Exhibit 10.11

2002 EQUITY INCENTIVE PLAN

OF

IDENTIX INCORPORATED

A DELAWARE CORPORATION

 

1. PURPOSE OF THIS PLAN

The purpose of this 2002 Equity Incentive Plan of Identix Incorporated, a
Delaware corporation, (the “COMPANY”) is to enhance the long-term shareholder
value of the Company by offering opportunities to eligible individuals to
participate in the growth in value of the equity of the Company.

 

2. DEFINITIONS AND RULES OF INTERPRETATION

2.1 DEFINITIONS. This Plan uses the following defined terms:

(a) “ADMINISTRATOR” means the Board, the Committee, or any officer or employee
of the Company to whom the Board or the Committee delegates authority to
administer this Plan.

(b) “AFFILIATE” means a “parent” or “subsidiary” (as each is defined in
Section 424 of the Code) of the Company and any other entity that the Board or
Committee designates as an “Affiliate” for purposes of this Plan.

(c) “APPLICABLE LAW” means any and all laws of whatever jurisdiction, within or
without the United States, and the rules of any stock exchange or quotation
system on which Shares are listed or quoted, applicable to the taking or
refraining from taking of any action under this Plan, including the
administration of this Plan and the issuance or transfer of Awards or Award
Shares.

(d) “AWARD” means a Stock Purchase Right, Performance Share Award, Restricted
Stock Award or Option granted in accordance with the terms of the Plan.

(e) “AWARD AGREEMENT” means the document evidencing the grant of an Award.

(f) “AWARD SHARES” means Shares covered by an outstanding Award or purchased
under an Award.

(g) “BOARD” means the board of directors of the Company.

(h) “CHANGE OF CONTROL” means any transaction or event that the Board specifies
as a Change of Control under Section 10.4.

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(i) “CHANGE OF CONTROL PRICE” for purposes of Section 10.4 means the highest
price per share paid in any transaction reported on the NASDAQ National Market
or paid or offered in any bona fide transaction related to a potential or actual
Change in Control of the Company at any time during the preceding 60-day period
as determined by the Board, except that, in the case of Incentive Stock Options,
such price shall be based only on transactions reported for the date on which
the Board decides to cash out such Options.

(j) “CODE” means the Internal Revenue Code of 1986.

(k) “COMMITTEE” means a committee composed of Company Directors appointed in
accordance with the Company’s charter documents and Section 4.

(l) “COMPANY DIRECTOR” means a member of the Board.

(m) “CONSULTANT” means an individual who, or an employee of any entity that,
provides bona fide services to the Company or an Affiliate not in connection
with the offer or sale of securities in a capital-raising transaction, but who
is not an Employee.

(n) “DIRECTOR” means a member of the board of directors of the Company or an
Affiliate.

(o) “DIVESTITURE” means any transaction or event that the Board specifies as a
Divestiture under Section 10.5.

(p) “EMPLOYEE” means a regular employee of the Company or an Affiliate,
including an officer or Director, who is treated as an employee in the personnel
records of the Company or an Affiliate, but not individuals who are classified
by the Company or an Affiliate as: (i) leased from or otherwise employed by a
third party, (ii) independent contractors, or (iii) intermittent or temporary
workers. The Company’s or an Affiliate’s classification of an individual as an
“Employee” (or as not an “Employee”) for purposes of this Plan shall not be
altered retroactively even if that classification is changed retroactively for
another purpose as a result of an audit, litigation or otherwise. A Recipient
shall not cease to be an Employee due to transfers between locations of the
Company, or between the Company and an Affiliate, or to any successor to the
Company or an Affiliate that assumes the Recipient’s Options under Section 10.
Neither service as a Director nor receipt of a director’s fee shall be
sufficient to make a Director an “Employee.”

(q) “EXCHANGE ACT” means the Securities Exchange Act of 1934.

(r) “EXECUTIVE” means an individual who is subject to Section 16 of the Exchange
Act or who is a “covered employee” under Section 162(m) of the Code, in either
case because of the individual’s relationship with the Company or an Affiliate.

 

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(s) “EXPIRATION DATE” means, with respect to an Award, the date stated in the
Award Agreement as the expiration date of the Award or, if no such date is
stated in the Award Agreement, then the last day of the maximum exercise period
for the Award, disregarding the effect of a Recipient’s Termination or any other
event that would shorten that period.

(t) “FAIR MARKET VALUE” means the value of Shares as determined under
Section 17.2.

(u) “FUNDAMENTAL TRANSACTION” means any transaction or event described in
Section 10.3.

(v) “GRANT DATE” means the date the Administrator approves the grant of an
Award. However, if the Administrator specifies that an Award’s Grant Date is a
future date or the date on which a condition is satisfied, the Grant Date for
such Award is that future date or the date that the condition is satisfied.

(w) “INCENTIVE STOCK OPTION” means an Option intended to qualify as an incentive
stock option under Section 422 of the Code and designated as an Incentive Stock
Option in the Award Agreement for that Option.

(x) “NONSTATUTORY OPTION” means any Option other than an Incentive Stock Option.

(y) “OBJECTIVELY DETERMINABLE PERFORMANCE CONDITION” shall mean a performance
condition (i) that is established (x) at the time an Award is granted or (y) no
later than the earlier of (1) 90 days after the beginning of the period of
service to which it relates, or (2) before the elapse of 25% of the period of
service to which it relates, (ii) that is uncertain of achievement at the time
it is established, and (iii) the achievement of which is determinable by a third
party with knowledge of the relevant facts. Examples of measures that may be
used in Objectively Determinable Performance Conditions include net order
dollars, net profit dollars, net profit growth, net revenue dollars, revenue
growth, earnings per share, return on assets, return on equity, and other
financial objectives, objective customer satisfaction indicators and efficiency
measures, each with respect to the Company and/or an individual business unit.

(z) “OFFICER” means an officer of the Company as defined in Rule 16a-1 adopted
under the Exchange Act.

(aa) “OPTION” means a right to purchase Shares of the Company granted under this
Plan.

(bb) “OPTION PRICE” means the price payable under an Option for Shares, not
including any amount payable in respect of withholding or other taxes.

 

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(cc) “OPTION SHARES” means Shares covered by an outstanding Option or purchased
under an Option.

(dd) “PERFORMANCE PERIOD” means the period determined by the Administrator under
Section 8.3(a).

(ee) “PERFORMANCE SHARE AWARD” means an Award under Section 8.3.

(ff) “PLAN” means this 2002 Equity Incentive Plan of Identix Incorporated.

(gg) “PURCHASE PRICE” means the price payable under a Restricted Stock Award for
Shares, not including any amount payable in respect of withholding or other
taxes.

(hh) “QUALIFIED DOMESTIC RELATIONS ORDER” means a judgment, order, or decree
meeting the requirements of Section 414(p) of the Code.

(ii) “RECIPIENT” means: (i) a person to whom an Award has been granted,
including a holder of a Substitute Award, (ii) a person to whom an Award has
been transferred in accordance with all applicable requirements of Sections 6.5,
7(h), and 16, and (iii) a person who holds Option Shares subject to any right of
repurchase under Section 15.2.

(jj) “RESTRICTED STOCK AWARD” means an offer by the Company to sell shares
subject to certain restrictions pursuant to the Award Agreement as described in
Section 8.1.

(kk) “REVERSE VESTING” means, with respect to an Option, that an Option is or
was fully exercisable but that, subject to a “reverse” vesting schedule, the
Company has a right to repurchase the Option Shares as specified in
Section 15.2(a), with the Company’s right of repurchase expiring in accordance
with the “forward” vesting schedule that would otherwise have applied to the
Option under which the Option Shares were purchased or other vesting schedule
described in the Award Agreement. With respect to a Restricted Stock Award,
Reverse Vesting means that the Company has a right to repurchase the Award
Shares purchased pursuant to the Restricted Stock Award, as specified in
Section 15.2(a), with the Company’s right of repurchase expiring in accordance
with the vesting schedule in the Award Agreement.

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

(mm) “SECURITIES ACT” means the Securities Act of 1933.

 

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(nn) “SHARE” means a share of the common stock of the Company or other
securities substituted for the common stock under Section 10.

(oo) “STOCK PURCHASE RIGHT” means an Award granted under Section 8.2.

(pp) “SUBSTITUTE AWARDS” means any Substitute Performance Share Awards,
Substitute Stock Purchase Rights, Substitute Options or Substitute Restricted
Stock Awards.

(qq) “SUBSTITUTE OPTION” means an Option granted in substitution for, or upon
the conversion of, an option granted by another entity to purchase equity
securities in the granting entity.

(rr) “SUBSTITUTE PERFORMANCE SHARE AWARDS” means Performance Share Awards
granted in substitution for, or upon the conversion of, a performance share
award granted by another entity to purchase equity securities in the granting
entity.

(ss) “SUBSTITUTE RESTRICTED STOCK AWARD” means a Restricted Stock Award granted
in substitution for, or upon the conversion of, a stock award granted by another
entity to purchase equity securities in the granting entity.

(tt) “SUBSTITUTE STOCK PURCHASE RIGHT” means a Stock Purchase Right granted in
substitution for, or upon the conversion of, a stock purchase right granted by
another entity with respect to equity securities in the granting entity.

(uu) “TEN PERCENT SHAREHOLDER” means any person who, directly or by attribution
under Section 424(d) of the Code, owns stock possessing more than ten percent of
the total combined voting power of all classes of stock of the Company or of any
Affiliate on the Grant Date.

(vv) “TERMINATION” means that the Recipient has ceased to be, with or without
any cause or reason, an Employee, Director or Consultant. However, unless so
determined by the Administrator, “Termination” shall not include a change in
status from an Employee, Consultant or Director to another such status. An event
that causes an Affiliate to cease being an Affiliate shall be treated as the
“Termination” of that Affiliate’s Employees, Directors, and Consultants.

2.2 RULES OF INTERPRETATION. Any reference to a “Section,” without more, is to a
Section of this Plan. Captions and titles are used for convenience in this Plan
and shall not, by themselves, determine the meaning of this Plan. Except when
otherwise indicated by the context, the singular includes the plural and vice
versa. Any reference to a statute is also a reference to the applicable rules
and regulations adopted under that statute. Any reference to a statute, rule or
regulation, or to a section of a statute, rule or regulation, is a reference to
that statute, rule, regulation, or section as amended from time to time, both
before and after the effective date of this Plan and including any successor
provisions.

 

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3. SHARES SUBJECT TO THIS PLAN; TERM OF THIS PLAN

3.1 NUMBER OF AWARD SHARES. Subject to adjustment under Section 10, the maximum
number of Shares that may be issued under this Plan is 5,800,000.

3.2 SOURCE OF SHARES. Award Shares may be authorized but unissued Shares or
treasury Shares. If an Award is terminated, expires, or otherwise becomes
unexercisable without having been exercised in full, the unpurchased Shares that
were subject to the Award shall revert to this Plan and shall again be available
for future issuance under this Plan. Shares actually issued under this Plan
shall not be available for regrant even if repurchased by the Company.

3.3 TERM OF THIS PLAN

(a) This Plan shall be effective on the date it is approved by the Board.
However, no Award may be exercised unless and until the Company’s shareholders
approve this Plan within 12 months after the Board approves this Plan.

(b) Subject to Section 13, this Plan shall continue in effect for a period of
ten years from the earlier of the date on which the Plan was adopted by the
Board and the date on which the Plan was approved by the Company’s shareholders.

 

4. ADMINISTRATION

4.1 GENERAL

(a) The Board shall have ultimate responsibility for administering this Plan.
The Board may delegate certain of its responsibilities to a Committee, which
shall consist of at least two members of the Board. The Board or the Committee
may further delegate its responsibilities to any Employee of the Company or any
Affiliate. Where this Plan specifies that an action is to be taken or a
determination made by the Board, only the Board may take that action or make
that determination. Where this Plan specifies that an action is to be taken or a
determination made by the Committee, only the Committee may take that action or
make that determination. Where this Plan references the “Administrator,” the
action may be taken or determination made by the Board, the Committee, or other
Administrator. However, only the Board or the Committee may approve grants of
Awards to Executives, and an Administrator other than the Board or the Committee
may grant Awards only within guidelines established by the Board or Committee.
Moreover, all actions and determinations by any Administrator are subject to the
provisions of this Plan.

(b) So long as the Company has registered and outstanding a class of equity
securities under Section 12 of the Exchange Act, the Committee shall consist of
Company Directors who are “Non-Employee Directors” as defined in Rule 16b-3 and,

 

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after the expiration of any transition period permitted by Treasury Regulations
Section 1.162-27(h)(3), who are “outside directors” as defined in Section 162(m)
of the Code.

4.2 AUTHORITY OF ADMINISTRATOR. Subject to the other provisions of this Plan,
the Administrator shall have the authority:

(a) to grant Awards, including Substitute Awards;

(b) to determine the Fair Market Value of Shares;

(c) to determine the Option Price and the Purchase Price under Awards;

(d) to select the Recipients;

(e) to determine the times Awards are granted;

(f) to determine the number of Shares subject to each Award;

(g) to determine the types of payment that may be used to purchase Award Shares;

(h) to determine the types of payment that may be used to satisfy withholding
tax obligations;

(i) to determine the other terms of each Award, including but not limited to the
time or times at which Awards may be exercised, whether and under what
conditions an Award is assignable, and whether an Option is a Nonstatutory
Option or an Incentive Stock Option;

(j) to modify or amend any Award;

(k) to authorize any person to sign any Award Agreement or other document
related to this Plan on behalf of the Company;

(l) to determine the form of any Award Agreement or other document related to
this Plan, and whether that document, including signatures, may be in electronic
form;

(m) to interpret this Plan and any Award Agreement or document related to this
Plan;

(n) to correct any defect, remedy any omission, or reconcile any inconsistency
in this Plan, any Award Agreement or any other document related to this Plan;

 

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(o) to adopt, amend, and revoke rules and regulations under this Plan, including
rules and regulations relating to sub-plans and Plan addenda;

(p) to adopt, amend, and revoke rules and procedures relating to the operation
and administration of this Plan to accommodate non-U.S. Recipients and the
requirements of Applicable Law such as: (i) rules and procedures regarding the
conversion of local currency, withholding procedures and the handling of stock
certificates to comply with local practice and requirements, and (ii) sub-plans
and Plan addenda for non-U.S. Recipients;

(q) to determine whether a transaction or event should be treated as a Change of
Control, a Divestiture or neither;

(r) to determine the effect of a Fundamental Transaction and, if the Board
determines that a transaction or event should be treated as a Change of Control
or a Divestiture, then the effect of that Change of Control or Divestiture; and

(s) to make all other determinations the Administrator deems necessary or
advisable for the administration of this Plan.

4.3 SCOPE OF DISCRETION. Subject to the specific provisions and specific
limitations of this Plan, as well as all rights conferred on specific Recipients
by Award Agreements and other agreements, (i) on all matters for which this Plan
confers the authority, right or power on the Board, the Committee, or other
Administrator to make decisions, that body may make those decisions in its sole
and absolute discretion and (ii) in making those decisions the Board, Committee
or other Administrator need not treat all persons eligible to receive Awards,
all Recipients, all Awards or all Award Shares the same way.

 

5. PERSONS ELIGIBLE TO RECEIVE AWARDS

5.1 ELIGIBLE INDIVIDUALS. Awards (including Substitute Awards) may be granted
to, and only to, Employees, Directors and Consultants, including to prospective
Employees, Directors and Consultants conditioned on the beginning of their
service for the Company or an Affiliate.

5.2 SECTION 162(m) LIMITATION.

(a) OPTIONS. So long as the Company is a “publicly held corporation” within the
meaning of Section 162(m) of the Code: (a) no Employee or prospective Employee
may be granted one or more Options within any fiscal year of the Company to
purchase more than 450,000 Shares under Options, subject to adjustment under
Section 10, and (b) Options may be granted to an Executive only by the Committee
(and,

 

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notwithstanding Section 4.1(a), not by the Board). If an Option is cancelled
without being exercised or if the Option Price of an Option is reduced, that
cancelled or repriced Option shall continue to be counted against the limit on
Shares under this Section 5.2.

(b) RESTRICTED STOCK AWARDS AND PERFORMANCE SHARE AWARDS. Any Restricted Stock
Award and Performance Share Awards intended as “qualified performance-based
compensation” within the meaning of Section 162(m) of the Code must vest or
become exercisable contingent on the achievement of one or more Objectively
Determinable Performance Conditions, such Award may be granted only by the
Committee, and the material terms of the Award, including the maximum amount of
the Award and the Award formula, must be approved by the shareholders of the
Company before any Award Shares under such Award are issued.

 

6. TERMS AND CONDITIONS OF OPTIONS

The following rules apply to all Options:

6.1 PRICE. Subject to Section 13.2, no Option may have an Option Price less than
100% of the Fair Market Value of the Shares on the Grant Date. No Option
intended as “qualified incentive-based compensation” within the meaning of
Section 162(m) of the Code may have an Option Price less than 100% of the Fair
Market Value of the Shares on the Grant Date. In no event will the Option Price
of any Option be less than the par value of the Shares issuable under the Option
if that is required by Applicable Law.

6.2 TERM. No Option shall be exercisable after its Expiration Date. Subject to
Section 7(a), no Option may have an Expiration Date that is more than fifteen
years after its Grant Date.

6.3 VESTING. Options shall be exercisable: (a) on the Grant Date, or (b) in
accordance with a schedule related to the Grant Date, the date the Recipient’s
directorship, employment or consultancy begins, or a different date specified in
the Option Award Agreement. If so provided in the Option Award Agreement, an
Option may be exercisable subject to the application of Reverse Vesting to the
Option Shares.

6.4 FORM OF PAYMENT.

(a) The Administrator shall determine the acceptable form and method of payment
for exercising an Option.

(b) Acceptable forms of payment for all Option Shares are cash, check or wire
transfer, denominated in U.S. dollars except as specified by the Administrator
for non-U.S. Employees or non-U.S. sub-plans.

 

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(c) In addition, the Administrator may permit payment to be made by any of the
following methods:

(i) other Shares, or the designation of other Shares, which (A) in the case of
Shares acquired upon exercise of an option (whether or not under this Plan) have
been owned by the Recipient for more than six months on the date of surrender,
and (B) have a Fair Market Value on the date of surrender equal to the Option
Price of the Shares as to which the Option is being exercised;

(ii) provided that a public market exists for the Shares, through a “same day
sale” commitment from the Recipient and a broker-dealer that is a member of the
National Association of Securities Dealers (an “NASD DEALER”) under which the
Recipient irrevocably elects to exercise the Option and the NASD Dealer
irrevocably commits to forward an amount equal to the Option Price, directly to
the Company, upon receipt of the Option Shares (a “CASHLESS EXERCISE”);

(iii) one or more full recourse promissory notes bearing interest at a fair
market value rate that is at least sufficient to avoid imputation of interest
under Sections 483, 1274 and 7872 of the Code and with such other terms as the
Administrator specifies, except that Consultants may not purchase Shares with a
promissory note unless the note is adequately secured by collateral other than
the Shares, the portion of the Option Price equal to the par value of the Shares
must be paid in cash or other lawful consideration, other than the note, if that
is required by Applicable Law, the Company shall at all times comply with any
applicable margin rules of the Federal Reserve, the note must have a term of no
more than five years and the principal amount of the note may not exceed 90% of
the purchase price paid by the Recipient; and

(iv) any combination of the methods of payment permitted by any paragraph of
this Section 6.4.

6.5 NONASSIGNABILITY OF OPTIONS. Except as set forth in any Option Award
AGREEMENT, no Option shall be assignable or otherwise transferable by the
Recipient except by will or by the laws of descent and distribution. However,
Options may be transferred and exercised in accordance with a Qualified Domestic
Relations Order.

6.6 SUBSTITUTE OPTIONS. The Board may cause the Company to grant Substitute
Options in connection with the acquisition by the Company or an Affiliate of
equity securities of any entity (including by merger) or all or a portion of the
assets of any entity. Any such substitution shall be effective when the
acquisition closes. Substitute Options may be Nonstatutory Options or Incentive
Stock Options. Unless and

 

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to the extent specified otherwise by the Board, Substitute Options shall have
the same terms and conditions as the options they replace, except that (subject
to Section 10) Substitute Options shall be Options to purchase Shares rather
than equity securities of the granting entity and shall have an Option Price
that, as determined by the Board in its sole and absolute discretion, properly
reflects the substitution.

6.7 REPRICINGS. Other than in accordance with Sections 10 and 13.2, Options may
not be repriced, replaced, regranted through cancellation or modified, if the
effect of the repricing, replacement, regrant or modification would be to reduce
the effective Option Price of the Options.

 

7. INCENTIVE STOCK OPTIONS

The following rules apply only to Incentive Stock Options and only to the extent
these rules are more restrictive than the rules that would otherwise apply under
this Plan. With the consent of the Recipient, or where this Plan provides that
an action may be taken notwithstanding any other provision of this Plan, the
Administrator may deviate from the requirements of this Section, notwithstanding
that any Incentive Stock Option modified by the Administrator will thereafter be
treated as a Nonstatutory Option.

(a) The Expiration Date of an Incentive Stock Option shall not be later than ten
years from its Grant Date, with the result that no Incentive Stock Option may be
exercised after the expiration of ten years from its Grant Date.

(b) No Incentive Stock Option may be granted more than ten years from the date
this Plan was approved by the Board.

(c) Options intended to be incentive stock options under Section 422 of the Code
that are granted to any single Recipient under all incentive stock option plans
of the Company and its Affiliates, including incentive stock options granted
under this Plan, may not vest at a rate of more than $100,000 in Fair Market
Value of stock (measured on the grant dates of the options) during any calendar
year. For this purpose, an option vests with respect to a given share of stock
the first time its holder may purchase that share, notwithstanding any right of
the Company to repurchase that share. Unless the Administrator specifies
otherwise in the related agreement governing the option, this vesting limitation
shall be applied by, to the extent necessary to satisfy this $100,000 rule,
treating certain stock options that were intended to be incentive stock options
under Section 422 of the Code as Nonstatutory Options. The stock options or
portions of stock options to be reclassified as Nonstatutory Options are those
with the highest option prices, whether granted under this Plan or any other
equity compensation plan of the Company or any Affiliate that permits that
treatment. This Section 7(c) shall not cause an Incentive Stock Option to vest
before its original vesting date or cause an Incentive Stock Option that has
already vested to cease to be vested.

 

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(d) In order for an Incentive Stock Option to be exercised for any form of
payment other than those described in Section 6.4(b), that right must be stated
in the Award Agreement relating to that Incentive Stock Option.

(e) Any Incentive Stock Option granted to a Ten Percent Shareholder, must have
an Expiration Date that is not later than five years from its Grant Date, with
the result that no such Option may be exercised after the expiration of five
years from the Grant Date.

(f) The Option Price of an Incentive Stock Option shall never be less than the
Fair Market Value of the Shares at the Grant Date. The Option Price for the
Shares covered by an Incentive Stock Option granted to a Ten Percent Shareholder
shall never be less than 110% of the Fair Market Value of the Shares at the
Grant Date.

(g) Incentive Stock Options may be granted only to Employees. If a Recipient
changes status from an Employee to a Consultant, that Recipient’s Incentive
Stock Options become Nonstatutory Options if not exercised within the time
period described in Section 7(i).

(h) No rights under an Incentive Stock Option may be transferred by the
Recipient, other than by will or the laws of descent and distribution. During
the life of the Recipient, an Incentive Stock Option may be exercised only by
the Recipient. The Company’s compliance with a Qualified Domestic Relations
Order, or the exercise of an Incentive Stock Option by a guardian or conservator
appointed to act for the Recipient, shall not violate this Section 7(h).

(i) An Incentive Stock Option shall be treated as a Nonstatutory Option if it
remains exercisable after, but is not exercised within, the three-month period
beginning with the Recipient’s Termination for any reason other than the
Recipient’s death or disability (as defined in Section 22(c) of the Code). In
the case of Termination due to death, an Incentive Stock Option shall continue
to be treated as an Incentive Stock Option if it remains exercisable after, but
is not exercised within, that three-month period provided it is exercised before
the Expiration Date. In the case of Termination due to disability, an Incentive
Stock Option shall be treated as a Nonstatutory Option if it remains exercisable
after, but is not exercised within, one year after the Recipient’s Termination.

 

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8. RESTRICTED STOCK AWARDS, STOCK PURCHASE RIGHTS AND PERFORMANCE SHARE AWARDS

8.1 RESTRICTED STOCK AWARDS. The following rules apply to all Restricted Stock
Awards:

(a) PRICE. The Purchase Price for the Award Shares issuable under a Restricted
Stock Award shall be determined by the Administrator provided that in no event
shall such Purchase Price be less than the par value of the Award Shares
issuable under the Restricted Stock Award.

(b) TERM. No Restricted Stock Award shall be exercisable after its Expiration
Date. No Restricted Stock Award may have an Expiration Date that is more than
ten years after its Grant Date.

(c) VESTING. Restricted Stock Awards shall be exercisable: (a) on the Grant
Date, or (b) in accordance with a schedule related to the Grant Date, the date
the Recipient’s directorship, employment or consultancy begins, or a different
date specified in the Award Agreement.

(d) RESTRICTION PERIOD. Subject to this Plan and the Award Agreement, during a
period set by the Administrator, commencing with the Grant Date of the
Restricted Stock Award and ending not more than ten (10) years from such Grant
Date, the Recipient shall not be permitted to sell, assign, transfer, pledge or
otherwise encumber the Award Shares of a Restricted Stock Award. Within these
limits, the Administrator may provide for the lapse of such restrictions in
installments, based on service, performance or such other factors or criteria as
the Committee may determine, but, subject to Sections 10.3 and 10.4, may not
accelerate or waive such restrictions.

(e) RIGHT OF REPURCHASE. If so provided in the Award Agreement, Award Shares
acquired pursuant to a Restricted Stock Award may be subject to Reverse Vesting.

(f) FORM OF PAYMENT. The Administrator shall determine the acceptable form and
method of payment for exercising a Restricted Stock Award.

(i) Acceptable forms of payment for all Award Shares are cash, check or wire
transfer, denominated in U.S. dollars except as specified by the Administrator
for non-U.S. Employees or non-U.S. sub-plans.

(ii) In addition, the Administrator may permit payment to be made by any of the
methods permitted with respect to the exercise of Options pursuant to
Section 6.4.

 

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(g) NONASSIGNABILITY OF RESTRICTED STOCK AWARDS. Except as set forth in any
Award Agreement, no Restricted Stock Award shall be assignable or otherwise
transferable by the Recipient except by will or by the laws of descent and
distribution. However, Restricted Stock Awards may be transferred and exercised
in accordance with a Qualified Domestic Relations Order.

(h) SUBSTITUTE RESTRICTED STOCK AWARD. The Board may cause the Company to grant
Substitute Restricted Stock Awards in connection with the acquisition by the
Company or an Affiliate of equity securities of any entity (including by merger)
or all or a portion of the assets of any entity. Unless and to the extent
specified otherwise by the Board, Substitute Restricted Stock Awards shall have
the same terms and conditions as the awards they replace, except that (subject
to Section 10) Substitute Restricted Stock Awards shall be Restricted Stock
Awards to purchase Shares rather than equity securities of the granting entity
and shall have a Purchase Price that, as determined by the Board in its sole and
absolute discretion, properly reflects the substitution.

(i) REPRICINGS. Other than in accordance with Sections 10, Restricted Stock
Awards may not be repriced, replaced, regranted through cancellation or modified
without shareholder approval, if the effect of the repricing, replacement,
regrant or modification would be to reduce the effective Purchase Price of the
Shares subject to the Restricted Stock Awards.

(j) DIVIDENDS. Unless otherwise determined by the Committee, for Restricted
Stock Awards, dividends payable in cash shall be automatically reinvested in
additional Restricted Stock Awards, and dividends payable in Shares shall be
paid in the form of Restricted Stock Awards. The reinvestment of dividends in
additional Restricted Stock Awards at the time of any dividend payment pursuant
to this Section only shall be permissible if sufficient Shares are available
under Section 3 for such reinvestment (taking into account then outstanding
Awards).

8.2 STOCK PURCHASE RIGHTS.

(a) PRICE. The Administrator may grant Stock Purchase Rights which shall enable
the Recipients to purchase Shares at a price equal to not less than 85% of the
Fair Market Value of the Shares on the Grant Date.

(b) EXERCISABILITY. Stock Purchase Rights shall be exercisable for a period
determined by the Administrator not exceeding 30 days from the Grant Date.

(c) SUBSTITUTE STOCK PURCHASE RIGHTS. The Board may cause the Company to grant
Substitute Stock Purchase Rights in connection with the acquisition by the
Company or an Affiliate of equity securities of any entity (including by merger)
or all or a portion of the assets of any entity. Unless and to the extent
specified otherwise by the Board, Substitute Stock Purchase Rights shall have
the same terms and conditions as

 

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the rights they replace, except that (subject to Section 10) Substitute Stock
Purchase Rights shall be Stock Purchase Rights with rights to acquire Shares
rather than equity securities of the granting entity and shall have
consideration that, as determined by the Board in its sole and absolute
discretion, properly reflects the substitution.

8.3 PERFORMANCE SHARE AWARDS.

(a) AWARDS. The Administrator shall determine the nature, length and starting
date of the Performance Period for each Performance Share Award, which period
shall be at least one (1) year and not more than six (6) years from the Grant
Date. The consideration payable by a Recipient with respect to a Performance
Share Award shall be an amount determined by the Administrator in the exercise
of the Administrator’s discretion on the Grant Date; provided, that the amount
of consideration may be at least par value of the Shares issuable under the
Performance Share Award if required by Applicable Law and may in no event exceed
50% of the Fair Market Value of the Award Shares as of the Grant Date. The
Administrator shall determine the performance objectives to be used in awarding
Performance Share Awards and the extent to which such Award Shares have been
earned. Performance Periods may overlap and Recipients may participate
simultaneously with respect to Performance Share Awards that are subject to
different Performance Periods and different performance factors and criteria. At
the beginning of each Performance Period, the Administrator shall determine for
each Performance Share Award subject to such Performance Period the number of
Award Shares (which may consist of Restricted Stock Awards) to be awarded to the
Recipient at the end of the Performance Period if and to the extent that the
relevant measures of performance for such Performance Share Awards are met. Such
number of Award Shares may be fixed or may vary in accordance with such
performance or other criteria as may be determined by the Administrator. The
Administrator may provide that (a) amounts equivalent to interest at such rates
as the Administrator may determine, or (b) amounts equivalent to dividends paid
by the Company upon outstanding Shares shall be payable with respect to
Performance Share Awards.

(b) FORM OF PAYMENT. Payment for the exercise of any Performance Share Awards
shall be made in the form of cash or whole Shares as provided in Section 6.4(c),
as the Administrator, in its discretion, shall determine.

(c) SUBSTITUTE PERFORMANCE SHARE AWARDS. The Board may cause the Company to
grant Substitute Performance Share Awards in connection with the acquisition by
the Company or an Affiliate of equity securities of any entity (including by
merger) or all or a portion of the assets of any entity. Unless and to the
extent specified otherwise by the Board, Substitute Performance Share Awards
shall have the same terms and conditions as the awards they replace, except that
(subject to Section 10) Substitute Performance Share Awards shall be Performance
Share Awards with rights to acquire Shares rather than equity securities of the
granting entity and shall have consideration that, as determined by the Board in
its sole and absolute discretion, properly reflects the substitution.

 

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(d) REPRICINGS. Other than in accordance with Sections 10, a Performance Share
Award may not be repriced, replaced, regranted through cancellation or modified
without shareholder approval, if the effect of the repricing, replacement,
regrant or modification would be to increase the consideration payable for the
Performance Share Award.

 

9. EXERCISE OF AWARDS

9.1 IN GENERAL. An Award shall be exercisable in accordance with this Plan, the
Award Agreement under which it is granted, and as prescribed by the
Administrator.

9.2 TIME OF EXERCISE. Awards shall be considered exercised when the Company
receives: (a) written notice of exercise from the person entitled to exercise
the Award, (b) full payment, or provision for payment, in a form and method
approved by the Administrator, for the Shares for which the Award is being
exercised, and (c) with respect to Nonstatutory Options or other Awards subject
to withholding, payment, or provision for payment, in a form approved by the
Administrator, of all applicable withholding taxes due upon exercise. An Award
may not be exercised for a fraction of a Share.

9.3 ISSUANCE OF AWARD SHARES. The Company shall issue Award Shares in the name
of the person properly exercising the Award. If the Recipient is that person and
so requests, the Award Shares shall be issued in the name of the Recipient and
the Recipient’s spouse. The Company shall endeavor to issue Award Shares
promptly after an Award is exercised. However, until Award Shares are actually
issued, as evidenced by the appropriate entry on the stock books of the Company
or its transfer agent, no right to vote or receive dividends or other
distributions, and no other rights as a shareholder, shall exist with respect to
the Award Shares, even though the Recipient has completed all the steps
necessary to exercise the Award. No adjustment shall be made for any dividend,
distribution, or other right for which the record date precedes the date the
Award Shares are issued, except as provided in Section 10.

9.4 TERMINATION

(a) IN GENERAL. Except as provided by the Administrator, including in an Award
Agreement, and as otherwise provided in Sections 9.4(b), (c), (d), (e), (f) and
(g), after a Recipient’s Termination, the Recipient’s Awards shall be
exercisable to the extent (but only to the extent) they are vested on the date
of that Termination and only during the period ending three months after the
Termination, but in no event after the Expiration Date. To the extent the
Recipient does not exercise an Award within the time specified for exercise, the
Award shall automatically terminate. With respect to

 

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Restricted Stock Awards and Performance Share Awards, except to the extent
otherwise provided by the Administrator, including in the Award Agreement and in
accordance with Section 10, upon termination of a Recipient’s employment for any
reason (i) during the restriction period provided for in Section 8.1(d), all
Award Shares of a Restricted Stock Award still subject to such restriction
period shall be forfeited by the Recipient and to the extent previously
purchased by the Recipient shall be repurchased by the Company for an amount
equal to the original Purchase Price and (ii) during a Performance Period, the
Recipient shall not be entitled to any payment with respect to the Performance
Share Awards subject to the Performance Period.

(b) LEAVES OF ABSENCE. Unless otherwise provided in the Award Agreement, no
Award may be exercised more than three months after the beginning of a leave of
absence, other than a personal or medical leave approved by the Administrator
with employment guaranteed upon return. Awards shall not continue to vest during
a leave of absence, other than an approved personal or medical leave with
employment guaranteed upon return.

(c) DEATH OR DISABILITY. Unless otherwise provided in the Award Agreement, if a
Recipient’s Termination is due to death or disability (as determined by the
Administrator with respect to all Awards other than Incentive Stock Options and
as defined by Section 22(e) of the Code with respect to Incentive Stock
Options), all Awards of that Recipient to the extent exercisable at the date of
that Termination may be exercised for two years after that Termination, but in
no event after the Expiration Date. In the case of Termination due to death, an
Award may be exercised as provided in Section 16. In the case of Termination due
to disability, if a guardian or conservator has been appointed to act for the
Recipient and been granted this authority as part of that appointment, that
guardian or conservator may exercise the Award on behalf of the Recipient. In
the case of a Recipient who dies or become disabled within three months after
Termination, if the Termination was not due to Cause, the Recipient’s Awards may
be exercised for one year after that Termination. To the extent an Award is not
so exercised within the time specified for its exercise, the Award shall
automatically terminate.

(d) DIVESTITURE. If a Recipient’s Termination is due to a Divestiture, the Board
may take any one or more of the actions described in Section 10.3 or 10.4.

(e) RETIREMENT. Unless otherwise provided in the Award Agreement, if a
Recipient’s Termination is due to the Recipient’s retirement in accordance with
the Company’s or an Affiliate’s retirement policy, all Awards of that Recipient
to the extent exercisable at the Recipient’s date of retirement may be exercised
for two years after the Recipient’s date of retirement, but in no event after
the Expiration Date. To the extent the Recipient does not exercise an Option
within the time specified for exercise, the Award shall automatically terminate.

 

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(f) SEVERANCE PROGRAMS. Unless otherwise provided in the Award Agreement, if a
Recipient’s Termination results from participation in a voluntary severance
incentive program of the Company or an Affiliate approved by the Board, all
Awards of that Employee to the extent exercisable at the time of that
Termination shall be exercisable for one year after the Recipient’s Termination,
but in no event after the Expiration Date. If the Recipient does not exercise an
Award within the time specified for exercise, the Award shall automatically
terminate.

(g) TERMINATION FOR CAUSE. Unless otherwise provided in the Award Agreement, if
a Recipient’s Termination is due to cause, all of the Recipient’s Awards shall
automatically terminate and cease to be exercisable at the time of Termination
and all Awards exercised after the first event constituting cause may be
rescinded by the Administrator. “CAUSE” means dishonesty, fraud, misconduct,
disclosure or misuse of confidential information, conviction of, or a plea of
guilty or no contest to, a felony or similar offense, habitual absence from work
for reasons other than illness, or intentional conduct that could cause
significant injury to the Company or an Affiliate, in each case as determined by
the Administrator.

(h) REVERSE VESTING. Under any circumstances stated in this Section 9.4 in which
all unvested Options of a Recipient immediately vest, the Company’s repurchase
rights shall lapse on all Option Shares held by that Recipient that are subject
to Reverse Vesting.

(i) CONSULTING OR EMPLOYMENT RELATIONSHIP. Nothing in this Plan or in any Award
Agreement, and no Award or the fact that Award Shares remain subject to
repurchase rights, shall: (a) interfere with or limit the right of the Company
or any Affiliate to terminate the employment or consultancy of any Recipient at
any time, whether with or without cause or reason, and with or without the
payment of severance or any other compensation or payment, or (b) interfere with
the application of any provision in any of the Company’s or any Affiliate’s
charter documents or Applicable Law relating to the election, appointment, term
of office, or removal of a Director.

 

10. CERTAIN TRANSACTIONS AND EVENTS

10.1 IN GENERAL. Except as specifically provided in this Section 10, no change
in the capital structure of the Company, merger, sale or other disposition of
assets or a subsidiary, change of control, issuance by the Company of shares of
any class of securities convertible into shares of any class, conversion of
securities, or other transaction or event shall require or be the occasion for
any adjustments of the type described in this Section 10.

10.2 CHANGES IN CAPITAL STRUCTURE. In the event of any stock split, reverse
stock split, recapitalization, combination or reclassification of stock, stock
dividend, spin-off, or similar change to the capital structure of the Company
(not including a

 

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Fundamental Transaction or Change of Control), the Board shall make whatever
adjustments it concludes are appropriate to: (a) the number and type of Awards
that may be granted under this Plan, (b) the number and type of Options that may
be granted to any individual under this Plan, (c) the Purchase Price of any
Restricted Stock Award [and the consideration for any Performance Share Award or
Stock Purchase Right or], (d) the Option Price and number and class of
securities issuable under each outstanding Option, and (e) the repurchase price
of any securities substituted for Option Shares that are subject to repurchase
rights. The specific adjustments shall be determined by the Board in its sole
and absolute discretion. Unless the Board specifies otherwise, any securities
issuable as a result of any such adjustment shall be rounded to the next lower
whole security.

10.3 FUNDAMENTAL TRANSACTIONS. If the Company merges with another entity in a
transaction in which the Company is not the surviving entity or if, as a result
of any other transaction or event, other securities are substituted for the
Shares or Shares may no longer be issued (each a “FUNDAMENTAL TRANSACTION”),
then, notwithstanding any other provision of this Plan, the Board shall do one
or more of the following contingent on the closing or completion of the
Fundamental Transaction: (a) arrange for the substitution of options or other
compensatory awards on equity securities other than Shares (including, if
appropriate, equity securities of an entity other than the Company) in exchange
for Awards, (b) accelerate the vesting and termination of outstanding Awards, in
whole or in part, so that Awards can be exercised before or otherwise in
connection with the closing or completion of the transaction or event but then
terminate, (c) cancel Awards in exchange for cash payments to Recipients, and
(d) either arrange for any repurchase rights of the Company with respect to
Award Shares to apply to the securities issued in substitution for Shares or
terminate repurchase rights on Award Shares. The Board need not adopt the same
rules for each Award or each Recipient.

10.4 CHANGES OF CONTROL. The Board may also, but need not, specify that other
transactions or events constitute a “CHANGE OF CONTROL”. The Board may do that
either before or after the transaction or event occurs. Examples of transactions
or events that the Board may treat as Changes of Control are: (a) the Company or
an Affiliate is a party to a merger, consolidation, amalgamation, or other
transaction in which the beneficial shareholders of the Company, immediately
before the transaction, beneficially own securities representing less than 70%
of the total combined voting power or value of the Company immediately after the
transaction, (b) any “person”, as such term is used in Sections 13(d) and 14(d)
of the Exchange Act (other than the Company, a subsidiary, an affiliate, or a
Company employee benefit plan, including any trustee of such plan acting as
trustee) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company’s then
outstanding securities, (c) the solicitation of proxies (within the meaning of
Rule 14a-1 under the Exchange Act) with respect to the election of any Company
Director where such solicitation is for any

 

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candidate who is not a candidate proposed by a majority of the Board in office
prior to the time of such election, (d) the dissolution or liquidation (partial
or total) of the Company or a sale of assets involving 30% or more of the assets
of the Company, or (e) any other event which the Board determines, in its
discretion, would materially alter the structure of the Company or its
ownership. In connection with a Change of Control, notwithstanding any other
provision of this Plan, the Board may take any one or more of the following
actions (provided however, the Board need not adopt the same rules for each
Award or each Recipient); but only if and to the extent so specifically
determined by the Board in its discretion, which determination may be amended or
reversed only by the affirmative vote of a majority of the persons who were
Company Directors at the time such determination was made, and only if
acceleration and valuation provisions no more favorable to Recipients than the
following may apply:

(a) any Options outstanding as of the date such Change in Control is determined
to have occurred and not then exercisable and vested may become fully
exercisable and vested;

(b) the restrictions and limitations applicable to any Restricted Stock Awards
and Stock Purchase Rights may lapse, and such Restricted Stock Awards may become
fully vested;

(c) the value (net of any Exercise Price, Purchase Price or other consideration)
of all outstanding Options, Restricted Stock Awards and Stock Purchase Rights,
unless otherwise determined by the Committee at or after grant and subject to
Rule 16b-3, may be cashed out on the basis of the Change in Control Price as of
the date such Change in Control is determined to have occurred or such other
date as the Board may determine prior to the Change in Control;

(d) any outstanding Performance Share Awards may be vested and paid in full as
if all performance criteria had been met;

(e) the date for the exercise of Awards may be extended (but not beyond their
original Expiration Date); or

(f) any one or more actions under Section 10.3 may be taken.

10.5 DIVESTITURE. If the Company or an Affiliate sells or otherwise transfers
equity securities of an Affiliate to a person or entity other than the Company
or an Affiliate, or leases, exchanges or transfers all or any portion of its
assets to such a person or entity, then the Board, in its sole and absolute
discretion, may specify that such transaction or event constitutes a
“DIVESTITURE”. In connection with a Divestiture, notwithstanding any other
provision of this Plan, the Board may take one or more of the actions described
in Section 10.3 or 10.4 with respect to Awards or Award Shares held by, for
example, Employees, Directors or Consultants for whom that transaction or event
results in a Termination. The Board need not adopt the same rules for each Award
or each Recipient.

 

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10.6 DISSOLUTION. If the Company adopts a plan of dissolution, the Board may, in
its sole and absolute discretion, cause Awards to be fully vested and
exercisable (but not after their Expiration Date) before the dissolution is
completed but contingent on its completion and may cause the Company’s
repurchase rights on Award Shares to lapse upon completion of the dissolution.
To the extent not exercised before the earlier of the completion of the
dissolution or their Expiration Date, Awards shall terminate just before the
dissolution is completed. The Board need not adopt the same rules for each Award
or each Recipient.

10.7 CUT-BACK TO PRESERVE BENEFITS. If the Administrator determines that the net
after-tax amount to be realized by any Recipient, taking into account any
accelerated vesting, termination of repurchase rights, or cash payments to that
Recipient in connection with any transaction or event addressed in this
Section 10 would be greater if one or more of those steps were not taken with
respect to that Recipient’s Awards or Award Shares, then and to the extent
determined by the Administrator one or more of those steps shall not be taken.

 

11. WITHHOLDING AND TAX REPORTING

11.1 TAX WITHHOLDING ALTERNATIVES

(a) GENERAL. Whenever Award Shares are issued or become free of restrictions,
the Company may require the Recipient to remit to the Company an amount
sufficient to satisfy any applicable tax withholding requirement, whether the
related tax is imposed on the Recipient or the Company. The Company shall have
no obligation to deliver Award Shares or release Award Shares from an escrow
until the Recipient has satisfied those tax withholding obligations. Whenever
payment in satisfaction of Awards is made in cash, the payment will be reduced
by an amount sufficient to satisfy all tax withholding requirements.

(b) METHOD OF PAYMENT. The Recipient shall pay any required withholding using
the forms of consideration described in Section 6.4(b), except that, in the
discretion of the Administrator, the Company may also permit the Recipient to
use any of the forms of payment described in Section 6.4(c). The Administrator
may also permit Award Shares to be withheld to pay required withholding. If the
Administrator permits Award Shares to be withheld, the Fair Market Value of the
Award Shares withheld shall not exceed the amount determined by the applicable
minimum statutory withholding rates, and shall be determined as of the date that
the amount of tax to be withheld or tendered for this purpose is to be
determined.

 

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11.2 REPORTING OF DISPOSITIONS. Any holder of Option Shares acquired under an
Incentive Stock Option shall promptly notify the Administrator in writing of the
sale or other disposition of any of those Option Shares if the disposition
occurs during: (a) the longer of two years after the Grant Date of the Incentive
Stock Option and one year after the date the Incentive Stock Option was
exercised, or (b) such other period as the Administrator has established.

 

12. COMPLIANCE WITH LAW

The grant of Awards and the issuance and subsequent transfer of Award Shares
shall be subject to compliance with all Applicable Law, including all applicable
securities laws. Awards may not be exercised, and Award Shares may not be
transferred, in violation of Applicable Law. Thus, for example, Awards may not
be exercised unless: (a) a registration statement under the Securities Act is
then in effect with respect to the related Award Shares, or (b) in the opinion
of legal counsel to the Company, those Award Shares may be issued in accordance
with an applicable exemption from the registration requirements of the
Securities Act and any other applicable securities laws. The failure or
inability of the Company to obtain from any regulatory body the authority
considered by the Company’s legal counsel to be necessary or useful for the
lawful issuance of any Award Shares or their subsequent transfer shall relieve
the Company of any liability for failing to issue those Award Shares or
permitting their transfer. As a condition to the exercise of any Award or the
transfer of any Award Shares, the Company may require the Recipient to satisfy
any requirements or qualifications that may be necessary or appropriate to
comply with or evidence compliance with any Applicable Law.

 

13. AMENDMENT OR TERMINATION OF THIS PLAN OR OUTSTANDING AWARDS

13.1 AMENDMENT AND TERMINATION. The Board may at any time amend, suspend, or
terminate this Plan.

13.2 SHAREHOLDER APPROVAL. The Company shall obtain the approval of the
Company’s shareholders for any amendment to this Plan if shareholder approval is
necessary or desirable to comply with any Applicable Law or with the
requirements applicable to the grant of Awards intended to be Incentive Stock
Options. Furthermore, subject to Section 10, the Company may not, without the
approval of the shareholders of the Company, (a) grant any Options with an
Exercise Price that is less than 100% of the Fair Market Value of the underlying
Shares on the Grant Date, (b) reprice, replace, regrant through cancellation or
modify any Option if the effect would be to reduce the effective Option Price or
(c) amend Section 6.7. In addition, to the extent required for the Plan to
comply with Rule 16b-3 or, with respect to provisions solely as they relate to
Incentive Stock Options, to the extent required for the Plan to comply with
Section 422 of the Code, the Board may not amend or alter the Plan without
shareholder approval, where such amendment or alteration would: (i) except as
expressly provided in the Plan, increase the total number of shares reserved for
issuance pursuant to Awards under the

 

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Plan; (ii) except as expressly provided in the Plan, change the minimum price
terms of Section 6.1; (iii) change the class of Employees and Consultants
eligible to participate in the Plan; (iv) extend the maximum Option term under
Section 6.2; or (v) materially increase the benefits accruing to Recipients
under the Plan. The Board may also, but need not, require that the Company’s
shareholders approve any other amendments to this Plan.

13.3 EFFECT. No amendment, suspension, or termination of this Plan, and no
modification of any Award even in the absence of an amendment, suspension, or
termination of this Plan, shall impair any existing contractual rights of any
Recipient unless the affected Recipient consents to the amendment, suspension,
termination, or modification. However, no such consent shall be required if the
Administrator determines in its sole and absolute discretion that the amendment,
suspension, termination, or modification: (a) is required or advisable in order
for the Company, the Plan or the Award to satisfy Applicable Law, to meet the
requirements of any accounting standard or to avoid any adverse accounting
treatment, or (b) in connection with any transaction or event described in
Section 10, is in the best interests of the Company or its shareholders. The
Administrator may, but need not, take the tax consequences to affected
Recipients into consideration in acting under the preceding sentence.
Termination of this Plan shall not affect the Administrator’s ability to
exercise the powers granted to it under this Plan with respect to Awards granted
before the termination, or Award Shares issued under such Awards, even if those
Award Shares are issued after the termination.

 

14. RESERVED RIGHTS

14.1 NONEXCLUSIVITY OF THIS PLAN. This Plan shall not limit the power of the
Company or any Affiliate to adopt other incentive arrangements including, for
example, the grant or issuance of stock options, stock, or other equity-based
rights under other plans or independently of any plan.

14.2 UNFUNDED PLAN. This Plan shall be unfunded. Although bookkeeping accounts
may be established with respect to Recipients, any such accounts will be used
merely as a convenience. The Company shall not be required to segregate any
assets on account of this Plan, the grant of Awards, or the issuance of Award
Shares. The Company and the Administrator shall not be deemed to be a trustee of
stock or cash to be awarded under this Plan. Any obligations of the Company to
any Recipient shall be based solely upon contracts entered into under this Plan,
such as Award Agreements. No such obligation shall be deemed to be secured by
any pledge or other encumbrance on any assets of the Company. Neither the
Company nor the Administrator shall be required to give any security or bond for
the performance of any such obligation.

 

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15. SPECIAL ARRANGEMENTS REGARDING AWARD SHARES

15.1 ESCROWS AND PLEDGES. To enforce any restrictions on Award Shares including
restrictions related to Reverse Vesting, the Administrator may require their
holder to deposit the certificates representing Award Shares, with stock powers
or other transfer instruments approved by the Administrator endorsed in blank,
with the Company or an agent of the Company to hold in escrow until the
restrictions have lapsed or terminated. The Administrator may also cause a
legend or legends referencing the restrictions to be placed on the certificates.
Any Recipient who delivers a promissory note as partial or full consideration
for the purchase of Award Shares will be required to pledge and deposit, with
the Company, some or all of the Award Shares as collateral to secure the payment
of the note. However, the Administrator may require or accept other or
additional forms of collateral to secure the note and, in any event, the Company
will have full recourse against the maker of the note, notwithstanding any
pledge or other collateral, unless stated otherwise in the Award Agreement and
the note.

15.2 REPURCHASE RIGHTS

(a) REVERSE VESTING. If an Option or Restricted Stock Award is subject to
Reverse Vesting, the Company shall have the right, during the seven months after
the Recipient’s Termination, to repurchase any or all of the Award Shares that
were unvested as of the date of that Termination, for a price equal to the lower
of: (i) the Option Price or Purchase Price for such Shares, minus the amount of
any cash dividends paid or payable with respect to the Award Shares for which
the record date precedes the repurchase, and (ii) the Fair Market Value of those
Option Shares as of the date of the Termination. The repurchase price shall be
paid in cash or, if the Option Shares were purchased in whole or in part for a
promissory note, cancellation of indebtedness under that note, or a combination
of those means. The Company may assign this right of repurchase.

(b) PROCEDURE. The Company or its assignee may choose to give the Recipient a
written notice of exercise of its repurchase rights under this Section 15.2.
However, the Company’s failure to give such a notice shall not affect its rights
to repurchase Award Shares. The Company must, however, tender the repurchase
price during the period specified in this Section 15.2 for exercising its
repurchase rights in order to exercise such rights.

15.3 DIVIDENDS. Dividends on Award Shares that are subject to any restrictions,
including Reverse Vesting, shall be subject to the same restriction, including
those set forth in this Section 15, as the Award Shares on which the dividends
were paid.

 

16. BENEFICIARIES

A Recipient may file a written designation of one or more beneficiaries who are
to receive the Recipient’s rights under the Recipient’s Awards after the
Recipient’s death.

 

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A Recipient may change such a designation at any time by written notice. If a
Recipient designates a beneficiary, the beneficiary may exercise the Recipient’s
Awards after the Recipient’s death. If a Recipient dies when the Recipient has
no living beneficiary designated under this Plan, the Company shall allow the
executor or administrator of the Recipient’s estate to exercise the Award or, if
there is none, the person entitled to exercise the Option under the Recipient’s
will or the laws of descent and distribution. In any case, no Award may be
exercised after its Expiration Date.

 

17. MISCELLANEOUS

17.1 GOVERNING LAW. This Plan and all determinations made and actions taken
under this Plan shall be governed by the substantive laws, but not the choice of
law rules, of the State of Delaware.

17.2 DETERMINATION OF VALUE. If the Shares are traded on any established stock
exchange or quoted on a national market system, Fair Market Value shall be the
closing sales price for the Shares as quoted on that stock exchange or system
for the date the value is to be determined (the “VALUE DATE”) as reported in The
Wall Street Journal or a similar publication. If no sales are reported as having
occurred on the Value Date, Fair Market Value shall be that closing sales price
for the last preceding trading day on which sales of Shares are reported as
having occurred. If no sales are reported as having occurred during the five
trading days before the Value Date, Fair Market Value shall be the closing bid
for Shares on the Value Date. If Shares are listed on multiple exchanges or
systems, Fair Market Value shall be based on sales or bids on the primary
exchange or system on which Shares are traded or quoted.

17.3 RESERVATION OF SHARES. During the term of this Plan, the Company will at
all times reserve and keep available such number of Shares as are still issuable
under this Plan.

17.4 ELECTRONIC COMMUNICATIONS. Any Award Agreement, notice of exercise of an
Award, or other document required or permitted by this Plan may be delivered in
writing or, to the extent determined by the Administrator, electronically.
Signatures may also be electronic if permitted by the Administrator.

17.5 NOTICES. Unless the Administrator specifies otherwise, any notice to the
Company under any Award Agreement or with respect to any Awards or Award Shares
shall be in writing (or, if so authorized by Section 17.4, communicated
electronically), shall be addressed to the Secretary of the Company, and shall
only be effective when received by the Secretary of the Company.

17.6 NON-COMPETITION. The Committee may condition its discretionary waiver of a
forfeiture, the acceleration of vesting at the time of Termination of a
Recipient holding any unexercised or unvested Award, the waiver of restrictions
on any Award, or

 

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the extension of the expiration period to a period not longer than that provided
by the Plan upon such Recipient’s agreement (and compliance with such agreement)
to (a) not engage in any business or activity competitive with any business or
activity conducted by the Company and (b) be available for consultations at the
request of the Company’s management, all on such terms and conditions (including
conditions in addition to (a) and (b)) as the Committee may determine.

Adopted by the Board on: February 22, 2002

Approved by the shareholders on: June 25, 2002

 

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