Exhibit 10.1
 
MULTIMEDIA GAMES HOLDING COMPANY, INC.
2012 EQUITY INCENTIVE PLAN

I.
PURPOSE

 
The Multimedia Games Holding Company, Inc. 2012 Equity Incentive Plan is adopted
effective December 14, 2011 and amended effective January 20, 2012.  The Plan is
designed to attract, retain and motivate selected Eligible Employees and Key
Non-Employees of the Company and its Affiliates, and reward them for making
major contributions to the success of the Company and its Affiliates.  These
objectives are accomplished by making long-term incentive awards under the Plan
that will offer Participants an opportunity to have a greater proprietary
interest in, and closer identity with, the Company and its Affiliates and their
financial success.
 
The Awards may consist of:
 
 1.           Incentive Options;
 
2.           Nonstatutory Options;
 
3.           Restricted Stock;
 
4.           Rights;
 
5.           Dividend Equivalents;
 
6.           Other Stock-Based Awards;
 
7.           Performance Awards; or
 
8.           Cash Awards;
 
or any combination of the foregoing, as the Committee may determine.
 
The Plan is intended to qualify certain compensation awarded under the Plan for
tax deductibility under Section 162(m) of the Code to the extent deemed
necessary and appropriate by the Committee.  The Plan and the grant of Awards
hereunder are expressly conditioned upon the Plan’s approval by the shareholders
of the Company.  If such approval is not obtained, then this Plan and all Awards
hereunder shall be null and void ab initio .
 
II.
DEFINITIONS

 
A.           Affiliate  means any individual, corporation, partnership,
association, limited liability company, joint-stock company, trust,
unincorporated association or other entity (other than the Company) that, for
purposes of Section 424 of the Code, is a parent or subsidiary of the Company,
direct or indirect.
 
B.           Award  means the grant to any Eligible Employee or Key Non-Employee
of any form of Option, Restricted Stock, Right, Dividend Equivalent, Other
Stock-Based Award, Performance Award, or Cash Award, whether granted singly, in
combination, or in tandem, and pursuant to such terms, conditions, and
limitations as the Committee may establish in order to fulfill the objectives of
the Plan.
 
C.           Award Agreement means a written agreement entered into between the
Company and a Participant under which an Award is granted and which sets forth
the terms, conditions, and limitations applicable to the Award.
 
D.           Board  means the Board of Directors of the Company.
 
 
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E.            Cash Award  means an Award of cash, subject to the requirements of
Article XIII and such other restrictions as the Committee deems appropriate or
desirable.
 
F.            Code  means the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute thereto.  References to any provision of
the Code shall be deemed to include regulations thereunder and successor
provisions and regulations thereto.
 
G.           Committee  means the committee to which the Board delegates the
power to act under or pursuant to the provisions of the Plan, or the Board if no
committee is selected.  If the Board delegates powers to a committee, and if the
Company is or becomes subject to Section 16 of the Exchange Act, then, if
necessary for compliance therewith, such committee shall consist of not less
than two (2) members of the Board, each member of which must be a “non-employee
director,” within the meaning of the applicable rules promulgated pursuant to
the Exchange Act.  If the Company is or becomes subject to Section 16 of the
Exchange Act, no member of the Committee shall receive any Award pursuant to the
Plan or any similar plan of the Company or any Affiliate while serving on the
Committee, unless the Board determines that the grant of such an Award satisfies
the then current Rule 16b-3 requirements under the Exchange
Act.  Notwithstanding anything herein to the contrary, if the Company is a
“publicly held company”, as such term is defined under Section 162(m) of the
Code and the Board determines that it is necessary and desirable in order for
compensation recognized by Participants pursuant to the Plan to be fully
deductible to the Company for federal income tax purposes, each member of the
Committee also shall be an “outside director” (as defined in regulations or
other guidance issued by the Internal Revenue Service under Code
Section 162(m)).
 
H.           Common Stock  means the common stock of the Company.
 
I.            Company  means Multimedia Games Holding Company, Inc., a Texas
corporation, and includes any successor or assignee corporation or corporations
into which the Company may be merged, changed, or consolidated; any corporation
for whose securities the securities of the Company shall be exchanged; and any
assignee of or successor to substantially all of the assets of the Company.
 
J.           Disability or Disabled  means a permanent and total disability as
defined in Section 22(e)(3) of the Code.
 
K.           Dividend Equivalent  means an Award subject to the requirements of
Article X.
 
L.           Eligible Employee  means an employee of the Company or of an
Affiliate who is designated by the Committee as being eligible to be granted one
or more Awards under the Plan.
 
M.          Exchange Act  means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute thereto.  References to any
provision of the Exchange Act shall be deemed to include rules promulgated
thereunder and successor provisions and rules thereto.
 
N.           Fair Market Value  means, if the Shares are listed on any national
securities exchange, the closing sales price, if any, on the largest such
exchange on the valuation date, or, if none, on the most recent trade date
immediately prior to the valuation date provided such trade date is no more than
thirty (30) days prior to the valuation date.  If the Shares are not then listed
on any such exchange, the fair market value of such Shares shall be the closing
sales price if such is reported, or otherwise the mean between the closing “Bid”
and the closing “Ask” prices, if any, as reported in the National Association of
Securities Dealers Automated Quotation System (“NASDAQ”) for the valuation date,
or if none, on the most recent trade date immediately prior to the valuation
date provided such trade date is no more than thirty (30) days prior to the
valuation date.  If the Shares are not then either listed on any such exchange
or quoted in NASDAQ, or there has been no trade date within such thirty (30) day
period, the fair market value shall be the mean between the average of the “Bid”
and the average of the “Ask” prices, if any, as reported by the Electronic
Quotation Service or Pink Sheets LLC (or such equivalent reporting service) for
the valuation date, or, if none, for the most recent trade date immediately
prior to the valuation date provided such trade date is no more than thirty (30)
days prior to the valuation date.  If the fair market value cannot be determined
under the preceding three sentences, it shall be determined in good faith by the
Committee.
 
 
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O.           Incentive Option  means an Option that, when granted, is intended
to be an “incentive stock option,” as defined in Section 422 of the Code.
 
P.           Key Non-Employee  means a Non-Employee Board Member, consultant,
advisor or independent contractor of the Company or of an Affiliate who is
designated by the Committee as being eligible to be granted one or more Awards
under the Plan.
 
Q.           Non-Employee Board Member  means a director of the Company who is
not an employee of the Company or any of its Affiliates.  For purposes of the
Plan, a Non-Employee Board Member shall be deemed to include the employer or
other designee of such Non-Employee Board Member, if the Non-Employee Board
Member is required, as a condition of his or her employment, to provide that any
Award granted hereunder be made to the employer or other designee.
 
R.           Nonstatutory Option  means an Option that, when granted, is not
intended to be an “incentive stock option,” as defined in Section 422 of the
Code, or that subsequently fails to comply with the requirements of Section 422
of the Code.
 
S.           Option  means a right or option to purchase Common Stock, including
Restricted Stock if the Committee so determines.
 
T.           Other Stock-Based Award  means a grant or sale of Common Stock that
is valued in whole or in part based upon the Fair Market Value of Common Stock.
 
U.           Participant  means an Eligible Employee or Key Non-Employee to whom
one or more Awards are granted under the Plan.
 
V.           Performance Award  means an Award subject to the requirements of
Article XII, and such performance conditions as the Committee deems appropriate
or desirable.
 
W.          Plan  means the Multimedia Games Holding Company, Inc. 2012 Equity
Incentive Plan, as amended from time to time.
 
X.           Restricted Stock  means an Award made in Common Stock or
denominated in units of Common Stock and delivered under the Plan, subject to
the requirements of Article VIII, such other restrictions as the Committee deems
appropriate or desirable, and as awarded in accordance with the terms of the
Plan.
 
Y.           Right  means a stock appreciation right delivered under the Plan,
subject to the requirements of Article IX and as awarded in accordance with the
terms of the Plan.
 
Z.           Shares  means the following shares of the capital stock of the
Company as to which Options or Restricted Stock have been or may be granted
under the Plan and upon which Rights, units of Restricted Stock or Other
Stock-Based Awards may be based:  treasury or authorized but unissued Common
Stock, $.01 par value, of the Company, or any shares of capital stock into which
the Shares are changed or for which they are exchanged within the provisions of
Article XIX of the Plan.
 
III.
SHARES SUBJECT TO THE PLAN

 
The aggregate number of Shares as to which Awards may be granted from time to
time shall be One Million Nine Hundred Thousand (1,900,000) Shares (subject to
adjustment for stock splits, stock dividends, and other adjustments described in
Article XIX hereof). Any Shares granted in connection with Options and Rights
shall be counted as one (1) Share against the aggregate number of Shares which
may be granted hereunder and any Shares granted with respect to any Awards other
than Options and Rights shall be counted against the aggregate Share limit as
1.58 Shares for every one (1) Share of Common Stock subject thereto.  The
aggregate number of Shares as to which Incentive Options may be granted from
time to time shall be Nine Hundred Fifty Thousand (950,000) Shares (subject to
adjustment for stock splits, stock dividends and other adjustments described in
Article XIX hereof).
 
 
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In accordance with Code Section 162(m), if applicable, the aggregate number of
Shares as to which Awards may be granted in any one calendar year to any one
Eligible Employee shall not exceed Nine Hundred Fifty Thousand (950,000) Shares
(subject to adjustment for stock splits, stock dividends, and other adjustments
described in Article XIX hereof).
 
From time to time, the Committee and/or appropriate officers of the Company
shall take whatever actions are necessary to file required documents with
governmental authorities and/or stock exchanges so as to make Shares available
for issuance pursuant to the Plan.  Shares subject to Awards that are forfeited,
terminated, expire unexercised, canceled by agreement of the Company and the
Participant, settled in cash in lieu of Common Stock or in such manner that all
or some of the Shares covered by such Awards are not issued to a Participant
(or, if issued to the Participant, are returned to the Company by the
Participant pursuant to a right of repurchase or right of first refusal
exercised by the Company), or are exchanged for Awards that do not involve
Common Stock, shall immediately become available for Awards. Notwithstanding the
foregoing, Shares subject to an Award under the Plan may not again be made
available for issuance or delivery under the Plan if such Shares are (i) Shares
that were subject to a stock-settled Right and were not issued upon the net
settlement or net exercise of such Right, (ii) Shares delivered or withheld by
the Company to pay the exercise price of an Option, (iii) Shares delivered to or
withheld by the Company to pay the withholding taxes related to an Award, or
(iv) Shares repurchased on the open market with the proceeds of an Option
exercise.  Awards payable in cash shall not reduce the number of Shares
available for Awards under the Plan.
 
IV.
ADMINISTRATION OF THE PLAN

 
The Plan shall be administered by the Committee.  A majority of the Committee
shall constitute a quorum at any meeting thereof (including by telephone
conference) and the acts of a majority of the members present, or acts approved
in writing by a majority of the entire Committee without a meeting, shall be the
acts of the Committee for purposes of this Plan.  The Committee may authorize
one or more of its members or an officer of the Company to execute and deliver
documents on behalf of the Committee.  A member of the Committee shall not
exercise any discretion respecting Awards to himself or herself under the Plan,
other than as applies to the Participants or a class of similarly situated
Participants as a whole.  The Board shall have the authority to remove, replace
or fill any vacancy of any member of the Committee upon notice to the Committee
and the affected member.  Any member of the Committee may resign upon notice to
the Board.  The Committee may allocate among one or more of its members, or may
delegate to one or more of its agents, such duties and responsibilities as it
determines.  Subject to the provisions of the Plan, the Committee is authorized
to:
 
A.           Interpret the provisions of the Plan and any Award or Award
Agreement, and make all rules and determinations that it deems necessary or
advisable to the administration of the Plan;
 
B.            Determine which employees of the Company or an Affiliate shall be
designated as Eligible Employees and which of the Eligible Employees shall be
granted Awards;
 
C.            Determine the Key Non-Employees to whom Awards, other than
Incentive Options and Performance Awards for which Key Non-Employees shall not
be eligible, shall be granted;
 
D.            Determine whether an Option to be granted shall be an Incentive
Option or Nonstatutory Option;
 
E.            Determine the number of Shares for which an Option, Restricted
Stock or Other Stock-Based Award shall be granted;
 
F.            Determine the number of Rights, the Cash Award or the Performance
Award to be granted;
 
G.            Provide for the acceleration of the right to exercise any Award;
and
 
H.            Specify the terms, conditions, and limitations upon which Awards
may be granted;
 
provided, however, that with respect to Incentive Options, all such
interpretations, rules, determinations, terms, and conditions shall be made and
prescribed in the context of preserving the tax status of the Incentive Options
as “incentive stock options” within the meaning of Section 422 of the Code.
 
 
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If permitted by applicable law, and in accordance with any such law, the
Committee may delegate to the chief executive officer and to other senior
officers of the Company or its Affiliates its duties under the Plan pursuant to
such conditions or limitations as the Committee may establish, except that only
the Committee may select, and grant Awards to, Participants who are subject to
Section 16 of the Exchange Act.  All determinations of the Committee shall be
made by a majority of its members.  No member of the Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any Award.
 
The Committee shall have the authority at any time to cancel Awards for
reasonable cause and/or to provide for the conditions and circumstances under
which Awards shall be forfeited.
 
Any determination made by the Committee pursuant to the provisions of the Plan
shall be made in its sole discretion, and in the case of any determination
relating to an Award, may be made at the time of the grant of the Award or,
unless in contravention of any express term of the Plan or any Award Agreement,
at any time thereafter.  All decisions made by the Committee pursuant to the
provisions of the Plan shall be final and binding on all persons, including the
Company and the Participants.  No determination shall be subject to de novo
review if challenged in court.
 
V.
ELIGIBILITY FOR PARTICIPATION

 
Awards may be granted under this Plan only to Eligible Employees and Key
Non-Employees of the Company or its Affiliates.  The foregoing notwithstanding,
each Participant receiving an Incentive Option must be an Eligible Employee of
the Company or of an Affiliate at the time the Incentive Option is granted.
 
The Committee may, at any time and from time to time, grant one or more Awards
to one or more Eligible Employees or Key Non-Employees and may designate the
number of Shares, if applicable,  to be subject to each Award so granted,
provided, however that no Incentive Option shall be granted after the expiration
of ten (10) years from the earlier of the date of the adoption of the Plan by
the Company or the approval of the Plan by the shareholders of the Company, and
provided further, that the Fair Market Value of the Shares (determined at the
time the Option is granted) as to which Incentive Options are exercisable for
the first time by any Eligible Employee during any single calendar year (under
the Plan and under any other incentive stock option plan of the Company or an
Affiliate) shall not exceed One Hundred Thousand Dollars ($100,000).  To the
extent that the Fair Market Value of such Shares exceeds One Hundred Thousand
Dollars ($100,000), the Shares subject to Option in excess of One Hundred
Thousand Dollars ($100,000) shall, without further action by the Committee,
automatically be converted to Nonstatutory Options.
 
Notwithstanding any of the foregoing provisions, the Committee may authorize the
grant of an Award to a person not then in the employ of, or engaged by, the
Company or of an Affiliate, conditioned upon such person becoming eligible to be
granted an Award at or prior to the execution of the Award Agreement evidencing
the actual grant of such Award.
 
VI.
AWARDS UNDER THIS PLAN

 
As the Committee may determine, the following types of Awards may be granted
under the Plan on a stand-alone, combination, or tandem basis:
 
A.           Incentive Option
 
An Award in the form of an Option that shall comply with the requirements of
Section 422 of the Code.
 
B.           Nonstatutory Option
 
An Award in the form of an Option that shall not be intended to, or has
otherwise failed to, comply with the requirements of Section 422 of the Code.
 
 
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C.           Restricted Stock
 
An Award made to a Participant in Common Stock or denominated in units of Common
Stock, subject to future service and/or such other restrictions and conditions
as may be established by the Committee, and as set forth in the Award Agreement,
including but not limited to continuous service with the Company or its
Affiliates, achievement of specific business objectives, increases in specified
indices, attainment of growth rates, and/or other measurements of Company or
Affiliate performance.
 
D.           Stock Appreciation Right
 
An Award in the form of a Right to receive the excess of the Fair Market Value
of a Share on the date the Right is exercised over the Fair Market Value of a
Share on the date the Right was granted.
 
E.           Dividend Equivalents
 
An Award in the form of, and based upon the value of, dividends on Shares.
 
F.           Other Stock-Based Awards
 
An Award made to a Participant that is valued in whole or in part by reference
to, or is otherwise based upon, the Fair Market Value of Shares.
 
G.           Performance Awards
 
An Award made to a Participant that is subject to performance conditions
specified by the Committee, including, but not limited to, continuous service
with the Company and/or its Affiliates, achievement of specific business
objectives, increases in specified indices, attainment of growth rates, and/or
other measurements of Company or Affiliate performance.
 
H.           Cash Awards
 
An Award made to a Participant and denominated in cash, with the eventual
payment subject to future service and/or such other restrictions and conditions
as may be established by the Committee, and as set forth in the Award Agreement.
 
Each Award under the Plan shall be evidenced by an Award Agreement.  Delivery of
an Award Agreement to each Participant shall constitute an agreement between the
Company and the Participant as to the terms and conditions of the Award.
 
VII.
TERMS AND CONDITIONS OF INCENTIVE OPTIONS AND NONSTATUTORY OPTIONS

 
Each Option shall be set forth in an Award Agreement, duly executed on behalf of
the Company and by the Participant to whom such Option is granted.  Except for
the setting of the Option price under Paragraph A, no Option shall be granted
and no purported grant of any Option shall be effective until such Award
Agreement shall have been duly executed on behalf of the Company and by the
Participant.  Each such Award Agreement shall be subject to at least the
following terms and conditions:
 
A.           Option Price
 
In the case of an Incentive Option granted to a Participant that owns, directly
or by reason of the applicable attribution rules, ten percent (10%) or less of
the total combined voting power of all classes of stock of the Company, and in
the case of a Nonstatutory Option, the Option price per share of the Shares
covered by each such Incentive Option or Nonstatutory Option shall be not less
than the Fair Market Value of the Shares on the date of the grant of the
Option.  In all other cases of Incentive Options, the Option price shall be not
less than one hundred ten percent (110%) of the Fair Market Value of the Shares
on the date of grant.
 
 
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B.           Number of Shares
 
Each Option shall state the number of Shares to which it pertains.
 
C.           Term of Option
 
Each Incentive Option and Nonstatutory Option shall terminate not more than ten
(10) years from the date of the grant thereof, or at such earlier time as the
Award Agreement may provide, and shall be subject to earlier termination as
herein provided, except in the case of an Incentive Option that if the Option
price is required under Paragraph A of this Article VII to be at least one
hundred ten percent (110%) of Fair Market Value, each such Incentive Option
shall terminate not more than five (5) years from the date of the grant thereof,
and shall be subject to earlier termination as herein provided.
 
D.           Date of Exercise
 
Upon the authorization of the grant of an Option, or at any time thereafter, the
Committee may, subject to the provisions of Paragraph C of this Article VII,
prescribe the date or dates on which the Option becomes exercisable, and may
provide that the Option rights become exercisable in installments over a period
of years, and/or upon the attainment of stated goals.  Unless the Committee
otherwise provides in writing, or unless otherwise required by law (including,
if applicable, the Uniformed Services Employment and Reemployment Rights Act),
the date or dates on which the Option becomes exercisable shall be tolled during
any unpaid leave of absence.  It is expressly understood that Options hereunder
shall, unless otherwise provided for in writing by the Committee, be granted in
contemplation of, and earned by the Participant through the completion of,
future employment or service with the Company.
 
E.           Medium of Payment
 
The Option price shall be payable upon the exercise of the Option, as set forth
in Paragraph I.  It shall be payable in such form (permitted by Section 422 of
the Code in the case of Incentive Options) as the Committee shall, either by
rules promulgated pursuant to the provisions of Article IV of the Plan, or in
the particular Award Agreement, provide.
 
F.           Termination of Employment
 
1.           A Participant who ceases to be an employee or Key Non-Employee of
the Company or of an Affiliate for any reason other than death, Disability, or
termination “for cause,” as defined in subparagraph (2) below, may exercise any
Option granted to such Participant, to the extent that the right to purchase
Shares thereunder has become exercisable by the date of such termination, but
only within ninety (90) days (or such other period of time as the Committee may
determine, with such determination in the case of an Incentive Option being made
at the time of the grant of the Option and not exceeding three (3) months) after
such date, or, if earlier, within the originally prescribed term of the Option,
and subject to the conditions that (i) no Option shall be exercisable after the
expiration of the term of the Option and (ii) unless the Committee otherwise
provides, no Option that has not become exercisable by the date of such
termination shall at any time thereafter be or become exercisable.  A
Participant’s employment shall not be deemed terminated by reason of a transfer
to another employer that is the Company or an Affiliate.
 
 
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2.           A Participant who ceases to be an employee or Key Non-Employee of
the Company or of an Affiliate “for cause” shall, upon such termination, cease
to have any right to exercise any Option.  For purposes of this Plan, cause
shall be as defined in any employment or other agreement between the Participant
and the Company (or an Affiliate) or, if there is no such agreement or
definition therein, cause shall be defined to include (i) a Participant’s theft
or embezzlement, or attempted theft or embezzlement, of money or property of the
Company or of an Affiliate, a Participant’s perpetration or attempted
perpetration of fraud, or a Participant’s participation in a fraud or attempted
fraud, on the Company or an Affiliate or a Participant’s unauthorized
appropriation of, or a Participant’s attempt to misappropriate, any tangible or
intangible assets or property of the Company or an Affiliate; (ii) any act or
acts by a Participant of disloyalty, dishonesty, misconduct, moral turpitude, or
any other act or acts by a Participant injurious to the interest, property,
operations, business or reputation of the Company or an Affiliate; (iii) a
Participant’s commission of a felony or any other crime the commission of which
results in injury to the Company or an Affiliate; (iv) any violation of any
restriction on the disclosure or use of confidential information of the Company
or an Affiliate, client, customer, prospect, or merger or acquisition target, or
on competition with the Company or an Affiliate or any of its businesses as then
conducted; or (v) any other action that the Board or the Committee, in their
sole discretion, may deem to be sufficiently injurious to the interests of the
Company or an Affiliate to constitute substantial cause for termination.  The
determination of the Committee as to the existence of cause shall be conclusive
and binding upon the Participant and the Company.
 
3.           Except as the Committee may otherwise expressly provide or
determine (consistent with Section 422 of the Code, if applicable), a
Participant who is absent from work with the Company or an Affiliate because of
temporary disability (any disability other than a Disability), or who is on
leave of absence for any purpose permitted by the Company or by any
authoritative interpretation (i.e., regulation, ruling, case law, etc.) of
Section 422 of the Code, shall not, during the period of any such absence, be
deemed, by virtue of such absence alone, to have terminated his or her
employment or relationship with the Company or with an Affiliate.  For purposes
of Incentive Options, no leave of absence may exceed ninety (90) days, unless
reemployment upon expiration of such leave is guaranteed by statute or contract
(or the Committee approves such longer leave of absence, in which event the
Incentive Option held by the Participant shall be treated for tax purposes as a
Nonstatutory Option on the date that is six (6) months following the first day
of such leave).
 
4.           Paragraph F(1) shall control and fix the rights of a Participant
who ceases to be an employee or Key Non-Employee of the Company or of an
Affiliate for any reason other than Disability, death, or termination “for
cause,” and who subsequently becomes Disabled or dies.  Nothing in Paragraphs G
and H of this Article VII shall be applicable in any such case.
 
G.           Total and Permanent Disability
 
A Participant who ceases to be an employee or Key Non-Employee of the Company or
of an Affiliate by reason of Disability may exercise any Option granted to such
Participant to the extent that the right to purchase Shares thereunder has
become exercisable on or before the date such Participant becomes Disabled as
determined by the Committee; provided, the Company may, in its sole discretion,
accelerate the timing of the exercise provisions of such Option upon the
Participant’s Disability.
 
A Disabled Participant, or his estate or personal representative, shall exercise
such rights, if at all, only within a period of not more than twelve (12)  
months after the date that the Participant became Disabled as determined by the
Committee (notwithstanding that the Participant might have been able to exercise
the Option as to some or all of the Shares on a later date if the Participant
had not become Disabled) or, if earlier, within the originally prescribed term
of the Option.
 
H.           Death
 
In the event that a Participant to whom an Option has been granted ceases to be
an employee or Key Non-Employee of the Company or of an Affiliate by reason of
such Participant’s death, such Option, to the extent that the right is
exercisable but not exercised on the date of death, may be exercised by the
Participant’s estate or personal representative within twelve (12) months after
the date of death of such Participant or, if earlier, within the originally
prescribed term of the Option, notwithstanding that the decedent might have been
able to exercise the Option as to some or all of the Shares on a later date if
the Participant were alive and had continued to be an employee or Key
Non-Employee of the Company or of an Affiliate; provided, the Company may, in
its sole discretion, accelerate the timing of the exercise provisions of such
Option upon the Participant’s death.
 
 
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I.           Exercise of Option and Issuance of Stock
 
Options shall be exercised by giving written notice to the Company.  Such
written notice shall: (i) be signed by the person exercising the Option,
(ii) state the number of Shares with respect to which the Option is being
exercised, (iii) contain the warranty required by Paragraph M of this
Article VII, if applicable, and (iv) specify a date (other than a Saturday,
Sunday or legal holiday) not more than ten (10) days after the date of such
written notice, as the date on which the Shares will be purchased.  Such tender
and conveyance shall take place at the principal office of the Company during
ordinary business hours, or at such other hour and place agreed upon by the
Company and the person or persons exercising the Option.  On the date specified
in such written notice (which date may be extended by the Company in order to
comply with any law or regulation that requires the Company to take any action
with respect to the Option Shares prior to the issuance thereof), the Company
shall accept payment for the Option Shares in cash, by bank or certified check,
by wire transfer, or by such other means as may be approved by the Committee,
and shall deliver to the person or persons exercising the Option in exchange
therefor an appropriate certificate or certificates for fully paid nonassessable
Shares or undertake to deliver an appropriate certificate or certificates within
a reasonable period of time.  In the event of any failure to pay for the number
of Shares specified in such written notice on the date set forth therein (or on
the extended date as above provided), the right to exercise the Option shall
terminate with respect to such number of Shares, but shall continue with respect
to the remaining Shares covered by the Option and not yet acquired pursuant
thereto.
  
Subject to compliance with the Sarbanes-Oxley Act of 2002 or the requirements of
any applicable securities laws, payment in full or in part also may be made
(i) by delivering Shares, or by attestation of Shares, which have a total Fair
Market Value on the date of such delivery equal to the Option price and provided
that accepting such Shares, in the sole discretion of the Committee, shall not
result in any adverse accounting consequences to the Company; (ii) by
authorizing the Company to retain Shares that otherwise would be issuable upon
exercise of the Option having a total Fair Market Value on the date of delivery
equal to the Option price; (iii) by the delivery of cash or the extension of
credit by a broker-dealer to whom the Participant has submitted a notice of
exercise or otherwise indicated an intent to exercise an Option (in accordance
with part 220, Chapter II, Title 12 of the Code of Federal Regulations, a
so-called “cashless” exercise); or (iv) by any combination of the
foregoing.  Any certificate for shares of outstanding stock of the Company used
to pay the purchase price shall be accompanied by a stock power duly endorsed in
blank by the registered holder of the certificate, with signature guaranteed in
the event the certificate shall also be accompanied by instructions from the
Participant to the Company’s transfer agent with respect to disposition of the
balance of the shares covered thereby.
 
J.           Rights as a Shareholder
 
No Participant to whom an Option has been granted shall have rights as a
shareholder with respect to any Shares covered by such Option except as to such
Shares as have been registered in the Company’s share register in the name of
such Participant upon the due exercise of the Option and tender of the full
Option price.
 
K.           Assignability and Transferability of Option
 
Unless otherwise permitted by the Code, by Rule 16b-3 of the Exchange Act and by
the exemption set forth under Section 12(g) of the Exchange Act (Release No.
34-56887), if applicable, and approved in advance by the Committee, an Option
granted to a Participant shall not be transferable by the Participant and shall
be exercisable, during the Participant’s lifetime, only by such Participant or,
in the event of the Participant’s incapacity, his guardian or legal
representative.  Except as otherwise permitted herein, such Option shall not be
assigned, pledged, or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment, or similar process
and any attempted transfer, assignment, pledge, hypothecation or other
disposition of any Option or of any rights granted thereunder contrary to the
provisions of this Paragraph K, or the levy of any attachment or similar process
upon an Option or such rights, shall be null and void.
 
 
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L.           Other Provisions
 
The Award Agreement for an Incentive Option shall contain such limitations and
restrictions upon the exercise of the Option as shall be necessary in order that
such Option qualifies as an “incentive stock option” within the meaning of
Section 422 of the Code.  Further, the Award Agreements authorized under the
Plan shall be subject to such other terms and conditions including, without
limitation, restrictions upon the exercise of the Option, as the Committee shall
deem advisable and which, in the case of Incentive Options, are not inconsistent
with the requirements of Section 422 of the Code.
 
M.           Purchase for Investment
 
If Shares to be issued upon the particular exercise of an Option shall not have
been effectively registered under the Securities Act of 1933, as now in force or
hereafter amended, the Company shall be under no obligation to issue the Shares
covered by such exercise unless and until the following conditions have been
fulfilled.  The person who exercises such Option shall warrant to the Company
that, at the time of such exercise, such person is acquiring his or her Option
Shares for investment and not with a view to, or for sale in connection with,
the distribution of any such Shares, and shall make such other representations,
warranties, acknowledgments, and/or affirmations, if any, as the Committee may
require.  In such event, the person acquiring such Shares shall be bound by the
provisions of the following legend (or similar legend) which shall be endorsed
upon the certificate(s) evidencing his or her Option Shares issued pursuant to
such exercise.
 
“The shares represented by this certificate have been acquired for investment
and they may not be sold or otherwise transferred by any person, including a
pledgee, in the absence of an effective registration statement for the shares
under the Securities Act of 1933 or an opinion of counsel satisfactory to the
Company that an exemption from registration is then available.”
 
Without limiting the generality of the foregoing, the Company may delay issuance
of the Shares until completion of any action or obtaining any consent that the
Company deems necessary under any applicable law (including without limitation
state securities or “blue sky” laws).
 
VIII.
TERMS AND CONDITIONS OF RESTRICTED STOCK

 
A.            The Committee may from time to time grant an Award in Shares of
Common Stock or grant an Award denominated in units of Common Stock, for such
consideration as the Committee deems appropriate (which amount may be less than
the Fair Market Value of the Common Stock on the date of the Award), and subject
to such restrictions and conditions and other terms as the Committee may
determine at the time of the Award (including, but not limited to, continuous
service with the Company or its Affiliates, achievement of specific business
objectives, increases in specified indices, attainment of growth rates, and/or
other measurements of Company or Affiliate performance), and subject further to
the general provisions of the Plan, the applicable Award Agreement, and the
following specific rules.
 
B.            If Shares of Restricted Stock are awarded, such Shares cannot be
assigned, sold, transferred, pledged, or hypothecated prior to the lapse of the
restrictions applicable thereto, and, in no event, absent Committee approval,
prior to six (6) months from the date of the Award.  The Company shall issue, in
the name of the Participant, stock certificates representing the total number of
Shares of Restricted Stock awarded to the Participant, as soon as may be
reasonably practicable after the grant of the Award, which certificates shall be
held by the Secretary of the Company as provided in Paragraph G.
 
C.            Restricted Stock issued to a Participant under the Plan shall be
governed by an Award Agreement that shall specify whether Shares of Common Stock
are awarded to the Participant, or whether the Award shall be one not of Shares
of Common Stock but one denominated in units of Common Stock, any consideration
required thereto, and such other provisions as the Committee shall determine.
 
D.            Subject to the provisions of Paragraphs B and E hereof and the
restrictions set forth in the related Award Agreement, the Participant receiving
an Award of Shares of Restricted Stock shall thereupon be a shareholder with
respect to all of the Shares represented by such certificate or certificates and
shall have the rights of a shareholder with respect to such Shares, including
the right to vote such Shares and to receive dividends and other distributions
made with respect to such Shares.  All Common Stock received by a Participant as
the result of any dividend on the Shares of Restricted Stock, or as the result
of any stock split, stock distribution, or combination of the Shares affecting
Restricted Stock, shall be subject to the restrictions set forth in the related
Award Agreement.
 
 
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E.            Restricted Stock or units of Restricted Stock awarded to a
Participant pursuant to the Plan will be forfeited, and any Shares of Restricted
Stock or units of Restricted Stock sold to a Participant pursuant to the Plan
may, at the Company’s option, be resold to the Company for an amount equal to
the price paid therefor, and in either case, such Restricted Stock or units of
Restricted Stock shall revert to the Company, if the Company so determines in
accordance with Article XV or any other condition set forth in the Award
Agreement, or, alternatively, if the Participant’s employment with the Company
or its Affiliates terminates, other than for reasons set forth in Article XIV,
prior to the expiration of the forfeiture or restriction provisions set forth in
the Award Agreement.
 
F.            The Committee, in its discretion, shall have the power to
accelerate the date on which the restrictions contained in the Award Agreement
shall lapse with respect to any or all Restricted Stock awarded under the Plan.
 
G.            The Secretary of the Company shall hold the certificate or
certificates representing Shares of Restricted Stock issued under the Plan,
properly endorsed for transfer, on behalf of each Participant who holds such
Shares, until such time as the Shares of Restricted Stock are forfeited, resold
to the Company, or the restrictions lapse.  Any Restricted Stock denominated in
units of Common Stock, if not previously forfeited, shall be payable in
accordance with Article XVI at the time set forth in the Award Agreement.
 
H.            The Committee may prescribe such other restrictions, conditions,
and terms applicable to Restricted Stock issued to a Participant under the Plan
that are neither inconsistent with nor prohibited by the Plan or the Award
Agreement, including, without limitation, terms providing for a lapse of the
restrictions of this Article or any Award Agreement in installments.
 
IX.
TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS

 
If deemed by the Committee to be in the best interests of the Company, a
Participant may be granted a Right.  Each Right shall be granted subject to such
restrictions and conditions and other terms as the Committee may specify in the
Award Agreement at the time the Right is granted, subject to the general
provisions of the Plan, and the following specific rules.
 
A.            Rights may be granted, if at all, either singly, in combination
with another Award, or in tandem with another Award.  At the time of grant of a
Right, the Committee shall specify the base price of Common Stock to be used in
connection with the calculation described in Paragraph B below, provided that
the base price shall not be less than one hundred percent (100%) of the Fair
Market Value of a Share of Common Stock on the date of grant, unless approved by
the shareholders of the Company.
 
 
B.            Upon exercise of a Right, which shall, absent Committee approval,
be not less than six (6) months from the date of the grant, the Participant
shall be entitled to receive in accordance with Article XVI, and as soon as
practicable after exercise, the excess of the Fair Market Value of one Share of
Common Stock on the date of exercise over the base price specified in such
Right, multiplied by the number of Shares of Common Stock then subject to the
Right, or the portion thereof being exercised.
 
C.            Notwithstanding anything herein to the contrary, if the Award
granted to a Participant allows him or her to elect to cancel all or any portion
of an unexercised Option by exercising an additional or tandem Right, then the
Option price per Share of Common Stock shall be used as the base price specified
in Paragraph A to determine the value of the Right upon such exercise and, in
the event of the exercise of such Right, the Company’s obligation with respect
to such Option or portion thereof shall be discharged by payment of the Right so
exercised.  In the event of such a cancellation, the number of Shares as to
which such Option was canceled shall become available for use under the Plan,
less the number of Shares, if any, received by the Participant upon such
cancellation in accordance with Article XVI.
 
 
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D.            A Right may be exercised only by the Participant (or, if
applicable under Article XIV, by a legatee or legatees of such Right, or by the
Participant’s executors, personal representatives, or distributees).
 
X.
TERMS AND CONDITIONS OF DIVIDEND EQUIVALENTS

 
A Participant may be granted an Award in the form of Dividend Equivalents.  Such
an Award shall entitle the Participant to receive cash, Shares, other Awards or
other property equal in value to dividends paid with respect to a specified
number of Shares.  Dividend Equivalents may be awarded on a free-standing basis
or in connection with another Award.  The Committee may provide that Dividend
Equivalents shall be paid or distributed when accrued or shall be deemed to have
been reinvested in additional Shares, Awards or other investment vehicles, and
subject to such restrictions on transferability and risks of forfeiture, as the
Committee may specify.
 
XI.
TERMS AND CONDITIONS OF OTHER STOCK-BASED AWARDS

 
The Committee, in its sole discretion, may grant Awards of  Shares and/or Awards
that are valued in whole or in part by reference to, or are otherwise based on,
Shares or on the Fair Market Value thereof (“Other Stock-Based Awards”).  Such
Other Stock-Based Awards shall be in such form, and dependent on such
conditions, as the Committee shall determine, including, without limitation, the
right to receive, or vest with respect to, one or more Shares (or the equivalent
cash value of such Shares) upon the completion of a specified period of service,
the occurrence of an event and/or the attainment of performance
objectives.  Other Stock-Based Awards may be granted alone or in addition to any
other Awards granted under the Plan.  Subject to the provisions of the Plan, the
Committee shall determine the number of Shares to be awarded to a Participant
under (or otherwise related to) such Other Stock-Based Awards and all other
terms and conditions of such Awards (including, without limitation, the vesting
provisions thereof and provisions ensuring that all Shares so awarded and issued
shall be fully paid and non-assessable).
 
XII.
TERMS AND CONDITIONS OF PERFORMANCE AWARDS

 
A.            A Participant may be granted an Award that is subject to
performance conditions specified by the Committee.  The Committee may use
business criteria and/or other measures of performance as it deems appropriate
in establishing any performance conditions (including, but not limited to,
continuous service with the Company or its Affiliates, achievement of specific
business objectives, increases in specified indices, attainment of growth rates,
and/or other measurements of Company or Affiliate performance), and may exercise
its discretion to reduce or increase the amounts payable under any Award subject
to performance conditions, except as otherwise limited under Paragraphs C and D,
below, in the case of a Performance Award intended to qualify under Code
Section 162(m).
 
B.            Any Performance Award will be forfeited if the Company so
determines in accordance with Article XV or any other condition set forth in the
Award Agreement, or, alternatively, if the Participant’s employment with the
Company or its Affiliates terminates, other than for reasons set forth in
Article XIV, prior to the expiration of the time period over which the
performance conditions are to be measured.
 
C.            If the Committee determines that a Performance Award to be granted
to an Eligible Employee should qualify as “performance-based compensation” for
purposes of Code Section 162(m), the grant and/or settlement of such Performance
Award shall be contingent upon achievement of pre-established performance goals
and other terms set forth in this Paragraph C.
 
1.            Performance Goals Generally .  The performance goals for such
Performance Awards shall consist of one or more business criteria and a targeted
level or levels of performance with respect to such criteria, as specified by
the Committee consistent with this Paragraph C.  Performance goals shall be
objective and shall otherwise meet the requirements of Code Section 162(m),
including the requirement that the level or levels of performance targeted by
the Committee result in the performance goals being “substantially
uncertain.”  The Committee may determine that more than one performance goal
must be achieved as a condition to settlement of such Performance
Awards.  Performance goals may differ for Performance Awards granted to any one
Participant or to different Participants.
 
 
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2.            Business Criteria .  One or more of the following business
criteria for the Company, on a consolidated basis, and/or for specified
Affiliates or business units of the Company (except with respect to the total
shareholder return and earnings per share criteria), shall be used exclusively
by the Committee in establishing performance goals for such Performance Awards:
(a) total shareholder return; (b) such total shareholder return as compared to
the total return (on a comparable basis) of a publicly available index such as,
but not limited to, the Standard & Poor’s 500 or the Nasdaq-U.S. Index; (c)
stock price; (d) net income or net operating income; (e) pre-tax earnings or
profits; (f) EBIT or EBITDA; (g) pre-tax operating earnings after interest
expense and before bonuses, service fees, and extraordinary or special items;
(h) operating margin; (i) earnings per share or growth in earnings per share;
(j) return on equity; (k) return on assets or capital; (l) return on investment;
(m) operating income, excluding the effect of charges for acquired in-process
technology and before payment of executive bonuses; (n) earnings per share,
excluding the effect of charges for acquired in-process technology and before
payment of executive bonuses; (o) working capital; (p) sales; (q) gross or net
revenues or changes in gross or net revenues; (r) market share or market
penetration with respect to designated products and/or geographic areas;
(s) reduction of losses, loss ratios or expense ratios; (t) cost of capital;
(u) debt reduction; (v) satisfaction of business expansion goals or goals
relating to acquisitions or divestitures; and/or (w) employee turnover.  The
foregoing business criteria also may be used in establishing performance goals
for Cash Awards granted under Article XIII hereof.
 
 3.            Compensation Limitation .  No Eligible Employee may receive a
Performance Award in excess of $5,000,000 during any three (3) year period.
 
D.            Achievement of performance goals in respect of such Performance
Awards shall be measured over such periods as may be specified by the
Committee.  Performance goals shall be established on or before the dates that
are required or permitted for “performance-based compensation” under Code
Section 162(m).
 
E.            Settlement of Performance Awards may be in cash or Shares, or
other property, in the discretion of the Committee. The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be made in connection
with such Performance Awards, but may not exercise discretion to increase any
such amount payable in respect of a Performance Award that is subject to Code
Section 162(m).
 
XIII.
TERMS AND CONDITIONS OF CASH AWARDS

 
A.            The Committee may from time to time authorize the award of cash
payments under the Plan to Participants, subject to such restrictions and
conditions and other terms as the Committee may determine at the time of
authorization (including, but not limited to, continuous service with the
Company or its Affiliates, achievement of specific business objectives,
increases in specified indices, attainment of growth rates, and/or other
measurements of Company or Affiliate performance), and subject to the general
provisions of the Plan, the applicable Award Agreement, and the following
specific rules.
 
B.            Any Cash Award will be forfeited if the Company so determines in
accordance with Article XV or any other condition set forth in the Award
Agreement, or, alternatively, if the Participant’s employment or engagement with
the Company or its Affiliates terminates, other than for reasons set forth in
Article XIV, prior to the attainment of any goals set forth in the Award
Agreement or prior to the expiration of the forfeiture or restriction provisions
set forth in the Award Agreement, whichever is applicable.
  
C.            The Committee, in its discretion, shall have the power to change
the date on which the restrictions contained in the Award Agreement shall lapse,
or the date on which goals are to be measured, with respect to any Cash Award.
 
D.            Any Cash Award, if not previously forfeited, shall be payable in
accordance with Article XVI on or about March 15 of the fiscal year immediately
following the fiscal year during which the goals are attained, and in no event
later than December 31 of such year.
 
 
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E.            The Committee may prescribe such other restrictions, conditions,
and terms applicable to the Cash Awards issued to a Participant under the Plan
that are neither inconsistent with nor prohibited by the Plan or the Award
Agreement, including, without limitation, terms providing for a lapse of the
restrictions, or a measurement of the goals, in installments.
 
XIV.
TERMINATION OF EMPLOYMENT OR SERVICE

 
Except as may otherwise be (i) provided in Article VII for Options,
(ii) provided for under the Award Agreement, or (iii) permitted pursuant to
Paragraphs A through C of this Article XIV (subject to the limitations under the
Code for Incentive Options), if the employment or service of a Participant
terminates, all unexpired, unpaid, unexercised, or deferred Awards shall be
canceled immediately.
 
A.           Retirement under a Company or Affiliate Retirement Plan .  When a
Participant’s employment or service terminates as a result of retirement as
defined under a Company or Affiliate tax-qualified retirement plan, the
Committee may permit Awards to continue in effect beyond the date of retirement
in accordance with the applicable Award Agreement, and/or the exercisability and
vesting of any Award may be accelerated.
 
B.           Termination in the Best Interests of the Company or an Affiliate
.  When a Participant’s employment or service with the Company or an Affiliate
terminates and, in the judgment of the chief executive officer or other senior
officer designated by the Committee, the acceleration and/or continuation of
outstanding Awards would be in the best interests of the Company, the Committee
may (i) authorize, where appropriate, the acceleration and/or continuation of
all or any part of Awards granted prior to such termination and/or (ii) permit
the exercise, vesting, and payment of such Awards for such period as may be set
forth in the applicable Award Agreement, subject to earlier cancellation
pursuant to Article XV or at such time as the Committee shall deem the
continuation of all or any part of the Participant’s Awards are not in the
Company’s or its Affiliate’s best interests.
 
C.           Death or Disability of a Participant .
 
1.           In the event of a Participant’s death, the Participant’s estate or
beneficiaries shall have a period up to the earlier of (i) the expiration date
specified in the Award Agreement, or (ii) the expiration date specified in
Paragraph H of Article VII, within which to receive or exercise any outstanding
Awards held by the Participant under such terms as may be specified in the
applicable Award Agreement.  Rights to any such outstanding Awards shall pass by
will or the laws of descent and distribution in the following order:  (a) to
beneficiaries so designated by the Participant; (b) to a legal representative of
the Participant; or (c) to the persons entitled thereto as determined by a court
of competent jurisdiction.  Awards so passing shall be paid and/or may be
exercised at such times and in such manner as if the Participant were living.
 
 2.           In the event a Participant is determined by the Company to be
Disabled, and subject to the limitations of Paragraph G of Article VII, Awards
may be paid to, or exercised by, the Participant, if legally competent, or by a
legally designated guardian or other representative if the Participant is
legally incompetent by virtue of such Disability.
 
3.           After the death or Disability of a Participant, the Committee may
in its sole discretion at any time (i) terminate restrictions in Award
Agreements; (ii) accelerate any or all installments and rights; and/or
(iii) instruct the Company to pay the total of any accelerated payments in a
lump sum to the Participant, the Participant’s estate, beneficiaries or
representative, notwithstanding that, in the absence of such termination of
restrictions or acceleration of payments, any or all of the payments due under
the Awards ultimately might have become payable to other beneficiaries.
 
 
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XV.
CANCELLATION AND RESCISSION OF AWARDS

 
Unless the Award Agreement specifies otherwise, the Committee may cancel any
unexpired, unpaid, unexercised, or deferred Awards at any time if the
Participant is not in compliance with the applicable provisions of the Award
Agreement, the Plan, or with the following conditions:
 
A.            A Participant shall not breach any restrictive covenant,
employment, consulting or other agreement entered into between him or her and
the Company or any Affiliates, or render services for any organization or engage
directly or indirectly in any business which, in the judgment of the Committee
or a senior officer designated by the Committee, is or becomes competitive with
the Company, or which organization or business, or the rendering of services to
such organization or business, is or becomes otherwise prejudicial to or in
conflict with the interests of the Company.  For a Participant whose employment
or engagement has terminated, the judgment of the Committee shall be based on
the terms of the restrictive covenant agreement, if applicable, or on the
Participant’s position and responsibilities while employed or engaged by the
Company or its Affiliates, the Participant’s post-employment/engagement
responsibilities and position with the other organization or business, the
extent of past, current, and potential competition or conflict between the
Company and the other organization or business, the effect of the Participant’s
assuming the post-employment/engagement position on the Company’s or its
Affiliate’s customers, suppliers, investors, and competitors, and such other
considerations as are deemed relevant given the applicable facts and
circumstances.  A Participant may, however, purchase as an investment or
otherwise, stock or other securities of any organization or business so long as
they are listed upon a recognized securities exchange or traded
over-the-counter, and such investment does not represent a substantial
investment to the Participant or a greater than one percent (1%) equity interest
in the organization or business.
 
B.            A Participant shall not, without prior written authorization from
the Company, disclose to anyone outside the Company or its Affiliates, or use in
other than the Company’s or Affiliate’s business, any confidential information
or materials relating to the business of the Company or its Affiliates, acquired
by the Participant either during or after his or her employment or engagement
with the Company or its Affiliates.
 
 
C.            A Participant shall disclose promptly and assign to the Company
all right, title, and interest in any invention or idea, patentable or not, made
or conceived by the Participant during employment or engagement with the Company
or an Affiliate, relating in any manner to the actual or anticipated business,
research, or development work of the Company or its Affiliates, and shall do
anything reasonably necessary to enable the Company or its Affiliates to secure
a patent, trademark, copyright, or other protectable interest where appropriate
in the United States and in foreign countries.
 
Upon exercise, payment, or delivery pursuant to an Award, the Participant shall
certify on a form acceptable to the Committee that he or she is in compliance
with the terms and conditions of the Plan, including the provisions of
Paragraphs A, B and C of this Article XV.  Failure to comply with the provisions
of Paragraphs A, B and C of this Article XV at any time prior to, or during the
one (1) year period after, the date Participant’s employment or engagement with
the Company or any Affiliate terminates shall cause any exercise, payment, or
delivery which occurred during the two (2) year period prior to the breach of
Paragraph A, B or C of this Article XV to be rescinded.  The Company shall
notify the Participant in writing of any such rescission within one (1) year of
the date it acquires actual knowledge of such breach.  Within ten (10) days
after receiving such a notice from the Company, the Participant shall pay to the
Company the amount of any gain realized or payment received as a result of the
exercise, payment, or delivery pursuant to the Award.  Such payment shall be
made either in cash or by returning to the Company the number of Shares of
Common Stock that the Participant received in connection with the rescinded
exercise, payment, or delivery.
 
XVI.
PAYMENT OF RESTRICTED STOCK, RIGHTS, OTHER STOCK-BASED AWARDS, PERFORMANCE
AWARDS AND CASH AWARDS

 
Payment of Restricted Stock, Rights, Other Stock-Based Awards, Performance
Awards and Cash Awards may be made, as the Committee shall specify, in the form
of cash, Shares of Common Stock, or combinations thereof; provided, however,
that a fractional Share of Common Stock shall be paid in cash equal to the Fair
Market Value of the fractional Share of Common Stock at the time of payment.
 
XVII.
WITHHOLDING

 
Except as otherwise provided by the Committee,
 
 
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A.            the Company shall have the power and right to deduct or withhold,
or require a Participant to remit to the Company, an amount sufficient to
satisfy the minimum federal, state, and local taxes required by law to be
withheld with respect to any grant, exercise, or payment made under or as a
result of this Plan; and
 
B.            in the case of payments of Awards, or upon any other taxable event
hereunder, a Participant may elect, subject to the approval in advance by the
Committee, to satisfy the withholding requirement, if any, in whole or in part,
by having the Company withhold Shares of Common Stock that would otherwise be
transferred to the Participant having a Fair Market Value, on the date the tax
is to be determined, equal to the minimum marginal tax that could be imposed on
the transaction.  All elections shall be made in writing and signed by the
Participant.
 
XVIII.
SAVINGS CLAUSE

 
This Plan is intended to comply in all respects with applicable law and
regulations, including, (i) with respect to those Participants who are officers
or directors for purposes of Section 16 of the Exchange Act, Rule 16b-3 of the
Securities and Exchange Commission, if applicable, (ii) Section 402 of the
Sarbanes-Oxley Act, (iii) Code Section 409A, and (iv) with respect to executive
officers, Code Section 162(m).  In no event whatsoever shall the Company be
liable for any additional tax, interest or penalty that may be imposed on a
Participant by Code Section 409A or damages for failing to comply with Section
409A.  In case any one or more provisions of this Plan shall be held invalid,
illegal, or unenforceable in any respect under applicable law and regulation
(including Rule 16b-3, Code Section 162(m) and Code Section 409A), the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby and the invalid, illegal, or unenforceable
provision shall be deemed null and void; however, to the extent permitted by
law, any provision that could be deemed null and void shall first be construed,
interpreted, or revised retroactively to permit this Plan to be construed in
compliance with all applicable law (including Rule 16b-3, Code Section 162(m)
and Code Section 409A) so as to foster the intent of this Plan.  Notwithstanding
anything herein to the contrary, with respect to Participants who are officers
and directors for purposes of Section 16 of the Exchange Act, if applicable, and
if required to comply with rules promulgated thereunder, no grant of, or Option
to purchase, Shares shall permit unrestricted ownership of Shares by the
Participant for at least six (6) months from the date of grant or Option, unless
the Board determines that the grant of, or Option to purchase, Shares otherwise
satisfies the then current Rule 16b-3 requirements.
 
XIX.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE TRANSACTIONS

 
If the outstanding Shares of the Company are changed into or exchanged for a
different number or kind of shares or other securities of the Company or of
another corporation by reason of any reorganization, merger, or consolidation,
or if a change is made to the Common Stock of the Company by reason of any
recapitalization, reclassification, change in par value, stock split, reverse
stock split, combination of shares or dividends payable in capital stock, or the
like, the Company shall make adjustments to such Awards (including, by way of
example and not by way of limitation, the grant of substitute Awards under the
Plan or under the plan of such other corporation or the suspension of the right
to exercise an Award for a specified period of time in connection with a
corporate transaction) as it may determine to be appropriate under the
circumstances, and, in addition, appropriate adjustments shall be made in the
number and kind of shares and in the option price per share subject to
outstanding Awards under the Plan or under the plan of such successor
corporation.  The foregoing notwithstanding, unless the Committee otherwise
determines, no such adjustment shall be made to an Option which shall, within
the meaning of Sections 424 and 409A of the Code, as applicable, constitute such
a modification, extension, or renewal of an option as to cause it to be
considered as the grant of a new option.
 
            Notwithstanding anything herein to the contrary, the Company may, in
its sole discretion, accelerate the timing of the exercise provisions of any
Award in the event of (i) the adoption of a plan of merger or consolidation
under which a majority of the Shares of the Company would be converted into or
exercised for cash or securities of any other corporation or entity, or (ii) a
sale of all or any portion of the Company’s assets or capital
stock.  Alternatively, the Company may, in its sole discretion and without the
consent of the Participants, provide for one or more of the following in the
event of any merger, consolidation, recapitalization, sale of all or any portion
of the Company’s assets or capital stock, including but not limited to a
“going-private” transaction: (i) the assumption of the Plan and outstanding
Awards by the surviving corporation or its parent; (ii) the substitution by the
surviving corporation or its parent of awards with substantially the same terms
for such outstanding Awards; (iii) immediate exercisability of such outstanding
Awards followed by cancellation of such Awards; and (iv) settlement of the
intrinsic value of the outstanding Awards (whether or not then vested or
exercisable) in cash or cash equivalents or equity followed by the cancellation
of such Awards.
 
 
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Upon a business combination by the Company or any of its Affiliates with any
corporation or other entity through the adoption of a plan of merger or
consolidation or a share exchange or through the purchase of all or
substantially all of the capital stock or assets of such other corporation or
entity, the Board or the Committee may, in its sole discretion, grant Options
pursuant hereto to all or any persons who, on the effective date of such
transaction, hold outstanding options to purchase securities of such other
corporation or entity and who, on and after the effective date of such
transaction, will become employees or directors of, or consultants or advisors
to, the Company or its Affiliates.  The number of Shares subject to such
substitute Options shall be determined in accordance with the terms of the
transaction by which the business combination is effectuated.  Notwithstanding
the other provisions of this Plan, the other terms of such substitute Options
shall be substantially the same as or economically equivalent to the terms of
the options for which such Options are substituted, all as determined by the
Board or by the Committee, as the case may be.  Upon the grant of substitute
Options pursuant hereto, the options to purchase securities of such other
corporation or entity for which such Options are substituted shall be canceled
immediately.
 
XX.
DISSOLUTION OR LIQUIDATION OF THE COMPANY

 
Upon the dissolution or liquidation of the Company other than in connection with
a transaction to which Article XIX is applicable, all Awards granted hereunder
shall terminate and become null and void; provided, however, that if the rights
of a Participant under the applicable Award have not otherwise terminated and
expired, the Participant may, if the Committee, in its sole discretion, so
permits, have the right immediately prior to such dissolution or liquidation to
exercise any Award granted hereunder to the extent that the right thereunder has
become exercisable as of the date immediately prior to such dissolution or
liquidation.
 
XXI.
TERMINATION OF THE PLAN

 
The Plan shall terminate ten (10) years from the earlier of the date of its
adoption by the Board or the date of its approval by the shareholders.  The Plan
may be terminated at an earlier date by vote of the shareholders or the Board;
provided, however, that any such earlier termination shall not affect any Award
Agreements executed prior to the effective date of such
termination.  Notwithstanding anything in this Plan to the contrary, any Options
granted prior to the effective date of the Plan’s termination may be exercised
until the earlier of (i) the date set forth in the Award Agreement, or (ii) in
the case of an Incentive Option, ten (10) years from the date the Option is
granted; and the provisions of the Plan with respect to the full and final
authority of the Committee under the Plan shall continue to control.
 
 XXII.
AMENDMENT OF THE PLAN AND AWARDS

 
The Plan may be amended by the Board and such amendment shall become effective
upon adoption by the Board; provided, however, that any amendment shall be
subject to the approval of the shareholders of the Company at or before the next
annual meeting of the shareholders of the Company if such shareholder approval
is required by the Code, any federal or state law or regulation, the rules of
any stock exchange or automated quotation system on which the Shares may be
listed or quoted, or if the Board, in its discretion, determines to submit such
changes to the Plan to its shareholders for approval.  Further, no amendment to
the Plan which reduces the Option exercise price below that provided for in
Article VII of the Plan shall be effective unless it is approved by the
shareholders of the Company.
 
The Board may amend the terms of any Award theretofore granted, prospectively or
retroactively, but no such amendment shall (a) materially impair the rights of
any Participant without his or her consent or (b) except for adjustments made
pursuant to Article XIX, reduce the exercise price of outstanding Options or
Rights or cancel or amend outstanding Options or Rights for the purpose of
repricing, replacing, or regranting such Options or Rights with an exercise
price that is less than the exercise price of the original Options or Rights or
cancel or amend outstanding Options or Rights with an exercise price that is
greater than the Fair Market Value of a Share for the purpose of exchanging such
Options or Rights for cash or any other Awards without shareholder approval.
 
 
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XXIII.
EMPLOYMENT RELATIONSHIP

 
Nothing herein contained shall be deemed to prevent the Company or an Affiliate
from terminating the employment of a Participant, nor to prevent a Participant
from terminating the Participant’s employment with the Company or an Affiliate,
unless otherwise limited by an agreement between the Company (or an Affiliate)
and the Participant.
 
XXIV.
INDEMNIFICATION OF COMMITTEE

 
In addition to such other rights of indemnification as they may have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Company against all reasonable expenses, including attorneys’
fees, actually and reasonably incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken by them as
directors or members of the Committee and against all amounts paid by them in
settlement thereof (provided such settlement is approved by the Board) or paid
by them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that the director or Committee member is liable for gross
negligence or willful misconduct in the performance of his or her duties.  To
receive such indemnification, a director or Committee member must first offer in
writing to the Company the opportunity, at its own expense, to defend any such
action, suit or proceeding.
 
XXV.
UNFUNDED PLAN

 
Insofar as it provides for payments in cash in accordance with Article XVI, or
otherwise, the Plan shall be unfunded.  Although bookkeeping accounts may be
established with respect to Participants who are entitled to cash, Common Stock,
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, Common Stock, or rights
thereto, nor shall the Plan be construed as providing for such segregation, nor
shall the Company, the Board, or the Committee be deemed to be a trustee of any
cash, Common Stock, or rights thereto to be granted under the Plan.  Any
liability of the Company to any Participant with respect to a grant of cash,
Common Stock, 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 of the Company.  Neither the Company nor the
Board 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.
 
XXVI.
MITIGATION OF EXCISE TAX

 
Unless otherwise provided for in the Award Agreement or in any other agreement
between the Company (or an Affiliate) and the Participant, if any payment or
right accruing to a Participant under this Plan (without the application of this
Article XXVI), either alone or together with other payments or rights accruing
to the Participant from the Company or an Affiliate, would constitute a
“parachute payment” (as defined in Section 280G of the Code and regulations
thereunder), such payment or right shall be reduced to the largest amount or
greatest right that will result in no portion of the amount payable or right
accruing under the Plan being subject to an excise tax under Section 4999 of the
Code or being disallowed as a deduction under Section 280G of the Code.  The
determination of whether any reduction in the rights or payments under this Plan
is necessary shall be made by the Company.  The Participant shall cooperate in
good faith with the Company in making such determination and providing any
necessary information for this purpose.
 
XXVII.
EFFECTIVE DATE

 
This Plan shall become effective upon adoption by the Board, provided that the
adoption of the Plan shall be subject to the approval of the shareholders of the
Company if such shareholder approval is required by the Code, any federal or
state law or regulations, the rules of any stock exchange or automated quotation
system on which the Shares may be listed or quoted, or if the Board, in its
discretion, desires to submit the Plan to its shareholders for approval.
 
 
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XXVIII.
REQUIRED FINANCIAL AND OTHER INFORMATION

 
To the extent the Committee determines that there are five hundred (500) or more
Participants in this Plan and all similar plans, and that it desires to comply
with the exemption set forth under Section 12(g) of the Exchange Act (Release
No. 34-56887), the Committee shall provide each Participant every six (6) months
with the risk and financial information so required thereunder, and in the
manner so required, in order to comply with such exemption.
  
XXIX.
FOREIGN JURISDICTIONS

 
To the extent the Committee determines that the restrictions imposed by the Plan
preclude the achievement of the material purposes of the Plan in jurisdictions
outside the United States of America, the Committee in its discretion may modify
those restrictions as it determines to be necessary or appropriate to conform to
applicable requirements or practices of jurisdictions outside of the United
States of America.
 
XXX.
DEFERRAL OF AWARDS

 
At the time of the grant of an Award, the Company may permit a Participant to
elect to:
 

 
(a)
have cash that otherwise would be paid to such Participant as a result of the
exercise of an Award credited to a deferred compensation account established for
such Participant by the Committee as an entry on the Company’s books;

 

 
(b)
have Shares that otherwise would be delivered to such Participant as a result of
the exercise of an Award converted into an equal number of Rights; or

 

 
(c)
have Shares that otherwise would be delivered to such Participant as a result of
the exercise of an Award converted into amounts credited to a deferred
compensation account established for such Participant by the Committee as an
entry on the Company’s books.  Such amounts shall be determined by reference to
the Fair Market Value of the Shares as of the date on which they otherwise would
have been delivered to such Participant.

 
A deferred compensation account established under this Article XXX may be
credited with interest or other forms of investment return, as determined by the
Committee and shall be subject to compliance with Section 409A of the Code.  A
Participant for whom such an account is established shall have no rights other
than those of a general creditor of the Company.  Such an account shall
represent an unfunded and unsecured obligation of the Company and shall be
subject to the terms and conditions of the applicable agreement between such
Participant and the Company.  If the deferral or conversion of Awards is
permitted or required, the Committee may establish rules, procedures and forms
pertaining to such Awards, including (without limitation) the settlement of
deferred compensation accounts established under this Article XXX.
 
XXXI.
GOVERNING LAW

 
This Plan shall be governed by the laws of the State of Texas and construed in
accordance therewith.
 
Adopted this 14 th day of December, 2011, and amended this 20 th day of January,
2012.
 
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