the
Company), (2) no Person (excluding (x) any employee benefit plan (or related
trust) sponsored or maintained by the Continuing Corporation or any corporation
controlled by the Continuing Corporation, (y) Jeffrey Katzenberg and (z) David
Geffen) beneficially owns, directly or indirectly, 40% or more of the combined
voting power of the then outstanding voting securities of the Continuing
Corporation and (3) at least 50% of the members of the board of directors of the
Continuing Corporation were Incumbent Directors at the time of the execution of
the definitive agreement providing for such Reorganization or Sale or, in the
absence of such an agreement, at the time at which approval of the Board was
obtained for such Reorganization or Sale;

 

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(iii) the stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company; or

(iv) any Person, corporation or other entity or “group” (as used in
Section 14(d)(2) of the Exchange Act) (other than (A) the Company, (B) any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or an Affiliate or (C) any company owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of the voting power of the Company Voting Securities) becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 40% or more of the combined voting power of the Company Voting
Securities but only if the percentage so owned exceeds the aggregate percentage
of the combined voting power of the Company Voting Securities then owned,
directly or indirectly, by Jeffrey Katzenberg and David Geffen; provided,
however, that for purposes of this subparagraph (iv), the following acquisitions
shall not constitute a Change of Control: (x) any acquisition directly from the
Company or (y) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or an Affiliate.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, or
any successor statute thereto, and the regulations promulgated thereunder.

“Committee” means the compensation committee of the Board, or such other
committee of the Board as may be designated by the Board to administer the Plan.

“Company” means DreamWorks Animation SKG, Inc., a corporation organized under
the laws of Delaware, together with any successor thereto.

“Deferred Share Unit” means a deferred share unit Award that represents an
unfunded and unsecured promise to deliver Shares in accordance with the terms of
the applicable Award Agreement.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, or any successor statute thereto, and the regulations promulgated
thereunder.

“Exercise Price” means (a) in the case of Options, the price specified in the
applicable Award Agreement as the price-per-Share at which Shares may be
purchased pursuant to such Option or (b) in the case of SARs, the price
specified in the applicable Award Agreement as the reference price-per-Share
used to calculate the amount payable to the Participant.

“Fair Market Value” means, except as otherwise provided in the applicable Award
Agreement, (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 the
Shares, as of any date, (i) the closing per-share sales price of the Shares
(A) as reported by the NYSE for such date or (B) if the Shares are listed on any
other national stock exchange, as

 

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reported on the stock exchange composite tape for securities traded on such
stock exchange for such date or, with respect to each of clauses (A) and (B), if
there were no sales on such date, on the closest preceding date on which there
were sales of Shares or (ii) in the event there shall be no public market for
the Shares on such date, the fair market value of the Shares as determined in
good faith by the Committee.

“Incentive Stock Option” means an option to purchase Shares from the Company
that (a) is granted under Section 6(b) of the Plan and (b) is intended to
qualify for special Federal income tax treatment pursuant to Sections 421 and
422 of the Code, as now constituted or subsequently amended, or pursuant to a
successor provision of the Code, and which is so designated in the applicable
Award Agreement.

“Independent Director” means a member of the Board (a) who is neither an
employee of the Company nor an employee of any Affiliate, and (b) who, at the
time of acting, is a “Non-Employee Director” under Rule 16b-3.

“IRS” means the Internal Revenue Service or any successor thereto and includes
the staff thereof.

“Nonqualified Stock Option” means an option to purchase Shares from the Company
that (a) is granted under Section 6(b) of the Plan and (b) is not an Incentive
Stock Option.

“NYSE” means the New York Stock Exchange.

“Option” means an Incentive Stock Option or a Nonqualified Stock Option or both,
as the context requires.

“Participant” means any director, officer, employee or consultant (including any
prospective director, officer, employee or consultant) of the Company or its
Affiliates who is eligible for an Award under Section 5 and who is selected by
the Committee to receive an Award under the Plan or who receives a Substitute
Award pursuant to Section 4(c).

“Performance Compensation Award” means any Award designated by the Committee as
a Performance Compensation Award pursuant to Section 6(e) of the Plan.

“Performance Criteria” means the criterion or criteria that the Committee shall
select for purposes of establishing the Performance Goal(s) for a Performance
Period with respect to any Performance Compensation Award, Performance Unit or
Cash Incentive Award under the Plan.

“Performance Formula” means, for a Performance Period, the one or more objective
formulas applied against the relevant Performance Goal to determine, with regard
to the Performance Compensation Award, Performance Unit or Cash Incentive Award
of a particular Participant, whether all, some portion but less than all, or
none of such Award has been earned for the Performance Period.

 

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“Performance Goal” means, for a Performance Period, the one or more goals
established by the Committee for the Performance Period based upon the
Performance Criteria.

“Performance Period” means the one or more periods of time as the Committee may
select over which the attainment of one or more Performance Goals will be
measured for the purpose of determining a Participant’s right to and the payment
of a Performance Compensation Award, Performance Unit or Cash Incentive Award.

“Performance Unit” means an Award under Section 6(f) of the Plan that has a
value set by the Committee (or that is determined by reference to a valuation
formula specified by the Committee or the Fair Market Value of Shares), which
value may be paid to the Participant by delivery of such property as the
Committee shall determine, including without limitation, cash or Shares, or any
combination thereof, upon achievement of such Performance Goals during the
relevant Performance Period as the Committee shall establish at the time of such
Award or thereafter.

“Plan” shall have the meaning specified in Section 1.

“Prior Plan” shall have the meaning specified in Section 1.

“Restricted Share” means a Share that is granted under Section 6(d) of the Plan
that is subject to certain transfer restrictions, forfeiture provisions and/or
other terms and conditions specified herein and in the applicable Award
Agreement.

“RSU” means a restricted stock unit Award that is granted under Section 6(d) of
the Plan and is designated as such in the applicable Award Agreement and that
represents an unfunded and unsecured promise to deliver Shares, cash, other
securities, other Awards or other property in accordance with the terms of the
applicable Award Agreement.

“Rule 16b-3” means Rule 16b-3 as promulgated and interpreted by the SEC under
the Exchange Act or any successor rule or regulation thereto as in effect from
time to time.

“SAR” means a stock appreciation right Award that is granted under Section 6(c)
of the Plan and that represents an unfunded and unsecured promise to deliver
Shares, cash, other securities, other Awards or other property equal in value to
the excess, if any, of the Fair Market Value per Share over the Exercise Price
per Share of the SAR, subject to the terms of the applicable Award Agreement.

“SEC” means the Securities and Exchange Commission or any successor thereto and
shall include the staff thereof.

“Shares” means shares of Class A Common Stock of the Company, $0.01 par value,
or such other securities of the Company (a) into which such shares shall be
changed by reason of a recapitalization, merger, consolidation, split-up,
combination,

 

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exchange of shares or other similar transaction or (b) as may be determined by
the Committee pursuant to Section 4(b).

“Subsidiary” means any entity in which the Company, directly or indirectly,
possesses fifty percent (50%) or more of the total combined voting power of all
classes of its stock.

“Substitute Awards” shall have the meaning specified in Section 4(c).

“Substituted Options” shall have the meaning specified in Section 6(c)(v).

“Substitution SARs” shall have the meaning specified in Section 6(c)(v).

“Treasury Regulations” means all proposed, temporary and final regulations
promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).

SECTION 3. Administration. (a) Composition of Committee. The Plan shall be
administered by the Committee, which shall be composed of one or more directors,
as determined by the Board; provided that, to the extent necessary to comply
with the rules of the NYSE and Rule 16b-3 and to satisfy any applicable
requirements of Section 162(m) of the Code and any other applicable laws or
rules, the Committee shall be composed of two or more directors, all of whom
shall be Independent Directors and all of whom shall (i) qualify as “outside
directors” under Section 162(m) of the Code and (ii) meet the independence
requirements of the NYSE.

(b) Authority of Committee. Subject to the terms of the Plan and applicable law,
and in addition to other express powers and authorizations conferred on the
Committee by the Plan, the Committee shall have sole and plenary authority to
administer the Plan, including, but not limited to, the authority to
(i) designate Participants, (ii) determine the type or types of Awards to be
granted to a Participant, (iii) determine the number of Shares to be covered by,
or with respect to which payments, rights or other matters are to be calculated
in connection with, Awards, (iv) determine the terms and conditions of any
Awards, (v) determine the vesting schedules of Awards and, if certain
performance criteria must be attained in order for an Award to vest or be
settled or paid, establish such performance criteria and certify whether, and to
what extent, such performance criteria have been attained, (vi) determine
whether, to what extent and under what circumstances Awards may be settled or
exercised in cash, Shares, other securities, other Awards or other property, or
canceled, forfeited or suspended and the method or methods by which Awards may
be settled, exercised, canceled, forfeited or suspended, (vii) determine
whether, to what extent and under what circumstances cash, Shares, other
securities, other Awards, other property and other amounts payable with respect
to an Award shall be deferred either automatically or at the election of the
holder thereof or of the Committee, (viii) interpret, administer, reconcile any
inconsistency in, correct any default in and/or supply any omission in, the Plan
and any instrument or agreement relating to, or Award made under, the Plan,
(ix) establish, amend, suspend or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the proper

 

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administration of the Plan, (x) accelerate the vesting or exercisability of,
payment for or lapse of restrictions on, Awards, (xi) amend an outstanding Award
or grant a replacement Award for an Award previously granted under the Plan if,
in its sole discretion, the Committee determines that (A) the tax consequences
of such Award to the Company or the Participant differ from those consequences
that were expected to occur on the date the Award was granted or
(B) clarifications or interpretations of, or changes to, tax law or regulations
permit Awards to be granted that have more favorable tax consequences than
initially anticipated and (xii) make any other determination and take any other
action that the Committee deems necessary or desirable for the administration of
the Plan.

(c) Committee Decisions. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations and other decisions under or with
respect to the Plan or any Award shall be within the sole and plenary discretion
of the Committee, may be made at any time and shall be final, conclusive and
binding upon all Persons, including the Company, any Affiliate, any Participant,
any holder or beneficiary of any Award and any stockholder.

(d) Indemnification. No member of the Board, the Committee or any employee of
the Company (each such person, a “Covered Person”) shall be liable for any
action taken or omitted to be taken or any determination made in good faith with
respect to the Plan or any Award hereunder. Each Covered Person shall be
indemnified and held harmless by the Company from and against (i) any loss,
cost, liability or expense (including attorneys’ fees) that may be imposed upon
or incurred by such Covered Person in connection with or resulting from any
action, suit or proceeding to which such Covered Person may be a party or in
which such Covered Person may be involved by reason of any action taken or
omitted to be taken under the Plan or any Award Agreement and (ii) any and all
amounts paid by such Covered Person, with the Company’s approval, in settlement
thereof, or paid by such Covered Person in satisfaction of any judgment in any
such action, suit or proceeding against such Covered Person; provided that the
Company shall have the right, at its own expense, to assume and defend any such
action, suit or proceeding, and, once the Company gives notice of its intent to
assume the defense, the Company shall have sole control over such defense with
counsel of the Company’s choice. The foregoing right of indemnification shall
not be available to a Covered Person to the extent that a court of competent
jurisdiction in a final judgment or other final adjudication, in either case not
subject to further appeal, determines that the acts or omissions of such Covered
Person giving rise to the indemnification claim resulted from such Covered
Person’s bad faith, fraud or willful criminal act or omission or that such right
of indemnification is otherwise prohibited by law or by the Company’s Restated
Certificate of Incorporation or Restated Bylaws. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which Covered Persons may be entitled under the Company’s Restated Certificate
of Incorporation or Restated Bylaws, as a matter of law, or otherwise, or any
other power that the Company may have to indemnify such persons or hold them
harmless.

(e) Delegation of Authority to Senior Officers. The Committee may delegate, on
such terms and conditions as it determines in its sole and plenary discretion,
to one or more senior officers of the Company the authority to make grants of
Awards to

 

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officers (other than any officer subject to Section 16 of the Exchange Act),
employees and consultants of the Company and its Affiliates (including any
prospective officer (other than any such officer who is expected to be subject
to Section 16 of the Exchange Act), employee or consultant) and all necessary
and appropriate decisions and determinations with respect thereto.

(f) Awards to Independent Directors. Notwithstanding anything to the contrary
contained herein, the Board may, in its sole and plenary discretion, at any time
and from time to time, grant Awards to Independent Directors or administer the
Plan with respect to such Awards. In any such case, the Board shall have all the
authority and responsibility granted to the Committee herein.

SECTION 4. Shares Available for Awards; Cash Payable Pursuant to Awards.
(a) Shares and Cash Available. Subject to adjustment as provided in
Section 4(b), the maximum aggregate number of Shares that may be delivered
pursuant to Awards granted under the Plan shall be equal to (i) 5,000,000 plus
(ii) any Shares with respect to awards granted under the Prior Plan that are
forfeited following the date that the Plan is approved by the Company’s
stockholders, of which all Shares may be delivered pursuant to Incentive Stock
Options granted under the Plan. The maximum aggregate number of Shares that may
be delivered pursuant to Awards other than Options and SARs granted under the
Plan shall be 2,500,000. Upon exercise of a stock-settled SAR, each Share with
respect to which such stock-settled SAR is exercised shall be counted as one
Share against the maximum aggregate number of Shares that may be delivered
pursuant to Awards granted under the Plan as provided above, regardless of the
number of Shares actually delivered upon settlement of such stock-settled SAR.
Awards that are required to be settled in cash will not reduce the number of
Shares available for delivery under the Plan. If, after the effective date of
the Plan, any Award granted under the Plan is (A) forfeited, or otherwise
expires, terminates or is canceled without the delivery of all Shares subject
thereto, or (B) is settled other than by the delivery of Shares (including,
without limitation, cash settlement), then, in the case of clauses (A) and (B),
the number of Shares subject to such Award that were not issued with respect to
such Award will not be treated as issued hereunder for purposes of reducing the
maximum aggregate number of Shares that may be delivered pursuant to Awards
granted under the Plan. Notwithstanding the foregoing, no Shares that are
surrendered or tendered to the Company in payment of the Exercise Price of an
Award or any taxes required to be withheld in respect of an Award shall again
become available to be delivered pursuant to Awards under the Plan. Subject to
adjustment as provided in Section 4(b), (1) in the case of Awards that are
settled in Shares, the maximum aggregate number of Shares with respect to which
Awards may be granted to any Participant in any fiscal year of the Company under
the Plan shall be 2,500,000, and (2) in the case of Awards that are settled in
cash based on the Fair Market Value of a Share, the maximum aggregate amount of
cash that may be paid pursuant to Awards granted to any Participant in any
fiscal year of the Company under the Plan shall be equal to the per-Share Fair
Market Value as of the relevant vesting, payment or settlement date multiplied
by the number of Shares described in the preceding clause (1). In the case of
all Awards other than those described in the preceding sentence, the maximum
aggregate amount of cash and other property (valued at its Fair Market Value)
other than Shares that may be paid or delivered

 

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pursuant to Awards under the Plan to any Participant in any fiscal year of the
Company shall be equal to $10,000,000.

(b) Adjustments for Changes in Capitalization and Similar Events. (i) In the
event of any extraordinary dividend or other extraordinary distribution (whether
in the form of cash, Shares, other securities or other property),
recapitalization, rights offering, stock split, reverse stock split, split-up or
spin-off, the Committee shall, in the manner determined by the Committee to be
appropriate or desirable, adjust any or all of (A) the number of Shares or other
securities of the Company (or number and kind of other securities or property)
with respect to which Awards may be granted, including (1) the maximum aggregate
number of Shares that may be delivered pursuant to Awards granted under the Plan
(including pursuant to Incentive Stock Options) and (2) the maximum number of
Shares or other securities of the Company (or number and kind of other
securities or property) with respect to which Awards may be granted to any
Participant in any fiscal year of the Company, in each case, as provided in
Section 4(a), and (B) the terms of any outstanding Award, including (1) the
number of Shares or other securities of the Company (or number and kind of other
securities or property) subject to outstanding Awards or to which outstanding
Awards relate and (2) the Exercise Price, if applicable, with respect to any
Award.

(ii) In the event that the Committee determines that any reorganization, merger,
consolidation, combination, repurchase or exchange of Shares or other securities
of the Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee in its
discretion to be appropriate or desirable, then the Committee may (A) in such
manner as it may deem appropriate or desirable, adjust any or all of (1) the
number of Shares or other securities of the Company (or number and kind of other
securities or property) with respect to which Awards may be granted, including
(X) the maximum aggregate number of Shares that may be delivered pursuant to
Awards granted under the Plan and (Y) the maximum number of Shares or other
securities of the Company (or number and kind of other securities or property)
with respect to which Awards may be granted to any Participant in any fiscal
year of the Company, in each case, as provided in Section 4(a), and (2) the
terms of any outstanding Award, including (X) the number of Shares or other
securities of the Company (or number and kind of other securities or property)
subject to outstanding Awards or to which outstanding Awards relate and (Y) the
Exercise Price, if applicable, with respect to any Award, (B) if deemed
appropriate or desirable by the Committee, make provision for a cash payment to
the holder of an outstanding Award in consideration for the cancelation of such
Award, including, in the case of an outstanding Option or SAR, a cash payment to
the holder of such Option or SAR in consideration for the cancelation of such
Option or SAR in an amount equal to the excess, if any, of the Fair Market Value
(as of a date specified by the Committee) of the Shares subject to such Option
or SAR over the aggregate Exercise Price of such Option or SAR and (C) if deemed
appropriate or desirable by the Committee, cancel and terminate any Option or
SAR having a per-Share Exercise Price equal to, or in excess of, the Fair Market
Value of a Share subject to such Option or SAR without any payment or
consideration therefor.

 

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(c) Substitute Awards. Subject to the restrictions on “repricing” of Options and
SARs as set forth in Section 7(b), Awards may, in the discretion of the
Committee, be granted under the Plan in assumption of, or in substitution for,
outstanding awards previously granted by the Company or any of its Affiliates or
a company acquired by the Company or any of its Affiliates or with which the
Company or any of its Affiliates combines (“Substitute Awards”). The number of
Shares underlying any Substitute Awards shall be counted against the maximum
aggregate number of Shares available for Awards under the Plan; provided,
however, that Substitute Awards issued in connection with the assumption of, or
in substitution for, outstanding awards previously granted by an entity that is
acquired by the Company or any of its Affiliates or with which the Company or
any of its Affiliates combines shall not be counted against the maximum
aggregate number of Shares available for Awards under the Plan; provided
further, however, that Substitute Awards issued in connection with the
assumption of, or in substitution for, outstanding stock options intended to
qualify for special tax treatment under Sections 421 and 422 of the Code that
were previously granted by an entity that is acquired by the Company or any of
its Affiliates or with which the Company or any of its Affiliates combines shall
be counted against the maximum aggregate number of Shares available for
Incentive Stock Options under the Plan.

(d) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to
an Award may consist, in whole or in part, of authorized and unissued Shares or
of treasury Shares.

SECTION 5. Eligibility. Any director, officer, employee or consultant (including
any prospective director, officer, employee or consultant) of the Company or any
of its Affiliates shall be eligible to be designated a Participant.

SECTION 6. Awards. (a) Types of Awards. Awards may be made under the Plan in the
form of (i) Options, (ii) SARs, (iii) Restricted Shares, (iv) RSUs,
(v) Performance Compensation Awards, (vi) Performance Units, (vii) Cash
Incentive Awards, (viii) Deferred Share Units and (ix) other equity based or
equity related Awards that the Committee determines are consistent with the
purpose of the Plan and the interests of the Company. Awards may be granted in
tandem with other Awards. No Incentive Stock Option (other than an Incentive
Stock Option that may be assumed or issued by the Company in connection with a
transaction to which Section 424(a) of the Code applies) may be granted to a
person who is ineligible to receive an Incentive Stock Option under the Code.

(b) Options. (i) Grant. Subject to the provisions of the Plan, the Committee
shall have sole and plenary authority to determine (A) the Participants to whom
Options shall be granted, (B) subject to Section 4(a), the number of Shares
subject to Options to be granted to each Participant, (C) whether each Option
will be an Incentive Stock Option or a Nonqualified Stock Option and (D) the
conditions and limitations applicable to the vesting and exercise of each
Option. In the case of Incentive Stock Options, the terms and conditions of such
grants shall be subject to and comply with such rules as may be prescribed by
Section 422 of the Code and any regulations related thereto, as may be amended
from time to time. All Options granted under the Plan shall

 

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be Nonqualified Stock Options unless the applicable Award Agreement expressly
states that the Option is intended to be an Incentive Stock Option. If an Option
is intended to be an Incentive Stock Option, and if, for any reason, such Option
(or any portion thereof) shall not qualify as an Incentive Stock Option, then,
to the extent of such nonqualification, such Option (or portion thereof) shall
be regarded as a Nonqualified Stock Option appropriately granted under the Plan;
provided that such Option (or portion thereof) otherwise complies with the
Plan’s requirements relating to Nonqualified Stock Options.

(ii) Exercise Price. The Exercise Price of each Share covered by an Option shall
be not less than 100% of the Fair Market Value of such Share (determined as of
the date the Option is granted); provided, however, in the case of an Incentive
Stock Option granted to an employee who, at the time of the grant of such
Option, owns stock representing more than 10% of the voting power of all classes
of stock of the Company or any Affiliate, the per-Share Exercise Price shall be
no less than 110% of the Fair Market Value per Share on the date of the grant.
Options are intended to qualify as “qualified performance-based compensation”
under Section 162(m) of the Code.

(iii) Vesting and Exercise. Each Option shall be vested and exercisable at such
times, in such manner and subject to such terms and conditions as the Committee
may, in its sole and plenary discretion, specify in the applicable Award
Agreement or thereafter. Except as otherwise specified by the Committee in the
applicable Award Agreement, an Option may only be exercised to the extent that
it has already vested at the time of exercise. Except as otherwise specified by
the Committee in the Award Agreement, Options shall become vested and
exercisable with respect to one-fourth of the Shares subject to such Options on
each of the first four anniversaries of the date of grant. An Option shall be
deemed to be exercised when written or electronic notice of such exercise has
been given to the Company in accordance with the terms of the Award by the
person entitled to exercise the Award and full payment pursuant to
Section 6(b)(iv) for the Shares with respect to which the Award is exercised has
been received by the Company. Exercise of an Option in any manner shall result
in a decrease in the number of Shares that thereafter may be available for sale
under the Option and, except as expressly set forth in Sections 4(a) and 4(c),
in the number of Shares that may be available for purposes of the Plan, by the
number of Shares as to which the Option is exercised. The Committee may impose
such conditions with respect to the exercise of Options, including, without
limitation, any conditions relating to the application of Federal or state
securities laws, as it may deem necessary or advisable.

(iv) Payment. (A) No Shares shall be delivered pursuant to any exercise of an
Option until payment in full of the aggregate Exercise Price therefor is
received by the Company, and the Participant has paid to the Company (or the
Company has withheld in accordance with Section 9(d)) an amount equal to any
Federal, state, local and foreign income and employment taxes required to be
withheld. Such payments may be made in cash (or its equivalent) or, in the
Committee’s sole and plenary discretion, (1) by exchanging Shares owned by the
Participant (which are not the subject of any pledge or other security
interest), (2) if there shall be a public market for the Shares at such time,
subject to such rules as may be established by the Committee, through delivery

 

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of irrevocable instructions to a broker to sell the Shares otherwise deliverable
upon the exercise of the Option and to deliver promptly to the Company an amount
equal to the aggregate Exercise Price, or (3) through any other method (or
combination of methods) as approved by the Committee; provided that the combined
value of all cash and cash equivalents and the Fair Market Value of any such
Shares so tendered to the Company, together with any Shares withheld by the
Company in accordance with Section 9(d), as of the date of such tender, is at
least equal to such aggregate Exercise Price and the amount of any Federal,
state, local or foreign income or employment taxes required to be withheld, if
applicable.

(B) Wherever in the Plan or any Award Agreement a Participant is permitted to
pay the Exercise Price of an Option or taxes relating to the exercise of an
Option by delivering Shares, the Participant may, subject to procedures
satisfactory to the Committee, satisfy such delivery requirement by presenting
proof of beneficial ownership of such Shares, in which case the Company shall
treat the Option as exercised without further payment and shall withhold such
number of Shares from the Shares acquired by the exercise of the Option.

(v) Expiration. Except as otherwise set forth in the applicable Award Agreement,
each Option shall expire immediately, without any payment, upon the earlier of
(A) the tenth anniversary of the date the Option is granted and (B) 90 days
after the date the Participant who is holding the Option ceases to be a
director, officer, employee or consultant of the Company or one of its
Affiliates. In no event may an Option be exercisable after the tenth anniversary
of the date the Option is granted.

(c) SARs. (i) Grant. Subject to the provisions of the Plan, the Committee shall
have sole and plenary authority to determine (A) the Participants to whom SARs
shall be granted, (B) subject to Section 4(a), the number of SARs to be granted
to each Participant, (C) the Exercise Price thereof and (D) the conditions and
limitations applicable to the exercise thereof.

(ii) Exercise Price. The Exercise Price of each Share covered by a SAR shall be
not less than 100% of the Fair Market Value of such Share (determined as of the
date the SAR is granted). SARs are intended to qualify as “qualified
performance-based compensation” under Section 162(m) of the Code.

(iii) Exercise. A SAR shall entitle the Participant to receive an amount upon
exercise equal to the excess, if any, of the Fair Market Value of a Share on the
date of exercise of the SAR over the Exercise Price thereof. The Committee shall
determine, in its sole and plenary discretion, whether a SAR shall be settled in
cash, Shares, other securities, other Awards, other property or a combination of
any of the foregoing.

(iv) Other Terms and Conditions. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine, at or after the grant
of a SAR, the vesting criteria, term, methods of exercise, methods and form of
settlement and any other terms and conditions of any SAR; provided, however,
that in no event may any SAR be exercisable after the tenth anniversary of the
date the SAR is granted. Any

 

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determination by the Committee that is made pursuant to this Section 6(c)(iv)
may be changed by the Committee from time to time and may govern the exercise of
SARs granted or exercised thereafter.

(v) Substitution SARs. Only in the event the Company is not accounting for
equity compensation under Accounting Principles Board Opinion No. 25,
“Accounting for Stock Issued to Employees”, the Committee shall have the ability
to substitute, without the consent of the affected Participant or any holder or
beneficiary of SARs, SARs settled in Shares (or SARs settled in Shares or cash
in the Committee’s discretion) (“Substitution SARs”) for outstanding
Nonqualified Stock Options (“Substituted Options”); provided that (A) the
substitution shall not otherwise result in a modification of the terms of any
Substituted Option, (B) the number of Shares underlying the Substitution SARs
shall be the same as the number of Shares underlying the Substituted Options and
(C) the Exercise Price of the Substitution SARs shall be equal to the Exercise
Price of the Substituted Options. If, in the opinion of the Company’s auditors,
this provision creates adverse accounting consequences for the Company, it shall
be considered null and void.

(d) Restricted Shares and RSUs. (i) Grant. Subject to the provisions of the
Plan, the Committee shall have sole and plenary authority to determine (A) the
Participants to whom Restricted Shares and RSUs shall be granted, (B) subject to
Section 4(a), the number of Restricted Shares and RSUs to be granted to each
Participant, (C) the duration of the period during which, and the conditions, if
any, under which, the Restricted Shares and RSUs may vest or may be forfeited to
the Company and (D) the other terms and conditions of such Awards.

(ii) Transfer Restrictions. Restricted Shares and RSUs may not be sold,
assigned, transferred, pledged or otherwise encumbered except as provided in the
Plan or as may be provided in the applicable Award Agreement; provided, however,
that the Committee may, in its discretion, determine that Restricted Shares and
RSUs may be transferred by the Participant for no consideration. Restricted
Shares may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Shares are registered in the name of the
applicable Participant, such certificates must bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such
Restricted Shares, and the Company may, at its discretion, retain physical
possession of such certificates until such time as all applicable restrictions
lapse.

(iii) Payment/Lapse of Restrictions. Each RSU shall be granted with respect to
one Share or shall have a value equal to the Fair Market Value of one Share.
RSUs shall be paid in cash, Shares, other securities, other Awards or other
property, as determined in the sole and plenary discretion of the Committee,
upon the lapse of restrictions applicable thereto, or otherwise in accordance
with the applicable Award Agreement. If a Restricted Share or an RSU is intended
to qualify as “qualified performance-based compensation” under Section 162(m) of
the Code, unless the grant of such Restricted Share or RSU is contingent on
satisfaction of the requirements for the payment of “qualified performance-based
compensation” under Section 162(m) of the Code (whether pursuant to Section 6(e)
of this Plan, the DreamWorks Animation

 

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SKG, Inc. 2008 Annual Incentive Plan or any other plan), all requirements set
forth in Section 6(e) must be satisfied in order for the restrictions applicable
thereto to lapse.

(e) Performance Compensation Awards. (i) General. The Committee shall have the
authority, at the time of grant of any Award, to designate such Award (other
than an Option or SAR) as a Performance Compensation Award in order for such
Award to qualify as “qualified performance-based compensation” under
Section 162(m) of the Code. Options and SARs granted under the Plan shall not be
included among Awards that are designated as Performance Compensation Awards
under this Section 6(e).

(ii) Eligibility. The Committee shall, in its sole discretion, designate within
the first 90 days of a Performance Period (or, if shorter, within the maximum
period allowed under Section 162(m) of the Code) which Participants will be
eligible to receive Performance Compensation Awards in respect of such
Performance Period. However, designation of a Participant as eligible to receive
an Award hereunder for a Performance Period shall not in any manner entitle such
Participant to receive payment in respect of any Performance Compensation Award
for such Performance Period. The determination as to whether or not such
Participant becomes entitled to payment in respect of any Performance
Compensation Award shall be decided solely in accordance with the provisions of
this Section 6(e). Moreover, designation of a Participant as eligible to receive
an Award hereunder for a particular Performance Period shall not require
designation of such Participant as eligible to receive an Award hereunder in any
subsequent Performance Period and designation of one person as a Participant
eligible to receive an Award hereunder shall not require designation of any
other person as a Participant eligible to receive an Award hereunder in such
period or in any other period.

(iii) Discretion of Committee with Respect to Performance Compensation Awards.
With regard to a particular Performance Period, the Committee shall have full
discretion to select (A) the length of such Performance Period, (B) the type(s)
of Performance Compensation Awards to be issued, (C) the Performance Criteria
that will be used to establish the Performance Goal(s), (D) the kind(s) and/or
level(s) of the Performance Goals(s) that is (are) to apply to the Company or
any of its Subsidiaries, Affiliates, divisions or operational units, or any
combination of the foregoing, and (E) the Performance Formula. Within the first
90 days of a Performance Period (or, if shorter, within the maximum period
allowed under Section 162(m) of the Code), the Committee shall, with regard to
the Performance Compensation Awards to be issued for such Performance Period,
exercise its discretion with respect to each of the matters enumerated in the
immediately preceding sentence and record the same in writing.

(iv) Performance Criteria. Notwithstanding the foregoing, the Performance
Criteria that will be used to establish the Performance Goal(s) with respect to
Performance Compensation Awards shall be based on the attainment of specific
levels of performance of the Company or any of its Subsidiaries, Affiliates,
divisions or operational units, or any combination of the foregoing, and shall
be limited to the following: (A) net income or earnings before or after taxes
(including earnings before interest, taxes, depreciation and amortization),
(B) operating income, (C) earnings per

 

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share, (D) return on shareholders’ equity, (E) return on investment or capital,
(F) return on assets, (G) level or amount of acquisitions, (H) share price,
(I) profitability/profit margins, (J) market share (in the aggregate or by
segment), (K) revenues or sales (including specified types or categories
thereof) (based on units and/or dollars), (L) costs (including specified types
or categories thereof), (M) cash flow, (N) working capital, (O) completion of
production or stages of production within specified time and/or budget
parameters, (P) budgeted expenses (operating and capital) and (Q) box office
results (domestic, international or worldwide) of any of the Company’s films.
Such Performance Criteria may be applied on an absolute basis, be relative to
one or more peer companies of the Company or indices or any combination thereof
or, if applicable, be computed on an accrual or cash accounting basis. To the
extent required under Section 162(m) of the Code, the Committee shall, within
the first 90 days of the applicable Performance Period (or, if shorter, within
the maximum period allowed under Section 162(m) of the Code), define in an
objective manner the method of calculating the Performance Criteria it selects
to use for such Performance Period.

(v) Modification of Performance Goals. The Committee is authorized at any time
during the first 90 days of a Performance Period (or, if shorter, within the
maximum period allowed under Section 162(m) of the Code), or any time thereafter
(but only to the extent the exercise of such authority after such 90-day period
(or such shorter period, if applicable) would not cause the Performance
Compensation Awards granted to any Participant for the Performance Period to
fail to qualify as “qualified performance-based compensation” under
Section 162(m) of the Code), in its sole and plenary discretion, to adjust or
modify the calculation of a Performance Goal for such Performance Period to the
extent permitted under Section 162(m) of the Code (A) in the event of, or in
anticipation of, any unusual or extraordinary corporate item, transaction, event
or development affecting the Company, or any of its Affiliates, Subsidiaries,
divisions or operating units (to the extent applicable to such Performance Goal)
or (B) in recognition of, or in anticipation of, any other unusual or
nonrecurring events affecting the Company or any of its Affiliates,
Subsidiaries, divisions or operating units (to the extent applicable to such
Performance Goal), or the financial statements of the Company or any of its
Affiliates, Subsidiaries, divisions or operating units (to the extent applicable
to such Performance Goal), or of changes in applicable rules, rulings,
regulations or other requirements of any governmental body or securities
exchange, accounting principles, law or business conditions.

(vi) Payment of Performance Compensation Awards. (A) Condition to Receipt of
Payment. A Participant must be employed by the Company or one of its
Subsidiaries on the last day of a Performance Period to be eligible for payment
in respect of a Performance Compensation Award for such Performance Period.
Notwithstanding the foregoing and to the extent permitted by Section 162(m) of
the Code, in the discretion of the Committee, Performance Compensation Awards
may be paid to Participants who have retired or whose employment has terminated
prior to the last day of the Performance Period for which a Performance
Compensation Award is made, or to the designee or estate of a Participant who
died prior to the last day of a Performance Period.

 

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(B) Limitation. Except as otherwise permitted by Section 162(m) of the Code, a
Participant shall be eligible to receive payments in respect of a Performance
Compensation Award only to the extent that (1) the Performance Goal(s) for the
relevant Performance Period are achieved and certified by the Committee in
accordance with Section 6(e)(vi)(C) and (2) the Performance Formula as applied
against such Performance Goal(s) determines that all or some portion of such
Participant’s Performance Compensation Award has been earned for such
Performance Period.

(C) Certification. Following the completion of a Performance Period, the
Committee shall meet to review and certify in writing whether, and to what
extent, the Performance Goals for the Performance Period have been achieved and,
if so, to calculate and certify in writing that amount of the Performance
Compensation Awards earned for the period based upon the Performance Formula.
The Committee shall then determine the actual size of each Participant’s
Performance Compensation Award for the Performance Period and, in so doing, may
apply negative discretion as authorized by Section 6(e)(vi)(D).

(D) Negative Discretion. In determining the actual size of an individual
Performance Compensation Award for a Performance Period, the Committee may, in
its sole and plenary discretion, reduce or eliminate the amount of the Award
earned in the Performance Period, even if applicable Performance Goals have been
attained and without regard to any employment agreement between the Company and
a Participant.

(E) Discretion. Except as otherwise permitted by Section 162(m) of the Code, in
no event shall any discretionary authority granted to the Committee by the Plan
be used to (1) grant or provide payment in respect of Performance Compensation
Awards for a Performance Period if the Performance Goals for such Performance
Period have not been attained, (2) increase a Performance Compensation Award for
any Participant at any time after the first 90 days of the Performance Period
(or, if shorter, the maximum period allowed under Section 162(m) of the Code) or
(3) increase a Performance Compensation Award above the maximum amount payable
under Section 4(a) of the Plan.

(F) Form of Payment. In the case of any Performance Compensation Award other
than a Restricted Share, RSU or other equity-based Award that is subject to
performance-based vesting conditions, such Performance Compensation Award shall
be payable, in the discretion of the Committee, in cash or in Restricted Shares,
RSUs or fully vested Shares of equivalent value and shall be paid on such terms
as determined by the Committee in its discretion. Any Restricted Shares and RSUs
shall be subject to the terms of this Plan (or any successor equity-compensation
plan) and any applicable Award Agreement. The number of Restricted Shares, RSUs
or Shares that is equivalent in value to a dollar amount shall be determined in
accordance with a methodology specified by the Committee within the first
90 days of the relevant Performance Period (or, if shorter, within the maximum
period allowed under Section 162(m) of the Code).

 

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(f) Performance Units. (i) Grant. Subject to the provisions of the Plan, the
Committee shall have sole and plenary authority to determine the Participants to
whom Performance Units shall be granted.

(ii) Value of Performance Units. Each Performance Unit shall have an initial
value that is established by the Committee at the time of grant. The Committee
shall set Performance Goals in its discretion which, depending on the extent to
which they are met during a Performance Period, will determine in accordance
with Section 4(a) the number and/or value of Performance Units that will be paid
out to the Participant.

(iii) Earning of Performance Units. Subject to the provisions of the Plan, after
the applicable Performance Period has ended, the holder of Performance Units
shall be entitled to receive a payout of the number and value of Performance
Units earned by the Participant over the Performance Period, to be determined by
the Committee, in its sole and plenary discretion, as a function of the extent
to which the corresponding Performance Goals have been achieved.

(iv) Form and Timing of Payment of Performance Units. Subject to the provisions
of the Plan, the Committee, in its sole and plenary discretion, may pay earned
Performance Units in the form of cash or in Shares (or in a combination thereof)
that have an aggregate Fair Market Value equal to the value of the earned
Performance Units at the close of the applicable Performance Period. Such Shares
may be granted subject to any restrictions in the applicable Award Agreement
deemed appropriate by the Committee. The determination of the Committee with
respect to the form and timing of payout of such Awards shall be set forth in
the applicable Award Agreement. If a Performance Unit is intended to qualify as
“qualified performance-based compensation” under Section 162(m) of the Code, all
requirements set forth in Section 6(e) must be satisfied in order for a
Participant to be entitled to payment.

(g) Cash Incentive Awards. Subject to the provisions of the Plan, the Committee,
in its sole and plenary discretion, shall have the authority to grant Cash
Incentive Awards. Subject to Section 4(a), the Committee shall establish Cash
Incentive Award levels to determine the amount of a Cash Incentive Award payable
upon the attainment of Performance Goals. If a Cash Incentive Award is intended
to qualify as “qualified performance-based compensation” under Section 162(m) of
the Code, all requirements set forth in Section 6(e) must be satisfied in order
for a Participant to be entitled to payment.

(h) Other Stock-Based Awards. Subject to the provisions of the Plan, the
Committee shall have the sole and plenary authority to grant to Participants
other equity-based or equity-related Awards (including, but not limited to,
Deferred Share Units and fully vested Shares) (whether payable in cash, equity
or otherwise) in such amounts and subject to such terms and conditions as the
Committee shall determine, provided that any such Awards must comply, to the
extent deemed desirable by the Committee, with Rule 16b-3 and applicable law.

 

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(i) Dividends and Dividend Equivalents. In the sole and plenary discretion of
the Committee, an Award, other than an Option or SAR or a Cash Incentive Award,
may provide the Participant with dividends or dividend equivalents, payable in
cash, Shares, other securities, other Awards or other property, on a current or
deferred basis, on such terms and conditions as may be determined by the
Committee in its sole and plenary discretion, including, without limitation,
(A) payment directly to the Participant, (B) withholding of such amounts by the
Company subject to vesting of the Award or (C) reinvestment in additional
Shares, Restricted Shares or other Awards.

SECTION 7. Amendment and Termination. (a) Amendments to the Plan. Subject to any
applicable law or government regulation, to any requirement that must be
satisfied if the Plan is intended to be a shareholder-approved plan for purposes
of Section 162(m) of the Code and to the rules of the NYSE or any successor
exchange or quotation system on which the Shares may be listed or quoted, the
Plan may be amended, modified or terminated by the Board without the approval of
the stockholders of the Company, except that stockholder approval shall be
required for any amendment that would (i) increase the maximum number of Shares
for which Awards may be granted under the Plan or increase the maximum number of
Shares that may be delivered pursuant to Incentive Stock Options granted under
the Plan; provided, however, that any adjustment under Section 4(b) shall not
constitute an increase for purposes of this Section 7(a), or (ii) change the
class of employees or other individuals eligible to participate in the Plan. No
amendment, modification or termination of the Plan may, without the consent of
the Participant to whom any Award shall theretofor have been granted, materially
and adversely affect the rights of such Participant (or his or her transferee)
under such Award, unless otherwise provided by the Committee in the applicable
Award Agreement.

(b) Amendments to Awards. The Committee may waive any conditions or rights
under, amend any terms of, or alter, suspend, discontinue, cancel or terminate
any Award theretofor granted, prospectively or retroactively; provided, however,
that, except as set forth in the Plan, unless otherwise provided by the
Committee in the applicable Award Agreement, any such waiver, amendment,
alteration, suspension, discontinuance, cancelation or termination that would
materially and adversely impair the rights of any Participant or any holder or
beneficiary of any Award theretofor granted shall not to that extent be
effective without the consent of the applicable Participant, holder or
beneficiary. Notwithstanding the preceding sentence, in no event may any Option
or SAR (i) be amended to decrease the Exercise Price thereof, (ii) be cancelled
at a time when its Exercise Price exceeds the Fair Market Value of the
underlying Shares in exchange for another Option or SAR or any Restricted Share,
RSU, other equity-based Award, award under any other equity-compensation plan or
any cash payment or (iii) be subject to any action that would be treated, for
accounting purposes, as a “repricing” of such Option or SAR, unless such
amendment, cancellation, or action is approved by the Company’s stockholders.
For the avoidance of doubt, an adjustment to the Exercise Price of an Option or
SAR that is made in accordance with Section 4(b) or Section 8 shall not be
considered a reduction in Exercise Price or “repricing” of such Option or SAR.

 

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(c) Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring
Events. Subject to Section 6(e)(v) and the final sentence of Section 7(b), the
Committee is hereby authorized to make adjustments in the terms and conditions
of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in
Section 4(b) or the occurrence of a Change of Control) affecting the Company,
any Affiliate, or the financial statements of the Company or any Affiliate, or
of changes in applicable rules, rulings, regulations or other requirements of
any governmental body or securities exchange, accounting principles or law
(i) whenever the Committee, in its sole and plenary discretion, determines that
such adjustments are appropriate or desirable, including, without limitation,
providing for a substitution or assumption of Awards, accelerating the
exercisability of, lapse of restrictions on, or termination of, Awards or
providing for a period of time for exercise prior to the occurrence of such
event, (ii) if deemed appropriate or desirable by the Committee, in its sole and
plenary discretion, by providing for a cash payment to the holder of an Award in
consideration for the cancelation of such Award, including, in the case of an
outstanding Option or SAR, a cash payment to the holder of such Option or SAR in
consideration for the cancelation of such Option or SAR in an amount equal to
the excess, if any, of the Fair Market Value (as of a date specified by the
Committee) of the Shares subject to such Option or SAR over the aggregate
Exercise Price of such Option or SAR and (iii) if deemed appropriate or
desirable by the Committee, in its sole and plenary discretion, by canceling and
terminating any Option or SAR having a per-Share Exercise Price equal to, or in
excess of, the Fair Market Value of a Share subject to such Option or SAR
without any payment or consideration therefor.

SECTION 8. Change of Control. Unless otherwise provided in the applicable Award
Agreement, in the event of a Change of Control after the date of the adoption of
the Plan, unless provision is made in connection with the Change of Control for
(a) assumption of Awards previously granted or (b) substitution for such Awards
of new awards covering stock of a successor corporation or its “parent
corporation” (as defined in Section 424(e) of the Code) or “subsidiary
corporation” (as defined in Section 424(f) of the Code) with appropriate
adjustments as to the number and kinds of shares and the Exercise Prices, if
applicable, (i) any outstanding Options or SARs then held by Participants that
are unexercisable or otherwise unvested shall automatically be deemed
exercisable or otherwise vested, as the case may be, as of immediately prior to
such Change of Control, (ii) all Performance Units, Cash Incentive Awards and
Awards designated as Performance Compensation Awards shall be paid out as if the
date of the Change of Control were the last day of the applicable Performance
Period and “target” performance levels had been attained and (iii) all other
outstanding Awards (i.e., other than Options, SARs, Performance Units, Cash
Incentive Awards and Awards designated as Performance Compensation Awards) then
held by Participants that are unexercisable, unvested or still subject to
restrictions or forfeiture, shall automatically be deemed exercisable and vested
and all restrictions and forfeiture provisions related thereto shall lapse as of
immediately prior to such Change of Control.

SECTION 9. General Provisions. (a) Nontransferability. Except as otherwise
specified in the applicable Award Agreement, during the Participant’s lifetime

 

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each Award (and any rights and obligations thereunder) shall be exercisable only
by the Participant, or, if permissible under applicable law, by the
Participant’s legal guardian or representative, and no Award (or any rights and
obligations thereunder) may be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by a Participant otherwise than by will or
by the laws of descent and distribution, 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 (i) the
designation of a beneficiary shall not constitute an assignment, alienation,
pledge, attachment, sale, transfer or encumbrance and (ii) the Board or the
Committee may permit further transferability, on a general or specific basis,
and may impose conditions and limitations on any permitted transferability;
provided, however, that Incentive Stock Options granted under the Plan shall not
be transferable in any way that would violate Section 1.422-2(a)(2) of the
Treasury Regulations and in no event may any Award (or any rights and
obligations thereunder) be transferred in any way in exchange for value. All
terms and conditions of the Plan and all Award Agreements shall be binding upon
any permitted successors and assigns.

(b) No Rights to Awards. No Participant or other Person shall have any claim to
be granted any Award, and there is no obligation for uniformity of treatment of
Participants or holders or beneficiaries of Awards. The terms and conditions of
Awards and the Committee’s determinations and interpretations with respect
thereto need not be the same with respect to each Participant and may be made
selectively among Participants, whether or not such Participants are similarly
situated.

(c) Share Certificates. All certificates for Shares or other securities of the
Company or any Affiliate 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 Plan, the applicable
Award Agreement or the rules, regulations and other requirements of the SEC, the
NYSE or any other stock exchange or quotation system upon which such Shares or
other securities are then listed or reported and any applicable Federal or state
laws, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.

(d) Withholding. (i) Authority to Withhold. A Participant may be required to pay
to the Company or any Affiliate, and the Company or any Affiliate shall have the
right and is hereby authorized to withhold from any Award, from any payment due
or transfer made under any Award or under the Plan or from any compensation or
other amount owing to a Participant, the amount (in cash, Shares, other
securities, other Awards or other property) of any applicable withholding taxes
in respect of an Award, its exercise or any payment or transfer under an Award
or under the Plan and to take such other action as may be necessary in the
opinion of the Committee or the Company to satisfy all obligations for the
payment of such taxes.

(ii) Alternative Ways to Satisfy Withholding Liability. Without limiting the
generality of clause (i) above, a Participant may satisfy, in whole or in part,
the foregoing withholding liability by delivery of Shares owned by the
Participant (which are

 

20

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not subject to any pledge or other security interest) having a Fair Market Value
equal to such withholding liability or, at the discretion of the Participant, by
having the Company withhold from the number of Shares otherwise issuable
pursuant to the exercise of the Option or SAR, or the lapse of the restrictions
on any other Award (in the case of SARs and other Awards, if such SARs and other
Awards are settled in Shares), a number of Shares having a Fair Market Value
equal to such withholding liability.

(e) Section 409A. (i) It is intended that the provisions of the Plan comply with
Section 409A of the Code, and all provisions of the Plan shall be construed and
interpreted in a manner consistent with the requirements for avoiding taxes or
penalties under Section 409A of the Code.

(ii) No Participant or the creditors or beneficiaries of a Participant shall
have the right to subject any deferred compensation (within the meaning of
Section 409A of the Code) payable under the Plan to any anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment. Except as permitted under Section 409A of the Code, any deferred
compensation (within the meaning of Section 409A of the Code) payable to any
Participant or for the benefit of any Participant under the Plan may not be
reduced by, or offset against, any amount owing by any such Participant to the
Company or any of its Affiliates.

(iii) If, at the time of a Participant’s separation from service (within the
meaning of Section 409A of the Code), (A) such Participant shall be a specified
employee (within the meaning of Section 409A of the Code and using the
identification methodology selected by the Company from time to time) and
(B) the Company shall make a good faith determination that an amount payable
pursuant to an Award constitutes deferred compensation (within the meaning of
Section 409A of the Code) the payment of which is required to be delayed
pursuant to the six-month delay rule set forth in Section 409A of the Code in
order to avoid taxes or penalties under Section 409A of the Code, then the
Company shall not pay such amount on the otherwise scheduled payment date but
shall instead pay it on the first business day after such six-month period. Such
amount shall be paid without interest, unless otherwise determined by the
Committee, in its sole discretion, or as otherwise provided in any applicable
employment agreement between the Company and the relevant Participant.

(iv) Notwithstanding any provision of the Plan to the contrary, in light of the
uncertainty with respect to the proper application of Section 409A of the Code,
the Company reserves the right to make amendments to any Award as the Company
deems necessary or desirable to avoid the imposition of taxes or penalties under
Section 409A of the Code. In any case, a Participant shall be solely responsible
and liable for the satisfaction of all taxes and penalties that may be imposed
on such Participant or for such Participant’s account in connection with an
Award (including any taxes and penalties under Section 409A of the Code), and
neither the Company nor any of its Affiliates shall have any obligation to
indemnify or otherwise hold such Participant harmless from any or all of such
taxes or penalties.

 

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(f) Award Agreements. Each Award hereunder shall be evidenced by an Award
Agreement, which shall be delivered to the Participant and shall specify the
terms and conditions of the Award and any rules applicable thereto, including,
but not limited to, the effect on such Award of the death, disability or
termination of employment or service of a Participant and the effect, if any, of
such other events as may be determined by the Committee.

(g) No Limit on Other Compensation Arrangements. Nothing contained in the Plan
shall prevent the Company or any Affiliate from adopting or continuing in effect
other compensation arrangements, which may, but need not, provide for the grant
of options, restricted stock, shares, other types of equity-based awards
(subject to stockholder approval if such approval is required) and cash
incentive awards, and such arrangements may be either generally applicable or
applicable only in specific cases.

(h) No Right to Employment. The grant of an Award shall not be construed as
giving a Participant the right to be retained as a director, officer, employee
or consultant of or to the Company or any Affiliate, nor shall it be construed
as giving a Participant any rights to continued service on the Board. Further,
the Company or an Affiliate may at any time dismiss a Participant from
employment or discontinue any directorship or consulting relationship, free from
any liability or any claim under the Plan, unless otherwise expressly provided
in the Plan or in any Award Agreement.

(i) No Rights as Stockholder. No Participant or holder or beneficiary of any
Award shall have any rights as a stockholder with respect to any Shares to be
distributed under the Plan until he or she has become the holder of such Shares.
In connection with each grant of Restricted Shares, except as provided in the
applicable Award Agreement, the Participant shall be entitled to the rights of a
stockholder (including the right to vote) in respect of such Restricted Shares.
Except as otherwise provided in Section 4(b), Section 7(c) or the applicable
Award Agreement, no adjustments shall be made for dividends or distributions on
(whether ordinary or extraordinary, and whether in cash, Shares, other
securities or other property), or other events relating to, Shares subject to an
Award for which the record date is prior to the date such Shares are delivered.

(j) Governing Law. The validity, construction and effect of the Plan and any
rules and regulations relating to the Plan and any Award Agreement shall be
determined in accordance with the laws of the State of Delaware, without giving
effect to the conflict of laws provisions thereof.

(k) Severability. If any provision of the Plan or any Award is or becomes or is
deemed to be invalid, illegal or unenforceable in any jurisdiction or as to any
Person or Award, or would disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed amended
to conform to the applicable laws, or if it cannot be construed or deemed
amended without, in the determination of the Committee, materially altering the
intent of the Plan or the Award, such provision shall be construed or deemed
stricken as to such jurisdiction, Person or

 

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Award and the remainder of the Plan and any such Award shall remain in full
force and effect.

(l) Other Laws; Restrictions on Transfer of Shares. The Committee may refuse to
issue or transfer any Shares or other consideration under an Award if, acting in
its sole and plenary discretion, it determines that the issuance or transfer of
such Shares or such other consideration might violate any applicable law or
regulation or entitle the Company to recover the same under Section 16(b) of the
Exchange Act, and any payment tendered to the Company by a Participant, other
holder or beneficiary in connection with the exercise of such Award shall be
promptly refunded to the relevant Participant, holder or beneficiary. Without
limiting the generality of the foregoing, no Award granted hereunder shall be
construed as an offer to sell securities of the Company, and no such offer shall
be outstanding, unless and until the Committee in its sole and plenary
discretion has determined that any such offer, if made, would be in compliance
with all applicable requirements of the U.S. Federal and any other applicable
securities laws.

(m) No Trust or Fund Created. Neither the Plan nor any Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate, on one hand, and a
Participant or any other Person, on the other. To the extent that any Person
acquires a right to receive payments from the Company or any Affiliate pursuant
to an Award, such right shall be no greater than the right of any unsecured
general creditor of the Company or such Affiliate.

(n) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash, other securities or other property shall be paid or transferred in lieu of
any fractional Shares or whether such fractional Shares or any rights thereto
shall be canceled, terminated or otherwise eliminated.

(o) Requirement of Consent and Notification of Election Under Section 83(b) of
the Code or Similar Provision. No election under Section 83(b) of the Code (to
include in gross income in the year of transfer the amounts specified in
Section 83(b) of the Code) or under a similar provision of law may be made
unless expressly permitted by the terms of the applicable Award Agreement or by
action of the Committee in writing prior to the making of such election. If an
Award recipient, in connection with the acquisition of Shares under the Plan or
otherwise, is expressly permitted under the terms of the applicable Award
Agreement or by such Committee action to make such an election and the
Participant makes the election, the Participant shall notify the Committee of
such election within ten days of filing notice of the election with the IRS or
other governmental authority, in addition to any filing and notification
required pursuant to regulations issued under Section 83(b) of the Code or any
other applicable provision.

(p) Requirement of Notification Upon Disqualifying Disposition Under
Section 421(b) of the Code. If any Participant shall make any disposition of
Shares delivered pursuant to the exercise of an Incentive Stock Option under the
circumstances described in Section 421(b) of the Code (relating to certain
disqualifying dispositions) or

 

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any successor provision of the Code, such Participant shall notify the Company
of such disposition within ten days of such disposition.

(q) Headings. Headings are given to the Sections and subsections of the Plan
solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.

SECTION 10. Term of the Plan. (a) Effective Date. The Plan shall be effective as
of the date of its adoption by the Board and approval by the Company’s
stockholders.

(b) Expiration Date. No Award shall be granted under the Plan after the tenth
anniversary of the date the Plan is approved by the Company’s stockholders under
Section 10(a). Unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award granted hereunder, and the authority of
the Board or the Committee to amend, alter, adjust, suspend, discontinue or
terminate any such Award or to waive any conditions or rights under any such
Award, shall nevertheless continue thereafter.

 

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