Exhibit 10.1

 

COPART, INC.

 

2007 EQUITY INCENTIVE PLAN

 

1.             PURPOSES OF THE PLAN.  THE PURPOSES OF THIS PLAN ARE:

 

·              to attract and retain the best available personnel for positions
of substantial responsibility,

 

·              to provide incentives to individuals who perform services to the
Company, and

 

·              to promote the success of the Company’s business.

 

The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock
Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units,
Performance Units, Performance Shares and other stock or cash awards as the
Administrator may determine.

 

2.             DEFINITIONS.  AS USED HEREIN, THE FOLLOWING DEFINITIONS WILL
APPLY:

 

(A)           “ADMINISTRATOR” MEANS THE BOARD OR ANY OF ITS COMMITTEES AS WILL
BE ADMINISTERING THE PLAN, IN ACCORDANCE WITH SECTION 4 OF THE PLAN.

 

(B)           “APPLICABLE LAWS” MEANS THE REQUIREMENTS RELATING TO THE
ADMINISTRATION OF EQUITY-BASED AWARDS UNDER U.S. STATE CORPORATE LAWS, U.S.
FEDERAL AND STATE SECURITIES LAWS, THE CODE, ANY STOCK EXCHANGE OR QUOTATION
SYSTEM ON WHICH THE COMMON STOCK IS LISTED OR QUOTED AND THE APPLICABLE LAWS OF
ANY FOREIGN COUNTRY OR JURISDICTION WHERE AWARDS ARE, OR WILL BE, GRANTED UNDER
THE PLAN.

 

(C)           “AWARD” MEANS, INDIVIDUALLY OR COLLECTIVELY, A GRANT UNDER THE
PLAN OF OPTIONS, STOCK APPRECIATION RIGHTS, RESTRICTED STOCK, RESTRICTED STOCK
UNITS, PERFORMANCE UNITS, PERFORMANCE SHARES AND OTHER STOCK OR CASH AWARDS AS
THE ADMINISTRATOR MAY DETERMINE.

 

(D)           “AWARD AGREEMENT” MEANS THE WRITTEN OR ELECTRONIC AGREEMENT
SETTING FORTH THE TERMS AND PROVISIONS APPLICABLE TO EACH AWARD GRANTED UNDER
THE PLAN.  THE AWARD AGREEMENT IS SUBJECT TO THE TERMS AND CONDITIONS OF THE
PLAN.

 

(E)           “BOARD” MEANS THE BOARD OF DIRECTORS OF THE COMPANY.

 

(F)            “CHANGE IN CONTROL” MEANS THE OCCURRENCE OF ANY OF THE FOLLOWING
EVENTS:

 

(I)            A CHANGE IN THE OWNERSHIP OF THE COMPANY WHICH OCCURS ON THE DATE
THAT ANY ONE PERSON, OR MORE THAN ONE PERSON ACTING AS A GROUP, (“PERSON”)
ACQUIRES OWNERSHIP OF THE STOCK OF THE COMPANY THAT, TOGETHER WITH THE STOCK
HELD BY SUCH PERSON, CONSTITUTES MORE THAN 50% OF THE TOTAL VOTING POWER OF THE
STOCK OF THE COMPANY; PROVIDED, HOWEVER, THAT FOR PURPOSES OF THIS SUBSECTION
(I), THE ACQUISITION OF ADDITIONAL STOCK BY ANY ONE PERSON, WHO IS CONSIDERED TO
OWN MORE

 

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THAN 50% OF THE TOTAL VOTING POWER OF THE STOCK OF THE COMPANY WILL NOT BE
CONSIDERED A CHANGE IN CONTROL; OR

 

(II)           A CHANGE IN THE EFFECTIVE CONTROL OF THE COMPANY WHICH OCCURS ON
THE DATE THAT A MAJORITY OF MEMBERS OF THE BOARD IS REPLACED DURING ANY TWELVE
(12) MONTH PERIOD BY DIRECTORS WHOSE APPOINTMENT OR ELECTION IS NOT ENDORSED BY
A MAJORITY OF THE MEMBERS OF THE BOARD PRIOR TO THE DATE OF THE APPOINTMENT OR
ELECTION.  FOR PURPOSES OF THIS CLAUSE (II), IF ANY PERSON IS CONSIDERED TO
EFFECTIVELY CONTROL THE COMPANY, THE ACQUISITION OF ADDITIONAL CONTROL OF THE
COMPANY BY THE SAME PERSON WILL NOT BE CONSIDERED A CHANGE IN CONTROL; OR

 

(III)          A CHANGE IN THE OWNERSHIP OF A SUBSTANTIAL PORTION OF THE
COMPANY’S ASSETS WHICH OCCURS ON THE DATE THAT ANY PERSON ACQUIRES (OR HAS
ACQUIRED DURING THE TWELVE (12) MONTH PERIOD ENDING ON THE DATE OF THE MOST
RECENT ACQUISITION BY SUCH PERSON OR PERSONS) ASSETS FROM THE COMPANY THAT HAVE
A TOTAL GROSS FAIR MARKET VALUE EQUAL TO OR MORE THAN 50% OF THE TOTAL GROSS
FAIR MARKET VALUE OF ALL OF THE ASSETS OF THE COMPANY IMMEDIATELY PRIOR TO SUCH
ACQUISITION OR ACQUISITIONS; PROVIDED, HOWEVER, THAT FOR PURPOSES OF THIS
SUBSECTION (III), THE FOLLOWING WILL NOT CONSTITUTE A CHANGE IN THE OWNERSHIP OF
A SUBSTANTIAL PORTION OF THE COMPANY’S ASSETS: (A) A TRANSFER TO AN ENTITY THAT
IS CONTROLLED BY THE COMPANY’S STOCKHOLDERS IMMEDIATELY AFTER THE TRANSFER, OR
(B) A TRANSFER OF ASSETS BY THE COMPANY TO: (1) A STOCKHOLDER OF THE COMPANY
(IMMEDIATELY BEFORE THE ASSET TRANSFER) IN EXCHANGE FOR OR WITH RESPECT TO THE
COMPANY’S STOCK, (2) AN ENTITY, 50% OR MORE OF THE TOTAL VALUE OR VOTING POWER
OF WHICH IS OWNED, DIRECTLY OR INDIRECTLY, BY THE COMPANY, (3) A PERSON, THAT
OWNS, DIRECTLY OR INDIRECTLY, 50% OR MORE OF THE TOTAL VALUE OR VOTING POWER OF
ALL THE OUTSTANDING STOCK OF THE COMPANY, OR (4) AN ENTITY, AT LEAST 50% OF THE
TOTAL VALUE OR VOTING POWER OF WHICH IS OWNED, DIRECTLY OR INDIRECTLY, BY A
PERSON DESCRIBED IN THIS SUBSECTION (III)(B)(3).  FOR PURPOSES OF THIS
SUBSECTION (III), GROSS FAIR MARKET VALUE MEANS THE VALUE OF THE ASSETS OF THE
COMPANY, OR THE VALUE OF THE ASSETS BEING DISPOSED OF, DETERMINED WITHOUT REGARD
TO ANY LIABILITIES ASSOCIATED WITH SUCH ASSETS.

 

For purposes of this Section 2(f), persons will be considered to be acting as a
group if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock, or similar business transaction
with the Company.

 

(G)           “CODE” MEANS THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.  ANY
REFERENCE TO A SECTION OF THE CODE HEREIN WILL BE A REFERENCE TO ANY SUCCESSOR
OR AMENDED SECTION OF THE CODE.

 

(H)           “COMMITTEE” MEANS A COMMITTEE OF DIRECTORS OR OF OTHER INDIVIDUALS
SATISFYING APPLICABLE LAWS APPOINTED BY THE BOARD IN ACCORDANCE WITH SECTION 4
HEREOF.

 

(I)            “COMMON STOCK” MEANS THE COMMON STOCK OF THE COMPANY.

 

(J)            “COMPANY” MEANS COPART, INC., A CALIFORNIA CORPORATION, OR ANY
SUCCESSOR THERETO.

 

(K)           “CONSULTANT” MEANS ANY PERSON, INCLUDING AN ADVISOR, ENGAGED BY
THE COMPANY OR A PARENT OR SUBSIDIARY TO RENDER SERVICES TO SUCH ENTITY.

 

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(L)            “DETERMINATION DATE” MEANS THE LATEST POSSIBLE DATE THAT WILL NOT
JEOPARDIZE THE QUALIFICATION OF AN AWARD GRANTED UNDER THE PLAN AS
“PERFORMANCE-BASED COMPENSATION” UNDER SECTION 162(M) OF THE CODE.

 

(M)          “DIRECTOR” MEANS A MEMBER OF THE BOARD.

 

(N)           “DISABILITY” MEANS TOTAL AND PERMANENT DISABILITY AS DEFINED IN
SECTION 22(E)(3) OF THE CODE, PROVIDED THAT IN THE CASE OF AWARDS OTHER THAN
INCENTIVE STOCK OPTIONS, THE ADMINISTRATOR IN ITS DISCRETION MAY DETERMINE
WHETHER A PERMANENT AND TOTAL DISABILITY EXISTS IN ACCORDANCE WITH UNIFORM AND
NON-DISCRIMINATORY STANDARDS ADOPTED BY THE ADMINISTRATOR FROM TIME TO TIME.

 

(O)           “EARNINGS PER SHARE” MEANS AS TO ANY PERFORMANCE PERIOD, THE
COMPANY’S OR A BUSINESS UNIT’S PROFIT AFTER-TAX, DIVIDED BY A WEIGHTED AVERAGE
NUMBER OF SHARES OUTSTANDING AND DILUTIVE COMMON EQUIVALENT SHARES DEEMED
OUTSTANDING, DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES.

 

(P)           “EMPLOYEE” MEANS ANY PERSON, INCLUDING OFFICERS AND DIRECTORS,
EMPLOYED BY THE COMPANY OR ANY PARENT OR SUBSIDIARY OF THE COMPANY.  NEITHER
SERVICE AS A DIRECTOR NOR PAYMENT OF A DIRECTOR’S FEE BY THE COMPANY WILL BE
SUFFICIENT TO CONSTITUTE “EMPLOYMENT” BY THE COMPANY.

 

(Q)           “EXCHANGE ACT” MEANS THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

(R)            “EXCHANGE PROGRAM” MEANS A PROGRAM UNDER WHICH (I) OUTSTANDING
AWARDS ARE SURRENDERED OR CANCELLED IN EXCHANGE FOR AWARDS OF THE SAME TYPE
(WHICH MAY HAVE LOWER EXERCISE PRICES AND DIFFERENT TERMS), AWARDS OF A
DIFFERENT TYPE, AND/OR CASH, (II) PARTICIPANTS WOULD HAVE THE OPPORTUNITY TO
TRANSFER ANY OUTSTANDING AWARDS TO A FINANCIAL INSTITUTION OR OTHER PERSON OR
ENTITY SELECTED BY THE ADMINISTRATOR, AND/OR (III) THE EXERCISE PRICE OF AN
OUTSTANDING AWARD IS REDUCED.  THE ADMINISTRATOR WILL DETERMINE THE TERMS AND
CONDITIONS OF ANY EXCHANGE PROGRAM IN ITS SOLE DISCRETION.

 

(S)           “FAIR MARKET VALUE” MEANS, AS OF ANY DATE, THE VALUE OF THE COMMON
STOCK AS THE ADMINISTRATOR MAY DETERMINE IN GOOD FAITH BY REFERENCE TO THE PRICE
OF SUCH STOCK ON ANY ESTABLISHED STOCK EXCHANGE OR A NATIONAL MARKET SYSTEM ON
THE DAY OF DETERMINATION IF THE COMMON STOCK IS SO LISTED ON ANY ESTABLISHED
STOCK EXCHANGE OR A NATIONAL MARKET SYSTEM.  IF THE COMMON STOCK IS NOT LISTED
ON ANY ESTABLISHED STOCK EXCHANGE OR A NATIONAL MARKET SYSTEM, THE VALUE OF THE
COMMON STOCK WILL BE DETERMINED AS THE ADMINISTRATOR MAY DETERMINE IN GOOD
FAITH.

 

(T)            “FISCAL YEAR” MEANS THE FISCAL YEAR OF THE COMPANY.

 

(U)           “INCENTIVE STOCK OPTION” MEANS AN OPTION THAT BY ITS TERMS
QUALIFIES AND IS OTHERWISE INTENDED TO QUALIFY AS AN INCENTIVE STOCK OPTION
WITHIN THE MEANING OF SECTION 422 OF THE CODE AND THE REGULATIONS PROMULGATED
THEREUNDER.

 

(V)           “NONSTATUTORY STOCK OPTION” MEANS AN OPTION THAT BY ITS TERMS DOES
NOT QUALIFY OR IS NOT INTENDED TO QUALIFY AS AN INCENTIVE STOCK OPTION.

 

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(W)          “OFFICER” MEANS A PERSON WHO IS AN OFFICER OF THE COMPANY WITHIN
THE MEANING OF SECTION 16 OF THE EXCHANGE ACT AND THE RULES AND REGULATIONS
PROMULGATED THEREUNDER.

 

(X)            “OPERATING CASH FLOW”  MEANS AS TO ANY PERFORMANCE PERIOD, THE
COMPANY’S OR A BUSINESS UNIT’S SUM OF PROFIT AFTER-TAX PLUS DEPRECIATION AND
AMORTIZATION LESS CAPITAL EXPENDITURES PLUS CHANGES IN WORKING CAPITAL COMPRISED
OF ACCOUNTS RECEIVABLE, INVENTORIES, OTHER CURRENT ASSETS, TRADE ACCOUNTS
PAYABLE, ACCRUED EXPENSES, PRODUCT WARRANTY, ADVANCE PAYMENTS FROM CUSTOMERS AND
LONG-TERM ACCRUED EXPENSES, DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTABLE
ACCOUNTING PRINCIPLES.”OPERATING INCOME” MEANS AS TO ANY PERFORMANCE PERIOD, THE
COMPANY’S OR A BUSINESS UNIT’S INCOME FROM OPERATIONS BUT EXCLUDING ANY UNUSUAL
ITEMS, DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES.(Z)         “OPTION” MEANS A STOCK OPTION GRANTED PURSUANT TO
SECTION 6 OF THE PLAN.

 

(AA)         “PARENT” MEANS A “PARENT CORPORATION,” WHETHER NOW OR HEREAFTER
EXISTING, AS DEFINED IN SECTION 424(E) OF THE CODE.

 

(BB)         “PARTICIPANT” MEANS THE HOLDER OF AN OUTSTANDING AWARD.

 

(CC)         “PERFORMANCE GOALS” WILL HAVE THE MEANING SET FORTH IN SECTION 11
OF THE PLAN.

 

(DD)         “PERFORMANCE PERIOD” MEANS ANY FISCAL YEAR OF THE COMPANY OR SUCH
OTHER PERIOD AS DETERMINED BY THE ADMINISTRATOR IN ITS SOLE DISCRETION.

 

(EE)         “PERFORMANCE SHARE” MEANS AN AWARD DENOMINATED IN SHARES WHICH MAY
BE EARNED IN WHOLE OR IN PART UPON ATTAINMENT OF PERFORMANCE GOALS OR OTHER
VESTING CRITERIA AS THE ADMINISTRATOR MAY DETERMINE PURSUANT TO SECTION 10.

 

(FF)           “PERFORMANCE UNIT” MEANS AN AWARD WHICH MAY BE EARNED IN WHOLE OR
IN PART UPON ATTAINMENT OF PERFORMANCE GOALS OR OTHER VESTING CRITERIA AS THE
ADMINISTRATOR MAY DETERMINE AND WHICH MAY BE SETTLED FOR CASH, SHARES OR OTHER
SECURITIES OR A COMBINATION OF THE FOREGOING PURSUANT TO SECTION 10.

 

(GG)         “PERIOD OF RESTRICTION” MEANS THE PERIOD DURING WHICH THE TRANSFER
OF SHARES OF RESTRICTED STOCK ARE SUBJECT TO RESTRICTIONS AND THEREFORE, THE
SHARES ARE SUBJECT TO A SUBSTANTIAL RISK OF FORFEITURE.  SUCH RESTRICTIONS MAY
BE BASED ON THE PASSAGE OF TIME, THE ACHIEVEMENT OF TARGET LEVELS OF
PERFORMANCE, OR THE OCCURRENCE OF OTHER EVENTS AS DETERMINED BY THE
ADMINISTRATOR.

 

(HH)         “PLAN” MEANS THIS 2007 EQUITY INCENTIVE PLAN.

 

(II)           “PROFIT AFTER-TAX” MEANS AS TO ANY PERFORMANCE PERIOD, THE
COMPANY’S OR A BUSINESS UNIT’S INCOME AFTER TAXES, DETERMINED IN ACCORDANCE WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.

 

(JJ)           “PROFIT BEFORE-TAX” MEANS AS TO ANY PERFORMANCE PERIOD, THE
COMPANY’S OR A BUSINESS UNIT’S INCOME BEFORE TAXES, DETERMINED IN ACCORDANCE
WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.

 

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(KK)         “RESTRICTED STOCK” MEANS SHARES ISSUED PURSUANT TO AN AWARD OF
RESTRICTED STOCK UNDER SECTION 8 OF THE PLAN, OR ISSUED PURSUANT TO THE EARLY
EXERCISE OF AN OPTION.

 

(LL)           “RESTRICTED STOCK UNIT” MEANS A BOOKKEEPING ENTRY REPRESENTING AN
AMOUNT EQUAL TO THE FAIR MARKET VALUE OF ONE SHARE, GRANTED PURSUANT TO
SECTION 9.  EACH RESTRICTED STOCK UNIT REPRESENTS AN UNFUNDED AND UNSECURED
OBLIGATION OF THE COMPANY.

 

(MM)       “RETURN ON ASSETS” MEANS AS TO ANY PERFORMANCE PERIOD, THE PERCENTAGE
EQUAL TO THE COMPANY’S OR A BUSINESS UNIT’S OPERATING INCOME BEFORE INCENTIVE
COMPENSATION, DIVIDED BY AVERAGE NET COMPANY OR BUSINESS UNIT, AS APPLICABLE,
ASSETS, DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.

 

(NN)         “RETURN ON EQUITY” MEANS AS TO ANY PERFORMANCE PERIOD, THE
PERCENTAGE EQUAL TO THE COMPANY’S PROFIT AFTER-TAX DIVIDED BY AVERAGE
STOCKHOLDER’S EQUITY, DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES.

 

(OO)         “RETURN ON SALES” MEANS AS TO ANY PERFORMANCE PERIOD, THE
PERCENTAGE EQUAL TO THE COMPANY’S OR A BUSINESS UNIT’S OPERATING INCOME BEFORE
INCENTIVE COMPENSATION, DIVIDED BY THE COMPANY’S OR THE BUSINESS UNIT’S, AS
APPLICABLE, REVENUE, DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES.

 

(PP)         “REVENUE” MEANS AS TO ANY PERFORMANCE PERIOD, THE COMPANY’S OR
BUSINESS UNIT’S NET SALES, DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES.

 

(QQ)         “RULE 16B-3” MEANS RULE 16B-3 OF THE EXCHANGE ACT OR ANY SUCCESSOR
TO RULE 16B-3, AS IN EFFECT WHEN DISCRETION IS BEING EXERCISED WITH RESPECT TO
THE PLAN.

 

(RR)           “SECTION 16(B)” MEANS SECTION 16(B) OF THE EXCHANGE ACT.

 

(SS)         “SERVICE PROVIDER” MEANS AN EMPLOYEE, DIRECTOR, OR CONSULTANT.

 

(TT)           “SHARE” MEANS A SHARE OF THE COMMON STOCK, AS ADJUSTED IN
ACCORDANCE WITH SECTION 14 OF THE PLAN.

 

(UU)         “STOCK APPRECIATION RIGHT” MEANS AN AWARD, GRANTED ALONE OR IN
CONNECTION WITH AN OPTION, THAT PURSUANT TO SECTION 7 IS DESIGNATED AS A STOCK
APPRECIATION RIGHT.

 

(VV)         “SUBSIDIARY” MEANS A “SUBSIDIARY CORPORATION,” WHETHER NOW OR
HEREAFTER EXISTING, AS DEFINED IN SECTION 424(F) OF THE CODE.

 

“TOTAL SHAREHOLDER RETURN” MEANS AS TO ANY PERFORMANCE PERIOD, THE TOTAL RETURN
(CHANGE IN SHARE PRICE PLUS REINVESTMENT OF ANY DIVIDENDS) OF A SHARE.

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3.             STOCK SUBJECT TO THE PLAN.

 

(A)           SUBJECT TO THE PROVISIONS OF SECTION 14 OF THE PLAN, THE MAXIMUM
AGGREGATE NUMBER OF SHARES THAT MAY BE AWARDED AND SOLD UNDER THE PLAN IS
4,000,000 SHARES.  THE SHARES MAY BE AUTHORIZED, BUT UNISSUED, OR REACQUIRED
COMMON STOCK.

 

(B)           FULL VALUE AWARDS.  ANY SHARES SUBJECT TO AWARDS GRANTED WITH AN
EXERCISE PRICE LESS THAN THE FAIR MARKET VALUE ON THE DATE OF GRANT OF SUCH
AWARDS WILL BE COUNTED AGAINST THE NUMERICAL LIMITS OF THIS SECTION 3 AS TWO
(2) SHARES FOR EVERY ONE (1) SHARE SUBJECT THERETO.  FURTHER, IF SHARES ACQUIRED
PURSUANT TO ANY SUCH AWARD ARE FORFEITED OR REPURCHASED BY THE COMPANY AND WOULD
OTHERWISE RETURN TO THE PLAN PURSUANT TO SECTION 3(C), TWO (2) TIMES THE NUMBER
OF SHARES SO FORFEITED OR REPURCHASED WILL RETURN TO THE PLAN AND WILL AGAIN
BECOME AVAILABLE FOR ISSUANCE.

 

(C)           LAPSED AWARDS.  IF AN AWARD EXPIRES OR BECOMES UNEXERCISABLE
WITHOUT HAVING BEEN EXERCISED IN FULL, OR, WITH RESPECT TO RESTRICTED STOCK,
RESTRICTED STOCK UNITS, PERFORMANCE SHARES OR PERFORMANCE UNITS, IS FORFEITED TO
OR REPURCHASED BY THE COMPANY, THE UNPURCHASED SHARES (OR FOR AWARDS OTHER THAN
OPTIONS AND STOCK APPRECIATION RIGHTS, THE FORFEITED OR REPURCHASED SHARES)
WHICH WERE SUBJECT THERETO WILL BECOME AVAILABLE FOR FUTURE GRANT OR SALE UNDER
THE PLAN (UNLESS THE PLAN HAS TERMINATED).  UPON EXERCISE OF A STOCK
APPRECIATION RIGHT SETTLED IN SHARES, THE GROSS NUMBER OF SHARES COVERED BY THE
PORTION OF THE AWARD SO EXERCISED WILL CEASE TO BE AVAILABLE UNDER THE PLAN. 
SHARES THAT HAVE ACTUALLY BEEN ISSUED UNDER THE PLAN UNDER ANY AWARD WILL NOT BE
RETURNED TO THE PLAN AND WILL NOT BECOME AVAILABLE FOR FUTURE DISTRIBUTION UNDER
THE PLAN; PROVIDED, HOWEVER, THAT IF UNVESTED SHARES OF RESTRICTED STOCK,
RESTRICTED STOCK UNITS, PERFORMANCE SHARES OR PERFORMANCE UNITS ARE REPURCHASED
BY THE COMPANY OR ARE FORFEITED TO THE COMPANY, SUCH SHARES WILL BECOME
AVAILABLE FOR FUTURE GRANT UNDER THE PLAN.  SHARES USED TO PAY THE TAX AND/OR
EXERCISE PRICE OF AN AWARD WILL NOT BECOME AVAILABLE FOR FUTURE GRANT OR SALE
UNDER THE PLAN.  TO THE EXTENT AN AWARD UNDER THE PLAN IS PAID OUT IN CASH
RATHER THAN SHARES, SUCH CASH PAYMENT WILL NOT RESULT IN REDUCING THE NUMBER OF
SHARES AVAILABLE FOR ISSUANCE UNDER THE PLAN.  NOTWITHSTANDING THE FOREGOING
PROVISIONS OF THIS SECTION 3(C), SUBJECT TO ADJUSTMENT PROVIDED IN SECTION 14,
THE MAXIMUM NUMBER OF SHARES THAT MAY BE ISSUED UPON THE EXERCISE OF INCENTIVE
STOCK OPTIONS WILL EQUAL THE AGGREGATE SHARE NUMBER STATED IN SECTION 3(A),
PLUS, TO THE EXTENT ALLOWABLE UNDER SECTION 422 OF THE CODE, ANY SHARES THAT
BECOME AVAILABLE FOR ISSUANCE UNDER THE PLAN UNDER THIS SECTION 3(C).

 

(D)           SHARE RESERVE.  THE COMPANY, DURING THE TERM OF THIS PLAN, WILL AT
ALL TIMES RESERVE AND KEEP AVAILABLE SUCH NUMBER OF SHARES AS WILL BE SUFFICIENT
TO SATISFY THE REQUIREMENTS OF THE PLAN.

 

4.             ADMINISTRATION OF THE PLAN.

 

(A)           PROCEDURE.

 

(I)            MULTIPLE ADMINISTRATIVE BODIES.  DIFFERENT COMMITTEES WITH
RESPECT TO DIFFERENT GROUPS OF SERVICE PROVIDERS MAY ADMINISTER THE PLAN.

 

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(II)           SECTION 162(M).  TO THE EXTENT THAT THE ADMINISTRATOR DETERMINES
IT TO BE DESIRABLE TO QUALIFY AWARDS GRANTED HEREUNDER AS “PERFORMANCE-BASED
COMPENSATION” WITHIN THE MEANING OF SECTION 162(M) OF THE CODE, THE PLAN WILL BE
ADMINISTERED BY A COMMITTEE OF TWO (2) OR MORE “OUTSIDE DIRECTORS” WITHIN THE
MEANING OF SECTION 162(M) OF THE CODE.

 

(III)          RULE 16B-3.  TO THE EXTENT DESIRABLE TO QUALIFY TRANSACTIONS
HEREUNDER AS EXEMPT UNDER RULE 16B-3, THE TRANSACTIONS CONTEMPLATED HEREUNDER
WILL BE STRUCTURED TO SATISFY THE REQUIREMENTS FOR EXEMPTION UNDER RULE 16B-3.

 

(IV)          OTHER ADMINISTRATION.  OTHER THAN AS PROVIDED ABOVE, THE PLAN WILL
BE ADMINISTERED BY (A) THE BOARD OR (B) A COMMITTEE, WHICH COMMITTEE WILL BE
CONSTITUTED TO SATISFY APPLICABLE LAWS.

 

(B)           POWERS OF THE ADMINISTRATOR.  SUBJECT TO THE PROVISIONS OF THE
PLAN, AND IN THE CASE OF A COMMITTEE, SUBJECT TO THE SPECIFIC DUTIES DELEGATED
BY THE BOARD TO SUCH COMMITTEE, THE ADMINISTRATOR WILL HAVE THE AUTHORITY, IN
ITS DISCRETION:

 

(I)            TO DETERMINE THE FAIR MARKET VALUE;

 

(II)           TO SELECT THE SERVICE PROVIDERS TO WHOM AWARDS MAY BE GRANTED
HEREUNDER;

 

(III)          TO DETERMINE THE TERMS AND CONDITIONS, NOT INCONSISTENT WITH THE
TERMS OF THE PLAN, OF ANY AWARD GRANTED HEREUNDER;

 

(IV)          TO DETERMINE THE TERMS AND CONDITIONS OF ANY, AND WITH THE
APPROVAL OF THE COMPANY’S STOCKHOLDERS, TO INSTITUTE AN EXCHANGE PROGRAM;

 

(V)           TO CONSTRUE AND INTERPRET THE TERMS OF THE PLAN AND AWARDS GRANTED
PURSUANT TO THE PLAN;

 

(VI)          TO PRESCRIBE, AMEND AND RESCIND RULES AND REGULATIONS RELATING TO
THE PLAN, INCLUDING RULES AND REGULATIONS RELATING TO SUB-PLANS ESTABLISHED FOR
THE PURPOSE OF SATISFYING APPLICABLE FOREIGN LAWS;

 

(VII)         TO MODIFY OR AMEND EACH AWARD (SUBJECT TO SECTION 19(C) OF THE
PLAN).  NOTWITHSTANDING THE PREVIOUS SENTENCE, THE ADMINISTRATOR MAY NOT,
WITHOUT THE APPROVAL OF THE COMPANY’S STOCKHOLDERS: (A) MODIFY OR AMEND AN
OPTION OR STOCK APPRECIATION RIGHT TO REDUCE THE EXERCISE PRICE OF SUCH OPTION
OR STOCK APPRECIATION RIGHT AFTER IT HAS BEEN GRANTED (EXCEPT FOR ADJUSTMENTS
MADE PURSUANT TO SECTION 14), OR (B) CANCEL ANY OUTSTANDING OPTION OR STOCK
APPRECIATION RIGHT AND IMMEDIATELY REPLACE IT WITH A NEW OPTION OR STOCK
APPRECIATION RIGHT WITH A LOWER EXERCISE PRICE;

 

(VIII)        TO AUTHORIZE ANY PERSON TO EXECUTE ON BEHALF OF THE COMPANY ANY
INSTRUMENT REQUIRED TO EFFECT THE GRANT OF AN AWARD PREVIOUSLY GRANTED BY THE
ADMINISTRATOR;

 

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(IX)           TO ALLOW A PARTICIPANT TO DEFER THE RECEIPT OF THE PAYMENT OF
CASH OR THE DELIVERY OF SHARES THAT WOULD OTHERWISE BE DUE TO SUCH PARTICIPANT
UNDER AN AWARD PURSUANT TO SUCH PROCEDURES AS THE ADMINISTRATOR MAY DETERMINE;
AND

 

(X)            TO MAKE ALL OTHER DETERMINATIONS DEEMED NECESSARY OR ADVISABLE
FOR ADMINISTERING THE PLAN.

 

(C)           EFFECT OF ADMINISTRATOR’S DECISION.  THE ADMINISTRATOR’S
DECISIONS, DETERMINATIONS, AND INTERPRETATIONS WILL BE FINAL AND BINDING ON ALL
PARTICIPANTS AND ANY OTHER HOLDERS OF AWARDS.

 

5.             ELIGIBILITY.  NONSTATUTORY STOCK OPTIONS, RESTRICTED STOCK,
RESTRICTED STOCK UNITS, STOCK APPRECIATION RIGHTS, PERFORMANCE UNITS,
PERFORMANCE SHARES, AND SUCH OTHER CASH OR STOCK AWARDS AS THE ADMINISTRATOR
DETERMINES MAY BE GRANTED TO SERVICE PROVIDERS.  INCENTIVE STOCK OPTIONS MAY BE
GRANTED ONLY TO EMPLOYEES.

 

6.             STOCK OPTIONS.

 

(A)           LIMITATIONS.

 

(I)            EACH OPTION WILL BE DESIGNATED IN THE AWARD AGREEMENT AS EITHER
AN INCENTIVE STOCK OPTION OR A NONSTATUTORY STOCK OPTION.  HOWEVER,
NOTWITHSTANDING SUCH DESIGNATION, TO THE EXTENT THAT THE AGGREGATE FAIR MARKET
VALUE OF THE SHARES WITH RESPECT TO WHICH INCENTIVE STOCK OPTIONS ARE
EXERCISABLE FOR THE FIRST TIME BY THE PARTICIPANT DURING ANY CALENDAR YEAR
(UNDER ALL PLANS OF THE COMPANY AND ANY PARENT OR SUBSIDIARY) EXCEEDS $100,000
(U.S.), SUCH OPTIONS WILL BE TREATED AS NONSTATUTORY STOCK OPTIONS.  FOR
PURPOSES OF THIS SECTION 6(A), INCENTIVE STOCK OPTIONS WILL BE TAKEN INTO
ACCOUNT IN THE ORDER IN WHICH THEY WERE GRANTED.  THE FAIR MARKET VALUE OF THE
SHARES WILL BE DETERMINED AS OF THE TIME THE OPTION WITH RESPECT TO SUCH SHARES
IS GRANTED.

 

(II)           THE ADMINISTRATOR WILL HAVE COMPLETE DISCRETION TO DETERMINE THE
NUMBER OF SHARES SUBJECT TO AN OPTION GRANTED TO ANY PARTICIPANT, PROVIDED THAT
DURING ANY FISCAL YEAR, NO PARTICIPANT WILL BE GRANTED AN OPTION COVERING MORE
THAN 1,000,000 SHARES.  NOTWITHSTANDING THE LIMITATION IN THE PREVIOUS SENTENCE,
IN CONNECTION WITH HIS OR HER INITIAL SERVICE AS AN EMPLOYEE, AN EMPLOYEE MAY BE
GRANTED OPTIONS COVERING UP TO AN ADDITIONAL 1,000,000 SHARES.

 

(B)           TERM OF OPTION.  THE ADMINISTRATOR WILL DETERMINE THE TERM OF EACH
OPTION IN ITS SOLE DISCRETION; PROVIDED, HOWEVER, THAT THE TERM WILL BE NO MORE
THAN TEN (10) YEARS FROM THE DATE OF GRANT THEREOF.  MOREOVER, IN THE CASE OF AN
INCENTIVE STOCK OPTION GRANTED TO A PARTICIPANT WHO, AT THE TIME THE INCENTIVE
STOCK OPTION IS GRANTED, OWNS STOCK REPRESENTING MORE THAN 10% OF THE TOTAL
COMBINED VOTING POWER OF ALL CLASSES OF STOCK OF THE COMPANY OR ANY PARENT OR
SUBSIDIARY, THE TERM OF THE INCENTIVE STOCK OPTION WILL BE FIVE (5) YEARS FROM
THE DATE OF GRANT OR SUCH SHORTER TERM AS MAY BE PROVIDED IN THE AWARD
AGREEMENT.

 

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(C)           OPTION EXERCISE PRICE AND CONSIDERATION.

 

(I)            EXERCISE PRICE.  THE PER SHARE EXERCISE PRICE FOR THE SHARES TO
BE ISSUED PURSUANT TO EXERCISE OF AN OPTION WILL BE DETERMINED BY THE
ADMINISTRATOR, BUT WILL BE NO LESS THAN 100% OF THE FAIR MARKET VALUE PER SHARE
ON THE DATE OF GRANT.  IN ADDITION, IN THE CASE OF AN INCENTIVE STOCK OPTION
GRANTED TO AN EMPLOYEE WHO, AT THE TIME THE INCENTIVE STOCK OPTION IS GRANTED,
OWNS STOCK REPRESENTING MORE THAN 10% OF THE VOTING POWER OF ALL CLASSES OF
STOCK OF THE COMPANY OR ANY PARENT OR SUBSIDIARY, THE PER SHARE EXERCISE PRICE
WILL BE NO LESS THAN 110% OF THE FAIR MARKET VALUE PER SHARE ON THE DATE OF
GRANT.  NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS SECTION 6(C), OPTIONS
MAY BE GRANTED WITH A PER SHARE EXERCISE PRICE OF LESS THAN 100% OF THE FAIR
MARKET VALUE PER SHARE ON THE DATE OF GRANT PURSUANT TO A TRANSACTION DESCRIBED
IN, AND IN A MANNER CONSISTENT WITH, SECTION 424(A) OF THE CODE.

 

(II)           WAITING PERIOD AND EXERCISE DATES.  AT THE TIME AN OPTION IS
GRANTED, THE ADMINISTRATOR WILL FIX THE PERIOD WITHIN WHICH THE OPTION MAY BE
EXERCISED AND WILL DETERMINE ANY CONDITIONS THAT MUST BE SATISFIED BEFORE THE
OPTION MAY BE EXERCISED.

 

(III)          FORM OF CONSIDERATION.  THE ADMINISTRATOR WILL DETERMINE THE
ACCEPTABLE FORM(S) OF CONSIDERATION FOR EXERCISING AN OPTION, INCLUDING THE
METHOD OF PAYMENT, TO THE EXTENT PERMITTED BY APPLICABLE LAWS.

 

(D)           EXERCISE OF OPTION.

 

(I)            PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER.  ANY OPTION
GRANTED HEREUNDER WILL BE EXERCISABLE ACCORDING TO THE TERMS OF THE PLAN AND AT
SUCH TIMES AND UNDER SUCH CONDITIONS AS DETERMINED BY THE ADMINISTRATOR AND SET
FORTH IN THE AWARD AGREEMENT.  AN OPTION MAY NOT BE EXERCISED FOR A FRACTION OF
A SHARE.

 

An Option will be deemed exercised when the Company receives: (i) notice of
exercise (in such form as the Administrator specifies from time to time) from
the person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised (together with any applicable
withholding taxes).  No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 14 of the Plan.

 

(II)   TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER.  IF A PARTICIPANT
CEASES TO BE A SERVICE PROVIDER, OTHER THAN UPON THE PARTICIPANT’S TERMINATION
AS THE RESULT OF THE PARTICIPANT’S DEATH OR DISABILITY, THE PARTICIPANT MAY
EXERCISE HIS OR HER OPTION WITHIN SUCH PERIOD OF TIME AS IS SPECIFIED IN THE
AWARD AGREEMENT TO THE EXTENT THAT THE OPTION IS VESTED ON THE DATE OF
TERMINATION (BUT IN NO EVENT LATER THAN THE EXPIRATION OF THE TERM OF SUCH
OPTION AS SET FORTH IN THE AWARD AGREEMENT).  IN THE ABSENCE OF A SPECIFIED TIME
IN THE AWARD AGREEMENT, THE OPTION WILL REMAIN EXERCISABLE FOR THREE (3) MONTHS
FOLLOWING THE PARTICIPANT’S TERMINATION.  UNLESS OTHERWISE PROVIDED BY THE
ADMINISTRATOR, IF ON THE DATE OF TERMINATION THE PARTICIPANT IS NOT VESTED AS TO
HIS OR HER ENTIRE OPTION, THE SHARES COVERED BY THE UNVESTED PORTION OF THE
OPTION WILL REVERT TO THE PLAN.  IF AFTER TERMINATION THE PARTICIPANT DOES NOT
EXERCISE HIS OR HER OPTION WITHIN THE TIME SPECIFIED BY THE ADMINISTRATOR, THE
OPTION WILL TERMINATE, AND THE SHARES COVERED BY SUCH OPTION WILL REVERT TO THE
PLAN.

 

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(III)          DISABILITY OF PARTICIPANT.  IF A PARTICIPANT CEASES TO BE A
SERVICE PROVIDER AS A RESULT OF THE PARTICIPANT’S DISABILITY, THE PARTICIPANT
MAY EXERCISE HIS OR HER OPTION WITHIN SUCH PERIOD OF TIME AS IS SPECIFIED IN THE
AWARD AGREEMENT TO THE EXTENT THE OPTION IS VESTED ON THE DATE OF TERMINATION
(BUT IN NO EVENT LATER THAN THE EXPIRATION OF THE TERM OF SUCH OPTION AS SET
FORTH IN THE AWARD AGREEMENT).  IN THE ABSENCE OF A SPECIFIED TIME IN THE AWARD
AGREEMENT, THE OPTION WILL REMAIN EXERCISABLE FOR TWELVE (12) MONTHS FOLLOWING
THE PARTICIPANT’S TERMINATION. UNLESS OTHERWISE PROVIDED BY THE ADMINISTRATOR,
IF ON THE DATE OF TERMINATION THE PARTICIPANT IS NOT VESTED AS TO HIS OR HER
ENTIRE OPTION, THE SHARES COVERED BY THE UNVESTED PORTION OF THE OPTION WILL
REVERT TO THE PLAN.  IF AFTER TERMINATION THE PARTICIPANT DOES NOT EXERCISE HIS
OR HER OPTION WITHIN THE TIME SPECIFIED HEREIN, THE OPTION WILL TERMINATE, AND
THE SHARES COVERED BY SUCH OPTION WILL REVERT TO THE PLAN.

 

(IV)          DEATH OF PARTICIPANT.  IF A PARTICIPANT DIES WHILE A SERVICE
PROVIDER, THE OPTION MAY BE EXERCISED FOLLOWING THE PARTICIPANT’S DEATH WITHIN
SUCH PERIOD OF TIME AS IS SPECIFIED IN THE AWARD AGREEMENT TO THE EXTENT THAT
THE OPTION IS VESTED ON THE DATE OF DEATH (BUT IN NO EVENT MAY THE OPTION BE
EXERCISED LATER THAN THE EXPIRATION OF THE TERM OF SUCH OPTION AS SET FORTH IN
THE AWARD AGREEMENT), BY THE PARTICIPANT’S DESIGNATED BENEFICIARY, PROVIDED SUCH
BENEFICIARY HAS BEEN DESIGNATED PRIOR TO PARTICIPANT’S DEATH IN A FORM
ACCEPTABLE TO THE ADMINISTRATOR.  IF NO SUCH BENEFICIARY HAS BEEN DESIGNATED BY
THE PARTICIPANT, THEN SUCH OPTION MAY BE EXERCISED BY THE PERSONAL
REPRESENTATIVE OF THE PARTICIPANT’S ESTATE OR BY THE PERSON(S) TO WHOM THE
OPTION IS TRANSFERRED PURSUANT TO THE PARTICIPANT’S WILL OR IN ACCORDANCE WITH
THE LAWS OF DESCENT AND DISTRIBUTION.  IN THE ABSENCE OF A SPECIFIED TIME IN THE
AWARD AGREEMENT, THE OPTION WILL REMAIN EXERCISABLE FOR TWELVE (12) MONTHS
FOLLOWING PARTICIPANT’S DEATH.  UNLESS OTHERWISE PROVIDED BY THE ADMINISTRATOR,
IF AT THE TIME OF DEATH PARTICIPANT IS NOT VESTED AS TO HIS OR HER ENTIRE
OPTION, THE SHARES COVERED BY THE UNVESTED PORTION OF THE OPTION WILL
IMMEDIATELY REVERT TO THE PLAN.  IF THE OPTION IS NOT SO EXERCISED WITHIN THE
TIME SPECIFIED HEREIN, THE OPTION WILL TERMINATE, AND THE SHARES COVERED BY SUCH
OPTION WILL REVERT TO THE PLAN.

 

(V)           OTHER TERMINATION.  A PARTICIPANT’S AWARD AGREEMENT MAY ALSO
PROVIDE THAT IF THE EXERCISE OF THE OPTION FOLLOWING THE TERMINATION OF
PARTICIPANT’S STATUS AS A SERVICE PROVIDER (OTHER THAN UPON THE PARTICIPANT’S
DEATH OR DISABILITY) WOULD RESULT IN LIABILITY UNDER SECTION 16(B), THEN THE
OPTION WILL TERMINATE ON THE EARLIER OF (A) THE EXPIRATION OF THE TERM OF THE
OPTION SET FORTH IN THE AWARD AGREEMENT, OR (B) THE 10TH DAY AFTER THE LAST DATE
ON WHICH SUCH EXERCISE WOULD RESULT IN SUCH LIABILITY UNDER SECTION 16(B). 
FINALLY, A PARTICIPANT’S AWARD AGREEMENT MAY ALSO PROVIDE THAT IF THE EXERCISE
OF THE OPTION FOLLOWING THE TERMINATION OF THE PARTICIPANT’S STATUS AS A SERVICE
PROVIDER (OTHER THAN UPON THE PARTICIPANT’S DEATH OR DISABILITY) WOULD BE
PROHIBITED AT ANY TIME SOLELY BECAUSE THE ISSUANCE OF SHARES WOULD VIOLATE THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, THEN THE OPTION WILL
TERMINATE ON THE EARLIER OF (A) THE EXPIRATION OF THE TERM OF THE OPTION, OR
(B) THE EXPIRATION OF A PERIOD OF THREE (3) MONTHS AFTER THE TERMINATION OF THE
PARTICIPANT’S STATUS AS A SERVICE PROVIDER DURING WHICH THE EXERCISE OF THE
OPTION WOULD NOT BE IN VIOLATION OF SUCH REGISTRATION REQUIREMENTS.

 

7.             STOCK APPRECIATION RIGHTS.

 

(A)           GRANT OF STOCK APPRECIATION RIGHTS.  SUBJECT TO THE TERMS AND
CONDITIONS OF THE PLAN, A STOCK APPRECIATION RIGHT MAY BE GRANTED TO SERVICE
PROVIDERS AT ANY TIME AND FROM TIME TO TIME AS WILL BE DETERMINED BY THE
ADMINISTRATOR, IN ITS SOLE DISCRETION.

 

10

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(B)           NUMBER OF SHARES.  THE ADMINISTRATOR WILL HAVE COMPLETE DISCRETION
TO DETERMINE THE NUMBER OF STOCK APPRECIATION RIGHTS GRANTED TO ANY PARTICIPANT,
PROVIDED THAT DURING ANY FISCAL YEAR, NO PARTICIPANT WILL BE GRANTED STOCK
APPRECIATION RIGHTS COVERING MORE THAN 1,000,000 SHARES.  NOTWITHSTANDING THE
LIMITATION IN THE PREVIOUS SENTENCE, IN CONNECTION WITH HIS OR HER INITIAL
SERVICE AS AN EMPLOYEE, AN EMPLOYEE MAY BE GRANTED STOCK APPRECIATION RIGHTS
COVERING UP TO AN ADDITIONAL 1,000,000 SHARES.

(C)           EXERCISE PRICE AND OTHER TERMS.  THE ADMINISTRATOR, SUBJECT TO THE
PROVISIONS OF THE PLAN, WILL HAVE COMPLETE DISCRETION TO DETERMINE THE TERMS AND
CONDITIONS OF STOCK APPRECIATION RIGHTS GRANTED UNDER THE PLAN, PROVIDED,
HOWEVER, THAT THE EXERCISE PRICE WILL BE NOT LESS THAN 100% OF THE FAIR MARKET
VALUE OF A SHARE ON THE DATE OF GRANT.

 

(D)           STOCK APPRECIATION RIGHT AGREEMENT.  EACH STOCK APPRECIATION RIGHT
GRANT WILL BE EVIDENCED BY AN AWARD AGREEMENT THAT WILL SPECIFY THE EXERCISE
PRICE, THE TERM OF THE STOCK APPRECIATION RIGHT, THE CONDITIONS OF EXERCISE, AND
SUCH OTHER TERMS AND CONDITIONS AS THE ADMINISTRATOR, IN ITS SOLE DISCRETION,
WILL DETERMINE.

 

(E)           EXPIRATION OF STOCK APPRECIATION RIGHTS.  A STOCK APPRECIATION
RIGHT GRANTED UNDER THE PLAN WILL EXPIRE UPON THE DATE DETERMINED BY THE
ADMINISTRATOR, IN ITS SOLE DISCRETION, AND SET FORTH IN THE AWARD AGREEMENT;
PROVIDED, HOWEVER, THAT THE TERM WILL BE NO MORE THAN TEN (10) YEARS FROM THE
DATE OF GRANT THEREOF.  NOTWITHSTANDING THE FOREGOING, THE RULES OF
SECTION 6(D) ALSO WILL APPLY TO STOCK APPRECIATION RIGHTS.

 

(F)            PAYMENT OF STOCK APPRECIATION RIGHT AMOUNT.  UPON EXERCISE OF A
STOCK APPRECIATION RIGHT, A PARTICIPANT WILL BE ENTITLED TO RECEIVE PAYMENT FROM
THE COMPANY IN AN AMOUNT DETERMINED BY MULTIPLYING:

 

(I)    THE DIFFERENCE BETWEEN THE FAIR MARKET VALUE OF A SHARE ON THE DATE OF
EXERCISE OVER THE EXERCISE PRICE; TIMES

 

(II)   THE NUMBER OF SHARES WITH RESPECT TO WHICH THE STOCK APPRECIATION RIGHT
IS EXERCISED.

 

At the discretion of the Administrator, the payment upon Stock Appreciation
Right exercise may be in cash, in Shares of equivalent value, or in some
combination thereof.

 

8.             RESTRICTED STOCK.

 

(A)           GRANT OF RESTRICTED STOCK.  SUBJECT TO THE TERMS AND PROVISIONS OF
THE PLAN, THE ADMINISTRATOR, AT ANY TIME AND FROM TIME TO TIME, MAY GRANT SHARES
OF RESTRICTED STOCK TO SERVICE PROVIDERS IN SUCH AMOUNTS AS THE ADMINISTRATOR,
IN ITS SOLE DISCRETION, WILL DETERMINE.

 

(B)           RESTRICTED STOCK AGREEMENT.  EACH AWARD OF RESTRICTED STOCK WILL
BE EVIDENCED BY AN AWARD AGREEMENT THAT WILL SPECIFY THE PERIOD OF RESTRICTION,
THE NUMBER OF SHARES GRANTED, AND SUCH OTHER TERMS AND CONDITIONS AS THE
ADMINISTRATOR, IN ITS SOLE DISCRETION, WILL DETERMINE.  NOTWITHSTANDING THE
FOREGOING SENTENCE, FOR RESTRICTED STOCK INTENDED TO QUALIFY AS
“PERFORMANCE-BASED COMPENSATION” WITHIN THE MEANING OF SECTION 162(M) OF THE
CODE, DURING ANY FISCAL YEAR NO PARTICIPANT WILL RECEIVE MORE THAN AN AGGREGATE
OF 300,000 SHARES OF RESTRICTED

 

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STOCK.  NOTWITHSTANDING THE FOREGOING LIMITATION, IN CONNECTION WITH HIS OR HER
INITIAL SERVICE AS AN EMPLOYEE, FOR RESTRICTED STOCK INTENDED TO QUALIFY AS
“PERFORMANCE-BASED COMPENSATION” WITHIN THE MEANING OF SECTION 162(M) OF THE
CODE, AN EMPLOYEE MAY BE GRANTED AN AGGREGATE OF UP TO AN ADDITIONAL 300,000
SHARES OF RESTRICTED STOCK.  UNLESS THE ADMINISTRATOR DETERMINES OTHERWISE,
SHARES OF RESTRICTED STOCK WILL BE HELD BY THE COMPANY AS ESCROW AGENT UNTIL THE
RESTRICTIONS ON SUCH SHARES HAVE LAPSED.

 

(C)           TRANSFERABILITY.  EXCEPT AS PROVIDED IN THIS SECTION 8, SHARES OF
RESTRICTED STOCK MAY NOT BE SOLD, TRANSFERRED, PLEDGED, ASSIGNED, OR OTHERWISE
ALIENATED OR HYPOTHECATED UNTIL THE END OF THE APPLICABLE PERIOD OF RESTRICTION.

 

(D)           OTHER RESTRICTIONS.  THE ADMINISTRATOR, IN ITS SOLE DISCRETION,
MAY IMPOSE SUCH OTHER RESTRICTIONS ON SHARES OF RESTRICTED STOCK AS IT MAY DEEM
ADVISABLE OR APPROPRIATE.

 

(E)           REMOVAL OF RESTRICTIONS.  EXCEPT AS OTHERWISE PROVIDED IN THIS
SECTION 8, SHARES OF RESTRICTED STOCK COVERED BY EACH RESTRICTED STOCK GRANT
MADE UNDER THE PLAN WILL BE RELEASED FROM ESCROW AS SOON AS PRACTICABLE AFTER
THE LAST DAY OF THE PERIOD OF RESTRICTION.  THE ADMINISTRATOR, IN ITS
DISCRETION, MAY ACCELERATE THE TIME AT WHICH ANY RESTRICTIONS WILL LAPSE OR BE
REMOVED.

 

(F)            VOTING RIGHTS.  DURING THE PERIOD OF RESTRICTION, SERVICE
PROVIDERS HOLDING SHARES OF RESTRICTED STOCK GRANTED HEREUNDER MAY EXERCISE FULL
VOTING RIGHTS WITH RESPECT TO THOSE SHARES, UNLESS THE ADMINISTRATOR DETERMINES
OTHERWISE.

 

(G)           DIVIDENDS AND OTHER DISTRIBUTIONS.  DURING THE PERIOD OF
RESTRICTION, SERVICE PROVIDERS HOLDING SHARES OF RESTRICTED STOCK WILL BE
ENTITLED TO RECEIVE ALL DIVIDENDS AND OTHER DISTRIBUTIONS PAID WITH RESPECT TO
SUCH SHARES UNLESS OTHERWISE PROVIDED IN THE AWARD AGREEMENT.  IF ANY SUCH
DIVIDENDS OR DISTRIBUTIONS ARE PAID IN SHARES, THE SHARES WILL BE SUBJECT TO THE
SAME RESTRICTIONS ON TRANSFERABILITY AND FORFEITABILITY AS THE SHARES OF
RESTRICTED STOCK WITH RESPECT TO WHICH THEY WERE PAID.

 

(H)           RETURN OF RESTRICTED STOCK TO COMPANY.  ON THE DATE SET FORTH IN
THE AWARD AGREEMENT, THE RESTRICTED STOCK FOR WHICH RESTRICTIONS HAVE NOT LAPSED
WILL REVERT TO THE COMPANY AND AGAIN WILL BECOME AVAILABLE FOR GRANT UNDER THE
PLAN.

 

(I)            SECTION 162(M) PERFORMANCE RESTRICTIONS.  FOR PURPOSES OF
QUALIFYING GRANTS OF RESTRICTED STOCK AS “PERFORMANCE-BASED COMPENSATION” UNDER
SECTION 162(M) OF THE CODE, THE ADMINISTRATOR, IN ITS DISCRETION, MAY SET
RESTRICTIONS BASED UPON THE ACHIEVEMENT OF PERFORMANCE GOALS.  THE PERFORMANCE
GOALS WILL BE SET BY THE ADMINISTRATOR ON OR BEFORE THE DETERMINATION DATE.  IN
GRANTING RESTRICTED STOCK WHICH IS INTENDED TO QUALIFY UNDER SECTION 162(M) OF
THE CODE, THE ADMINISTRATOR WILL FOLLOW ANY PROCEDURES DETERMINED BY IT FROM
TIME TO TIME TO BE NECESSARY OR APPROPRIATE TO ENSURE QUALIFICATION OF THE AWARD
UNDER SECTION 162(M) OF THE CODE (E.G., IN DETERMINING THE PERFORMANCE GOALS).

 

9.             RESTRICTED STOCK UNITS.

 

(A)           GRANT.  RESTRICTED STOCK UNITS MAY BE GRANTED AT ANY TIME AND FROM
TIME TO TIME AS DETERMINED BY THE ADMINISTRATOR.  EACH RESTRICTED STOCK UNIT
GRANT WILL BE EVIDENCED BY AN

 

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AWARD AGREEMENT THAT WILL SPECIFY SUCH OTHER TERMS AND CONDITIONS AS THE
ADMINISTRATOR, IN ITS SOLE DISCRETION, WILL DETERMINE, INCLUDING ALL TERMS,
CONDITIONS, AND RESTRICTIONS RELATED TO THE GRANT, THE NUMBER OF RESTRICTED
STOCK UNITS AND THE FORM OF PAYOUT, WHICH, SUBJECT TO SECTION 9(D), MAY BE LEFT
TO THE DISCRETION OF THE ADMINISTRATOR.  NOTWITHSTANDING ANYTHING TO THE
CONTRARY IN THIS

SUBSECTION (A), FOR RESTRICTED STOCK UNITS INTENDED TO QUALIFY AS
“PERFORMANCE-BASED COMPENSATION” WITHIN THE MEANING OF SECTION 162(M) OF THE
CODE, DURING ANY FISCAL YEAR OF THE COMPANY, NO PARTICIPANT WILL RECEIVE MORE
THAN AN AGGREGATE OF 300,000 RESTRICTED STOCK UNITS.  NOTWITHSTANDING THE
LIMITATION IN THE PREVIOUS SENTENCE, FOR RESTRICTED STOCK UNITS INTENDED TO
QUALIFY AS “PERFORMANCE-BASED COMPENSATION” WITHIN THE MEANING OF
SECTION 162(M) OF THE CODE, IN CONNECTION WITH HIS OR HER INITIAL SERVICE AS AN
EMPLOYEE, AN EMPLOYEE MAY BE GRANTED AN AGGREGATE OF UP TO AN ADDITIONAL 300,000
RESTRICTED STOCK UNITS.

 

(B)           VESTING CRITERIA AND OTHER TERMS.  THE ADMINISTRATOR WILL SET
VESTING CRITERIA IN ITS DISCRETION, WHICH, DEPENDING ON THE EXTENT TO WHICH THE
CRITERIA ARE MET, WILL DETERMINE THE NUMBER OF RESTRICTED STOCK UNITS THAT WILL
BE PAID OUT TO THE PARTICIPANT.  AFTER THE GRANT OF RESTRICTED STOCK UNITS, THE
ADMINISTRATOR, IN ITS SOLE DISCRETION, MAY REDUCE OR WAIVE ANY RESTRICTIONS FOR
SUCH RESTRICTED STOCK UNITS.  EACH AWARD OF RESTRICTED STOCK UNITS WILL BE
EVIDENCED BY AN AWARD AGREEMENT THAT WILL SPECIFY THE VESTING CRITERIA, AND SUCH
OTHER TERMS AND CONDITIONS AS THE ADMINISTRATOR, IN ITS SOLE DISCRETION WILL
DETERMINE.

 

(C)           EARNING RESTRICTED STOCK UNITS.  UPON MEETING THE APPLICABLE
VESTING CRITERIA, THE PARTICIPANT WILL BE ENTITLED TO RECEIVE A PAYOUT AS
SPECIFIED IN THE AWARD AGREEMENT.

 

(D)           FORM AND TIMING OF PAYMENT.  PAYMENT OF EARNED RESTRICTED STOCK
UNITS WILL BE MADE AS SOON AS PRACTICABLE AFTER THE DATE(S) SET FORTH IN THE
AWARD AGREEMENT.  THE ADMINISTRATOR, IN ITS SOLE DISCRETION, MAY PAY EARNED
RESTRICTED STOCK UNITS IN CASH, SHARES, OR A COMBINATION THEREOF.  SHARES
REPRESENTED BY RESTRICTED STOCK UNITS THAT ARE FULLY PAID IN CASH AGAIN WILL BE
AVAILABLE FOR GRANT UNDER THE PLAN.

 

(E)           CANCELLATION.  ON THE DATE SET FORTH IN THE AWARD AGREEMENT, ALL
UNEARNED RESTRICTED STOCK UNITS WILL BE FORFEITED TO THE COMPANY.

 

(F)            SECTION 162(M) PERFORMANCE RESTRICTIONS.  FOR PURPOSES OF
QUALIFYING GRANTS OF RESTRICTED STOCK UNITS AS “PERFORMANCE-BASED COMPENSATION”
UNDER SECTION 162(M) OF THE CODE, THE ADMINISTRATOR, IN ITS DISCRETION, MAY SET
RESTRICTIONS BASED UPON THE ACHIEVEMENT OF PERFORMANCE GOALS.  THE PERFORMANCE
GOALS WILL BE SET BY THE ADMINISTRATOR ON OR BEFORE THE DETERMINATION DATE.  IN
GRANTING RESTRICTED STOCK UNITS WHICH ARE INTENDED TO QUALIFY UNDER
SECTION 162(M) OF THE CODE, THE ADMINISTRATOR WILL FOLLOW ANY PROCEDURES
DETERMINED BY IT FROM TIME TO TIME TO BE NECESSARY OR APPROPRIATE TO ENSURE
QUALIFICATION OF THE AWARD UNDER SECTION 162(M) OF THE CODE (E.G., IN
DETERMINING THE PERFORMANCE GOALS).

 

10.           PERFORMANCE UNITS AND PERFORMANCE SHARES.

 

(A)           GRANT OF PERFORMANCE UNITS/SHARES.  PERFORMANCE UNITS AND
PERFORMANCE SHARES MAY BE GRANTED TO SERVICE PROVIDERS AT ANY TIME AND FROM TIME
TO TIME, AS WILL BE DETERMINED BY THE ADMINISTRATOR, IN ITS SOLE DISCRETION. 
THE ADMINISTRATOR WILL HAVE COMPLETE DISCRETION IN DETERMINING THE NUMBER OF
PERFORMANCE UNITS/SHARES GRANTED TO EACH PARTICIPANT PROVIDED THAT

 

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DURING ANY FISCAL YEAR, FOR PERFORMANCE UNITS OR PERFORMANCE SHARES INTENDED TO
QUALIFY AS “PERFORMANCE-BASED COMPENSATION” WITHIN THE MEANING OF
SECTION 162(M) OF THE CODE, (I) NO PARTICIPANT WILL RECEIVE PERFORMANCE UNITS
HAVING AN INITIAL VALUE GREATER THAN $2,000,000, AND (II) NO PARTICIPANT WILL
RECEIVE MORE THAN 300,000 PERFORMANCE SHARES.  NOTWITHSTANDING THE FOREGOING
LIMITATION, FOR PERFORMANCE SHARES INTENDED TO QUALIFY AS “PERFORMANCE-BASED
COMPENSATION” WITHIN THE MEANING OF SECTION 162(M) OF THE CODE, IN CONNECTION
WITH HIS OR HER INITIAL SERVICE, A SERVICE PROVIDER MAY BE GRANTED UP TO AN
ADDITIONAL 300,000 PERFORMANCE SHARES.

 

(B)           VALUE OF PERFORMANCE UNITS/SHARES.  EACH PERFORMANCE UNIT WILL
HAVE AN INITIAL VALUE THAT IS ESTABLISHED BY THE ADMINISTRATOR ON OR BEFORE THE
DATE OF GRANT.  EACH PERFORMANCE SHARE WILL HAVE AN INITIAL VALUE EQUAL TO THE
FAIR MARKET VALUE OF A SHARE ON THE DATE OF GRANT.

 

(C)           PERFORMANCE OBJECTIVES AND OTHER TERMS.  THE ADMINISTRATOR WILL
SET PERFORMANCE OBJECTIVES OR OTHER VESTING PROVISIONS.  THE ADMINISTRATOR MAY
SET VESTING CRITERIA BASED UPON THE ACHIEVEMENT OF COMPANY-WIDE, BUSINESS UNIT,
OR INDIVIDUAL GOALS (INCLUDING, BUT NOT LIMITED TO, CONTINUED EMPLOYMENT), OR
ANY OTHER BASIS DETERMINED BY THE ADMINISTRATOR IN ITS DISCRETION.  EACH AWARD
OF PERFORMANCE UNITS/SHARES WILL BE EVIDENCED BY AN AWARD AGREEMENT THAT WILL
SPECIFY THE PERFORMANCE PERIOD, AND SUCH OTHER TERMS AND CONDITIONS AS THE
ADMINISTRATOR, IN ITS SOLE DISCRETION, WILL DETERMINE.  THE ADMINISTRATOR, IN
ITS SOLE DISCRETION, MAY PROVIDE AT THE TIME OF OR FOLLOWING THE DATE OF GRANT
FOR ACCELERATED VESTING FOR AN AWARD OF PERFORMANCE UNITS/SHARES.

 

(D)           EARNING OF PERFORMANCE UNITS/SHARES.  AFTER THE APPLICABLE
PERFORMANCE PERIOD HAS ENDED, THE HOLDER OF PERFORMANCE UNITS/SHARES WILL BE
ENTITLED TO RECEIVE A PAYOUT OF THE NUMBER OF PERFORMANCE UNITS/SHARES EARNED BY
THE PARTICIPANT OVER THE PERFORMANCE PERIOD, TO BE DETERMINED AS A FUNCTION OF
THE EXTENT TO WHICH THE CORRESPONDING PERFORMANCE OBJECTIVES OR OTHER VESTING
PROVISIONS HAVE BEEN ACHIEVED.  AFTER THE GRANT OF A PERFORMANCE UNIT/SHARE, THE
ADMINISTRATOR, IN ITS SOLE DISCRETION, MAY REDUCE OR WAIVE ANY PERFORMANCE
OBJECTIVES OR OTHER VESTING PROVISIONS FOR SUCH PERFORMANCE UNIT/SHARE.

 

(E)           FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES.  PAYMENT
OF EARNED PERFORMANCE UNITS/SHARES WILL BE MADE AS SOON AS PRACTICABLE AFTER THE
EXPIRATION OF THE APPLICABLE PERFORMANCE PERIOD.  THE ADMINISTRATOR, IN ITS SOLE
DISCRETION, MAY PAY EARNED PERFORMANCE UNITS/SHARES IN THE FORM OF CASH, IN
SHARES (WHICH HAVE AN AGGREGATE FAIR MARKET VALUE EQUAL TO THE VALUE OF THE
EARNED PERFORMANCE UNITS/SHARES AT THE CLOSE OF THE APPLICABLE PERFORMANCE
PERIOD) OR IN A COMBINATION THEREOF.

 

(F)            CANCELLATION OF PERFORMANCE UNITS/SHARES.  ON THE DATE SET FORTH
IN THE AWARD AGREEMENT, ALL UNEARNED OR UNVESTED PERFORMANCE UNITS/SHARES WILL
BE FORFEITED TO THE COMPANY, AND AGAIN WILL BE AVAILABLE FOR GRANT UNDER THE
PLAN.

 

(g)           Section 162(m) Performance Restrictions.  For purposes of
qualifying grants of Performance Units/Shares as “performance-based
compensation” under Section 162(m) of the Code, the Administrator, in its
discretion, may set restrictions based upon the achievement of Performance
Goals.  The Performance Goals will be set by the Administrator on or before the
Determination Date. In granting Performance Units/Shares which are intended to
qualify under

 

14

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SECTION 162(M) OF THE CODE, THE ADMINISTRATOR WILL FOLLOW ANY PROCEDURES
DETERMINED BY IT FROM TIME TO TIME TO BE NECESSARY OR APPROPRIATE TO ENSURE
QUALIFICATION OF THE AWARD UNDER SECTION 162(M) OF THE CODE (E.G., IN
DETERMINING THE PERFORMANCE GOALS).

 

11.           PERFORMANCE GOALS.  THE GRANTING AND/OR VESTING OF AWARDS OF
RESTRICTED STOCK, RESTRICTED STOCK UNITS, PERFORMANCE SHARES AND PERFORMANCE
UNITS AND OTHER INCENTIVES UNDER THE PLAN MAY BE MADE SUBJECT TO THE ATTAINMENT
OF PERFORMANCE GOALS RELATING TO ONE OR MORE BUSINESS CRITERIA WITHIN THE
MEANING OF SECTION 162(M) OF THE CODE AND MAY PROVIDE FOR A TARGETED LEVEL OR
LEVELS OF ACHIEVEMENT (“PERFORMANCE GOALS”) INCLUDING (A) EARNINGS PER SHARE,
(B) OPERATING CASH FLOW, (C) OPERATING INCOME, (D) PROFIT AFTER-TAX, (E) PROFIT
BEFORE-TAX, (F) RETURN ON ASSETS, (G) RETURN ON EQUITY, (H) RETURN ON SALES,
(I)  REVENUE, AND (J) TOTAL SHAREHOLDER RETURN.  ANY PERFORMANCE GOALS MAY BE
USED TO MEASURE THE PERFORMANCE OF THE COMPANY AS A WHOLE OR A BUSINESS UNIT OF
THE COMPANY AND MAY BE MEASURED RELATIVE TO A PEER GROUP OR INDEX.  THE
PERFORMANCE GOALS MAY DIFFER FROM PARTICIPANT TO PARTICIPANT AND FROM AWARD TO
AWARD.  PRIOR TO THE DETERMINATION DATE, THE ADMINISTRATOR WILL DETERMINE
WHETHER ANY SIGNIFICANT ELEMENT(S) WILL BE INCLUDED IN OR EXCLUDED FROM THE
CALCULATION OF ANY PERFORMANCE GOAL WITH RESPECT TO ANY PARTICIPANT.  IN ALL
OTHER RESPECTS, PERFORMANCE GOALS WILL BE CALCULATED IN ACCORDANCE WITH THE
COMPANY’S FINANCIAL STATEMENTS, GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, OR
UNDER A METHODOLOGY ESTABLISHED BY THE ADMINISTRATOR PRIOR TO THE ISSUANCE OF AN
AWARD, WHICH IS CONSISTENTLY APPLIED AND IDENTIFIED IN THE FINANCIAL STATEMENTS,
INCLUDING FOOTNOTES, OR THE MANAGEMENT DISCUSSION AND ANALYSIS SECTION OF THE
COMPANY’S ANNUAL REPORT.

 

12.           LEAVES OF ABSENCE.  UNLESS THE ADMINISTRATOR PROVIDES OTHERWISE,
VESTING OF AWARDS GRANTED HEREUNDER WILL BE SUSPENDED DURING ANY UNPAID LEAVE OF
ABSENCE.  A SERVICE PROVIDER WILL NOT CEASE TO BE AN EMPLOYEE IN THE CASE OF
(I) ANY LEAVE OF ABSENCE APPROVED BY THE COMPANY, OR (II) TRANSFERS BETWEEN
LOCATIONS OF THE COMPANY OR BETWEEN THE COMPANY, ITS PARENT, OR ANY SUBSIDIARY. 
FOR PURPOSES OF INCENTIVE STOCK OPTIONS, NO SUCH LEAVE MAY EXCEED THREE
(3) MONTHS, UNLESS REEMPLOYMENT UPON EXPIRATION OF SUCH LEAVE IS GUARANTEED BY
STATUTE OR CONTRACT.  IF REEMPLOYMENT UPON EXPIRATION OF A LEAVE OF ABSENCE
APPROVED BY THE COMPANY IS NOT SO GUARANTEED, THEN SIX (6) MONTHS AND ONE DAY
FOLLOWING THE COMMENCEMENT OF SUCH LEAVE ANY INCENTIVE STOCK OPTION HELD BY THE
PARTICIPANT WILL CEASE TO BE TREATED AS AN INCENTIVE STOCK OPTION AND WILL BE
TREATED FOR TAX PURPOSES AS A NONSTATUTORY STOCK OPTION.

 

13.           TRANSFERABILITY OF AWARDS.  UNLESS DETERMINED OTHERWISE BY THE
ADMINISTRATOR, AN AWARD MAY NOT BE SOLD, PLEDGED, ASSIGNED, HYPOTHECATED,
TRANSFERRED, OR DISPOSED OF IN ANY MANNER OTHER THAN BY WILL OR BY THE LAWS OF
DESCENT OR DISTRIBUTION AND MAY BE EXERCISED, DURING THE LIFETIME OF THE
PARTICIPANT, ONLY BY THE PARTICIPANT.  IF THE ADMINISTRATOR MAKES AN AWARD
TRANSFERABLE, SUCH AWARD WILL CONTAIN SUCH ADDITIONAL TERMS AND CONDITIONS AS
THE ADMINISTRATOR DEEMS APPROPRIATE.

 

14.           ADJUSTMENTS; DISSOLUTION OR LIQUIDATION; MERGER OR CHANGE IN
CONTROL.

 

(A)           ADJUSTMENTS.  IN THE EVENT THAT ANY DIVIDEND OR OTHER DISTRIBUTION
(WHETHER IN THE FORM OF CASH, SHARES, OTHER SECURITIES, OR OTHER PROPERTY),
RECAPITALIZATION, STOCK SPLIT, REVERSE STOCK SPLIT, REORGANIZATION, MERGER,
CONSOLIDATION, SPLIT-UP, SPIN-OFF, COMBINATION, REPURCHASE, OR EXCHANGE OF
SHARES OR OTHER SECURITIES OF THE COMPANY, OR OTHER CHANGE IN THE CORPORATE
STRUCTURE OF THE COMPANY AFFECTING THE SHARES OCCURS, THE ADMINISTRATOR, IN
ORDER TO PREVENT DIMINUTION OR ENLARGEMENT OF THE BENEFITS OR POTENTIAL BENEFITS
INTENDED TO BE MADE AVAILABLE UNDER THE PLAN, WILL

 

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ADJUST THE NUMBER AND CLASS OF SHARES THAT MAY BE DELIVERED UNDER THE PLAN
AND/OR THE NUMBER, CLASS, AND PRICE OF SHARES COVERED BY EACH OUTSTANDING AWARD,
AND THE NUMERICAL SHARE LIMITS SET FORTH IN SECTIONS 3, 6, 7, 8, 9, AND 10.

 

(B)           DISSOLUTION OR LIQUIDATION.  IN THE EVENT OF THE PROPOSED
DISSOLUTION OR LIQUIDATION OF THE COMPANY, THE ADMINISTRATOR WILL NOTIFY EACH
PARTICIPANT AS SOON AS PRACTICABLE PRIOR TO THE EFFECTIVE DATE OF SUCH PROPOSED
TRANSACTION.  TO THE EXTENT IT HAS NOT BEEN PREVIOUSLY EXERCISED, AN AWARD WILL
TERMINATE IMMEDIATELY PRIOR TO THE CONSUMMATION OF SUCH PROPOSED ACTION.

 

(C)           CHANGE IN CONTROL.  IN THE EVENT OF A MERGER OR CHANGE IN CONTROL,
EACH OUTSTANDING AWARD WILL BE TREATED AS THE ADMINISTRATOR DETERMINES,
INCLUDING, WITHOUT LIMITATION, THAT EACH AWARD WILL BE ASSUMED OR AN EQUIVALENT
OPTION OR RIGHT SUBSTITUTED BY THE SUCCESSOR CORPORATION OR A PARENT OR
SUBSIDIARY OF THE SUCCESSOR CORPORATION (THE “SUCCESSOR CORPORATION”).  THE
ADMINISTRATOR WILL NOT BE REQUIRED TO TREAT ALL AWARDS SIMILARLY IN THE
TRANSACTION.

 

In the event that the Successor Corporation does not assume or substitute for
the Award, the Participant will fully vest in and have the right to exercise all
of his or her outstanding Options and Stock Appreciation Rights, including
Shares as to which such Awards would not otherwise be vested or exercisable, all
restrictions on Restricted Stock will lapse, and, with respect to Restricted
Stock Units, Performance Shares and Performance Units, all Performance Goals or
other vesting criteria will be deemed achieved at target levels and all other
terms and conditions met.  In addition, if an Option or Stock Appreciation Right
is not assumed or substituted for in the event of a Change in Control, the
Administrator will notify the Participant in writing or electronically that the
Option or Stock Appreciation Right will be fully vested and exercisable for a
period of time determined by the Administrator in its sole discretion, and the
Option or Stock Appreciation Right will terminate upon the expiration of such
period.

 

For the purposes of this subsection (c), an Award will be considered assumed if,
following the Change in Control, the Award confers the right to purchase or
receive, for each Share subject to the Award immediately prior to the Change in
Control, the consideration (whether stock, cash, or other securities or
property) or, in the case of a Stock Appreciation Right upon the exercise of
which the Administrator determines to pay cash or a Performance Share or
Performance Unit which the Administrator can determine to pay in cash, the fair
market value of the consideration received in the merger or Change in Control by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the Change in Control
is not solely common stock of the Successor Corporation, the Administrator may,
with the consent of the Successor Corporation, provide for the consideration to
be received upon the exercise of an Option or Stock Appreciation Right or upon
the payout of a Performance Share or Performance Unit, for each Share subject to
such Award (or in the case of Performance Units, the number of implied shares
determined by dividing the value of the Performance Units by the per share
consideration received by holders of Common Stock in the Change in Control), to
be solely common stock of the Successor Corporation equal in fair market value
to the per share consideration received by holders of Common Stock in the Change
in Control.

 

NOTWITHSTANDING ANYTHING IN THIS SECTION 14(C) TO THE CONTRARY, AN AWARD THAT
VESTS, IS EARNED OR PAID-OUT UPON THE SATISFACTION OF ONE OR MORE PERFORMANCE
GOALS WILL NOT BE CONSIDERED

 

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ASSUMED IF THE COMPANY OR ITS SUCCESSOR MODIFIES ANY OF SUCH PERFORMANCE GOALS
WITHOUT THE PARTICIPANT’S CONSENT; PROVIDED, HOWEVER, A MODIFICATION TO SUCH
PERFORMANCE GOALS ONLY TO REFLECT THE SUCCESSOR CORPORATION’S POST-CHANGE IN
CONTROL CORPORATE STRUCTURE WILL NOT BE DEEMED TO INVALIDATE AN OTHERWISE VALID
AWARD ASSUMPTION.

 

15.           TAX WITHHOLDING

 

(A)           WITHHOLDING REQUIREMENTS.  PRIOR TO THE DELIVERY OF ANY SHARES OR
CASH PURSUANT TO AN AWARD (OR EXERCISE THEREOF), THE COMPANY WILL HAVE THE POWER
AND THE RIGHT TO DEDUCT OR WITHHOLD, OR REQUIRE A PARTICIPANT TO REMIT TO THE
COMPANY, AN AMOUNT SUFFICIENT TO SATISFY FEDERAL, STATE, LOCAL, FOREIGN OR OTHER
TAXES (INCLUDING THE PARTICIPANT’S FICA OBLIGATION) REQUIRED TO BE WITHHELD WITH
RESPECT TO SUCH AWARD (OR EXERCISE THEREOF).

 

(B)           WITHHOLDING ARRANGEMENTS.  THE ADMINISTRATOR, IN ITS SOLE
DISCRETION AND PURSUANT TO SUCH PROCEDURES AS IT MAY SPECIFY FROM TIME TO TIME,
MAY PERMIT A PARTICIPANT TO SATISFY SUCH TAX WITHHOLDING OBLIGATION, IN WHOLE OR
IN PART BY (WITHOUT LIMITATION) (I) PAYING CASH, (II) ELECTING TO HAVE THE
COMPANY WITHHOLD OTHERWISE DELIVERABLE CASH OR SHARES HAVING A FAIR MARKET VALUE
EQUAL TO THE MINIMUM AMOUNT REQUIRED TO BE WITHHELD, (III) DELIVERING TO THE
COMPANY ALREADY-OWNED SHARES HAVING A FAIR MARKET VALUE EQUAL TO THE AMOUNT
REQUIRED TO BE WITHHELD, OR (IV) SELLING A SUFFICIENT NUMBER OF SHARES OTHERWISE
DELIVERABLE TO THE PARTICIPANT THROUGH SUCH MEANS AS THE ADMINISTRATOR MAY
DETERMINE IN ITS SOLE DISCRETION (WHETHER THROUGH A BROKER OR OTHERWISE) EQUAL
TO THE AMOUNT REQUIRED TO BE WITHHELD.  THE AMOUNT OF THE WITHHOLDING
REQUIREMENT WILL BE DEEMED TO INCLUDE ANY AMOUNT WHICH THE ADMINISTRATOR AGREES
MAY BE WITHHELD AT THE TIME THE ELECTION IS MADE, NOT TO EXCEED THE AMOUNT
DETERMINED BY USING THE MAXIMUM FEDERAL, STATE OR LOCAL MARGINAL INCOME TAX
RATES APPLICABLE TO THE PARTICIPANT WITH RESPECT TO THE AWARD ON THE DATE THAT
THE AMOUNT OF TAX TO BE WITHHELD IS TO BE DETERMINED.  THE FAIR MARKET VALUE OF
THE SHARES TO BE WITHHELD OR DELIVERED WILL BE DETERMINED AS OF THE DATE THAT
THE TAXES ARE REQUIRED TO BE WITHHELD.

 

16.           NO EFFECT ON EMPLOYMENT OR SERVICE.  NEITHER THE PLAN NOR ANY
AWARD WILL CONFER UPON A PARTICIPANT ANY RIGHT WITH RESPECT TO CONTINUING THE
PARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER WITH THE COMPANY, NOR WILL THEY
INTERFERE IN ANY WAY WITH THE PARTICIPANT’S RIGHT OR THE COMPANY’S RIGHT TO
TERMINATE SUCH RELATIONSHIP AT ANY TIME, WITH OR WITHOUT CAUSE, TO THE EXTENT
PERMITTED BY APPLICABLE LAWS.

 

17.           DATE OF GRANT.  THE DATE OF GRANT OF AN AWARD WILL BE, FOR ALL
PURPOSES, THE DATE ON WHICH THE ADMINISTRATOR MAKES THE DETERMINATION GRANTING
SUCH AWARD, OR SUCH OTHER LATER DATE AS IS DETERMINED BY THE ADMINISTRATOR. 
NOTICE OF THE DETERMINATION WILL BE PROVIDED TO EACH PARTICIPANT WITHIN A
REASONABLE TIME AFTER THE DATE OF SUCH GRANT.

 

18.           TERM OF PLAN.  SUBJECT TO SECTION 22 OF THE PLAN, THE PLAN WILL
BECOME EFFECTIVE UPON ITS ADOPTION BY THE BOARD.  IT WILL CONTINUE IN EFFECT FOR
A TERM OF TEN (10) YEARS UNLESS TERMINATED EARLIER UNDER SECTION 19 OF THE PLAN.

 

19.           AMENDMENT AND TERMINATION OF THE PLAN.

 

(A)           AMENDMENT AND TERMINATION.  THE ADMINISTRATOR MAY AT ANY TIME
AMEND, ALTER, SUSPEND OR TERMINATE THE PLAN.

 

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(B)           STOCKHOLDER APPROVAL.  THE COMPANY WILL OBTAIN STOCKHOLDER
APPROVAL OF ANY PLAN AMENDMENT TO THE EXTENT NECESSARY AND DESIRABLE TO COMPLY
WITH APPLICABLE LAWS.

 

(C)           EFFECT OF AMENDMENT OR TERMINATION.  NO AMENDMENT, ALTERATION,
SUSPENSION, OR TERMINATION OF THE PLAN WILL IMPAIR THE RIGHTS OF ANY
PARTICIPANT, UNLESS MUTUALLY AGREED OTHERWISE

 

BETWEEN THE PARTICIPANT AND THE ADMINISTRATOR, WHICH AGREEMENT MUST BE IN
WRITING AND SIGNED BY THE PARTICIPANT AND THE COMPANY.  TERMINATION OF THE PLAN
WILL NOT AFFECT THE ADMINISTRATOR’S ABILITY TO EXERCISE THE POWERS GRANTED TO IT
HEREUNDER WITH RESPECT TO AWARDS GRANTED UNDER THE PLAN PRIOR TO THE DATE OF
SUCH TERMINATION.

 

20.           CONDITIONS UPON ISSUANCE OF SHARES.

 

(A)           LEGAL COMPLIANCE.  SHARES WILL NOT BE ISSUED PURSUANT TO THE
EXERCISE OF AN AWARD UNLESS THE EXERCISE OF SUCH AWARD AND THE ISSUANCE AND
DELIVERY OF SUCH SHARES WILL COMPLY WITH APPLICABLE LAWS AND WILL BE FURTHER
SUBJECT TO THE APPROVAL OF COUNSEL FOR THE COMPANY WITH RESPECT TO SUCH
COMPLIANCE.

 

(B)           INVESTMENT REPRESENTATIONS.  AS A CONDITION TO THE EXERCISE OF AN
AWARD, THE COMPANY MAY REQUIRE THE PERSON EXERCISING SUCH AWARD TO REPRESENT AND
WARRANT AT THE TIME OF ANY SUCH EXERCISE THAT THE SHARES ARE BEING PURCHASED
ONLY FOR INVESTMENT AND WITHOUT ANY PRESENT INTENTION TO SELL OR DISTRIBUTE SUCH
SHARES IF, IN THE OPINION OF COUNSEL FOR THE COMPANY, SUCH A REPRESENTATION IS
REQUIRED.

 

21.           INABILITY TO OBTAIN AUTHORITY.  THE INABILITY OF THE COMPANY TO
OBTAIN AUTHORITY FROM ANY REGULATORY BODY HAVING JURISDICTION, WHICH AUTHORITY
IS DEEMED BY THE COMPANY’S COUNSEL TO BE NECESSARY TO THE LAWFUL ISSUANCE AND
SALE OF ANY SHARES HEREUNDER, WILL RELIEVE THE COMPANY OF ANY LIABILITY IN
RESPECT OF THE FAILURE TO ISSUE OR SELL SUCH SHARES AS TO WHICH SUCH REQUISITE
AUTHORITY WILL NOT HAVE BEEN OBTAINED.

 

22.           STOCKHOLDER APPROVAL.  THE PLAN WILL BE SUBJECT TO APPROVAL BY THE
STOCKHOLDERS OF THE COMPANY WITHIN TWELVE (12) MONTHS AFTER THE DATE THE PLAN IS
ADOPTED.  SUCH STOCKHOLDER APPROVAL WILL BE OBTAINED IN THE MANNER AND TO THE
DEGREE REQUIRED UNDER APPLICABLE LAWS.

 

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