Exhibit 10.1
MAKEMUSIC, INC.
2003 EQUITY INCENTIVE PLAN
(AS AMENDED THROUGH NOVEMBER 24, 2008)
SECTION 1.
DEFINITIONS
     As used herein, the following terms shall have the meanings indicated
below:
     (a) “Administrator” shall mean the Board or the Committee, as the case may
be.
     (b) “Affiliate” shall mean a Parent or Subsidiary of the Company.
     (c) “Award” shall mean any grant of an Option, Restricted Stock and
Restricted Stock Unit Awards, Stock Appreciation Right or Performance Award.
     (d) “Committee” shall mean a Committee of two or more directors who shall
be appointed by and serve at the pleasure of the Board. If the Company’s
securities are registered pursuant to Section 12 of the Securities Exchange Act
of 1934, as amended, then, to the extent necessary for compliance with
Rule 16b-3, or any successor provision, each of the members of the Committee
shall be a “non-employee director.” Solely for purposes of this Section 1(a),
“non-employee director” shall have the same meaning as set forth in Rule 16b-3,
or any successor provision, as then in effect, of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended. Further, to
the extent necessary for compliance with the limitations set forth in Internal
Revenue Code Section 162(m), each of the members of the Committee shall be an
“outside director” within the meaning of Code Section 162(m) and the regulations
issued thereunder.
     (e) The “Company” shall mean MakeMusic, Inc., a Minnesota corporation.
     (f) “Fair Market Value” as of any date shall mean (i) if such stock is
listed on the Nasdaq National Market, Nasdaq SmallCap Market, or an established
stock exchange, the price of such stock at the close of the regular trading
session of such market or exchange on such date, as reported by The Wall Street
Journal or a comparable reporting service, or, if no sale of such stock shall
have occurred on such date, on the next preceding day on which there was a sale
of stock; (ii) if such stock is not so listed on the Nasdaq National Market,
Nasdaq SmallCap Market, or an established stock exchange, the average of the
closing “bid” and “asked” prices quoted by the OTC Bulletin Board, the National
Quotation Bureau, or any comparable reporting service on such date or, if there
are no quoted “bid” and “asked” prices on such date, on the next preceding date
for which there are such quotes; or (iii) if such stock is not publicly traded
as of such date, the per share value as determined by the Board, or the
Committee, in its sole discretion by applying principles of valuation with
respect to the Company’s Common Stock.
     (g) The “Internal Revenue Code” is the Internal Revenue Code of 1986, as
amended from time to time.

 

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     (h) “Option” means an incentive stock option or nonqualified stock option
granted pursuant to the Plan.
     (i) “Option Stock,” “Stock” or “Common Stock” shall mean Common Stock of
the Company (subject to adjustment as described in Section 14) reserved for
Options, Restricted Stock Awards, Stock Appreciation Rights and Performance
Shares pursuant to this Plan.
     (j) “Parent” shall mean any corporation which owns, directly or indirectly
in an unbroken chain, fifty percent (50%) or more of the total voting power of
the Company’s outstanding stock.
     (k) The “Participant” means a key employee of the Company or any Subsidiary
to whom an incentive stock option has been granted pursuant to Section 9; a
consultant or advisor to, or director, key employee or officer, of the Company
or any Subsidiary to whom a nonqualified stock option has been granted pursuant
to Section 10; or a consultant or advisor to, or director, key employee or
officer, of the Company or any Subsidiary to whom a Restricted Stock or
Restricted Stock Unit Award has been granted pursuant to Section 11; or a
consultant or advisor to, or director, key employee or officer, of the Company
or any Subsidiary to whom a Performance Award has been granted pursuant to
Section 12; or a consultant or advisor to, or director, key employee or officer,
of the Company or any Subsidiary to whom a Stock Appreciation Right has been
granted pursuant to Section 13.
     (l) “Performance Award” shall mean any Performance Shares or Performance
Units granted pursuant to Section 12 hereof.
     (m) “Performance Period” shall mean the period, established at the time any
Performance Award is granted or at any time thereafter, during which any
performance goals specified by the Administrator with respect to such
Performance Award are to be measured.
     (n) “Performance Share” shall mean any grant pursuant to Section 12 hereof
of an award, which value, if any, shall be paid to a Participant by delivery
shares of Common Stock of the Company upon achievement of such performance goals
during the Performance Period as the Administrator shall establish at the time
of such grant or thereafter.
     (o) “Performance Unit” shall mean any grant pursuant to Section 12 hereof
of an award, which value, if any, shall be paid to a Participant by delivery of
cash upon achievement of such performance goals during the Performance Period as
the Administrator shall establish at the time of such grant or thereafter.
     (p) The “Plan” means the MakeMusic, Inc. 2003 Equity Incentive Plan, as
amended hereafter from time to time, including the form of Agreements as they
may be modified by the Administrator from time to time.

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     (q) “Restricted Stock Award” shall mean any grant of restricted shares of
Common Stock of the Company pursuant to Section 11 hereof.
     (r) “Restricted Stock Unit Award” shall mean any grant of restricted stock
units pursuant to Section 11 hereof.
     (s) “Stock Appreciation Right” shall mean a grant pursuant to Section 13
hereof.
     (t) A “Subsidiary” shall mean any corporation of which fifty percent (50%)
or more of the total voting power of outstanding stock is owned, directly or
indirectly in an unbroken chain, by the Company.
SECTION 2.
PURPOSE
     The purpose of the Plan is to promote the success of the Company and its
Subsidiaries by facilitating the employment and retention of competent personnel
and by furnishing incentive to officers, directors, employees, consultants, and
advisors upon whose efforts the success of the Company and its Subsidiaries will
depend to a large degree.
     It is the intention of the Company to carry out the Plan through the
granting of Options which will qualify as “incentive stock options” under the
provisions of Section 422 of the Internal Revenue Code, or any successor
provision, pursuant to Section 9 of this Plan, through the granting of Options
that are “nonqualified stock options” pursuant to Section 10 of this Plan,
through the granting of Restricted Stock Awards pursuant to Section 11 of this
Plan, through the granting of Performance Awards pursuant to Section 12 of this
Agreement and through the granting of Stock Appreciation Rights pursuant to
Section 13 hereof. Adoption of this Plan shall be and is expressly subject to
the condition of approval by the shareholders of the Company within twelve
(12) months before or after the adoption of the Plan by the Board of Directors.
In no event shall any Options, Restricted Stock or Restricted Stock Unit Awards,
Performance Awards or Stock Appreciation Rights be granted prior to the date
this Plan is approved by the shareholders of the Company.
SECTION 3.
EFFECTIVE DATE OF PLAN
     The Plan shall be effective as of the date of adoption by the Board of
Directors, subject to approval by the shareholders of the Company as required in
Section 2.
SECTION 4.
ADMINISTRATION

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     The Plan shall be administered by the Board of Directors of the Company
(hereinafter referred to as the “Board”) or by a Committee which may be
appointed by the Board from time to time to administer the Plan (hereinafter
collectively referred to as the “Administrator”). Except as otherwise provided
herein, the Administrator shall have all of the powers vested in it under the
provisions of the Plan, including but not limited to exclusive authority to
determine, in its sole discretion, whether an Award shall be granted; the
individuals to whom, and the time or times at which, such Awards shall be
granted; the number of shares subject to each such Award, the performance
criteria, if any, and any other terms and conditions of each Award. The
Administrator shall have full power and authority to administer and interpret
the Plan, to make and amend rules, regulations and guidelines for administering
the Plan, to prescribe the form and conditions of the respective Awards (which
may vary from Participant to Participant) evidencing each Award, and to make all
other determinations necessary or advisable for the administration of the Plan.
The Administrator’s interpretation of the Plan, and all actions taken and
determinations made by the Administrator pursuant to the power vested in it
hereunder, shall be conclusive and binding on all parties concerned.
     No member of the Board or the Committee shall be liable for any action
taken or determination made in good faith in connection with the administration
of the Plan. In the event the Board appoints a Committee as provided hereunder,
any action of the Committee with respect to the administration of the Plan shall
be taken pursuant to a majority vote of the Committee members or pursuant to the
written resolution of all Committee members.
SECTION 5.
PARTICIPANTS
     The Administrator shall from time to time, at its discretion and without
approval of the shareholders, designate those employees, officers, directors,
consultants, and advisors of the Company or of any Subsidiary to whom Awards
shall be granted under this Plan; provided, however, that consultants or
advisors shall not be eligible to receive Awards hereunder unless such
consultant or advisor renders bona fide services to the Company or Subsidiary
and such services are not in connection with the offer or sale of securities in
a capital raising transaction and do not directly or indirectly promote or
maintain a market for the Company’s securities. The Administrator shall, from
time to time, at its discretion and without approval of the shareholders,
designate those employees of the Company or any Subsidiary to whom Awards shall
be granted under this Plan. The Administrator may grant additional Awards under
this Plan to some or all Participants then holding Awards, or may grant Awards
solely or partially to new Participants. In designating Participants, the
Administrator shall also determine the number of shares subject to each Award
granted to each Participant and, with respect to Performance Awards, the
performance criteria applicable to each Participant. The Administrator may from
time to time designate individuals as being ineligible to participate in the
Plan.

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SECTION 6.
STOCK
     The capital stock to be issued under this Plan shall consist of authorized
but unissued shares of Stock. One Million Five Hundred Thousand (1,500,000)
shares of Stock shall be reserved and available for Awards under the Plan;
provided, however, that the total number of shares of Stock reserved for Awards
under this Plan shall be subject to adjustment as provided in Section 14 of the
Plan. In the event that any outstanding Option, Stock Appreciation Right,
Performance Share Award or Restricted Stock or Restricted Stock Unit Award under
the Plan for any reason expires or is terminated prior to the exercise of the
Option or Stock Appreciation Right, prior to the achievement of the performance
criteria under the Performance Share Award, or prior to the lapsing of the risks
of forfeiture on the Restricted Stock or Restricted Stock Unit Awards, the
shares of Stock allocable to the unexercised portion of such Option or Stock
Appreciation Right, to the unearned portion of the Performance Share Award or to
the forfeited portion of the Restricted Stock or Restricted Stock Unit Award
shall continue to be reserved for Options, Stock Appreciation Rights,
Performance Share Awards and Restricted Stock and Restricted Stock Unit Awards
under the Plan and may be optioned or awarded hereunder.
SECTION 7.
DURATION OF PLAN
     Incentive stock options may be granted pursuant to the Plan from time to
time during a period of ten (10) years from the effective date as defined in
Section 3. Other Awards may be granted pursuant to the Plan from time to time
after the effective date of the Plan and until the Plan is discontinued or
terminated by the Board.
SECTION 8.
PAYMENT
     (a) Participants may pay for shares of Stock of the Company upon exercise
of Options granted pursuant to this Plan by (i) cash, (ii) personal check,
(iii) certified check, (iv) if approved by the Administrator in its sole
discretion, delivery to the Company of previously-owned shares of Common Stock,
(v) if approved by the Administrator in its sole discretion and permitted by the
Option Agreement governing the Award, requesting that shares of Common Stock
otherwise issuable upon exercise of the Option be withheld, (vi) such other form
of payment as may be authorized by the Administrator, or (vii) any combination
thereof. If shares of Common Stock are tendered or withheld as payment, the
Administrator shall use the Fair Market Value of such shares as of the date the
Option is exercised to calculate the number of shares equal to the total
exercise price of the shares being purchased. The Administrator may, in its sole
discretion, limit the forms of payment available to the Participant and may
exercise such discretion any time prior to the termination of the Option granted
to the Participant or upon any exercise of the Option by the Participant.

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     (b) With respect to payment in the form of Common Stock, the Administrator
may require advance approval or adopt such rules as it deems necessary to assure
compliance with Rule 16b-3, or any successor provision, as then in effect, of
the General Rules and Regulations under the Securities Exchange Act of 1934, if
applicable.
SECTION 9.
TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS
     Each incentive stock option granted pursuant to this Section 9 shall be
evidenced by a written stock option agreement (the “Option Agreement”). The
Option Agreement shall be in such form as may be approved from time to time by
the Administrator and may vary from Participant to Participant; provided,
however, that each Participant and each Option Agreement shall comply with and
be subject to the following terms and conditions:
     (a) Number of Shares and Option Price. The Option Agreement shall state the
total number of shares covered by the incentive stock option. Except as
permitted by Section 424(d) of the Internal Revenue Code, or any successor
provision, the option price per share shall not be less than one hundred percent
(100%) of the per share Fair Market Value of the Company’s Common Stock on the
date the Administrator grants the option; provided, however, that if a
Participant owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of its Parent or
any Subsidiary, the option price per share of an incentive stock option granted
to such Participant shall not be less than one hundred ten percent (110%) of the
per share Fair Market Value of the Company’s Common Stock on the date of the
grant of the option. The Administrator shall have full authority and discretion
in establishing the option price and shall be fully protected in so doing.
     (b) Term and Exercisability of Incentive Stock Option. The term during
which any incentive stock option granted under the Plan may be exercised shall
be established in each case by the Administrator. In no event shall any
incentive stock option be exercisable during a term of more than ten (10) years
after the date on which it is granted; provided, however, that if a Participant
owns stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or of its Parent or any Subsidiary,
the incentive stock option granted to such Participant shall be exercisable
during a term of not more than five (5) years after the date on which it is
granted.
          The Option Agreement shall state when the incentive stock option
becomes exercisable and shall also state the maximum term during which such
option may be exercised. In the event an incentive stock option is exercisable
immediately, the manner of exercise of such option in the event it is not
exercised in full immediately shall be specified in the Option Agreement. The
Administrator may accelerate the exercisability of any incentive stock option
granted hereunder which is not immediately exercisable as of the date of grant.

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     (c) Nontransferability. No incentive stock option shall be transferable, in
whole or in part, by the Participant other than by will or by the laws of
descent and distribution. During the Participant’s lifetime, the incentive stock
option may be exercised only by the Participant. If the Participant shall
attempt any transfer of any incentive stock option granted under the Plan during
the Participant’s lifetime, such transfer shall be void and the incentive stock
option, to the extent not fully exercised, shall terminate.
     (d) No Rights as Shareholder. A Participant (or the Participant’s successor
or successors) shall have no rights as a shareholder with respect to any shares
covered by an incentive stock option until the date of the issuance of a stock
certificate evidencing such shares. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property),
distributions or other rights for which the record date is prior to the date
such stock certificate is actually issued (except as otherwise provided in
Section 14 of the Plan).
     (e) Withholding. The Company or its Affiliate shall be entitled to withhold
and deduct from future wages of the Participant all legally required amounts
necessary to satisfy any and all withholding and employment-related taxes
attributable to the Participant’s exercise of an incentive stock option or a
“disqualifying disposition” of shares acquired through the exercise of an
incentive stock option as defined in Code Section 421(b). In the event the
Participant is required under the Option Agreement to pay the Company or its
Affiliate, or make arrangements satisfactory to the Company or its Affiliate
respecting payment of, such withholding and employment-related taxes, the
Administrator may, in its discretion and pursuant to such rules as it may adopt,
permit the Participant to satisfy such obligation, in whole or in part, by
electing to have the Company or its Affiliate withhold shares of Option Stock
otherwise issuable to the Participant as a result of the exercise of the
incentive stock option having a Fair Market Value equal to the minimum required
tax withholding, based on the minimum statutory withholding rates for federal
and state tax purposes, including payroll taxes, that are applicable to the
supplemental income resulting from such exercise. In no event may the Company or
its Affiliate withhold shares having a Fair Market Value in excess of such
statutory minimum required tax withholding. The Participant’s election to have
shares withheld for this purpose shall be made on or before the date the
incentive stock option is exercised or, if later, the date that the amount of
tax to be withheld is determined under applicable tax law. Such election shall
be approved by the Administrator and otherwise comply with such rules as the
Administrator may adopt to assure compliance with Rule 16b-3, or any successor
provision, as then in effect, of the General Rules and Regulations under the
Securities Exchange Act of 1934, if applicable.
     (f) Other Provisions. The Option Agreement authorized under this Section 9
shall contain such other provisions as the Administrator shall deem advisable.
Any such Option Agreement shall contain such limitations and restrictions upon
the exercise of the Option as shall be necessary to ensure that such Option will
be considered an “incentive stock option” as defined in Section 422 of the
Internal Revenue Code or to conform to any change therein.

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SECTION 10.
TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS
     Each nonqualified stock option granted pursuant to this Section 10 shall be
evidenced by a written Option Agreement. The Option Agreement shall be in such
form as may be approved from time to time by the Administrator and may vary from
Participant to Participant; provided, however, that each Participant and each
Option Agreement shall comply with and be subject to the following terms and
conditions:
     (a) Number of Shares and Option Price. The Option Agreement shall state the
total number of shares covered by the nonqualified stock option. Unless
otherwise determined by the Administrator, the option price per share shall be
one hundred percent (100%) of the per share Fair Market Value of the Company’s
Common Stock on the date the Administrator grants the option.
     (b) Term and Exercisability of Nonqualified Stock Option. The term during
which any nonqualified stock option granted under the Plan may be exercised
shall be established in each case by the Administrator. The Option Agreement
shall state when the nonqualified stock option becomes exercisable and shall
also state the maximum term during which such option may be exercised. In the
event a nonqualified stock option is exercisable immediately, the manner of
exercise of such option in the event it is not exercised in full immediately
shall be specified in the Option Agreement. The Administrator may accelerate the
exercisability of any nonqualified stock option granted hereunder which is not
immediately exercisable as of the date of grant.
     (c) Transferability. The Administrator may, in its sole discretion, permit
the Participant to transfer any or all nonqualified stock options to any member
of the Participant’s “immediate family” as such term is defined in Rule 16a-1(e)
promulgated under the Securities Exchange Act of 1934, or any successor
provision, or to one or more trusts whose beneficiaries are members of such
Participant’s “immediate family” or partnerships in which such family members
are the only partners; provided, however, that the Participant cannot receive
any consideration for the transfer and such transferred nonqualified stock
option shall continue to be subject to the same terms and conditions as were
applicable to such nonqualified stock option immediately prior to its transfer.
     (d) No Rights as Shareholder. A Participant (or the Participant’s successor
or successors) shall have no rights as a shareholder with respect to any shares
covered by a nonqualified stock option until the date of the issuance of a stock
certificate evidencing such shares. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property),
distributions or other rights for which the record date is prior to the date
such stock certificate is actually issued (except as otherwise provided in
Section 14 of the Plan).
     (e) Withholding. The Company or its Affiliate shall be entitled to withhold
and deduct from future wages of the Participant all legally required amounts
necessary to satisfy any and all withholding and employment-related taxes
attributable to the Participant’s exercise of a nonqualified stock option. In
the event the Participant is required under the Option Agreement to

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pay the Company or its Affiliate, or make arrangements satisfactory to the
Company or its Affiliate respecting payment of, such withholding and
employment-related taxes, the Administrator may, in its discretion and pursuant
to such rules as it may adopt, permit the Participant to satisfy such
obligation, in whole or in part, by electing to have the Company or its
Affiliate withhold shares of Option Stock otherwise issuable to the Participant
as a result of the exercise of the nonqualified stock option having a Fair
Market Value equal to the minimum required tax withholding, based on the minimum
statutory withholding rates for federal and state tax purposes, including
payroll taxes, that are applicable to the supplemental income resulting from
such exercise. In no event may the Company or its Affiliate withhold shares
having a Fair Market Value in excess of such statutory minimum required tax
withholding. The Participant’s election to have shares withheld for this purpose
shall be made on or before the date the nonqualified stock option is exercised
or, if later, the date that the amount of tax to be withheld is determined under
applicable tax law. Such election shall be approved by the Administrator and
otherwise comply with such rules as the Administrator may adopt to assure
compliance with Rule 16b-3, or any successor provision, as then in effect, of
the General Rules and Regulations under the Securities Exchange Act of 1934, if
applicable.
     (f) Other Provisions. The Option Agreement authorized under this Section 10
shall contain such other provisions as the Administrator shall deem advisable.
SECTION 11.
RESTRICTED STOCK AND RESTRICTED STOCK UNIT AWARDS
     Each Restricted Stock/Restricted Stock Unit Award granted pursuant to the
Plan shall be evidenced by a written restricted stock/restricted stock unit
agreement (the ‘Restricted Stock Agreement’ or ‘Restricted Unit Agreement,’ as
the case may be). The Restricted Stock Agreement or Restricted Stock Unit
Agreement shall be in such form as may be approved from time to time by the
Administrator and may vary from Participant to Participant; provided, however,
that each Participant and each Restricted Stock Agreement or Restricted Stock
Unit Agreement shall comply with and be subject to the following terms and
conditions:
     (a) Number of Shares. The Restricted Stock Agreement or Restricted Stock
Unit Agreement shall state the total number of shares of Stock covered by the
Restricted Stock/Restricted Stock Unit Award.
     (b) Risks of Forfeiture or Vesting. The Restricted Stock Agreement or
Restricted Stock Unit Agreement shall set forth the risks of forfeiture or
vesting schedule, if any, which shall apply to the shares of Stock covered by
the Restricted Stock or Restricted Stock Unit Award, respectively, and shall
specify the manner in which such risks of forfeiture shall lapse or vesting
shall occur.
(i) To the extent that the Administrator determines it to be desirable to
qualify Restricted Stock or Restricted Stock Unit Awards granted hereunder as
“performance-based compensation” within the meaning of Code Section 162(m), the

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risks of forfeiture shall be based on the achievement of one or more Performance
Objectives established in writing by the Administrator. For purposes of this
Section 11(b)(i), “Performance Objectives” shall be limited to any one, or a
combination of, (i) revenue, (ii) net income, (iii) stockholders’ equity, (iv)
earnings per share, (v) return on equity, (vi) return on assets, (vii) total
shareholder return, (viii) net operating income, (ix) cost controls, (x) cash
flow, (xi) increase in revenue, (xii) increase in share price or earnings,
(xiii) return on investment, (xiv) department or business unit performance
goals, or (xv) increase in market share, in all cases including, if selected by
the Administrator, minimum threshold, target and maximum levels.
(ii) The Administrator may, in its sole discretion, and to the extent permitted
by applicable tax and securities laws and regulations, accelerate the date on
which the risks of forfeiture shall lapse or vesting shall occur, but only with
respect to those shares of Stock which remain subject to such restrictions as of
the effective date of the acceleration.
     (c) Issuance of Shares; Rights as Shareholder.
(i) With respect to a Restricted Stock Award, the Company shall cause to be
issued one or more stock certificates representing such shares of Stock in the
Participant’s name, and shall hold such certificates until such time as the risk
of forfeiture and other transfer restrictions set forth in the Participant’s
Restricted Stock Agreement shall have lapsed with respect to the shares
represented by a certificate. The Company shall place a legend on such
certificates describing the risks of forfeiture and other transfer restrictions
set forth in the Participant’s Restricted Stock Agreement and providing for the
cancellation of such certificates if the shares of Stock subject to the
restricted stock award are forfeited. Until the risks of forfeiture have lapsed
or the shares subject to such Restricted Stock Award have been forfeited, the
Participant shall be entitled to vote the shares of Stock represented by such
stock certificates and shall receive all dividends attributable to such shares,
but the Participant shall not have any other rights as a shareholder with
respect to such shares.
(ii) With respect to a Restricted Stock Unit Award, as vesting occurs, the
Administrator shall cause to be issued one or more stock certificates in the
Participant’s name and shall deliver such certificates to the Participant in
satisfaction of such Restricted Stock Units. Until the Restricted Stock Units
vest, the Participant shall not be entitled to vote any shares of stock which
may be acquired through the Restricted Stock Units, shall not receive any
dividends attributable to such shares, and shall not have any other rights as a
shareholder with respect to such shares.
     (d) Withholding Taxes. The Company or its Affiliate shall be entitled to
withhold and deduct from future wages of the Participant all legally required
amounts necessary to satisfy any and

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all withholding and employment-related taxes attributable to the Participant’s
Restricted Stock/Restricted Stock Unit Award. In the event the Participant is
required under the Restricted Stock Agreement or Restricted Stock Unit Agreement
to pay the Company or its Affiliate, or make arrangements satisfactory to the
Company or its Affiliate respecting payment of, such withholding and
employment-related taxes, the Administrator may, in its discretion and pursuant
to such rules as it may adopt, require the Participant to satisfy such
obligations, in whole or in part, by delivering shares of Stock received
pursuant to a restricted stock/restricted stock unit award on which the risks of
forfeiture have lapsed or to permit the Participant to satisfy such obligations,
in whole or in part, by delivering shares of Common Stock, including shares of
Stock received pursuant to a Restricted Stock/Restricted Stock Unit Award on
which the risks of forfeiture have lapsed. Such shares shall have a Fair Market
Value equal to the minimum required tax withholding, based on the minimum
statutory withholding rates for federal and state tax purposes, including
payroll taxes, that are applicable to the supplemental income resulting from the
lapsing of the risks of forfeiture on such Restricted Stock/Restricted Stock
Unit. In no event may the Participant deliver shares having a Fair Market Value
in excess of such statutory minimum required tax withholding. The Participant’s
election to deliver shares of Common Stock for this purpose shall be made on or
before the date that the amount of tax to be withheld is determined under
applicable tax law. Such election shall be approved by the Administrator and
otherwise comply with such rules as the Administrator may adopt to assure
compliance with Rule 16b-3, or any successor provision, as then in effect, of
the General Rules and Regulations under the Securities Exchange Act of 1934, if
applicable.
     (f) Nontransferability. No Restricted Stock/Restricted Stock Unit Award
shall be transferable, in whole or in part, by the Participant, other than by
will or by the laws of descent and distribution, prior to the lapse of the risks
of forfeiture or satisfaction of the vesting conditions described in the
Restricted Stock Agreement or Restricted Stock Unit Agreement. If the
Participant shall attempt any transfer of any Restricted Stock/Restricted Stock
Unit Award granted under the Plan prior to such date, such transfer shall be
void and the Restricted Stock/Restricted Stock Unit Award shall terminate.
     (g) Other Provisions. The Restricted Stock Agreement or Restricted Stock
Unit Agreement authorized under this Section 11 shall contain such other
provisions as the Administrator shall deem advisable.
     (h) Delay of Payment for Section 162(m). In the event the Administrator
reasonably anticipates that the Company’s income tax deduction with respect to
the vesting of any Restricted Stock Award or any issuance of shares of Stock
required by a Restricted Stock Unit Award would be limited or eliminated by Code
Section 162(m), the Administrator may, subject to such terms and conditions as
determined by the Administrator, delay all or a portion of the vesting or
issuance of such shares of Stock until the earlier of (i) the date at which the
Administrator reasonably anticipates that the corresponding income tax deduction
will not be so limited or eliminated, and (ii) the Participant’s separation from
service, as such term is defined in Code Section 409A and the regulations,
notices and other guidance of general applicability issued thereunder.

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     (i) Limitation on Restricted Stock or Restricted Stock Units. In no event
shall any Participant receive during any one fiscal year Restricted Stock or
Restricted Stock Unit Awards for a number of shares that is greater than
(i) 175% of the Participant’s base salary in effect on the date of the grant of
the Award, divided by (ii) the Fair Market Value of the Stock on the date of the
grant of the Award.
SECTION 12.
PERFORMANCE AWARDS
     Each Performance Award granted pursuant to this Section 12 shall be
evidenced by a written agreement (the “Performance Award Agreement”). The
Performance Award Agreement shall be in such form as may be approved from time
to time by the Administrator and may vary from Participant to Participant;
provided, however, that each Participant and each Performance Award Agreement
shall comply with and be subject to the following terms and conditions:
     (a) Awards. Performance Awards in the form of Performance Units or
Performance Shares may be granted to any Participant in the Plan. Performance
Units shall consist of monetary awards which may be earned or become vested in
whole or in part if the Company achieves certain goals established by the
Administrator over a specified Performance Period. Performance Shares shall
consist of shares of Stock or other Awards denominated in shares of Stock that
may be earned or become vested in whole or in part if the Company achieves
certain goals established by the Administrator over a specified Performance
Period.
     (b) Performance Goals, Performance Period and Payment. The Performance
Award Agreement shall set forth:
          (i) the number of Performance Units or Performance Shares subject to
the Performance Award, and the dollar value of each Performance Unit;
          (ii) one or more performance goals established by the Administrator
based on any one, or combination of, earnings per share, return on equity,
return on assets, total shareholder return, net operating income, cash flow,
increase in revenue, economic value added, increase in share price or cash flow
return on investment, including threshold, target and maximum levels;
          (iii) the Performance Period over which Performance Units or
Performance Shares may be earned or may become vested;
          (iv) the extent to which partial achievement of the goal(s) may result
in a payment or vesting of the Performance Award, as determined by the
Administrator; and
          (v) the date upon which payment of Performance Units will be made or
Performance Shares will be issued, as the case may be, and the extent to which
such payment or the receipt of such Shares may be deferred.

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     (c) Regulatory Compliance. This Section 12 is intended to comply with the
performance-based compensation requirements of Section 162(m) of the Internal
Revenue Code and shall be interpreted in accordance with the rules and
regulations thereunder.
     (d) Withholding Taxes. The Company or its Affiliate shall be entitled to
withhold and deduct from future wages of the Participant all legally required
amounts necessary to satisfy any and all withholding and employment-related
taxes attributable to the Participant’s Performance Award. In the event the
Participant is required under the Performance Award Agreement to pay the Company
or its Affiliate, or make arrangements satisfactory to the Company or its
Affiliate respecting payment of, such withholding and employment-related taxes,
the Administrator may, in its discretion and pursuant to such rules as it may
adopt, permit the Participant to satisfy such obligations, in whole or in part,
by delivering shares of Common Stock. Such shares shall have a Fair Market Value
equal to the minimum required tax withholding, based on the minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes.
In no event may the Participant deliver shares having a Fair Market Value in
excess of such statutory minimum required tax withholding. The Participant’s
election to deliver shares of Common Stock for this purpose shall be made on or
before the date that the amount of tax to be withheld is determined under
applicable tax law. Such election shall be approved by the Administrator and
otherwise comply with such rules as the Administrator may adopt to assure
compliance with Rule 16b-3, or any successor provision, as then in effect, of
the General Rules and Regulations under the Securities Exchange Act of 1934, if
applicable.
     (e) Nontransferability. No Performance Award shall be transferable, in
whole or in part, by the Participant, other than by will or by the laws of
descent and distribution. If the Participant shall attempt any transfer of any
Performance Award granted under the Plan, such transfer shall be void and the
Performance Award shall terminate.
     (f) No Rights as Shareholder. A Participant (or the Participant’s successor
or successors) shall have no rights as a shareholder with respect to any shares
covered by a Performance Award until the date of the issuance of a stock
certificate evidencing such shares. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property),
distributions or other rights for which the record date is prior to the date
such stock certificate is actually issued (except as otherwise provided in
Section 14 of the Plan).
     (g) Other Provisions. The Performance Award Agreement authorized under this
Section 12 shall contain such other provisions as the Administrator shall deem
advisable.
SECTION 13.
STOCK APPRECIATION RIGHTS
     Each Stock Appreciation Right granted pursuant to this Section 13 shall be
evidenced by a written agreement (the “Stock Appreciation Agreement”). The Stock
Appreciation Agreement shall

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be in such form as may be approved from time to time by the Administrator and
may vary from Participant to Participant; provided, however, that each
Participant and each Stock Appreciation Agreement shall comply with and be
subject to the following terms and conditions:
     (a) Awards. A Stock Appreciation Right shall entitle the Participant to
receive, upon exercise, cash, shares of Stock, or any combination thereof,
having a value equal to the excess of (i) the Fair Market Value of a specified
number of shares of Stock on the date of such exercise, over (ii) a specified
exercise price. Unless otherwise determined by the Administrator, the specified
exercise price shall not be less than 100% of the Fair Market Value of such
shares of Stock on the date of grant of the Stock Appreciation Right. A Stock
Appreciation Right may be granted independent of or in tandem with a previously
or contemporaneously granted Option.
     (b) Term and Exercisability. The term during which any Stock Appreciation
Right granted under the Plan may be exercised shall be established in each case
by the Administrator. The Stock Appreciation Agreement shall state when the
Stock Appreciation Right becomes exercisable and shall also state the maximum
term during which such Stock Appreciation Right may be exercised. In the event a
Stock Appreciation Right is exercisable immediately, the manner of exercise of
such Stock Appreciation Right in the event it is not exercised in full
immediately shall be specified in the Stock Appreciation Agreement. The
Administrator may accelerate the exercisability of any Stock Appreciation Right
granted hereunder which is not immediately exercisable as of the date of grant.
If a Stock Appreciation Right is granted in tandem with an Option, Stock
Appreciation Agreement shall set forth the extent to which the exercise of all
or a portion of the Stock Appreciation Right shall cancel a corresponding
portion of the Option, and the extent to which the exercise of all or a portion
of the Option shall cancel a corresponding portion of the Stock Appreciation
Right.
     (c) Withholding Taxes. The Company or its Affiliate shall be entitled to
withhold and deduct from future wages of the Participant all legally required
amounts necessary to satisfy any and all withholding and employment-related
taxes attributable to the Participant’s Stock Appreciation Right. In the event
the Participant is required under the Stock Appreciation Right to pay the
Company or its Affiliate, or make arrangements satisfactory to the Company or
its Affiliate respecting payment of, such withholding and employment-related
taxes, the Administrator may, in its discretion and pursuant to such rules as it
may adopt, permit the Participant to satisfy such obligations, in whole or in
part, by delivering shares of Common Stock. Such shares shall have a Fair Market
Value equal to the minimum required tax withholding, based on the minimum
statutory withholding rates for federal and state tax purposes, including
payroll taxes. In no event may the Participant deliver shares having a Fair
Market Value in excess of such statutory minimum required tax withholding. The
Participant’s election to deliver shares of Common Stock for this purpose shall
be made on or before the date that the amount of tax to be withheld is
determined under applicable tax law. Such election shall be approved by the
Administrator and otherwise comply with such rules as the Administrator may
adopt to assure compliance with Rule 16b-3, or any successor provision, as then
in effect, of the General Rules and Regulations under the Securities Exchange
Act of 1934, if applicable.

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     (d) Nontransferability. No Stock Appreciation Right shall be transferable,
in whole or in part, by the Participant, other than by will or by the laws of
descent and distribution. If the Participant shall attempt any transfer of any
Stock Appreciation Right granted under the Plan, such transfer shall be void and
the Stock Appreciation Right shall terminate.
     (e) No Rights as Shareholder. A Participant (or the Participant’s successor
or successors) shall have no rights as a shareholder with respect to any shares
covered by a Stock Appreciation Right until the date of the issuance of a stock
certificate evidencing such shares. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property),
distributions or other rights for which the record date is prior to the date
such stock certificate is actually issued (except as otherwise provided in
Section 14 of the Plan).
     (f) Other Provisions. The Stock Appreciation Agreement authorized under
this Section 13 shall contain such other provisions as the Administrator shall
deem advisable, including but not limited to any restrictions on the exercise of
the Stock Appreciation Right which may be necessary to comply with Rule 16b-3 of
the Securities Exchange Act of 1934, as amended.
SECTION 14.
RECAPITALIZATION, SALE, MERGER, EXCHANGE OR LIQUIDATION
     In the event of an increase or decrease in the number of shares of Common
Stock resulting from a subdivision or consolidation of shares, stock dividend,
or stock split, the Board may, in its sole discretion, adjust the number of
shares of Stock reserved under Section 6 hereof, the number of shares of Stock
covered by each Award, and, if applicable, the price per share thereof to
reflect such change. Additional shares which may be credited pursuant to such
adjustment shall be subject to the same restrictions as are applicable to the
shares with respect to which the adjustment relates.
     Unless otherwise provided in the agreement with respect to an Award, in the
event of an acquisition of the Company through the sale of substantially all of
the Company’s assets and the consequent discontinuance of its business or
through a merger, consolidation, exchange, reorganization, reclassification,
extraordinary dividend, divestiture or liquidation of the Company (collectively
referred to as a “transaction”), the Board may provide for one or more of the
following:
     (a) the equitable acceleration of the exercisability of any outstanding
Options or Stock Appreciation Rights, the vesting and payment of any Performance
Awards, or the lapsing of the risks of forfeiture on any Restricted Stock
Awards;
     (b) the complete termination of this Plan, the cancellation of outstanding
Options or Stock Appreciation Rights not exercised prior to a date specified by
the Board (which date shall give Participants a reasonable period of time in
which to exercise such Award prior to the effectiveness of such transaction),
the cancellation of any Performance Award and the cancellation of any Restricted
Stock Awards for which the risks of forfeiture have not lapsed;

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     (c) that Participants holding outstanding Options and Stock Appreciation
Rights shall receive, with respect to each share of Stock subject to such
Awards, as of the effective date of any such transaction, cash in an amount
equal to the excess of the Fair Market Value of such Stock on the date
immediately preceding the effective date of such transaction over the price per
share of such Options or Stock Appreciation Rights; provided that the Board may,
in lieu of such cash payment, distribute to such Participants shares of Common
Stock of the Company or shares of stock of any corporation succeeding the
Company by reason of such transaction, such shares having a value equal to the
cash payment herein;
     (d) that Participants holding outstanding Restricted Stock Awards and
Performance Share Awards shall receive, with respect to each share of Stock
subject to such Awards, as of the effective date of any such transaction, cash
in an amount equal to the Fair Market Value of such Stock on the date
immediately preceding the effective date of such transaction; provided that the
Board may, in lieu of such cash payment, distribute to such Participants shares
of Common Stock of the Company or shares of stock of any corporation succeeding
the Company by reason of such transaction, such shares having a value equal to
the cash payment herein;
     (e) the continuance of the Plan with respect to the exercise of Options or
Stock Appreciation Rights which were outstanding as of the date of adoption by
the Board of such plan for such transaction and provide to Participants holding
such Options and Stock Appreciation Rights the right to exercise their
respective Options or Stock Appreciation Rights as to an equivalent number of
shares of stock of the corporation succeeding the Company by reason of such
transaction; and
     (f) the continuance of the Plan with respect to Restricted Stock Awards for
which the risks of forfeiture have not lapsed as of the date of adoption by the
Board of such plan for such transaction and provide to Participants holding such
Awards the right to receive an equivalent number of shares of stock of the
corporation succeeding the Company by reason of such transaction.
     The Board may restrict the rights of or the applicability of this
Section 14 to the extent necessary to comply with Section 16(b) of the
Securities Exchange Act of 1934, the Internal Revenue Code or any other
applicable law or regulation. The grant of an Award pursuant to the Plan shall
not limit in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, exchange or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.
SECTION 15.
INVESTMENT PURPOSE
     No shares of Stock shall be issued pursuant to the Plan unless and until
there has been compliance, in the opinion of Company’s counsel, with all
applicable legal requirements, including without limitation, those relating to
securities laws and stock exchange listing

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requirements. As a condition to the issuance of Stock to Participant, the
Administrator may require Participant to (a) represent that the shares of Stock
are being acquired for investment and not resale and to make such other
representations as the Administrator shall deem necessary or appropriate to
qualify the issuance of the shares as exempt from the Securities Act of 1933 and
any other applicable securities laws, and (b) represent that Participant shall
not dispose of the shares of Stock in violation of the Securities Act of 1933 or
any other applicable securities laws.
     As a further condition to the issuance of Stock to Participant, Participant
agrees to the following:
     (a) In the event the Company advises Participant that it plans an
underwritten public offering of its Common Stock in compliance with the
Securities Act of 1933, as amended, and the underwriter(s) seek to impose
restrictions under which certain shareholders may not sell or contract to sell
or grant any option to buy or otherwise dispose of part or all of their rights
to the Common Stock underlying Awards, Participant will not, for a period not to
exceed 180 days from the prospectus, sell or contract to sell or grant an option
to buy or otherwise dispose of any Award granted to Participant pursuant to the
Plan or any of the underlying shares of Common Stock without the prior written
consent of the underwriter(s) or its representative(s).
     (b) In the event the Company makes any public offering of its securities
and determines in its sole discretion that it is necessary to reduce the number
of issued but unexercised Options or Stock Appreciation Rights so as to comply
with any state’s securities or Blue Sky law limitations with respect thereto,
the Board shall have the right (i) to accelerate the exercisability of any Award
and the date on which such Award must be exercised, provided that the Company
gives Participant prior written notice of such acceleration, and (ii) to cancel
any Awards or portions thereof which Participant does not exercise prior to or
contemporaneously with such public offering.
     (c) In the event of a transaction (as defined in Section 14 of the Plan),
Participant will comply with Rule 145 of the Securities Act of 1933 and any
other restrictions imposed under other applicable legal or accounting principles
if Participant is an “affiliate” (as defined in such applicable legal and
accounting principles) at the time of the transaction, and Participant will
execute any documents necessary to ensure compliance with such rules.
     The Company reserves the right to place a legend on any stock certificate
issued upon the exercise of an Award pursuant to the Plan to assure compliance
with this Section 15.
SECTION 16.
AMENDMENT OF THE PLAN
     The Board may from time to time, insofar as permitted by law, suspend or
discontinue the Plan or revise or amend it in any respect; provided, however,
that no such revision or amendment, except as is authorized in Section 14, shall
impair the terms and conditions of any Award which is outstanding on the date of
such revision or amendment to the material detriment

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of the Participant without the consent of the Participant. Notwithstanding the
foregoing, no such revision or amendment shall (i) materially increase the
number of shares subject to the Plan except as provided in Section 14 hereof,
(ii) change the designation of the class of employees eligible to receive
Awards, (iii) decrease the price at which Options may be granted, or
(iv) materially increase the benefits accruing to Participants under the Plan
without the approval of the shareholders of the Company if such approval is
required for compliance with the requirements of any applicable law or
regulation. Furthermore, the Plan may not, without the approval of the
shareholders, be amended in any manner that will cause incentive stock options
to fail to meet the requirements of Section 422 of the Internal Revenue Code.
SECTION 17.
NO OBLIGATION TO EXERCISE OPTION
     The granting of an Option or Stock Appreciation Right shall impose no
obligation upon the Participant to exercise such Option or Stock Appreciation
Right. Further, the granting of any Award hereunder shall not impose upon the
Company or any Affiliate any obligation to retain the Participant in its employ
for any period.

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