BIOTRICITY INC.

2016 EQUITY INCENTIVE PLAN

1.

ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

1.1

Establishment. The Biotricity Inc. 2016 Equity Incentive Plan (the “Plan”) was
approved by the Board and by the holders of a majority of the issued and
outstanding shares of the common stock of the Company as of February 2, 2016
(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 for the Participating
Company Group 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 Purchase Rights, Restricted Stock Bonuses, Restricted
Stock Units, Performance Shares, Performance Units and Other Stock-Based Awards.

1.3

Term of Plan. The Plan shall continue in effect until its termination by the
Committee; provided, however, that all Awards shall be granted, if at all, on or
before the day immediately preceding the tenth (10th) anniversary of 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) a parent entity, other than a Parent Company, that
directly, or indirectly through one or more intermediary entities, controls the
Company or (ii) a subsidiary entity, other than a Subsidiary Company, that is
controlled by the Company directly or indirectly through one or more
intermediary entities. For this purpose, the terms “parent,” “subsidiary,”
“control” and “controlled by” shall have the meanings assigned such terms for
the purposes of registration of securities on Form S-8 under the Securities Act.

(b)

“Applicable Law” shall mean the applicable provisions of the Code, the
Securities Act, the Exchange Act and any other federal, state or foreign
corporate, securities or tax or other laws, rules, requirements or regulations,
the rules of any national securities exchange or automated quotation system on
which the shares of Stock are listed, quoted or traded and any other applicable
law.

(c)

“Appreciation Award” (i) an Option, (ii) a Stock Appreciation Right, or (iii) a
Restricted Stock Purchase Right under which the Company will receive monetary
consideration equal to the Fair Market Value (determined on the effective date
of grant) of the shares subject to such Award.

(d)

“Award” means any Option, Stock Appreciation Right, Restricted Stock Purchase
Right, Restricted Stock Bonus, Restricted Stock Unit, Performance Share,
Performance Unit or Other Stock-Based Award granted under the Plan.

(e)

“Award Agreement” means a written or electronic agreement between the Company
and a Participant setting forth the terms, conditions and restrictions
applicable to an Award.

(f)

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

(g)

“Cashless Exercise” means a Cashless Exercise as defined in Section 6.3(b)(i).

(h)

“Cause” means (i) conviction of, or the entry of a plea of guilty or no contest
to, a felony or any other crime that causes any Participating Company public
disgrace or disrepute, or adversely affects any Participating Company’s
operations or financial performance or the relationship the Company has with any
other Participating Company, (ii) gross negligence or willful misconduct with
respect to any Participating Company, including, without limitation fraud,
embezzlement, theft or dishonesty in the course of his employment; (iii)
refusal, failure or inability to perform any material obligation or fulfill any
duty (other than any duty or obligation of the type described in clause (v)
below) to any Participating Company (other than due to a Disability), which
failure, refusal or inability is not cured within 10 days after delivery of
notice thereof; (iv) material breach of any agreement with or duty owed to any
Participating Company; (v) any breach of any obligation or duty to any
Participating Company (whether arising by statute, common law, covenant,
contract or otherwise) relating to confidentiality, noncompetition,
nonsolicitation or proprietary rights; or (vi) any other conduct that
constitutes “cause” at common law. Notwithstanding the foregoing, if a
Participant and the Company (or any other Participating Company) have entered
into an employment agreement, consulting agreement or other similar agreement
that specifically defines “cause,” then with respect to such Participant,
“Cause” shall have the meaning defined in that employment agreement, consulting
agreement or other agreement unless otherwise specifically provided therein.

(i)

“Change in Control” means, the occurrence of any of the following, in one
transaction or a series of related transactions: (i) any person (including any
individual, firm, partnership or other entity) together with all “Affiliates”
and “Associates” (each as defined under Rule 12b-2 of the General Rules and
Regulations promulgated under the Exchange Act) of such person (but excluding
(A) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any subsidiary of the Company, (B) a corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of the Company, (C) the Company or any
subsidiary of the Company or (D) a Participant, together with all Affiliates and
Associates of such Participant) who is not a stockholder or an Affiliate or
Associate of a stockholder of the Company on the date of stockholder approval of
the Plan is or becomes the Beneficial Owner (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of (x) securities
of the Company representing more than 50% of the combined voting power of the
Company’s then outstanding securities or (y) all, or substantially all, of the
Company’s assets; (ii) a consolidation, share exchange, reorganization or merger
of the Company resulting in the stockholders of the Company immediately prior to
such event not owning at least a majority of the voting power of the resulting
entity’s securities outstanding immediately following such event; (iii) the sale
or other disposition of all or substantially all the assets of the Company
(other than a transfer of financial assets made in the ordinary course of
business for the purpose of securitization); or (iv) a liquidation or
dissolution of the Company. For the avoidance of doubt, a transaction or a
series of related transactions will not constitute a Change in Control if such
transaction(s) result(s) in the Company, any successor to the Company, or any
successor to the Company’s business, being controlled, directly or indirectly,
by the same Person or Persons who controlled the Company, directly or
indirectly, immediately before such transaction(s). Notwithstanding the
foregoing, with respect to Awards constituting “non-qualified deferred
compensation” pursuant to the provisions of Code Section 409A and the
regulations promulgated thereunder, the term “Change in Control of the Company”
shall have the meanings of the relevant terms defined under forth Treas. Reg.

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Section 1.409A-3(i)(5). In no instance shall an initial or secondary public
offering of the Company’s Stock be deemed to constitute a Change in Control of
the Company

(j)

“Code” means the Internal Revenue Code of 1986, as amended, and any applicable
regulations or administrative guidelines promulgated thereunder.

(k)

 “Committee” means the Compensation Committee of the Board 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. If, at any time, there is no committee of the Board then authorized or
properly constituted to administer the Plan, the Board shall exercise all of the
powers of the Committee granted herein, and, in any event, the Board may in its
discretion exercise any or all of such powers.

(l)

“Company” means Biotricity Inc., a Nevada corporation, or any successor
corporation thereto.

(m)

“Consultant” means a person engaged to provide consulting or advisory services
(other than as an Employee or a member of the Board) to a Participating Company,
provided that the identity of such person, the nature of such services or the
entity to which such services are provided would not preclude the Company from
offering or selling securities to such person pursuant to the Plan in reliance
on registration on Form S-8 under the Securities Act.

(n)

“Covered Employee” means, at any time the Plan is subject to Section 162(m), any
Employee who is or may reasonably be expected to become a “covered employee” as
defined in Section 162(m), or any successor statute, and who is designated,
either as an individual Employee or a member of a class of Employees, by the
Committee no later than the earlier of (i) the date that is ninety (90) days
after the beginning of the Performance Period, or (ii) the date on which
twenty-five percent (25%) of the Performance Period has elapsed, as a “Covered
Employee” under this Plan for such applicable Performance Period.

(o)

“Director” means a member of the Board.

(p)

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

(q)

“Dividend Equivalent Right” means the right of a Participant, granted at the
discretion of the Committee or as otherwise provided by the Plan, to receive a
credit for the account of such Participant in an amount equal to the cash
dividends paid on one share of Stock for each share of Stock represented by an
Award (other than an Appreciation Award) held by such Participant.

(r)

“DRO” shall mean a domestic relations order as defined by the Code or Title I of
the Employee Retirement Income Security Act of 1974, as amended

(s)

“Employee” means any person treated as an employee (including an Officer or a
member of the Board who is also treated as an employee) in the records of a
Participating Company and, with respect to any Incentive Stock Option granted to
such person, who is an employee for purposes of Section 422 of the Code;
provided, however, that neither service as a member of the Board nor payment of
a director’s fee shall be sufficient to constitute employment for purposes of
the Plan. The Company shall determine in good faith and in the exercise of its
discretion, whether an individual has become or has ceased to be an Employee and
the effective date of such individual’s employment or termination of employment,
as the case may be. For purposes of an individual’s rights, if any, under the

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terms of the Plan as of the time of the Company’s determination of whether or
not the individual is an Employee, all such determinations by the Company shall
be final, binding and conclusive as to such rights, if any, notwithstanding that
the Company or any court of law or governmental agency subsequently makes a
contrary determination as to such individual’s status as an Employee.

(t)

“Exchangeable Shares” means the Exchangeable Shares of 1062024 B.C. LTD., a
company existing under the laws of the Province of British Columbia and an
indirect subsidiary of the Company.

(u)

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

(v)

“Fair Market Value” means, as of any date, the value of a share of Stock or
other property as determined by the Committee, 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 Committee, if, on such date, the Stock is
listed or quoted on a national or regional securities exchange or quotation
system, the Fair Market Value of a share of Stock shall be the closing price of
a share of Stock as quoted on the national or regional securities exchange or
quotation system constituting the primary market for the Stock, as reported in
such 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 quotation
system, the date on which the Fair Market Value shall be established shall be
the last day on which the Stock was so traded or quoted prior to the relevant
date, or such other appropriate day as shall be determined by the Committee, in
its discretion.

(ii)

If, on such date, the Stock is not listed or quoted on a national or regional
securities exchange or quotation system, the Fair Market Value of a share of
Stock shall be as determined by the Committee in good faith without regard to
any restriction other than a restriction which, by its terms, will never lapse,
and in a manner consistent with the requirements of Section 409A.

(w)

“Full Value Award” means any Award settled in Stock, other than an Appreciation
Award (i.e., (i) an Option, (ii) a Stock Appreciation Right, or (iii) a
Restricted Stock Purchase Right under which the Company will receive monetary
consideration equal to the Fair Market Value (determined on the effective date
of grant) of the shares subject to such Award).

(x)

“Incentive Stock Option” means an Option intended to be (as set forth in the
Award Agreement) and which qualifies as an incentive stock option within the
meaning of Section 422(b) of the Code.

(y)

“Incumbent Director” means a director who either (i) is a member of the Board as
of the Effective Date or (ii) is elected, or nominated for election, to the
Board with the affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination (but excluding a director
who was elected or nominated in connection with an actual or threatened proxy
contest relating to the election of directors of the Company).

(z)

“Net Exercise” means a Net Exercise as defined in Section 6.3(b)(iii).

(aa)

“Nonemployee Director” means a Director who is not an Employee.

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(bb)

“Nonemployee Director Award” means any Award granted to a Nonemployee Director.

(cc)

“Non-Qualified Stock Option” means an Option not intended to be (as set forth in
the Award Agreement) or which does not qualify as an incentive stock option
within the meaning of Section 422(b) of the Code.

(dd)

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

(ee)

“Option” means an Incentive Stock Option or a Non-Qualified Stock Option granted
pursuant to the Plan.

(ff)

“Other Stock-Based Award” means an Award denominated in shares of Stock and
granted pursuant to Section 11.

(gg)

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

(hh)

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

(ii)

“Participating Company” means the Company or any Parent Company, Subsidiary
Company or Affiliate that has adopted this Plan for the benefit of its
Employees, Consultants or other eligible persons.

(jj)

“Participating Company Group” means, at any point in time, the Company and all
other entities collectively which are then Participating Companies.

(kk)

“Performance Award” means an Award of Performance Shares or Performance Units.

(ll)

“Performance Award Formula” means, for any Performance Award, a formula or table
established by the Committee pursuant to Section 10.3 which provides the basis
for computing the value of a Performance Award at one or more levels of
attainment of the applicable Performance Goal(s) measured as of the end of the
applicable Performance Period.

(mm)

“Performance-Based Compensation” means compensation under an Award that
satisfies the requirements of Section 162(m) for certain performance-based
compensation paid to Covered Employees.

(nn)

“Performance Goal” means a performance goal established by the Committee
pursuant to Section 10.3.

(oo)

“Performance Period” means a period established by the Committee pursuant to
Section 10.3 at the end of which one or more Performance Goals are to be
measured.

(pp)

“Performance Share” means a right granted to a Participant pursuant to Section
10 to receive a payment equal to the value of one share of Stock, as determined
by the Committee, based upon attainment of applicable Performance Goal(s).

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(qq)

“Performance Unit” means a right granted to a Participant pursuant to Section 10
to receive a payment equal to the value of one share of Stock, as determined by
the Committee, based upon attainment of applicable Performance Goal(s).

(rr)

“Permitted Transferee” shall mean, with respect to a Participant, any “family
member” of the Participant, as defined under the instructions to use the
Registration Statement on Form S-8 (or successor form) under the Securities Act,
or any other transferee specifically approved by the Committee after taking into
account Applicable Law.

(ss)

“Restricted Stock Award” means an Award of a Restricted Stock Bonus or a
Restricted Stock Purchase Right.

(tt)

“Restricted Stock Bonus” means Stock granted to a Participant pursuant to
Section 8.

(uu)

“Restricted Stock Purchase Right” means a right to purchase Stock granted to a
Participant pursuant to Section 8.

(vv)

“Restricted Stock Unit” means a right granted to a Participant pursuant to
Section 9 to receive on a future date or event a share of Stock or cash in lieu
thereof, as determined by the Committee.

(ww)

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

(xx)

“SAR” or “Stock Appreciation Right” means a right granted to a Participant
pursuant to Section 7 to receive payment, for each share of Stock subject to
such Award, 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 Award over the exercise price
thereof.

(yy)

“Section 16 Insider” means an Officer, Director or any other person whose
transactions in Stock are subject to Section 16 of the Exchange Act.

(zz)

“Section 162(m)” means Section 162(m) of the Code.

(aaa)

“Section 409A” means Section 409A of the Code.

(bbb)

“Section 409A Deferred Compensation” means compensation provided pursuant to an
Award that constitutes nonqualified deferred compensation within the meaning of
Section 409A.

(ccc)

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

(ddd)

“Service” means a Participant’s employment or service with the Participating
Company Group, whether as an Employee, a Director or a Consultant. Unless
otherwise provided by the Committee, 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 been interrupted or terminated
if the Participant takes any military leave, sick leave, or other bona fide
leave of absence approved by the Company. However, unless otherwise provided by
the

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Committee, and/or set forth in an applicable Award Agreement, 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, an unpaid 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
business entity for which the Participant performs Service ceasing to be a
Participating Company. Subject to the foregoing, the Company, in its discretion,
shall determine whether the Participant’s Service has terminated and the
effective date of such termination.

(eee)

“Short-Term Deferral Period” means the period described in Section 16.1.

(fff)

“Stock” means the common stock, par value $0.001 per share, of the Company, as
adjusted from time to time in accordance with Section 4.3.

(ggg)

“Stock Tender Exercise” means a Stock Tender Exercise as defined in
Section 6.3(b)(ii).

(hhh)

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

(iii)

“Substitute Award” shall mean an Award granted under the Plan upon the
assumption of, or in substitution for, outstanding equity awards previously
granted by a company or other entity in connection with a corporate transaction,
such as a merger, combination, consolidation or acquisition of property or
stock; provided, however, that in no event shall the term “Substitute Award” be
construed to refer to an award made in connection with the cancellation and
repricing of an Option or Stock Appreciation Right.

(jjj)

“Ten Percent Owner” means a Participant who, at the time an Option is granted to
the Participant, owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of a Participating Company (other
than an Affiliate) within the meaning of Section 422(b)(6) of the Code.

(kkk)

“Trading Compliance 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.

(lll)

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

2.2

Construction.

(a)

The headings and subheadings set forth in this Plan are inserted for the
convenience of reference only and are to be ignored in any construction of the
terms set forth herein.

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(b)

Wherever applicable, the neuter, feminine or masculine pronoun as used herein
shall also include the masculine or feminine, as the case may be.

(c)

The words “hereof,” “herein,” “hereunder” and similar words refer to this Plan
as a whole and not to any particular provision of this Plan; and any subsection,
Section, Schedule, Appendix or Exhibit references are to this Plan unless
otherwise specified.

(d)

The term “including” is not limiting and means “including without limitation.”

(e)

References in this Plan to any statute or statutory provisions include a
reference to such statute or statutory provisions as from time to time amended,
modified, reenacted, extended, consolidated or replaced (whether before or after
the date of this Plan) and to any subordinate legislation made from time to time
under such statute or statutory provision.

(f)

References to this Plan or to any other document include a reference to this
Plan or to such other document as varied, amended, modified, novated or
supplemented from time to time.

(g)

References to “writing” or “written” include any non-transient means of
representing or copying words legibly, including by facsimile or electronic
mail.

(h)

References to “$” are to United States Dollars.

(i)

References to “%” are to percent.

3.

ADMINISTRATION.

3.1

Administration by the Committee. The Plan shall be administered by the
Committee. All questions of interpretation of the Plan, of any Award Agreement
or of any other form of agreement or other document employed by the Company in
the administration of the Plan or of any Award shall be determined by the
Committee, and such determinations shall be final, binding and conclusive upon
all persons having an interest in the Plan or such Award, unless fraudulent or
made in bad faith. Any and all actions, decisions and determinations taken or
made by the Committee in the exercise of its discretion pursuant to the Plan or
Award Agreement or other agreement thereunder (other than determining questions
of interpretation pursuant to the preceding sentence) shall be final, binding
and conclusive upon all persons having an interest therein. All expenses
incurred in the administration of the Plan shall be paid by the Company. The
Committee may delegate to one or more “executive officers” (as defined under
applicable rules promulgated under the Exchange Act) the authority to grant
Awards hereunder to employees who are not executive officers, and to consultants
and advisers, in accordance with such guidelines as the Committee shall set
forth at any time or from time to time.

3.2

Administration. Directors who are eligible for Awards or have received Awards
may vote on any matters affecting the administration of the Plan or the grant of
Awards, except that no such member will act upon the grant of an Award to
himself or herself, but any such member may be counted in determining the
existence of a quorum at any meeting of the Board during which action is taken
with respect to the grant of Awards to himself or herself.

3.3

Administration with Respect to Section 16 Insiders. With respect to
participation by Section 16 Insiders in the Plan, at any time that any class
of equity security of the

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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.

3.4

Committee Complying with Section 162(m). When necessary or desirable for an
Award to qualify as “performance-based compensation” under Section 162(m) of the
Code the Committee shall include at least two persons who are “Outside
Directors” (as such term is defined in Section 162(m) of the Code and the
regulations promulgated thereunder) and at least two (or a majority if more than
two then serve on the Committee) such Outside Directors shall approve the grant
of such Award and timely determine (as applicable) the performance period and
any performance criteria upon which vesting or settlement of any portion of such
Award is to be subject. When required by Section 162(m) of the Code, prior to
payment or settlement of any such Award (i) at least two (or a majority if more
than two then serve on the Committee) such Outside Directors then serving on the
Committee shall determine and certify in writing the extent to which such
performance criteria have been timely achieved and the extent to which cash or
the shares of Stock subject to such Award have thereby been earned and (ii) the
payment or settlement of such Award must be approved by the Company’s
stockholders in the manner, and subject to the procedures, set forth in Section
162(m) of the Code and the regulations promulgated thereunder.

3.5

Powers of the Committee. In addition to any other powers set forth in
the Plan and subject to the provisions of the Plan, the Committee 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, units or monetary value 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 any 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 Performance Measures, Performance Period, Performance Award Formula and
Performance Goals applicable to any Award and the extent to which such
Performance Goals have been attained, (vi) the time of the expiration of any
Award, (vii) the effect of the Participant’s termination of Service on any of
the foregoing and (viii) 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 determine whether an Award will be settled in shares of Stock, cash, other
property or in any combination thereof;

(f)

to approve one or more forms of Award Agreement;

(g)

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;

9

(h)

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;

(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 Committee 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 Committee may
deem advisable to the extent not inconsistent with the provisions of the Plan or
applicable law.

3.6

Indemnification.  In addition to such other rights of indemnification as they
may have as members of the Board or the Committee or as officers or employees of
the Participating Company Group, to the extent permitted by applicable law,
members of the Board or the Committee and any officers or employees of the
Participating Company Group to whom authority to act for the Board, the
Committee 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.

3.7

Delegation of Authority. To the extent permitted by Applicable Law, the Board or
Committee may from time to time delegate to a committee of one or more members
of the Board or one or more officers of the Company or any affiliate the
authority to grant or amend Awards or to take other administrative actions
pursuant to this Article 3; provided, however, that in no event shall an officer
of the Company or any affiliate be delegated the authority to grant awards to,
or amend awards held by, the following individuals: (i) individuals who are
subject to Section 16 of the Exchange Act, (ii) Covered Employees, or (iii)
officers of the Company (or directors) to whom authority to grant or amend
Awards has been delegated hereunder; provided, further, that any delegation of
administrative authority shall only be permitted to the extent it is permissible
under Section 162(m) of the Code and other Applicable Law, to the extent
applicable. Any delegation hereunder shall be subject to the restrictions and
limits that the Board or Committee specifies at the time of such delegation, and
the Board or Committee, as the case may be, may, at any time, rescind the
authority so delegated or appoint a new delegatee. At all times, the delegatee
appointed under this Section 3.7 shall serve in such capacity at the pleasure of
the Board and the Committee.

4.

SHARES SUBJECT TO PLAN.

4.1

Maximum Number of Shares Issuable. Subject to adjustment as provided in Section
4.3, as of the Plan’s Effective Date, the maximum number of shares of Stock that
may be issued under the Plan pursuant to Awards shall be equal to 3,750,000
shares; provided that the maximum

10

number of shares of Stock that may be issued under the Plan pursuant to Awards
shall automatically and without any further Company or shareholder approval,
increase on January 1 of each year for not more than 10 years from the Effective
Date, so the number of shares that may be issued is an amount no greater than
15% of the Company’s outstanding shares of Stock and shares of Stock underlying
any outstanding Exchangeable Shares as of such January 1; provided further that
no such increase shall be effective if it would violate any applicable law or
stock exchange rule or regulation, or result in adverse tax consequences to the
Company or any Participant that would not otherwise result but for the increase.

4.2

Share Counting. 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, then in each case 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 of Stock
shall not be deemed to have been issued pursuant to the Plan with respect to any
portion of an Award that is settled in cash. Shares withheld or reacquired by
the Company in satisfaction of tax withholding obligations applicable to
Appreciation Awards pursuant to Section 16.2, shall not again be available for
issuance under the Plan. Shares withheld by the Company in satisfaction of tax
withholding obligations described in Section 16.2 with respect to Full Value
Awards, shall 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 subject to such SAR. If the exercise price of an Appreciation Award 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 of stock for which the Option is exercised. Shares reacquired
by the Company on the open market or otherwise using cash proceeds from the
exercise of Options shall not be added to the shares of Stock authorized for
grant under this Plan.

4.3

Adjustments for Changes in Capital Structure. Subject to any required action by
the stockholders of the Company and the requirements of Section 409A Section 424
of the Code to the extent applicable, 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 regular, periodic cash dividends) that has a material effect on
the Fair Market Value of shares of Stock, appropriate and proportionate
adjustments shall be made in the number and kind of shares subject to
the Plan and to any outstanding Awards, the Award limits set forth in Section
5.3, 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 a Change in
Control) shares of another corporation (the “New Shares”), the Committee 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 Committee, in its
discretion. Any fractional share resulting from an adjustment pursuant to this
Section 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 Committee in
its 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,

11

including modification of Performance Goals, Performance Award Formulas and
Performance Periods. The adjustments determined by the Committee pursuant to
this Section shall be final, binding and conclusive.

4.4

Assumption or Substitution of Awards. To the extent permitted by Applicable Law,
Substitute Awards shall not reduce the number of shares of Stock authorized for
grant under the Plan. Additionally, in the event that an entity acquired by the
Company or any Affiliate or with which the Company or any Affiliate combines has
shares available under a pre-existing plan approved by stockholders or equity
holders and not adopted in contemplation of such acquisition or combination, the
shares available for grant pursuant to the terms of such pre-existing plan (as
adjusted, to the extent appropriate, using the exchange ratio or other
adjustment or valuation ratio or formula used in such acquisition or combination
to determine the consideration payable to the holders of common stock of the
entities party to such acquisition or combination) may be used for Awards under
the Plan and shall not reduce the number of shares of Stock authorized for grant
under the Plan; provided that Awards using such available shares shall not be
made after the date awards or grants could have been made under the terms of the
pre-existing plan, absent the acquisition or combination, and shall only be made
to individuals who were not employed by or providing services to the Company or
its Affiliates immediately prior to such acquisition or combination.

5.

ELIGIBILITY, PARTICIPATION AND AWARD LIMITATIONS.

5.1

Persons Eligible for Awards. Awards may be granted only to Employees,
Consultants and Directors.

5.2

Participation in the Plan. Awards are granted solely at the discretion of the
Committee. Eligible persons may be granted more than one Award. However,
eligibility in accordance with this Section shall not entitle any person to be
granted an Award, or, having been granted an Award, to be granted an additional
Award.

5.3

Award Limitations.

(a)

Incentive Stock Option Limitations.

(i)

Maximum Number of Shares Issuable Pursuant to Incentive Stock Options. Subject
to adjustment as provided in Section 4.3, the maximum aggregate number of shares
of Stock that may be issued under the Plan pursuant to the exercise
of Incentive Stock Options shall not exceed 3,750,000.

(ii)

Persons Eligible. An Incentive Stock Option may be granted only to a person who,
on the effective date of grant, is an Employee of the Company, a Parent Company
or a Subsidiary Company (each being an “ISO-Qualifying Company”). Any person who
is not an Employee of an ISO-Qualifying Company on the effective date of the
grant of an Option to such person may be granted only a Non-Qualified Stock
Option.

(iii)

Fair Market Value Limitation. To the extent that options designated
as Incentive Stock Options (granted under all stock option plans of the
Participating Company Group, including the Plan) become exercisable by a
Participant for the first time during any calendar year for stock having a Fair
Market Value greater than One Hundred Thousand Dollars ($100,000), the portion
of such options which exceeds such amount shall be treated as Non-Qualified
Stock Options. For purposes of this Section, options designated
as Incentive Stock Options shall be taken into account in the order in which
they were granted, and the Fair Market Value of stock shall be determined as of
the time

12

the option with respect to such stock is granted. If the Code is amended to
provide for a limitation different from that set forth in this Section, such
different limitation shall be deemed incorporated herein effective as of the
date and with respect to such Options as required or permitted by such amendment
to the Code. If an Option is treated as an Incentive Stock Option in part and as
a Non-Qualified Stock Option in part by reason of the limitation set forth in
this Section, the Participant may designate which portion of such Option the
Participant is exercising. In the absence of such designation, the Participant
shall be deemed to have exercised the Incentive Stock Option portion of the
Option first. Upon exercise, shares issued pursuant to each such portion shall
be separately identified.

(b)

Section 162(m) Award Limits. Subject to adjustment as provided in Section 4.3,
no Employee shall be granted within any fiscal year of the Company one or more
Awards intended to qualify for treatment as Performance-Based Compensation, (i)
in the case of Options and SARs, that provide for the acquisition of more than
3,750,000 shares of Stock and (ii) in the case of other Awards, which could
result in such Employee receiving more than 3,750,000 shares of Stock for each
full fiscal year of the Company contained in the Performance Period relating to
such Award. With respect to an Award of Performance Based Compensation payable
in cash to a Participant, the maximum dollar amount of such Award shall be
$1,000,000 for each fiscal year of the Company contained in the Performance
Period relating to such Award.

6.

STOCK OPTIONS.  Options shall be evidenced by Award Agreements specifying the
number of shares of Stock covered thereby, in such form as the Committee shall
from time to time establish. Award Agreements evidencing Options may incorporate
all or any of the terms of the Plan by reference and shall comply with and be
subject to the following terms and conditions:

6.1

Exercise Price. The exercise price for each Option shall be established in the
discretion of the Committee; provided, however, that (a) the exercise price per
share shall be not less than the Fair Market Value of a share of Stock on the
effective date of grant of the Option and (b) no Incentive Stock Option granted
to a Ten Percent Owner shall have an exercise price per share less than one
hundred ten percent (110%) of the Fair Market Value of a share of Stock on the
effective date of grant of the Option. Notwithstanding the foregoing, an Option
(whether an Incentive Stock Option or a Non-Qualified Stock 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
409A or Section 424(a) of the Code.

6.2

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 Committee
and set forth in the Award Agreement evidencing such Option; provided, however,
that (a) no Option shall be exercisable after the expiration of ten (10) years
after the effective date of grant of such Option and (b) no Incentive Stock
Option granted to a Ten Percent Owner shall be exercisable after the expiration
of five (5) years after the effective date of grant of such Option. Subject to
the foregoing, unless otherwise specified by the Committee 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.

6.3

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, by check or in cash equivalent; (ii) if
permitted by the Committee and subject to the limitations contained in
Section 6.3(b), by means of (1) a Cashless Exercise, (2) a Stock Tender Exercise
or (3) a Net Exercise; (iii) by such other consideration as may be approved by
the

13

Committee from time to time to the extent permitted by applicable law, or
(iv) by any combination thereof. The Committee 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)

Cashless Exercise. A “Cashless Exercise” means the 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). 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.

(ii)

Stock Tender Exercise. A “Stock Tender Exercise” means the delivery of a
properly executed exercise notice accompanies by a Participant’s tender to the
Company, or attestation to the ownership, in a form acceptable to the Company of
whole shares of Stock owned by the Participant having a Fair Market Value that
does not exceed the aggregate exercise price for the shares with respect to
which the Option is exercised. A Stock Tender Exercise shall not be permitted if
it would constitute a violation of the provisions of any law, regulation or
agreement restricting the redemption of the Company’s stock. If required by the
Company, an Option may not be exercised by tender to the Company, or attestation
to the ownership, of shares of Stock unless such shares either have been owned
by the Participant for a period of time required by the Company (and not used
for another option exercise by attestation during such period) or were not
acquired, directly or indirectly, from the Company.

(iii)

Net Exercise. A “Net Exercise” means the delivery of a properly executed
exercise notice followed by a procedure pursuant to which (1) the Company will
reduce the number of shares otherwise issuable to a Participant upon the
exercise of an Option by the largest whole number of shares having a Fair Market
Value that does not exceed the aggregate exercise price for the shares with
respect to which the Option is exercised, and (2) the Participant shall pay to
the Company in cash the remaining balance of such aggregate exercise price not
satisfied by such reduction in the number of whole shares to be issued.

6.4

Effect of Termination of Service.

(a)

Option Exercisability. Subject to earlier termination of the Option as otherwise
provided by this Plan and unless otherwise provided by the Committee, 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. Except as otherwise provided in the Award Agreement, or other
agreement governing the Option, Options shall be subject to the following terms
with respect to terminations of Service as follows:

(i)

Disability. If the Participant’s Service terminates because of the Disability of
the Participant, the Option to the extent unexercised and exercisable on the
date on which the Participant’s Service terminated, by the Participant (or the
Participant’s guardian or legal representative) at any time prior to the
expiration of one (1) year after the date on which the Participant’s Service

14

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”).

(ii)

Death. If the Participant’s Service terminates because of the death of the
Participant, the Option to the extent unexercised and exercisable on the date on
which the Participant’s Service terminated, 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 one (1)
year after the date on which the Participant’s Service terminated, but in any
event no later than the Option Expiration Date.

(iii)

Termination for Cause. Notwithstanding any other provision of the Plan to the
contrary, if the Participant’s Service is terminated for Cause or if, following
the Participant’s termination of Service and during any period in which the
Option otherwise would remain exercisable, the Participant engages in any act
that would constitute Cause: (A) the Option shall terminate in its entirety and
cease to be exercisable immediately upon such termination of Service or act, and
(B) any shares of Stock for which the Company has not yet delivered share
certificates will be immediately and automatically forfeited and the Company
will refund to the Participant the Option exercise price paid for such shares of
Stock, if any.

(iv)

Other Termination of Service. If the Participant’s Service terminates for any
reason, except Disability, death or Cause, the Option, to the extent unexercised
and exercisable for vested shares of Stock on the date on which the
Participant’s Service terminated, may be exercised by the Participant at any
time prior to the expiration of ninety (90) days 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, and
subject to compliance with applicable law, including, but not limited to Section
409A other than termination of Service for Cause, if the exercise of an Option
within the applicable time periods set forth in Section 6.4(a) is prevented by
the provisions of Section 14 below, the Option shall remain exercisable until
the later of (i) thirty (30) days after the date such exercise first would no
longer be prevented by such provisions or (ii) the end of the applicable time
period under Section 6.4(a).

6.5

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, to the extent permitted by the Committee, in its
discretion, and set forth in the Award Agreement evidencing such Option, a
Non-Qualified Stock Option may be assignable or transferable subject to the
applicable limitations, if any, described in the General Instructions to
Form S-8 under the Securities Act, and provided further that no consideration
may be received in any transfer. An Incentive Stock Option shall not be
assignable or transferable in any manner.

6.6

Certain Options.  Notwithstanding the foregoing, the Committee shall have
discretion, with respect to Non-Qualified Stock Options, to establish an
exercise price at less than the Fair Market Value per share of Stock on the date
the Option is granted, but only if any such Option is designed to comply with
the requirements of Section 409A of the Code by including one of the following
provisions:

(a)

The Award Agreement related to any such Option must provide that, under all
circumstances, the Stock (or cash or other property) to be received by the
Participant (or other

15

person) upon the exercise or settlement of the Option must be so received no
later than the 15th day of the third month of the year immediately following the
year during which the Option vests;

(b)

The Award Agreement related to any such Option must provide that the Option may
be exercised only during a specific year specified in the Award Agreement or
upon a payment event permitted under Section 409A of the Code and the
regulations promulgated thereunder (with such year(s) and payment events being
set forth in the related Award Agreement); or

(c)

The Award Agreement related to any such Option must provide that Stock (or cash
or other property) deliverable to a Participant (or other person) pursuant to an
exercise or settlement of the Option may not be so delivered until a specified
date or payment event permitted under Section 409A of the Code and the
regulations promulgated thereunder (with such date(s) and payment events being
set forth in the related Award Agreement).

6.7

Substitute Awards.  Notwithstanding the foregoing provisions of this Article V
to the contrary, but subject to the requirements of Sections 409A and 424 of the
Code, in the case of an Option that is a Substitute Award, the exercise price
per share of the shares of Stock subject to such Option may be less than the
Fair Market Value per share on the date of grant of the Substitute Award;
provided that the excess of: (i) the aggregate Fair Market Value (as of the date
such Substitute Award is granted) of the shares of Stock subject to the
Substitute Award, over (ii) the aggregate exercise price thereof does not exceed
the excess of: (x) the aggregate Fair Market Value (as of the time immediately
preceding the transaction giving rise to the Substitute Award, such Fair Market
Value to be determined by the Committee) of the shares of the predecessor entity
that were subject to the grant assumed or substituted for by the Company, over
(y) the aggregate exercise price of such shares pursuant to the option of the
acquired company or other entity for which the Substitute Award substitutes.

7.

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 Committee shall from time to time establish. Award
Agreements evidencing SARs may incorporate all or any of the terms of
the Plan by reference and shall comply with and be subject to the following
terms and conditions:

7.1

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.

7.2

Exercise Price. The exercise price for each SAR shall be established in the
discretion of the Committee; 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. Notwithstanding the foregoing, a SAR may be
granted with an exercise price lower than the minimum exercise price set forth
above if such SAR is granted pursuant to an assumption or substitution for
another stock appreciation right in a manner that would qualify under the
provisions of Section 409A.

7.3

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 Committee may specify where the Tandem SAR is granted
with respect to less than the full number of

16

shares of Stock subject to the related Option. The Committee 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 Committee and set forth
in the Award Agreement evidencing such SAR; provided, however, that (i) no
Freestanding SAR shall be exercisable after the expiration of ten (10) years
after the effective date of grant of such SAR, and (ii) no Freestanding SAR
granted to an Employee who is a non-exempt employee for purposes of the Fair
Labor Standards Act of 1938, as amended, shall be first exercisable until at
least six (6) months following the date of grant of such SAR (except in the
event of such Employee’s death, Disability, upon a Change in Control, or as
otherwise permitted by the Worker Economic Opportunity Act). Subject to the
foregoing, unless otherwise specified by the Committee in the grant of a
Freestanding SAR, each Freestanding SAR shall terminate ten (10) years after the
effective date of grant of the SAR, unless earlier terminated in accordance with
its provisions.

7.4

Exercise of SARs. Upon the exercise (or deemed exercise pursuant to Section 7.5)
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 (a) in the case of a Tandem
SAR, in shares of Stock or in an equivalent value in cash in a lump sum upon the
date of exercise of the SAR and (b) in the case of a Freestanding SAR, in cash,
shares of Stock, or any combination thereof as determined by the Committee, in a
lump sum upon the date of exercise of the SAR. When payment is to be made in
shares of Stock, the number of shares to be issued 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 7, 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 7.5.

7.5

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 so terminate or expire or, in the discretion of
the Committee be deemed to be exercised as of such date with respect to such
portion pursuant to a Net Exercise procedure and withholding of Shares as
described in Section 16.2.

7.6

Effect of Termination of Service. Subject to earlier termination of the SAR as
otherwise provided herein and unless otherwise provided by the Committee, 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 6.4 (treating the SAR as if it were an Option) and thereafter shall
terminate.

17

7.7

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, to the extent permitted by the Committee, in its
discretion, and set forth in the Award Agreement evidencing such Award, a Tandem
SAR related to a Non-Qualified Stock Option or a Freestanding SAR may be
assignable or transferable subject to the applicable limitations, if any,
described in the General Instructions to Form S-8 under the Securities Act, and
provided further that no consideration may be received in any transfer.

7.8

Certain SARs.  Notwithstanding the foregoing, the Committee shall have
discretion, with respect to Stock Appreciation Rights, to establish an exercise
price at less than the Fair Market Value per share of Stock on the date the
Stock Appreciation Right is granted, but only if any such Stock Appreciation
Right is designed to comply with the requirements of Section 409A of the Code by
including one or more of the following provisions:

(a)

The Award Agreement related to any such Stock Appreciation Right must provide
that, under all circumstances, the Stock (or cash or other property) to be
received by the Participant (or other person) upon the exercise or settlement of
the Stock Appreciation Right must be so received no later than the 15th day of
the third month of the year immediately following the year during which the
Stock Appreciation Right vests;

(b)

The Award Agreement related to any such Stock Appreciation Right must provide
that the Stock Appreciation Right may be exercised only during a specific year
specified in the Award Agreement or upon a payment event permitted under Section
409A of the Code and the regulations promulgated thereunder (with such year(s)
and payment events being set forth in the related Award Agreement); or

(c)

The Award Agreement related to any such Stock Appreciation Right must provide
that Stock (or cash or other property) deliverable to a Participant (or other
person) pursuant to an exercise or settlement of the Stock Appreciation Right
may not be so delivered until a specified date or payment event permitted under
Section 409A of the Code and the regulations promulgated thereunder (with such
date(s) and payment events being set forth in the related Award Agreement).

8.

RESTRICTED STOCK AWARDS.  Restricted Stock Awards shall be evidenced by Award
Agreements specifying whether the Award is a Restricted Stock Bonus or a
Restricted Stock Purchase Right and the number of shares of Stock subject to the
Award, in such form as the Committee shall from time to time establish. Award
Agreements evidencing Restricted Stock Awards may incorporate all or any of the
terms of the Plan by reference and shall comply with and be subject to the
following terms and conditions.

8.1

Types of Restricted Stock Awards Authorized. Restricted Stock Awards may be
granted in the form of either a Restricted Stock Bonus or a Restricted Stock
Purchase Right. Restricted Stock Awards may be granted upon such conditions as
the Committee shall determine, including, without limitation, upon the
attainment of one or more Performance Goals described in Section 10.4. If either
the grant of or satisfaction of Vesting Conditions applicable to a Restricted
Stock Award is to be contingent upon the attainment of one or more Performance
Goals, the Committee shall follow procedures substantially equivalent to those
set forth in Sections 10.3 through 10.5(a).

18

8.2

Purchase Price. The purchase price for shares of Stock issuable under each
Restricted Stock Purchase Right shall be established by the Committee in its
discretion. No monetary payment (other than applicable tax withholding) shall be
required as a condition of receiving shares of Stock pursuant to a Restricted
Stock Bonus, 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 subject to a Restricted Stock Award.

8.3

Purchase Period. A Restricted Stock Purchase Right shall be exercisable within a
period established by the Committee, which shall in no event exceed thirty (30)
days from the effective date of the grant of the Restricted Stock Purchase
Right. Any restricted Stock Purchase Right that allows a Participant to elect
the date on which such Right is exercised shall, for all purposes of this Plan,
be treated as a Non-Qualified Stock Option and shall be subject to all of the
requirements set forth hereunder with respect to Non-Qualified Stock Options.

8.4

Payment of Purchase Price. Except as otherwise provided below, payment of the
purchase price for the number of shares of Stock being purchased pursuant to any
Restricted Stock Purchase Right shall be made (a) in cash, by check or in cash
equivalent, (b) by such other consideration as may be approved by the Committee
from time to time to the extent permitted by applicable law, or (c) by any
combination thereof.

8.5

Vesting and Restrictions on Transfer. Shares issued pursuant to any Restricted
Stock Award will be made subject to Vesting Conditions based upon the
satisfaction of such Service requirements, conditions, restrictions or
performance criteria, including, without limitation, Performance Goals as
described in Section 10.4, as shall be established by the Committee and set
forth in the Award Agreement evidencing such Award. During any period in which
shares acquired pursuant to a Restricted Stock Award remain subject to Vesting
Conditions, such shares may not be sold, exchanged, transferred, pledged,
assigned or otherwise disposed of other than pursuant to a Change in Control or
as provided in Section 8.8. The Committee, in its discretion, may provide in any
Award Agreement evidencing a Restricted Stock Award that, if the satisfaction of
Vesting Conditions with respect to any shares subject to such Restricted Stock
Award would otherwise occur on a day on which the sale of such shares would
violate the provisions of the Trading Compliance Policy, then satisfaction of
the Vesting Conditions automatically shall be determined on the next trading day
on which the sale of such shares would not violate the Trading Compliance
Policy. 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.

8.6

Voting Rights; Dividends and Distributions. Except as provided in this Section,
Section 8.5 and any Award Agreement, during any period in which shares acquired
pursuant to a Restricted Stock Award remain subject to Vesting Conditions, the
Participant shall have all of the rights of a stockholder of the Company holding
shares of Stock, including the right to vote such shares and to receive all
dividends and other distributions paid with respect to such shares; provided,
however, that such dividends and distributions shall be subject to the same
Vesting Conditions as the shares subject to the Restricted Stock Award with
respect to which such dividends or distributions were paid, and otherwise shall
vest and become nonforfeitable only if the underlying shares of Stock subject to
the Restricted Stock Award become vested (including, but not limited to, the
satisfaction of any performance related Vesting Conclusion). 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, any and all new, substituted or additional securities
or other property (other than

19

regular, periodic cash dividends) to which the Participant is entitled by reason
of the Participant’s Restricted Stock Award shall be immediately subject to the
same Vesting Conditions as the shares subject to the Restricted Stock Award with
respect to which such dividends or distributions were paid or adjustments were
made.

8.7

Effect of Termination of Service. Unless otherwise provided by the Committee in
the Award Agreement evidencing a Restricted Stock Award, if a Participant’s
Service terminates for any reason, whether voluntary or involuntary (including
the Participant’s death or Disability), then (a) the Company shall have the
option to repurchase for the purchase price paid by the Participant any shares
acquired by the Participant pursuant to a Restricted Stock Purchase Right which
remain subject to Vesting Conditions as of the date of the Participant’s
termination of Service and (b) the Participant shall forfeit to the Company any
shares acquired by the Participant pursuant to a Restricted Stock Bonus which
remain subject to Vesting Conditions as of the date of the Participant’s
termination of Service. 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.

8.8

Nontransferability of Restricted Stock Award Rights. Rights to acquire shares of
Stock pursuant to a Restricted Stock 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 the laws of descent and distribution.
All rights with respect to a Restricted Stock 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.

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 Committee shall from time to time establish.
Award Agreements evidencing Restricted Stock Units may incorporate all or any of
the terms of the Plan by reference and shall comply with and be subject to the
following terms and conditions:

9.1

Grant of Restricted Stock Unit Awards. Restricted Stock Unit Awards may be
granted upon such conditions as the Committee shall determine, including,
without limitation, upon the attainment of one or more Performance Goals
described in Section 10.4. If either the grant of a Restricted Stock Unit Award
or the Vesting Conditions with respect to such Award is to be contingent upon
the attainment of one or more Performance Goals, the Committee shall follow
procedures substantially equivalent to those set forth in Sections 10.3
through 10.5(a).

9.2

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.

9.3

Vesting. Restricted Stock Unit Awards will be made subject to Vesting Conditions
based upon the satisfaction of such Service requirements, conditions,
restrictions or performance criteria, including, without limitation, Performance
Goals as described in Section 10.4, as shall be established by the Committee and
set forth in the Award Agreement evidencing such Award. The Committee, in its
discretion, may provide in any Award Agreement evidencing a Restricted Stock
Unit Award that, if the satisfaction of Vesting Conditions with respect to any
shares subject to the Award would otherwise occur on a day on which the sale of
such shares would violate the provisions of the Trading Compliance Policy, then
the satisfaction of the Vesting Conditions automatically shall be

20

determined on the first to occur of (a) the next trading day on which the sale
of such shares would not violate the Trading Compliance Policy or (b) the later
of (i) last day of the calendar year in which the original vesting date occurred
or (ii) the last day of the Company’s taxable year in which the original vesting
date occurred.

9.4

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 Committee, in its discretion, may provide in
the Award Agreement evidencing any Restricted Stock Unit Award that the
Participant shall be entitled to Dividend Equivalent Rights 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 each share subject to the Award, on
the earlier of the date the Award is settled or the date on which it is
terminated. Such Dividend Equivalent Rights, 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 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 regular,
periodic 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.

9.5

Effect of Termination of Service. Unless otherwise provided by the Committee 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.

9.6

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 Committee, 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 9.4) 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 Committee, the Participant may elect, consistent with the requirements of
Section 409A, 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) and amount(s) elected by the Participant
shall be set forth in the Award Agreement. Notwithstanding the foregoing, the
Committee, in its discretion, may provide for settlement of any Restricted Stock
Unit Award by payment to the Participant in cash of an amount equal to the Fair
Market Value on the payment date of the shares of Stock or other property
otherwise issuable to the Participant pursuant to this Section.

21

9.7

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.

PERFORMANCE AWARDS.  Performance Awards shall be evidenced by Award Agreements
in such form as the Committee shall from time to time establish. Award
Agreements evidencing Performance Awards may incorporate all or any of the terms
of the Plan by reference and shall comply with and be subject to the provisions
of Code Section 162(m) and the regulations promulgated thereunder in order for
such Performance Awards to satisfy the performance-based compensation exception
to the deduction limitations set forth under Section 162(m) of the Code and to
the following terms and conditions:

10.1

Types of Performance Awards Authorized. Performance Awards may be granted in the
form of either Performance Shares or Performance Units. Each Award Agreement
evidencing a Performance Award shall specify the number of Performance Shares or
Performance Units subject thereto, the Performance Award Formula, the
Performance Goal(s) and Performance Period applicable to the Award, and the
other terms, conditions and restrictions of the Award.

10.2

Initial Value of Performance Shares and Performance Units. Unless otherwise
provided by the Committee in granting a Performance Award, each Performance
Share shall have an initial monetary value equal to the Fair Market Value of one
(1) share of Stock, subject to adjustment as provided in Section 4.3, on the
effective date of grant of the Performance Share, and each Performance Unit
shall have an initial monetary value established by the Committee at the time of
grant. The final value payable to the Participant in settlement of a Performance
Award determined on the basis of the applicable Performance Award Formula will
depend on the extent to which Performance Goals established by the Committee are
attained within the applicable Performance Period established by the Committee.

10.3

Establishment of Performance Period, Performance Goals and Performance Award
Formula. In granting each Performance Award, the Committee shall establish in
writing the applicable Performance Period, Performance Award Formula and one or
more Performance Goals which, when measured at the end of the Performance
Period, shall determine on the basis of the Performance Award Formula the final
value of the Performance Award to be paid to the Participant. Unless otherwise
permitted in compliance with the requirements under Section 162(m) with respect
to each Performance Award intended to result in the payment of Performance-Based
Compensation, the Committee shall establish the Performance Goal(s) and
Performance Award Formula applicable to each Performance Award no later than the
earlier of (a) the date ninety (90) days after the commencement of the
applicable Performance Period or (b) the date on which 25% of the Performance
Period has elapsed, and, in any event, at a time when the outcome of the
Performance Goals remains substantially uncertain. Once established, the
Performance Goals and Performance Award Formula applicable to a Covered Employee
shall not be changed during the Performance Period. The Company shall notify
each Participant granted a Performance Award of the terms of such Award,
including the Performance Period, Performance Goal(s) and Performance Award
Formula.

10.4

Measurement of Performance Goals. Performance Goals shall be established by the
Committee on the basis of targets to be attained (“Performance Targets”) with
respect to one or

22

more measures of business or financial performance (each, a “Performance
Measure”), subject to the following:

(a)

Performance Measures. Performance Measures shall be calculated in accordance
with the Company’s financial statements, or, if such terms are not used in the
Company’s financial statements, they shall be calculated in accordance with
generally accepted accounting principles, a method used generally in the
Company’s industry, or in accordance with a methodology established by the
Committee prior to the grant of the Performance Award. Performance Measures
shall be calculated with respect to the Company and each Subsidiary Company
consolidated therewith for financial reporting purposes or such division or
other business unit as may be selected by the Committee. Unless otherwise
determined by the Committee prior to the grant of the Performance Award, the
Performance Measures applicable to the Performance Award shall be calculated
prior to the accrual of expense for any Performance Award for the same
Performance Period and excluding the effect (whether positive or negative) on
the Performance Measures of any change in accounting standards or any
extraordinary, unusual or nonrecurring item, as determined by the Committee,
occurring after the establishment of the Performance Goals applicable to the
Performance Award. Each such adjustment, if any, shall be made solely for the
purpose of providing a consistent basis from period to period for the
calculation of Performance Measures in order to prevent the dilution or
enlargement of the Participant’s rights with respect to a Performance Award.
Performance Measures may be one or more of the measures set forth in Appendix A
hereto, as determined by the Committee.

(b)

Performance Targets. Performance Targets may include a minimum, maximum, target
level and intermediate levels of performance, with the final value of a
Performance Award determined under the applicable Performance Award Formula by
the level attained during the applicable Performance Period. A Performance
Target may be stated as an absolute value, an increase or decrease in a value,
or as a value determined relative to an index, budget or other standard selected
by the Committee.

10.5

Settlement of Performance Awards.

(a)

Determination of Final Value. As soon as practicable following the completion of
the Performance Period applicable to a Performance Award, the Committee shall
certify in writing the extent to which the applicable Performance Goals have
been attained and the resulting final value of the Award earned by the
Participant and to be paid upon its settlement in accordance with the applicable
Performance Award Formula.

(b)

Discretionary Adjustment of Award Formula. In its discretion, the Committee may,
either at the time it grants a Performance Award or at any time thereafter,
provide for the positive or negative adjustment of the Performance Award Formula
applicable to a Performance Award granted to any Participant who is not a
Covered Employee to reflect such Participant’s individual performance in his or
her position with the Company or such other factors as the Committee may
determine. Unless prohibited under a Covered Employee’s Award Agreement, the
Committee shall have the discretion, on the basis of such criteria as may be
established by the Committee, to reduce some or all of the value of the
Performance Award that would otherwise be paid to the Covered Employee upon its
settlement notwithstanding the attainment of any Performance Goal and the
resulting value of the Performance Award determined in accordance with the
Performance Award Formula. No such reduction may result in an increase in the
amount payable upon settlement of another Participant’s Performance Award that
is intended to result in Performance-Based Compensation.

(c)

Effect of Leaves of Absence. To the extent required by law or a Participant’s
Award Agreement, payment of the final value, if any, of a Performance Award held
by a

23

Participant who has taken in excess of thirty (30) days in unpaid leaves of
absence during a Performance Period shall be prorated on the basis of the number
of days of the Participant’s Service during the Performance Period during which
the Participant was not on an unpaid leave of absence. Otherwise, the effect of
a leave of absence shall be as established by the Committee and/or set forth in
an Award Agreement.

(d)

Notice to Participants. As soon as practicable following the Committee’s
determination and certification in accordance with Sections 10.5(a) and (b), the
Company shall notify each Participant of the determination of the Committee.

(e)

Payment in Settlement of Performance Awards. As soon as practicable following
the Committee’s determination and certification in accordance with
Sections 10.5(a) and (b) but in any event within the Short-Term Deferral Period
described in Section 16.1 (except as otherwise provided below or in an Award
Agreement, to the extent consistent with the requirements of Section 409A),
payment shall be made to each eligible Participant (or such Participant’s legal
representative or other person who acquired the right to receive such payment by
reason of the Participant’s death) of the final value of the Participant’s
Performance Award. Payment of such amount shall be made in cash, shares of
Stock, or a combination thereof as determined by the Committee. Unless otherwise
provided in the Award Agreement evidencing a Performance Award, payment shall be
made in a lump sum. If permitted by the Committee, the Participant may elect,
consistent with the requirements of Section 409A, to defer receipt of all or any
portion of the payment to be made to the Participant pursuant to this Section,
and such deferred payment date(s) elected by the Participant shall be set forth
in the Award Agreement. If any payment is to be made on a deferred basis, the
Committee may, but shall not be obligated to, provide for the payment during the
deferral period of Dividend Equivalent Rights or interest.

(f)

Provisions Applicable to Payment in Shares. If payment is to be made in shares
of Stock, the number of such shares shall be determined by dividing the final
value of the Performance Award by the Fair Market Value of a share of Stock
determined by the method specified in the Award Agreement. Shares of Stock
issued in payment of any Performance Award may be fully vested and freely
transferable shares or may be shares of Stock subject to Vesting Conditions as
provided in Section 8.5. Any shares subject to Vesting Conditions shall be
evidenced by an appropriate Award Agreement and shall be subject to the
provisions of Sections 8.5 through 8.8 above.

10.6

Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall
have no voting rights with respect to shares of Stock represented by Performance
Share Awards until the date of the issuance of such shares, if any (as evidenced
by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company). However, the Committee, in its discretion, may
provide in the Award Agreement evidencing any Performance Share Award that the
Participant shall be entitled to Dividend Equivalent Rights with respect to the
payment of cash dividends on Stock during the period beginning on the date the
Award is granted and ending, with respect to each share subject to the Award, on
the earlier of the date on which the Performance Shares are settled or the date
on which they are forfeited. Such Dividend Equivalent Rights, if any, shall be
credited to the Participant in the form of additional whole Performance Shares
as of the date of payment of such cash dividends on Stock. The number of
additional Performance Shares (rounded down to the nearest whole number) to be
so credited shall be determined by dividing (a) the amount of cash dividends
paid on the dividend payment date with respect to the number of shares of Stock
represented by the Performance Shares previously credited to the Participant by
(b) the Fair Market Value per share of Stock on such date. Dividend Equivalent
Rights shall be accumulated and paid to the extent that Performance Shares
become nonforfeitable, as determined by the Committee. Settlement of Dividend
Equivalent Rights may be made in cash, shares of Stock, or a combination thereof
as determined by the Committee, and may be paid on the same basis as settlement
of the related Performance Share as provided in Section 10.5. In the event of

24

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 Performance Share Award so that it represents the right to receive
upon settlement any and all new, substituted or additional securities or other
property (other than regular, periodic cash dividends) to which the Participant
would be entitled by reason of the shares of Stock issuable upon settlement of
the Performance Share Award, and all such new, substituted or additional
securities or other property shall be immediately subject to the same
Performance Goals as are applicable to the Award.

10.7

Effect of Termination of Service. Unless otherwise provided by the Committee and
set forth in the Award Agreement evidencing a Performance Award or in the
Participant’s employment agreement, if any, referencing such Awards, the effect
of a Participant’s termination of Service on the Performance Award shall be as
follows:

(a)

Disability. If the Participant’s Service terminates because of the Disability of
the Participant before the completion of the Performance Period applicable to
the Performance Award, the final value of the Participant’s Performance Award
shall be determined by the extent to which the applicable Performance Goals have
been attained with respect to the entire Performance Period and shall be
prorated based on the number of months of the Participant’s Service during the
Performance Period. Payment shall be made following the end of the Performance
Period in any manner permitted by Section 10.5.

(b)

Death. If the Participant’s Service terminates due to death before the
completion of a Performance Period applicable to the Performance Award, the
Award shall vest in full based the target level of performance and shall be paid
as soon as practicable following the Participant’s death, but only if such
payment based on target level (irrespective of actual performance) would not
cause the Performance Award to otherwise violate the performance-based
compensation provisions of Section 162(m) of the Code and the regulations
promulgated thereunder).

(c)

Other Termination of Service. If the Participant’s Service terminates for any
reason except death or Disability before the completion of the Performance
Period applicable to the Performance Award, such Award shall be forfeited in its
entirety.

10.8

Nontransferability of Performance Awards. Prior to settlement in accordance with
the provisions of the Plan, no Performance Award shall 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 Performance 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.

11.

OTHER STOCK-BASED AWARDS.  Other Stock-Based Awards shall be evidenced by Award
Agreements in such form as the Committee shall from time to time establish.
Award Agreements evidencing Other Stock-Based Awards may incorporate all or any
of the terms of the Plan by reference and shall comply with and be subject to
the following terms and conditions:

11.1

Grant of Other Stock-Based Awards. The Committee may grant other types
of equity-based or equity-related Awards not otherwise described by the terms of
this Plan (including the grant or offer for sale of unrestricted securities,
stock-equivalent units, stock appreciation units, securities or debentures
convertible into common stock or other forms determined by the Committee) in
such amounts and subject to such terms and conditions as the Committee shall
determine. Other Stock-Based

25

Awards may be made available as a form of payment in the settlement of other
Awards or as payment in lieu of compensation to which a Participant is otherwise
entitled. Other Stock-Based Awards may involve the transfer of actual shares of
Stock to Participants, or payment in cash or otherwise of amounts based on the
value of Stock and may include, without limitation, Awards designed to comply
with or take advantage of the applicable local laws of jurisdictions other than
the United States.

11.2

Value of Other Stock-Based Awards.  Each Other Stock-Based Award shall be
expressed in terms of shares of Stock or units based on such shares of Stock, as
determined by the Committee. The Committee may require the satisfaction of such
Service requirements, conditions, restrictions or performance criteria,
including, without limitation, Performance Goals as described in Section 10.4,
as shall be established by the Committee and set forth in the Award Agreement
evidencing such Award. If the Committee exercises its discretion to establish
performance criteria, the final value of Other Stock-Based Awards that will be
paid to the Participant will depend on the extent to which the performance
criteria are met. The establishment of performance criteria with respect to the
grant or vesting of any Other Stock-Based Award intended to result in
Performance-Based Compensation shall follow procedures substantially equivalent
to those applicable to Performance Awards set forth in Section 10.

11.3

Payment or Settlement of Other Stock-Based Awards. Payment or settlement, if
any, with respect to an Other Stock-Based Award shall be made in accordance with
the terms of the Award, in cash, shares of Stock or other securities or any
combination thereof as the Committee determines. The determination and
certification of the final value with respect to any Other Stock-Based Award
intended to result in Performance-Based Compensation shall comply with the
requirements applicable to Performance Awards set forth in Section 10. To the
extent applicable, payment or settlement with respect to each Other Stock-Based
Award shall be made in compliance with the requirements of Section 409A.

11.4

Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall
have no voting rights with respect to shares of Stock represented by Other
Stock-Based Awards until the date of the issuance of such shares of Stock (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), if any, in settlement of such Award.
However, the Committee, in its discretion, may provide in the Award Agreement
evidencing any Other Stock-Based Award that the Participant shall be entitled to
Dividend Equivalent Rights 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 each share subject to the Award, on the earlier of the date the
Award is settled or the date on which it is terminated. Such Dividend Equivalent
Rights, if any, shall be paid in accordance with the provisions set forth in
Section 9.4. 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 Other Stock-Based Award so that it represents
the right to receive upon settlement any and all new, substituted or additional
securities or other property (other than regular, periodic cash dividends) to
which the Participant would be entitled by reason of the shares of Stock
issuable upon settlement of such Award, and all such new, substituted or
additional securities or other property shall be immediately subject to the same
Vesting Conditions and performance criteria, if any, as are applicable to the
Award.

11.5

Effect of Termination of Service. Each Award Agreement evidencing an Other
Stock-Based Award shall set forth the extent to which the Participant shall have
the right to retain such Award following termination of the Participant’s
Service. Such provisions shall be determined in the discretion of the Committee,
need not be uniform among all Other Stock-Based Awards, and may reflect
distinctions based on the reasons for termination, subject to the requirements
of Section 409A, if applicable.

26

11.6

Nontransferability of Other Stock-Based Awards. Prior to the payment or
settlement of an Other Stock-Based Award, the 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. The Committee may impose such additional restrictions on any
shares of Stock issued in settlement of Other Stock-Based Awards as it may deem
advisable, including, without limitation, minimum holding period requirements,
restrictions under applicable federal securities laws, under the requirements of
any stock exchange or market upon which such shares of Stock are then listed
and/or traded, or under any state securities laws or foreign law applicable to
such shares of Stock.

12.

STANDARD FORMS OF AWARD AGREEMENT.

12.1

Award Agreements. 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
Committee and as amended from time to time. No Award or purported Award shall be
a valid and binding obligation of the Company unless evidenced by a fully
executed Award Agreement, which execution may be evidenced by electronic means.

12.2

Authority to Vary Terms. Subject to the provisions of Sections 162(m), 409A and
422 of the Code, and of other Applicable Law, the Committee 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.

13.

CHANGE IN CONTROL.

13.1

Effect of Change in Control on Awards. Subject to the requirements and
limitations of Section 409A, if applicable, the Committee may provide for any
one or more of the following:

(a)

Assumption, Continuation or Substitution. In the event of a Change in Control,
the surviving, continuing, successor, or purchasing corporation or other
business entity or parent thereof, as the case may be (the “Acquiror”), may,
without the consent of any Participant, assume or continue the Company’s rights
and obligations under each or any Award or portion thereof outstanding
immediately prior to the Change in Control or substitute for each or any such
outstanding Award or portion thereof a substantially equivalent award with
respect to the Acquiror’s stock, as applicable. For purposes of this Section, if
so determined by the Committee in its discretion, an Award denominated in shares
of Stock shall be deemed assumed if, following the Change in Control, the Award
confers the right to receive, subject to the terms and conditions of
the Plan and the applicable Award Agreement, for each share of Stock subject to
the Award immediately prior to the Change in Control, the consideration (whether
stock, cash, other securities or property or a combination thereof) to which a
holder of a share of Stock on the effective date of the Change in Control was
entitled (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares of
Stock); provided, however, that if such consideration is not solely common stock
of the Acquiror, the Committee may, with the consent of the Acquiror, provide
for the consideration to be received upon the exercise or settlement of the
Award, for each share of Stock subject to the Award, to consist solely of common
stock of the Acquiror equal in Fair Market Value to the per share consideration
received by holders of Stock pursuant to the Change in Control. Any Award which
is not assumed, substituted for or otherwise continued by the Acquiror shall
vest in full effective and contingent upon the consummation of the Change in
Control. Any Award or portion thereof which is not assumed, substituted for, or
otherwise

27

continued by the Acquiror in connection with the Change in Control nor exercised
or settled 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.

(b)

Cash-Out of Outstanding Stock-Based Awards. The Committee may, in its discretion
and without the consent of any Participant, determine that, upon the occurrence
of a Change in Control, each or any Award denominated in shares of Stock or
portion thereof outstanding immediately prior to the Change in Control and not
previously exercised or settled shall be canceled in exchange for a payment with
respect to each vested share (and each unvested share, if so determined by the
Committee) of Stock subject to such canceled Award 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 Fair Market Value of the
consideration to be paid per share of Stock in the Change in Control, reduced
(but not below zero) by the exercise or purchase price per share, if any, under
such Award. In the event such determination is made by the Committee, an Award
having an exercise or purchase price per share equal to or greater than the Fair
Market Value of the consideration to be paid per share of Stock in the Change in
Control may be canceled without payment of consideration to the holder thereof.
Payment pursuant to this Section (reduced by applicable withholding taxes, if
any) shall be made to Participants in respect of the vested portions of their
canceled Awards as soon as practicable following the date of the Change in
Control and in respect of the unvested portions of their canceled Awards in
accordance with the vesting schedules applicable to such Awards.

(c)

Accelerated Vesting. In its discretion, the Committee may provide in the grant
of any Award or at any other time may take such action as it deems appropriate
to provide for acceleration of the exercisability, vesting and/or settlement in
connection with a Change in Control of each or any outstanding Award or portion
thereof and shares acquired pursuant thereto upon such conditions, including
termination of the Participant’s Service prior to, upon, or following such
Change in Control, and to such extent as the Committee shall determine.

13.2

Effect of Change in Control on Nonemployee Director Awards. Subject to the
requirements and limitations of Section 409A, if applicable, including as
provided by Section 16.4(f), in the event of a Change in Control, each
outstanding Nonemployee Director Award shall become immediately exercisable and
vested in full to the extent the Nonemployee Director will cease to be a member
of the Board of the surviving entity in connection with the Change in Control
and, except to the extent assumed, continued, or substituted for pursuant to
Section 13.1(b), shall be settled effective immediately prior to the time of
consummation of the Change in Control.

13.3

Federal Excise Tax Under Section 4999 of the Code.

(a)

Excess Parachute Payment. Notwithstanding any other provisions of this Plan to
the contrary, if the receipt of any payments or benefits under this Plan would
subject a Participant to tax under Code Section 4999, the Committee may
determine whether some amount of payments or benefits would meet the definition
of a “Reduced Amount.” If the Committee determines that there is a Reduced
Amount, the total payments or benefits to the Participant under all Awards must
be reduced to such Reduced Amount, but not below zero. It is the intention of
the Company and any such Participant to reduce the payments under this Plan only
if the aggregate “Net After Tax Receipts” to such Participant would thereby be
increased. If the Committee determines that the benefits and payments must be
reduced to the Reduced Amount, the Company must promptly notify such Participant
of that determination, with a copy of the detailed calculations by the
Committee. All determinations of the Committee under this Section 13.3(a) shall
be final, conclusive and binding upon the Company and any such Participant. As
result of the uncertainty in the application of Code Section 4999 at the time of
the initial determination by the Committee under this Section 13.3(a), however,
it is possible that amounts

28

will have been paid under the Plan to or for the benefit of a Participant which
should not have been so paid (“Overpayment”) or that additional amounts which
will not have been paid under the Plan to or for the benefit of a Participant
could have been so paid (“Underpayment”), in each case consistent with the
calculation of the Reduced Amount. If the Committee, based either upon the
assertion of a deficiency by the Internal Revenue Service against the Company or
a Participant, which the Committee believes has a high probability of success,
or controlling precedent or other substantial authority, determines that an
Overpayment has been made, any such Overpayment must be treated for all purposes
as a loan, to the extent permitted by Applicable Law, which such Participant
must repay to the Company together with interest at the applicable federal rate
under Code Section 7872(f)(2); provided, however, that no such loan may be
deemed to have been made and no amount shall be payable by a Participant to the
Company if and to the extent such deemed loan and payment would not either
reduce the amount on which the Participant is subject to tax under Code Sections
1, 3101 or 4999 or generate a refund of such taxes. If the Committee, based upon
controlling precedent or other substantial authority, determines that an
Underpayment has occurred, the Committee must promptly notify the Company of the
amount of the Underpayment, which then shall be paid promptly to the Participant
but no later than the end of the Participant's taxable year next following the
Participant’s taxable year in which the determination is made that the
Underpayment has occurred. For purposes of this Section 13.3(a), (i) “Net After
Tax Receipts” means the Present Value of a payment under this Plan net of all
taxes imposed on Participant with respect thereto under Code Sections 1, 3101
and 4999, determined by applying the highest marginal rate under Code Section 1
which applies to the Participant's taxable income for the applicable taxable
year; (ii) “Present Value” means the value determined in accordance with Code
Section 280G(d)(4); and (iii) “Reduced Amount” means the smallest aggregate
amount of all payments and benefits under this Plan which (x) is less than the
sum of all payments and benefits under this Plan and (y) results in aggregate
Net After Tax Receipts which are equal to or greater than the Net After Tax
Receipts which would result if the aggregate payments and benefits under this
Plan were any other amount less than the sum of all payments and benefits to be
made under this Plan. If any payment or benefit is reduced under this Section
13.3(a), such reduction shall be made in the following order: (i) first, any
future cash payments (if any) shall be reduced (if necessary, to zero); (ii)
second, any current cash payments shall be reduced (if necessary, to zero);
(iii) third, all non-cash payments (other than equity or equity derivative
related payments) shall be reduced (if necessary, to zero); and (iv) fourth, all
equity or equity derivative payments shall be reduced. Any necessary reduction
in each subcategory shall first be applied to the latest scheduled payment in
such subcategory and shall continue to the extent necessary until the most
current payment is reduced or eliminated.

(b)

Determination by Independent Accountants. To aid the Participant in making any
election called for under Section 13.3(a), no later than the date of the
occurrence of any event that might reasonably be anticipated to result in an
“excess parachute payment” to the Participant as described in Section 13.3(a),
the Company shall request a determination in writing by independent public
accountants selected by the Company (the “Accountants”). As soon as practicable
thereafter, the Accountants shall determine and report to the Company and the
Participant the amount of such acceleration of vesting, payments and benefits
which would produce the greatest after-tax benefit to the Participant. For the
purposes of such determination, the Accountants may rely on reasonable, good
faith interpretations concerning the application of Sections 280G and 4999 of
the Code. The Company and the Participant shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make their required determination. The Company shall bear all fees and expenses
the Accountants charge in connection with their services contemplated by this
Section.

14.

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

29

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 under the Plan 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.

15.

COMPLIANCE WITH SECTION 409A.

15.1

Awards Subject to Section 409A. The Company intends that Awards granted pursuant
to the Plan shall either be exempt from or comply with Section 409A, and
the Plan shall be so construed. The provisions of this Section 15 shall apply to
any Award or portion thereof that constitutes or provides for payment of
Section 409A Deferred Compensation. Such Awards may include, without limitation:

(a)

A Non-Qualified Stock Option or SAR that includes any feature for the deferral
of compensation other than the deferral of recognition of income until the later
of (i) the exercise or disposition of the Award or (ii) the time the stock
acquired pursuant to the exercise of the Award first becomes substantially
vested.

(b)

Any Restricted Stock Unit Award, Performance Award or Other Stock-Based Award
that either (i) provides by its terms for settlement of all or any portion of
the Award at a time or upon an event that will or may occur later than the end
of the Short-Term Deferral Period (as defined below) or (ii) permits the
Participant granted the Award to elect one or more dates or events upon which
the Award will be settled after the end of the Short-Term Deferral Period.

Subject to the provisions of Section 409A, the term “Short-Term Deferral
Period” means the 2½ month period ending on the later of (i) the 15th day of the
third month following the end of the Participant’s taxable year in which the
right to payment under the applicable portion of the Award is no longer subject
to a substantial risk of forfeiture or (ii) the 15th day of the third month
following the end of the Company’s taxable year in which the right to payment
under 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 provided by Section 409A.

15.2

Deferral and/or Distribution Elections. Except as otherwise permitted or
required by Section 409A, the following rules shall apply to any compensation
deferral and/or payment elections (each, an “Election”) that may be permitted or
required by the Committee pursuant to an Award providing Section 409A Deferred
Compensation:

(a)

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

(b)

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.

30

(c)

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

15.3

Subsequent Elections. Except as otherwise permitted or required by Section 409A,
any Award providing Section 409A Deferred Compensation which permits a
subsequent Election to delay the payment or change the form of payment 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 payment in settlement of an Award not
described in Section 16.4(a)(ii), 16.4(a)(iii) or 16.4(a)(vi) must result in a
delay of the payment for a period of not less than five (5) years from the date
on which such payment would otherwise have been made.

(c)

No subsequent Election related to a payment pursuant to Section 16.4(a)(iv)
shall be made less than twelve (12) months before the date on which such payment
would otherwise have been made.

(d)

subsequent Elections shall continue in effect until a written revocation or
change in the subsequent Election is received by the Company, except that a
written revocation or change in a subsequent Election must be received by the
Company prior to the last day for making the subsequent Election determined in
accordance the preceding paragraphs of this Section 16.3.

15.4

Payment of Section 409A Deferred Compensation.

(a)

Permissible Payments. Except as otherwise permitted or required by Section 409A,
an Award providing Section 409A Deferred Compensation must provide for payment
in settlement of the Award only upon one or more of the following:

(i)

The Participant’s “separation from service” (as defined by Section 409A);

(ii)

The Participant’s becoming “disabled” (as defined by Section 409A);

(iii)

The Participant’s death;

(iv)

A time or fixed schedule that is either (i) specified by the Committee 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 or 16.3, as applicable;

(v)

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 determined in
accordance with Section 409A;

31

(vi)

The occurrence of an “unforeseeable emergency” (as defined by Section 409A); or

(vii)

Vesting of the Award.

(b)

Installment Payments. It is the intent of this Plan that any right of a
Participant to receive installment payments (within the meaning of Section 409A)
shall, for all purposes of Section 409A, be treated as a right to a series of
separate payments.

(c)

Required Delay in Payment to Specified Employee Pursuant to Separation from
Service. Notwithstanding any provision of the Plan or an Award Agreement to the
contrary, except as otherwise permitted by Section 409A, no payment pursuant to
Section 16.4(a)(i) in settlement of an Award providing for Section 409A Deferred
Compensation may be made to a Participant who is a “specified employee” (as
defined by Section 409A) as of the date of the Participant’s separation from
service before the date (the “Delayed Payment Date”) that is six (6) months
after the date of such Participant’s separation from service, or, if earlier,
the date of the Participant’s death. All such amounts that would, but for this
paragraph, become payable prior to the Delayed Payment Date shall be accumulated
and paid on the Delayed Payment Date.

(d)

Payment Upon Disability. All distributions of Section 409A Deferred Compensation
payable by reason of a Participant becoming disabled shall be paid in a lump sum
or in periodic installments as set forth in the applicable Award Agreement or as
otherwise established by the Participant’s Election. Except as may be provided
in the applicable Award Agreement, if the Participant has made no Election with
respect to distributions of Section 409A Deferred Compensation upon becoming
disabled, all such distributions shall be paid in a lump sum upon the
determination that the Participant has become disabled.

(e)

Payment Upon 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 applicable Award Agreement or
Participant’s Election upon receipt by the Committee of satisfactory notice and
confirmation of the Participant’s death. Except as provided in the applicable
Award Agreement, if the Participant has made no Election with respect to
distributions of Section 409A Deferred Compensation upon death, all such
distributions shall be paid in a lump sum upon receipt by the Committee of
satisfactory notice and confirmation of the Participant’s death.

(f)

Payment Upon Change in Control. Notwithstanding any provision of the Plan or an
Award Agreement to the contrary, to the extent that any amount constituting
Section 409A Deferred Compensation would become payable under this Plan by
reason of a Change in Control, such amount shall become payable only if the
event constituting a Change in Control would also constitute a change in
ownership or effective control of the Company or a change in the ownership of a
substantial portion of the assets of the Company within the meaning of Section
409A. Except as may be permitted under Section 162(m) and the regulations
promulgated thereunder, any Award which constitutes Section 409A Deferred
Compensation and which would vest and otherwise become payable upon a Change in
Control as a result of the failure of the Acquiror to assume, continue or
substitute for such Award in accordance with Section 13.1(b) shall vest to the
extent provided by such Award but shall be converted automatically at the
effective time of such Change in Control into a right to receive, in cash on the
date or dates such award would have been settled in accordance with its then
existing settlement schedule (or as required by Section 16.4(c)), an amount or
amounts equal in the aggregate to the intrinsic value of the Award at the time
of the Change in Control.

32

(g)

Payment Upon Unforeseeable Emergency. The Committee shall have the authority to
provide in the Award Agreement evidencing any Award providing for Section 409A
Deferred Compensation for payment in settlement of all or a portion of such
Award in the event that a Participant establishes, to the satisfaction of the
Committee, the occurrence of an unforeseeable emergency. In such event, the
amount(s) distributed with respect to such unforeseeable emergency cannot exceed
the amounts reasonably necessary to satisfy the emergency need plus amounts
necessary to pay taxes reasonably anticipated as a result of such
distribution(s), after taking into account the extent to which such emergency
need is or may be relieved through reimbursement or compensation by insurance or
otherwise, by liquidation of the Participant’s assets (to the extent the
liquidation of such assets would not itself cause severe financial hardship) or
by cessation of deferrals under the Award. All distributions with respect to an
unforeseeable emergency shall be made in a lump sum upon the Committee’s
determination that an unforeseeable emergency has occurred. The Committee’s
decision with respect to whether an unforeseeable emergency has occurred and the
manner in which, if at all, the payment in settlement of an Award shall be
altered or modified, shall be final, conclusive, and not subject to approval or
appeal.

(h)

Prohibition of Acceleration of Payments. Notwithstanding any provision of
the Plan or an Award Agreement to the contrary, this Plan does not permit the
acceleration of the time or schedule of any payment under an Award providing
Section 409A Deferred Compensation, except as permitted by Section 409A.

(i)

Payment During Certain Period. To the extent the Plan provides that
Non-Qualified Deferred Compensation can be paid, at the discretion of the
Committee, during a certain period (e.g., 60 days) following a permissible
payment event or trigger, and if the payment period spans two taxable years of a
Participant, then such Non-Qualified Deferred Compensation shall be paid during
the second of such taxable years.

(j)

No Representation Regarding Section 409A Compliance. Notwithstanding any other
provision of the Plan, the Company makes no representation that Awards shall be
exempt from or comply with Section 409A. No Participating Company shall be
liable for any tax, penalty or interest imposed on a Participant by reason of
any violation of Section 409A, regardless of the cause of such violation.

16.

TAX WITHHOLDING.

16.1

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 (including social insurance), if
any, required by law to be withheld by any Participating Company 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
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.

16.2

Withholding in or Directed Sale of 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 any Participating Company. 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. The Company may require a

33

Participant to direct a broker, upon the vesting, exercise or settlement of an
Award, to sell a portion of the shares subject to the Award determined by the
Company in its discretion to be sufficient to cover the tax withholding
obligations of any Participating Company and to remit an amount equal to such
tax withholding obligations to such Participating Company in cash.

17.

AMENDMENT, SUSPENSION OR TERMINATION OF PLAN.  The Committee 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), (b) no change in the class of persons
eligible to receive Incentive Stock Options and (c) 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
quotation system upon which the Stock may then be listed or quoted. No
amendment, suspension or termination of the Plan shall affect any then
outstanding Award unless expressly provided by the Committee. 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 Committee 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.

18.

MISCELLANEOUS PROVISIONS.

18.1

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
Committee 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.

18.2

Forfeiture Events.

(a)

The Committee may specify in an Award Agreement that the Participant’s rights,
payments, and benefits with respect to an Award shall be subject to reduction,
cancellation, forfeiture, or recoupment upon the occurrence of specified events,
in addition to any otherwise applicable vesting or performance conditions of an
Award. Such events may include, but shall not be limited to, termination of
Service for Cause or any act by a Participant, whether before or after
termination of Service, that would constitute Cause for termination of Service.

(b)

If the Company is required to prepare an accounting restatement due to the
material noncompliance of the Company, as a result of misconduct, with any
financial reporting requirement under the securities laws, any Participant who
knowingly or through gross negligence engaged in the misconduct, or who
knowingly or through gross negligence failed to prevent the misconduct, and any
Participant who is one of the individuals subject to automatic forfeiture under
Section 304 of the Sarbanes-Oxley Act of 2002, shall reimburse the Company for
(i) the amount of any payment in settlement of an Award received by such
Participant during the twelve- (12-) month period following the first public
issuance or filing with the United States Securities and Exchange Commission
(whichever first occurred) of the financial document embodying such financial
reporting requirement, and (ii) any profits realized by such Participant from
the sale of securities of the Company during such

34

twelve- (12-) month period. In addition, to the extent claw-back or similar
provisions applicable to Awards are required by applicable law, listing
standards and/or policies adopted by the Company, Awards granted under
the Plan shall be subject to such provisions.

18.3

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.

18.4

Rights as Employee, Consultant or Director. No person, even though eligible
pursuant to Section 5, shall have a right to be selected as a Participant, or,
having been so selected, to be selected again as a Participant. Nothing in
the Plan or any Award granted under the Plan shall confer on any Participant a
right to remain an Employee, Consultant or Director or interfere with or limit
in any way any right of a Participating Company to terminate the Participant’s
Service at any time. To the extent that an Employee of a Participating Company
other than the Company receives an Award under the Plan, that Award shall in no
event be understood or interpreted to mean that the Company is the Employee’s
employer or that the Employee has an employment relationship with the Company.

18.5

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.

18.6

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.

18.7

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

18.8

Retirement and Welfare Plans. Neither Awards made under this Plan nor shares of
Stock or cash paid pursuant to such Awards may be included as “compensation” for
purposes of computing the benefits payable to any Participant under any
Participating Company’s retirement plans (both qualified and non-qualified) or
welfare benefit plans unless such other plan expressly provides that such
compensation shall be taken into account in computing a Participant’s benefit.
In addition, unless a written employment agreement or other service agreement
references Awards, a general reference to “benefits” in such agreement shall not
be deemed to refer to Awards granted hereunder.

18.9

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.

18.10

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

35

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.

18.11

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 considered 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 Committee 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.

18.12

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 New York, without
regard to its conflict of law rules. In the event that any person is compelled
to bring a claim related to this Plan, to interpret or enforce the provisions of
the Plan, to recover damages as a result of a breach of the terms of this Plan,
or from any other cause (a “Claim”), such Claim must be processed in the manner
set forth below:

(a)

THE SOLE AND EXCLUSIVE METHOD TO RESOLVE ANY CLAIM IS ARBITRATION, AND THE
CORPORATION AND EACH PARTICIPANT (INCLUDING FORMER PARTICIPANTS, BENEFICIARIES
OF PARTICIPANTS OR OF FORMER PARTICIPANTS OR PERSONS ACTING FOR OR NON BEHALF
THEREOF) WAIVE THE RIGHT TO A JURY TRIAL OR COURT TRIAL. No Participant shall
initiate or prosecute any lawsuit in any way related to any Claim covered by the
terms of this Plan.

(b)

Any arbitration shall be binding and conducted before a single arbitrator in
accordance with the then-current JAMS Arbitration Rules and Procedures for
Employment Disputes or the appropriate governing body, as modified by the terms
and conditions of this paragraph. Venue for any arbitration pursuant to this
Plan will lie in the locality of the principal executive offices of the Company.
The arbitrator will be selected by mutual agreement of the parties to such
arbitration or, if the parties cannot agree, then by striking from a list of
arbitrators supplied by JAMS or the appropriate governing body. The parties to
the arbitration shall each pay an equal amount of the arbitrator’s fees and
arbitration costs (recognizing that each party to the arbitration bears the cost
of its own deposition(s), witness, expert and attorneys’ fees and other expenses
as and to the same extent as if the matter were being heard in a court of law).
Upon the conclusion of the arbitration hearing, the arbitrator shall issue a
written opinion revealing, however briefly, the essential findings and
conclusions upon which the arbitrator’s award is based. The award of the
arbitrator shall be final and binding. Judgment upon any award may be entered in
any court having jurisdiction thereof.

18.13

Investment Representation.  In the case of Awards paid in shares of Stock or
other securities, or, with respect to shares of Stock received pursuant to the
exercise of an Option or a Stock Appreciation Right, or upon the payment upon
any Award, the Committee may require, as a condition of receiving such
securities, that the Participant furnish to the Company such written

36

representations and information as the Committee deems appropriate to permit the
Company, in light of the existence or nonexistence of an effective registration
statement under the Securities Act, to deliver such securities in compliance
with the provisions of the Securities Act.

18.14

Payments Due Missing Persons.  The Company shall make a reasonable effort to
locate all persons entitled to benefits under the Plan other than Options and
Stock Appreciation Rights (the “Benefits”); however, notwithstanding any
provisions of the Plan to the contrary, if, after a period of one (1) year from
the date such Benefits shall be due, any such persons entitled to Benefits have
not been located, their rights under the Plan with respect to such Benefits
shall stand suspended. Before this provision becomes operative, the Company
shall send a certified letter to all such persons at their last known addresses
advising them that their rights under the Plan shall be suspended. Subject to
all applicable state laws, any such suspended Benefits shall be held by the
Company for a period of one (1) additional year and thereafter such Benefits
shall be forfeited and thereafter remain the property of the Company.

18.15

Incapacity.  If the Committee shall receive evidence satisfactory to it that a
person entitled to receive payment of, or exercise, any Award is, at the time
when such benefit becomes payable or exercisable, a minor, or is physically or
mentally incompetent to receive or exercise such Award and to give a valid
release thereof, and that another person or an institution is then maintaining
or has custody of such person and that no guardian, committee or other
representative of the estate of such person shall have been duly appointed, the
Committee may make payment of such Award otherwise payable to such person to (or
permit such Award to be exercised by) such other person or institution,
including a custodian under a Uniform Gifts to Minors Act or corresponding
legislation (who shall be an adult, a guardian of the minor or a trust company),
and the release by such other person or institution shall be a valid and
complete discharge for the payment or exercise of such Award.

18.16

Cooperation of Parties.  The Company, each Participant and any person claiming
any interest hereunder agree to perform any and all acts and execute any and all
documents and papers which are necessary or desirable for carrying out the Plan
or any of its provisions.

18.17

Listing, Registration, Etc.  All shares of Stock issued pursuant to the terms of
this Plan will be subject to the requirement that if at any time the Board
determines, in its sole discretion, that it is necessary or desirable to list,
register or qualify upon any national securities exchange or under any state or
federal securities or other law or regulation, such shares of Stock, or that it
is necessary or desirable to obtain the consent or approval of any governmental
regulatory body, as a condition to or in connection with the issuance hereunder
of Stock, the Stock may not be issued unless or until the listing, registration,
qualification, consent or approval has been effected or obtained free of any
conditions not acceptable to the Board. The recipient of any shares of Stock
must supply the Company with any certificates, representations and information
as the Company reasonably requests, and must otherwise cooperate with the
Company in obtaining or effecting any listing, registration, qualification,
consent or approval the Board deems necessary or desirable. If the Company, as
part of an offering of securities or otherwise, finds it desirable because of
federal or state regulatory requirements to reduce the period during which any
shares of Stock vest, the Board may, in its sole discretion and without the
holders’ consent, reduce that period on not less than 10 days’ written notice to
the holders affected. Nothing contained herein will obligate the Company to
list, register or qualify any shares of Stock or other securities upon any
national securities exchange or otherwise or under any federal or state
securities laws.

18.18

Lock-up Agreement.  Each recipient of a Award hereunder agrees, in connection
with any registration with the Securities and Exchange Commission under the
Securities Act of the public sale of the Company’s Stock, not to sell, make any
short sale of, loan, grant any option for the purchase of or otherwise dispose
of any securities of the Company, including any Awards, (other than

37

those included in the registration) without the prior written consent of the
Company or the underwriters of such public offer or sale, as the case may be,
for such period of time (not to exceed 180 days) from the effective date of such
registration as the Company or the underwriters, as the case may be, shall
specify. Each such recipient agrees that the Company may instruct its transfer
agent to place stop-transfer notations in its records to enforce this Section
XI(u). Each such recipient agrees to execute such form of agreement reflecting
the foregoing restrictions and such other restrictions as requested by the
underwriters managing such offering.

18.19

Paperless Administration.  In the event that the Company establishes, for itself
or using the services of a third party, an automated system for the
documentation, granting or exercise of Awards, such as a system using an
internet website or interactive voice response, then the paperless
documentation, granting or exercise of Awards by a Participant may be permitted
through the use of such an automated system.

18.20

Compliance with Laws.  The Plan, the granting and vesting of Awards under the
Plan and the issuance and delivery of shares of Stock and the payment of money
under the Plan or under Awards granted or awarded hereunder are subject to
compliance with all Applicable Laws (including but not limited to margin
requirements), and to such approvals by any listing, regulatory or governmental
authority as may, in the opinion of counsel for the Company, be necessary or
advisable in connection therewith. Any securities delivered under the Plan shall
be subject to such restrictions, and the person acquiring such securities shall,
if requested by the Company, provide such assurances and representations to the
Company as the Company may deem necessary or desirable to assure compliance with
all Applicable Laws. To the extent permitted by Applicable Law, the Plan and
Awards granted or awarded hereunder shall be deemed amended to the extent
necessary to conform to Applicable Law.

18.21

Securities Law and Other Regulator/Compliance.  An Award will not be effective
unless such Award is in compliance with all applicable federal, state and
foreign securities laws, rules and regulations of any governmental body, and the
requirements of any national stock exchange or automated quotation system upon
which the shares of Stock granted under such Award may then be listed or quoted,
as they are in effect on the date of grant of the Award on the date of exercise
or other issuance or any other date while the Award is outstanding.
Notwithstanding any other provision in this Plan, the Company will have no
obligation to issue or deliver certificates for shares of Stock under this Plan
prior to: (i) obtaining any approvals from governmental agencies that the
Company determines are necessary or advisable; and/or (ii) completion of any
registration or other qualification of such shares of Stock under any state,
federal or foreign law or ruling of any governmental body that the Company
determines to be necessary or advisable. The Company will be under no obligation
to register the shares of Stock with the Securities and Exchange Commission or
to effect compliance with the registration, qualification or listing
requirements of any state securities laws, national stock exchange or automated
quotation system, and the Company will have no liability for any inability or
failure to do so. As a condition to the grant of any Award, the Company may
require each 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.

18.22

Transferability of Awards.

(a)

In General.  Except as otherwise provided in this Section 18.22:

(i)

No Award may be sold, pledged, encumbered, assigned or transferred in any manner
other than by will or the laws of descent and distribution or, subject to the
consent of the Committee, pursuant to a DRO, unless and until such Award has
been exercised, or the

38

shares of Stock underlying such Award have been issued, and all restrictions,
including without limitation risks of forfeiture, applicable to such shares of
Stock have lapsed;

(ii)

No Award or interest or right therein shall be liable for or may be applied to
pay, satisfy or settle the debts, contracts or engagements of a Participant or
his or her successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, hypothecation, encumbrance,
assignment or any other means, whether such disposition be voluntary or
involuntary, or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy or
insolvency), and any attempted disposition thereof shall be null and void and of
no effect, except to the extent that such disposition is permitted by this
Section 18.22; and

(iii)

During the lifetime of a Participant, only such Participant may exercise an
Award (or any portion thereof) granted to him under the Plan, unless it has been
disposed of pursuant to a DRO, and after the death of a Participant any
exercisable portion of an Award may, prior to the time when such portion becomes
unexercisable under the Plan or the applicable Award Agreement, be exercised by
Participant's personal representative or by any person empowered to do so under
the deceased Participant's will or under the then applicable laws of descent and
distribution.

(b)

Permitted Transferees. Notwithstanding Section 18.22(a) hereof, the Committee
may, in its sole discretion, determine to permit a Participant to transfer an
Award other than an Incentive Stock Option to any one or more Permitted
Transferees, subject to the following terms and conditions: (i) an Award
transferred to a Permitted Transferee shall not be assignable or transferable by
the Permitted Transferee other than by will or the laws of descent and
distribution; (ii) an Award transferred to a Permitted Transferee shall continue
to be subject to all the terms and conditions of the Award as applicable to the
original Participant (other than the ability to further transfer the Award);
(iii) any transfer of an Award to a Permitted Transferee shall be without
consideration; and (iv) the Participant and the Permitted Transferee shall
execute any and all documents requested by the Committee, including, without
limitation documents to (A) confirm the status of the transferee as a Permitted
Transferee, (B) satisfy any requirements for an exemption for the transfer under
Applicable Law and (C) evidence the transfer.

(c)

Beneficiaries. Notwithstanding Section 18.22(a) hereof, a Participant may, in
the manner determined by the Committee, designate a beneficiary to exercise the
rights of such Participant and to receive any distribution with respect to any
Award upon the Participant’s death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights pursuant to the Plan is
subject to all terms and conditions of the Plan and any Award Agreement
applicable to the Participant, except to the extent the Plan and the Award
Agreement otherwise provide, and to any additional restrictions deemed necessary
or appropriate by the Committee. If a Participant is married or a domestic
partner in a domestic partnership qualified under Applicable Law and resides in
a community property state, a designation of a person other than the
Participant’s spouse or domestic partner, as applicable, as his or her
beneficiary with respect to more than 50% of the Participant’s interest in the
Award shall not be effective without the prior written or electronic consent in
form and substance satisfactory to the Committee of such Participant’s spouse or
domestic partner. If no beneficiary has been designated or survives the
Participant, payment shall be made to the person entitled thereto pursuant to
the Participant’s will or the laws of descent and distribution. Subject to the
foregoing, a beneficiary designation may be changed or revoked by a Participant
at any time provided that the change or revocation is filed with the Committee
prior to the Participant’s death.

18.23

Delivery of Certificates. Notwithstanding anything herein to the contrary, the
Company shall not be required to issue or deliver any certificates or make any
book entries evidencing

39

shares of Stock pursuant to the exercise of any Award, unless and until the
Board or the Committee has determined, with advice of counsel, that the issuance
of such shares of Stock is in compliance with Applicable Law and the shares of
Stock are covered by an effective registration statement under the Securities
Act or applicable exemption under the Securities Act from registration. In
addition to the terms and conditions provided herein, the Board or the Committee
may require that a Participant make such reasonable covenants, agreements, and
representations as the Board or the Committee, in its discretion, deems
advisable in order to comply with Applicable Law as a condition to the issuance
or exercise of any Award.

18.24

Stop-Transfer Orders. All stock certificates delivered pursuant to the Plan and
all shares of Stock issued pursuant to book entry procedures are subject to any
stop-transfer orders and other restrictions as the Committee deems necessary or
advisable to comply with Applicable Law. The Committee may place legends on any
stock certificate or book entry to reference restrictions applicable to the
shares of Stock.

18.25

Book Entry Stock. Notwithstanding any other provision of the Plan, unless
otherwise determined by the Committee or required by Applicable Law or the
By-Laws of the Company, the Company shall not deliver to any Participant
certificates evidencing shares of Stock issued in connection with any Award and
instead such shares of Stock shall be recorded in the books of the Company (or,
as applicable, its transfer agent or stock plan administrator).

18.26

Amendment or Termination of the Plan. The Board of Directors of the Company
shall have the right to amend, suspend or terminate the Plan at any time,
provided that no amendment shall be made which shall increase the total number
of shares of the Stock of the Company which may be issued and sold pursuant to
Incentive Stock Options, reduce the minimum exercise price in the case of an
Incentive Stock Option or modify the provisions of the Plan relating to
eligibility with respect to Incentive Stock Options unless such amendment is
made by or with the approval of the stockholders of the Company within 12 months
of the effective date of such amendment, but only if such approval is required
by Applicable Law. Furthermore, no amendment to the Plan may change (i) the
maximum amount of Awards that may be granted or paid on an annual basis or (ii)
the exercise price of any options granted hereunder without the prior approval
of the Company’s stockholders in the manner required under Section 162(m) of the
Code; provided, however, that such stockholder consent is required only during
such period that the deduction limitations under Code Section 162(m) apply to
Awards granted under the Plan. Lastly, any amendment or termination of the Plan
shall be subject to all other Applicable Law. The Board of Directors of the
Company shall also be authorized to amend the Plan and the Options granted
thereunder to maintain qualification as Incentive Stock Options, if applicable.
Except as otherwise provided herein, no amendment, suspension or termination of
the Plan shall alter or impair any Award (to the extent vested) previously
granted under the Plan without the consent of the holder thereof.

18.27

Stockholder Approval. Notwithstanding any provision of this Plan or any Award
Agreement to the contrary, but only to the extent necessary to satisfy the
performance-based compensation exception to the application of Section 162(m) of
the Code or in order to satisfy any other Applicable Law, no Award may be
granted (or settled) in the absence of the timely approval of the Plan and/or
the Awards by that number of the owners of the Company’s outstanding shares of
Stock required by Applicable Law to approve the Plan and/or such Awards. Such
approval must be obtained by a separate vote of the Company’s stockholders or by
any other method allowed under the Applicable Law. Furthermore, at such times
that no class of the Company’s capital stock is transferable over a public
exchange and to the extent necessary to avoid the excise tax set forth under
Section 4999 of the Code, and the loss of an income tax deduction under Section
280G of the Code, the grant, vesting, acceleration of vesting and/or payments of
or relating to Awards (or relating to the exercise or other disposition of

40

Awards) shall be subject to the approval of the Company’s stockholders in a
manner consistent with the requirements of Treas. Reg. Section 1.280G-1 Q&A 7.

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APPENDIX A

Performance conditions or goals may be stated with respect to (a) net sales; (b)
revenue; (c) revenue growth or product revenue growth; (d) operating income
(before or after taxes); (e) pre-or after-tax income (before or after allocation
of corporate overhead and bonus); (f) net earnings; (g) earnings per share; (h)
net income (before or after taxes); (i) return on equity; (j) total shareholder
return; (k) return on assets or net assets; (l) appreciation in and/or
maintenance of the price of the shares of Stock (or any other publicly-traded
securities of the Company); (m) market share; (n) gross profits; (o) earnings
(including earnings before taxes, before interest and taxes or before interest,
taxes, depreciation and amortization and non-cash extraordinary or non-recurring
charges or items); (p) economic value-added models or equivalent metrics; (q)
comparisons with various stock market indices; (r) reductions in cost; (s) cash
flow or cash flow per share (before or after dividends); (t) return on capital
(including return on total capital or return on invested capital); (u) cash flow
return on investments; (v) improvement in or attainment of expense levels or
working capital levels; (w) operating margin, gross margin or cash margin; (x)
year-end cash; (y) debt reduction; (z) shareholder equity; (aa) market shares;
(bb) regulatory achievements; and (cc) implementation, completion or attainment
of measurable objectives with respect to products, projects, capital raising and
recruiting and maintaining personnel. The business criteria above, may be
related to a specific customer or group of customers or products or geographic
region. The form of the performance conditions may be measured on a corporate,
affiliate, product, division, business unit, service line, segment or geographic
basis, individually, alternatively or in any combination, subset or component
thereof. Performance goals may include one or more of the foregoing business
criteria, either individually, alternatively or any combination, subset or
component thereof. Performance goals may reflect absolute performance or a
relative comparison of the performance to the performance of a peer group or
index or other external measure of the selected business criteria. Profits,
earnings and revenues used for any performance condition measurement may exclude
any extraordinary or non-recurring items. The performance conditions may, but
need not, be based upon an increase or positive result under the aforementioned
business criteria and could include, for example and not by way of limitation,
maintaining the status quo or limiting the economic losses (measured, in each
case, by reference to the specific business criteria). The performance
conditions may not include solely the mere continued employment of the
Participant. However, the Award may become exercisable, nonforfeitable and
transferable or earned and payable contingent on the Participant’s continued
employment or service, and/or employment or service at the time the Award
becomes exercisable, nonforfeitable and transferable or earned and payable, in
addition to the performance conditions described above. The Committee shall have
the sole discretion to select one or more periods of time over which the
attainment of one or more of the foregoing performance conditions will be
measured for the purpose of determining a Participant’s right to, and the
settlement of, a Award that will become exercisable, nonforfeitable and
transferable or earned and payable based on performance conditions, except that
the performance period shall not be less than one year, except in the case of
newly-hired or newly-promoted employees and, to the extent permitted by the
Committee or set forth in the Award Agreement, in the event of the Participant’s
death, Disability, retirement, involuntary Termination of Service without Cause
or voluntary Termination of service for Good Reason during the performance
period.

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