Exhibit 10.1

SED INTERNATIONAL HOLDINGS, INC.

2009 INCENTIVE COMPENSATION PLAN

I.  PURPOSES

          1.1 Purposes. The purposes of this 2009 INCENTIVE COMPENSATION PLAN
(as the same may be amended from time to time, the “Plan”) are (i) to advance
the interests of SED INTERNATIONAL HOLDINGS, INC., a Georgia corporation (the
“Company”), and its Subsidiaries (as defined below) and stockholders by
strengthening the ability of the Company and its Subsidiaries to attract and
retain employees, officers and directors of experience and ability and (ii) to
furnish an additional incentive to such persons to expend their best efforts on
behalf of the Company or any such Subsidiary.

          1.2 Types of Awards. The Plan provides for the granting of the
following types of Awards:

 

 

 

 

(a)

Incentive Options (as defined below);

 

 

 

 

(b)

Nonstatutory Options (as defined below);

 

 

 

 

(c)

Restricted Stock Awards (as defined below); and

 

 

 

 

(d)

Restricted Stock Units (as defined below).

          1.3 Effectiveness. The Plan shall be effective on the date it is
adopted by the Board of Directors of the Company (the “Board”) or such later
date as may be designated by them (the “Effective Date”).  

II.  CERTAIN DEFINITIONS

          In addition to any terms defined elsewhere in the Plan, the following
capitalized terms shall have the following respective meanings as used in the
Plan:

          2.1 “Arbitration Notice” has the meaning given to that term in Section
9.20.

          2.2 “Available Shares” has the meaning given to that term in Section
3.2.

          2.3 “Award” means the grant of any form of Option, Restricted Stock
Award, or Restricted Stock Unit, whether granted singly, in combination, or in
tandem, to a Holder pursuant to such terms, conditions and limitations as the
Committee may establish from time to time in order to fulfill the objectives of
the Plan.

          2.4 “Award Agreement” means the written document or agreement
evidencing the grant of an Award by the Company to a Holder and any additional
terms, conditions or limitations with respect to such grant.

          2.5 “Board of Directors” means the board of directors of the Company.

          2.6 “Business Day” means any day other than a Saturday, a Sunday, or a
day on which banking institutions in the State of Georgia are authorized or
obligated by law or executive order to close.

          2.7 “Change in Control” means:

                    (a) Any “person” (solely for purposes of this Section 2.7,
defined as such term is used in Sections 13(d)(3) and 14(d)(2) of the Exchange
Act) or more than one person acting as a group (as defined in paragraph (c)
below) is or becomes the beneficial owner, directly or indirectly, of securities
of the Company representing more than twenty-five percent (25%) of the combined
voting power of the Company’s outstanding stock;

                    (b) There is a change in the composition of the Board of
Directors over a period of twelve (12) consecutive months or less such that a
majority of the members of the Board of Directors (rounded up to the nearest
whole number) cease to be individuals who either (x) have been members of the
Board of Directors continuously since the beginning of such period or (y) have
been elected or nominated for election as members of the Board of Directors
during such period by a majority of the members of the Board of Directors
described in clause (x) who were still in office at the time such election or
nomination was approved by the Board of Directors; or

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                    (c) The sale of all or substantially all of the assets of
the Company.

                          It is intended that the Change in Control events
described in this definition meet the requirements for a “Change in Control
Event” as described in Section 1.409A-3(i)(5) of the Treasury Regulations
promulgated under Section 409A, and the term “Change in Control” shall be
interpreted and applied for all purposes of this Plan in a manner consistent
with such intent.

          2.8 “Code” means the Internal Revenue Code of 1986, as amended.

          2.9 “Committee” means the Compensation Committee of the Board of
Directors or such other committee appointed by the Board of Directors pursuant
to Article IV to administer the Plan.

          2.10 “Company” has the meaning given to that term in Section 1.1.

          2.11 “Covered Event” means (a) the commission by a Holder of a
criminal or other act that causes or probably will cause substantial economic
damage to the Company or a Subsidiary or substantial injury to the business
reputation of the Company or a Subsidiary; (b) the commission by a Holder of an
act of fraud in the performance of such Holder’s duties on behalf of the Company
or a Subsidiary; (c) the continuing failure of a Holder to perform the duties of
such Holder to the Company or a Subsidiary (other than such failure resulting
from the Holder’s incapacity due to physical or mental illness) after written
notice thereof (specifying the particulars thereof in reasonable detail) and a
reasonable opportunity to cure such failure are given to the Holder by the
Company; or (d) the order of a court of competent jurisdiction requiring the
termination of the Holder’s employment.

          2.12 “Date of Grant” has the meaning given to that term in Section
5.4.

          2.13 “Designated Beneficiary” has the meaning given to that term in
Section 9.7.

          2.14 “Disability” has the meaning given it in the employment agreement
between the Company or a Subsidiary and the Holder; provided, however, that if
the Holder has no such employment agreement or such term is not defined in the
employment agreement, “Disability” shall mean that (1) the Committee has
determined that the Holder has a permanent physical or mental impairment of
sufficient severity as to prevent the Holder from performing duties for the
Company or Subsidiary, as applicable, and (2) the Committee or the Company or
the relevant Subsidiary has provided written notice to the Holder that the
Holder’s employment is terminated due to a permanent “Disability” pursuant to
this Section. Notwithstanding the preceding sentence, with respect to any Award
constituting a deferral of compensation subject to the requirements of Section
409A, “Disability” shall mean that a Holder is “disabled” within the meaning of
Section 409A(a)(2)(C). The Committee may establish any process or procedure it
deems appropriate for determining whether a Holder has a “Disability.”

          2.15 “Dispute” has the meaning given to that term in Section 9.20.

          2.16 “Effective Date” has the meaning given to that term in Section
1.3.

          2.17 “Eligible Individuals” means directors, officers, employees and
agents of, and other providers of services to, the Company or any of its
Subsidiaries.

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

          2.19 “Exercise Notice” has the meaning given to that term in Section
6.6 (with respect to Options).

          2.20 “Exercise Price” has the meaning given to that term in Section
6.5.

          2.21 “Fair Market Value” means a per share value defined as follows,
for a particular day:

                    (a) Subject to Section 2.21(d), if shares of Stock of the
same class are listed on any national securities exchange at the date of
determination of Fair Market Value, then the closing price of one share on that
exchange (or, if more than one exchange, the exchange determined by the
Committee to be used for such purpose) on the date in question or, if such day
is not a Business Day or no such closing price is reported for that day, on the
last Business Day for which such a closing price is reported before the date in
question, in any case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to unlisted
trading privileges on that exchange; or

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                    (b) Subject to Section 2.21(d), if shares of Stock of the
same class are not listed as provided in Section 2.21(a) and if bid and asked
prices for shares of Stock of the same class in the over-the-counter market are
reported by the OTC Bulletin Board of the National Association of Securities
Dealers, Inc. at the date of determination of Fair Market Value, then the mean
between the high bid and low asked prices on the date in question or, if such
day is not a Business Day or no such prices are reported that day, on the last
Business Day for which such prices are reported before the date in question; or

                    (c) If shares of Stock of the same class are not listed as
provided in Section 2.21(a) and bid and asked prices therefor are not reported
by the OTC Bulletin Board as provided in Section 2.21(b) at the date of
determination of Fair Market Value, then the value determined by the Committee;
or

                    (d) If shares of Stock of the same class are listed as
provided in Section 2.21(a) or bid and asked prices therefor are reported by the
OTC Bulletin Board as provided in Section 2.21(b) at the date of determination
of Fair Market Value, but the volume of trading is so low that the Committee
determines that such prices are not indicative of the fair value of the Stock,
then the value determined by the Committee.

          2.22 “Holder” means an Eligible Individual to whom an Award has been
granted.

          2.23 “Incentive Option” means an incentive stock option as defined
under Section 422 of the Code.

          2.24 “Maximum Shares” has the meaning given to that term in Section
3.1.

          2.25 “NASDAQ” means the Nasdaq Stock Market, Inc.

          2.26 “Non-Employee Director” means a person who is a “Non-Employee
Director” as that term is used in Rule 16b-3.

          2.27 “Nonstatutory Option” means a stock option that (i) does not
satisfy the requirements for an incentive stock option under Section 422 of the
Code; (ii) that is designated at the Date of Grant or in the applicable Option
Agreement to be an option other than an Incentive Option; or (iii) is modified
in accordance with Section 9.3(b) to be an option other than an Incentive
Option.

          2.28 “Normal Retirement” means the termination of the Holder’s
employment with the Company and its Subsidiaries on account of retirement at any
time on or after the date on which the Holder attains age seventy (70) or such
other date the Committee or the Board of Directors shall designate (but for
purposes of clarification excludes any termination of employment as a result of
a Covered Event).

          2.29 “Option” means either an Incentive Option or a Nonstatutory
Option, or both.

          2.30 “Option Agreement” means an Award Agreement for an Option.

          2.31 “Outside Director” means an “outside director” as that term is
used in Section 162(m).

          2.32 “Person” means any individual, partnership, joint venture,
corporation, trust, unincorporated organization, association, limited liability
company, joint stock company, government or any department or agency thereof, or
any other form of association or entity.

          2.33 “Plan” has the meaning given to that term in Section 1.1.

          2.34 “Restricted Stock Award” means the grant or purchase, on the
terms, conditions and limitations that the Committee determines or on the terms,
conditions and limitations of Article VII, of Stock that is nontransferable and
subject to substantial risk of forfeiture until specific conditions are met;
provided, however, that this term shall not apply to shares of Stock issued or
transferred in connection with the exercise or settlement of an Option or a
Restricted Stock Unit whether or not such shares of Stock are nontransferable or
subject to substantial risk of forfeiture when issued or transferred.

          2.35 “Restricted Stock Unit" means the grant of a unit representing a
contingent right to receive a specified number of shares of Stock issued and
delivered at the end of a specified period, subject to the terms, conditions and
limitations that the Committee determines or on the terms, conditions and
limitations of Article VIII.

          2.36 “Rule 16b-3” means Rule 16b-3 under Section 16(b) of the Exchange
Act.

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

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

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

          2.40 “Stock” means the Company’s authorized common stock, par value
$0.01 per share, or any other securities, property or assets that are
substituted for the Stock as provided in Section 9.2.

          2.41 “Subsidiary” means an entity, as may from time to time be
designated by the Committee, that is (i) a subsidiary corporation, or is treated
as, or as part of, a subsidiary corporation of the Company (within the meaning
of Section 424 of the Code), or (ii) any other entity that the Company controls,
directly or indirectly. For purposes of this definition, “control” means the
power to direct the management and policies of such entity, whether through the
ownership of Voting Securities, by contract or otherwise.

          2.42 “Ten Percent Stockholder” shall have the meaning given to that
term in Section 5.2.

          2.43 “Voting Securities” means any securities that at the applicable
time are entitled to vote generally in the election of directors, in the
admission of general partners, or in the selection of any other similar
governing body.

III.  SHARES OF STOCK SUBJECT TO THE PLAN

          3.1 Maximum Shares. Subject to the provisions of Sections 3.2, 3.3,
3.6 and Section 9.2, the aggregate number of shares of Stock that may be issued
or transferred pursuant to Awards under the Plan (the “Maximum Shares”) shall be
equal to two hundred fifty thousand (250,000) shares of Stock.

          3.2 Available Shares. Except as otherwise provided in Section 3.3, at
any time, the number of shares of Stock that may then be made subject to
issuance or transfer pursuant to new Awards under the Plan (the “Available
Shares”) shall be equal to (a) the number of Maximum Shares minus (b) the sum of
(1) the number of shares of Stock subject to issuance or transfer upon exercise
or settlement of the then outstanding Awards granted under this Plan; and (2)
the number of shares of Stock issued or transferred upon exercise or settlement
of Awards granted under this Plan.

          3.3 Restoration of Unused Shares. If Stock subject to any Award under
this Plan is not issued or transferred, or ceases to be issuable or
transferable, for any reason, including the termination, forfeiture, unexercised
expiration, exchange for other Awards under this Plan or settlement in cash in
lieu of Stock, of an Award under this Plan, the shares of Stock that were
subject to that Award shall no longer be charged against the number of Maximum
Shares in calculating the number of Available Shares under Section 3.2 and shall
again be included in Available Shares.

          3.4 Description of Shares. The shares of Stock to be delivered under
the Plan shall be made available from (a) authorized but unissued shares of
Stock, (b) Stock held in the treasury of the Company, or (c) previously issued
shares of Stock reacquired by the Company, including shares purchased on the
open market, in each situation as the Board of Directors or the Committee may
determine from time to time.  All shares of Stock issued or transferred as
provided in the Plan shall be fully paid and non-assessable to the extent
permitted by law.

          3.5 Listing, Registration, etc. of Shares. If at any time the Board of
Directors shall determine in its discretion that the listing, registration or
qualification of the shares of Stock covered by the Plan upon any national
securities exchange or other trading system or under any state or federal law,
or the consent or approval of any governmental or regulatory body, is necessary
or desirable as a condition of, or in connection with, the issuance or transfer
of shares of Stock under the Plan, no shares of Stock shall be issued or
transferred under the Plan unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained, or
otherwise provided for, free of any conditions not acceptable to the Board of
Directors. Nothing in the Plan shall require the Company to list, register or
qualify any securities, to obtain any such consent or approval, or to maintain
any such listing, registration, qualification, consent or approval.

          3.6 Reduction in Outstanding Shares of Stock. Nothing in this Article
III shall impair the right of the Company to reduce the number of outstanding
shares of Stock pursuant to repurchases, redemptions, or otherwise; provided,
however, that no reduction in the number of outstanding shares of Stock shall
(a) impair the validity of any outstanding Award, whether or not that Award is
fully exercisable or fully vested, or (b) impair the status of any shares of
Stock previously issued or transferred pursuant to an Award or thereafter issued
or transferred pursuant to a then-outstanding Award as duly authorized, validly
issued, fully paid, and nonassessable shares.

IV.  ADMINISTRATION OF THE PLAN

          4.1 Committee. The Board of Directors shall designate the Committee to
administer the Plan, each member of which shall at all times be (a) a
Non-Employee Director and (b) an Outside Director. The number of individuals
that shall constitute the Committee shall be determined from time to time by the
Board of Directors, but shall be no fewer than two (2) individuals.

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          4.2 Duration, Removal, Etc. The members of the Committee shall serve
at the pleasure of the Board of Directors, which shall have the power, at any
time and from time to time, to remove members from or add members to the
Committee. Removal from the Committee may be with or without cause. Any
individual serving as a member of the Committee shall have the right to resign
from membership on the Committee by written notice to the Board of Directors.
The Board of Directors, and not the remaining members of the Committee, shall
have the power and authority to fill vacancies on the Committee, however caused.
The Board of Directors shall promptly fill any vacancy that causes the number of
members of the Committee to be below two (2) or any other number that Rule 16b-3
or Section 162(m) may require from time to time.

          4.3 Meetings and Actions of Committee. The Board of Directors shall
designate the chairman of the Committee. If the Board of Directors fails to
designate a Committee chairman, the members of the Committee shall elect one of
the Committee members as chairman, who shall act as chairman until the director
ceases to be a member of the Committee or until the Board of Directors
designates a new chairman. The Committee shall hold its meetings at such times
and places as the chairman of the Committee may determine. At all meetings of
the Committee, a quorum for the transaction of business shall be required, and a
quorum shall be deemed present if at least a majority of the members of the
Committee are present. At any meeting of the Committee, each member shall have
one vote. All decisions and determinations of the Committee shall be made by the
majority vote or majority decision of all of its members present at a meeting at
which a quorum is present; provided, however, that any decision or determination
reduced to writing and signed by all of the members of the Committee shall be as
fully effective as if it had been made at a meeting that was duly called and
held. The Committee may make any rules and regulations for the conduct of its
business that are not inconsistent with the provisions of the Plan and the
Company’s Certificate of Incorporation and Bylaws (in each case as amended from
time to time), Rule 16b-3 and Section 162(m), to the extent applicable, as the
Committee may deem advisable.

          4.4 Committee’s Powers. Subject to the express provisions of the Plan,
any applicable Award Agreement, Rule 16b-3 and Section 162(m), to the extent
applicable, the Committee shall have the authority (a) to adopt, amend, and
rescind administrative, interpretive and other rules and regulations relating to
the Plan; (b) to determine the Eligible Individuals to whom, and the time or
times at which, Awards shall be granted; (c) to determine the number of shares
of Stock that shall be the subject of each Award; (d) to determine the terms and
provisions of each Award Agreement and any amendments thereto, including
provisions defining or otherwise relating to (i) the term and the period or
periods and extent of exercisability of the Options, Restricted Stock Awards and
Restricted Stock Units, (ii) the extent to which the transferability of shares
of Stock issued or transferred pursuant to any Award is restricted, (iii) the
effect of termination of employment on the Award, and (iv) except as provided in
Section 9.6, the effect of leaves of absence and the effect of transfers of an
Eligible Individual’s employment from the Company to a Subsidiary or from a
Subsidiary to the Company (consistent with any applicable regulations of the
Internal Revenue Service and any other requirements of applicable law with
respect to the same); (e) to construe the respective Award Agreements, the Plan,
and any rules or regulations with respect thereto; (f) to make determinations of
the Fair Market Value of the Stock pursuant to the Plan; (g) to reduce,
eliminate or accelerate any restriction or vesting requirement applicable to an
Award at any time after the grant of an Award or to extend the time for
exercising any Option (but not beyond the original ten year term), Restricted
Stock Awards and Restricted Stock Units; (h) to amend any Award Agreement or
waive any provision, condition or limitation thereof; (i) to delegate its duties
under the Plan to such agents as it may appoint from time to time, provided that
the Committee may not delegate its duties with respect to making Awards to
Eligible Individuals; (j) to take or refrain from taking such other actions as
are described in the Plan as within the purview of the Committee; and (k) to
make all other determinations, perform all other acts, and exercise all other
powers and authority necessary or advisable for administering the Plan,
including the delegation of those ministerial acts and responsibilities as the
Committee deems appropriate. Subject to Rule 16b-3 and Section 162(m), to the
extent applicable, the Committee may correct any defect, supply any omission or
reconcile any inconsistency in the Plan, in any Award, or in any Award Agreement
in the manner and to the extent it deems necessary or desirable to carry the
Plan into effect. Any determinations and other actions of the Committee with
respect to any of the matters referred to in this Section 4.4 or elsewhere in
the Plan or in any Award Agreement need not be consistent, even among Eligible
Individuals who are similarly situated and/or who have previously received
similar or other Awards, except as may be specifically provided to the contrary
in the Plan or in the applicable Award Agreement. The determinations and other
actions of the Committee with respect to any of the matters referred to in this
Section 4.4 or elsewhere in the Plan or in any Award Agreement shall, except as
may be specifically provided to the contrary in the Plan or in the applicable
Award Agreement, be made in the sole discretion of the Committee (subject to
modification or rescission by the Board of Directors, if consistent with Rule
16b-3 and Section 162(m), to the extent applicable) and shall be final, binding
and conclusive.

          4.5 Counsel, Consultants and Agents. The Committee may employ such
legal counsel, consultants and agents as it may deem desirable for the
administration of the Plan and may rely upon any opinion received from any such
counsel or consultants and any computation received from any such consultants or
agents. Expenses incurred by the Committee in the engagement of any such
counsel, consultants or agents shall be paid by the Company.

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V.  ELIGIBILITY AND PARTICIPATION; CERTAIN AWARD TERMS

          5.1 Eligible Individuals. Awards may be granted pursuant to the Plan
only to persons who are Eligible Individuals at the time of the grant thereof
(and, with respect to Incentive Options, satisfy the requirements of Section
5.2). Notwithstanding the preceding sentence, except as indicated by Section
1.409A-1(b)(5)(iii)(E) of the Code and except as may otherwise be provided in
guidance issued by the Internal Revenue Service under Section 409A of the Code,
a person shall not be awarded an Option pursuant to the Plan if the Subsidiary
by which such person is employed (or to which such person provides services)
would not be considered part of the same “single employer” as the Company under
Sections 414(b) and 414(c) of the Code.

          5.2 Limitation for Incentive Options. Notwithstanding any provision
contained in the Plan to the contrary, (a) a person shall not be eligible to
receive an Incentive Option unless the person is an Eligible Individual employed
by the Company or any Subsidiary of the Company that is a subsidiary
corporation, or is treated as, or as part of, a subsidiary corporation of the
Company (within the meaning of Section 424 of the Code) at the time of the grant
thereof, and (b) a person shall not be eligible to receive an Incentive Option
if, immediately before the time the Option is granted, that person owns (within
the meaning of Sections 422 and 424 of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or a Subsidiary of the Company that is a subsidiary corporation, or is
treated as, or as part of, a subsidiary corporation of the Company (within the
meaning of Section 424 of the Code) (a “Ten Percent Stockholder”). Nevertheless,
clause (b) of the foregoing sentence of this Section 5.2 shall not apply if, at
the time the Incentive Option is granted, the Exercise Price of the Incentive
Option is at least one hundred and ten percent (110%) of the Fair Market Value
per share of Stock and the Incentive Option is not, by its terms, exercisable
after the expiration of five (5) years from the Date of Grant.

          5.3 Grant of Awards. Subject to the express provisions of the Plan,
the Committee shall determine which Eligible Individuals shall be granted Awards
from time to time.  The Committee shall also determine the number (or the method
of determining the number) of shares of Stock, or amounts (or method of
determining the amounts) of cash or other property or assets, subject to each of
the Awards.

          5.4 Date of Grant. The date on which the Award covered by an Award
Agreement is granted (the “Date of Grant”) shall be the date specified by the
Committee as the effective date or date of grant of an Award. Except as
otherwise determined by the Committee, in no event shall a Holder gain any
rights with respect to an Award in addition to those specified by the Committee
in its grant, regardless of the time that may pass between the grant of the
Award and the actual execution or delivery of the Award Agreement by the Company
and (if required in the Award Agreement) the Holder. The Committee may
invalidate an Award at any time before the Award Agreement is executed by the
Holder (if such execution is required) or is delivered to the Holder (if such
execution is not required), and any such invalidated Award shall be treated as
never having been granted.

          5.5 Award Agreements. Each Award granted under the Plan shall be
evidenced by an Award Agreement that is executed by the Company and, if required
in the Award Agreement, by the Eligible Individual to whom the Award is granted,
and that includes such terms, conditions and limitations that the Committee
shall deem necessary or desirable. More than one Award may be granted under the
Plan to the same Eligible Individual and be outstanding concurrently.

          5.6 No Right to Award. The adoption of the Plan shall not be deemed to
give any person a right to be granted an Award.

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          5.7 Payment of Taxes. The Committee may require a Holder to pay to the
Company (or, if the Holder is an employee of a Subsidiary of the Company, to
such Subsidiary), with respect to an Option, at the time of the exercise of such
Option, and with respect to a Restricted Stock Award or Restricted Stock Unit,
at such time or times as may be designated by the Committee, the amount that the
Committee deems necessary to satisfy the Company’s or such Subsidiary’s current
or future obligation to withhold federal, state or local income or other taxes
associated with the exercise, grant or payment with respect to the relevant
Award. Upon the exercise of an Option requiring tax withholding (or, with
respect to a Restricted Stock Award or Restricted Stock Unit, prior to such time
or times as such payment is due from the Holder to the Company or such
Subsidiary), the Holder may (a) request that the Company withhold from the
shares of Stock to be issued or transferred to the Holder the number of shares
(based upon the shares’ Fair Market Value per share as of the day before the
date of withholding) necessary to satisfy the Company’s or such Subsidiary’s
obligation to withhold taxes, the determination as to such obligation to be
based on the shares’ Fair Market Value per share as of the day before the date
of exercise (with respect to an Option) or as of the date on which tax
withholding is to be made (with respect to Restricted Stock Awards or Restricted
Stock Units); (b) request that the Holder be allowed to deliver to the Company
sufficient shares of Stock (based upon the shares’ Fair Market Value per share
as of the day before the date of such delivery) to satisfy the Company’s or such
Subsidiary’s tax withholding obligations; or (c) deliver sufficient cash to the
Company to satisfy the Company’s or such Subsidiary’s tax withholding
obligations. Holders who wish to proceed under clause (a) or (b) above must make
their request to do so at such time and in such manner that the Committee
prescribes from time to time, and such transaction shall be effected in
accordance with such procedures as the Committee may establish from time to
time.  Notwithstanding the foregoing, however, the Committee may, at its sole
option, deny any Holder’s request to proceed under clause (a) or (b) above or
may impose any conditions it deems appropriate on such action, including the
escrow of shares of Stock or cash.  In the event the Committee subsequently
determines that the cash amount or the aggregate Fair Market Value (as
determined above) of any shares of Stock withheld or tendered as payment of any
tax withholding obligation is insufficient to discharge that tax withholding
obligation, then the Holder shall pay to the Company, immediately upon the
Committee’s request, the amount of that deficiency.  The Company may also, if
the Committee so elects, retain any cash and any certificates evidencing shares
of Stock to which such Holder is entitled upon the exercise of the Option or in
connection with a Restricted Stock Award or in settlement of a Restricted Stock
Unit as security for the payment of any tax withholding obligation until
satisfied, and the Company shall have all rights of a secured creditor under the
applicable Uniform Commercial Code with respect to the same.  

          5.8 Forfeiture and Restrictions on Transfer; Other Conditions. Without
limitation of any other provisions of the Plan or any power of the Board of
Directors or the Committee hereunder, any Award Agreement may contain or
otherwise provide for, in addition to any terms, conditions or limitations
required or permitted by other provisions of the Plan, such other terms,
conditions or limitations as the Committee may deem advisable or proper from
time to time provided any such additional term, condition or limitation is not
inconsistent with the terms of the Plan, including (i) restrictions on the
transferability of the Award; (ii) restrictions or the removal of restrictions
upon the exercise of an Award; (iii) restrictions or the removal of restrictions
on the retention or transfer of any shares of Stock acquired pursuant to an
Award or otherwise; (iv) options and rights of first refusal in favor of the
Company and one or more stockholders of the Company; (v) requirements that the
Holder render substantial services to the Company or one or more of its
Subsidiaries for a specified period of time; (vi) restrictions on disclosure and
use of certain information regarding the Company or other Persons; (vii)
restrictions on solicitation of employees and other Persons; (viii) restrictions
on competition; and (ix) other terms, conditions or limitations; all of which as
the Committee may deem proper or advisable from time to time.

VI.  TERMS AND CONDITIONS OF OPTIONS

          6.1 Compliance with Option Agreement. All Options granted under the
Plan shall comply with, and the related Option Agreements shall be subject to,
the terms, conditions and limitations set forth in this Article VI (to the
extent each such term, condition or limitation applies to the form of Option and
provided that, if any such term, condition or limitation is left to the
discretion of the Committee, the Committee determines to apply it to such
Option) and also to the terms, conditions and limitations set forth in Article
IX (to the extent each such term, condition or limitation applies to the form of
Option and provided that, if any such term, condition or limitation is left to
the discretion of the Committee, the Committee determines to apply it to such
Option); provided, however, that the Committee may authorize an Option Agreement
that expressly contains or is subject to terms, conditions and limitations that
differ from any of the terms, conditions and limitations of Article IX. The
Committee may also authorize an Option Agreement that contains or is subject to
any or all of the terms, conditions and limitations of Article X (to the extent
each such term, condition or limitation applies to the form of Option and
provided that, if any such term, condition or limitation is left to the
discretion of the Committee, the Committee determines to apply it to such
Option) or similar terms, conditions and limitations; nevertheless, no term,
condition or limitation of Article X (or any similar term, condition or
limitation) shall apply to an Option Agreement unless the Option Agreement
expressly states that such term, condition or limitation applies.

          6.2 Number of Shares; Type of Award. Each Option Agreement shall state
the total number of shares of Stock to which it relates. Each Option Agreement
shall identify the Option evidenced thereby as an Incentive Option or
Nonstatutory Option, as the case may be.

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          6.3 Vesting. The Option Agreement shall state (i) any time, periods or
other conditions in or pursuant to which the right to exercise the Option or a
portion thereof shall vest and (ii) the number (or method of determining the
number) of shares of Stock with respect to each such vesting.  Any or all of the
foregoing shall be determined by the Committee or the Board of Directors in
their sole and absolute discretion.

          6.4 Expiration. Nonstatutory Options and Incentive Options may be
exercised during the term determined by the Committee and set forth in the
Option Agreement; provided that no Incentive Option shall be exercised after the
expiration of a period of ten (10) years (or, with respect to a Ten Percent
Stockholder, five (5) years) commencing on the Date of Grant of the Incentive
Option.

          6.5 Exercise Price. Each Option Agreement shall state the exercise
price per share of Stock (the “Exercise Price”), which shall not be less than
the greatest of (a) the par value per share of the Stock, (b) one hundred
percent (100%) of the Fair Market Value per share of the Stock on the Date of
Grant of the Option, or (c) in the case of an Incentive Option granted to a Ten
Percent Stockholder, one hundred ten percent (110%) of the Fair Market Value per
share of the Stock on the Date of Grant of the Option.

          6.6 Method of Exercise. Each Option shall be exercisable only by
notice of exercise (the “Exercise Notice”) in the manner (including the time
period) specified by the Committee from time to time (which need not comply with
Section 12.14 if expressly so provided by the Committee) to the Secretary of the
Company at the chief executive office of the Company (or to such other person
and location as may be designated from time to time by the Committee) during the
term of the Option, which notice shall (a) state the number of shares of Stock
with respect to which the Option is being exercised, (b) be signed or otherwise
given by the Holder of the Option or by another Person authorized to exercise
the Option pursuant to Section 9.7 or 9.8 (to the extent that each is applicable
to the Option) or pursuant to the relevant Option Agreement, (c) be accompanied
by the aggregate Exercise Price for all shares of Stock for which the Option is
exercised in accordance with Section 6.8, and (d) include such other
information, instruments, and documents as may be required to satisfy any other
condition under the Plan or the relevant Option Agreement or as may be
reasonably imposed by the Committee. The Option shall not be deemed to have been
exercised unless all of the requirements of the preceding provisions of this
Section 6.6 have been satisfied.

          6.7 Incentive Option Exercises and Disqualifying Dispositions. Except
as provided in Section 9.7(b) or Section 9.8 (to the extent that each is
applicable to the Option), during the Holder’s lifetime, only the Holder may
exercise an Incentive Option. The Holder of an Incentive Option shall
immediately notify the Company in writing of any disposition of any Stock
acquired pursuant to the Incentive Option that would disqualify the Incentive
Option from being treated as an incentive stock option under Section 422 of the
Code (including any disposition of Stock upon exercise of an Award requiring
exercise, or in connection with the payment of taxes with respect to an Award,
if the same would constitute such a disqualifying disposition). The notice shall
state the number of shares disposed of, the dates of acquisition and disposition
of the shares, and the consideration received in connection with each
disposition.

          6.8 Medium and Time of Payment. The Exercise Price of an Option shall
be payable in full upon the exercise of the Option (a) in cash, by cashier’s
check, by wire transfer or by other means as may be acceptable to the Committee
from time to time, (b) with the Committee’s prior consent (which consent, with
respect to an Incentive Option, must be evidenced in the relevant Option
Agreement as of the Date of Grant), and to the extent permitted by applicable
law, with shares of Stock that would otherwise be issued or transferred to the
Holder upon the exercise of the Option or with shares of Stock already owned by
the Holder (but in all events excluding any shares that are to be or were issued
or transferred pursuant to a Restricted Stock Award with respect to which the
restrictions have not yet expired or been removed or that otherwise are or will
be subject to restrictions on transferability or a substantial risk of
forfeiture) and having an aggregate Fair Market Value at least equal to the
aggregate Exercise Price payable in connection with such exercise, and pursuant
to such procedures (including constructive delivery of such shares of Stock) as
the Committee may establish from time to time for such purpose, (c) with the
Committee’s prior consent (which consent, with respect to an Incentive Option,
must be evidenced in the relevant Option Agreement as of the Date of Grant), and
to the extent permitted by applicable law, in such other forms, under such other
terms, and by such other means (including those specified in Section 6.9) as may
be acceptable to the Committee from time to time, and pursuant to such
procedures as the Committee may establish from time to time for such purpose, or
(d) with the Committee’s prior consent (which consent, with respect to an
Incentive Option, must be evidenced in the relevant Option Agreement as of the
Date of Grant), by any combination of clauses (a), (b) and (c). Unless otherwise
provided in the relevant Option Agreement, any portion of the Exercise Price
that is paid with shares of Stock that the Holder acquired from the Company,
directly or indirectly, shall be paid only with shares of Stock that the Holder
has owned for more than six (6) months (or such longer or shorter period of
time, if any, as may be required to avoid payment with such shares resulting in
a charge to earnings for financial accounting purposes). If the Committee elects
to accept shares of Stock in payment of all or any portion of the aggregate
Exercise Price, then (for purposes of payment of the aggregate Exercise Price)
unless otherwise provided in the relevant Option Agreement those shares of Stock
shall be deemed to have a cash value equal to their aggregate Fair Market Value
determined as of the day before the date of the delivery of the Exercise Notice.

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          6.9 Payment with Sale Proceeds. The Committee may (but shall not be
required to) approve from time to time (which approval, with respect to an
Incentive Option, must be evidenced in the relevant Option Agreement as of the
Date of Grant) arrangements with a brokerage firm (provided that such
arrangements comply with applicable law, including Regulation T of the Board of
Governors of the Federal Reserve System), under which that brokerage firm, on
behalf of the Holder, shall pay to the Company the aggregate Exercise Price of
the Option being exercised (either as a loan to the Holder or from the proceeds
of the sale of Stock issued or transferred pursuant to that exercise of the
Option), and the Company shall cause the shares with respect to which the Option
was so exercised to be delivered to the brokerage firm. Such transactions shall
be effected in accordance with such procedures (which may include payment of the
exercise price by, or delivery of Stock to, such brokerage firm) as the
Committee may establish from time to time.

          6.10 Limitation on Aggregate Value of Shares That May Become First
Exercisable During Any Calendar Year Under an Incentive Option. With respect to
any Incentive Option granted under the Plan, the aggregate Fair Market Value of
shares of Stock subject to an incentive stock option that first becomes
exercisable by a Holder in any calendar year (under all plans of the Company,
its Subsidiaries that are subsidiary corporations, or are treated as, or as part
of, a subsidiary corporation of the Company (within the meaning of Section 424
of the Code) or any predecessor corporation) may not (with respect to that
Holder) exceed $100,000, or such other amount as may be prescribed under Section
422 of the Code. As used in the previous sentence, Fair Market Value shall be
determined as of the date the Incentive Option is granted, and the limitation
shall be applied by taking into account Incentive Options in the order in which
they were granted. For purposes of this Section 6.10, “predecessor corporation”
means (a) a corporation that was a party to a transaction described in Section
424(a) of the Code (or which would be so described if a substitution or
assumption under that section had been effected) with the Company, (b) a
corporation which, at the time the new incentive stock option (within the
meaning of Section 422 of the Code) is granted, is a related corporation of the
Company, or (c) a predecessor corporation of any such corporations. Failure to
comply with this Section 6.10 (including any such failure resulting from
accelerated vesting of an Incentive Option) shall not impair the enforceability
or exercisability of any Incentive Option, but shall cause the Incentive Option
to be treated as a Nonstatutory Option for federal tax purposes to the extent
that it exceeds the $100,000 limitation described in this Section 6.10.

          6.11 No Fractional Shares. The Company shall not in any case be
required to sell, issue, transfer or deliver any fractional shares with respect
to any Option. In lieu of the issuance or transfer of any fractional share of
Stock, the Company shall pay to the Holder an amount in cash equal to the same
fraction (as the fractional share) of the Fair Market Value of a share of Stock
determined as of the date of the applicable Exercise Notice.

          6.12 Other Provisions Regarding Incentive Options. With respect to any
Option that is designated in the governing Option Agreement as an Incentive
Option, (i) if any of the terms, conditions or limitations of the Plan or the
relevant Option Agreement conflict with the requirements of Sections 421, 422
and 424 of the Code, as applicable, then those conflicting terms, conditions and
limitations shall be deemed inoperative to the extent they so conflict with such
requirements, and (ii) if the Plan or such Option Agreement does not contain any
provision required to be included herein or therein under Sections 421, 422 and
424 of the Code, as applicable, that provision shall be deemed to be
incorporated herein or therein with the same force and effect as if that
provision had been set out at length herein or therein, in each case unless the
Committee determines to treat such Option (in whole or in part) as a
Nonstatutory Option. Notwithstanding the foregoing, however, (i) to the extent
that any Option that was intended to qualify as an Incentive Option nevertheless
cannot so qualify, that Option (to that extent) shall be deemed a Nonstatutory
Option for all purposes of the Plan, and (ii) in no event shall this Section
6.12 operate to overcome the terms under which such Option vests (including any
accelerated vesting, to the extent applicable).

VII.  RESTRICTED STOCK AWARDS

          7.1 Compliance with Award Agreement. All Restricted Stock Awards
granted under the Plan shall comply with, and the related Award Agreements shall
be subject to, the terms, conditions and limitations set forth in this Article
VII (to the extent each such term, condition or limitation applies to the form
of Restricted Stock Award and provided that, if any such term, condition or
limitation is left to the discretion of the Committee, the Committee determines
to apply it to such Restricted Stock Award) and also to the terms, conditions
and limitations set forth in Article VII (to the extent applicable to the form
of Restricted Stock Award and provided that, if any such term, condition or
limitation is left to the discretion of the Committee, the Committee determines
to apply it to such Restricted Stock Award); provided, however, that the
Committee may authorize an Award Agreement governing a Restricted Stock Award
that expressly contains or is subject to terms, conditions and limitations that
differ from the terms, conditions and limitations set forth in Article IX. The
Committee may also authorize an Award Agreement governing a Restricted Stock
Award that contains or is subject to any or all of the terms, conditions and
limitations of Article X (to the extent applicable to the form of Restricted
Stock Award and provided that, if any such term, condition or limitation is left
to the discretion of the Committee, the Committee determines to apply it to such
Restricted Stock Award) or similar terms, conditions and limitations;
nevertheless, no term, condition or limitation of Article X (or any similar
term, condition or limitation) shall apply to an Award Agreement governing a
Restricted Stock Award unless the Award Agreement expressly states that such
term, condition or limitation applies.

          7.2 Number of Shares; Type of Award. Each Award Agreement governing a
Restricted Stock Award shall state the total number of shares of Stock to which
it relates.

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          7.3 Restrictions Applicable to Restricted Stock Awards. Unless
otherwise provided in the relevant Award Agreement, all shares of Stock granted
or sold pursuant to Restricted Stock Awards made under the Plan shall be subject
to the following terms, conditions and limitations:

                    (a) Transferability. The shares may not be sold, transferred
or otherwise alienated or hypothecated until the restrictions are removed or
expire.

                    (b) Legend. Each certificate representing such shares shall
bear a legend making appropriate reference to the restrictions imposed as set
forth in Sections 9.12 and 9.13.  The text of any such legend shall be
determined by the Company.

                    (c) Possession. The Committee may (i) authorize issuance of
a certificate for shares associated with a Restricted Stock Award only upon
removal or expiration of the applicable restrictions, (ii) require the Company
to retain physical custody of certificates representing shares issued or
transferred pursuant to Restricted Stock Awards during the restriction period
and require the Holder of the Award to execute stock powers in blank for those
certificates and deliver those stock powers to the Company, (iii) require the
Holder to enter into an escrow agreement providing that the certificates
representing shares issued or transferred pursuant to Restricted Stock Awards
shall remain in the physical custody of an escrow holder until all restrictions
are removed or expire, or (iv) take such other steps as the Committee may
determine in order to enforce such restrictions.

                    (d) Expiration or Removal of Restrictions. The restrictions
imposed pursuant to this Section 7.3 on Restricted Stock Awards shall expire as
determined by the Committee and set forth in the applicable Award Agreement.
Expiration of the restrictions may be based on or conditioned on the passage of
time, continuing employment or service as an employee or officer, achievement of
performance objectives, or other events, occurrences or conditions determined by
the Committee. Each Restricted Stock Award may have different restrictions,
including a different restriction period, as determined by the Committee. The
Committee may remove any restriction or reduce any restriction period applicable
to a particular Restricted Stock Award. Upon the expiration or removal of all
restrictions, the Company shall deliver to the Holder of the Restricted Stock
Award, as soon as practicable following the request of such Holder, a
certificate representing the number of shares for which such restrictions have
expired or been removed, free of any restrictive legend relating to the expired
or removed restrictions.

                    (e) Rights as Stockholder. Subject to the provisions of this
Section 7.3, the Holder shall be entitled to share in the receipt of dividends
or distributions to the same extent as a stockholder of the Company holding an
equal amount of unrestricted Stock; provided, however, the Committee or the
Board of Directors may determine what rights, if any, the Holder shall have with
respect to the Restricted Stock Awards granted or sold, including any right to
vote the related shares or to receive dividends and other distributions paid or
made with respect thereto.

                    (f) Other Conditions. The Committee or the Board of
Directors may impose such other terms, conditions or limitations on any shares
granted or sold pursuant to Restricted Stock Awards made under the Plan as it
may deem advisable, including (i) restrictions under the Securities Act or
Exchange Act, (ii) restrictions relating to the requirements of any securities
exchange or quotation system upon which the shares or shares of the same class
are listed or traded, and (iii) restrictions relating to any state or foreign
securities law applicable to the shares.

          7.4 Purchase and Payment. If any shares of Stock are to be sold rather
than granted pursuant to Restricted Stock Awards made under the Plan, then the
relevant Award Agreement shall set forth the price to be paid for such shares
and the method of payment.

          7.5 Compliance with Section 409A. Each Restricted Stock Award shall
comply with the requirements of subsection (a) of Section 409A, if applicable,
and be operated in accordance with such requirements.

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VIII.  RESTRICTED STOCK UNITS

         8.1 Compliance with Award Agreement. All Restricted Stock Units granted
under the Plan shall comply with, and the related Award Agreements shall be
subject to, the terms, conditions and limitations set forth in this Article VIII
(to the extent each such term, condition or limitation applies to the form of
Restricted Stock Units granted and provided that, if any such term, condition or
limitation is left to the discretion of the Committee, the Committee determines
to apply it to such Restricted Stock Units) and also to the terms, conditions
and limitations set forth in Article X (to the extent applicable to the form of
Restricted Stock Units granted and provided that, if any such term, condition or
limitation is left to the discretion of the Committee, the Committee determines
to apply it to such Restricted Stock Units); provided, however, that the
Committee may authorize an Award Agreement governing a grant of Restricted Stock
Units that expressly contains or is subject to terms, conditions and limitations
that differ from the terms, conditions and limitations set forth in Article IX.
 The Committee may also authorize an Award Agreement governing Restricted Stock
Units that contains or is subject to any or all of the terms, conditions and
limitations of Article X (to the extent applicable to the form of Restricted
Stock Units granted and provided that, if any such term, condition or limitation
is left to the discretion of the Committee, the Committee determines to apply it
to such Restricted Stock Units) or similar terms, conditions and limitations;
nevertheless, no term, condition or limitation of Article X (or any similar
term, condition or limitation) shall apply to an Award Agreement governing a
Restricted Stock Units unless the Award Agreement expressly states that such
term, condition or limitation applies.

          8.2 Number of Shares Underlying Restricted Stock Units; Type of Award.
Each Award Agreement governing Restricted Stock Units shall state the total
number of shares of Stock that may be deliverable in settlement of the Award.

          8.3 Terms Applicable to Restricted Stock Units. Unless otherwise
provided in the relevant Award Agreement, Restricted Stock Units (including the
shares deliverable in settlement) shall be subject to the following terms,
conditions and limitations:

                   (a) Number of Units. Each Award Agreement governing a
Restricted Stock Unit shall state the total number of Restricted Stock Units
awarded under that Award Agreement.

                   (b) Vesting and Settlement. Each Award Agreement governing a
Restricted Stock Unit shall state (i) the grant date of the Award, (ii) any
time, periods or other conditions in or pursuant to which the Restricted Stock
Units or a portion thereof shall vest, including any vesting in connection with
a Change in Control or specified termination of employment events, (iii) the
number of Restricted Stock Units (or portions thereof) with respect to each such
vesting, and (iv) the settlement date applicable to each Restricted Stock Unit.
 Vesting may be based on or conditioned on the passage of time, continuing
employment or service as an employee or officer, achievement of performance
objectives, or other events, occurrences or conditions determined by the
Committee. Each grant of Restricted Stock Units may have different restrictions,
including a different vesting period, as determined by the Committee.  Subject
to compliance with Code Section 409A, the Committee may remove any vesting
condition or other restriction or reduce any restriction period applicable to a
particular grant of Restricted Stock Units.  Upon settlement, the Company shall
deliver to the Participant one share of Stock for each Restricted Stock Unit
then being settled, at the settlement date, such delivery to be made in any
commercially reasonable manner the Company shall determine.   

                    (c) Dividend Equivalents.  Subject to the provisions of this
Section 8.3, the Holders of Restricted Stock Units shall be entitled to dividend
equivalents, being amounts equal to the cash value of the dividends or
distributions payable on the underlying Stock.  Each Award Agreement shall
specify if dividend equivalents are to be paid or credited on Restricted Stock
Units, in cash or by deemed reinvestment in additional Restricted Stock Units,
and all other terms of such dividend equivalents.

                    (d) Transferability. The Restricted Stock Units may not be
sold, transferred or otherwise alienated or hypothecated, until the Award has
been settled, at which time the shares delivered in settlement shall be freely
transferable except for any specific restrictions imposed by the Committee.

                    (e) Other Conditions. The Committee or the Board of
Directors may impose such other terms, conditions or limitations on any grant of
Restricted Stock Units or shares of Stock issued and delivered in settlement
thereof as it may deem advisable, including (i) restrictions under the
Securities Act or Exchange Act, (ii) restrictions relating to the requirements
of any securities exchange or quotation system upon which the shares or shares
of the same class are listed or traded, and (iii) restrictions relating to any
state or foreign securities law applicable to the shares.

          8.4 Compliance with Section 409A. Each Restricted Stock Unit shall
comply with the requirements of subsection (a) of Section 409A (to constitute
either a short-term deferral or otherwise be excluded from Section 409A, or to
meet the requirements of Section 409A applicable to a deferral of compensation)
and be implemented in accordance with such requirements.

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IX.  ADDITIONAL PROVISIONS

          9.1 The terms, conditions and limitations of this Article IX shall
apply to each Award (unless, pursuant to the relevant Award Agreement, such
term, condition or limitation is inapplicable or is altered); provided, however,
that the Committee may authorize an Award Agreement that expressly contains
terms, conditions and limitations that differ from the terms, conditions and
limitations set forth in this Article IX.

          9.2 Adjustment of Awards and Authorized Stock. The terms of an Award
and the Stock authorized for issuance or transfer under the Plan shall be
subject to adjustment from time to time in accordance with the following
provisions:

                    (a) In the event that the Committee shall determine that any
dividend or other distribution (whether in the form of cash, Stock, other
securities, or other property or assets), reclassification, consolidation, Stock
split, reverse Stock split, recapitalization, reorganization, merger, plan of
exchange, split-up, spin off, combination, repurchase, issuance or transfer of
securities or other similar transaction or event affects the shares of Stock
such that an adjustment is determined by the Committee to be appropriate in
order to prevent dilution or enlargement of the benefits or potential benefits
made or intended to be made available under the Plan, then the Committee shall,
in such manner as it may deem equitable: (i) adjust any or all of (w) the number
and type of shares of Stock (or other securities, property or assets) which
thereafter may be made the subject of Awards, (x) the number and type of shares
of Stock (or other securities, property or assets) subject to outstanding
Awards, (y) the number and type of shares of Stock (or other securities,
property or assets) specified as the Maximum Shares, Available Shares, or other
restriction, and (z) the grant, purchase or exercise price of, or amount payable
with respect to, any Award; or (ii) if deemed appropriate by the Committee,
provide for a cash payment to the Holder of an outstanding Award.
Notwithstanding the foregoing, however, with respect to any Awards of Incentive
Options, no such adjustment shall be authorized except to the extent that such
adjustment complies with the rules of Section 424(a) of the Code, and in no
event shall any such adjustment be made that would render any Incentive Option
granted hereunder other than an “incentive stock option” for purposes of Section
422 of the Code (unless the Committee determines to treat such Option as a
Nonstatutory Option). In addition, notwithstanding the foregoing, with respect
to any Option or Stock Appreciation Right, no adjustment shall be made that
would cause such Option or Stock Appreciation Right to constitute a deferral of
compensation subject to the requirements of Section 409A.

                    (b) Whenever outstanding Awards are required to be adjusted
as provided in this Section 9.2, the Committee shall promptly prepare and
provide to each Holder a notice setting forth, in reasonable detail, the event
requiring adjustment, the amount of the adjustment, the method by which such
adjustment was calculated, and the change in price and the number of shares of
Stock, other securities, cash, property or assets purchasable subject to each
Award after giving effect to the adjustments.

                    (c) Adjustments under Section 9.2(a) shall be made by the
Committee. No fractional interests shall be issued or transferred under the Plan
on account of any such adjustments.

                    (d) The existence of the Plan and any Awards granted
hereunder shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any and all adjustments, recapitalizations,
reorganizations or other changes in the Company’s capital structure or business,
or any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stock or other securities ahead of or
affecting the Company’s common stock or the rights thereof, or the dissolution
or liquidation of the Company or any sale, exchange or transfer of all or any
part of its assets or business, or any other corporate act or proceedings,
whether of a character similar to that described in Section 9.2(a) or this
Section 9.2(d) or otherwise. Except as may be expressly provided in this Section
9.2, the Company’s issuance or transfer of securities of any class, for money,
services, other property or assets, or otherwise, upon direct sales, upon the
exercise of rights or warrants to subscribe therefor, upon conversion of shares
or obligations of the Company convertible into shares, or otherwise, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number, price or other attributes of Stock subject to the Plan or to Awards
granted hereunder.

          9.3 Termination of Employment Other than for Death, Disability or
Normal Retirement. Subject to Section 9.21, if a Holder’s employment is
terminated for any reason other than that Holder’s death, Disability or Normal
Retirement, then the following provisions shall apply to all Awards held by that
Holder:

                    (a) If such termination was by the Company or a Subsidiary,
as applicable, as a result of a Covered Event, then the following provisions
shall apply to all Awards held by that Holder:

 

 

 

 

(1)

That portion, if any, of all Options held by that Holder that have not been
exercised as of the time of the termination of employment shall be null and void
as of the time of the termination of employment; and

 

 

 

 

(2)

That portion, if any, of any Restricted Stock Awards or Restricted Stock Units
held by that Holder with respect to which the restrictions have not expired or
been removed (by acceleration or otherwise) as of the time of the termination of
employment shall be forfeited as of the time of the termination of employment;
and

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                    (b) If such termination was (i) by the Company or a
Subsidiary, as applicable, but not as a result of a Covered Event or (ii) by the
Holder, then the following provisions shall apply to all Awards held by that
Holder:

 

 

 

 

 

(1)

That portion, if any, of all Options held by that Holder that are not yet
exercisable (by acceleration or otherwise) as of the time of the termination of
employment shall be null and void as of the time of the termination of
employment;

 

 

 

 

(2)

That portion, if any, of all Options held by that Holder that are exercisable
(by acceleration or otherwise) but have not been exercised as of the time of the
termination of employment shall be exercisable by that Holder until the earlier
of:

 

 

 

 

 

(A)

the termination of the Option; or

 

 

 

 

 

 

(B)

(i) three (3) months after the date of the termination of employment in the case
of termination by the Company or a Subsidiary but not as a result of a Covered
Event; and (ii) thirty (30) days after the date of the termination of employment
in the case of termination by the Holder; provided, however, that if the
termination was by the Company but not as a result of a Covered Event and the
Holder dies within the three (3) month period described in clause (i) of this
subparagraph or if the termination was by the Holder and the Holder dies with
the thirty (30) day period described in clause (ii) of this subparagraph, then
such three (3) month period or such thirty (30) day period, as applicable, shall
automatically be extended to one (1) year after the date of the termination of
employment;

 

 

 

 

 

 

and any portion of any Option not exercised prior to the expiration of the
relevant period shall be null and void; and

 

 

 

 

(3)

That portion, if any, of any Restricted Stock Awards or Restricted Stock Units
held by that Holder with respect to which the restrictions have not expired or
been removed (by acceleration or otherwise) as of the time of the termination of
employment shall be forfeited as of the time of the termination of employment.

          9.4 Termination of Employment for Death or Disability. Subject to
Section 9.21, if a Holder’s employment is terminated by reason of the death or
Disability of such Holder, then the following provisions shall apply to all
Awards held by that Holder:

                    (a) That portion, if any, of all Options held by that Holder
that are (i) not yet exercisable (by acceleration or otherwise) as of the time
of the termination of employment, or (ii) exercisable (by acceleration or
otherwise) but have not been exercised as of the time of the termination of
employment shall be exercisable by that Holder or that Holder’s Designated
Beneficiary, guardian, legal representatives, legatees or distributees until the
earlier of:

 

 

 

 

(1)

the termination of the Option; or

 

 

 

 

(2)

one (1) year after the date of the termination of employment;

and any portion of any Option not exercised prior to expiration of the relevant
period shall be null and void;

                    (b)  All restrictions, other than restrictions required by
the Securities Act, Exchange Act or applicable law, on that portion, if any, of
any Restricted Stock Awards or Restricted Stock Units held by that Holder with
respect to which the restrictions have not expired or been removed (by
acceleration or otherwise) as of the time of the termination of employment shall
immediately be removed and deemed to have expired.

                    (c) If a Holder’s employment is terminated due to a physical
or mental impairment or condition of any degree of severity or permanence, but
the Committee or the Board of Directors does not inform the Holder in writing
that the Holder’s employment is terminated due to “Disability” for the purposes
of this Section, such Holder’s employment is not terminated due to “Disability”
for the purposes of this Section.

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          9.5 Termination of Employment for Normal Retirement. Subject to
Section 9.21, if a Holder’s employment is terminated by reason of the Holder’s
Normal Retirement, then the following provisions shall apply to all Awards held
by that Holder:

                    (a) That portion, if any, of all Options held by that Holder
that are (i) not yet exercisable (by acceleration or otherwise) as of the time
of the termination of employment, or (ii) exercisable (by acceleration or
otherwise) but have not been exercised as of the time of the termination of
employment shall be exercisable by that Holder until the earlier of:

 

 

 

 

(1)

the termination of the term of the Option; or

 

 

 

 

(2)

three (3) months after the date of the termination of employment; provided,
however, that if that Holder dies within such three (3) month period, then such
three (3) month period shall automatically be extended to one (1) year after the
date of the termination of employment;

and any portion of any Option not exercised prior to the expiration of the
relevant period shall be null and void; and

                    (b) That portion, if any, of any Restricted Stock Awards or
Restricted Stock Unit held by that Holder with respect to which the restrictions
have not expired or been removed (by acceleration or otherwise) as of the time
of the termination of employment shall continue until they expire or are
removed; provided, however, that any restrictions that require forfeiture of the
Restricted Stock Award or Restricted Stock Unit solely based on termination of
employment shall be deemed removed as of the time of the termination of
employment.

          9.6 Cause of Termination; Employment Relationship. For purposes of
this Article IX, the Committee shall have the authority to determine whether any
Eligible Individual’s employment with the Company or any Subsidiary, as
applicable, terminated as a result of death, Disability, Normal Retirement, a
Covered Event, or any other cause or reason. For purposes of Incentive Options,
an employment relationship shall be deemed to exist between a Holder and the
Company or a Subsidiary that is a subsidiary corporation, or is treated as, or
as part of, a subsidiary corporation of the Company (within the meaning of
Section 424 of the Code) while the Holder is on military leave, sick leave or
other bona fide leave of absence (such as temporary employment by the
government) if the period of such leave does not exceed ninety (90) days, or, if
longer, so long as the Holder’s right to re-employment with the Company or
Subsidiary that is a subsidiary corporation, or is treated as, or as part of, a
subsidiary corporation of the Company (within the meaning of Section 424 of the
Code) is guaranteed either by statute or by contract. Where the period of leave
exceeds ninety (90) days and where the Holder’s right to re-employment is not
guaranteed by statute or by contract, termination of employment shall be deemed
to have occurred on the ninety-first (91st) day of such leave.

          9.7 Exercise of Options Following Death or Disability.

                    (a) All Options that remain subject to exercise following
the death of the Holder may be exercised by the Holder’s beneficiary as
designated by the Holder on such forms and in accordance with such procedures as
may be required or authorized by the Committee from time to time (a “Designated
Beneficiary”) or, in the absence of an authorized designation, by the legatee or
legatees of such Options under the Holder’s last will, or by such Holder’s legal
representatives, heirs or distributees.  If an Option shall be exercised by any
Person referenced above (other than a Designated Beneficiary), notice of
exercise shall be accompanied by a certified copy of letters testamentary or
equivalent proof of the right of such Person to exercise such Option.

                    (b) All Options that remain subject to exercise following
the Disability of the Holder may be exercised by the Holder or by the Holder’s
guardian or legal representative that meets the requirements of Section 9.8 on
such forms and in accordance with such procedures as may be required or
authorized by the Committee from time to time (which may include proof of the
status of such guardian or legal representative).

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          9.8 Transferability of Awards. No Option, Restricted Stock Award or
Restricted Stock Unit shall be transferable or subject to pledge, encumbrance or
any other disposition in any manner, whether by operation of law or otherwise,
other than (to the extent such a transfer is not prohibited by Section 7.3(a) or
other provisions of this Plan or the relevant Award Agreement) by (i) will or
the laws of descent and distribution or (ii) with respect to all Awards other
than Incentive Options (and with the approval of the Committee), by a domestic
relations order.  Any Award requiring exercise shall be exercisable during a
Holder’s lifetime only by that Holder or by that Holder’s guardian or legal
representative; provided, however, that, under applicable state law, the
guardian or legal representative is a mere custodian of the Holder’s property or
assets, standing in a fiduciary relationship to the Holder and subject to court
supervision. Notwithstanding anything in this Section 9.8 to the contrary,
however, the Committee may determine to grant a Nonstatutory Option that is
transferable by a Holder (but not by a Holder’s transferee) to any member of the
Holder’s immediate family, to a trust established for the exclusive benefit of
one or members of the Holder’s immediate family, to a partnership or other
entity of which the only partners or interest holders are members of the
Holder’s immediate family, and to a charitable organization, or to any of the
foregoing; provided, however, that (i) the Holder receives no consideration for
the transfer, (ii) the Holder gives the Committee at least fifteen (15) days
prior written notice of any proposed transfer, and (iii) the Holder and
transferee shall comply with such other requirements as the Committee may
require from time to time to assure compliance with applicable laws, including
federal, state and foreign securities laws. Following any transfer permitted by
the preceding sentence, a transferred Nonstatutory Option shall continue to be
subject to the same terms, conditions and limitations that were applicable
immediately prior to its transfer and shall be exercisable by the transferee
only to the extent and for the periods that it would have been exercisable by
the Holder. The Committee may amend an outstanding Nonstatutory Option to
provide that the Nonstatutory Option shall be transferable in the manner
described in the two immediately preceding sentences. As used in this Section
9.8, the term “immediate family” shall mean any child, step-child, grandchild,
parent, step-parent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include
relationships arising from legal adoption. A beneficiary designation authorized
pursuant to any provision of the Plan or relevant Award Agreement shall not be
deemed a transfer or encumbrance for purposes of this Section 9.8.

          9.9 Delivery of Certificates of Stock. Subject to Section 9.10 and
upon receipt by the Company of any tax withholding as may be required, the
Company shall promptly deliver one or more certificates representing the number
of shares of Stock as to which vested Awards payable in Stock have been properly
exercised or are otherwise payable (and, with respect to Restricted Stock Awards
or Restricted Stock Units, with respect to which restrictions have expired or
been removed).  If a Holder is entitled to receive certificates representing
Stock received for more than one form of Award under the Plan, separate Stock
certificates may be delivered with respect to each such Award; further, separate
Stock certificates may be delivered with respect to shares of Stock issued or
transferred upon exercise of Incentive Options and Nonstatutory Options
respectively.

          9.10 Certain Conditions. Nothing herein or in any Award Agreement
shall require the Company to permit any exercise of, or issue or transfer any
shares with respect to, any Award if (i) the Holder has failed to satisfy any
term, condition or limitation of the Plan or the relevant Award Agreement or
(ii) that issuance or transfer would, in the opinion of counsel for the Company,
constitute a violation of the Securities Act, any other applicable law or
regulation (including state and foreign securities laws and regulations), or any
rule of any applicable securities exchange or securities association. At the
time of any grant or exercise of an Option, at the time of any grant or vesting
of a Restricted Stock Award, and at the time of any grant or settlement of a
Restricted Stock Unit, the Company may, as a condition precedent to such grant
or exercise of that Option, or grant or vesting of the Restricted Stock Award,
or grant or settlement of a Restricted Stock Unit, require from the Holder of
the Award (or in the event of the Holder’s death or Disability, the Holder’s
Designated Beneficiary, guardian, legal representatives, heirs, legatees, or
distributees) such written representations, if any, concerning the Holder’s or
such Persons’ intentions with regard to the retention or disposition of the
shares of Stock being acquired pursuant to the Award and such written covenants
and agreements, if any, as to the manner of disposal of such shares as, in the
opinion of counsel to the Company, may be necessary or appropriate to ensure
that any disposition by that Holder or such other Person will not involve a
violation of the Securities Act, any other applicable law or regulation
(including state and foreign securities laws and regulations), or any rule of
any applicable securities exchange or securities association. The Company may
also endorse such legend or legends upon certificates for any shares of Stock
issued or transferred pursuant to the Plan, and may issue such “stop transfer”
instructions to its transfer agent in respect of such shares, as the Committee
determines from time to time to be necessary or appropriate to (i) prevent a
violation of, or perfect an exemption from, the registration requirements of the
Securities Act or any other applicable state or foreign securities law, (ii)
implement the provisions of the Plan and any relevant Award Agreement, or (iii)
permit the Company to determine the occurrence of any disposition of shares of
Stock issued or transferred upon exercise of an Incentive Option that would
disqualify the Incentive Option from the incentive option tax treatment afforded
by Section 422 of the Code.

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          9.11 Certain Directors and Officers. If any of the terms, conditions
or limitations of the Plan or any Award Agreement would preclude any award to an
Eligible Individual who is subject to Section 16(b) of the Exchange Act from
qualifying for the exemptions from Section 16(b) of the Exchange Act provided by
Rule 16b-3, then those conflicting terms, conditions or limitations shall be
deemed inoperative to the extent necessary to allow such qualification (unless
the Board of Directors has expressly determined that the Plan, or the Committee
has expressly determined that the Award, should not comply with Rule 16b-3). In
addition, all Award Agreements for Eligible Individuals who are subject to
Section 16(b) of the Exchange Act shall be deemed to include such additional
terms, conditions and limitations as may be required in order for the related
Award to qualify for the exemptions from Section 16(b) of the Exchange Act
provided by Rule 16b-3 (unless the Committee has expressly determined that any
such Award should not comply with the requirements of Rule 16b-3).

          9.12 Securities Act Legend. The Committee may require that
certificates for some or all shares of Stock issued or transferred pursuant to
the Plan have a legend similar to the following, or statements of other
applicable restrictions, endorsed thereon:

 

 

 

 

THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THE
SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, TRANSFERRED, OR OTHERWISE
DISPOSED OF UNTIL THE HOLDER HEREOF PROVIDES EVIDENCE SATISFACTORY TO THE ISSUER
(WHICH, IN THE DISCRETION OF THE ISSUER, MAY INCLUDE AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER) THAT SUCH OFFER, SALE, PLEDGE, TRANSFER, OR OTHER
DISPOSITION WILL NOT VIOLATE APPLICABLE FEDERAL OR STATE LAWS.

 

This legend shall not be required for shares of Stock issued or transferred
pursuant to an effective registration statement under the Securities Act.

          9.13 Legend for Restrictions on Transfer. Each certificate
representing shares of Stock issued or transferred to a Holder pursuant to an
Award granted under the Plan shall, if such shares are subject to any transfer
restriction, including a right of first refusal, provided for under the Plan or
the relevant Award Agreement, bear a legend that complies with applicable law
with respect to such transfer restriction, such as:

 

 

 

 

THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY IMPOSED BY THE SED INTERNATIONAL HOLDINGS, INC. 2009 STOCK
AND INCENTIVE PLAN AS ADOPTED BY SED INTERNATIONAL HOLDINGS, INC. (THE
“COMPANY”) ON DECEMBER 15, 2009 AND AN AWARD AGREEMENT THEREUNDER BETWEEN THE
COMPANY AND ___________ DATED ______________, _____, AND MAY NOT BE TRANSFERRED,
SOLD, OR OTHERWISE DISPOSED OF EXCEPT AS THEREIN PROVIDED. THE COMPANY WILL
FURNISH A COPY OF SUCH INSTRUMENT AND AGREEMENT TO THE RECORD HOLDER OF THIS
CERTIFICATE WITHOUT CHARGE ON REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF
BUSINESS OR REGISTERED OFFICE.

 

          9.14 Rights as a Stockholder; Dividends. Except as may be specifically
provided to the contrary by the Committee pursuant to Section 7.3(e) with
respect to a particular Restricted Stock Award or Restricted Stock Unit, a
Holder shall have no right as a stockholder with respect to any shares of Stock
covered by the Holder’s Award until a certificate representing those shares is
issued in the Holder’s name and subject to any further restrictions imposed in
accordance with the Plan. Except as may be expressly determined by the Committee
from time to time with respect to one or more Awards, and subject to such terms,
conditions and limitations as the Committee may establish with respect to the
same, no adjustment shall be made for dividends (whether ordinary or
extraordinary, whether in cash or other property or assets) or distributions or
other rights for which the record date is before the date that the certificate
is issued and any such restrictions have expired or been removed.

          9.15 No Interest. Neither the value of any shares of Stock, nor any
cash or other property or assets, issued, transferred or delivered with respect
to any Award under the Plan shall bear any interest, even if not issued,
transferred or delivered when required by the Plan, except as may be otherwise
provided in the applicable Award Agreement or as may be required pursuant to
rules and procedures established by the Committee from time to time for the
crediting of such interest.

          9.16 Furnishing of Information. Each Holder shall furnish to the
Company all information requested by the Company that the Committee deems
necessary or appropriate in order to allow the Company to administer the Plan
and any Awards or to enable it to comply with any reporting or other requirement
imposed upon the Company by or under any applicable law or regulation.

          9.17 No Obligation to Exercise. No grant of any Award shall impose any
obligation upon the Holder or any other Person to exercise the same or any part
thereof.

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          9.18 Remedies. The Company shall be entitled to recover from a Holder
the Company’s damages, costs and expenses, including reasonable attorneys’ fees,
incurred in connection with the enforcement of any of the terms, conditions or
limitations of the Plan or any Award Agreement, whether by an action to enforce
specific performance, for damages for breach, or otherwise.

          9.19 Certain Information Confidential. As partial consideration for
the granting of each Award hereunder, each Holder agrees with the Company that
such Holder shall keep confidential all information and knowledge that such
Holder may have relating to the manner, extent and amount of the Holder’s (or
any other Holder’s) participation in the Plan; provided, however, that the
Holder may disclose such information or knowledge to the Holder’s spouse or to
the Holder’s tax or financial advisors, provided such disclosure is made
pursuant to similar terms and conditions (but without any further rights of
distribution). The foregoing obligations of confidentiality shall not apply to
the extent that the Company specifically consents in writing to further
disclosure or to the extent that the information or knowledge becomes generally
and readily available to the public without breach by the Holder or any other
Person of any contractual, fiduciary or other duty owed to the Company or any of
its affiliates. In addition, the foregoing obligations of confidentiality shall
not prohibit a Holder from disclosing such information or knowledge to the
extent such Holder is required to do so by government or judicial order,
provided that such Holder gives the Company prompt written notice of such order
and a reasonable opportunity to limit such disclosure and reasonable assistance
in contesting or limiting any such disclosure.

          9.20 Dispute Resolution. Any claim, demand, cause of action, dispute
or controversy arising out of or relating to the Plan, any Award Agreement, any
Award, the parties’ performance with respect to any thereof, or any alleged
breach of any thereof (each a “Dispute”), shall be settled by the sole
determination of the Committee or the Board of Directors which determination
shall be final and binding.

          9.21 Compliance with Section 409A. No provision of this Article IX
shall be interpreted to require a payment or other transfer with respect to an
Award at a time or in a manner that would violate any requirement of subsection
(a) of Section 409A; and the Committee may defer or otherwise change the terms
of payment with respect to any Award, as otherwise set forth in this Article IX
or any related Award Agreement, if and to the extent necessary to comply with
the requirements of Section 409A (if applicable). With respect to any Award
constituting a deferral of compensation to which Section 409A applies and that
is made to a “specified employee” of the Company or its Subsidiaries as defined
in Section 409A(a)(2)(B)(i) of the Code, no payment resulting from a separation
from service of such employee shall be made with respect to the Award before the
date which is six (6) months after the date of separation from service (or, if
earlier, the date of death of the employee).

X.  CHANGE IN CONTROL PROVISIONS

          The Committee may authorize an Award that contains or is subject to
any or all of the terms, conditions and limitations of this Article X or similar
terms, conditions and limitations; nevertheless, no term, condition or
limitation of this Article X (or any similar term, condition or limitation)
shall apply to an Award unless the related Award Agreement expressly states that
such term, condition or limitation applies.

          10.1 Changes in Control. Immediately prior to the occurrence of a
Change in Control (or at such other time prior to a Change in Control or
proposed Change in Control as may be determined by the Committee), (a) all
outstanding Options shall immediately become fully vested and exercisable in
full, including that portion of any Options that pursuant to the terms and
provisions of the applicable Award Agreement had not yet become exercisable; and
(b) the expiration of the restrictions applicable to all outstanding Restricted
Stock Awards and Restricted Stock Units, shall immediately become fully vested
and be accelerated so that the Stock subject to those Awards shall be owned by
the Holders thereof without transfer restrictions or risks of forfeiture.
Nothing in this Section 10.1 shall impose on any Holder any obligation to
exercise any Award immediately before or upon any Change in Control, nor shall
any Holder forfeit the right to exercise any Award during the remainder of the
original term of the Award because of a Change in Control, except as provided
under Article IX (if applicable), under other provisions governing termination
or expiration of the applicable Award, or as provided in the following sentence.
Notwithstanding the foregoing, the Committee may, by notice to any or all
Holders, provide that all or any portion of any outstanding Option (whether
vested prior to the Change in Control or subject to accelerated vesting due to
the Change in Control) that is not exercised within a specified time period (as
determined by the Committee) ending on or before the Change in Control shall
terminate upon the Change in Control (or at such later time as may be determined
by the Committee) and in such event such unexercised Options shall terminate
upon the Change in Control, notwithstanding any provisions of this Plan that
would allow for a later exercise, including Article IX if applicable.

XI.  DURATION AND AMENDMENT OF PLAN AND AWARD AGREEMENTS

          11.1 Duration. No Awards may be granted hereunder after the date that
is ten (10) years after the Effective Date; provided, however, that Awards
granted prior to the expiration of such period may extend beyond the expiration
of such period, in accordance with the terms of the Plan (including all rights
of the Company and the Committee hereunder) and the relevant Award.

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          11.2 Amendment, etc.

                    (a) The Board of Directors may, at any time and from time to
time, insofar as is permitted by law, suspend or terminate the Plan, in whole or
in part, but without the consent of such Holder no such action shall adversely
affect in any significant respect the rights, or increase any obligations, of
any Holder with respect to any Award previously granted to such Holder
hereunder. The Board of Directors may also, at any time and from time to time,
insofar as is permitted by law, amend or modify the Plan in any respect
whatsoever including (i) for purposes of making the Plan comply with Section
16(b) of the Exchange Act and the exemptions from that Section, the Code
(including Section 409A and Section 422 of the Code), or the Employee Retirement
Income Security Act of 1974, as amended, (ii) for purposes of meeting or
addressing any changes in any legal requirements applicable to the Company or
the Plan or (iii) for any other purpose permitted by law. Notwithstanding the
foregoing, (i) any amendment or modification of the Plan is subject to any other
applicable restrictions on such amendment or modification set forth in the Plan,
(ii) without the consent of such Holder no such amendment or modification shall
adversely affect any rights, or increase any obligations, of any Holder under
any Award previously granted to such Holder hereunder and (iii) without the
consent of the holders of a majority of the shares of Stock represented and
voting on such amendment or modification at a stockholders’ meeting duly called
and held, no amendment or modification to the Plan may be made that would
materially (a) increase the aggregate number of shares of Stock that may be
issued or transferred under the Plan or increase the aggregate number of shares
of Stock (except for acceleration of vesting or other adjustments pursuant to
Sections 9.2 or 10.1 of the Plan, to the extent each is applicable), or (b)
modify the requirements regarding eligibility for participation in the Plan;
provided, however, that such amendments or modifications may be made without the
consent of stockholders of the Company if (x) necessary to permit Incentive
Options granted under the Plan to qualify as incentive stock options within the
meaning of Section 422 of the Code, or (y) necessary to comply with changes that
occur in law or in other legal requirements (including Rule 16b-3, Section
162(m), Section 409A, and the Employee Retirement Income Security Act of 1974,
as amended).

                    (b) Subject to the terms, conditions and limitations of the
Plan, Rule 16b-3, to the extent it is applicable, and any consent required by
the last three sentences of this Section 11.2(b),the Committee may (a) modify,
amend, extend or renew outstanding Awards granted under the Plan, and (b) accept
the surrender of Awards requiring exercise that may be outstanding under the
Plan (to the extent not previously exercised) and authorize the granting of new
Awards in substitution for such outstanding Awards (or portion thereof) so
surrendered. Without the consent of the Holder, the Committee may not modify or
amend the terms of an Incentive Option at any time to include provisions that
have the effect of changing the Incentive Option to a Nonstatutory Option;
provided, however, that the consent of the Holder is not required to the extent
that the acceleration of the vesting of an Incentive Option (whether under
Section 6.2 or otherwise) causes the Incentive Option to be treated as a
Nonstatutory Option, for federal tax purposes, to the extent that it exceeds the
$100,000 limitation described in Section 6.10. Without the consent of the Holder
and of the holders of a majority of the shares of Stock represented and voting
on such modification or amendment at a stockholders’ meeting duly called and
held, the Committee may not modify or amend any outstanding Option so as to
specify a higher or lower exercise price or accept the surrender of outstanding
Incentive Options and authorize the granting of new Options in substitution
therefor specifying a higher or lower exercise price, or take any other action
to “reprice” any option if the effect of such repricing would be to increase or
decrease the exercise price applicable to such Option. In addition, no
modification or amendment of an Award shall, without the consent of the Holder,
adversely affect any rights of the Holder or increase the obligations of the
Holder under such Award except, with respect to Incentive Options, as may be
necessary to satisfy the requirements of Section 422 of the Code.

XII.  GENERAL

          12.1 Application of Funds. The proceeds received by the Company from
the sale of shares of Stock pursuant to Awards shall be used for general
corporate purposes or any other purpose permitted by law.

          12.2 Right of the Company and Subsidiaries to Terminate Employment.
Nothing contained in the Plan, or in any Award Agreement, shall confer upon any
Holder any right to continue in the employ of the Company or any Subsidiary, or
interfere in any way with the rights of the Company or any Subsidiary to
terminate any such employment relationship at any time.

          12.3 No Liability for Good Faith Determinations. Neither the Board of
Directors nor the Committee nor any member of either shall be liable for any
act, omission, or determination taken or made in good faith with respect to the
Plan or any Award granted under the Plan, and members of the Board of Directors
and the Committee shall be entitled to indemnification and reimbursement by the
Company in respect of any claim, loss, damage, or expense (including attorneys’
fees, the costs of settling any suit, provided such settlement is approved by
independent legal counsel selected by the Company, and amounts paid in
satisfaction of a judgment, except a judgment based on a finding of bad faith)
arising therefrom to the full extent permitted by law and under any directors
and officers liability or similar insurance coverage that may from time to time
be in effect. This right to indemnification shall be in addition to, and not a
limitation on, any other indemnification rights any member of the Board of
Directors or the Committee may have.

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          12.4 Other Benefits. Participation in the Plan shall not preclude any
Holder from eligibility in (or entitle any Holder to participate in) any other
stock or stock option plan of the Company or any Subsidiary or any old age
benefit, insurance, pension, profit sharing, retirement, bonus, or other extra
compensation plan that the Company or any Subsidiary has adopted or may, at any
time, adopt for the benefit of its employees or other Persons. Neither the
adoption of the Plan by the Board of Directors nor the submission of the Plan to
the stockholders of the Company for approval shall be construed as creating any
limitations on the power of the Board of Directors to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and the awarding of securities and cash otherwise than
under the Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.

          12.5 Exclusion From Pension and Profit-Sharing Compensation. By
acceptance of an Award (whether in Stock or cash), as applicable, each Holder
shall be deemed to have agreed that the Award is special incentive compensation
that will not be taken into account in any manner as salary, compensation or
bonus in determining the amount of any payment under any pension, retirement or
other employee benefit plan of the Company or any Subsidiary except as may
otherwise be specifically provided in such plan. In addition, each beneficiary
of a deceased Holder shall be deemed to have agreed that no Award to such Holder
shall affect the amount of any life insurance coverage, if any, provided by the
Company or a Subsidiary on the life of the Holder that is payable to the
beneficiary under any life insurance plan covering employees of the Company or
any Subsidiary.

          12.6 Execution of Receipts and Releases. Any issuance or transfer of
shares of Stock to the Holder, or to the Holder’s Designated Beneficiary,
guardian, legal representatives, heirs, legatees, distributees or permitted
assigns, in accordance with the provisions hereof, shall, to the extent thereof,
be in full satisfaction of all claims of such Persons hereunder.  The Committee
may require any Holder, Designated Beneficiary, guardian, legal representative,
heir, legatee, distributee or assignee, as a condition precedent to such
payment, to execute a release and receipt therefor in such form as the Committee
shall determine.

          12.7 Unfunded Plan. Insofar as it provides for Awards of cash, Stock
or other property or assets, the Plan shall be unfunded. Although bookkeeping
accounts may be established with respect to Holders who are entitled to cash,
Stock, other property or assets or rights thereto under the Plan, any such
accounts shall be used merely as a bookkeeping convenience. The Company shall
not be required to segregate any assets that may at any time be represented by
cash, Stock, other property or assets or rights thereto, nor shall the Plan be
construed as providing for such segregation, nor shall the Company nor the Board
of Directors nor the Committee be deemed to be a trustee of any cash, Stock,
other property or assets or rights thereto to be granted under the Plan. Any
liability of the Company to any Holder with respect to a grant of cash, Stock,
other property or assets or rights thereto under the Plan shall be based solely
upon any contractual obligations that may be created by the Plan and any Award
Agreement; no such obligation of the Company shall be deemed to be secured by
any pledge or other encumbrance on any property or assets of the Company.
Neither the Company nor the Board of Directors nor the Committee shall be
required to give any security or bond for the performance of any obligation that
may be created by the Plan.

          12.8 No Guarantee of Interests. None of the Company, the Board of
Directors, or the Committee guarantees the Stock of the Company from loss or
depreciation.

          12.9 Payment of Expenses. Subject to Section 9.18, all expenses
incident to the administration, termination or protection of the Plan, including
legal and accounting fees and any issue taxes with respect to the issuance of
shares of Stock pursuant to the Plan, shall be paid by the Company or its
Subsidiaries.

          12.10 Company Records. The records of the Company or its Subsidiaries
regarding any Holder’s period of employment, termination of employment and the
reason therefor, leaves of absence, re-employment, and other matters shall be
conclusive for all purposes hereunder, unless determined by the Committee to be
incorrect.

          12.11 No Liability of Company. The Company assumes no obligation or
responsibility to the Holder or the Holder’s Designated Beneficiary, guardian,
legal representatives, heirs, legatees, distributees or assignees for any act
of, or failure to act on the part of, the Committee.

          12.12 Company Action. Any action required of the Company shall be by
resolution of its Board of Directors or by a duly authorized officer of the
Company or by another Person authorized to act by resolution of the Board of
Directors.

          12.13 Severability. Whenever possible, each provision of the Plan and
each Award Agreement shall be interpreted in such a manner as to be effective
and valid under applicable law, but if any provision of the Plan or any Award
Agreement, or the application thereof to any Person or under any circumstances,
is invalid or unenforceable to any extent under applicable law, then such
provision shall be deemed severed from the Plan or such Award Agreement with
respect to such Person or circumstance, without invalidating the remainder of
the Plan or such Award Agreement or the application of such provision to other
Persons or circumstances, and a new provision shall be deemed substituted in
lieu of the provision so severed which new provision shall, to the extent
possible, accomplish the intent of the parties as evidenced by the provision so
severed.

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          12.14 Notices. Except as may be expressly provided in the Plan or the
relevant Award Agreement, whenever any notice is required or permitted to be
given under the Plan or such Award Agreement, such notice must be in writing and
delivered (including delivery by private courier or facsimile transmittal) or
sent by mail (which if to the Company must be certified or registered, return
receipt requested) postage and other charges prepaid, addressed to the Person
for whom the communication is intended (which for the Company shall be the
address of the Company’s chief executive office from time to time, or such other
address as may be established from time to time by the Committee, and which for
any Holder shall be the address for such Holder set forth in the relevant Award
Agreement or such other address as shall have been furnished by notice by such
Holder to the Company). Any such notice shall be deemed to be given on the date
received or (if mailed in the manner set forth herein) three (3) Business Days
after the date of mailing. Any person entitled to notice hereunder may waive
such notice.

          12.15 No Waiver. No waiver of any provision of the Plan or any Award
Agreement shall be effective unless made in writing and signed by the party to
be charged with the waiver. Failure of any party at any time to require any
other party’s performance of any obligation under the Plan or Award Agreement
shall not affect the right to require performance of that obligation. Any waiver
by any party of any breach of any provision of the Plan or any Award Agreement
shall not be construed as a waiver of any continuing or succeeding breach of
such provision, or as a waiver or modification of the provision itself.

          12.16 Successors. Subject to the restrictions contained herein, the
Plan shall be binding upon the Holder, the Holder’s Designated Beneficiaries,
guardian, legal representatives, heirs, legatees, distributees and permitted
assigns, and upon the Company, its successors and assigns.

          12.17 Further Assurances. Each Holder shall execute and deliver such
documents, and take or cause to be taken such other actions, as may be
reasonably requested by the Committee in order to implement the terms of the
Plan and any Award Agreement with respect to that Holder.

          12.18 Governing Law. EXCEPT AS MAY BE OTHERWISE PROVIDED IN A
PARTICULAR AWARD AGREEMENT, TO THE EXTENT NOT GOVERNED BY FEDERAL LAW, THIS PLAN
AND EACH AWARD AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF GEORGIA, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS
OF LAW OF SUCH STATE; PROVIDED, HOWEVER, THAT ISSUES REGARDING THE INTERNAL
AFFAIRS OF THE COMPANY SHALL BE GOVERNED BY THE LAW OF THE COMPANY’S
JURISDICTION OF ORGANIZATION.

          12.19 Jurisdiction and Venue. EXCEPT AS MAY BE OTHERWISE PROVIDED IN A
PARTICULAR AWARD AGREEMENT, EACH HOLDER HEREBY SUBMITS TO THE JURISDICTION OF
ALL FEDERAL AND STATE COURTS OF GEORGIA AND HEREBY AGREES THAT ANY SUCH COURT
SHALL BE A PROPER FORUM FOR THE DETERMINATION OF ANY DISPUTE ARISING UNDER THE
PLAN OR ANY AWARD AGREEMENT WITH RESPECT TO SUCH HOLDER.

          12.20 Interpretation. When a reference is made in the Plan or any
Award Agreement to Schedules, Exhibits or Addenda, such reference shall be to a
schedule, exhibit or addendum to this Plan or the relevant Award Agreement
unless otherwise indicated. Each instance in the Plan or any Award Agreement of
the words “include,” “includes,” and “including” shall be deemed to be followed
by the words “without limitation.” As used in the Plan or any Award Agreement,
the term “days” means calendar days, not business days, unless otherwise
specified. Unless otherwise specified, the words “herein,” “hereof,” and
“hereunder” and other words of similar import refer to the Plan or relevant
Award Agreement as a whole and not to any particular article, section,
paragraph, subparagraph, schedule, exhibit, addendum or other subdivision.
Similarly, unless otherwise specified, the words “therein,” “thereof” and
“thereunder” and other words of similar import refer to a particular agreement
or other instrument as a whole and not to any particular article, section,
paragraph, subparagraph, schedule, exhibit, addendum or other subdivision.
Unless otherwise specified, any reference to a statute includes and refers to
the statute itself, as well as to any rules and regulations made and duly
promulgated pursuant thereto, and all amendments made thereto and in force
currently from time to time and any statutes, rules or regulations thereafter
duly made, enacted and/or promulgated, as may be appropriate, and/or any other
governmental actions thereafter duly taken from time to time having the effect
of supplementing or superseding such statute, rules, and/or regulations. The
language in all parts of the Plan and each Award Agreement shall be in all cases
construed simply, fairly, equitably, and reasonably, according to its plain
meaning and not strictly for or against one or more of the parties. Any table of
contents or headings contained in the Plan or any Award Agreement are for
reference purposes only and shall not be construed to affect the meaning or
interpretation of the Plan or any Award Agreement. When required by the context,
(i) whenever the singular number is used in the Plan or any Award Agreement, the
same shall include the plural, and the plural shall include the singular; and
(ii) the masculine gender shall include the feminine and neuter genders and vice
versa.

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          12.21 No Representations. NEITHER THE COMPANY, ANY OF ITS SUBSIDIARIES
OR OTHER AFFILIATES, THE BOARD OF DIRECTORS OR THE COMMITTEE, OR ANY MEMBER OF
EITHER THEREOF MAKES ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER REGARDING THE
LEGAL, TAX OR ACCOUNTING CONSEQUENCES OF ANY ASPECT OF THE PLAN OR ANY AWARDS,
INCLUDING ANY REPRESENTATION OR WARRANTY THAT ANY OPTION SHALL BE TREATED AS AN
INCENTIVE STOCK OPTION UNDER THE CODE. BY ACCEPTING ANY AWARD, EACH HOLDER
ACKNOWLEDGES THAT SUCH HOLDER HAS CONSULTED WITH SUCH ADVISORS AS THE HOLDER HAS
DEEMED APPROPRIATE WITH RESPECT TO ANY OF SUCH MATTERS.

* * * * * *

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