Exhibit 10.1

 

EARTHLINK, INC.

2006 EQUITY AND CASH INCENTIVE PLAN

 

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EARTHLINK, INC.

 

2006 EQUITY AND CASH INCENTIVE PLAN

 

TABLE OF CONTENTS

 

Section

 

Page

 

 

 

ARTICLE I DEFINITIONS

 

1

 

 

 

1.01 Affiliate

 

1

1.02 Agreement

 

1

1.03 Award

 

1

1.04 Board

 

1

1.05 Cause

 

1

1.06 Change in Control

 

2

1.07 Code

 

3

1.08 Committee

 

3

1.09 Common Stock

 

3

1.10 Company

 

3

1.11 Control Change Date

 

3

1.12 Corresponding SAR

 

3

1.13 Deferred Compensation Program

 

3

1.14 Deferred Stock Benefit

 

4

1.15 Exchange Act

 

4

1.16 Fair Market Value

 

4

1.17 Incentive Award

 

4

1.18 Incumbent Board

 

4

1.19 Initial Value

 

5

1.20 Named Executive Officer

 

5

1.21 Option

 

5

1.22 Participant

 

5

1.23 Plan

 

5

1.24 Person

 

5

1.25 Restricted Stock Award

 

6

1.26 Restricted Stock Unit

 

6

1.27 SAR

 

6

1.28 Ten Percent Shareholder

 

6

 

 

 

ARTICLE II PURPOSES

 

7

 

 

 

ARTICLE III ADMINISTRATION

 

8

 

 

 

ARTICLE IV ELIGIBILITY

 

10

 

 

 

ARTICLE V COMMON STOCK SUBJECT TO PLAN

 

11

 

 

 

5.01 Common Stock Issued

 

11

5.02 Aggregate Limit

 

11

5.03 Individual Limit

 

11

5.04 Awards Settled in Cash; Reissue of Awards and Shares

 

12

5.05 Deferred Stock Benefits.

 

12

 

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ARTICLE VI OPTIONS

 

13

 

 

 

6.01 Grant

 

13

6.02 Option Price

 

13

6.03 Maximum Option Period

 

13

6.04 Nontransferability

 

13

6.05 Transferable Options

 

13

6.06 Exercise

 

14

6.07 Payment

 

14

6.08 Employee Status

 

15

6.09 Change in Control

 

15

6.10 Stockholder Rights

 

16

6.11 Disposition of Shares

 

16

6.12 No Liability of Company

 

16

 

 

 

ARTICLE VII SARS

 

17

 

 

 

7.01 Grant

 

17

7.02 Maximum SAR Period

 

17

7.03 Nontransferability

 

17

7.04 Transferable SARs

 

17

7.05 Exercise

 

18

7.06 Settlement

 

18

7.07 Employee Status

 

18

7.08 Change in Control

 

18

7.09 Stockholder Rights

 

19

 

 

 

ARTICLE VIII RESTRICTED STOCK AWARDS

 

20

 

 

 

8.01 Award

 

20

8.02 Payment.

 

20

8.03 Vesting

 

20

8.04 Maximum Restriction Period

 

21

8.05 Employee Status

 

21

8.06 Change in Control

 

21

8.07 Stockholder Rights

 

22

 

 

 

ARTICLE IX RESTRICTED STOCK UNITS

 

23

 

 

 

9.01 Grant

 

23

9.02 Earning the Award

 

23

9.03 Maximum Restricted Stock Unit Award Period

 

23

9.04 Payment

 

23

9.05 Nontransferability

 

23

9.06 Transferable Restricted Stock Units

 

24

9.07 Employee Status

 

24

9.08 Change in Control

 

24

9.09 Stockholder Rights

 

25

 

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ARTICLE X INCENTIVE AWARDS

 

26

 

 

 

10.01 Grant

 

26

10.02 Earning the Award

 

26

10.03 Maximum Incentive Award Period

 

26

10.04 Payment

 

26

10.05 Nontransferability

 

26

10.06 Transferable Incentive Awards

 

27

10.07 Employee Status

 

27

10.08 Change in Control

 

27

10.09 Stockholder Rights

 

28

 

 

 

ARTICLE XI QUALIFIED PERFORMANCE-BASED COMPENSATION

 

29

 

 

 

11.01 Performance Conditions

 

29

11.02 Establishing the Amount of the Award

 

29

11.03 Earning the Award

 

30

11.04 Definitions of Performance Criteria

 

30

 

 

 

ARTICLE XII ADJUSTMENT UPON CHANGE IN COMMON STOCK

 

32

 

 

 

ARTICLE XIII COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES

 

33

 

 

 

13.01 Compliance.

 

33

13.02 Postponement of Exercise or Payment.

 

33

13.03 Forfeiture of Payment.

 

34

 

 

 

ARTICLE XIV LIMITATION ON BENEFITS

 

35

 

 

 

ARTICLE XV GENERAL PROVISIONS

 

36

 

 

 

15.01 Effect on Employment and Service

 

36

15.02 Unfunded Plan

 

36

15.03 Rules of Construction

 

36

15.04 Tax Withholding and Reporting.

 

36

15.05 Reservation of Shares.

 

37

15.06 Governing Law.

 

37

15.07 Other Actions.

 

37

15.08 Repurchase of Common Stock

 

37

15.09 Other Conditions.

 

37

15.10 Forfeiture Provisions.

 

38

15.11 Repricing of Awards.

 

38

15.12 Deferred Benefits

 

38

 

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ARTICLE XVI CLAIMS PROCEDURES

 

40

 

 

 

ARTICLE XVII AMENDMENT

 

41

 

 

 

ARTICLE XVIII DURATION OF PLAN

 

42

 

 

 

ARTICLE XIX EFFECTIVE DATE OF PLAN

 

43

 

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ARTICLE I
DEFINITIONS

 

1.01        Affiliate

 

Affiliate, as it relates to any limitations or requirements with respect to
incentive stock options, means any “subsidiary” or “parent” corporation (as such
terms are defined in Code Section 424) of the Company.  Affiliate otherwise
means any entity that is part of a controlled group of corporations or is under
common control with the Company within the meaning of Code Sections 1563(a),
414(b) or 414(c), except that, in making any such determination, 50 percent
shall be substituted for 80 percent under such Code Sections and the related
regulations.

 

1.02        Agreement

 

Agreement means a written agreement (including any amendment or supplement
thereto) between the Company and a Participant specifying the terms and
conditions of an Award granted to such Participant.

 

1.03        Award

 

Award means an Incentive Award, Option, Restricted Stock Award, Restricted Stock
Unit or SAR granted under this Plan.

 

1.04        Board

 

Board means the Board of Directors of the Company.

 

1.05        Cause

 

Cause has the same definition as under any employment or service agreement
between the Company or any Affiliate and the Participant or, if no such
employment or service agreement exists or if such employment or service
agreement does not contain any such definition, Cause means (i) the
Participant’s willful and repeated failure to comply with the lawful directives
of the Board, the Board of Directors of any Affiliate or any supervisory
personnel of the Participant; (ii) any criminal act or act of dishonesty or
willful misconduct by the Participant that has a material adverse effect on the
property, operations, business or reputation of the Company or any Affiliate;
(iii) the material breach by the Participant of the terms of any
confidentiality, noncompetition, non-solicitation or other agreement that the
Participant has with the Company or any Affiliate or (iv) acts by the
Participant of willful malfeasance or gross negligence in a matter of material
importance to the Company or any Affiliate.  For purposes of the Plan, other
than where the definition of Cause is determined under any employment or service
agreement between the Company or any Affiliate and the Participant, in which
case such employment or service agreement shall control, in no event shall any
termination of employment be deemed for Cause unless the Company’s Chief
Executive Officer concludes that the situation warrants a determination that the
Participant’s employment terminated for Cause; in the case of the Chief

 

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Executive Officer, any determination that the Chief Executive Officer’s
employment terminated for Cause shall be made by the Board acting without the
Chief Executive Officer.

 

1.06        Change in Control

 

Change in Control means the occurrence of any of the following events:

 

(A)           THE ACCUMULATION IN ANY NUMBER OF RELATED OR UNRELATED
TRANSACTIONS BY ANY PERSON OF BENEFICIAL OWNERSHIP (AS SUCH TERM IS USED IN
RULE 13D-3 PROMULGATED UNDER THE EXCHANGE ACT) OF MORE THAN FIFTY PERCENT (50%)
OF THE COMBINED VOTING POWER OF THE COMPANY’S VOTING STOCK; PROVIDED THAT FOR
PURPOSES OF THIS SUBSECTION (A), A CHANGE IN CONTROL WILL NOT BE DEEMED TO HAVE
OCCURRED IF THE ACCUMULATION OF MORE THAN FIFTY PERCENT (50%) OF THE VOTING
POWER OF THE COMPANY’S VOTING STOCK RESULTS FROM ANY ACQUISITION OF VOTING STOCK
(I) DIRECTLY FROM THE COMPANY THAT IS APPROVED BY THE INCUMBENT BOARD, (II) BY
THE COMPANY, (III) BY ANY EMPLOYEE BENEFIT PLAN (OR RELATED TRUST) SPONSORED OR
MAINTAINED BY THE COMPANY OR ANY AFFILIATE, OR (IV) BY ANY PERSON PURSUANT TO A
MERGER, CONSOLIDATION OR REORGANIZATION (A “BUSINESS COMBINATION”) THAT WOULD
NOT CAUSE A CHANGE IN CONTROL UNDER CLAUSES (I) AND (II) OF
SUBSECTION (B) BELOW; OR

 

(B)           CONSUMMATION OF A BUSINESS COMBINATION, UNLESS, IMMEDIATELY
FOLLOWING THAT BUSINESS COMBINATION, (I) ALL OR SUBSTANTIALLY ALL OF THE PERSONS
WHO WERE THE BENEFICIAL OWNERS OF VOTING STOCK OF THE COMPANY IMMEDIATELY PRIOR
TO THAT BUSINESS COMBINATION BENEFICIALLY OWN, DIRECTLY OR INDIRECTLY, AT LEAST
FIFTY PERCENT (50%) OF THE THEN OUTSTANDING SHARES OF COMMON STOCK AND AT LEAST
FIFTY PERCENT (50%) OF THE COMBINED VOTING POWER OF THE THEN OUTSTANDING VOTING
STOCK ENTITLED TO VOTE GENERALLY IN THE ELECTION OF DIRECTORS OF THE ENTITY
RESULTING FROM THAT BUSINESS COMBINATION (INCLUDING, WITHOUT LIMITATION, AN
ENTITY THAT AS A RESULT OF THAT TRANSACTION OWNS THE COMPANY OR ALL OR
SUBSTANTIALLY ALL OF THE COMPANY’S ASSETS EITHER DIRECTLY OR THROUGH ONE OR MORE
SUBSIDIARIES) IN SUBSTANTIALLY THE SAME PROPORTIONS RELATIVE TO EACH OTHER AS
THEIR OWNERSHIP, IMMEDIATELY PRIOR TO THAT BUSINESS COMBINATION, OF THE VOTING
STOCK OF THE COMPANY, AND (II) AT LEAST SIXTY PERCENT (60%) OF THE MEMBERS OF
THE BOARD OF DIRECTORS OF THE ENTITY RESULTING FROM THAT BUSINESS COMBINATION
HOLDING AT LEAST SIXTY PERCENT (60%) OF THE VOTING POWER OF SUCH BOARD OF
DIRECTORS WERE MEMBERS OF THE INCUMBENT BOARD AT THE TIME OF THE EXECUTION OF
THE INITIAL AGREEMENT OR OF THE ACTION OF THE BOARD OF DIRECTORS PROVIDING FOR
THAT BUSINESS COMBINATION AND AS A RESULT OF OR IN CONNECTION WITH SUCH BUSINESS
COMBINATION, NO PERSON HAS A RIGHT TO DILUTE EITHER OF SUCH PERCENTAGES BY
APPOINTING ADDITIONAL MEMBERS TO THE BOARD OF DIRECTORS OR OTHERWISE WITHOUT
ELECTION OR OTHER ACTION BY THE SHAREHOLDERS; OR

 

(C)           A SALE OR OTHER DISPOSITION OF ALL OR SUBSTANTIALLY ALL OF THE
ASSETS OF THE COMPANY, EXCEPT PURSUANT TO A BUSINESS COMBINATION THAT WOULD NOT
CAUSE A CHANGE IN CONTROL UNDER CLAUSES (I) AND (II) OF SUBSECTION (B) ABOVE; OR

 

(D)           APPROVAL BY THE SHAREHOLDERS OF THE COMPANY OF A COMPLETE
LIQUIDATION OR DISSOLUTION OF THE COMPANY, EXCEPT PURSUANT TO A BUSINESS
COMBINATION THAT WOULD NOT CAUSE A CHANGE IN CONTROL UNDER CLAUSES (I) AND
(II) OF SUBSECTION (B) ABOVE; OR

 

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(E)           THE ACQUISITION BY ANY PERSON, DIRECTLY OR INDIRECTLY, OF THE
POWER TO DIRECT OR CAUSE THE DIRECTION OF THE MANAGEMENT AND POLICIES OF THE
COMPANY (I) THROUGH THE OWNERSHIP OF SECURITIES WHICH PROVIDE THE HOLDER WITH
SUCH POWER, EXCLUDING VOTING RIGHTS ATTENDANT WITH SUCH SECURITIES, OR (II) BY
CONTRACT; PROVIDED THAT A CHANGE IN CONTROL WILL NOT BE DEEMED TO HAVE OCCURRED
IF SUCH POWER WAS ACQUIRED (X) DIRECTLY FROM THE COMPANY IN A TRANSACTION
APPROVED BY THE INCUMBENT BOARD, (Y) BY AN EMPLOYEE BENEFIT PLAN (OR RELATED
TRUST) SPONSORED OR MAINTAINED BY THE COMPANY OR ANY AFFILIATE OR (Z) BY ANY
PERSON PURSUANT TO A BUSINESS COMBINATION THAT WOULD NOT CAUSE A CHANGE IN
CONTROL UNDER CLAUSES (I) AND (II) OF SUBSECTION (B) ABOVE.

 

1.07        Code

 

Code means the Internal Revenue Code of 1986 and any amendments thereto.

 

1.08        Committee

 

Committee means the Compensation Committee of the Board, or the Board itself if
no Compensation Committee exists.  If such Compensation Committee exists, if and
to the extent deemed necessary by the Board, such Compensation Committee shall
consist of two or more directors, all of whom are “non-employee directors”
within the meaning of Rule 16b-3 under the Exchange Act and “outside directors”
within the meaning of Code Section 162(m).

 

1.09        Common Stock

 

Common Stock means the common stock, $0.01 par value per share, of the Company.

 

1.10        Company

 

Company means EarthLink, Inc., a Delaware corporation, and any successor
thereto.

 

1.11        Control Change Date

 

Control Change Date means the date on which a Change in Control occurs.  If a
Change in Control occurs on account of a series of transactions, the “Control
Change Date” is the date of the last of such transactions.

 

1.12        Corresponding SAR

 

Corresponding SAR means a SAR that is granted in relation to a particular Option
and that can be exercised only upon the surrender to the Company, unexercised,
of that portion of the Option to which the SAR relates.

 

1.13        Deferred Compensation Program

 

Deferred Compensation Program means any plan or program that the Company may
establish that is intended to constitute a deferred compensation plan for a
select group of management and highly compensated employees of the Company and
its Affiliates, pursuant to

 

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which eligible individuals may elect to defer the receipt of specified benefits
or to which specified benefits otherwise deferred will be credited on behalf of
eligible individuals (whether or not such benefits are deferred in connection
with Awards granted under this Plan).

 

1.14        Deferred Stock Benefit

 

Deferred Stock Benefit means the specified benefit that the eligible individual
elected to defer under the Deferred Compensation Program or that otherwise was
deferred and credited under the Deferred Compensation Program that must be
distributed or paid, if at all, in shares of Common Stock.  A Deferred Stock
Benefit will be paid pursuant to the terms of the Deferred Compensation Program
and at such time or times as are set forth therein (which may be more than ten
years from the date of grant of the Award in connection with which the receipt
of Common Stock or cash or other consideration was deferred).

 

1.15        Exchange Act

 

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

 

1.16        Fair Market Value

 

Fair Market Value of a share of Common Stock means, on any given date, the fair
market value of a share of Common Stock as the Committee in its discretion shall
determine; provided, however, that the Committee shall determine Fair Market
Value without regard to any restriction other than a restriction which, by its
terms, will never lapse and, if the shares of Common Stock are traded on any
national stock exchange or quotation system, the Fair Market Value of a share of
Common Stock shall be the closing price of a share of Common Stock as reported
on such stock exchange or quotation system on such date, or if the shares of
Common Stock are not traded on such stock exchange or quotation system on such
date, then on the next preceding day that the shares of Common Stock were traded
on such stock exchange or quotation system, all as reported by such source as
the Committee shall select.  The Fair Market Value that the Committee determines
shall be final, binding and conclusive on the Company, any Affiliate and each
Participant.

 

1.17        Incentive Award

 

Incentive Award means an award stated with reference to a specified dollar
amount or number of shares of Common Stock which, subject to such terms and
conditions as may be prescribed by the Committee, entitles the Participant to
receive shares of Common Stock, cash or a combination thereof from the Company
or an Affiliate.

 

1.18        Incumbent Board

 

Incumbent Board means a Board of Directors at least a majority of whom consist
of individuals who either are (a) members of the Company’s Board as of the
effective date of the adoption of this Plan or (b) members who become members of
the Company’s Board subsequent

 

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to the date of the adoption of this Plan whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least sixty
percent (60%) of the directors then comprising the Incumbent Board (either by a
specific vote or by approval of the proxy statement of the Company in which that
person is named as a nominee for director, without objection to that
nomination), but excluding, for that purpose, any individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest (within the meaning of Rule 14a-11 of the Exchange Act) with respect to
the election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board of
Directors.

 

1.19        Initial Value

 

Initial Value means, with respect to a Corresponding SAR, the Option price per
share of the related Option and, with respect to a SAR granted independently of
an Option, the Fair Market Value of one share of Common Stock on the date of
grant.

 

1.20        Named Executive Officer

 

Named Executive Officer means a Participant who, as of the last day of a taxable
year, is the Chief Executive Officer of the Company (or is acting in such
capacity) or one of the four highest compensated officers of the Company (other
than the Chief Executive Officer) or is otherwise one of the group of “covered
employees,” as defined in the regulations promulgated under Code Section 162(m).

 

1.21        Option

 

Option means a stock option that entitles the holder to purchase from the
Company a stated number of shares of Common Stock at the price set forth in an
Agreement.

 

1.22        Participant

 

Participant means an employee of the Company or an Affiliate, a member of the
Board or the Board of Directors of an Affiliate (whether or not an employee), or
a person or entity that provides services to the Company or an Affiliate and who
satisfies the requirements of Article IV and is selected by the Committee to
receive an Award.

 

1.23        Plan

 

Plan means this EarthLink, Inc. 2006 Equity and Cash Incentive Plan, in its
current form and as hereafter amended.

 

1.24        Person

 

Person means any individual, corporation, partnership, limited liability
company, joint venture, incorporated or unincorporated association, joint-stock
company, trust, unincorporated

 

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organization or government or other agency or political subdivision thereof or
any other entity of any kind.

 

1.25        Restricted Stock Award

 

Restricted Stock Award means shares of Common Stock granted to a Participant
under Article VIII.

 

1.26        Restricted Stock Unit

 

Restricted Stock Unit means an award, stated with respect to a specified number
of shares of Common Stock, that entitles the Participant to receive one share of
Common Stock with respect to each Restricted Stock Unit that becomes payable
under the terms and conditions of the Plan and the applicable Agreement.

 

1.27        SAR

 

SAR means a stock appreciation right that in accordance with the terms of an
Agreement entitles the holder to receive cash or a number of shares of Common
Stock based on the increase in the Fair Market Value of the shares underlying
the stock appreciation right during a stated period specified by the Committee. 
References to “SARs” include both Corresponding SARs and SARs granted
independently of Options, unless the context requires otherwise.

 

1.28        Ten Percent Shareholder

 

Ten Percent Shareholder means any individual who (considering the stock
attribution rules described in Code Section 424(d)) owns stock possessing more
than 10 percent of the total combined voting power of all classes of stock of
the Company or any Affiliate.

 

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ARTICLE II
PURPOSES

 

The Plan is intended to assist the Company and its Affiliates in recruiting and
retaining individuals with ability and initiative by enabling such persons to
participate in the future success of the Company and its Affiliates by
associating their interests with those of the Company and its stockholders.  The
Plan is intended to permit the grant of Options qualifying under Code
Section 422 (“incentive stock options”) and Options not so qualifying, SARs,
Restricted Stock Awards, Restricted Stock Units and Incentive Awards in
accordance with the Plan and procedures that may be established by the
Committee.  No Option that is intended to be an incentive stock option shall be
invalid for failure to qualify as an incentive stock option.  The proceeds
received by the Company from the sale of shares of Common Stock pursuant to this
Plan may be used for general corporate purposes.

 

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ARTICLE III
ADMINISTRATION

 

The Plan shall be administered by the Committee.  The Committee shall have
authority to grant Awards upon such terms (not inconsistent with the provisions
of this Plan) as the Committee may consider appropriate.  Such terms may include
conditions (in addition to those contained in this Plan) on the exercisability,
transferability, and forfeitability of all or any part of an Option or SAR, the
transferability or forfeitability of a Restricted Stock Award, or the grant,
settlement, forfeitability, or transferability of a Restricted Stock Unit or an
Incentive Award, among other terms.  Notwithstanding any such conditions, the
Committee may, in its discretion and whether or not in connection with a Change
in Control, accelerate the time at which any Option or SAR may be exercised, or
the time at which a Restricted Stock Award may become transferable or
nonforfeitable or the time at which an Incentive Award or award of Restricted
Stock Units may be earned and settled.  In addition, the Committee shall have
complete authority to interpret all provisions of this Plan; to prescribe the
form of Agreements; to adopt, amend, and rescind rules and regulations
pertaining to the administration of the Plan; and to make all other
determinations necessary or advisable for the administration of this Plan.  The
express grant in the Plan of any specific power to the Committee shall not be
construed as limiting any power or authority of the Committee.  Any decision
made, or action taken, by the Committee in connection with the administration of
this Plan shall be final and conclusive.  The members of the Committee shall not
be liable for any act done in good faith with respect to this Plan or any
Agreement or Award.

 

To the extent applicable law so permits, the Committee, in its discretion, may
delegate to one or more officers of the Company all or part of the Committee’s
authority and duties with respect to Awards to be granted to individuals who are
not subject to the reporting and other provisions of Section 16 of the Exchange
Act and who are not Named Executive Officers.  The Committee may revoke or amend
the terms of a delegation at any time but such action shall not invalidate any
prior actions of the Committee’s delegate or delegates that were consistent with
the terms of the Plan and the Committee’s prior delegation.  If and to the
extent deemed necessary by the Board, (i) all Awards granted to any individual
who is subject to the reporting and other provisions of Section 16 of the
Exchange Act shall be made by a Committee comprised solely of two or more
directors, all of whom are “non-employee directors” within the meaning of
Rule 16b-3 under the Exchange Act and (ii) all Awards granted to an individual
who is a Named Executive Officer shall be made by a Committee comprised solely
of two or more directors, all of whom are “outside directors” within the meaning
of Code Section 162(m).

 

The Company shall bear all expenses of administering this Plan.  The Company
shall indemnify and hold harmless each person who is or shall have been a member
of the Committee acting as administrator of the Plan, or any delegate of such,
against and from any cost, liability, loss or expense that may be imposed upon
or reasonably incurred by such person in connection with or resulting from any
action, claim, suit, or proceeding to which such person may be a party or in
which such person may be involved by reason of any action taken or not taken
under the Plan and against and from any and all amounts paid by such person in
settlement thereof, with the Company’s approval, or paid by such person in
satisfaction of any judgment in any such

 

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action, suit, or proceeding against such person, provided he or she shall give
the Company an opportunity, at its own expense, to handle and defend the same
before he or she undertakes to handle and defend it on his or her own behalf. 
Notwithstanding the foregoing, the Company shall not indemnify and hold harmless
any such person if (i) applicable law or the Company’s Certificate of
Incorporation or Bylaws prohibit such indemnification or (ii) such person did
not act in good faith and in a manner that such person believed to be consistent
with the Plan or (iii) such person’s conduct constituted gross negligence or
willful misconduct.  The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled under the Company’s Certificate of Incorporation or Bylaws, as a matter
of law or otherwise, or under any other power that the Company may have to
indemnify such person or hold him or her harmless.  The provisions of the
foregoing indemnity shall survive indefinitely the term of this Plan.

 

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ARTICLE IV
ELIGIBILITY

 

Any employee of the Company or an Affiliate (including an entity that becomes an
Affiliate after the adoption of this Plan), a member of the Board or the Board
of Directors of an Affiliate (including an entity that becomes an Affiliate
after the adoption of the Plan) (whether or not such board member is an
employee) and any other person or entity that provides services to the Company
or an Affiliate (including an entity that becomes an Affiliate after the
adoption of the Plan) is eligible to participate in this Plan if the Committee,
in its sole discretion, determines that such person or entity has contributed
significantly or can be expected to contribute significantly to the profits or
growth of the Company or any Affiliate or if it is otherwise in the best
interest of the Company or any Affiliate for such person or entity to
participate in this Plan.

 

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ARTICLE V
COMMON STOCK SUBJECT TO PLAN

 

5.01        Common Stock Issued

 

Upon the issuance of shares of Common Stock pursuant to an Award, the Company
may deliver to the Participant (or the Participant’s broker if the Participant
so directs) shares of Common Stock from its authorized but unissued Common
Stock, treasury shares or reacquired shares, whether reacquired on the open
market or otherwise.  On the distribution or payment of Deferred Stock Benefits,
the Company may issue shares of Common Stock from its authorized but unissued
Common Stock, treasury shares or reacquired shares, whether reacquired on the
open market or otherwise.

 

5.02        Aggregate Limit

 

The maximum aggregate number of shares of Common Stock that may be issued under
this Plan and to which Awards may relate or which may be distributed or paid in
settlement of Deferred Stock Benefits shall be 10,000,000 shares.  One hundred
percent (100%) of such shares may be issued pursuant to Options or in settlement
of Deferred Stock Benefits that represent deferred shares of Common Stock
previously subject to Options.  Alternatively, one hundred percent (100%) of
such shares may be issued pursuant to SARs, Restricted Stock Awards, Restricted
Stock Units or Incentive Awards or any other Deferred Stock Benefits to be
distributed or paid under the Deferred Compensation Program, including without
limitation, those with respect to SARs, Restricted Stock Awards, Restricted
Stock Units or Incentive Awards.  The maximum number of shares of Common Stock
that may be issued in each instance shall be subject to adjustment as provided
in Article XII.

 

5.03        Individual Limit

 

In any calendar year, no Participant may be granted Options, SARs, Restricted
Stock Awards, Restricted Stock Units or any combination thereof that relate to
more than one million shares of Common Stock.  For purposes of the foregoing
limit, an Option and its Corresponding SAR shall be treated as a single Award. 
In any calendar year, no Participant may be granted an Incentive Award (i) with
reference to a specified dollar limit for more than $1,000,000 and (ii) with
reference to a specified number of shares of Common Stock for more than one
million shares of Common Stock.  If an Award that a Participant holds is
cancelled or subject to a repricing within the meaning of the regulations under
Code Section 162(m) (after shareholder approval as required herein), the
cancelled Award shall continue to be counted against the maximum number of
shares of Common Stock for which Awards may be granted to the Participant in any
calendar year as required under Code Section 162(m).  The maximum number of
shares that may be granted in any calendar year to any Participant shall be
subject to adjustment as provided in Article XII.

 

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5.04        Awards Settled in Cash; Reissue of Awards and Shares

 

To the extent that an Award is settled in cash or a form other than shares of
Common Stock, the shares of Common Stock that would have been delivered had
there been no such cash or other settlement shall not be counted against the
shares of Common Stock available for issuance under the Plan; however, the
number of underlying shares of Common Stock with respect to which the Award
related shall be counted against the applicable Common Stock limit under
Section 5.02 above as opposed to counting the number of shares of Common Stock
that would have been delivered had there been no such cash or other settlement. 
To the extent that any shares of Common Stock are issued pursuant to an Award,
the number of shares of Common Stock that shall be counted against the
applicable Common Stock limit under Section 5.02 above shall be the greater of
(i) the number of underlying shares of Common Stock with respect to which the
Award related or (ii) the number of shares of Common Stock actually issued in
settlement of such Award.  Shares of Common Stock that are subject to or
underlie Awards that expire, or for any reason are cancelled, terminated or
forfeited, fail to vest, or for any other reason are not paid or delivered under
the Plan, shall again be available for issuance pursuant to subsequent Awards
under the Plan.  Such shares of Common Stock, with respect to the portion of
that Award that is cancelled, terminated, forfeited, fails to vest or is
otherwise not paid or delivered, will be treated for purposes of Section 5.02
above as if they had never been issued.  Shares of Common Stock that are
otherwise reacquired from the Participant or the Participant’s transferee to pay
the exercise or purchase price of an Award or to satisfy the minimum applicable
tax withholding obligation of the Company or an Affiliate with respect to an
Award shall not be treated, for purposes of Section 5.02 above, as shares of
Common Stock available for issuance under the Plan and shall not be so
available.

 

5.05        Deferred Stock Benefits

 

Shares of Common Stock issued or distributed in settlement of Deferred Stock
Benefits, shares of Common Stock subject to Awards with respect to which there
is a Deferred Stock Benefit and any other Deferred Stock Benefits to be paid or
distributed under the Deferred Compensation Program shall be counted against the
maximum number of shares of Common Stock that may be issued under this Plan and
to which Awards may relate unless and until such shares of Common Stock shall
not be issued because of the surrender, lapse, expiration, forfeiture or
termination of any rights in such shares of Common Stock or the Deferred Stock
Benefits; provided, however, that shares of Common Stock shall be counted toward
the foregoing limits only once (so that in the case of shares of Common Stock
subject to Awards that are cancelled in connection with the Deferred Stock
Benefits, such shares of Common Stock shall only be counted once).  If a
Deferred Stock Benefit is forfeited, in whole or in part, the number of shares
of Common Stock allocated to such Deferred Stock Benefit or portion thereof may
be reallocated to other Awards to be granted under the Plan or to settle other
Deferred Stock Benefits.  However, shares of Common Stock issued in settlement
of or representing Deferred Stock Benefits that constitute earnings on deferred
shares of Common Stock shall be counted separately towards the foregoing Common
Stock limit under Section 5.02 above.

 

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ARTICLE VI
OPTIONS

 

6.01        Grant

 

In accordance with the provisions of Article IV, the Committee will designate
each individual or entity to whom an Option is to be granted and will specify
the number of shares of Common Stock covered by such grant and whether the
Option is an incentive stock option or a nonqualified stock option. 
Notwithstanding any other provision of the Plan or any Agreement, the Committee
may only grant an incentive stock option to an individual who is an employee of
the Company or an Affiliate.  An Option may be granted with or without a
corresponding SAR.

 

6.02        Option Price

 

The price per share of Common Stock purchased on the exercise of an Option shall
be determined by the Committee on the date of grant, but shall not be less than
the Fair Market Value of a share of Common Stock on the date the Option is
granted.  However, if at the time of grant of an Option that is intended to be
an incentive stock option, the Participant is a Ten Percent Shareholder, the
price per share of Common Stock purchased on the exercise of such Option shall
not be less than 110% of the Fair Market Value of a share of Common Stock on the
date the Option is granted.

 

6.03        Maximum Option Period

 

The maximum period in which an Option may be exercised shall be determined by
the Committee on the date of grant, except that no Option shall be exercisable
after the expiration of ten years from the date such Option was granted (five
years from the date such Option was granted in the event of an incentive stock
option granted to a Ten Percent Shareholder).

 

6.04        Nontransferability

 

Except as provided in Section 6.05, each Option granted under this Plan shall be
nontransferable except by will or by the laws of descent and distribution.  In
the event of any transfer of an Option (by the Participant or his transferee),
the Option and any Corresponding SAR that relates to such Option must be
transferred to the same person or persons or entity or entities.  Except as
provided in Section 6.05, during the lifetime of the Participant to whom the
Option is granted, the Option may be exercised only by the Participant.  No
right or interest of a Participant in any Option shall be liable for, or subject
to, any lien, obligation, or liability of such Participant.

 

6.05        Transferable Options

 

Section 6.04 to the contrary notwithstanding, if the Agreement so provides, an
Option that is not an incentive stock option may be transferred by a Participant
to the Participant’s children, grandchildren, spouse, one or more trusts for the
benefit of such family members or a

 

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partnership in which such family members are the only partners, on such terms
and conditions as are appropriate for such transferees to be included in the
class of transferees who may rely on a Form S-8 Registration Statement under the
Securities Act of 1933 to sell shares issuable upon exercise of Options granted
under the Plan.  Any such transfer will be permitted only if (i) the Participant
does not receive any consideration for the transfer and (ii) the Committee
expressly approves the transfer.  The holder of an Option transferred pursuant
to this Section shall be bound by the same terms and conditions that governed
the Option during the period that it was held by the Participant; provided,
however, that such transferee may not transfer the Option except by will or the
laws of descent and distribution.  In the event of any transfer of an Option (by
the Participant or his transferee), the Option and any Corresponding SAR that
relates to such Option must be transferred to the same person or persons or
entity or entities.

 

6.06        Exercise

 

Subject to the provisions of this Plan and the applicable Agreement, an Option
may be exercised in whole at any time or in part from time to time at such times
and in compliance with such requirements as the Committee shall determine;
provided, however, that incentive stock options (granted under the Plan and all
plans of the Company and its Affiliates) may not be first exercisable in a
calendar year for shares of Common Stock having a Fair Market Value (determined
as of the date the Option is granted) exceeding $100,000.  If the limitation is
exceeded, the Options that cause the limitation to be exceeded shall be treated
as nonqualified stock options.  An Option granted under this Plan may be
exercised with respect to any number of whole shares less than the full number
for which the Option could be exercised.  A partial exercise of an Option shall
not affect the right to exercise the Option from time to time in accordance with
this Plan and the applicable Agreement with respect to the remaining shares
subject to the Option.  The exercise of an Option shall result in the
termination of the Corresponding SAR to the extent of the number of shares with
respect to which the Option is exercised.

 

6.07        Payment

 

Subject to rules established by the Committee and unless otherwise provided in
an Agreement, payment of all or part of the Option price shall be made in cash
or cash equivalent acceptable to the Committee.  If the Agreement so provides,
the Committee, in its discretion and provided applicable law so permits, may
allow a Participant to pay all or part of the Option price (i) by surrendering
shares of Common Stock to the Company that the Participant already owns; (ii) by
a cashless exercise through a broker; (iii) by such other medium of payment as
the Administrator in its discretion shall authorize or (iv) by any combination
of the aforementioned methods of payment.  If shares of Common Stock are used to
pay all or part of the Option price, the sum of the cash and cash equivalent and
the Fair Market Value (determined as of the day preceding the date of exercise)
of the shares surrendered must not be less than the Option price of the shares
for which the Option is being exercised.

 

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6.08        Employee Status

 

For purposes of determining the applicability of Code Section 422 (relating to
incentive stock options), or in the event that the terms of any Option provide
that it may be exercised only during employment or continued service or within a
specified period of time after termination of employment or continued service,
the Committee may decide to what extent leaves of absence for governmental or
military service, illness, temporary disability, or other reasons shall not be
deemed interruptions of continuous employment or service.

 

6.09        Change in Control

 

Notwithstanding any provision of any Agreement, in the event of or in
anticipation of a Change in Control, the Committee in its discretion may
(i) declare that some or all outstanding Options previously granted under the
Plan, whether or not then exercisable, shall terminate as of a date before or on
the Control Change Date without any payment to the holder of the Option,
provided the Committee gives prior written notice to the Participants of such
termination and gives such Participants the right to exercise their outstanding
Options for at least seven (7) days before such date to the extent then
exercisable (or to the extent such Options would have been exercisable as of the
Control Change Date), (ii) terminate before or on the Control Change Date some
or all outstanding Options previously granted under the Plan, whether or not
then exercisable, in consideration of payment to the holder of the Option, with
respect to each share of Common Stock for which the Option is then exercisable
(or for which the Option would have been exercisable as of the Control Change
Date), of the excess, if any, of the Fair Market Value on such date of the
Common Stock subject to such portion of the Option over the Option price
(provided that outstanding Options that are not then exercisable and that would
not become exercisable on the Control Change Date, and Options with respect to
which the Fair Market Value of the Common Stock subject to the Options does not
exceed the Option price, shall be cancelled without any payment therefor) or
(iii) take such other action as the Committee determines to be reasonable under
the circumstances to permit the Participant to realize the value of the Option
(which value for purposes of Options that are not then exercisable and that
would not become exercisable as of the Control Change Date, and Options with
respect to which the Fair Market Value of the Common Stock subject to the
Options does not exceed the Option price, shall be deemed to be zero).  The
payment described in (ii) above may be made in any manner the Committee
determines, including in cash, stock or other property.  The Committee may take
the actions described in (i) or (ii) above with respect to Options that are not
then exercisable whether or not the Participant will receive any payment
therefor.  The Committee in its discretion may take any of the actions described
in this Section 6.09 contingent on consummation of the Change in Control and
with respect to some or all outstanding Options, whether or not then
exercisable, or on an Option-by-Option basis, which actions need not be uniform
with respect to all outstanding Options.  However, the Options shall not be
terminated to the extent that written provision is made for their continuance,
assumption or substitution by the Company or a successor employer or its parent
or subsidiary in connection with the Change in Control.  The Committee may
provide in an applicable Agreement that a Participant’s outstanding Options
shall be fully exercisable on and after a Control Change Date or

 

15

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immediately before the date the Options will be terminated in connection with
the Change in Control, as described above.

 

6.10        Stockholder Rights

 

No Participant shall have any rights as a stockholder with respect to shares
subject to his or her Option until the date of exercise of such Option.

 

6.11        Disposition of Shares

 

A Participant shall notify the Company of any sale or other disposition of
shares of Common Stock acquired pursuant to an Option that was an incentive
stock option if such sale or disposition occurs (i) within two years of the
grant of an Option or (ii) within one year of the issuance of shares of Common
Stock to the Participant.  Such notice shall be in writing and directed to the
Secretary of the Company.

 

6.12        No Liability of Company

 

The Company shall not be liable to any Participant or any other person if the
Internal Revenue Service or any court or other authority having jurisdiction
over such matter determines for any reason that an Option intended to be an
incentive stock option and granted hereunder does not qualify as an incentive
stock option.

 

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ARTICLE VII
SARS

 

7.01        Grant

 

In accordance with the provisions of Article IV, the Committee will designate
each individual or entity to whom SARs are to be granted and will specify the
number of shares of Common Stock covered by such grant.  In addition, no
Participant may be granted Corresponding SARs (under this Plan and all other
incentive stock option plans of the Company and its Affiliates) that are related
to incentive stock options which are first exercisable in any calendar year for
shares of Common Stock having an aggregate Fair Market Value (determined as of
the date the related Option is granted) that exceeds $100,000.

 

7.02        Maximum SAR Period

 

The term of each SAR shall be determined by the Committee on the date of grant,
except that no SAR shall have a term of more than ten years from the date such
SAR was granted (five years for a Corresponding SAR that is related to an
incentive stock option and that is granted to a Ten Percent Shareholder).  No
Corresponding SAR shall be exercisable or continue in existence after the
expiration of the Option to which the Corresponding SAR relates.

 

7.03        Nontransferability

 

Except as provided in Section 7.04, each SAR granted under this Plan shall be
nontransferable except by will or by the laws of descent and distribution.  In
the event of any such transfer, a Corresponding SAR and the related Option must
be transferred to the same person or persons or entity or entities.  Except as
provided in Section 7.04, during the lifetime of the Participant to whom the SAR
is granted, the SAR may be exercised only by the Participant.  No right or
interest of a Participant in any SAR shall be liable for, or subject to, any
lien, obligation, or liability of such Participant.

 

7.04        Transferable SARs

 

Section 7.03 to the contrary notwithstanding, if the Agreement so provides, a
SAR, other than a Corresponding SAR that is related to an incentive stock
option, may be transferred by a Participant to the Participant’s children,
grandchildren, spouse, one or more trusts for the benefit of such family members
or a partnership in which such family members are the only partners, on such
terms and conditions as are appropriate for such transferees to be included in
the class of transferees who may rely on a Form S-8 Registration Statement under
the Securities Act of 1933 to sell shares received pursuant to Awards granted
under the Plan.  Any such transfer will be permitted only if (i) the Participant
does not receive any consideration for the transfer and (ii) the Committee
expressly approves the transfer.  The holder of a SAR transferred pursuant to
this Section shall be bound by the same terms and conditions that governed the
SAR during the period that it was held by the Participant; provided, however,
that such transferee may not transfer the SAR except by will or the laws of
descent and distribution.  In the event of any

 

17

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transfer of a Corresponding SAR (by the Participant or his or her transferee),
the Corresponding SAR and the related Option must be transferred to the same
person or person or entity or entities.

 

7.05        Exercise

 

Subject to the provisions of this Plan and the applicable Agreement, a SAR may
be exercised in whole at any time or in part from time to time at such times and
in compliance with such requirements as the Committee shall determine; provided,
however, that a SAR may be exercised only when the Fair Market Value of the
Common Stock that is subject to the exercise exceeds the Initial Value of the
SAR and a Corresponding SAR may be exercised only to the extent that the related
Option is exercisable.  A SAR granted under this Plan may be exercised with
respect to any number of whole shares less than the full number for which the
SAR could be exercised.  A partial exercise of a SAR shall not affect the right
to exercise the SAR from time to time in accordance with this Plan and the
applicable Agreement with respect to the remaining shares subject to the SAR. 
The exercise of a Corresponding SAR shall result in the termination of the
related Option to the extent of the number of shares with respect to which the
SAR is exercised.

 

7.06        Settlement

 

The amount payable as a result of the exercise of a SAR shall be settled in
cash, by the issuance of shares of Common Stock or by a combination thereof.  No
fractional share will be deliverable upon the exercise of a SAR but a cash
payment will be made in lieu thereof.

 

7.07        Employee Status

 

If the terms of any SAR provide that it may be exercised only during employment
or continued service or within a specified period of time after termination of
employment or continued service, the Committee may decide to what extent leaves
of absence for governmental or military service, illness, temporary disability
or other reasons shall not be deemed interruptions of continuous employment or
service.

 

7.08        Change in Control

 

Notwithstanding any provision of any Agreement, in the event of or in
anticipation of a Change in Control, the Committee in its discretion may
(i) declare that some or all outstanding SARs previously granted under the Plan,
whether or not then exercisable, shall terminate as of a date before or on the
Control Change Date without any payment to the holder of the SAR, provided the
Committee gives prior written notice to the Participants of such termination and
gives such Participants the right to exercise their outstanding SARs at least
seven (7) days before such termination date to the extent then exercisable (or
to the extent such SARs would have been exercisable as of the Control Change
Date), (ii) terminate before or on the Control Change Date some or all
outstanding SARs previously granted under the Plan, whether or not then
exercisable, in consideration of payment to the holder of the SARs, with respect
to each share of Common Stock for which the SARs are then exercisable (or for
which the SARs would have been

 

18

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exercisable as of the Control Change Date), of the excess, if any, of the Fair
Market Value of such Common Stock on such date over the Initial Value of the
SARs (provided that outstanding SARs that are not then exercisable and that
would not become exercisable on the Control Change Date, and SARs with respect
to which the Fair Market Value of the Common Stock does not exceed the Initial
Value, shall be cancelled without any payment therefor) or (iii) take such other
action as the Committee determines to be reasonable under the circumstances to
permit the Participant to realize the value of the SARs (which value for
purposes of SARs that are not then exercisable and that would not become
exercisable as of the Control Change Date, and SARs with respect to which the
Fair Market Value of the Common Stock does not exceed the Initial Value, shall
be deemed to be zero).  The payment described in (ii) above may be made in any
manner the Committee determines, including in cash, stock or other property. 
The Committee may take the actions described in (i) or (ii) above with respect
to SARs that are not then exercisable whether or not the Participant will
receive any payment therefor.  The Committee in its discretion may take any of
the actions described in this Section 7.08 contingent on consummation of the
Change in Control and with respect to some or all outstanding SARs, whether or
not then exercisable, or on a SAR-by-SAR basis, which actions need not be
uniform with respect to all outstanding SARs.  Notwithstanding the foregoing, no
payment shall be made with respect to a Corresponding SAR to the extent the
Committee made a payment with respect to the Option that relates to the
Corresponding SAR.  No SARs shall be terminated to the extent that written
provision is made for their assumption, continuance or substitution by the
Company or a successor employer or its parent or subsidiary in connection with
the Change in Control.  The Committee may provide in an applicable Agreement
that a Participant’s outstanding SARs shall be fully exercisable on and after a
Control Change Date or immediately before the date the SARs will be terminated
in connection with the Change in Control, as described above.

 

7.09        Stockholder Rights

 

No Participant shall, as a result of receiving a SAR, have any rights as a
stockholder of the Company or any Affiliate until the date that the SAR is
exercised and then only to the extent that the SAR is settled by the issuance of
Common Stock.

 

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ARTICLE VIII
RESTRICTED STOCK AWARDS

 

8.01        Award

 

In accordance with the provisions of Article IV, the Committee will designate
each individual or entity to whom a Restricted Stock Award is to be granted,
will specify the number of shares of Common Stock covered by such grant and the
price, if any, to be paid for each share of Common Stock covered by the grant.

 

8.02        Payment.

 

Unless the Agreement provides otherwise, if the Participant must pay for a
Restricted Stock Award, payment of the Award shall be made in cash or cash
equivalent acceptable to the Committee.  If the Agreement so provides, the
Committee, in its discretion and provided applicable law so permits, may allow a
Participant to pay all or part of the purchase price (i) by surrendering shares
of Common Stock to the Company the Participant already owns, (ii) by such other
medium of payment as the Committee in its discretion shall authorize or (iii) by
any combination of the foregoing methods of payment.  If Common Stock is used to
pay all or part of the purchase price, the sum of cash and cash equivalent and
other payments and the Fair Market Value (determined as of the day preceding the
date of purchase) of the Common Stock surrendered must not be less than the
purchase price of the Restricted Stock Award.

 

8.03        Vesting

 

The Committee, on the date of grant may, but need not, prescribe that a
Participant’s rights in the Restricted Stock Award shall be forfeitable and
nontransferable for a period of time or subject to such conditions as may be set
forth in the Agreement.  Notwithstanding any provision herein to the contrary,
the Committee, in its sole discretion may grant Restricted Stock Awards that are
nonforfeitable and transferable immediately upon grant.  By way of example and
not of limitation, the Committee may prescribe that a Participant’s rights in a
Restricted Stock Award shall be forfeitable and nontransferable subject to
(a) the attainment of objectively determinable performance conditions based on
the criteria described in Article XI, (b) the Participant’s completion of a
specified period of employment or service with the Company or an Affiliate,
(c) the Participant’s death, disability or retirement or (d) satisfaction of a
combination of any of the foregoing factors.  Notwithstanding the preceding
sentence, if and to the extent deemed necessary by the Committee, Restricted
Stock Awards granted to Named Executive Officers shall be forfeitable and
nontransferable subject to attainment of objectively determinable performance
conditions based on the criteria described in Article XI and shall be subject to
the other requirements set forth in Article XI so as to enable such Restricted
Stock Award to qualify as “qualified performance-based compensation” under the
regulations promulgated under Code Section 162(m).  A Restricted Stock Award can
only become nonforfeitable and transferable during the Participant’s lifetime in
the hands of the Participant.

 

20

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8.04        Maximum Restriction Period

 

To the extent the Participant’s rights in a Restricted Stock Award are
forfeitable and nontransferable for a period of time, the Committee on the date
of grant shall determine the maximum period over which the rights may become
nonforfeitable and transferable, except that such period shall not exceed ten
years from the date of grant.

 

8.05        Employee Status

 

In the event that the terms of any Restricted Stock Award provide that shares
shall become nonforfeitable and transferable thereunder only after completion of
a specified period of employment or continuous service, the Committee may decide
in each case to what extent leaves of absence for governmental or military
service, illness, temporary disability, or other reasons shall not be deemed
interruptions of continuous employment or service.

 

8.06        Change in Control

 

Notwithstanding any provision of any Agreement, in the event of or in
anticipation of a Change in Control, the Committee in its discretion may
(i) terminate before or on the Control Change Date outstanding Restricted Stock
Awards previously granted under the Plan that are not then nonforfeitable and
transferable (and that will not have become nonforfeitable and transferable as
of the Control Change Date) without any payment to the holder of the Restricted
Stock Awards other than return of the purchase price, if any, paid for the
Restricted Stock Award, (ii) terminate before or on the Control Change Date
outstanding Restricted Stock Awards previously granted under the Plan that are
not then nonforfeitable and transferable (but that would have become
nonforfeitable and transferable as of the Control Change Date) in exchange for a
payment equal to the difference between the then Fair Market Value of the shares
of Common Stock subject to the Restricted Stock Award less the unpaid purchase
price, if any, for such shares or (iii) take such other action as the Committee
determines to be reasonable under the circumstances to permit the Participant to
realize the value of the Restricted Stock Award (which value for purposes of a
Restricted Stock Award that is forfeitable and nontransferable and that would
not have become nonforfeitable and transferable as of the Control Change Date
shall be deemed to be zero).  The payment described in (ii) above may be made in
any manner the Committee determines, including in cash, stock or other
property.  The Committee in its discretion may take any of the actions described
in this Section 8.06 contingent on the consummation of the Change in Control and
with respect to some or all outstanding Restricted Stock Awards or on a
Restricted Stock Award-by-Restricted Stock Award basis, which actions need not
be uniform with respect to all outstanding Restricted Stock Awards.  The
preceding sentences to the contrary notwithstanding, the Restricted Stock Awards
shall not be terminated to the extent that written provision is made for their
assumption, continuance or substitution by the Company or a successor employer
or its parent or subsidiary in connection with the Change in Control.  The
Committee may provide in an applicable Agreement that a Participant’s
outstanding Restricted Stock Awards shall be nonforfeitable and transferable on
and after a Control Change Date or immediately before the date the Restricted
Stock Awards would otherwise be terminated in connection with the Change in
Control, as described above.

 

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8.07        Stockholder Rights

 

Prior to their forfeiture (in accordance with the applicable Agreement and while
the shares of Common Stock granted pursuant to the Restricted Stock Award may be
forfeited and are nontransferable), a Participant will have all rights of a
stockholder with respect to a Restricted Stock Award, including the right to
receive dividends and vote the shares; provided, however, that during such
period (i) a Participant may not sell, transfer, pledge, exchange, hypothecate,
or otherwise dispose of shares granted pursuant to a Restricted Stock Award,
(ii) the Company shall retain custody of the certificates evidencing shares
granted pursuant to a Restricted Stock Award, and (iii) the Participant will
deliver to the Company a stock power, endorsed in blank, with respect to each
Restricted Stock Award.  Notwithstanding the preceding sentence, if and to the
extent deemed necessary by the Committee, dividends payable with respect to
Restricted Stock Awards shall accumulate (without interest) and become payable
to the Participant at the time, and only to the extent that, the portion of the
Restricted Stock Award to which the dividends relate has become transferable and
nonforfeitable.  The limitations set forth in the preceding sentences shall not
apply after the shares granted under the Restricted Stock Award are transferable
and are no longer forfeitable.

 

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ARTICLE IX
RESTRICTED STOCK UNITS

 

9.01        Grant

 

In accordance with the provisions of Article IV, the Committee will designate
each individual or entity to whom a grant of Restricted Stock Units is to be
made and will specify the number of shares covered by such grant.

 

9.02        Earning the Award

 

The Committee, on the date of grant of the Restricted Stock Units, shall
prescribe that the Restricted Stock Units will be earned and become payable
subject to such conditions as are set forth in the Agreement.  By way of example
and not of limitation, the Committee may prescribe that the Restricted Stock
Units will be earned and become payable upon (a) the satisfaction of objectively
determinable performance conditions based on the criteria described in
Article XI, (b) the Participant’s completion of a specified period of employment
or service with the Company or an Affiliate, (c) the Participant’s death,
disability or retirement or (d) satisfaction of a combination of any of the
foregoing factors.  If and to the extent deemed necessary by the Committee,
Restricted Stock Units granted to Named Executive Officers shall become payable
upon the satisfaction of objectively determinable performance conditions based
on the criteria described in Article XI and shall be subject to the other
requirements set forth in Article XI so as to enable such Restricted Stock Units
to qualify as “qualified performance-based compensation” under the regulations
promulgated under Code Section 162(m).

 

9.03        Maximum Restricted Stock Unit Award Period

 

The Committee, on the date of grant, shall determine the maximum period over
which Restricted Stock Units may be earned, except that such period shall not
exceed ten years from the date of grant.

 

9.04        Payment

 

The amount payable when an award of Restricted Stock Units is earned shall be
settled by the issuance of one share of Common Stock for each Restricted Stock
Unit that is earned.  A fractional share of Common Stock shall not be
deliverable when an award of Restricted Stock Units is earned, but a cash
payment will be made in lieu thereof.

 

9.05        Nontransferability

 

Except as provided in Section 9.06, Restricted Stock Units granted under this
Plan shall be nontransferable except by will or by the laws of descent and
distribution.  No right or interest of a Participant in any Restricted Stock
Units shall be liable for, or subject to, any lien, obligation, or liability of
such Participant.

 

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9.06        Transferable Restricted Stock Units

 

Section 9.05 to the contrary notwithstanding, if the Agreement provides, an
award of Restricted Stock Units may be transferred by a Participant to the
Participant’s children, grandchildren, spouse, one or more trusts for the
benefit of such family members or a partnership in which such family members are
the only partners, on such terms and conditions as are appropriate for such
transferees to be included in the class of transferees who may rely on a
Form S-8 Registration Statement under the Securities Act of 1933 to sell shares
received pursuant to Awards granted under the Plan.  Any such transfer will be
permitted only if (i) the Participant does not receive any consideration for the
transfer and (ii) the Committee expressly approves the transfer.  The holder of
Restricted Stock Units transferred pursuant to this Section shall be bound by
the same terms and conditions that governed the Restricted Stock Units during
the period that they were held by the Participant; provided, however that such
transferee may not transfer Restricted Stock Units except by will or the laws of
descent and distribution.

 

9.07        Employee Status

 

In the event that the terms of any Restricted Stock Unit award provide that no
payment will be made unless the Participant completes a stated period of
employment or continued service, the Committee may decide to what extent leaves
of absence for government or military service, illness, temporary disability, or
other reasons shall not be deemed interruptions of continuous employment or
service.

 

9.08        Change in Control

 

Notwithstanding any provision of any Agreement, in the event of or in
anticipation of a Change in Control, the Committee in its discretion may
(i) terminate before or on the Control Change Date some or all outstanding
Restricted Stock Units previously granted under the Plan that are not then
earned and payable (and that will not become earned and payable as of the
Control Change Date) without any payment to the holder of the Restricted Stock
Units, (ii) terminate before or on the Control Change Date some or all
outstanding Restricted Stock Units previously granted under the Plan that are
not then earned and payable (but that will become earned and payable as of the
Control Change Date) in exchange for a payment equal to the then Fair Market
Value of the Common Stock covered by the Restricted Stock Units or (iii) take
such other action as the Committee determines to be reasonable under the
circumstances to permit the Participant to realize the value of the Restricted
Stock Units (which value for purposes of Restricted Stock Units that are not
then earned and payable and that will not become earned and payable as of the
Control Change Date shall be deemed to be zero).  The payment described in
(ii) above may be made in any manner the Committee determines, including in
cash, stock or other property.  The Committee in its discretion may take the
actions described in this Section 9.08 contingent on consummation of the Change
in Control and with respect to some or all outstanding Restricted Stock Units or
on a Restricted Stock Unit-by-Restricted Stock Unit basis, which actions need
not be uniform with respect to all outstanding Restricted Stock Units.  The
Restricted Stock Units shall not be terminated to the extent that written
provision is made for their assumption, continuance or substitution by the
Company or a successor employer or its

 

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parent or subsidiary in connection with the Change in Control.  The Committee
may provide in an applicable Agreement that a Participant’s outstanding
Restricted Stock Units shall be deemed earned (and any shares of Common Stock to
be paid in settlement of such Restricted Stock Units shall be nonforfeitable and
transferable) as of a Control Change Date or immediately before the date the
Restricted Stock Units would otherwise be terminated in connection with the
Change in Control, as described above.

 

9.09        Stockholder Rights

 

No Participant shall, as a result of receiving a grant of Restricted Stock
Units, have any rights as a stockholder until and then only to the extent that
the Restricted Stock Units are earned and settled in shares of Common Stock. 
However, notwithstanding the foregoing, the Committee in its sole discretion may
set forth in the Agreement that, for so long as the Participant holds any
Restricted Stock Units, if the Company pays any cash dividends on its Common
Stock, then (a) the Company may pay the Participant in cash for each outstanding
Restricted Stock Unit covered by the Agreement as of the record date of such
dividend, less than any required withholdings, the per share amount of such
dividend or (b) the number of outstanding Restricted Stock Units covered by the
Agreement may be increased by the number of Restricted Stock Units, rounded down
to the nearest whole number, equal to (i) the product of the number of the
Participant’s outstanding Restricted Stock Units as of the record date for such
dividend multiplied by the per share amount of the dividend divided by (ii) the
fair market value of a share of Common Stock on the payment date of such
dividend.  In the event additional Restricted Stock Units are awarded, such
Restricted Stock Units shall be subject to the same terms and conditions set
forth in the Plan and the Agreement as the outstanding Restricted Stock Units
with respect to which they were granted.

 

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ARTICLE X
INCENTIVE AWARDS

 

10.01      Grant

 

In accordance with the provisions of Article IV, the Committee will designate
each individual or entity to whom Incentive Awards are to be granted.  All
Incentive Awards shall be determined exclusively by the Committee under the
procedures established by the Committee.

 

10.02      Earning the Award

 

The Committee, on the date of grant of an Incentive Award, shall specify in the
applicable Agreement the terms and conditions which govern the grant, including
without limitation, whether the Participant, to be entitled to payment, must be
employed or providing services to the Company or an Affiliate at the time the
Incentive Award is to be paid.  By way of example and not of limitation, the
Committee may prescribe that the Incentive Award shall be earned and payable
upon (a) the satisfaction of objectively determinable performance conditions
based on the criteria described in Article XI, (b) the Participant’s completion
of a specified period of employment or service with the Company or an Affiliate,
(c) the Participant’s death, disability or retirement or (d) satisfaction of a
combination of any of the foregoing factors.  If and to the extent deemed
necessary by the Committee, Incentive Awards granted to Named Executive Officers
shall be earned and become payable upon the satisfaction of objectively
determinable performance conditions based on the criteria described in
Article XI and shall be subject to the other requirements set forth in
Article XI so as to enable the Incentive Awards to qualify as “qualified
performance-based compensation” under the regulations promulgated under Code
Section 162(m).

 

10.03      Maximum Incentive Award Period

 

The Committee, at the time an Incentive Award is made, shall determine the
maximum period over which the Incentive Award may be earned, except that such
period shall not exceed ten years from the date of grant.

 

10.04      Payment

 

The amount payable when an Incentive Award is earned may be settled in cash, by
the issuance of shares of Common Stock or by a combination thereof, as the
Committee, in its sole discretion determines and sets forth in the applicable
Agreement.  A fractional share of Common Stock shall not be deliverable when an
Incentive Award is earned, but a cash payment will be made in lieu thereof.

 

10.05      Nontransferability

 

Except as provided in Section 10.06, Incentive Awards granted under this Plan
shall be nontransferable except by will or by the laws of descent and
distribution.  No right or interest of

 

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a Participant in an Incentive Award shall be liable for, or subject to, any
lien, obligation, or liability of such Participant.

 

10.06      Transferable Incentive Awards

 

Section 10.05 to the contrary notwithstanding, if an Agreement so provides, an
Incentive Award may be transferred by a Participant to the Participant’s
children, grandchildren, spouse, one or more trusts for the benefit of such
family members or to a partnership in which such family members are the only
partners, on such terms and conditions as are appropriate for such transferees
to be included in the class of transferees who may rely on a Form S-8
Registration Statement under the Securities Act of 1933 to sell shares received
pursuant to Awards granted under the Plan.  Any such transfer will be permitted
only if (i) the Participant does not receive any consideration for the transfer
and (ii) the Committee expressly approves the transfer.  The holder of an
Incentive Award transferred pursuant to this Section shall be bound by the same
terms and conditions that governed the Incentive Award during the period that it
was held by the Participant; provided, however, that such transferee may not
transfer the Incentive Award except by will or the laws of descent and
distribution.

 

10.07      Employee Status

 

If the terms of an Incentive Award provide that a payment will be made
thereunder only if the Participant completes a stated period of employment or
continuous service, the Committee may decide to what extent leaves of absence
for governmental or military service, illness, temporary disability or other
reasons shall not be deemed interruptions of continuous employment or service.

 

10.08      Change in Control

 

Notwithstanding any provision of any Agreement, in the event of or in
anticipation of a Change in Control, the Committee in its discretion may
(i) terminate before or on the Control Change Date some or all outstanding
Incentive Awards previously granted under the Plan that are not then earned and
payable (and that will not become earned and payable as of the Control Change
Date) without any payment to the holder of the Incentive Award or (ii) take such
other action as the Committee determines to be reasonable under the
circumstances to permit the Participant to realize the value of the Incentive
Awards (which value for purposes of Incentive Awards that are not then earned
and payable and that will not become earned and payable as of the Control Change
Date shall be deemed to be zero).  The Committee in its discretion may take the
actions described in this Section 10.08 contingent on consummation of the Change
in Control and with respect to some or all outstanding Incentive Awards or on an
Incentive Award-by-Incentive Award basis, which actions need not be uniform with
respect to all outstanding Incentive Awards.  The Incentive Awards shall not be
terminated to the extent that written provision is made for their assumption,
continuance or substitution by the Company or a successor employer or its parent
or subsidiary in connection with the Change in Control.  The Committee may
provide in an applicable Agreement that a Participant’s outstanding Incentive
Awards shall be deemed earned (and any shares of Common Stock to be paid in
settlement of

 

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such Incentive Awards shall be nonforfeitable and transferable) as of a Control
Change Date or immediately before the date the Incentive Awards would otherwise
be terminated in connection with the Change in Control, as described above.

 

10.09      Stockholder Rights

 

No Participant shall, as a result of receiving an Incentive Award, have any
rights as a stockholder of the Company or any Affiliate on account of such
Incentive Award, unless and then only to the extent that the Incentive Award is
earned and settled in shares of Common Stock.

 

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ARTICLE XI
QUALIFIED PERFORMANCE-BASED COMPENSATION

 

11.01      Performance Conditions

 

In accordance with the Plan, the Committee may prescribe that Awards will become
exercisable, nonforfeitable and transferable, and earned and payable, based on
objectively determinable performance conditions.  Objectively determinable
performance conditions are performance conditions (i) that are established in
writing (a) at the time of grant or (b) no later than the earlier of (x) 90 days
after the beginning of the period of service to which they relate and (y) before
the lapse of 25% of the period of service to which they relate; (ii) that are
uncertain of achievement at the time they are established and (iii) the
achievement of which is determinable by a third party with knowledge of the
relevant facts.  The performance conditions may be stated with respect to the
Company’s, an Affiliate’s, a product’s or business unit’s (a) gross, operating
or net earnings before or after taxes; (b) return on equity; (c) return on
capital; (d) return on sales; (e) return on investments; (f) return on assets or
net assets; (g) earnings per share; (h) cash flow per share; (i) book value per
share; (j) sales; (k) customers or subscribers; (l) cash flow; (m) Fair Market
Value of the Company or any Affiliate or shares of Common Stock; (n) share price
or total shareholder return; (o) market share; (p) level of expenses or other
costs; (q) “net contributions”; (r) “adjusted after-tax GAAP profit,” (s) gross,
operating or net revenue; (t) EBIT; (u) service revenue; (v) profitability; (w)
net income; (x) EBITDA; (y) Adjusted EBIDTA; (z) Free Cash Flow; (aa) Churn or
Churn Rate; (bb) product launches; (cc) market launches; (dd) serviceable units
or households; or (ee) peer group comparisons of any of the aforementioned
performance conditions.  Products include (a) premium narrowband; (b) value
narrowband; (c) retail broadband; (d) wholesale broadband; (e) web hosting;
(f) advertising, content and commerce; (g) value-added services; (h) retail and
wholesale municipal wireless broadband services; (i) SME services, including
software-based and connectivity-based services; and (j) any future products of
the Company or an Affiliate that the Committee determines is appropriate to base
performance conditions.  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.

 

11.02      Establishing the Amount of the Award

 

The amount of the Award that will become exercisable, nonforfeitable and
transferable or earned and payable if the performance conditions are obtained
(or an objective formula for, or method of, computing such amount) also must be
established at the time set forth in Section 11.01 above.  Notwithstanding the
preceding sentence, the Committee may, in its sole discretion,

 

29

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reduce the amount of the Award that will become exercisable, nonforfeitable and
transferable or earned and payable, as applicable, if the Committee determines
that such reduction is appropriate under the facts and circumstances.  In no
event shall the Committee have the discretion to increase the amount of the
Award that will become exercisable, nonforfeitable and transferable or earned
and payable.

 

11.03      Earning the Award

 

If the Committee, on the date of grant, prescribes that an Award shall become
exercisable, nonforfeitable and transferable or earned and payable only upon the
attainment of any of the above performance conditions, the Award shall become
exercisable, nonforfeitable and transferable or earned and payable only to the
extent that the Committee certifies in writing that such conditions have been
achieved.  An Award will not satisfy the requirements of this Article XI to
constitute “qualified performance-based compensation” if the facts and
circumstances indicate the Award will become exercisable, nonforfeitable and
transferable or earned and payable regardless of whether the performance
conditions are attained.  However, an Award does not fail to meet the
requirements of this Article XI merely because the Award would become
exercisable, nonforfeitable and transferable or earned and payable upon the
Participant’s death or disability or upon a Change in Control, although an Award
that actually becomes exercisable, nonforfeitable and transferable or earned and
payable on account of those events prior to the attainment of the performance
conditions would not constitute “qualified performance-based compensation” under
Code Section 162(m).  In determining if the performance conditions have been
achieved, the Committee may adjust the performance targets in the event of any
unbudgeted acquisition, divestiture or other unexpected fundamental change in
the business of the Company, an Affiliate or business unit or in any product
that is material taken as a whole as appropriate to fairly and equitably
determine if the Award is to become exercisable, nonforfeitable and transferable
or earned and payable pursuant to the conditions set forth in the Award.

 

11.04      Definitions of Performance Criteria

 

“Adjusted After-Tax GAAP Profit” means GAAP net income before stock option or
other equity compensation expense and before any income tax credits caused by
recognizing net operating loss carryforwards or income tax expense that is
offset by applying net operating loss carryforwards, but after any other income
tax expense or any asset write-downs or other one-time charges.

 

“Adjusted EBITDA” means EBITDA excluding facility exit and restructuring costs,
equity method loss of affiliates, and gain (loss) on investments in other
companies.

 

“Churn” means the number of customers or accounts discontinuing services during
a period, net of reactivations during the same period.

 

“Churn Rate” means average Churn during a period divided by the average number
of ending customers or accounts during the same period.

 

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“EBIT” means earning before interest and taxes.

 

“EBITDA” means earnings before interest, taxes, depreciation and amortization.

 

“Free Cash Flow” means Adjusted EBITDA less capital expenditures and cash used
to purchase customer bases.

 

“GAAP” means U.S. generally accepted accounting principles.

 

“Net contributions” means as determined in the Company’s internal management
reporting which shall be prepared on a basis consistent with past practice and
is determined after all operating costs and sales and marketing expenses, but
before amortization, interest income or expense, and income tax expense.

 

“SME” means small and medium-sized enterprises.

 

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ARTICLE XII
ADJUSTMENT UPON CHANGE IN COMMON STOCK

 

The maximum number of shares of Common Stock that may be issued pursuant to
Awards and Deferred Stock Benefits, the terms of outstanding Awards and Deferred
Stock Benefits, and the per individual limitations on the number of shares of
Common Stock that may be issued pursuant to Awards shall be adjusted as the
Board shall determine to be equitably required in the event (i) there occurs a
reorganization, recapitalization, stock split, spin-off, split-off, stock
dividend, issuance of stock rights, combination of shares, merger,
consolidation, or distribution to stockholders other than a cash dividend;
(ii) the Company engages in a transaction Code Section 424 describes or
(iii) there occurs any other transaction or event which, in the judgment of the
Board necessitates such action.  In addition, the Committee may make such other
adjustments to the terms of any Awards and Deferred Stock Benefits to the extent
equitable and necessary to prevent an enlargement or dilution of the
Participant’s rights thereunder as a result of any such event or similar
transaction.  Any determination made under this Article XII by the Board shall
be final and conclusive.

 

The issuance by the Company of stock of any class, or securities convertible
into stock of any class, for cash or property, or for labor or services, either
upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of stock or obligations of the Company convertible
into such stock or other securities, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the maximum number of shares that
may be issued pursuant to Awards and Deferred Stock Benefits, the per individual
limitations on the number of shares that may be issued pursuant to Awards or the
terms of outstanding Awards and Deferred Stock Benefits.

 

The Committee may grant Awards in substitution for stock options, stock
appreciation rights, restricted stock, restricted stock units, incentive awards,
or similar awards held by an individual who becomes an employee of the Company
or an Affiliate in connection with a transaction described in the first
paragraph of this Article XII.  Notwithstanding any provision of the Plan (other
than the limitation of Section 5.02), the terms of such substituted Awards shall
be as the Committee, in its discretion, determines is appropriate.

 

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ARTICLE XIII
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES

 

13.01      Compliance

 

No Option or SAR shall be exercisable, no Restricted Stock Award or Restricted
Stock Unit shall be granted, no shares of Common Stock shall be issued, no
certificates for shares of Common Stock shall be delivered, and no payment shall
be made under this Plan except in compliance with all applicable federal and
state laws and regulations (including, without limitation, withholding tax
requirements), any listing agreement to which the Company is a party, and the
rules of all domestic stock exchanges on which the Company’s shares may be
listed.  The Company shall have the right to rely on an opinion of its counsel
as to such compliance.  Any stock certificate evidencing shares of Common Stock
issued pursuant to an Award may bear such legends and statements as the
Committee may deem advisable to assure compliance with federal and state laws
and regulations and to reflect any other restrictions applicable to such shares
as the Committee otherwise deems appropriate.  No Option or SAR shall be
exercisable, no Restricted Stock Award or Restricted Stock Unit shall be
granted, no shares of Common Stock shall be issued, no certificate for shares of
Common Stock shall be delivered, and no payment shall be made under this Plan
until the Company has obtained such consent or approval as the Committee may
deem advisable from regulatory bodies having jurisdiction over such matters.

 

13.02      Postponement of Exercise or Payment

 

The Committee may postpone any grant, exercise, vesting or payment of an Award
for such time as the Committee in its sole discretion may deem necessary in
order to permit the Company (i) to effect, amend or maintain any necessary
registration of the Plan or the shares of Common Stock issuable pursuant to the
Award under the securities laws; (ii) to take any action in order to (A) list
such shares of Common Stock or other shares of stock of the Company on a stock
exchange if shares of Common Stock or other shares of stock of the Company are
not then listed on such exchange or (B) comply with restrictions or regulations
incident to the maintenance of a public market for its shares of Common Stock or
other shares of stock of the Company, including any rules or regulations of any
stock exchange on which the shares of Common Stock or other shares of stock of
the Company are listed; (iii) to determine that such shares of Common Stock in
the Plan are exempt from such registration or that no action of the kind
referred to in (ii)(B) above needs to be taken; (iv) to comply with any other
applicable law, including without limitation, securities laws; (v) to comply
with any legal or contractual requirements during any such time the Company or
any Affiliate is prohibited from doing any of such acts under applicable law,
including without limitation, during the course of an investigation of the
Company or any Affiliate, or under any contract, loan agreement or covenant or
other agreement to which the Company or any Affiliate is a party or (vi) to
otherwise comply with any prohibition on such acts or payments during any
applicable blackout period; and the Company shall not be obligated by virtue of
any terms and conditions of any Agreement or any provision of the Plan to
recognize the grant, exercise, vesting or payment of an Award or to grant, sell
or issue shares of Common Stock or make any such payments in violation of the

 

33

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securities laws or the laws of any government having jurisdiction thereof or any
of the provisions hereof.  Any such postponement shall not extend the term of
the Award and neither the Company nor its directors and officers nor the
Committee shall have any obligation or liability to any Participant or to any
other person with respect to shares of Common Stock or payments as to which the
Award shall lapse because of such postponement.

 

Additionally, the Committee shall postpone any grant, exercise vesting or
payment of an Award if the Company reasonably believes the Company’s or any
applicable Affiliate’s deduction with respect to such Award would be limited or
eliminated by application of Code Section 162(m); provided, however, such delay
will last only until the earliest date at which the Company reasonably
anticipates that the deduction with respect to the Award will not be limited or
eliminated by the application of Code Section 162(m) or the calendar year in
which the Participant separates from service.

 

13.03      Forfeiture of Payment

 

A Participant shall be required to forfeit any and all rights under Awards or to
reimburse the Company for any payment under any Award (with interest as
necessary to avoid imputed interest or original issue discount under the Code or
as otherwise required by applicable law) to the extent applicable law requires
such forfeiture or reimbursement.

 

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ARTICLE XIV
LIMITATION ON BENEFITS

 

Despite 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 hereunder must be reduced to such Reduced Amount, but not below
zero.  If the Committee determines that the benefits and payments must be
reduced to the Reduced Amount, the Company must promptly notify the Participant
of that determination, with a copy of the detailed calculations by the
Committee.  All determinations of the Committee under this Article XIV are
final, conclusive and binding upon the Company and the Participant.  It is the
intention of the Company and the Participant to reduce the payments under this
Plan only if the aggregate Net After Tax Receipts to the Participant would
thereby be increased.  As result of the uncertainty in the application of Code
Section 4999 at the time of the initial determination by the Committee under
this Article XIV, however, it is possible that amounts 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 the 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 which the
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 the
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 Section 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 to the
Participant.  For purposes of this Section, (i) “Net After Tax Receipt” 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 (a) is less than the
sum of all payments and benefits under this Plan and (b) 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.

 

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ARTICLE XV
GENERAL PROVISIONS

 

15.01      Effect on Employment and Service

 

Neither the adoption of this Plan, its operation, nor any documents describing
or referring to this Plan (or any part thereof), shall confer upon any
individual or entity any right to continue in the employ or service of the
Company or an Affiliate or in any way affect any right and power of the Company
or an Affiliate to terminate the employment or service of any individual or
entity at any time with or without assigning a reason therefor.

 

15.02      Unfunded Plan

 

This Plan, insofar as it provides for Awards, shall be unfunded, and the Company
shall not be required to segregate any assets that may at any time be
represented by Awards under this Plan.  Any liability of the Company to any
person with respect to any Award under this Plan shall be based solely upon any
contractual obligations that may be created pursuant to this Plan.  No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Company.

 

15.03      Rules of Construction

 

Headings are given to the articles and sections of this Plan solely as a
convenience to facilitate reference.  The reference to any statute, regulation,
or other provision of law shall be construed to refer to any amendment to or
successor of such provision of law.

 

15.04      Tax Withholding and Reporting

 

Unless an Agreement provides otherwise, each Participant shall be responsible
for satisfying in cash or cash equivalent acceptable to the Committee any income
and employment (including without limitation Social Security and Medicare) tax
withholding obligations attributable to participation in the Plan and the grant,
exercise, vesting or payment of Awards granted thereunder (including the making
of a Code Section 83(b) election with respect to an Award).  In accordance with
procedures that the Committee establishes, the Committee, to the extent
applicable law permits, may allow a Participant to pay such amounts (i) by
surrendering shares of Common Stock that the Participant already owns (but only
for the minimum required withholding); (ii) by a cashless exercise through a
broker; (iii) by such other medium of payment as the Committee in its discretion
shall authorize or (iv) by any combination of the aforementioned methods of
payment.  The Company shall comply with all such reporting and other
requirements relating to the administration of this Plan and the grant,
exercise, vesting or payment of any Award hereunder as applicable law requires. 
Nevertheless, shares of Common Stock that the Company reacquires in connection
with any tax withholding will still be deemed issued and will not be available
for issuance pursuant to future Awards or Deferred Stock Benefits under the
plan.

 

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15.05      Reservation of Shares.

 

The Company, during the term of this Plan, shall at all times reserve and keep
available such number of shares of Common Stock as shall be sufficient to
satisfy the requirements of the Plan.  Additionally, the Company, during the
term of this Plan, shall use its best efforts to seek to obtain from appropriate
regulatory agencies any requisite authorizations needed in order to issue and to
sell such number of shares of Common Stock as shall be sufficient to satisfy the
requirements of the Plan.  However, the inability of the Company to obtain from
any such regulatory agency the requisite authorizations the Company’s counsel
deems to be necessary for the lawful issuance and sale of any shares of Common
Stock hereunder, or the inability of the Company to confirm to its satisfaction
that any issuance and sale of any shares of Common Stock hereunder will meet
applicable legal requirements, shall relieve the Company of any liability in
respect to the failure to issue or to sell such shares of Common Stock as to
which such requisite authority shall not have been obtained.

 

15.06      Governing Law.

 

This Plan and all Awards granted hereunder shall be governed by the laws of the
State of Delaware, except to the extent federal law applies.

 

15.07      Other Actions

 

Nothing in the Plan shall be construed to limit the authority of the Company to
exercise its corporate rights and powers, including, by way of illustration and
not by way of limitation, the right to grant options, stock appreciation rights,
restricted stock awards, incentive awards or restricted stock units for proper
corporate purposes otherwise than under the Plan to any employee or to any other
person, firm, corporation, association or other entity, or to grant options,
stock appreciation rights, restricted stock awards, incentive awards or
restricted stock units to, or assume such awards of any person in connection
with, the acquisition, purchase, lease, merger, consolidation, reorganization or
otherwise, of all or any part of the business and assets of any person, firm,
corporation, association or other entity.

 

15.08      Repurchase of Common Stock

 

The Company or its designee may have the option and right to purchase any Award
or any shares of Common Stock issued pursuant to any Award in accordance with
the terms and conditions set forth in the applicable Agreement.  However, shares
of Common Stock repurchased pursuant to an Agreement will still be deemed issued
pursuant to the Plan and will not be available for issuance pursuant to future
Awards or Deferred Stock Benefits under the Plan.

 

15.09      Other Conditions

 

The Committee, in its discretion, may, as a condition to the grant, exercise,
payment or settlement of an Award, require the Participant on or before the date
of grant, exercise, payment

 

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or settlement of the Award to enter into (i) a covenant not to compete
(including a confidentiality, non-solicitation, non-competition or other similar
agreement) with the Company or any Affiliate, which may become effective on the
date of termination of employment or service of the Participant with the Company
or any Affiliate or any other date the Committee may specify and shall contain
such terms and conditions as the Committee shall otherwise specify, (ii) an
agreement to cancel any other employment agreement, service agreement, fringe
benefit or compensation arrangement in effect between the Company or any
Affiliate and such Participant and/or (iii) a shareholders’ agreement with
respect to shares of Common Stock to be issued pursuant to the Award.  If the
Participant shall fail to enter into any such agreement at the Committee’s
request, then no Award shall be granted, exercised, paid or settled and the
number of shares of Common Stock that would have been subject to such Award, if
any, shall be added to the remaining shares of Common Stock available under the
Plan.

 

15.10      Forfeiture Provisions.

 

Notwithstanding any other provisions of the Plan or any Agreement, all rights to
any Award that a Participant has will be immediately discontinued and forfeited,
and the Company shall not have any further obligation hereunder to the
Participant with respect to any Award and the Award will not be exercisable
(whether or not previously exercisable) or become vested or payable on and after
the time the Participant is discharged from employment or service with the
Company or any Affiliate for Cause.

 

15.11      Repricing of Awards.

 

Notwithstanding any other provisions of this Plan, this Plan does not permit
(i) any repricing or decrease in the exercise price of any outstanding Awards,
(ii) the issuance of any replacement Options or SARs, which shall be deemed to
occur if a Participant agrees to forfeit an existing Option or SAR in exchange
for a new Option or SAR with a lower exercise price or base value, or (iii) the
Company to repurchase underwater or out-of-the-money Options or SARs, which
shall be deemed to be those Options or SARs with exercise prices or base values
in excess of the current Fair Market Value of the shares of Common Stock
underlying the Option or SAR.

 

15.12      Deferred Benefits

 

In accordance with rules that the Committee prescribes, any Participant who is
eligible for the Deferred Compensation Program may elect to defer the receipt of
Common Stock issuable or cash or other consideration payable to the Participant
pursuant to an Award if so designated by the Committee.  The Committee in its
discretion will prescribe (i) the types of Awards that are subject to the
Deferred Compensation Program, (ii) the Participants eligible to participate in
the Deferred Compensation Program and (iii) all administrative rules thereto
relating to Awards and the deferral of shares of Common Stock to be received
thereunder.  No Awards may be subject to the Deferred Compensation Program
unless and until the Administrator in its discretion prescribes that those types
of Awards are subject thereto.  Awards that are granted before the Committee in
its discretion prescribes that type of Award to be subject to the Deferred
Compensation Program, or after the type of Award is no longer subject to the

 

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Deferred Compensation Program, shall not be eligible for the Deferred
Compensation Program.  Additionally, shares of Common Stock available under the
Plan may be issued in payment of any other Deferred Stock Benefits under the
Deferred Compensation Program.

 

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ARTICLE XVI
CLAIMS PROCEDURES

 

If a Participant has exercised an Option or a SAR or if shares of Restricted
Stock have become vested or Restricted Stock Units or Incentive Awards have
become payable, and the Participant has not received the benefits to which the
Participant believes he or she is entitled under such Award, then the
Participant must submit a written claim for such benefits to the Committee
within 90 days of either the date the Participant tried to exercise the Option
or SAR, the date the Participant contends the Restricted Stock vested or the
date the Participant contends the Restricted Stock Units or Incentive Awards
became payable or the claim will be forever barred.

 

If a claim of a Participant is wholly or partially denied, the Participant or
his duly authorized representative may appeal the denial of the claim to the
Committee.  Such appeal must be made at any time within 30 days after the
Participant receives written notice from the Company of the denial of the
claim.  In connection therewith, the Participant or his duly authorized
representative may request a review of the denied claim, may review pertinent
documents, and may submit issues and comments in writing.  Upon receipt of an
appeal, the Committee shall make a decision with respect to the appeal and, not
later than 60 days after receipt of such request for review, shall furnish the
Participant with the decision on review in writing, including the specific
reasons for the decision written in a manner calculated to be understood by the
Participant, as well as specific references to the pertinent provisions of the
Plan upon which the decision is based.

 

The Committee has the discretionary and final authority under the Plan to
determine the validity of a claim.  Accordingly, any decision the Committee
makes on a Participant’s appeal will be administratively final.  If a
Participant disagrees with the Committee’s final decision, the Participant may
sue, but only after the claim on appeal has been denied.  Any lawsuit must be
filed within 90 days of receipt of the Committee’s final written denial of the
Participant’s claim or the claim will be forever barred.

 

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ARTICLE XVII
AMENDMENT

 

The Board may amend or terminate this Plan at any time; provided, however, that
no amendment to the Plan may adversely impair the rights of a Participant with
respect to outstanding Awards without the Participant’s consent.  No amendment
shall, without the consent of a Participant in the Deferred Compensation
Program, adversely affect any rights of such Participant under the Deferred
Compensation Program as in effect at that time.  Notwithstanding the foregoing,
the Plan may not be terminated so long as the Deferred Compensation Program
remains in effect unless all Deferred Stock Benefits payable with shares of
Common Stock under this Plan have been paid or distributed in full or the
Deferred Compensation Program is terminated in accordance with its terms on or
before such time.  In addition, an amendment will be contingent on approval of
the Company’s stockholders, to the extent required by law or by the rules of any
stock exchange on which the Company’s securities are traded or if the amendment
would (i) increase the benefits accruing to Participants under the Plan,
including without limitation, any amendment to the Plan or any Agreement to
permit a repricing or decrease in the exercise price of any outstanding Awards,
(ii) increase the aggregate number of shares of Common Stock that may be issued
under the Plan, (iii) modify the requirements as to eligibility for
participation in the Plan or, (iv) change the performance conditions set forth
in Article XI.  Additionally, to the extent the Board deems necessary to
continue to comply with the performance-based exception to the deduction limits
of Code Section 162(m), the Board will submit the material terms of the
performance conditions set forth in Article XI to the Company’s stockholders for
approval no later than the first stockholder meeting that occurs in the fifth
year following the year in which the stockholders previously approved the
performance objectives.

 

The Committee may amend any outstanding Awards to the extent it deems
appropriate; provided, however, that no amendment to an outstanding Award may
adversely impair the rights of a Participant without the Participant’s consent. 
Notwithstanding the preceding sentence, however, the Committee may amend any
outstanding Award without Participant consent if, as determined by the Committee
in its sole discretion, such amendment is required to either (i) comply with
Code Section 409A or (ii) prevent the Participant from being subject to any
excise tax or penalty under Code Section 409A.  Notwithstanding the foregoing,
none of the Company and its Affiliates or the Committee shall be liable to the
Participant if an Award is subject to Code Section 409A or 280G or the
Participant otherwise is subject to any excise tax or penalty under Code
Section 409A or 4999.

 

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ARTICLE XVIII
DURATION OF PLAN

 

No Award may be granted under this Plan on and after January 24, 2016 (10 years
following the effective date of the Plan).  Awards granted before that date
shall remain valid in accordance with their terms.

 

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ARTICLE XIX
EFFECTIVE DATE OF PLAN

 

The Plan is effective on January 24, 2006, the date of adoption by the Board,
contingent, however, on approval of the Plan by the Company’s stockholders
within 12 months of such date.  Awards may be granted under this Plan as of the
effective date, provided that no Award shall be effective, exercisable, vested,
earned or payable unless the Company’s stockholders approve the Plan within 12
months of the Board’s adoption of the Plan.  Shares of Common Stock shall not be
available to pay Deferred Stock Benefits unless and until the Company’s
stockholders approve the Plan within such 12-month period.

 

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