Exhibit 10.1

Zoran Corporation

2005 Outside Directors Equity Plan

TABLE OF CONTENTS

 

1.

  

ESTABLISHMENT, PURPOSE AND TERM OF PLAN

   1    1.1   

Establishment

   1    1.2   

Purpose

   1    1.3   

Term of Plan

   1

2.

  

DEFINITIONS AND CONSTRUCTION

   1    2.1   

Definitions

   1    2.2   

Construction

   5

3.

  

ADMINISTRATION

   5    3.1   

Administration by the Board

   5    3.2   

Authority of Officers

   5    3.3   

Powers of the Board

   5    3.4   

Option or SAR Repricing

   6    3.5   

Indemnification

   6

4.

  

SHARES SUBJECT TO PLAN

   6    4.1   

Maximum Number of Shares Issuable

   6    4.2   

Share Accounting

   7    4.3   

Adjustments for Changes in Capital Structure

   7

5.

  

ELIGIBILITY, PARTICIPATION AND AWARD LIMITATIONS

   7    5.1   

Persons Eligible for Awards

   7    5.2   

Annual Award Limits

   7

6.

  

OUTSIDE DIRECTOR AWARDS

   8

7.

  

STOCK OPTIONS

   8    7.1   

Exercise Price

   8    7.2   

Exercisability and Term of Options

   8    7.3   

Payment of Exercise Price

   8    7.4   

Effect of Termination of Service

   9    7.5   

Transferability of Options

   10

8.

  

STOCK APPRECIATION RIGHTS

   10    8.1   

Types of SARs Authorized

   10    8.2   

Exercise Price

   10    8.3   

Exercisability and Term of SARs

   10    8.4   

Exercise of SARs

   11

 

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   8.5   

Deemed Exercise of SARs

   11    8.6   

Effect of Termination of Service

   11    8.7   

Transferability of SARs

   11

9.

  

RESTRICTED STOCK UNIT AWARDS

   11    9.1   

Purchase Price

   11    9.2   

Vesting

   11    9.3   

Voting Rights, Dividend Equivalent Rights and Distributions

   11    9.4   

Effect of Termination of Service

   12    9.5   

Settlement of Restricted Stock Unit Awards

   12    9.6   

Nontransferability of Restricted Stock Unit Awards

   12

10.

  

DEFERRED COMPENSATION AWARDS

   12    10.1   

Establishment of Deferred Compensation Award Programs

   12    10.2   

Terms and Conditions of Deferred Compensation Awards

   13

11.

  

STANDARD FORMS OF AWARD AGREEMENT

   13    11.1   

Award Agreement

   13    11.2   

Authority to Vary Terms

   13

12.

  

CHANGE IN CONTROL

   13    12.1   

Effect of Change in Control on Options and SARs

   13    12.2   

Effect of Change in Control on Restricted Stock Unit Awards and Deferred
Compensation Awards

   14

13.

  

COMPLIANCE WITH SECURITIES LAW

   14

14.

  

TAX WITHHOLDING

   14    14.1   

Tax Withholding in General

   14    14.2   

Withholding in Shares

   15

15.

  

AMENDMENT OR TERMINATION OF PLAN

   15

16.

  

COMPLIANCE WITH SECTION 409A

   15    16.1   

Awards Subject to Section 409A

   15    16.2   

Deferral and/or Distribution Elections

   15    16.3   

Subsequent Elections

   16    16.4   

Distributions Pursuant to Deferral Elections

   16    16.5   

Unforeseeable Emergency

   16    16.6   

Disabled

   17    16.7   

Death

   17    16.8   

No Acceleration of Distributions

   17

17.

  

MISCELLANEOUS PROVISIONS

   17    17.1   

Repurchase Rights

   17    17.2   

Provision of Information

   17

 

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   17.3     

Rights as Outside Director

   18    17.4     

Rights as a Stockholder

   18    17.5     

Delivery of Title to Shares

   18    17.6     

Fractional Shares

   18    17.7     

Beneficiary Designation

   18    17.8     

Severability

   18    17.9     

No Constraint on Corporate Action

   18    17.10   

Unfunded Obligation

   18    17.11   

Choice of Law

   19

 

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Zoran Corporation

2005 Outside Directors Equity Plan

(Amended and Restated as of April 22, 2009)

1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

1.1 Establishment. The Zoran Corporation 2005 Outside Directors Equity Plan (the
“Plan”) is hereby established effective as of July 13, 2005 the date of its
approval by the stockholders of the Company (the “Effective Date”).

1.2 Purpose. The purpose of the Plan is to advance the interests of the
Participating Company Group and its stockholders by providing an incentive to
attract, retain and reward persons performing services as Outside Directors of
the Company and by motivating such persons to contribute to the growth and
profitability of the Participating Company Group. The Plan seeks to achieve this
purpose by providing for Awards in the form of Options, Stock Appreciation
Rights, Restricted Stock Units and Deferred Compensation Awards.

1.3 Term of Plan. The Plan shall continue in effect until its termination by the
Board; provided, however, that all Awards shall be granted, if at all, within
ten (10) years from the Effective Date.

2. DEFINITIONS AND CONSTRUCTION.

2.1 Definitions. Whenever used herein, the following terms shall have their
respective meanings set forth below:

(a) “Affiliate” means (i) an entity, other than a Parent Corporation, that
directly, or indirectly through one or more intermediary entities, controls the
Company or (ii) an entity, other than a Subsidiary Corporation, that is
controlled by the Company directly or indirectly through one or more
intermediary entities. For this purpose, the term “control” (including the term
“controlled by”) means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of the relevant
entity, whether through the ownership of voting securities, by contract or
otherwise; or shall have such other meaning assigned such term for the purposes
of registration on Form S-8 under the Securities Act.

(b) “Award” means any Option, Stock Appreciation Right, Restricted Stock Unit or
Deferred Compensation Award granted under the Plan.

(c) “Award Agreement” means a written or electronic agreement between the
Company and a Participant setting forth the terms, conditions and restrictions
of the Award granted to the Participant.

(d) “Board” means the Board of Directors of the Company. If one or more
Committees have been appointed by the Board to administer the Plan, “Board” also
means such Committee(s).

(e) “Change in Control” means, unless such term or an equivalent term is
otherwise defined with respect to an Award by the Participant’s Award Agreement,
the occurrence of any of the following:

(i) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than (1) a trustee or other fiduciary holding securities of
the Company under an employee benefit plan of a Participating Company or (2) a
corporation owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of the stock of the
Company, becomes the “beneficial owner” (as defined in Rule 13d-3 promulgated
under the Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of (i) the outstanding shares of common
stock of

 

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the Company or (ii) the total combined voting power of the Company’s
then-outstanding securities entitled to vote generally in the election of
directors; or

(ii) an Ownership Change Event or series of related Ownership Change Events
(collectively, a “Transaction”) in which the stockholders of the Company
immediately before the Transaction do not retain immediately after the
Transaction direct or indirect beneficial ownership of more than fifty percent
(50%) of the total combined voting power of the outstanding voting securities of
the Company or, in the case of an Ownership Change Event described in
Section 2.1(w)(iii), the entity to which the assets of the Company were
transferred (the “Transferee”), as the case may be; or

(iii) a liquidation or dissolution of the Company.

For purposes of the preceding sentence, indirect beneficial ownership shall
include, without limitation, an interest resulting from ownership of the voting
securities of one or more corporations or other business entities which own the
Company or the Transferee, as the case may be, either directly or through one or
more subsidiary corporations or other business entities. The Board shall have
the right to determine whether multiple sales or exchanges of the voting
securities of the Company or multiple Ownership Change Events are related, and
its determination shall be final, binding and conclusive.

(f) “Code” means the Internal Revenue Code of 1986, as amended, and any
applicable regulations promulgated thereunder.

(g) “Committee” means the Compensation Committee and such other committee or
subcommittee of the Board, if any, duly appointed to administer the Plan and
having such powers in each instance as shall be specified by the Board. Unless
the powers of the Committee have been specifically limited, the Committee shall
have all of the powers of the Board granted herein, including, without
limitation, the power to amend or terminate the Plan at any time, subject to the
terms of the Plan and any applicable limitations imposed by law.

(h) “Company” means Zoran Corporation, a Delaware corporation, or any successor
corporation thereto.

(i) “Consultant” means a person engaged to provide consulting or advisory
services (other than as an Employee or a Director) to a Participating Company.

(j) “Deferred Compensation Award” means an award granted to a Participant
pursuant to Section 10.

(k) “Director” means a member of the Board.

(l) “Disability” means the permanent and total disability of the Participant
within the meaning of Section 22(e)(3) of the Code.

(m) “Dividend Equivalent” means a credit, made at the discretion of the Board or
as otherwise provided by the Plan, to the account of a Participant in an amount
equal to the cash dividends paid on one share of Stock for each share of Stock
represented by an Award held by such Participant.

(n) “Employee” means any person treated as an employee (including an Officer or
a Director who is also treated as an employee) in the records of a Participating
Company; provided, however, that neither service as a Director nor payment of a
director’s fee shall be sufficient to constitute employment for purposes of the
Plan.

(o) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

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(p) “Fair Market Value” means, as of any date, the value of a share of Stock or
other property as determined by the Board, in its discretion, or by the Company,
in its discretion, if such determination is expressly allocated to the Company
herein, subject to the following:

(i) Except as otherwise determined by the Board, if, on such date, the Stock is
listed on a national or regional securities exchange or market system, the Fair
Market Value of a share of Stock shall be the closing price of a share of Stock
as quoted on the Nasdaq Global Market or such other national or regional
securities exchange or market system constituting the primary market for the
Stock, as reported in The Wall Street Journal or such other source as the
Company deems reliable. If the relevant date does not fall on a day on which the
Stock has traded on such securities exchange or market system, the date on which
the Fair Market Value shall be established shall be the last day on which the
Stock was so traded prior to the relevant date, or such other appropriate day as
shall be determined by the Board, in its discretion.

(ii) Notwithstanding the foregoing, the Board may, in its discretion, determine
the Fair Market Value on the basis of the opening, closing, or average of the
high and low sale prices of a share of Stock on such date, the preceding trading
day or the next succeeding trading day; and, for purposes other than determining
the exercise price or purchase price of shares pursuant to an Award, the high or
low sale price of a share of Stock on such date, the preceding trading day or
the next succeeding trading day, the average of any such prices determined over
a period of trading days or the actual sale price of a share of Stock received
by a Participant. The Board may vary its method of determination of the Fair
Market Value as provided in this Section for different purposes under the Plan.

(iii) If, on such date, the Stock is not listed on a national or regional
securities exchange or market system, the Fair Market Value of a share of Stock
shall be as determined by the Board in good faith without regard to any
restriction other than a restriction which, by its terms, will never lapse.

(q) “Full Value Award” means any Award settled in Stock, other than (i) an
Option, (ii) a Stock Appreciation Right or (iii) a Deferred Compensation Award
which is an elective cash compensation reduction award described in
Section 10.1(a) or a stock issuance deferral award described in Section 10.1(b).

(r) “Insider Trading Policy” means the written policy of the Company pertaining
to the purchase, sale, transfer or other disposition of the Company’s equity
securities by Directors, Officers, Employees or other service providers who may
possess material, nonpublic information regarding the Company or its securities.

(s) “Net-Exercise” means a procedure by which the Participant will be issued a
number of shares of Stock determined in accordance with the following formula:

N = X(A-B)/A, where

“N” = the number of shares of Stock to be issued to the Participant upon
exercise of the Option;

“X” = the total number of shares with respect to which the Participant has
elected to exercise the Option;

“A” = the Fair Market Value of one (1) share of Stock determined on the exercise
date; and

“B” = the exercise price per share (as defined in the Participant’s Award
Agreement)

(t) “Officer” means any person designated by the Board as an officer of the
Company.

(u) “Option” means a right to purchase Stock granted to a Participant pursuant
to Section 7. Each Option shall be a nonstatutory stock option, that is an
option not intended to qualify as an incentive stock option within the meaning
of Section 422(b) of the Code.

 

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(v) “Outside Director” means a Director who is not an Employee.

(w) “Ownership Change Event” means the occurrence of any of the following with
respect to the Company: (i) the direct or indirect sale or exchange in a single
or series of related transactions by the stockholders of the Company of more
than fifty percent (50%) of the voting stock of the Company; (ii) a merger or
consolidation in which the Company is a party; or (iii) the sale, exchange, or
transfer of all or substantially all of the assets of the Company (other than a
sale, exchange or transfer to one or more subsidiaries of the Company).

(x) “Parent Corporation” means any present or future “parent corporation” of the
Company, as defined in Section 424(e) of the Code.

(y) “Participant” means any eligible person who has been granted one or more
Awards.

(z) “Participating Company” means the Company or any Parent Corporation,
Subsidiary Corporation or Affiliate.

(aa) “Participating Company Group” means, at any point in time, all entities
collectively which are then Participating Companies.

(bb) “Restricted Stock Unit” or “Stock Unit” means a right granted to a
Participant pursuant to Section 9 or Section 10, respectively, to receive a
share of Stock on a date determined in accordance with the provisions of such
Sections, as applicable, and the Participant’s Award Agreement.

(cc) “Retirement” means a termination of the Participant’s Service as a result
of either of the following, provided that the Participant has served
continuously on the Board for at least two (2) years: (i) the Participant’s
resignation from the Board or (ii) the expiration of the Participant’s term as a
Director after the Participant has declined to stand for reelection.

(dd) “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended from time
to time, or any successor rule or regulation.

(ee) “SAR” or “Stock Appreciation Right” means a right granted to a Participant
pursuant to Section 8 to receive payment, for each share of Stock subject to
such SAR, of an amount equal to the excess, if any, of the Fair Market Value of
a share of Stock on the date of exercise of the SAR over the exercise price.

(ff) “Section 409A” means Section 409A of the Code (including regulations or
administrative guidelines thereunder).

(gg) “Securities Act” means the Securities Act of 1933, as amended.

(hh) “Service” means a Participant’s employment or service with the
Participating Company Group, whether in the capacity of an Employee, a Director,
or a Consultant. A Participant’s Service shall not be deemed to have terminated
merely because of a change in the capacity in which the Participant renders such
Service or a change in the Participating Company for which the Participant
renders such Service, provided that there is no interruption or termination of
the Participant’s Service. Furthermore, a Participant’s Service shall not be
deemed to have terminated if the Participant takes any military leave, sick
leave, or other bona fide leave of absence approved by the Company. However, if
any such leave taken by a Participant exceeds ninety (90) days, then on the
ninety-first (91st) day following the commencement of such leave the
Participant’s Service shall be deemed to have terminated, unless the
Participant’s right to return to Service is guaranteed by statute or contract.
Notwithstanding the foregoing, unless otherwise designated by the Company or
required by law, a leave of absence shall not be treated as Service for purposes
of determining vesting under the Participant’s Award Agreement. A Participant’s
Service shall be deemed to have terminated either upon an actual termination of
Service or upon the entity for which the Participant performs Service ceasing to
be a Participating Company. Subject to the foregoing, the Company, in

 

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its discretion, shall determine whether the Participant’s Service has terminated
and the effective date of such termination.

(ii) “Stock” means the common stock of the Company, as adjusted from time to
time in accordance with Section 4.3.

(jj) “Subsidiary Corporation” means any present or future “subsidiary
corporation” of the Company, as defined in Section 424(f) of the Code.

(kk) “Vesting Conditions” mean those conditions established in accordance with
the Plan prior to the satisfaction of which shares subject to an Award remain
subject to forfeiture or a repurchase option in favor of the Company exercisable
for the Participant’s purchase price for such shares upon the Participant’s
termination of Service.

2.2 Construction. Captions and titles contained herein are for convenience only
and shall not affect the meaning or interpretation of any provision of the Plan.
Except when otherwise indicated by the context, the singular shall include the
plural and the plural shall include the singular. Use of the term “or” is not
intended to be exclusive, unless the context clearly requires otherwise.

3. ADMINISTRATION.

3.1 Administration by the Board. The Plan shall be administered by the Board,
including any duly appointed Committee of the Board. At any time that any
class of equity security of the Company is registered pursuant to Section 12 of
the Exchange Act, the Plan shall be administered in compliance with the
requirements, if any, of Rule 16b-3. All questions of interpretation of the Plan
or of any Award shall be determined by the Board, and such determinations shall
be final and binding upon all persons having an interest in the Plan or such
Award.

3.2 Authority of Officers. Any Officer shall have the authority to act on behalf
of the Company with respect to any matter, right, obligation, determination or
election which is the responsibility of or which is allocated to the Company
herein, provided the Officer has apparent authority with respect to such matter,
right, obligation, determination or election.

3.3 Powers of the Board. In addition to any other powers set forth in the Plan
and subject to the provisions of the Plan, the Board shall have the full and
final power and authority, in its discretion:

(a) to determine the persons to whom, and the time or times at which, Awards
shall be granted and the number of shares of Stock or units to be subject to
each Award;

(b) to determine the type of Award granted;

(c) to determine the Fair Market Value of shares of Stock or other property;

(d) to determine the terms, conditions and restrictions applicable to each Award
(which need not be identical) and any shares acquired pursuant thereto,
including, without limitation, (i) the exercise or purchase price of shares
pursuant to any Award, (ii) the method of payment for shares purchased pursuant
to any Award, (iii) the method for satisfaction of any tax withholding
obligation arising in connection with Award, including by the withholding or
delivery of shares of Stock, (iv) the timing, terms and conditions of the
exercisability or vesting of any Award or any shares acquired pursuant thereto,
(v) the time of the expiration of any Award, (vi) the effect of the
Participant’s termination of Service on any of the foregoing, and (vii) all
other terms, conditions and restrictions applicable to any Award or shares
acquired pursuant thereto not inconsistent with the terms of the Plan;

(e) to approve one or more forms of Award Agreement;

 

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(f) to amend, modify, extend, cancel or renew any Award or to waive any
restrictions or conditions applicable to any Award or any shares acquired
pursuant thereto;

(g) to accelerate, continue, extend or defer the exercisability or vesting of
any Award or any shares acquired pursuant thereto, including with respect to the
period following a Participant’s termination of Service;

(h) without the consent of the affected Participant and notwithstanding the
provisions of any Award Agreement to the contrary, to unilaterally substitute at
any time a Stock Appreciation Right providing for settlement solely in shares of
Stock in place of any outstanding Option, provided that such Stock Appreciation
Right covers the same number of shares of Stock and provides for the same
exercise price (subject in each case to adjustment in accordance with
Section 4.3) as the replaced Option and otherwise provides substantially
equivalent terms and conditions as the replaced Option, as determined by the
Board;

(i) to prescribe, amend or rescind rules, guidelines and policies relating to
the Plan, or to adopt sub-plans or supplements to, or alternative versions of,
the Plan, including, without limitation, as the Board deems necessary or
desirable to comply with the laws or regulations of or to accommodate the tax
policy, accounting principles or custom of, foreign jurisdictions whose citizens
may be granted Awards; and

(j) to correct any defect, supply any omission or reconcile any inconsistency in
the Plan or any Award Agreement and to make all other determinations and take
such other actions with respect to the Plan or any Award as the Board may deem
advisable to the extent not inconsistent with the provisions of the Plan or
applicable law.

3.4 Option or SAR Repricing. Without the affirmative vote of holders of a
majority of the shares of Stock cast in person or by proxy at a meeting of the
stockholders of the Company at which a quorum representing a majority of all
outstanding shares of Stock is present or represented by proxy, the Board shall
not approve either (a) the cancellation of outstanding Options or SARs and the
grant in substitution therefor of new Options or SARs having a lower exercise
price or (b) the amendment of outstanding Options or SARs to reduce the exercise
price thereof or (c) the cancellation of outstanding Options or SARs in exchange
for cash or other awards for the purpose of repricing the Option or SAR.

3.5 Indemnification. In addition to such other rights of indemnification as they
may have as members of the Board or officers or employees of the Participating
Company Group, members of the Board and any officers or employees of the
Participating Company Group to whom authority to act for the Board or the
Company is delegated shall be indemnified by the Company against all reasonable
expenses, including attorneys’ fees, actually and necessarily incurred in
connection with the defense of any action, suit or proceeding, or in connection
with any appeal therein, to which they or any of them may be a party by reason
of any action taken or failure to act under or in connection with the Plan, or
any right granted hereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any
such action, suit or proceeding, except in relation to matters as to which it
shall be adjudged in such action, suit or proceeding that such person is liable
for gross negligence, bad faith or intentional misconduct in duties; provided,
however, that within sixty (60) days after the institution of such action, suit
or proceeding, such person shall offer to the Company, in writing, the
opportunity at its own expense to handle and defend the same.

4. SHARES SUBJECT TO PLAN.

4.1 Maximum Number of Shares Issuable. Subject to adjustment as provided in
Sections 4.2 and 4.3, the maximum aggregate number of shares of Stock that may
be issued under the Plan shall be equal to one million two hundred thousand
(1,200,000) shares, and shall consist of authorized but unissued or reacquired
shares of Stock or any combination thereof.

 

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4.2 Share Accounting.

(a) Each share of Stock subject to an Award other than a Full Value Award shall
be counted against the limit set forth in Section 4.1 as one (1) share. Each
share of Stock subject to a Full Value Award shall be counted against the limit
set forth in Section 4.1 as one and three-tenths (1.3) shares.

(b) If an outstanding Award for any reason expires or is terminated or canceled
without having been exercised or settled in full, or if shares of Stock acquired
pursuant to an Award subject to forfeiture or repurchase are forfeited or
repurchased by the Company for an amount not greater than the Participant’s
purchase price, the shares of Stock allocable to the terminated portion of such
Award or such forfeited or repurchased shares of Stock shall again be available
for issuance under the Plan. Shares withheld or reacquired by the Company in
satisfaction of tax withholding obligations pursuant to Section 14.2 shall not
again be available for issuance under the Plan. Upon payment in shares of Stock
pursuant to the exercise of an SAR, the number of shares available for issuance
under the Plan shall be reduced by the gross number of shares for which the SAR
is exercised. If the exercise price of an Option is paid by tender to the
Company, or attestation to the ownership, of shares of Stock owned by the
Participant, or by means of a Net-Exercise, the number of shares available for
issuance under the Plan shall be reduced by the gross number of shares for which
the Option is exercised.

4.3 Adjustments for Changes in Capital Structure. Subject to any required action
by the stockholders of the Company, in the event of any change in the Stock
effected without receipt of consideration by the Company, whether through
merger, consolidation, reorganization, reincorporation, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, split-up,
split-off, spin-off, combination of shares, exchange of shares, or similar
change in the capital structure of the Company, or in the event of payment of a
dividend or distribution to the stockholders of the Company in a form other than
Stock (excepting normal cash dividends) that has a material effect on the Fair
Market Value of shares of Stock, appropriate adjustments shall be made in the
number and kind of shares subject to the Plan and to any outstanding Awards, in
the Award limits set forth in Section 5.2 and in the exercise or purchase price
per share under any outstanding Award in order to prevent dilution or
enlargement of Participants’ rights under the Plan. For purposes of the
foregoing, conversion of any convertible securities of the Company shall not be
treated as “effected without receipt of consideration by the Company.” If a
majority of the shares which are of the same class as the shares that are
subject to outstanding Awards are exchanged for, converted into, or otherwise
become (whether or not pursuant to an Ownership Change Event) shares of another
corporation (the “New Shares”), the Board may unilaterally amend the outstanding
Awards to provide that such Awards are for New Shares. In the event of any such
amendment, the number of shares subject to, and the exercise or purchase price
per share of, the outstanding Awards shall be adjusted in a fair and equitable
manner as determined by the Board, in its discretion. Any fractional share
resulting from an adjustment pursuant to this Section 4.3 shall be rounded down
to the nearest whole number, and in no event may the exercise or purchase price
under any Award be decreased to an amount less than the par value, if any, of
the stock subject to such Award. The Board in its sole discretion, may also make
such adjustments in the terms of any Award to reflect, or related to, such
changes in the capital structure of the Company or distributions as it deems
appropriate. The adjustments determined by the Board pursuant to this
Section shall be final, binding and conclusive.

5. ELIGIBILITY, PARTICIPATION AND AWARD LIMITATIONS.

5.1 Persons Eligible for Awards. Only those persons who, at the time of grant,
are serving as Outside Directors shall be eligible to become Participants and to
be granted Awards.

5.2 Annual Award Limits. Subject to adjustment as provided in Section 4.3, no
Participant may be granted within any fiscal year of the Company one or more
Awards for more than twenty thousand (20,000) shares; provided, however, that
the foregoing annual limit shall be increased by one or more of the following
additions, as applicable: (i) an additional forty thousand (40,000) shares in
the fiscal year in which the Participant is first appointed or elected to the
Board as an Outside Director, (ii) an additional ten thousand (10,000) shares in
any fiscal year in which the Participant is serving as the Chairman of the Board
or Lead Director, (iii) an additional two thousand five hundred (2,500) shares
per committee in any fiscal year in which the Participant is serving on one or
more committees of the Board other than as the chairman of the committee, and
(iv) an additional five thousand (5,000) shares per committee in any fiscal year
in which the Participant is serving on one or more committees of the Board as
the chairman of the committee.

 

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6. OUTSIDE DIRECTOR AWARDS.

From time to time, the Board shall set the amount(s) and type(s) of Awards that
shall be granted to all Outside Directors on a periodic, nondiscriminatory basis
pursuant to the Plan, as well as the additional amount(s) and type(s) of Awards,
if any, to be awarded, also on a periodic, nondiscriminatory basis, in
consideration of one or more of the following: (a) the initial election or
appointment of an individual to the Board as an Outside Director, (b) an Outside
Director’s service as Chairman of the Board or Lead Director, (c) an Outside
Director’s service other than as chairman on one or more of the committees of
the Board, and (d) an Outside Director’s service as the chairman of one or more
committees of the Board. The terms and conditions of each Award shall comply
with the applicable provisions of the Plan. Subject to the limits set forth in
Section 5.2 and the foregoing, the Board shall grant Awards having such terms
and conditions as it shall from time to time determine.

7. STOCK OPTIONS.

Options shall be evidenced by Award Agreements specifying the number of shares
of Stock covered thereby, in such form as the Board shall from time to time
establish. No Option or purported Option shall be a valid and binding obligation
of the Company unless evidenced by a fully executed Award Agreement. Award
Agreements evidencing Options may incorporate all or any of the terms of the
Plan by reference, including the provisions of Section 16 with respect to
Section 409A if applicable, and shall comply with and be subject to the
following terms and conditions:

7.1 Exercise Price. The exercise price for each Option shall be the Fair Market
Value of a share of Stock on the effective date of grant of the Option.
Notwithstanding the foregoing, an Option may be granted with an exercise price
lower than the minimum exercise price set forth above if such Option is granted
pursuant to an assumption or substitution for another option in a manner that
would qualify under the provisions of Section 424(a) of the Code.

7.2 Exercisability and Term of Options. Options shall be exercisable at such
time or times, or upon such event or events, and subject to such terms,
conditions, performance criteria and restrictions as shall be determined by the
Board and set forth in the Award Agreement evidencing such Option; provided,
however, that no Option shall be exercisable after the expiration of ten
(10) years after the effective date of grant of such Option. Subject to the
foregoing, unless otherwise specified by the Board in the grant of an Option,
each Option shall terminate ten (10) years after the effective date of grant of
the Option, unless earlier terminated in accordance with its provisions.

7.3 Payment of Exercise Price.

(a) Forms of Consideration Authorized. Except as otherwise provided below,
payment of the exercise price for the number of shares of Stock being purchased
pursuant to any Option shall be made (i) in cash or by check or cash equivalent,
(ii) by tender to the Company, or attestation to the ownership, of shares of
Stock owned by the Participant having a Fair Market Value not less than the
exercise price, (iii) by delivery of a properly executed notice of exercise
together with irrevocable instructions to a broker providing for the assignment
to the Company of the proceeds of a sale or loan with respect to some or all of
the shares being acquired upon the exercise of the Option (including, without
limitation, through an exercise complying with the provisions of Regulation T as
promulgated from time to time by the Board of Governors of the Federal Reserve
System) (a “Cashless Exercise”), (iv) by delivery of a properly executed notice
electing a Net-Exercise, (v) by such other consideration as may be approved by
the Board from time to time to the extent permitted by applicable law, or
(vi) by any combination thereof. The Board may at any time or from time to time
grant Options which do not permit all of the foregoing forms of consideration to
be used in payment of the exercise price or which otherwise restrict one or more
forms of consideration.

(b) Limitations on Forms of Consideration.

(i) Tender of Stock. Notwithstanding the foregoing, an Option may not be
exercised by tender to the Company, or attestation to the ownership, of shares
of Stock to the extent such tender

 

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or attestation would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company’s stock.

(ii) Cashless Exercise. The Company reserves, at any and all times, the right,
in the Company’s sole and absolute discretion, to establish, decline to approve
or terminate any program or procedures for the exercise of Options by means of a
Cashless Exercise, including with respect to one or more Participants specified
by the Company notwithstanding that such program or procedures may be available
to other Participants.

7.4 Effect of Termination of Service.

(a) Option Exercisability. Subject to earlier termination of the Option as
otherwise provided herein and unless otherwise provided by the Board in the
grant of an Option and set forth in the Award Agreement, an Option shall
terminate immediately upon the Participant’s termination of Service to the
extent that it is then unvested and shall be exercisable after the Participant’s
termination of Service to the extent it is then vested only during the
applicable time period determined in accordance with this Section and thereafter
shall terminate:

(i) Disability. If the Participant’s Service terminates because of the
Disability of the Participant, the Option, to the extent unexercised and
exercisable for vested shares on the date on which the Participant’s Service
terminated, may be exercised by the Participant (or the Participant’s guardian
or legal representative) at any time prior to the expiration of twelve
(12) months after the date on which the Participant’s Service terminated, but in
any event no later than the date of expiration of the Option’s term as set forth
in the Award Agreement evidencing such Option (the “Option Expiration Date”);
provided, however, that if the Participant has served continuously on the Board
for at least two (2) years prior to such termination of Service, the Option, to
the extent unexercised and exercisable for vested shares on the date on which
the Participant’s Service terminated, may be exercised by the Participant (or
the Participant’s guardian or legal representative) at any time prior to the
Option Expiration Date.

(ii) Death. If the Participant’s Service terminates because of the death of the
Participant, the Option, to the extent unexercised and exercisable for vested
shares on the date on which the Participant’s Service terminated, may be
exercised by the Participant’s legal representative or other person who acquired
the right to exercise the Option by reason of the Participant’s death at any
time prior to the expiration of twelve (12) months after the date on which the
Participant’s Service terminated, but in any event no later than the Option
Expiration Date; provided, however, that if the Participant has served
continuously on the Board for at least two (2) years prior to such termination
of Service, the Option, to the extent unexercised and exercisable for vested
shares on the date on which the Participant’s Service terminated, may be
exercised by the Participant (or the Participant’s guardian or legal
representative) at any time prior to the Option Expiration Date. The
Participant’s Service shall be deemed to have terminated on account of death if
the Participant dies within three (3) months after the Participant’s termination
of Service.

(iii) Retirement. If the Participant’s Service terminates because of the
Retirement of the Participant, the Option, to the extent unexercised and
exercisable for vested shares on the date on which the Participant’s Service
terminated, may be exercised at any time prior to the Option Expiration Date.

(iv) Other Termination of Service. If the Participant’s Service terminates for
any reason, except Disability, death or Retirement, the Option, to the extent
unexercised and exercisable for vested shares on the date on which the
Participant’s Service terminated, may be exercised by the Participant at any
time prior to the expiration of three (3) months after the date on which the
Participant’s Service terminated, but in any event no later than the Option
Expiration Date.

(b) Extension if Exercise Prevented by Law. Notwithstanding the foregoing, if
the exercise of an Option within the applicable time periods set forth in
Section 7.4(a) is prevented by the provisions of Section 13 below, the Option
shall remain exercisable until three (3) months after the date the Participant
is notified by the Company that the Option is exercisable, but in any event no
later than the Option Expiration Date.

 

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(c) Extension if Participant Subject to Section 16(b). Notwithstanding the
foregoing, if a sale within the applicable time periods set forth in
Section 7.4(a) of shares acquired upon the exercise of the Option would subject
the Participant to suit under Section 16(b) of the Exchange Act, the Option
shall remain exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which a sale of such shares by the Participant would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day
after the Participant’s termination of Service, or (iii) the Option Expiration
Date.

7.5 Transferability of Options. During the lifetime of the Participant, an
Option shall be exercisable only by the Participant or the Participant’s
guardian or legal representative. An Option shall not be subject in any manner
to anticipation, alienation, sale, exchange, transfer, assignment, pledge,
encumbrance, or garnishment by creditors of the Participant or the Participant’s
beneficiary, except transfer by will or by the laws of descent and distribution.
Notwithstanding the foregoing, an Option shall be assignable or transferable
subject to the applicable limitations, if any, described in the General
Instructions to Form S-8 Registration Statement under the Securities Act.

8. STOCK APPRECIATION RIGHTS.

Stock Appreciation Rights shall be evidenced by Award Agreements specifying the
number of shares of Stock subject to the Award, in such form as the Board shall
from time to time establish. No SAR or purported SAR shall be a valid and
binding obligation of the Company unless evidenced by a fully executed Award
Agreement. Award Agreements evidencing SARs may incorporate all or any of the
terms of the Plan by reference, including provisions of Section 16 with respect
to Section 409A if applicable, and shall comply with and be subject to the
following terms and conditions:

8.1 Types of SARs Authorized. SARs may be granted in tandem with all or any
portion of a related Option (a “Tandem SAR”) or may be granted independently of
any Option (a “Freestanding SAR”). A Tandem SAR may only be granted concurrently
with the grant of the related Option.

8.2 Exercise Price. The exercise price for each SAR shall be established in the
discretion of the Board; provided, however, that (a) the exercise price per
share subject to a Tandem SAR shall be the exercise price per share under the
related Option and (b) the exercise price per share subject to a Freestanding
SAR shall be not less than the Fair Market Value of a share of Stock on the
effective date of grant of the SAR.

8.3 Exercisability and Term of SARs.

(a) Tandem SARs. Tandem SARs shall be exercisable only at the time and to the
extent, and only to the extent, that the related Option is exercisable, subject
to such provisions as the Board may specify where the Tandem SAR is granted with
respect to less than the full number of shares of Stock subject to the related
Option. The Board may, in its discretion, provide in any Award Agreement
evidencing a Tandem SAR that such SAR may not be exercised without the advance
approval of the Company and, if such approval is not given, then the Option
shall nevertheless remain exercisable in accordance with its terms. A Tandem SAR
shall terminate and cease to be exercisable no later than the date on which the
related Option expires or is terminated or canceled. Upon the exercise of a
Tandem SAR with respect to some or all of the shares subject to such SAR, the
related Option shall be canceled automatically as to the number of shares with
respect to which the Tandem SAR was exercised. Upon the exercise of an Option
related to a Tandem SAR as to some or all of the shares subject to such Option,
the related Tandem SAR shall be canceled automatically as to the number of
shares with respect to which the related Option was exercised.

(b) Freestanding SARs. Freestanding SARs shall be exercisable at such time or
times, or upon such event or events, and subject to such terms, conditions,
performance criteria and restrictions as shall be determined by the Board and
set forth in the Award Agreement evidencing such SAR; provided, however, that no
Freestanding SAR shall be exercisable after the expiration of ten (10) years
after the effective date of grant of such SAR.

 

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8.4 Exercise of SARs. Upon the exercise (or deemed exercise pursuant to
Section 8.5) of an SAR, the Participant (or the Participant’s legal
representative or other person who acquired the right to exercise the SAR by
reason of the Participant’s death) shall be entitled to receive payment of an
amount for each share with respect to which the SAR is exercised equal to the
excess, if any, of the Fair Market Value of a share of Stock on the date of
exercise of the SAR over the exercise price. Payment of such amount shall be
made solely in shares of Stock. Unless otherwise provided in the Award Agreement
evidencing a Freestanding SAR, payment upon the exercise of each SAR shall be
made in a lump sum as soon as practicable following the date of exercise of the
SAR. The Award Agreement evidencing any Freestanding SAR may provide for
deferred payment in a lump sum or in installments in compliance with
Section 409A. The number of shares to be issued in payment of an SAR shall be
determined on the basis of the Fair Market Value of a share of Stock on the date
of exercise of the SAR. For purposes of Section 8, an SAR shall be deemed
exercised on the date on which the Company receives notice of exercise from the
Participant or as otherwise provided in Section 8.5.

8.5 Deemed Exercise of SARs. If, on the date on which an SAR would otherwise
terminate or expire, the SAR by its terms remains exercisable immediately prior
to such termination or expiration and, if so exercised, would result in a
payment to the holder of such SAR, then any portion of such SAR which has not
previously been exercised shall automatically be deemed to be exercised as of
such date with respect to such portion.

8.6 Effect of Termination of Service. Subject to earlier termination of the SAR
as otherwise provided herein and unless otherwise provided by the Board in the
grant of an SAR and set forth in the Award Agreement, an SAR shall be
exercisable after a Participant’s termination of Service only to the extent and
during the applicable time period determined in accordance with Section 7.4
(treating the SAR as if it were an Option) and thereafter shall terminate.

8.7 Transferability of SARs. During the lifetime of the Participant, an SAR
shall be exercisable only by the Participant or the Participant’s guardian or
legal representative. An SAR shall not be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or
garnishment by creditors of the Participant or the Participant’s beneficiary,
except transfer by will or by the laws of descent and distribution.
Notwithstanding the foregoing, an SAR shall be assignable or transferable
subject to the applicable limitations, if any, described in the General
Instructions to Form S-8 Registration Statement under the Securities Act.

9. RESTRICTED STOCK UNIT AWARDS.

Restricted Stock Unit Awards shall be evidenced by Award Agreements specifying
the number of Restricted Stock Units subject to the Award, in such form as the
Board shall from time to time establish. No Restricted Stock Unit Award or
purported Restricted Stock Unit Award shall be a valid and binding obligation of
the Company unless evidenced by a fully executed Award Agreement. Award
Agreements evidencing Restricted Stock Units may incorporate all or any of the
terms of the Plan by reference, including the provisions of Section 16 with
respect to Section 409A, if applicable, and shall comply with and be subject to
the following terms and conditions:

9.1 Purchase Price. No monetary payment (other than applicable tax withholding,
if any) shall be required as a condition of receiving a Restricted Stock Unit
Award, the consideration for which shall be services actually rendered to a
Participating Company or for its benefit. Notwithstanding the foregoing, if
required by applicable state corporate law, the Participant shall furnish
consideration in the form of cash or past services rendered to a Participating
Company or for its benefit having a value not less than the par value of the
shares of Stock issued upon settlement of the Restricted Stock Unit Award.

9.2 Vesting. Restricted Stock Units shall be made subject to Vesting Conditions
based upon the satisfaction of such Service requirements, conditions,
restrictions or performance criteria as shall be established by the Board and
set forth in the Award Agreement evidencing such Award.

9.3 Voting Rights, Dividend Equivalent Rights and Distributions. Participants
shall have no voting rights with respect to shares of Stock represented by
Restricted Stock Units until the date of the issuance of such shares (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company). However, the Board, in its
discretion, may provide in the Award Agreement evidencing any

 

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Restricted Stock Unit Award that the Participant shall be entitled to receive
Dividend Equivalents with respect to the payment of cash dividends on Stock
during the period beginning on the date such Award is granted and ending, with
respect to the particular shares subject to the Award, on the earlier of the
date the Award is settled or the date on which it is terminated. Such Dividend
Equivalents, if any, shall be paid by crediting the Participant with additional
whole Restricted Stock Units as of the date of payment of such cash dividends on
Stock. The number of additional Restricted Stock Units (rounded to the nearest
whole number) to be so credited shall be determined by dividing (a) the amount
of cash dividends paid on such date with respect to the number of shares of
Stock represented by the Restricted Stock Units previously credited to the
Participant by (b) the Fair Market Value per share of Stock on such date. Such
additional Restricted Stock Units shall be subject to the same terms and
conditions and shall be settled in the same manner and at the same time (or as
soon thereafter as practicable) as the Restricted Stock Units originally subject
to the Restricted Stock Unit Award. In the event of a dividend or distribution
paid in shares of Stock or other property or any other adjustment made upon a
change in the capital structure of the Company as described in Section 4.3,
appropriate adjustments shall be made in the Participant’s Restricted Stock Unit
Award so that it represents the right to receive upon settlement any and all
new, substituted or additional securities or other property (other than normal
cash dividends) to which the Participant would be entitled by reason of the
shares of Stock issuable upon settlement of the Award, and all such new,
substituted or additional securities or other property shall be immediately
subject to the same Vesting Conditions as are applicable to the Award.

9.4 Effect of Termination of Service. Unless otherwise provided by the Board and
set forth in the Award Agreement evidencing a Restricted Stock Unit Award, if a
Participant’s Service terminates for any reason, whether voluntary or
involuntary (including the Participant’s death or disability), then the
Participant shall forfeit to the Company any Restricted Stock Units pursuant to
the Award which remain subject to Vesting Conditions as of the date of the
Participant’s termination of Service.

9.5 Settlement of Restricted Stock Unit Awards. The Company shall issue to a
Participant on the date on which Restricted Stock Units subject to the
Participant’s Restricted Stock Unit Award vest or on such other date determined
by the Board, in its discretion, and set forth in the Award Agreement one
(1) share of Stock (and/or any other new, substituted or additional securities
or other property pursuant to an adjustment described in Section 9.3) for each
Restricted Stock Unit then becoming vested or otherwise to be settled on such
date, subject to the withholding of applicable taxes, if any. If permitted by
the Board, subject to the provisions of Section 16 with respect to Section 409A,
the Participant may elect in accordance with terms specified in the Award
Agreement to defer receipt of all or any portion of the shares of Stock or other
property otherwise issuable to the Participant pursuant to this Section, and
such deferred issuance date(s) elected by the Participant shall be set forth in
the Award Agreement. The Board, in its discretion, may provide in any Award
Agreement evidencing a Restricted Stock Unit Award that, if the settlement of
the Award with respect to any shares would otherwise occur on a day on which the
sale of such shares would violate the Company’s Insider Trading Policy, then the
settlement with respect to such shares shall occur on the next day on which the
sale of such shares would not violate the Insider Trading Policy.

9.6 Nontransferability of Restricted Stock Unit Awards. The right to receive
shares pursuant to a Restricted Stock Unit Award shall not be subject in any
manner to anticipation, alienation, sale, exchange, transfer, assignment,
pledge, encumbrance, or garnishment by creditors of the Participant or the
Participant’s beneficiary, except transfer by will or by the laws of descent and
distribution. All rights with respect to a Restricted Stock Unit Award granted
to a Participant hereunder shall be exercisable during his or her lifetime only
by such Participant or the Participant’s guardian or legal representative.

10. DEFERRED COMPENSATION AWARDS.

10.1 Establishment of Deferred Compensation Award Programs. This Section 10
shall not be effective unless and until the Board determines to establish a
program pursuant to this Section. The Board, in its discretion and upon such
terms and conditions as it may determine, subject to the provisions of
Section 16 with respect to Section 409A, may establish one or more programs
pursuant to the Plan under which Participants may irrevocably elect, prior to a
date specified by the Board and complying with Section 409A, to reduce such
Participant’s compensation otherwise payable in cash (subject to any minimum or
maximum reductions imposed by the Board) and to be granted automatically at such
time or times as specified by the Board one or more Awards of Stock Units with
respect to such numbers of shares of Stock as determined in accordance with the
rules of the program established by the Board and having such other terms and
conditions as established by the Board.

 

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10.2 Terms and Conditions of Deferred Compensation Awards. Deferred Compensation
Awards granted pursuant to this Section 10 shall be evidenced by Award
Agreements in such form as the Board shall from time to time establish. No such
Deferred Compensation Award or purported Deferred Compensation Award shall be a
valid and binding obligation of the Company unless evidenced by a fully executed
Award Agreement. Award Agreements evidencing Deferred Compensation Awards may
incorporate all or any of the terms of the Plan by reference, including the
provisions of Section 16 with respect to Section 409A, and, except as provided
below, shall comply with and be subject to the terms and conditions of
Section 9.

(a) Voting Rights; Dividend Equivalent Rights and Distributions. Participants
shall have no voting rights with respect to shares of Stock represented by Stock
Units until the date of the issuance of such shares (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company). However, a Participant shall be entitled to receive
Dividend Equivalents with respect to the payment of cash dividends on Stock
during the period beginning on the date the Stock Units are granted
automatically to the Participant and ending on the earlier of the date on which
such Stock Units are settled or the date on which they are forfeited. Such
Dividend Equivalents shall be paid by crediting the Participant with additional
whole Stock Units as of the date of payment of such cash dividends on Stock. The
number of additional Stock Units (rounded to the nearest whole number) to be so
credited shall be determined by dividing (i) the amount of cash dividends paid
on the dividend payment date with respect to the number of shares of Stock
represented by the Stock Units previously credited to the Participant by
(ii) the Fair Market Value per share of Stock on such date. Such additional
Stock Units shall be subject to the same terms and conditions and shall be
settled in the same manner and at the same time (or as soon thereafter as
practicable) as the Stock Units originally subject to the Stock Unit Award. In
the event of a dividend or distribution paid in shares of Stock or other
property or any other adjustment made upon a change in the capital structure of
the Company as described in Section 4.3, appropriate adjustments shall be made
in the Participant’s Stock Unit Award so that it represents the right to receive
upon settlement any and all new, substituted or additional securities or other
property (other than normal cash dividends) to which the Participant would
entitled by reason of the shares of Stock issuable upon settlement of the Award.

(b) Settlement of Stock Unit Awards. A Participant electing to receive an Award
of Stock Units pursuant to this Section 10 shall specify at the time of such
election a settlement date with respect to such Award which complies with
Section 409A. The Company shall issue to the Participant on the settlement date
elected by the Participant, or as soon thereafter as practicable, a number of
whole shares of Stock equal to the number of vested Stock Units subject to the
Stock Unit Award. Such shares of Stock shall be fully vested, and the
Participant shall not be required to pay any additional consideration (other
than applicable tax withholding) to acquire such shares.

11. STANDARD FORMS OF AWARD AGREEMENT.

11.1 Award Agreement. Each Award shall comply with and be subject to the terms
and conditions set forth in the appropriate form of Award Agreement approved by
the Board and as amended from time to time. Any Award Agreement may consist of
an appropriate form of Notice of Grant and a form of Agreement incorporated
therein by reference, or such other form or forms, including electronic media,
as the Board may approve from time to time.

11.2 Authority to Vary Terms. The Board shall have the authority from time to
time to vary the terms of any standard form of Award Agreement either in
connection with the grant or amendment of an individual Award or in connection
with the authorization of a new standard form or forms; provided, however, that
the terms and conditions of any such new, revised or amended standard form or
forms of Award Agreement are not inconsistent with the terms of the Plan.

12. CHANGE IN CONTROL.

12.1 Effect of Change in Control on Options and SARs.

(a) Accelerated Vesting. Notwithstanding any other provision of the Plan to the
contrary, in the event of a Change in Control, each Option or SAR held by a
Participant whose Service has not terminated prior to the date of such Change in
Control, to the extent such Option or SAR is then outstanding or

 

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unvested, shall become immediately exercisable and vested in full as of such
date, subject to the consummation of the Change in Control.

(b) Assumption or Substitution. In the event of a Change in Control, the
surviving, continuing, successor, or purchasing entity or parent thereof, as the
case may be (the “Acquiror”), may, without the consent of any Participant,
either assume or continue the Company’s rights and obligations under outstanding
Options and SARs or substitute for outstanding Options and SARs substantially
equivalent options and stock appreciation rights (as the case may be) for the
Acquiror’s stock. Any Options or SARs which are neither assumed or continued by
the Acquiror in connection with the Change in Control nor exercised as of the
time of consummation of the Change in Control shall terminate and cease to be
outstanding effective as of the time of consummation of the Change in Control.

(c) Cash-Out. The Board may, in its sole discretion and without the consent of
any Participant, determine that, upon the occurrence of a Change in Control,
each or any Option or SAR outstanding immediately prior to the Change in Control
shall be canceled in exchange for a payment with respect to each vested share
(and each unvested share, if so determined by the Board) of Stock subject to
such canceled Option or SAR in (i) cash, (ii) stock of the Company or of a
corporation or other business entity a party to the Change in Control, or
(iii) other property which, in any such case, shall be in an amount having a
Fair Market Value equal to the excess of the Fair Market Value of the
consideration to be paid per share of Stock in the Change in Control over the
exercise price per share under such Option or SAR (the “Spread”). In the event
such determination is made by the Board, the Spread (reduced by applicable
withholding taxes, if any) shall be paid to Participants in respect of the
vested portion of their canceled Options and SARs as soon as practicable
following the date of the Change in Control and in respect of the unvested
portion of their canceled Options and SARs in accordance with the vesting
schedule applicable to such Awards as in effect prior to the Change in Control.

12.2 Effect of Change in Control on Restricted Stock Unit Awards and Deferred
Compensation Awards. Subject to the provisions of Section 16 with respect to
Section 409A if applicable, in the event of a Change in Control, each Restricted
Stock Unit Award and each Deferred Compensation Award held by a Participant
whose Service has not terminated prior to such date, to the extent such Award is
then outstanding and unvested, shall become vested in full as of such date,
subject to the consummation of the Change in Control, and shall be settled
effective as of the date of the Change in Control.

13. COMPLIANCE WITH SECURITIES LAW.

The grant of Awards and the issuance of shares of Stock pursuant to any Award
shall be subject to compliance with all applicable requirements of federal,
state and foreign law with respect to such securities and the requirements of
any stock exchange or market system upon which the Stock may then be listed. In
addition, no Award may be exercised or shares issued pursuant to an Award unless
(a) a registration statement under the Securities Act shall at the time of such
exercise or issuance be in effect with respect to the shares issuable pursuant
to the Award or (b) in the opinion of legal counsel to the Company, the shares
issuable pursuant to the Award may be issued in accordance with the terms of an
applicable exemption from the registration requirements of the Securities Act.
The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company’s legal 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. As a
condition to issuance of any Stock, the Company may require the Participant to
satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation and to make any representation
or warranty with respect thereto as may be requested by the Company.

14. TAX WITHHOLDING.

14.1 Tax Withholding in General. The Company shall have the right to deduct from
any and all payments made under the Plan, or to require the Participant, through
payroll withholding, cash payment or otherwise, to make adequate provision for,
the federal, state, local and foreign taxes, if any, required by law to be
withheld by the Participating Company Group with respect to an Award or the
shares acquired pursuant thereto. The Company shall have no obligation to
deliver shares of Stock, to release shares of Stock from an escrow

 

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established pursuant to an Award Agreement, or to make any payment in cash under
the Plan until the Participating Company Group’s tax withholding obligations
have been satisfied by the Participant.

14.2 Withholding in Shares. The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable to a Participant upon
the exercise or settlement of an Award, or to accept from the Participant the
tender of, a number of whole shares of Stock having a Fair Market Value, as
determined by the Company, equal to all or any part of the tax withholding
obligations of the Participating Company Group. The Fair Market Value of any
shares of Stock withheld or tendered to satisfy any such tax withholding
obligations shall not exceed the amount determined by the applicable minimum
statutory withholding rates.

15. AMENDMENT OR TERMINATION OF PLAN.

The Board may amend, suspend or terminate the Plan at any time. However, without
the approval of the Company’s stockholders, there shall be (a) no increase in
the maximum aggregate number of shares of Stock that may be issued under the
Plan (except by operation of the provisions of Section 4.3) and (b) no other
amendment of the Plan that would require approval of the Company’s stockholders
under any applicable law, regulation or rule, including the rules of any stock
exchange or market system upon which the Stock may then be listed. No amendment,
suspension or termination of the Plan shall affect any then outstanding Award
unless expressly provided by the Board. Except as provided by the next sentence,
no amendment, suspension or termination of the Plan may adversely affect any
then outstanding Award without the consent of the Participant. Notwithstanding
any other provision of the Plan to the contrary, the Board may, in its sole and
absolute discretion and without the consent of any Participant, amend the Plan
or any Award Agreement, to take effect retroactively or otherwise, as it deems
necessary or advisable for the purpose of conforming the Plan or such Award
Agreement to any present or future law, regulation or rule applicable to the
Plan, including, but not limited to, Section 409A.

16. COMPLIANCE WITH SECTION 409A.

16.1 Awards Subject to Section 409A. The provisions of this Section 16 shall
apply to any Award or portion thereof that is or becomes subject to
Section 409A, notwithstanding any provision to the contrary contained in the
Plan or the Award Agreement applicable to such Award. Awards subject to
Section 409A include, without limitation:

(a) Each Deferred Compensation Award.

(b) Any Restricted Stock Unit Award that either (i) provides by its terms for
settlement of all or any portion of the Award on one or more dates following the
Short-Term Deferral Period (as defined below) or (ii) permits or requires the
Participant to elect one or more dates on which the Award will be settled.

Subject to any applicable U.S. Treasury Regulations promulgated pursuant to
Section 409A or other applicable guidance, the term “Short-Term Deferral Period”
means the period ending on the later of (i) the date that is two and one-half
months from the end of the Company’s fiscal year in which the applicable portion
of the Award is no longer subject to a substantial risk of forfeiture or
(ii) the date that is two and one-half months from the end of the Participant’s
taxable year in which the applicable portion of the Award is no longer subject
to a substantial risk of forfeiture. For this purpose, the term “substantial
risk of forfeiture” shall have the meaning set forth in any applicable U.S.
Treasury Regulations promulgated pursuant to Section 409A or other applicable
guidance.

16.2 Deferral and/or Distribution Elections. Except as otherwise permitted or
required by Section 409A or any applicable U.S. Treasury Regulations promulgated
pursuant to Section 409A or other applicable guidance, the following rules shall
apply to any deferral and/or distribution elections (each, an “Election”) that
may be permitted or required by the Board pursuant to an Award subject to
Section 409A:

(a) All Elections must be in writing and specify the amount of the distribution
in settlement of an Award being deferred, as well as the time and form of
distribution as permitted by this Plan.

 

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(b) All Elections shall be made by the end of the Participant’s taxable year
prior to the year in which services commence for which an Award may be granted
to such Participant; provided, however, that if the Award qualifies as
“performance-based compensation” for purposes of Section 409A and is based on
services performed over a period of at least twelve (12) months, then the
Election may be made no later than six (6) months prior to the end of such
period.

(c) Elections shall continue in effect until a written election to revoke or
change such Election is received by the Company, except that a written election
to revoke or change such Election must be made prior to the last day for making
an Election determined in accordance with paragraph (b) above or as permitted by
Section 16.3.

16.3 Subsequent Elections. Any Award subject to Section 409A which permits a
subsequent Election to delay the distribution or change the form of distribution
in settlement of such Award shall comply with the following requirements:

(a) No subsequent Election may take effect until at least twelve (12) months
after the date on which the subsequent Election is made;

(b) Each subsequent Election related to a distribution in settlement of an Award
not described in Section 16.3(b), 16.4(b), or 16.4(f) must result in a delay of
the distribution for a period of not less than five (5) years from the date such
distribution would otherwise have been made; and

(c) No subsequent Election related to a distribution pursuant to Section 16.4(d)
shall be made less than twelve (12) months prior to the date of the first
scheduled payment under such distribution.

16.4 Distributions Pursuant to Deferral Elections. No distribution in settlement
of an Award subject to Section 409A may commence earlier than:

(a) Separation from service (as determined by the Secretary of the United States
Treasury);

(b) The date the Participant becomes Disabled (as defined below);

(c) Death;

(d) A specified time (or pursuant to a fixed schedule) that is either
(i) specified by the Board upon the grant of an Award and set forth in the Award
Agreement evidencing such Award or (ii) specified by the Participant in an
Election complying with the requirements of Section 16.2 and/or 16.3, as
applicable;

(e) To the extent provided by the Secretary of the U.S. Treasury, a change in
the ownership or effective control or the Company or in the ownership of a
substantial portion of the assets of the Company; or

(f) The occurrence of an Unforeseeable Emergency (as defined below).

Notwithstanding anything else herein to the contrary, to the extent that a
Participant is a “Specified Employee” (as defined in Section 409A(a)(2)(B)(i))
of the Company, no distribution pursuant to Section 16.4(a) in settlement of an
Award subject to Section 409A may be made before the date which is six
(6) months after such Participant’s date of separation from service, or, if
earlier, the date of the Participant’s death.

16.5 Unforeseeable Emergency. The Board shall have the authority to provide in
the Award Agreement evidencing any Award subject to Section 409A for
distribution in settlement of all or a portion of such Award in the event that a
Participant establishes, to the satisfaction of the Board, the occurrence of an
Unforeseeable Emergency. In such event, the amount(s) distributed with respect
to such Unforeseeable Emergency cannot exceed the amounts necessary to satisfy
such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably

 

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anticipated as a result of such distribution(s), after taking into account the
extent to which such hardship is or may be relieved through reimbursement or
compensation by insurance or otherwise or by liquidation of the Participant’s
assets (to the extent the liquidation of such assets would not itself cause
severe financial hardship). All distributions with respect to an Unforeseeable
Emergency shall be made in a lump sum as soon as practicable following the
Board’s determination that an Unforeseeable Emergency has occurred.

The occurrence of an Unforeseeable Emergency shall be judged and determined by
the Board. The Board’s decision with respect to whether an Unforeseeable
Emergency has occurred and the manner in which, if at all, the distribution in
settlement of an Award shall be altered or modified, shall be final, conclusive,
and not subject to approval or appeal.

16.6 Disabled. The Board shall have the authority to provide in any Award
subject to Section 409A for distribution in settlement of such Award in the
event that the Participant becomes Disabled. A Participant shall be considered
“Disabled” if either:

(a) the Participant is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than twelve (12) months, or

(b) the Participant is, by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than twelve (12) months, receiving
income replacement benefits for a period of not less than three (3) months under
an accident and health plan covering employees of the Participant’s employer.

All distributions payable by reason of a Participant becoming Disabled shall be
paid in a lump sum or in periodic installments as established by the
Participant’s Election, commencing as soon as practicable following the date the
Participant becomes Disabled. If the Participant has made no Election with
respect to distributions upon becoming Disabled, all such distributions shall be
paid in a lump sum as soon as practicable following the date the Participant
becomes Disabled.

16.7 Death. If a Participant dies before complete distribution of amounts
payable upon settlement of an Award subject to Section 409A, such undistributed
amounts shall be distributed to his or her beneficiary under the distribution
method for death established by the Participant’s Election as soon as
administratively possible following receipt by the Board of satisfactory notice
and confirmation of the Participant’s death. If the Participant has made no
Election with respect to distributions upon death, all such distributions shall
be paid in a lump sum as soon as practicable following the date of the
Participant’s death.

16.8 No Acceleration of Distributions. Notwithstanding anything to the contrary
herein, this Plan does not permit the acceleration of the time or schedule of
any distribution under this Plan, except as provided by Section 409A and/or the
Secretary of the U.S. Treasury.

17. MISCELLANEOUS PROVISIONS.

17.1 Repurchase Rights. Shares issued under the Plan may be subject to one or
more repurchase options, or other conditions and restrictions as determined by
the Board in its discretion at the time the Award is granted. The Company shall
have the right to assign at any time any repurchase right it may have, whether
or not such right is then exercisable, to one or more persons as may be selected
by the Company. Upon request by the Company, each Participant shall execute any
agreement evidencing such transfer restrictions prior to the receipt of shares
of Stock hereunder and shall promptly present to the Company any and all
certificates representing shares of Stock acquired hereunder for the placement
on such certificates of appropriate legends evidencing any such transfer
restrictions.

17.2 Provision of Information. Each Participant shall be given access to
information concerning the Company equivalent to that information generally made
available to the Company’s common stockholders.

 

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17.3 Rights as Outside Director. Nothing in the Plan or any Award granted under
the Plan shall confer on any Participant a right to remain an Outside Director,
or interfere with or limit in any way any right of a Participating Company to
terminate the Participant’s Service at any time.

17.4 Rights as a Stockholder. A Participant shall have no rights as a
stockholder with respect to any shares covered by an Award until the date of the
issuance of such shares (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company). No
adjustment shall be made for dividends, distributions or other rights for which
the record date is prior to the date such shares are issued, except as provided
in Section 4.3 or another provision of the Plan.

17.5 Delivery of Title to Shares. Subject to any governing rules or regulations,
the Company shall issue or cause to be issued the shares of Stock acquired
pursuant to an Award and shall deliver such shares to or for the benefit of the
Participant by means of one or more of the following: (a) by delivering to the
Participant evidence of book entry shares of Stock credited to the account of
the Participant, (b) by depositing such shares of Stock for the benefit of the
Participant with any broker with which the Participant has an account
relationship, or (c) by delivering such shares of Stock to the Participant in
certificate form.

17.6 Fractional Shares. The Company shall not be required to issue fractional
shares upon the exercise or settlement of any Award.

17.7 Beneficiary Designation. Subject to local laws and procedures, each
Participant may file with the Company a written designation of a beneficiary who
is to receive any benefit under the Plan to which the Participant is entitled in
the event of such Participant’s death before he or she receives any or all of
such benefit. Each designation will revoke all prior designations by the same
Participant, shall be in a form prescribed by the Company, and will be effective
only when filed by the Participant in writing with the Company during the
Participant’s lifetime. If a married Participant designates a beneficiary other
than the Participant’s spouse, the effectiveness of such designation may be
subject to the consent of the Participant’s spouse. If a Participant dies
without an effective designation of a beneficiary who is living at the time of
the Participant’s death, the Company will pay any remaining unpaid benefits to
the Participant’s legal representative.

17.8 Severability. If any one or more of the provisions (or any part thereof) of
this Plan shall be held invalid, illegal or unenforceable in any respect, such
provision shall be modified so as to make it valid, legal and enforceable, and
the validity, legality and enforceability of the remaining provisions (or any
part thereof) of the Plan shall not in any way be affected or impaired thereby.

17.9 No Constraint on Corporate Action. Nothing in this Plan shall be construed
to: (a) limit, impair, or otherwise affect the Company’s or another
Participating Company’s right or power to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure, or to merge or
consolidate, or dissolve, liquidate, sell, or transfer all or any part of its
business or assets; or (b) limit the right or power of the Company or another
Participating Company to take any action which such entity deems to be necessary
or appropriate.

17.10 Unfunded Obligation. Participants shall have the status of general
unsecured creditors of the Company. Any amounts payable to Participants pursuant
to the Plan shall be unfunded and unsecured obligations for all purposes,
including, without limitation, Title I of the Employee Retirement Income
Security Act of 1974. No Participating Company shall be required to segregate
any monies from its general funds, or to create any trusts, or establish any
special accounts with respect to such obligations. The Company shall retain at
all times beneficial ownership of any investments, including trust investments,
which the Company may make to fulfill its payment obligations hereunder. Any
investments or the creation or maintenance of any trust or any Participant
account shall not create or constitute a trust or fiduciary relationship between
the Board or any Participating Company and a Participant, or otherwise create
any vested or beneficial interest in any Participant or the Participant’s
creditors in any assets of any Participating Company. The Participants shall
have no claim against any Participating Company for any changes in the value of
any assets which may be invested or reinvested by the Company with respect to
the Plan.

 

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17.11 Choice of Law. Except to the extent governed by applicable federal law,
the validity, interpretation, construction and performance of the Plan and each
Award Agreement shall be governed by the laws of the State of California,
without regard to its conflict of law rules.

 

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