Exhibit 10.5

 

WCI COMMUNITIES, INC.
2013 INCENTIVE AWARD PLAN

 

ARTICLE 1.

 

PURPOSE

 

The purpose of the WCI Communities, Inc. 2013 Incentive Award Plan (as it may be
amended or restated from time to time, the “Plan”) is to promote the success and
enhance the value of WCI Communities, Inc. (the “Company”) by linking the
individual interests of the members of the Board, Employees, and Consultants to
those of Company stockholders and by providing such individuals with an
incentive for outstanding performance to generate superior returns to Company
stockholders. The Plan is further intended to provide flexibility to the Company
in its ability to motivate, attract, and retain the services of members of the
Board, Employees, and Consultants upon whose judgment, interest, and special
effort the successful conduct of the Company’s operation is largely dependent.

 

ARTICLE 2.

 

DEFINITIONS AND CONSTRUCTION

 

Wherever the following terms are used in the Plan they shall have the meanings
specified below, unless the context clearly indicates otherwise. The singular
pronoun shall include the plural where the context so indicates.

 

2.1          “Administrator” shall mean the entity that conducts the general
administration of the Plan as provided in Article 13. With reference to the
duties of the Committee under the Plan which have been delegated to one or more
persons pursuant to Section 13.6, or as to which the Board has assumed, the term
“Administrator” shall refer to such person(s) unless the Committee or the Board
has revoked such delegation or the Board has terminated the assumption of such
duties.

 

2.2          “Affiliate” shall mean (a) any Subsidiary; (b) any Parent and
(c) any domestic eligible entity that is disregarded, under Treasury Regulation
Section 301.7701-3, as an entity separate from either (i) the Company, (ii) any
Subsidiary, or (iii) any Parent.

 

2.3          “Applicable Accounting Standards” shall mean Generally Accepted
Accounting Principles in the United States, International Financial Reporting
Standards or such other accounting principles or standards as may apply to the
Company’s financial statements under United States federal securities laws from
time to time.

 

2.4          “Applicable Law” shall mean any applicable law, including without
limitation: (i) provisions of the Code, the Securities Act, the Exchange Act and
any rules or regulations thereunder; (ii) corporate, securities, tax or other
laws, statutes, rules, requirements or regulations, whether federal, state,
local or foreign; and (iii) rules of any securities exchange or automated
quotation system on which the Shares are listed, quoted or traded.

 

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2.5          “Automatic Exercise Date” shall mean, with respect to an Option or
a Stock Appreciation Right, the last business day of the applicable Option Term
or Stock Appreciation Right Term that was initially established by the
Administrator for such Option or Stock Appreciation Right (e.g., the last
business day prior to the tenth anniversary of the date of grant of such Option
or Stock Appreciation Right if the Option or Stock Appreciation Right initially
had a ten year Option Term or Stock Appreciation Right Term, as applicable).

 

2.6          “Award” shall mean an Option, a Restricted Stock award, a
Restricted Stock Unit award, a Performance Award, a Dividend Equivalents award,
a Deferred Stock award, a Deferred Stock Unit award, a Stock Payment award or a
Stock Appreciation Right, which may be awarded or granted under the Plan
(collectively, “Awards”).

 

2.7          “Award Agreement” shall mean any written notice, agreement, terms
and conditions, contract or other instrument or document evidencing an Award,
including through electronic medium, which shall contain such terms and
conditions with respect to an Award as the Administrator shall determine
consistent with the Plan.

 

2.8          “Award Limit” shall mean with respect to Awards that shall be
payable in Shares or in cash, as the case may be, the respective limit set forth
in Section 3.3.

 

2.9          “Board” shall mean the Board of Directors of the Company.

 

2.10        “Change in Control” shall mean the occurrence of (a) an event or
series of events (other than an offering of Common Stock to the general public
through a registration statement filed with the Securities and Exchange
Commission) by which any “person” or “group” (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934), but excluding the
Company, any of its subsidiaries, any employee benefit plan of the Company or
its subsidiaries, and any person or entity acting in its capacity as trustee,
agent or other fiduciary or administrator of any such plan, and further
excluding Stonehill Capital Management, LLC (together with its affiliates) and
Monarch Alternative Capital LP (together with its affiliates) and any other
“person” that, prior to such event or series of events, is the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of
1934), directly or indirectly, of 75% or more of the outstanding shares of
Common Stock, becomes the beneficial owner, directly or indirectly, of 75% or
more of the outstanding shares of Common Stock; (b) during any period of two
consecutive years, individuals who, at the beginning of such period, constitute
the Board together with any new Director(s) (other than a Director designated by
a person who shall have entered into an agreement with the Company to effect a
transaction described in Section 2.10(a), 2.10(c) or 2.10(d)) whose election by
the Board or nomination for election by the Company’s stockholders was approved
by a vote of at least two-thirds of the Directors then still in office who
either were Directors at the beginning of the two-year period or whose election
or nomination for election was previously so approved, cease for any reason to
constitute a majority thereof; (c) the consummation of a merger, consolidation,
reorganization, or other business combination of the Company with any other
entity, other than a merger, consolidation, reorganization or other business
combination which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 75% of the combined voting power of the voting
securities of the Company or such

 

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surviving entity outstanding immediately after such merger, consolidation,
reorganization or other business combination; (d) the consummation of a sale of
all or substantially all assets of the Company and its subsidiaries (taken as a
whole), other than a sale or disposition of all or substantially all assets of
the Company to an entity, at least 75% of the combined voting power of the
voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company immediately
prior to such sale; or (e) a liquidation or dissolution of the Company. Change
in Control shall refer solely to the first such Change in Control following the
Effective Date. Notwithstanding the foregoing, to the extent necessary not to
incur tax or interest pursuant to Section 409A of the Code, no Change in Control
shall be deemed to occur, unless it constitutes the “Change in the Ownership or
Effective Control of a Corporation or in the Ownership of a Substantial Portion
of the Assets of a Corporation,” with respect to the Company, under the Treasury
Department Regulation 1.409A-3(i)(5), as revised from time to time.

 

2.11        “Code” shall mean the Internal Revenue Code of 1986, as amended from
time to time, together with the regulations and official guidance promulgated
thereunder.

 

2.12        “Committee” shall mean the Compensation Committee of the Board, or
another committee or subcommittee of the Board or the Compensation Committee of
the Board, appointed as provided in Section 13.1.

 

2.13        “Common Stock” shall mean the common stock of the Company, par value
$0.01 per share.

 

2.14        “Company” shall have the meaning set forth in Article 1.

 

2.15        “Consultant” shall mean any consultant or adviser engaged to provide
services to the Company or any Affiliate that qualifies as a consultant under
the applicable rules of the Securities and Exchange Commission for registration
of shares on a Form S-8 Registration Statement.

 

2.16        “Covered Employee” shall mean any Employee who is, or could be, a
“covered employee” within the meaning of Section 162(m) of the Code.

 

2.17        “Deferred Stock” shall mean a right to receive Shares awarded under
Section 10.4.

 

2.18        “Deferred Stock Unit” shall mean a right to receive Shares awarded
under Section 10.5.

 

2.19        “Director” shall mean a member of the Board, as constituted from
time to time.

 

2.20        “Director Limit” shall have the meaning set forth in Section 4.6.

 

2.21        “Dividend Equivalent” shall mean a right to receive the equivalent
value (in cash or Shares) of dividends paid on Shares, awarded under
Section 10.2.

 

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2.22        “DRO” shall mean a domestic relations order as defined by the Code
or Title I of the Employee Retirement Income Security Act of 1974, as amended
from time to time, or the rules thereunder.

 

2.23        “Effective Date” shall mean June 28, 2013.

 

2.24        “Eligible Individual” shall mean any person who is an Employee, a
Consultant or a Non-Employee Director, as determined by the Committee.

 

2.25        “Employee” shall mean any officer or other employee (as determined
in accordance with Section 3401(c) of the Code and the Treasury Regulations
thereunder) of the Company or of any Affiliate.

 

2.26        “Equity Restructuring” shall mean a nonreciprocal transaction
between the Company and its stockholders, such as a stock dividend, stock split,
spin-off, rights offering or recapitalization through a large, nonrecurring cash
dividend, that affects the number or kind of Shares (or other securities of the
Company) or the share price of Common Stock (or other securities) and causes a
change in the per share value of the Common Stock underlying outstanding Awards.

 

2.27        “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended from time to time.

 

2.28        “Expiration Date” shall have the meaning given to such term in
Section 14.1.

 

2.29        “Fair Market Value” shall mean, as of any given date, the value of a
Share determined as follows:

 

(a)           If the Common Stock is listed on any (i) established securities
exchange (such as the New York Stock Exchange, the NASDAQ Global Market and the
NASDAQ Global Select Market), (ii) national market system or (iii) automated
quotation system on which the Shares are listed, quoted or traded, its Fair
Market Value shall be the closing sales price for a Share as quoted on such
exchange or system for such date or, if there is no closing sales price for a
Share on the date in question, the closing sales price for a Share on the last
preceding date for which such quotation exists, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;

 

(b)           If the Common Stock is not listed on an established securities
exchange, national market system or automated quotation system, but the Common
Stock is regularly quoted by a recognized securities dealer, its Fair Market
Value shall be the mean of the high bid and low asked prices for such date or,
if there are no high bid and low asked prices for a Share on such date, the high
bid and low asked prices for a Share on the last preceding date for which such
information exists, as reported in The Wall Street Journal or such other source
as the Administrator deems reliable; or

 

(c)           If the Common Stock is neither listed on an established securities
exchange, national market system or automated quotation system nor regularly
quoted by a

 

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recognized securities dealer, its Fair Market Value shall be established by the
Administrator in good faith.

 

Notwithstanding the foregoing, with respect to any Award granted prior the
effectiveness of the Company’s registration statement relating to its initial
public offering and effective as of or following the date of effectiveness of
the Company’s registration statement relating to its initial public offering and
on or prior to the Public Trading Date, the Fair Market Value shall mean the
initial public offering price of a Share as set forth in the Company’s final
prospectus relating to its initial public offering filed with the Securities and
Exchange Commission.

 

2.30        “Greater Than 10% Stockholder” shall mean an individual then owning
(within the meaning of Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company or any subsidiary
corporation (as defined in Section 424(f) of the Code) or parent corporation
thereof (as defined in Section 424(e) of the Code).

 

2.31        “Holder” shall mean a person who has been granted an Award.

 

2.32        “Incentive Stock Option” shall mean an Option that is intended to
qualify as an incentive stock option and conforms to the applicable provisions
of Section 422 of the Code.

 

2.33        “Non-Employee Director” shall mean a Director of the Company who is
not an Employee.

 

2.34        “Non-Employee Director Equity Compensation Policy” shall have the
meaning set forth in Section 4.6.

 

2.35        “Non-Qualified Stock Option” shall mean an Option that is not an
Incentive Stock Option.

 

2.36        “Option” shall mean a right to purchase Shares at a specified
exercise price, granted under Article 6. An Option shall be either a
Non-Qualified Stock Option or an Incentive Stock Option; provided, however, that
Options granted to Non-Employee Directors and Consultants shall only be
Non-Qualified Stock Options.

 

2.37        “Option Term” shall have the meaning set forth in Section 6.4.

 

2.38        “Parent” shall mean any entity (other than the Company), whether
domestic or foreign, in an unbroken chain of entities ending with the Company if
each of the entities other than the Company beneficially owns, at the time of
the determination, securities or interests representing at least fifty percent
(50%) of the total combined voting power of all classes of securities or
interests in one of the other entities in such chain.

 

2.39        “Performance Award” shall mean a cash bonus award, stock bonus
award, performance award or incentive award that is paid in cash, Shares or a
combination of both, awarded under Section 10.1.

 

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2.40        “Performance-Based Compensation” shall mean any compensation that is
intended to qualify as “performance-based compensation” as described in
Section 162(m)(4)(C) of the Code.

 

2.41        “Performance Criteria” shall mean the criteria (and adjustments)
that the Committee selects for an Award for purposes of establishing the
Performance Goal or Performance Goals for a Performance Period, determined as
follows:

 

(a)           The Performance Criteria that shall be used to establish
Performance Goals are limited to the following: (i) net earnings or losses
(either before or after one or more of the following: (A) interest, (B) taxes,
(C) depreciation and (D) amortization); (ii) gross or net sales or revenue;
(iii) revenue growth or product revenue growth; (iv) net income (either before
or after taxes); (v) adjusted net income; (vi) operating income (either before
or after taxes) (vii) operating earnings or profit; (viii) pre- or after-tax
income or loss (before or after allocation of corporate overhead and bonus);
(ix) cash flow (including, but not limited to, operating cash flow and free cash
flow); (x) return on assets or net assets; (xi) return on capital; (xii) return
on stockholders’ equity; (xiii) total stockholder return; (xiv) return on sales;
(xv) gross or net profit or operating margin; (xvi) costs or reduction in costs;
(xvii) funds from operations; (xviii) expenses; (xix) working capital;
(xx) earnings or loss per share; (xxi) adjusted earnings per share; (xxii) price
per share of the Common Stock; (xxiii) appreciation in and/or maintenance of the
price of the Company’s Common Stock or any other publicly-traded securities;
(xiv) economic value-added models or equivalent metrics; (xxv) comparisons with
various stock market indices (xxvi) regulatory achievements and compliance;
(xxvii) implementation or completion of critical projects; (xxviii) market
share; (xxix) customer satisfaction; (xxx) customer growth; (xxxi) employee
satisfaction; (xxxii) recruiting and maintaining personnel; (xxxiii) strategic
partnerships or transactions (including in-licensing and out-licensing of
intellectual property; and establishing relationships with commercial entities
with respect to the marketing, distribution and sale of the Company’s products
(including with group purchasing organizations, distributors and other vendors);
(xxxiv) supply chain achievements (including establishing relationships with
manufacturers or suppliers of component materials and manufacturers of the
Company’s products); (xxxv) co-development, co-marketing, profit sharing, joint
venture or other similar arrangements); (xxxvi) financial ratios, including
those measuring liquidity, activity, profitability or leverage; (xxxvii) cost of
capital or assets under management; (xxxviii) financing and other capital
raising transactions (including sales of the Company’s equity or debt
securities; factoring transactions; sales or licenses of the Company’s assets,
including its intellectual property, whether in a particular jurisdiction or
territory or globally; or through partnering transactions);
(xxxix) implementation, completion or attainment of measurable objectives with
respect to research, development, manufacturing, commercialization, products or
projects, production volume levels, acquisitions and divestitures; and (xl)
economic value, any of which may be measured either in absolute terms or as
compared to any incremental increase or decrease or as compared to results of a
peer group or to market performance indicators or indices.

 

(b)           The Administrator, in its sole discretion, may provide that one or
more objectively determinable adjustments shall be made to one or more of the
Performance Goals. Such adjustments may include one or more of the following:
(i) items related to a change in accounting principle; (ii) items relating to
financing activities; (iii) expenses for restructuring or

 

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productivity initiatives; (iv) other non-operating items; (v) items related to
acquisitions; (vi) items attributable to the business operations of any entity
acquired by the Company during the Performance Period; (vii) items related to
the disposal of a business or segment of a business; (viii) items related to
discontinued operations that do not qualify as a segment of a business under
Applicable Accounting Standards; (ix) items attributable to any stock dividend,
stock split, combination or exchange of stock occurring during the Performance
Period; (x) any other items of significant income or expense which are
determined to be appropriate adjustments; (xi) items relating to unusual or
extraordinary corporate transactions, events or developments, (xii) items
related to amortization of acquired intangible assets; (xiii) items that are
outside the scope of the Company’s core, on-going business activities;
(xiv) items related to acquired in-process research and development; (xv) items
relating to changes in tax laws; (xvi) items relating to major licensing or
partnership arrangements; (xvii) items relating to asset impairment charges;
(xviii) items relating to gains or losses for litigation, arbitration and
contractual settlements; or (xix) items relating to any other unusual or
nonrecurring events or changes in Applicable Law, accounting principles or
business conditions. For all Awards intended to qualify as Performance-Based
Compensation, such determinations shall be made within the time prescribed by,
and otherwise in compliance with, Section 162(m) of the Code.

 

2.42        “Performance Goals” shall mean, for a Performance Period, one or
more goals established in writing by the Administrator for the Performance
Period based upon one or more Performance Criteria. Depending on the Performance
Criteria used to establish such Performance Goals, the Performance Goals may be
expressed in terms of overall Company performance or the performance of an
Affiliate, division, business unit, or an individual. The achievement of each
Performance Goal shall be determined, to the extent applicable, with reference
to Applicable Accounting Standards.

 

2.43        “Performance Period” shall mean one or more periods of time, which
may be of varying and overlapping durations, as the Administrator may select,
over which the attainment of one or more Performance Goals will be measured for
the purpose of determining a Holder’s right to, and the payment of, an Award.

 

2.44        “Performance Stock Unit” shall mean a Performance Award awarded
under Section 10.1 which is denominated in units of value including dollar value
of Shares.

 

2.45        “Permitted Transferee” shall mean, with respect to a Holder, any
“family member” of the Holder, as defined in the instructions to Form S-8 under
the Securities Act, after taking into account Applicable Law.

 

2.46        “Plan” shall have the meaning set forth in Article I.

 

2.47        “Program” shall mean any program adopted by the Administrator
pursuant to the Plan containing the terms and conditions intended to govern a
specified type of Award granted under the Plan and pursuant to which such type
of Award may be granted under the Plan.

 

2.48        “Public Trading Date” shall mean the first date upon which Common
Stock is listed (or approved for listing) upon notice of issuance on any
securities exchange or designated

 

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(or approved for designation) upon notice of issuance as a national market
security on an interdealer quotation system.

 

2.49        “Restricted Stock” shall mean Common Stock awarded under Article 8
that is subject to certain restrictions and may be subject to risk of forfeiture
or repurchase.

 

2.50        “Restricted Stock Units” shall mean the right to receive Shares
awarded under Article 9.

 

2.51        “Securities Act” shall mean the Securities Act of 1933, as amended.

 

2.52        “Share Limit” shall have the meaning set forth in Section 3.1(a).

 

2.53        “Shares” shall mean shares of Common Stock.

 

2.54        “Stock Appreciation Right” shall mean a stock appreciation right
granted under Article 11.

 

2.55        “Stock Appreciation Right Term” shall have the meaning set forth in
Section 11.4.

 

2.56        “Stock Payment” shall mean (a) a payment in the form of Shares, or
(b) an option or other right to purchase Shares, as part of a bonus, deferred
compensation or other arrangement, awarded under Section 10.3.

 

2.57        “Subsidiary” shall mean any entity (other than the Company), whether
domestic or foreign, in an unbroken chain of entities beginning with the Company
if each of the entities other than the last entity in the unbroken chain
beneficially owns, at the time of the determination, securities or interests
representing at least fifty percent (50%) of the total combined voting power of
all classes of securities or interests in one of the other entities in such
chain.

 

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

 

2.59        “Termination of Service” shall mean:

 

(a)           As to a Consultant, the time when the engagement of a Holder as a
Consultant to the Company or an Affiliate is terminated for any reason, with or
without cause, including, without limitation, by resignation, discharge, death
or retirement, but excluding terminations where the Consultant simultaneously
commences or remains in employment or service with the Company or any Affiliate.

 

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(b)           As to a Non-Employee Director, the time when a Holder who is a
Non-Employee Director ceases to be a Director for any reason, including, without
limitation, a termination by resignation, failure to be elected, death or
retirement, but excluding terminations where the Holder simultaneously commences
or remains in employment or service with the Company or any Affiliate.

 

(c)           As to an Employee, the time when the employee-employer
relationship between a Holder and the Company or any Affiliate is terminated for
any reason, including, without limitation, a termination by resignation,
discharge, death, disability or retirement; but excluding terminations where the
Holder simultaneously commences or remains in employment or service with the
Company or any Affiliate.

 

The Administrator, in its sole discretion, shall determine the effect of all
matters and questions relating to any Termination of Service, including, without
limitation, the question of whether a Termination of Service resulted from a
discharge for cause and all questions of whether particular leaves of absence
constitute a Termination of Service; provided, however, that, with respect to
Incentive Stock Options, unless the Administrator otherwise provides in the
terms of the Program, the Award Agreement or otherwise, or as otherwise required
by Applicable Law, a leave of absence, change in status from an employee to an
independent contractor or other change in the employee-employer relationship
shall constitute a Termination of Service only if, and to the extent that, such
leave of absence, change in status or other change interrupts employment for the
purposes of Section 422(a)(2) of the Code and the then applicable regulations
and revenue rulings under said Section. For purposes of the Plan, a Holder’s
employee-employer relationship or consultancy relations shall be deemed to be
terminated in the event that the Affiliate employing or contracting with such
Holder ceases to remain an Affiliate following any merger, sale of stock or
other corporate transaction or event (including, without limitation, a
spin-off).

 

ARTICLE 3.

 

SHARES SUBJECT TO THE PLAN

 

3.1          Number of Shares.

 

(a)           Subject to Sections 3.1(b) and 14.2, the aggregate number of
Shares which may be issued or transferred pursuant to Awards under the Plan is
200,000 (the “Share Limit”). Notwithstanding the foregoing, to the extent
permitted under applicable law and applicable stock exchange rules, Awards that
provide for the delivery of Shares subsequent to the applicable grant date may
be granted in excess of the Share Limit if such Awards provide for the
forfeiture or cash settlement of such Awards to the extent that insufficient
Shares remain under the Share Limit at the time that Shares would otherwise be
issued in respect of such Award.

 

(b)           If any Shares subject to an Award are forfeited or expire or such
Award is settled in cash (in whole or in part), the Shares subject to such Award
shall, to the extent of such forfeiture, expiration or cash settlement, again be
available for future grants of Awards under the Plan. Notwithstanding anything
to the contrary contained herein, the following Shares shall not be added to the
Shares authorized for grant under Section 3.1(a) and shall not be available for

 

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future grants of Awards:  (i) Shares tendered by a Holder or withheld by the
Company in payment of the exercise price of an Option; (ii) Shares tendered by
the Holder or withheld by the Company to satisfy any tax withholding obligation
with respect to an Award; (iii) Shares subject to a Stock Appreciation Right
that are not issued in connection with the stock settlement of the Stock
Appreciation Right on exercise thereof; and (iv) Shares purchased on the open
market with the cash proceeds from the exercise of Options.  Any Shares
repurchased by the Company under Section 8.4 at the same price paid by the
Holder so that such Shares are returned to the Company shall again be available
for Awards.  The payment of Dividend Equivalents in cash in conjunction with any
outstanding Awards shall not be counted against the Shares available for
issuance under the Plan.  Notwithstanding the provisions of this Section 3.1(b),
no Shares may again be optioned, granted or awarded if such action would cause
an Incentive Stock Option to fail to qualify as an incentive stock option under
Section 422 of the Code.

 

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

 

3.2                               Stock Distributed.  Any Shares distributed
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Common Stock, treasury Common Stock or Common Stock purchased on the
open market.

 

3.3                               Limitation on Number of Shares Subject to
Awards.  Notwithstanding any provision in the Plan to the contrary, and subject
to Section 14.2, the maximum aggregate number of Shares with respect to one or
more Awards that may be granted to any one person during any calendar year shall
be 40,000 and the maximum aggregate amount that may be paid in cash to any one
person during any calendar year with respect to one or more Awards payable in
cash shall be $5,000,000; provided, however, that the foregoing limitations
shall not apply prior to the Public Trading Date and, following the Public
Trading Date, the foregoing limitations shall not apply until the earliest of:
(a) the first material modification of the Plan (including any increase in the
Share Limit); (b) the issuance of all of the Shares reserved for issuance under
the Plan; (c) the expiration of the Plan; (d) the first meeting of stockholders
at which members of the Board are to be elected that occurs after the close of
the third calendar year following the calendar year in which occurred the first
registration of an equity security of the Company under Section 12 of the
Exchange Act; or (e) such other date required by Section 162(m) of the Code and
the rules and regulations promulgated thereunder.  To the extent required by
Section 162(m) of the Code, Shares subject to Awards which are canceled shall
continue to be counted against the Award Limit.

 

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ARTICLE 4.

 

GRANTING OF AWARDS

 

4.1                               Participation.  The Administrator may, from
time to time, select from among all Eligible Individuals, those to whom an Award
shall be granted and shall determine the nature and amount of each Award, which
shall not be inconsistent with the requirements of the Plan.  Except as provided
in Section 4.6 regarding the grant of Awards pursuant to the Non-Employee
Director Equity Compensation Policy, no Eligible Individual shall have any right
to be granted an Award pursuant to the Plan.

 

4.2                               Award Agreement.  Each Award shall be
evidenced by an Award Agreement that sets forth the terms, conditions and
limitations for such Award, which may include the term of the Award, the
provisions applicable in the event of the Holder’s Termination of Service, and
the Company’s authority to unilaterally or bilaterally amend, modify, suspend,
cancel or rescind an Award.  Award Agreements evidencing Awards intended to
qualify as Performance-Based Compensation shall contain such terms and
conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code.  Award Agreements evidencing Incentive Stock Options
shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.

 

4.3                               Limitations Applicable to Section 16 Persons. 
Notwithstanding any other provision of the Plan, the Plan, and any Award granted
or awarded to any individual who is then subject to Section 16 of the Exchange
Act, shall be subject to any additional limitations set forth in any applicable
exemptive rule under Section 16 of the Exchange Act (including Rule 16b-3 of the
Exchange Act and any amendments thereto) that are requirements for the
application of such exemptive rule.  To the extent permitted by Applicable Law,
the Plan and Awards granted or awarded hereunder shall be deemed amended to the
extent necessary to conform to such applicable exemptive rule.

 

4.4                               At-Will Employment; Voluntary Participation. 
Nothing in the Plan or in any Program or Award Agreement hereunder shall confer
upon any Holder any right to continue in the employ of, or as a Director or
Consultant for, the Company or any Affiliate, or shall interfere with or
restrict in any way the rights of the Company and any Affiliate, which rights
are hereby expressly reserved, to discharge any Holder at any time for any
reason whatsoever, with or without cause, and with or without notice, or to
terminate or change all other terms and conditions of employment or engagement,
except to the extent expressly provided otherwise in a written agreement between
the Holder and the Company or any Affiliate.  Participation by each Holder in
the Plan shall be voluntary and nothing in the Plan shall be construed as
mandating that any Eligible Individual shall participate in the Plan.

 

4.5                               Foreign Holders.  Notwithstanding any
provision of the Plan to the contrary, in order to comply with the laws in
countries other than the United States in which the Company and its Affiliates
operate or have Employees, Non-Employee Directors or Consultants, or in order to
comply with the requirements of any foreign securities exchange, the
Administrator, in its sole discretion, shall have the power and authority to:
(a) determine which Affiliates shall be covered by the Plan; (b) determine which
Eligible Individuals outside the United States are

 

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eligible to participate in the Plan; (c) modify the terms and conditions of any
Award granted to Eligible Individuals outside the United States to comply with
applicable foreign laws or listing requirements of any such foreign securities
exchange; (d) establish subplans and modify exercise procedures and other terms
and procedures, to the extent such actions may be necessary or advisable (any
such subplans and/or modifications shall be attached to the Plan as appendices);
provided, however, that no such subplans and/or modifications shall increase the
Share Limit, the Award Limit or the Director Limit; and (e) take any action,
before or after an Award is made, that it deems advisable to obtain approval or
comply with any necessary local governmental regulatory exemptions or approvals
or listing requirements of any such foreign securities exchange. 
Notwithstanding the foregoing, the Administrator may not take any actions
hereunder, and no Awards shall be granted, that would violate Applicable Law. 
For purposes of the Plan, all references to foreign laws, rules, regulations or
taxes shall be references to the laws, rules, regulations and taxes of any
applicable jurisdiction other than the United States or a political subdivision
thereof.

 

4.6                               Non-Employee Director Awards.  The
Administrator, in its sole discretion, may provide that Awards granted to
Non-Employee Directors shall be granted pursuant to a written non-discretionary
formula established by the Administrator (the “Non-Employee Director Equity
Compensation Policy”), subject to the limitations of the Plan.  The Non-Employee
Director Equity Compensation Policy shall set forth the type of Award(s) to be
granted to Non-Employee Directors, the number of Shares to be subject to
Non-Employee Director Awards, the conditions on which such Awards shall be
granted, become exercisable and/or payable and expire, and such other terms and
conditions as the Administrator shall determine in its sole discretion.  The
Non-Employee Director Equity Compensation Policy may be modified by the
Administrator from time to time in its sole discretion.  Notwithstanding any
provision to the contrary in the Plan or in the Non-Employee Director Equity
Compensation Policy, the maximum aggregate grant date fair value of Awards
granted to a Non-Employee Director during any calendar year shall be $150,000
(the “Director Limit”).

 

4.7                               Stand-Alone and Tandem Awards.  Awards granted
pursuant to the Plan may, in the sole discretion of the Administrator, be
granted either alone, in addition to, or in tandem with, any other Award granted
pursuant to the Plan.  Awards granted in addition to or in tandem with other
Awards may be granted either at the same time as or at a different time from the
grant of such other Awards.

 

ARTICLE 5.

 

PROVISIONS APPLICABLE TO AWARDS INTENDED TO QUALIFY AS PERFORMANCE-BASED
COMPENSATION.

 

5.1                               Purpose.  The Committee, in its sole
discretion, may determine at the time an Award is granted or at any time
thereafter whether such Award is intended to qualify as Performance-Based
Compensation. If the Committee, in its sole discretion, decides to grant such an
Award to an Eligible Individual that is intended to qualify as Performance-Based
Compensation (other than an Option or Stock Appreciation Right), then the
provisions of this Article 5 shall control over any contrary provision contained
in the Plan.  The Administrator, in its sole discretion, may grant Awards to
other Eligible Individuals that are based on Performance

 

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Criteria or Performance Goals or any such other criteria and goals as the
Administrator shall establish, but that do not satisfy the requirements of this
Article 5 and that are not intended to qualify as Performance-Based
Compensation.  Unless otherwise specified by the Committee at the time of grant,
the Performance Criteria with respect to an Award intended to be
Performance-Based Compensation payable to a Covered Employee shall be determined
on the basis of Applicable Accounting Standards.

 

5.2                               Applicability.  The grant of an Award to an
Eligible Individual for a particular Performance Period shall not require the
grant of an Award to such Eligible Individual in any subsequent Performance
Period and the grant of an Award to any one Eligible Individual shall not
require the grant of an Award to any other Eligible Individual in such period or
in any other period.

 

5.3                               Types of Awards.  Notwithstanding anything in
the Plan to the contrary, the Committee may grant any Award to an Eligible
Individual intended to qualify as Performance-Based Compensation, including,
without limitation, Restricted Stock the restrictions with respect to which
lapse upon the attainment of specified Performance Goals, Restricted Stock Units
that vest and become payable upon the attainment of specified Performance Goals
and any Performance Awards described in Article 10 that vest or become
exercisable or payable upon the attainment of one or more specified Performance
Goals.

 

5.4                               Procedures with Respect to Performance-Based
Awards.  To the extent necessary to comply with the requirements of
Section 162(m)(4)(C) of the Code, with respect to any Award granted to one or
more Eligible Individuals which is intended to qualify as Performance-Based
Compensation, no later than 90 days following the commencement of any
Performance Period or any designated fiscal period or period of service (or such
earlier time as may be required under Section 162(m) of the Code), the Committee
shall, in writing, (a) designate one or more Eligible Individuals, (b) select
the Performance Criteria applicable to the Performance Period, (c) establish the
Performance Goals, and amounts of such Awards, as applicable, which may be
earned for such Performance Period based on the Performance Criteria, and
(d) specify the relationship between Performance Criteria and the Performance
Goals and the amounts of such Awards, as applicable, to be earned by each
Covered Employee for such Performance Period.  Following the completion of each
Performance Period, the Committee shall certify in writing whether and the
extent to which the applicable Performance Goals have been achieved for such
Performance Period.  In determining the amount earned under such Awards, the
Committee shall have the right to reduce or eliminate (but not to increase) the
amount payable at a given level of performance to take into account additional
factors that the Committee may deem relevant, including the assessment of
individual or corporate performance for the Performance Period.

 

5.5                               Payment of Performance-Based Awards.  Unless
otherwise provided in the applicable Program or Award Agreement and only to the
extent otherwise permitted by Section 162(m) of the Code, as to an Award that is
intended to qualify as Performance-Based Compensation, the Holder must be
employed by the Company or an Affiliate throughout the Performance Period. 
Unless otherwise provided in the applicable Performance Goals, Program or Award
Agreement, a Holder shall be eligible to receive payment pursuant to such Awards
for a Performance Period only if and to the extent the Performance Goals for
such period are achieved.

 

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5.6                               Additional Limitations.  Notwithstanding any
other provision of the Plan and except as otherwise determined by the
Administrator, any Award which is granted to an Eligible Individual and is
intended to qualify as Performance-Based Compensation shall be subject to any
additional limitations set forth in Section 162(m) of the Code or any
regulations or rulings issued thereunder that are requirements for qualification
as Performance-Based Compensation, and the Plan and the applicable Program and
Award Agreement shall be deemed amended to the extent necessary to conform to
such requirements.

 

ARTICLE 6.

 

GRANTING OF OPTIONS

 

6.1                               Granting of Options to Eligible Individuals. 
The Administrator is authorized to grant Options to Eligible Individuals from
time to time, in its sole discretion, on such terms and conditions as it may
determine, which shall not be inconsistent with the Plan.

 

6.2                               Qualification of Incentive Stock Options.  No
Incentive Stock Option shall be granted to any person who is not an Employee of
the Company or any “subsidiary corporation” (as defined in Section 424(f) of the
Code) of the Company.  No person who qualifies as a Greater Than 10% Stockholder
may be granted an Incentive Stock Option unless such Incentive Stock Option
conforms to the applicable provisions of Section 422 of the Code.  Any Incentive
Stock Option granted under the Plan may be modified by the Administrator, with
the consent of the Holder, to disqualify such Option from treatment as an
“incentive stock option” under Section 422 of the Code. To the extent that the
aggregate Fair Market Value of stock with respect to which “incentive stock
options” (within the meaning of Section 422 of the Code, but without regard to
Section 422(d) of the Code) are exercisable for the first time by a Holder
during any calendar year under the Plan, and all other plans of the Company and
any parent or subsidiary corporation thereof (each as defined in
Section 424(e) and 424(f) of the Code, respectively), exceeds $100,000, the
Options shall be treated as Non-Qualified Stock Options to the extent required
by Section 422 of the Code.  The rule set forth in the immediately preceding
sentence shall be applied by taking Options and other “incentive stock options”
into account in the order in which they were granted and the Fair Market Value
of stock shall be determined as of the time the respective options were granted.

 

6.3                               Option Exercise Price.  The exercise price per
Share subject to each Option shall be set by the Administrator, but shall not be
less than 100% of the Fair Market Value of a Share on the date the Option is
granted (or, as to Incentive Stock Options, on the date the Option is modified,
extended or renewed for purposes of Section 424(h) of the Code).  In addition,
in the case of Incentive Stock Options granted to a Greater Than 10%
Stockholder, such price shall not be less than 110% of the Fair Market Value of
a Share on the date the Option is granted (or the date the Option is modified,
extended or renewed for purposes of Section 424(h) of the Code).

 

6.4                               Option Term.  The term of each Option (the
“Option Term”) shall be set by the Administrator in its sole discretion;
provided, however, that the Option Term shall not be more than ten (10) years
from the date the Option is granted, or five (5) years from the date an
Incentive Stock Option is granted to a Greater Than 10% Stockholder.  The
Administrator shall determine the time period, including the time period
following a Termination of Service, during

 

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which the Holder has the right to exercise the vested Options, which time period
may not extend beyond the last day of the Option Term. Except as limited by the
requirements of Section 409A or Section 422 of the Code and regulations and
rulings thereunder or the first sentence of this Section 6.4, the Administrator
may extend the Option Term of any outstanding Option, and may extend the time
period during which vested Options may be exercised, in connection with any
Termination of Service of the Holder, and may amend, subject to Section 14.1,
any other term or condition of such Option relating to such a Termination of
Service.

 

6.5                               Option Vesting.

 

(a)                                 The period during which the right to
exercise, in whole or in part, an Option vests in the Holder shall be set by the
Administrator and the Administrator may determine that an Option may not be
exercised in whole or in part for a specified period after it is granted.  Such
vesting may be based on service with the Company or any Affiliate, any of the
Performance Criteria, or any other criteria selected by the Administrator, and,
except as limited by the Plan, at any time after the grant of an Option, the
Administrator, in its sole discretion and subject to whatever terms and
conditions it selects, may accelerate the period during which an Option vests.

 

(b)                                 No portion of an Option which is
unexercisable at a Holder’s Termination of Service shall thereafter become
exercisable, except as may be otherwise provided by the Administrator either in
the applicable Program, the Award Agreement evidencing the grant of an Option,
or by action of the Administrator following the grant of the Option.  Unless
otherwise determined by the Administrator in the Award Agreement or by action of
the Administrator following the grant of the Option, the portion of an Option
that is unexercisable at a Holder’s Termination of Service shall automatically
expire thirty (30) days following such Termination of Service.

 

6.6                               Substitute Awards.  Notwithstanding the
foregoing provisions of this Article 6 to the contrary, in the case of an Option
that is a Substitute Award, the price per share of the Shares subject to such
Option may be less than the Fair Market Value per share on the date of grant;
provided that the excess of:  (a) the aggregate Fair Market Value (as of the
date such Substitute Award is granted) of the Shares subject to the Substitute
Award, over (b) the aggregate exercise price thereof does not exceed the excess
of:  (x) the aggregate fair market value (as of the time immediately preceding
the transaction giving rise to the Substitute Award, such fair market value to
be determined by the Administrator) of the shares of the predecessor entity that
were subject to the grant assumed or substituted for by the Company, over
(y) the aggregate exercise price of such shares.

 

6.7                               Substitution of Stock Appreciation Rights. 
The Administrator may provide in the applicable Program or the Award Agreement
evidencing the grant of an Option that the Administrator, in its sole
discretion, shall have the right to substitute a Stock Appreciation Right for
such Option at any time prior to or upon exercise of such Option; provided that
such Stock Appreciation Right shall be exercisable with respect to the same
number of Shares for which such substituted Option would have been exercisable,
and shall also have the same exercise price, vesting schedule and remaining
Option Term as the substituted Option.

 

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ARTICLE 7.

 

EXERCISE OF OPTIONS

 

7.1                               Partial Exercise. An exercisable Option may be
exercised in whole or in part. However, an Option shall not be exercisable with
respect to fractional Shares and the Administrator may require that, by the
terms of the Option, a partial exercise must be with respect to a minimum number
of Shares.

 

7.2                               Expiration of Option Term:  Automatic Exercise
of In-The-Money Options. Unless otherwise provided by the Administrator (in an
Award Agreement or otherwise) or as otherwise directed by an Option Holder in
writing to the Company, each vested and exercisable Option outstanding on the
Automatic Exercise Date with an exercise price per share that is less than the
Fair Market Value per Share as of such date shall automatically and without
further action by the Option Holder or the Company be exercised on the Automatic
Exercise Date. In the sole discretion of the Administrator, payment of the
exercise price of any such Option shall be made pursuant to Section 12.1(b) or
12.1(c) and the Company or any Affiliate shall deduct or withhold an amount
sufficient to satisfy all taxes associated with such exercise in accordance with
Section 12.2. Unless otherwise determined by the Administrator, this Section 7.2
shall not apply to an Option if the Holder of such Option incurs a Termination
of Service on or before the Automatic Exercise Date. For the avoidance of doubt,
no Option with an exercise price per share that is equal to or greater than the
Fair Market Value per Share on the Automatic Exercise Date shall be exercised
pursuant to this Section 7.2.

 

7.3                               Manner of Exercise. All or a portion of an
exercisable Option shall be deemed exercised upon delivery of all of the
following to the Secretary of the Company, the stock administrator of the
Company or such other person or entity designated by the Administrator, or his,
her or its office, as applicable:

 

(a)                                 A written or electronic notice complying
with the applicable rules established by the Administrator stating that the
Option, or a portion thereof, is exercised. The notice shall be signed by the
Holder or other person then entitled to exercise the Option or such portion of
the Option;

 

(b)                                 Such representations and documents as the
Administrator, in its sole discretion, deems necessary or advisable to effect
compliance with Applicable Law. The Administrator, in its sole discretion, may
also take whatever additional actions it deems appropriate to effect such
compliance including, without limitation, placing legends on share certificates
and issuing stop-transfer notices to agents and registrars;

 

(c)                                  In the event that the Option shall be
exercised pursuant to Section 12.3 by any person or persons other than the
Holder, appropriate proof of the right of such person or persons to exercise the
Option, as determined in the sole discretion of the Administrator; and

 

(d)                                 Full payment of the exercise price and
applicable withholding taxes to the stock administrator of the Company for the
Shares with respect to which the Option, or portion thereof, is exercised, in a
manner permitted by Sections 12.1 and 12.2.

 

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7.4                               Notification Regarding Disposition. The Holder
shall give the Company prompt written or electronic notice of any disposition of
Shares acquired by exercise of an Incentive Stock Option which occurs within
(a) two years from the date of granting (including the date the Option is
modified, extended or renewed for purposes of Section 424(h) of the Code) such
Option to such Holder, or (b) one year after the transfer of such Shares to such
Holder.

 

ARTICLE 8.

 

AWARD OF RESTRICTED STOCK

 

8.1                               Award of Restricted Stock.

 

(a)                                 The Administrator is authorized to grant
Restricted Stock to Eligible Individuals, and shall determine the terms and
conditions, including the restrictions applicable to each award of Restricted
Stock, which terms and conditions shall not be inconsistent with the Plan, and
may impose such conditions on the issuance of such Restricted Stock as it deems
appropriate.

 

(b)                                 The Administrator shall establish the
purchase price, if any, and form of payment for Restricted Stock; provided,
however, that if a purchase price is charged, such purchase price shall be no
less than the par value, if any, of the Shares to be purchased, unless otherwise
permitted by Applicable Law. In all cases, legal consideration shall be required
for each issuance of Restricted Stock.

 

8.2                               Rights as Stockholders. Subject to
Section 8.4, upon issuance of Restricted Stock, the Holder shall have, unless
otherwise provided by the Administrator, all the rights of a stockholder with
respect to said Shares, subject to the restrictions in the applicable Program or
in each individual Award Agreement, including the right to receive all dividends
and other distributions paid or made with respect to the Shares; provided,
however, that, in the sole discretion of the Administrator, any extraordinary
distributions with respect to the Shares shall be subject to the restrictions
set forth in Section 8.3. In addition, with respect to a share of Restricted
Stock with performance-based vesting, dividends which are paid prior to vesting
shall only be paid out to the Holder to the extent that the performance-based
vesting conditions are subsequently satisfied and the share of Restricted Stock
vests.

 

8.3                               Restrictions. All shares of Restricted Stock
(including any shares received by Holders thereof with respect to shares of
Restricted Stock as a result of stock dividends, stock splits or any other form
of recapitalization) shall, in the terms of the applicable Program or in each
individual Award Agreement, be subject to such restrictions and vesting
requirements as the Administrator shall provide. Such restrictions may include,
without limitation, restrictions concerning voting rights and transferability
and such restrictions may lapse separately or in combination at such times and
pursuant to such circumstances or based on such criteria as selected by the
Administrator, including, without limitation, criteria based on the Holder’s
duration of employment, directorship or consultancy with the Company, the
Performance Criteria, Company performance, individual performance or other
criteria selected by the Administrator. By action taken after the Restricted
Stock is issued, the Administrator may, on such terms and conditions as it may
determine to be appropriate, accelerate the vesting of such

 

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Restricted Stock by removing any or all of the restrictions imposed by the terms
of the applicable Program or Award Agreement. Restricted Stock may not be sold
or encumbered until all restrictions are terminated or expire.

 

8.4                               Repurchase or Forfeiture of Restricted Stock.
Except as otherwise determined by the Administrator at the time of the grant of
the Award or thereafter, if no price was paid by the Holder for the Restricted
Stock, upon a Termination of Service during the applicable restriction period,
the Holder’s rights in unvested Restricted Stock then subject to restrictions
shall lapse, and such Restricted Stock shall be surrendered to the Company and
cancelled without consideration. If a price was paid by the Holder for the
Restricted Stock, upon a Termination of Service during the applicable
restriction period, the Company shall have the right to repurchase from the
Holder the unvested Restricted Stock then subject to restrictions at a cash
price per share equal to the price paid by the Holder for such Restricted Stock
or such other amount as may be specified in the applicable Program or Award
Agreement. Notwithstanding the foregoing, the Administrator, in its sole
discretion, may provide that upon certain events, including a Change in Control,
the Holder’s death, retirement or disability or any other specified Termination
of Service or any other event, the Holder’s rights in unvested Restricted Stock
shall not lapse, such Restricted Stock shall vest and, if applicable, the
Company shall not have a right of repurchase.

 

8.5                               Certificates for Restricted Stock. Restricted
Stock granted pursuant to the Plan may be evidenced in such manner as the
Administrator shall determine. Certificates or book entries evidencing shares of
Restricted Stock shall include an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Restricted Stock. The Company,
in its sole discretion, may (a) retain physical possession of any stock
certificate evidencing shares of Restricted Stock until the restrictions thereon
shall have lapsed and/or (b) require that the stock certificates evidencing
shares of Restricted Stock be held in custody by a designated escrow agent
(which may but need not be the Company) until the restrictions thereon shall
have lapsed, and that the Holder deliver a stock power, endorsed in blank,
relating to such Restricted Stock.

 

8.6                               Section 83(b) Election. If a Holder makes an
election under Section 83(b) of the Code to be taxed with respect to the
Restricted Stock as of the date of transfer of the Restricted Stock rather than
as of the date or dates upon which the Holder would otherwise be taxable under
Section 83(a) of the Code, the Holder shall be required to deliver a copy of
such election to the Company promptly after filing such election with the
Internal Revenue Service along with proof of the timely filing thereof with the
Internal Revenue Service.

 

ARTICLE 9.

 

AWARD OF RESTRICTED STOCK UNITS

 

9.1                               Grant of Restricted Stock Units. The
Administrator is authorized to grant Awards of Restricted Stock Units to any
Eligible Individual selected by the Administrator in such amounts and subject to
such terms and conditions as determined by the Administrator.

 

9.2                               Term. Except as otherwise provided herein, the
term of a Restricted Stock Unit award shall be set by the Administrator in its
sole discretion.

 

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9.3                               Purchase Price. The Administrator shall
specify the purchase price, if any, to be paid by the Holder to the Company with
respect to any Restricted Stock Unit award; provided, however, that value of the
consideration shall not be less than the par value of a Share, unless otherwise
permitted by Applicable Law.

 

9.4                               Vesting of Restricted Stock Units. At the time
of grant, the Administrator shall specify the date or dates on which the
Restricted Stock Units shall become fully vested and nonforfeitable, and may
specify such conditions to vesting as it deems appropriate, including, without
limitation, vesting based upon the Holder’s duration of service to the Company
or any Affiliate, one or more Performance Criteria, Company performance,
individual performance or other specific criteria, in each case on a specified
date or dates or over any period or periods, as determined by the Administrator.

 

9.5                               Maturity and Payment. At the time of grant,
the Administrator shall specify the maturity date applicable to each grant of
Restricted Stock Units which shall be no earlier than the vesting date or dates
of the Award and may be determined at the election of the Holder (if permitted
by the applicable Award Agreement); provided that, except as otherwise
determined by the Administrator, set forth in any applicable Award Agreement,
and subject to compliance with Section 409A of the Code, in no event shall the
maturity date relating to each Restricted Stock Unit occur following the later
of (a) the 15th day of the third month following the end of calendar year in
which the applicable portion of the Restricted Stock Unit vests; or (b) the
15th day of the third month following the end of the Company’s fiscal year in
which the applicable portion of the Restricted Stock Unit vests. On the maturity
date, the Company shall, subject to Section 12.4(e), transfer to the Holder one
unrestricted, fully transferable Share for each Restricted Stock Unit scheduled
to be paid out on such date and not previously forfeited, or in the sole
discretion of the Administrator, an amount in cash equal to the Fair Market
Value of such Shares on the maturity date or a combination of cash and Common
Stock as determined by the Administrator.

 

9.6                               Payment upon Termination of Service. An Award
of Restricted Stock Units shall only be payable while the Holder is an Employee,
a Consultant or a member of the Board, as applicable; provided, however, that
the Administrator, in its sole discretion, may provide (in an Award Agreement or
otherwise) that a Restricted Stock Unit award may be paid subsequent to a
Termination of Service in certain events, including a Change in Control, the
Holder’s death, retirement or disability or any other specified Termination of
Service.

 

9.7                               No Rights as a Stockholder. Unless otherwise
determined by the Administrator, a Holder of Restricted Stock Units shall
possess no incidents of ownership with respect to the Shares represented by such
Restricted Stock Units, unless and until such Shares are transferred to the
Holder pursuant to the terms of this Plan and the applicable Award Agreement.

 

9.8                               Dividend Equivalents. Subject to Section 10.2,
the Administrator, in its sole discretion, may provide that Dividend Equivalents
shall be earned by a Holder of Restricted Stock Units based on dividends
declared on the Common Stock, to be credited as of dividend payment dates during
the period between the date an Award of Restricted Stock Units is granted to a
Holder and the maturity date of such Award.

 

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ARTICLE 10.

 

AWARD OF PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS, STOCK PAYMENTS, DEFERRED
STOCK, DEFERRED STOCK UNITS

 

10.1                        Performance Awards.

 

(a)                                 The Administrator is authorized to grant
Performance Awards, including Awards of Performance Stock Units, to any Eligible
Individual and to determine whether such Performance Awards shall be
Performance-Based Compensation. The value of Performance Awards, including
Performance Stock Units, may be linked to any one or more of the Performance
Criteria or other specific criteria determined by the Administrator, in each
case on a specified date or dates or over any period or periods and in such
amounts as may be determined by the Administrator. Performance Awards, including
Performance Stock Unit awards may be paid in cash, Shares, or a combination of
cash and Shares, as determined by the Administrator.

 

(b)                                 Without limiting Section 10.1(a), the
Administrator may grant Performance Awards to any Eligible Individual in the
form of a cash bonus payable upon the attainment of objective Performance Goals,
or such other criteria, whether or not objective, which are established by the
Administrator, in each case on a specified date or dates or over any period or
periods determined by the Administrator. Any such bonuses paid to a Holder which
are intended to be Performance-Based Compensation shall be based upon
objectively determinable bonus formulas established in accordance with the
provisions of Article 5.

 

10.2                        Dividend Equivalents.

 

(a)                                 Dividend Equivalents may be granted by the
Administrator based on dividends declared on the Common Stock, to be credited as
of dividend payment dates with respect to dividends with record dates that occur
during the period between the date an Award is granted to a Holder and the date
such Award vests, is exercised, is distributed or expires, as determined by the
Administrator. Such Dividend Equivalents shall be converted to cash or
additional Shares by such formula and at such time and subject to such
restrictions and limitations as may be determined by the Administrator. In
addition, Dividend Equivalents with respect to an Award with performance-based
vesting that are based on dividends paid prior to the vesting of such Award
shall only be paid out to the Holder to the extent that the performance-based
vesting conditions are subsequently satisfied and the Award vests.

 

(b)                                 Notwithstanding the foregoing, no Dividend
Equivalents shall be payable with respect to Options or Stock Appreciation
Rights.

 

10.3                        Stock Payments. The Administrator is authorized to
make Stock Payments to any Eligible Individual. The number or value of Shares of
any Stock Payment shall be determined by the Administrator and may be based upon
one or more Performance Criteria or any other specific criteria, including
service to the Company or any Affiliate, determined by the Administrator. Shares
underlying a Stock Payment which is subject to a vesting schedule or other
conditions or criteria set by the Administrator shall not be issued until those
conditions have been satisfied. Unless otherwise provided by the Administrator,
a Holder of a Stock

 

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Payment shall have no rights as a Company stockholder with respect to such Stock
Payment until such time as the Stock Payment has vested and the Shares
underlying the Award have been issued to the Holder. Stock Payments may, but are
not required to, be made in lieu of base salary, bonus, fees or other cash
compensation otherwise payable to such Eligible Individual.

 

10.4                        Deferred Stock. The Administrator is authorized to
grant Deferred Stock to any Eligible Individual. The number of shares of
Deferred Stock shall be determined by the Administrator and may (but is not
required to) be based on one or more Performance Criteria or other specific
criteria, including service to the Company or any Affiliate, as the
Administrator determines, in each case on a specified date or dates or over any
period or periods determined by the Administrator. Shares underlying a Deferred
Stock award which is subject to a vesting schedule or other conditions or
criteria set by the Administrator shall be issued on the vesting date(s) or
date(s) that those conditions and criteria have been satisfied, as applicable.
Unless otherwise provided by the Administrator, a Holder of Deferred Stock shall
have no rights as a Company stockholder with respect to such Deferred Stock
until such time as the Award has vested and any other applicable conditions
and/or criteria have been satisfied and the Shares underlying the Award have
been issued to the Holder.

 

10.5                        Deferred Stock Units. The Administrator is
authorized to grant Deferred Stock Units to any Eligible Individual. The number
of Deferred Stock Units shall be determined by the Administrator and may (but is
not required to) be based on one or more Performance Criteria or other specific
criteria, including service to the Company or any Affiliate, as the
Administrator determines, in each case on a specified date or dates or over any
period or periods determined by the Administrator. Each Deferred Stock Unit
shall entitle the Holder thereof to receive one Share on the date the Deferred
Stock Unit becomes vested or upon a specified settlement date thereafter (which
settlement date may (but is not required to) be the date of the Holder’s
Termination of Service). Shares underlying a Deferred Stock Unit award which is
subject to a vesting schedule or other conditions or criteria set by the
Administrator shall not be issued until on or following the date that those
conditions and criteria have been satisfied. Unless otherwise provided by the
Administrator, a Holder of Deferred Stock Units shall have no rights as a
Company stockholder with respect to such Deferred Stock Units until such time as
the Award has vested and any other applicable conditions and/or criteria have
been satisfied and the Shares underlying the Award have been issued to the
Holder.

 

10.6                        Term. The term of a Performance Award, Dividend
Equivalent award, Stock Payment award, Deferred Stock award and/or Deferred
Stock Unit award shall be established by the Administrator in its sole
discretion.

 

10.7                        Purchase Price. The Administrator may establish the
purchase price of a Performance Award, Shares distributed as a Stock Payment
award, shares of Deferred Stock or Shares distributed pursuant to a Deferred
Stock Unit award; provided, however, that value of the consideration shall not
be less than the par value of a Share, unless otherwise permitted by Applicable
Law.

 

10.8                        Termination of Service. A Performance Award, Stock
Payment award, Dividend Equivalent award, Deferred Stock award and/or Deferred
Stock Unit award is distributable only while the Holder is an Employee, Director
or Consultant, as applicable. The Administrator,

 

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however, in its sole discretion may provide that the Performance Award, Dividend
Equivalent award, Stock Payment award, Deferred Stock award and/or Deferred
Stock Unit award may be distributed subsequent to a Termination of Service in
certain events, including a Change in Control, the Holder’s death, retirement or
disability or any other specified Termination of Service.

 

ARTICLE 11.

 

AWARD OF STOCK APPRECIATION RIGHTS

 

11.1                        Grant of Stock Appreciation Rights.

 

(a)                                 The Administrator is authorized to grant
Stock Appreciation Rights to Eligible Individuals from time to time, in its sole
discretion, on such terms and conditions as it may determine, which shall not be
inconsistent with the Plan.

 

(b)                                 A Stock Appreciation Right shall entitle the
Holder (or other person entitled to exercise the Stock Appreciation Right
pursuant to the Plan) to exercise all or a specified portion of the Stock
Appreciation Right (to the extent then exercisable pursuant to its terms) and to
receive from the Company an amount determined by multiplying the difference
obtained by subtracting the exercise price per share of the Stock Appreciation
Right from the Fair Market Value on the date of exercise of the Stock
Appreciation Right by the number of Shares with respect to which the Stock
Appreciation Right shall have been exercised, subject to any limitations the
Administrator may impose. Except as described in (c) below, the exercise price
per Share subject to each Stock Appreciation Right shall be set by the
Administrator, but shall not be less than 100% of the Fair Market Value on the
date the Stock Appreciation Right is granted.

 

(c)                                  Notwithstanding the foregoing provisions of
Section 11.1(b) to the contrary, in the case of a Stock Appreciation Right that
is a Substitute Award, the price per share of the Shares subject to such Stock
Appreciation Right may be less than 100% of the Fair Market Value per share on
the date of grant; provided, that the excess of:  (i) the aggregate Fair Market
Value (as of the date such Substitute Award is granted) of the Shares subject to
the Substitute Award, over (ii) the aggregate exercise price thereof does not
exceed the excess of:  (x) the aggregate fair market value (as of the time
immediately preceding the transaction giving rise to the Substitute Award, such
fair market value to be determined by the Administrator) of the shares of the
predecessor entity that were subject to the grant assumed or substituted for by
the Company, over (y) the aggregate exercise price of such shares.

 

11.2                        Stock Appreciation Right Vesting.

 

(a)                                 The period during which the right to
exercise, in whole or in part, a Stock Appreciation Right vests in the Holder
shall be set by the Administrator and the Administrator may determine that a
Stock Appreciation Right may not be exercised in whole or in part for a
specified period after it is granted. Such vesting may be based on service with
the Company or any Affiliate, any of the Performance Criteria, or any other
criteria selected by the Administrator. Except as limited by the Plan, at any
time after grant of a Stock Appreciation Right, the

 

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Administrator, in its sole discretion and subject to whatever terms and
conditions it selects, may accelerate the period during which a Stock
Appreciation Right vests.

 

(b)                                 No portion of a Stock Appreciation Right
which is unexercisable at a Holder’s Termination of Service shall thereafter
become exercisable, except as may be otherwise provided by the Administrator in
the applicable Program, the Award Agreement evidencing the grant of a Stock
Appreciation Right, or by action of the Administrator following the grant of the
Stock Appreciation Right.

 

11.3                        Manner of Exercise. All or a portion of an
exercisable Stock Appreciation Right shall be deemed exercised upon delivery of
all of the following to the Secretary of the Company, the stock administrator of
the Company, or such other person or entity designated by the Administrator, or
his, her or its office, as applicable:

 

(a)                                 A written or electronic notice complying
with the applicable rules established by the Administrator stating that the
Stock Appreciation Right, or a portion thereof, is exercised. The notice shall
be signed by the Holder or other person then entitled to exercise the Stock
Appreciation Right or such portion of the Stock Appreciation Right;

 

(b)                                 Such representations and documents as the
Administrator, in its sole discretion, deems necessary or advisable to effect
compliance with Applicable Law. The Administrator, in its sole discretion, may
also take whatever additional actions it deems appropriate to effect such
compliance, including, without limitation, placing legends on share certificates
and issuing stop transfer notices to agents and registrars;

 

(c)                                  In the event that the Stock Appreciation
Right shall be exercised pursuant to this Section 11.3 by any person or persons
other than the Holder, appropriate proof of the right of such person or persons
to exercise the Stock Appreciation Right, as determined in the sole discretion
of the Administrator; and

 

(d)                                 Full payment of applicable withholding taxes
to the stock administrator of the Company for the Shares with respect to which
the Stock Appreciation Right, or portion thereof, is exercised, in a manner
permitted by Sections 12.1 and 12.2.

 

11.4                        Stock Appreciation Right Term. The term of each
Stock Appreciation Right (the “Stock Appreciation Right Term”) shall be set by
the Administrator in its sole discretion; provided, however, that the Stock
Appreciation Right Term shall not be more than ten (10) years from the date the
Stock Appreciation Right is granted. The Administrator shall determine the time
period, including the time period following a Termination of Service, during
which the Holder has the right to exercise the vested Stock Appreciation Rights,
which time period may not extend beyond the last day of the Stock Appreciation
Right Term applicable to such Stock Appreciation Right. Except as limited by the
requirements of Section 409A of the Code and regulations and rulings thereunder
or the first sentence of this Section 11.4, the Administrator may extend the
Stock Appreciation Right Term of any outstanding Stock Appreciation Right, and
may extend the time period during which vested Stock Appreciation Rights may be
exercised, in connection with any Termination of Service of the Holder, and may
amend, subject

 

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to Section 14.1, any other term or condition of such Stock Appreciation Right
relating to such a Termination of Service.

 

11.5                        Payment.  Payment of the amounts payable with
respect to Stock Appreciation Rights pursuant to this Article 11 shall be in
cash, Shares (based on its Fair Market Value as of the date the Stock
Appreciation Right is exercised), or a combination of both, as determined by the
Administrator.

 

11.6                        Expiration of Stock Appreciation Right Term:
Automatic Exercise of In-The-Money Stock Appreciation Rights.  Unless otherwise
provided by the Administrator (in an Award Agreement or otherwise) or as
otherwise directed by a Stock Appreciation Right Holder in writing to the
Company, each vested and exercisable Stock Appreciation Right outstanding on the
Automatic Exercise Date with an exercise price per share that is less than the
Fair Market Value per Share as of such date shall automatically and without
further action by the Stock Appreciation Right Holder or the Company be
exercised on the Automatic Exercise Date.  In the sole discretion of the
Administrator, the Company or any Affiliate shall deduct or withhold an amount
sufficient to satisfy all taxes associated with such exercise in accordance with
Section 12.2.  For the avoidance of doubt, no Stock Appreciation Right with an
exercise price per share that is equal to or greater than the Fair Market Value
per Share on the Automatic Exercise Date shall be exercised pursuant to this
Section 11.6.

 

ARTICLE 12.

 

ADDITIONAL TERMS OF AWARDS

 

12.1                        Payment.  The Administrator shall determine the
methods by which payments by any Holder with respect to any Awards granted under
the Plan shall be made, including, without limitation: (a) cash or check,
(b) Shares (including, in the case of payment of the exercise price of an Award,
Shares issuable pursuant to the exercise of the Award) or Shares held for such
period of time as may be required by the Administrator in order to avoid adverse
accounting consequences, in each case, having a Fair Market Value on the date of
delivery equal to the aggregate payments required, (c) delivery of a written or
electronic notice that the Holder has placed a market sell order with a broker
acceptable to the Company with respect to Shares then issuable upon exercise or
vesting of an Award, and that the broker has been directed to pay a sufficient
portion of the net proceeds of the sale to the Company in satisfaction of the
aggregate payments required; provided, that payment of such proceeds is then
made to the Company upon settlement of such sale, or (d) other form of legal
consideration acceptable to the Administrator in its sole discretion.  The
Administrator shall also determine the methods by which Shares shall be
delivered or deemed to be delivered to Holders.  Notwithstanding any other
provision of the Plan to the contrary, no Holder who is a Director or an
“executive officer” of the Company within the meaning of Section 13(k) of the
Exchange Act shall be permitted to make payment with respect to any Awards
granted under the Plan, or continue any extension of credit with respect to such
payment with a loan from the Company or a loan arranged by the Company in
violation of Section 13(k) of the Exchange Act.

 

12.2                        Tax Withholding.  The Company or any Affiliate shall
have the authority and the right to deduct or withhold, or require a Holder to
remit to the Company, an amount sufficient to

 

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satisfy federal, state, local and foreign taxes (including the Holder’s FICA,
employment tax or other social security contribution obligation) required by law
to be withheld with respect to any taxable event concerning a Holder arising as
a result of the Plan.  The Administrator, in its sole discretion and in
satisfaction of the foregoing requirement, may withhold, or allow a Holder to
elect to have the Company withhold Shares otherwise issuable under an Award (or
allow the surrender of Shares). The number of Shares which may be so withheld or
surrendered shall be limited to the number of Shares which have a Fair Market
Value on the date of withholding or repurchase equal to the aggregate amount of
such liabilities based on the minimum statutory withholding rates for federal,
state, local and foreign income tax and payroll tax purposes that are applicable
to such supplemental taxable income. The Administrator shall determine the fair
market value of the Shares, consistent with applicable provisions of the Code,
for tax withholding obligations due in connection with a broker-assisted
cashless Option or Stock Appreciation Right exercise involving the sale of
Shares to pay the Option or Stock Appreciation Right exercise price or any tax
withholding obligation.

 

12.3                        Transferability of Awards.

 

(a)                                 Except as otherwise provided in Sections
12.3(b) and 12.3(c):

 

(i)                                     No Award under the Plan may be sold,
pledged, assigned or transferred in any manner other than by will or the laws of
descent and distribution or, subject to the consent of the Administrator,
pursuant to a DRO, unless and until such Award has been exercised, or the Shares
underlying such Award have been issued, and all restrictions applicable to such
Shares have lapsed;

 

(ii)                                  No Award or interest or right therein
shall be liable for the debts, contracts or engagements of the Holder or the
Holder’s successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, hypothecation, encumbrance, assignment or any
other means whether such disposition be voluntary or involuntary or by operation
of law by judgment, levy, attachment, garnishment or any other legal or
equitable proceedings (including bankruptcy), and any attempted disposition
thereof shall be null and void and of no effect, except to the extent that such
disposition is permitted by Section 12.3(a)(i); and

 

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

 

(b)                                 Notwithstanding Section 12.3(a), the
Administrator, in its sole discretion, may determine to permit a Holder to
transfer an Award other than an Incentive Stock Option to any one or more
Permitted Transferees, subject to the following terms and conditions:  (i) an
Award transferred to a Permitted Transferee shall not be assignable or
transferable by the Permitted Transferee other than by will or the laws of
descent and distribution or pursuant to a DRO; (ii) an Award transferred to a
Permitted Transferee shall continue to be subject to all the

 

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terms and conditions of the Award as applicable to the original Holder (other
than the ability to further transfer the Award); and (iii) the Holder and the
Permitted Transferee shall execute any and all documents requested by the
Administrator, including, without limitation documents to (A) confirm the status
of the transferee as a Permitted Transferee, (B) satisfy any requirements for an
exemption for the transfer under Applicable Law and (C) evidence the transfer.

 

(c)                                  Notwithstanding Section 12.3(a), a Holder
may, in the manner determined by the Administrator, designate a beneficiary to
exercise the rights of the Holder and to receive any distribution with respect
to any Award upon the Holder’s death.  A beneficiary, legal guardian, legal
representative, or other person claiming any rights pursuant to the Plan is
subject to all terms and conditions of the Plan and any Program or Award
Agreement applicable to the Holder, except to the extent the Plan, the Program
and the Award Agreement otherwise provide, and to any additional restrictions
deemed necessary or appropriate by the Administrator.  If the Holder is married
or a domestic partner in a domestic partnership qualified under Applicable Law
and resides in a community property state, a designation of a person other than
the Holder’s spouse or domestic partner, as applicable, as the Holder’s
beneficiary with respect to more than 50% of the Holder’s interest in the Award
shall not be effective without the prior written or electronic consent of the
Holder’s spouse or domestic partner.  If no beneficiary has been designated or
survives the Holder, payment shall be made to the person entitled thereto
pursuant to the Holder’s will or the laws of descent and distribution.  Subject
to the foregoing, a beneficiary designation may be changed or revoked by a
Holder at any time; provided that the change or revocation is filed with the
Administrator prior to the Holder’s death.

 

12.4                        Conditions to Issuance of Shares.

 

(a)                                 Notwithstanding anything herein to the
contrary, the Company shall not be required to issue or deliver any certificates
or make any book entries evidencing Shares pursuant to the exercise of any
Award, unless and until the Board or the Committee has determined, with advice
of counsel, that the issuance of such Shares is in compliance with Applicable
Law, and the Shares are covered by an effective registration statement or
applicable exemption from registration.  In addition to the terms and conditions
provided herein, the Board or the Committee may require that a Holder make such
reasonable covenants, agreements, and representations as the Board or the
Committee, in its sole discretion, deems advisable in order to comply with
Applicable Law.

 

(b)                                 All share certificates delivered pursuant to
the Plan and all Shares issued pursuant to book entry procedures are subject to
any stop-transfer orders and other restrictions as the Administrator deems
necessary or advisable to comply with Applicable Law.  The Administrator may
place legends on any share certificate or book entry to reference restrictions
applicable to the Shares.

 

(c)                                  The Administrator shall have the right to
require any Holder to comply with any timing or other restrictions with respect
to the settlement, distribution or exercise of any Award, including a
window-period limitation, as may be imposed in the sole discretion of the
Administrator.

 

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(d)                                 No fractional Shares shall be issued and the
Administrator, in its sole discretion, shall determine whether cash shall be
given in lieu of fractional Shares or whether such fractional Shares shall be
eliminated by rounding down.

 

(e)                                  Notwithstanding any other provision of the
Plan, unless otherwise determined by the Administrator or required by Applicable
Law, the Company shall not deliver to any Holder certificates evidencing Shares
issued in connection with any Award and instead such Shares shall be recorded in
the books of the Company (or, as applicable, its transfer agent or stock plan
administrator).

 

12.5                        Forfeiture and Claw-Back Provisions.  Pursuant to
its general authority to determine the terms and conditions applicable to Awards
under the Plan, the Administrator shall have the right to provide, in an Award
Agreement or otherwise, or to require a Holder to agree by separate written or
electronic instrument, that:

 

(a)                                 (i) Any proceeds, gains or other economic
benefit actually or constructively received by the Holder upon any receipt or
exercise of the Award, or upon the receipt or resale of any Shares underlying
the Award, shall be paid to the Company, and (ii) the Award shall terminate and
any unexercised portion of the Award (whether or not vested) shall be forfeited,
if (x) a Termination of Service occurs prior to a specified date, or within a
specified time period following receipt or exercise of the Award, or (y) the
Holder at any time, or during a specified time period, engages in any activity
in competition with the Company, or which is inimical, contrary or harmful to
the interests of the Company, as further defined by the Administrator or (z) the
Holder incurs a Termination of Service for “cause” (as such term is defined in
the sole discretion of the Administrator, or as set forth in the Award Agreement
relating to such Award between the Company and the Holder); and

 

(b)                                 All Awards (including any proceeds, gains or
other economic benefit actually or constructively received by the Holder upon
any receipt or exercise of any Award or upon the receipt or resale of any Shares
underlying the Award) shall be subject to the provisions of any claw-back policy
implemented by the Company, including, without limitation, any claw-back policy
adopted to comply with the requirements of Applicable Law, including without
limitation the Dodd-Frank Wall Street Reform and Consumer Protection Act and any
rules or regulations promulgated thereunder, to the extent set forth in such
claw-back policy and/or in the applicable Award Agreement.

 

12.6                        Prohibition on Repricing.  Subject to Section 14.2,
the Administrator shall not, without the approval of the stockholders of the
Company, (i) authorize the amendment of any outstanding Option or Stock
Appreciation Right to reduce its price per share, or (ii) cancel any Option or
Stock Appreciation Right in exchange for cash or another Award when the Option
or Stock Appreciation Right price per share exceeds the Fair Market Value of the
underlying Shares.  Subject to Section 14.2, the Administrator shall have the
authority, without the approval of the stockholders of the Company, to amend any
outstanding Award to increase the price per share or to cancel and replace an
Award with the grant of an Award having a price per share that is greater than
or equal to the price per share of the original Award. Furthermore, for purposes
of this Section 12.6, except in connection with a corporate transaction
involving the Company (including, without limitation, any stock dividend, stock
split, extraordinary cash dividend,

 

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recapitalization, reorganization, merger, consolidation, split up, spin off,
combination or exchange of shares), the terms of outstanding Awards may not be
amended to reduce the exercise price per share of outstanding Options or Stock
Appreciation Rights or cancel outstanding Options or Stock Appreciation Rights
in exchange for cash, other Awards or Options or Stock Appreciation Rights with
an exercise price per share that is less than the exercise price per share of
the original Options or Stock Appreciation Rights without the approval of the
stockholders of the Company.

 

ARTICLE 13.

 

ADMINISTRATION

 

13.1                        Administrator.  The Committee (or another committee
or a subcommittee of the Board assuming the functions of the Committee under the
Plan) shall administer the Plan (except as otherwise permitted herein).  To the
extent necessary to comply with Rule 16b-3 of the Exchange Act, and with respect
to Awards that are intended to be Performance-Based Compensation, including
Options and Stock Appreciation Rights, the Committee (or another committee or
subcommittee of the Board assuming the functions of the Committee under the
Plan) shall take all action with respect to such Awards, and the individuals
taking such action shall consist solely of two or more Non-Employee Directors
appointed by and holding office at the pleasure of the Board, each of whom is
intended to qualify as both a “non-employee director” as defined by Rule 16b-3
of the Exchange Act or any successor rule and an “outside director” for purposes
of Section 162(m) of the Code.  Additionally, to the extent required by
Applicable Law, each of the individuals constituting the Committee (or another
committee or subcommittee of the Board or the Compensation Committee of the
Board assuming the functions of the Committee under the Plan) shall be an
“independent director” under the rules of any securities exchange or automated
quotation system on which the Shares are listed, quoted or traded. 
Notwithstanding the foregoing, any action taken by the Committee shall be valid
and effective, whether or not members of the Committee at the time of such
action are later determined not to have satisfied the requirements for
membership set forth in this Section 13.l or otherwise provided in any charter
of the Committee.  Except as may otherwise be provided in any charter of the
Committee, appointment of Committee members shall be effective upon acceptance
of appointment.  Committee members may resign at any time by delivering written
or electronic notice to the Board.  Vacancies in the Committee may only be
filled by the Board.  Notwithstanding the foregoing, (a) the full Board, acting
by a majority of its members in office, shall conduct the general administration
of the Plan with respect to Awards granted to Non-Employee Directors and, with
respect to such Awards, the terms “Administrator” and “Committee” as used in the
Plan shall be deemed to refer to the Board and (b) the Board or Committee may
delegate its authority hereunder to the extent permitted by Section 13.6.

 

13.2                        Duties and Powers of Committee.  It shall be the
duty of the Committee to conduct the general administration of the Plan in
accordance with its provisions.  The Committee shall have the power to interpret
the Plan, the Program and the Award Agreement, and to adopt such rules for the
administration, interpretation and application of the Plan as are not
inconsistent therewith, to interpret, amend or revoke any such rules and to
amend any Program or Award Agreement; provided that the rights or obligations of
the Holder of the Award that is the subject of any such Program or Award
Agreement are not affected adversely by such amendment, unless

 

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the consent of the Holder is obtained or such amendment is otherwise permitted
under Section 14.10.  Any such grant or award under the Plan need not be the
same with respect to each Holder.  Any such interpretations and rules with
respect to Incentive Stock Options shall be consistent with the provisions of
Section 422 of the Code.  In its sole discretion, the Board may at any time and
from time to time exercise any and all rights and duties of the Committee under
the Plan except with respect to matters which under Rule 16b-3 under the
Exchange Act or any successor rule, or Section 162(m) of the Code, or any
regulations or rules issued thereunder, or the rules of any securities exchange
or automated quotation system on which the Shares are listed, quoted or traded
are required to be determined in the sole discretion of the Committee.

 

13.3                        Action by the Committee.  Unless otherwise
established by the Board or in any charter of the Committee, a majority of the
Committee shall constitute a quorum and the acts of a majority of the members
present at any meeting at which a quorum is present, and acts approved in
writing by all members of the Committee in lieu of a meeting, shall be deemed
the acts of the Committee.  Each member of the Committee is entitled to, in good
faith, rely or act upon any report or other information furnished to that member
by any officer or other employee of the Company or any Affiliate, the Company’s
independent certified public accountants, or any executive compensation
consultant or other professional retained by the Company to assist in the
administration of the Plan.

 

13.4                        Authority of Administrator.  Subject to the
Company’s Bylaws, the Committee’s Charter and any specific designation in the
Plan, the Administrator has the exclusive power, authority and sole discretion
to:

 

(a)                                 Designate Eligible Individuals to receive
Awards;

 

(b)                                 Determine the type or types of Awards to be
granted to each Eligible Individual;

 

(c)                                  Determine the number of Awards to be
granted and the number of Shares to which an Award will relate;

 

(d)                                 Determine the terms and conditions of any
Award granted pursuant to the Plan, including, but not limited to, the exercise
price, grant price, purchase price, any Performance Criteria, any reload
provision, any restrictions or limitations on the Award, any schedule for
vesting, lapse of forfeiture restrictions or restrictions on the exercisability
of an Award, and accelerations or waivers thereof, and any provisions related to
non-competition and recapture of gain on an Award, based in each case on such
considerations as the Administrator in its sole discretion determines;

 

(e)                                  Determine whether, to what extent, and
pursuant to what circumstances an Award may be settled in, or the exercise price
of an Award may be paid in cash, Shares, other Awards, or other property, or an
Award may be canceled, forfeited, or surrendered;

 

(f)                                   Prescribe the form of each Award
Agreement, which need not be identical for each Holder;

 

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(g)                                  Decide all other matters that must be
determined in connection with an Award;

 

(h)                                 Establish, adopt, or revise any rules and
regulations as it may deem necessary or advisable to administer the Plan;

 

(i)                                     Interpret the terms of, and any matter
arising pursuant to, the Plan, any Program or any Award Agreement;

 

(j)                                    Make all other decisions and
determinations that may be required pursuant to the Plan or as the Administrator
deems necessary or advisable to administer the Plan; and

 

(k)                                 Accelerate wholly or partially the vesting
or lapse of restrictions of any Award or portion thereof at any time after the
grant of an Award, subject to whatever terms and conditions it selects and
Section 14.2.

 

13.5                        Decisions Binding.  The Administrator’s
interpretation of the Plan, any Awards granted pursuant to the Plan, any
Program, any Award Agreement and all decisions and determinations by the
Administrator with respect to the Plan are final, binding, and conclusive on all
parties.

 

13.6                        Delegation of Authority.  To the extent permitted by
Applicable Law, the Board or Committee may from time to time delegate to a
committee of one or more members of the Board or one or more officers of the
Company the authority to grant or amend Awards or to take other administrative
actions pursuant to this Article 13; provided, however, that in no event shall
an officer of the Company be delegated the authority to grant awards to, or
amend awards held by, the following individuals:  (a) individuals who are
subject to Section 16 of the Exchange Act, (b) Covered Employees or (c) officers
of the Company (or Directors) to whom authority to grant or amend Awards has
been delegated hereunder; provided, further, that any delegation of
administrative authority shall only be permitted to the extent it is permissible
under Section 162(m) of the Code and other Applicable Law.  Any delegation
hereunder shall be subject to the restrictions and limits that the Board or
Committee specifies at the time of such delegation, and the Board may at any
time rescind the authority so delegated or appoint a new delegatee.  At all
times, the delegatee appointed under this Section 13.6 shall serve in such
capacity at the pleasure of the Board and the Committee.

 

ARTICLE 14.

 

MISCELLANEOUS PROVISIONS

 

14.1                        Amendment, Suspension or Termination of the Plan. 
Except as otherwise provided in this Section 14.1, the Plan may be wholly or
partially amended or otherwise modified, suspended or terminated at any time or
from time to time by the Board or the Committee.  However, without approval of
the Company’s stockholders given within twelve (12) months before or after the
action by the Administrator, no action of the Administrator may, except as
provided in Section 14.2, (a) increase the Share Limit, (b) reduce the price per
share of any outstanding Option or Stock Appreciation Right granted under the
Plan or take any action prohibited under Section 12.6, or (c) cancel any Option
or Stock Appreciation Right in exchange

 

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for cash or another Award when the Option or Stock Appreciation Right price per
share exceeds the Fair Market Value of the underlying Shares.  Except as
provided in Section 14.10, no amendment, suspension or termination of the Plan
shall, without the consent of the Holder, impair any rights or obligations under
any Award theretofore granted or awarded, unless the Award itself otherwise
expressly so provides.  No Awards may be granted or awarded during any period of
suspension or after termination of the Plan, and notwithstanding anything herein
to the contrary, in no event may any Award be granted under the Plan after the
tenth (10th) anniversary of the Effective Date (the “Expiration Date”).  Any
Awards that are outstanding on the Expiration Date shall remain in force
according to the terms of the Plan and the applicable Award Agreement.

 

14.2                        Changes in Common Stock or Assets of the Company,
Acquisition or Liquidation of the Company and Other Corporate Events.

 

(a)                                 In the event of any stock dividend, stock
split, combination or exchange of shares, merger, consolidation or other
distribution (other than normal cash dividends) of Company assets to
stockholders, or any other change affecting the Shares of the Company’s stock or
the share price of the Company’s stock other than an Equity Restructuring, the
Administrator may make equitable adjustments, if any, to reflect such change
with respect to (i) the aggregate number and kind of Shares that may be issued
under the Plan (including, but not limited to, adjustments of the Share Limit
and Award Limit); (ii) the number and kind of Shares (or other securities or
property) subject to outstanding Awards; (iii) the number and kind of Shares (or
other securities or property) for which automatic grants are subsequently to be
made to new and continuing Non-Employee Directors pursuant to Section 4.6;
(iv) the terms and conditions of any outstanding Awards (including, without
limitation, any applicable performance targets or criteria with respect
thereto); and (v) the grant or exercise price per share for any outstanding
Awards under the Plan.  Any adjustment affecting an Award intended as
Performance-Based Compensation shall be made consistent with the requirements of
Section 162(m) of the Code.

 

(b)                                 In the event of any transaction or event
described in Section 14.2(a) or any unusual or nonrecurring transactions or
events affecting the Company, any Affiliate of the Company, or the financial
statements of the Company or any Affiliate, or of changes in Applicable Law or
accounting principles, the Administrator, in its sole discretion, and on such
terms and conditions as it deems appropriate, either by the terms of the Award
or by action taken prior to the occurrence of such transaction or event and
either automatically or upon the Holder’s request, is hereby authorized to take
any one or more of the following actions whenever the Administrator determines
that such action is appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan
or with respect to any Award under the Plan, to facilitate such transactions or
events or to give effect to such changes in laws, regulations or principles:

 

(i)                                     To provide for either (A) termination of
any such Award in exchange for an amount of cash, if any, equal to the amount
that would have been attained upon the exercise of such Award or realization of
the Holder’s rights (and, for the avoidance of doubt, if as of the date of the
occurrence of the transaction or event described in this Section 14.2 the
Administrator determines in good faith that no amount would have been attained
upon the

 

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exercise of such Award or realization of the Holder’s rights, then such Award
may be terminated by the Company without payment) or (B) the replacement of such
Award with other rights or property selected by the Administrator, in its sole
discretion, having an aggregate value not exceeding the amount that could have
been attained upon the exercise of such Award or realization of the Holder’s
rights had such Award been currently exercisable or payable or fully vested;

 

(ii)                                  To provide that such Award be assumed by
the successor or survivor corporation, or a parent or subsidiary thereof, or
shall be substituted for by similar options, rights or awards covering the stock
of the successor or survivor corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and prices;

 

(iii)                               To make adjustments in the number and type
of Shares of the Company’s stock (or other securities or property) subject to
outstanding Awards, and in the number and kind of outstanding Restricted Stock
or Deferred Stock and/or in the terms and conditions of (including the grant or
exercise price), and the criteria included in, outstanding Awards and Awards
which may be granted in the future;

 

(iv)                              To provide that such Award shall be
exercisable or payable or fully vested with respect to all Shares covered
thereby, notwithstanding anything to the contrary in the Plan or the applicable
Program or Award Agreement; and

 

(v)                                 To provide that the Award cannot vest, be
exercised or become payable after such event.

 

(c)                                  In connection with the occurrence of any
Equity Restructuring, and notwithstanding anything to the contrary in Sections
14.2(a) and 14.2(b):

 

(i)                                     The number and type of securities
subject to each outstanding Award and the exercise price or grant price thereof,
if applicable, shall be equitably adjusted; and/or

 

(ii)                                  The Administrator shall make such
equitable adjustments, if any, as the Administrator, in its sole discretion, may
deem appropriate to reflect such Equity Restructuring with respect to the
aggregate number and kind of Shares that may be issued under the Plan
(including, but not limited to, adjustments of the Share Limit and Award
Limit).  The adjustments provided under this Section 14.2(c) shall be
nondiscretionary and shall be final and binding on the affected Holder and the
Company.

 

(d)                                 Notwithstanding any other provision of the
Plan, in the event of a Change in Control, (i) each outstanding Award (other
than Awards subject to performance-based vesting) shall continue in effect or be
assumed or an equivalent Award substituted by the successor corporation or a
parent or subsidiary of the successor corporation and (ii) each Award subject to
performance-based vesting shall be subject to the terms and conditions of the
applicable Award Agreement and, if no applicable terms and conditions in such
Award Agreement, the Administrator’s discretion.  In the event an Award
continues in effect or is assumed or an equivalent Award substituted, and a
Holder incurs a Termination of Service without “cause” (as

 

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such term is defined in the sole discretion of the Administrator, or as set
forth in the Award Agreement relating to such Award between the Company and the
Holder) upon or within twelve (12) months following the Change in Control, then
such Holder shall be fully vested in such continued, assumed or substituted
Award.

 

(e)                                  In the event that the successor corporation
in a Change in Control refuses to assume or substitute for an Award (other than
an Award subject to performance-based vesting), the Administrator may cause any
or all of such Awards to become fully exercisable immediately prior to the
consummation of such transaction and all forfeiture restrictions on any or all
of such Awards to lapse.  If such an Award is exercisable in lieu of assumption
or substitution in the event of a Change in Control, the Administrator shall
notify the Holder that such Award shall be fully exercisable for a period of
fifteen (15) days from the date of such notice, contingent upon the occurrence
of the Change in Control, and such Award shall terminate upon the expiration of
such period.

 

(f)                                   For the purposes of this Section 14.2, an
Award shall 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) received in the 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
was not solely common stock of the successor corporation or its parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of the Award, for each Share
subject to an Award, to be solely common stock of the successor corporation or
its parent equal in fair market value to the per share consideration received by
holders of Common Stock in the Change in Control.

 

(g)                                  The Administrator, in its sole discretion,
may include such further provisions and limitations in any Award, agreement or
certificate, as it may deem equitable and in the best interests of the Company
that are not inconsistent with the provisions of the Plan.

 

(h)                                 With respect to Awards which are granted to
Covered Employees and are intended to qualify as Performance-Based Compensation,
no adjustment or action described in this Section 14.2 or in any other provision
of the Plan shall be authorized to the extent that such adjustment or action
would cause such Award to fail to so qualify as Performance-Based Compensation,
unless the Administrator determines that the Award should not so qualify.  No
adjustment or action described in this Section 14.2 or in any other provision of
the Plan shall be authorized to the extent that such adjustment or action would
cause the Plan to violate Section 422(b)(1) of the Code.  Furthermore, no such
adjustment or action shall be authorized to the extent such adjustment or action
would result in short-swing profits liability under Section 16 or violate the
exemptive conditions of Rule 16b-3 unless the Administrator determines that the
Award is not to comply with such exemptive conditions.

 

(i)                                     The existence of the Plan, the Program,
the Award Agreement and the Awards granted hereunder shall not affect or
restrict in any way the right or power of the Company or the stockholders of the
Company to make or authorize any adjustment,

 

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recapitalization, reorganization or other change in the Company’s capital
structure or its business, any merger or consolidation of the Company, any issue
of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.

 

(j)                                    No action shall be taken under this
Section 14.2 which shall cause an Award to fail to be exempt from or comply with
Section 409A of the Code or the Treasury Regulations thereunder.

 

(k)                                 In the event of any pending stock dividend,
stock split, combination or exchange of shares, merger, consolidation or other
distribution (other than normal cash dividends) of Company assets to
stockholders, or any other change affecting the Shares or the share price of the
Common Stock including any Equity Restructuring, for reasons of administrative
convenience, the Company in its sole discretion may refuse to permit the
exercise of any Award during a period of up to thirty (30) days prior to the
consummation of any such transaction.

 

14.3                        Approval of Plan by Stockholders.  The Plan shall be
submitted for the approval of the Company’s stockholders within twelve (12)
months after the date of the Board’s initial adoption of the Plan.  Awards may
be granted or awarded prior to such stockholder approval; provided that such
Awards shall not be exercisable, shall not vest and the restrictions thereon
shall not lapse and no Shares shall be issued pursuant thereto prior to the time
when the Plan is approved by the stockholders; and provided, further, that if
such approval has not been obtained at the end of said twelve (12) month period,
all Awards previously granted or awarded under the Plan shall thereupon be
canceled and become null and void.

 

14.4                        No Stockholders Rights.  Except as otherwise
provided herein, a Holder shall have none of the rights of a stockholder with
respect to Shares covered by any Award until the Holder becomes the record owner
of such Shares.

 

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

 

14.6                        Effect of Plan upon Other Compensation Plans.  The
adoption of the Plan shall not affect any other compensation or incentive plans
in effect for the Company or any Affiliate.  Nothing in the Plan shall be
construed to limit the right of the Company or any Affiliate:  (a) to establish
any other forms of incentives or compensation for Employees, Directors or
Consultants of the Company or any Affiliate, or (b) to grant or assume options
or other rights or awards otherwise than under the Plan in connection with any
proper corporate purpose including without limitation, the grant or assumption
of options in connection with the acquisition by purchase,

 

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lease, merger, consolidation or otherwise, of the business, stock or assets of
any corporation, partnership, limited liability company, firm or association.

 

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

 

14.8                        Titles and Headings, References to Sections of the
Code or Exchange Act.  The titles and headings of the Sections in the Plan are
for convenience of reference only and, in the event of any conflict, the text of
the Plan, rather than such titles or headings, shall control. References to
sections of the Code or the Exchange Act shall include any amendment or
successor thereto.

 

14.9                        Governing Law.  The Plan and any agreements
hereunder shall be administered, interpreted and enforced under the internal
laws of the State of Delaware without regard to conflicts of laws thereof or of
any other jurisdiction.

 

14.10                 Section 409A.  To the extent that the Administrator
determines that any Award granted under the Plan is subject to Section 409A of
the Code, the Program pursuant to which such Award is granted and the Award
Agreement evidencing such Award shall incorporate the terms and conditions
required by Section 409A of the Code.  To the extent applicable, the Plan, the
Program and any Award Agreements shall be interpreted in accordance with
Section 409A of the Code and Department of Treasury regulations and other
interpretive guidance issued thereunder, including without limitation any such
regulations or other guidance that may be issued after the Effective Date. 
Notwithstanding any provision of the Plan to the contrary, in the event that
following the Effective Date the Administrator determines that any Award may be
subject to Section 409A of the Code and related Department of Treasury guidance
(including such Department of Treasury guidance as may be issued after the
Effective Date), the Administrator may adopt such amendments to the Plan and the
applicable Program and Award Agreement or adopt other policies and procedures
(including amendments, policies and procedures with retroactive effect), or take
any other actions, that the Administrator determines are necessary or
appropriate to (a) exempt the Award from Section 409A of the Code and/or
preserve the intended tax treatment of the benefits provided with respect to the
Award, or (b) comply with the requirements of Section 409A of the Code and
related Department of Treasury guidance and thereby avoid the application of any
penalty taxes under such Section.

 

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14.11                 No Rights to Awards.  No Eligible Individual or other
person shall have any claim to be granted any Award pursuant to the Plan, and
neither the Company nor the Administrator is obligated to treat Eligible
Individuals, Holders or any other persons uniformly.

 

14.12                 Unfunded Status of Awards.  The Plan is intended to be an
“unfunded” plan for incentive compensation.  With respect to any payments not
yet made to a Holder pursuant to an Award, nothing contained in the Plan or any
Program or Award Agreement shall give the Holder any rights that are greater
than those of a general creditor of the Company or any Affiliate.

 

14.13                 Indemnification.  To the extent allowable pursuant to
Applicable Law, each member of the Committee or of the Board shall be
indemnified and held harmless by the Company from any loss, cost, liability, or
expense that may be imposed upon or reasonably incurred by such member in
connection with or resulting from any claim, action, suit, or proceeding to
which he or she may be a party or in which he or she may be involved by reason
of any action or failure to act pursuant to the Plan and against and from any
and all amounts paid by him or her in satisfaction of judgment in such action,
suit, or proceeding against him or her; provided he or she gives 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.  The foregoing
right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled pursuant to the Company’s
Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.

 

14.14                 Relationship to other Benefits.  No payment pursuant to
the Plan shall be taken into account in determining any benefits under any
pension, retirement, savings, profit sharing, group insurance, welfare or other
benefit plan of the Company or any Affiliate except to the extent otherwise
expressly provided in writing in such other plan or an agreement thereunder.

 

14.15                 Expenses.  The expenses of administering the Plan shall be
borne by the Company and its Affiliates.

 

*  *  *  *  *

 

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I hereby certify that the foregoing Plan was duly adopted by the Board of
Directors of WCI Communities, Inc. on June 26, 2013, effective as of the
Effective Date.

 

*  *  *  *  *

 

I hereby certify that the foregoing Plan was approved by the stockholders of WCI
Communities, Inc. on July 9, 2013.

 

Executed on this 9th, day of July, 2013.

 

 

/s/ Vivien Hastings

 

Vivien Hastings, Corporate Secretary

 

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