Exhibit 10.34

 

 

 

 

 

 

CALIFORNIA MICRO DEVICES CORPORATION

2004 OMNIBUS INCENTIVE COMPENSATION PLAN

(As Amended by the Board on July 6, 2009)

 

 

 

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Table of Contents

 

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Section 1. ESTABLISHMENT AND PURPOSE

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Section 2. DEFINITIONS

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(a) “Affiliate”

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(b) “Award”

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(c) “Board of Directors”

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(d) “Change in Control”

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(e) “Code”

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(f) “Committee”

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(g) “Company”

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(h) “Consultant”

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(i) “Employee”

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(j) “Exchange Act”

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(k) “Exercise Price”

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(l) “Fair Market Value”

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(m) “ISO”

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(n) “Nonstatutory Option” or “NSO”

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(o) “Offeree”

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(p) “Option”

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(q) “Optionee”

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(r) “Outside Director”

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(s) “Parent”

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(t) “Participant”

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(u) “Plan”

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(v) “Purchase Price”

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(w) “Restricted Share”

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(x) “Restricted Share Agreement”

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(y) “SAR”

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(z) “SAR Agreement”

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(aa) “Service”

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(bb) “Share”

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CALIFORNIA MICRO DEVICES CORPORATION

2004 OMNIBUS INCENTIVE COMPENSATION PLAN

 

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(cc) “Stock”

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(dd) “Stock Option Agreement”

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(ee) “Stock Unit”

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(ff) “Stock Unit Agreement”

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(gg) “Subsidiary”

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(hh) “Total and Permanent Disability”

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Section 3. ADMINISTRATION

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(a) Committee Composition

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(b) Committee for Non-Officer Grants

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(c) Committee Procedures

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(d) Committee Responsibilities

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Section 4. ELIGIBILITY

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(a) General Rule

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(b) Automatic Grants to Outside Directors

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(c) Ten-Percent Stockholders

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(d) Attribution Rules

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(e) Outstanding Stock

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Section 5. STOCK SUBJECT TO PLAN

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(a) Basic Limitation

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(b) Individual Award Limitation

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(c) Additional Shares

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Section 6. RESTRICTED SHARES

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(a) Restricted Stock Agreement

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(b) Payment for Awards

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(c) Vesting

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(d) Voting and Dividend Rights

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(e) Restrictions on Transfer of Shares

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Section 7. TERMS AND CONDITIONS OF OPTIONS

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(a) Stock Option Agreement

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(b) Number of Shares

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(c) Exercise Price

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(d) Withholding Taxes

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(e) Exercisability and Term

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CALIFORNIA MICRO DEVICES CORPORATION

2004 OMNIBUS INCENTIVE COMPENSATION PLAN

 

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(f) Exercise of Options Upon Termination of Service

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(g) Effect of Change in Control

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(h) Leaves of Absence

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(i) No Rights as a Shareholder

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(j) Modification, Extension and Renewal of Options

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(k) Restrictions on Transfer of Shares

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Section 8. PAYMENT FOR SHARES

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(a) General Rule

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(b) Surrender of Stock

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(c) Services Rendered

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(d) Cashless Exercise

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(e) Exercise/Pledge

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(f) Other Forms of Payment

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(g) Limitations under Applicable Law

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Section 9. STOCK APPRECIATION RIGHTS

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(a) SAR Agreement

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(b) Number of Shares

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(c) Exercise Price

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(d) Exercisability and Term

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(e) Effect of Change in Control

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(f) Exercise of SARs

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(g) Modification or Assumption of SARs

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Section 10. STOCK UNITS

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(a) Stock Unit Agreement

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(b) Payment for Awards

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(c) Vesting Conditions

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(d) Voting and Dividend Rights

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(e) Form and Time of Settlement of Stock Units

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(f) Death of Recipient

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(g) Creditors’ Rights

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Section 11. TRANSFERABILITY; PERFORMANCE GOALS

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(a) Transferability

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(b) Performance Goals

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CALIFORNIA MICRO DEVICES CORPORATION

2004 OMNIBUS INCENTIVE COMPENSATION PLAN

 

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Section 12. ADJUSTMENT OF SHARES

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(a) Adjustments

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(b) Dissolution or Liquidation

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(c) Reorganizations

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(d) Reservation of Rights

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Section 13. DEFERRAL OF AWARDS

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Section 14. AWARDS UNDER OTHER PLANS

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Section 15. PAYMENT OF DIRECTOR’S FEES IN SECURITIES

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(a) Effective Date

   15

(b) Elections to Receive NSOs, Restricted Shares or Stock Units

   15

(c) Number and Terms of NSOs, Restricted Shares or Stock Units

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Section 16. LEGAL AND REGULATORY REQUIREMENTS

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Section 17. WITHHOLDING TAXES

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(a) General

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(b) Share Withholding

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Section 18. NO EMPLOYMENT RIGHTS

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Section 19. DURATION AND AMENDMENTS

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(a) Term of the Plan

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(b) Right to Amend or Terminate the Plan

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(c) Effect of Termination

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Section 20. EXECUTION

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CALIFORNIA MICRO DEVICES CORPORATION

2004 OMNIBUS INCENTIVE COMPENSATION PLAN

 

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CALIFORNIA MICRO DEVICES CORPORATION

2004 OMNIBUS INCENTIVE COMPENSATION PLAN

SECTION 1. ESTABLISHMENT AND PURPOSE.

The Plan was adopted by the Board of Directors on June 22, 2004, subject to
shareholder approval, which was obtained on August 12, 2004 (the “Effective
Date”). The plan is a successor to the Company’s 1995 Employee Stock Option
Compensation Plan and the 1995 Non-Employee Directors’ Stock Option Plan (the
“Prior Plans”). As of the Effective Date, no further awards shall be made under
the Prior Plans other than options to purchase up to 50,000 shares under the UK
subplan to the Company’s 1995 Employee Stock Option Compensation Plan. However,
the provisions of the Prior Plans shall continue to apply to awards granted
under the Prior Plans prior to the Effective Date. In the event that this Plan
is not approved by shareholders, awards shall continue to be made under the
Prior Plans in accordance with their terms. The purpose of the Plan is to
promote the long-term success of the Company and the creation of shareholder
value by (a) encouraging Employees, Outside Directors and Consultants to focus
on critical long-range objectives, (b) encouraging the attraction and retention
of Employees, Outside Directors and Consultants with exceptional qualifications
and (c) linking Employees, Outside Directors and Consultants directly to
shareholder interests through increased stock ownership. The Plan seeks to
achieve this purpose by providing for Awards in the form of restricted shares,
stock units, options (which may constitute incentive stock options or
nonstatutory stock options) or stock appreciation rights.

SECTION 2. DEFINITIONS.

(a) “Affiliate” shall mean any entity other than a Subsidiary, if the Company
and/or one of more Subsidiaries own not less than 50% of such entity.

(b) “Award” shall mean any award of an Option, a SAR, a Restricted Share or a
Stock Unit under the Plan.

(c) “Board of Directors” shall mean the Board of Directors of the Company, as
constituted from time to time.

(d) “Change in Control” shall mean the occurrence of any of the following
events:

(i) A change in the composition of the Board of Directors occurs, as a result of
which fewer than one-half of the incumbent directors are directors who either:

(A) Had been directors of the Company on the “look-back date” (as defined below)
(the “original directors”); or

(B) Were elected, or nominated for election, to the Board of Directors with the
affirmative votes of at least a majority of the aggregate of the original
directors who were still in office at the time of the election or nomination and
the directors whose election or nomination was previously so approved (the
“continuing directors”); or

(ii) Any “person” (as defined below) who by the acquisition or aggregation of
securities, 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 50% or more of the combined voting power of the Company’s then
outstanding securities ordinarily (and apart from rights accruing under

 

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special circumstances) having the right to vote at elections of directors (the
“Base Capital Stock”); except that any change in the relative beneficial
ownership of the Company’s securities by any person resulting solely from a
reduction in the aggregate number of outstanding shares of Base Capital Stock,
and any decrease thereafter in such person’s ownership of securities, shall be
disregarded until such person increases in any manner, directly or indirectly,
such person’s beneficial ownership of any securities of the Company; or

(iii) The consummation of a merger or consolidation of the Company with or into
another entity or any other corporate reorganization, if persons who were not
shareholders of the Company immediately prior to such merger, consolidation or
other reorganization own immediately after such merger, consolidation or other
reorganization 50% or more of the voting power of the outstanding securities of
each of (A) the continuing or surviving entity and (B) any direct or indirect
parent corporation of such continuing or surviving entity; or

(iv) The sale, transfer or other disposition of all or substantially all of the
Company’s assets.

For purposes of subsection (d)(i) above, the term “look-back” date shall mean
the later of (1) the Effective Date or (2) the date 24 months prior to the date
of the event that may constitute a Change in Control.

For purposes of subsection (d)(ii) above, the term “person” shall have the same
meaning as when used in Sections 13(d) and 14(d) of the Exchange Act but shall
exclude (1) a trustee or other fiduciary holding securities under an employee
benefit plan maintained by the Company or a Parent or Subsidiary and (2) a
corporation owned directly or indirectly by the shareholders of the Company in
substantially the same proportions as their ownership of the Stock.

Any other provision of this Section 2(d) notwithstanding, a transaction shall
not constitute a Change in Control if its sole purpose is to change the state of
the Company’s incorporation or to create a holding company that will be owned in
substantially the same proportions by the persons who held the Company’s
securities immediately before such transaction, and a Change in Control shall
not be deemed to occur if the Company files a registration statement with the
Securities and Exchange Commission for the initial offering of Stock to the
public.

(e) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(f) “Committee” shall mean the Compensation Committee as designated by the Board
of Directors, which is authorized to administer the Plan, as described in
Section 3 hereof.

(g) “Company” shall mean California Micro Devices Corporation, a California
corporation.

(h) “Consultant” shall mean a consultant or advisor who provides bona fide
services to the Company, a Parent, a Subsidiary or an Affiliate as an
independent contractor or a member of the board of directors of a Parent or a
Subsidiary who is not an Employee. Service as a Consultant shall be considered
Service for all purposes of the Plan.

(i) “Employee” shall mean any individual who is a common-law employee of the
Company, a Parent or a Subsidiary.

(j) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

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(k) “Exercise Price” shall mean, in the case of an Option, the amount for which
one Common Share may be purchased upon exercise of such Option, as specified in
the applicable Stock Option Agreement. “Exercise Price,” in the case of a SAR,
shall mean an amount, as specified in the applicable SAR Agreement, which is
subtracted from the Fair Market Value of one Common Share in determining the
amount payable upon exercise of such SAR.

(l) “Fair Market Value” with respect to a Share, shall mean the market price of
one Share of Stock, determined by the Committee as follows:

(i) If the Stock was traded over-the-counter on the date in question but was not
traded on The Nasdaq Stock Market, then the Fair Market Value shall be equal to
the last transaction price quoted for such date by the OTC Bulletin Board or, if
not so quoted, shall be equal to the mean between the last reported
representative bid and asked prices quoted for such date by the principal
automated inter-dealer quotation system on which the Stock is quoted or, if the
Stock is not quoted on any such system, by the “Pink Sheets” published by the
National Quotation Bureau, Inc.;

(ii) If the Stock was traded on The Nasdaq Stock Market, then the Fair Market
Value shall be equal to the last reported sale price quoted for such date by The
Nasdaq Stock Market;

(iii) If the Stock was traded on a United States stock exchange on the date in
question, then the Fair Market Value shall be equal to the closing price
reported for such date by the applicable composite-transactions report; and

(iv) If none of the foregoing provisions is applicable, then the Fair Market
Value shall be determined by the Committee in good faith on such basis as it
deems appropriate.

In all cases, the determination of Fair Market Value by the Committee shall be
conclusive and binding on all persons.

(m) “ISO” shall mean an employee incentive stock option described in Section 422
of the Code.

(n) “Nonstatutory Option” or “NSO” shall mean an employee stock option that is
not an ISO.

(o) “Offeree” shall mean an individual to whom the Committee has offered the
right to acquire Shares under the Plan (other than upon exercise of an Option).

(p) “Option” shall mean an ISO or Nonstatutory Option granted under the Plan and
entitling the holder to purchase Shares.

(q) “Optionee” shall mean an individual or estate who holds an Option or SAR.

(r) “Outside Director” shall mean a member of the Board of Directors who is not
a common-law employee of, or paid consultant to, the Company, a Parent or a
Subsidiary. Service as an Outside Director shall be considered Service for all
purposes of the Plan, except as provided in Section 4(a).

(s) “Parent” shall mean any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company, if each of the corporations other
than the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain. A
corporation that attains the status of a Parent on a date after the adoption of
the Plan shall be a Parent commencing as of such date.

 

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(t) “Participant” shall mean an individual or estate who holds an Award.

(u) “Plan” shall mean this 2004 Omnibus Incentive Compensation Plan of
California Micro Devices Corporation, as amended from time to time.

(v) “Purchase Price” shall mean the consideration for which one Share may be
acquired under the Plan (other than upon exercise of an Option), as specified by
the Committee.

(w) “Restricted Share” shall mean a Share awarded under the Plan.

(x) “Restricted Share Agreement” shall mean the agreement between the Company
and the recipient of a Restricted Share which contains the terms, conditions and
restrictions pertaining to such Restricted Shares.

(y) “SAR” shall mean a stock appreciation right granted under the Plan.

(z) “SAR Agreement” shall mean the agreement between the Company and an Optionee
which contains the terms, conditions and restrictions pertaining to his or her
SAR.

(aa) “Service” shall mean service as an Employee, Consultant or Outside
Director.

(bb) “Share” shall mean one share of Stock, as adjusted in accordance with
Section 8 (if applicable).

(cc) “Stock” shall mean the Common Stock of the Company.

(dd) “Stock Option Agreement” shall mean the agreement between the Company and
an Optionee that contains the terms, conditions and restrictions pertaining to
his Option.

(ee) “Stock Unit” shall mean a bookkeeping entry representing the equivalent of
one Share, as awarded under the Plan.

(ff) “Stock Unit Agreement” shall mean the agreement between the Company and the
recipient of a Stock Unit which contains the terms, conditions and restrictions
pertaining to such Stock Unit.

(gg) “Subsidiary” shall mean any corporation, if the Company and/or one or more
other Subsidiaries own not less than 50% of the total combined voting power of
all classes of outstanding stock of such corporation. A corporation that attains
the status of a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.

(hh) “Total and Permanent Disability” shall mean that the Optionee is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or that has lasted, or can be expected to last, for a continuous period of
not less than 12 months.

SECTION 3. ADMINISTRATION.

(a) Committee Composition. The Plan shall be administered by the Committee. The
Committee shall consist of two or more directors of the Company, who shall be
appointed by the Board. In addition, the composition of the Committee shall
satisfy (i) such requirements as the Securities and Exchange Commission may
establish for administrators acting under plans intended to qualify for

exemption under Rule 16b-3 (or its successor) under the Exchange Act; and
(ii) such requirements as the

 

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Internal Revenue Service may establish for outside directors acting under plans
intended to qualify for exemption under Section 162(m)(4)(C) of the Code.

(b) Committee for Non-Officer Grants. The Board may also appoint one or more
separate committees of the Board, each composed of two or more directors of the
Company who need not satisfy the requirements of Section 3(a), who may
administer the Plan with respect to Employees who are not considered officers or
directors of the Company under Section 16 of the Exchange Act, may grant Awards
under the Plan to such Employees and may determine all terms of such grants.
Within the limitations of the preceding sentence, any reference in the Plan to
the Committee shall include such committee or committees appointed pursuant to
the preceding sentence. Subject to compliance with applicable law, the Board of
Directors may also authorize one or more officers of the Company to designate
Employees, other than officers under Section 16 of the Exchange Act, to receive
Awards and/or to determine the number of such Awards to be received by such
persons; provided, however, that the Board of Directors shall specify the total
number of Awards that such officers may so award.

(c) Committee Procedures. The Board of Directors shall designate one of the
members of the Committee as chairman. The Committee may hold meetings at such
times and places as it shall determine. The acts of a majority of the Committee
members present at meetings at which a quorum exists, or acts reduced to or
approved in writing by all Committee members, shall be valid acts of the
Committee.

(d) Committee Responsibilities. Subject to the provisions of the Plan, the
Committee shall have full authority and discretion to take the following
actions:

(i) To interpret the Plan and to apply its provisions;

(ii) To adopt, amend or rescind rules, procedures and forms relating to the
Plan;

(iii) To authorize any person to execute, on behalf of the Company, any
instrument required to carry out the purposes of the Plan;

(iv) To determine when Awards are to be granted under the Plan;

(v) To select the Offerees and Optionees;

(vi) To determine the number of Shares to be made subject to each Award;

(vii) To prescribe the terms and conditions of each Award, including (without
limitation) the Exercise Price or Purchase Price, and the vesting or duration of
the Award (including accelerating the vesting of Awards, either at the time of
the Award or thereafter, without the consent of the Participant), to determine
whether an Option is to be classified as an ISO or as a Nonstatutory Option, and
to specify the provisions of the agreement relating to such Award;

(viii) To establish or verify the extent of satisfaction of any performance
goals or other conditions applicable to the grant, issuance, exercisability,
vesting and/or ability to retain any Award;

(ix) To amend any outstanding Award agreement, subject to applicable legal
restrictions and to the consent of the Participant if the Participant’s rights
or obligations would be adversely affected;

 

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(x) To prescribe the consideration for the grant of each Award or other right
under the Plan and to determine the sufficiency of such consideration;

(xi) To determine the disposition of each Award or other right under the Plan in
the event of a Participant’s divorce or dissolution of marriage;

(xii) To determine whether Options or other rights under the Plan will be
granted in replacement of other grants under an incentive or other compensation
plan of an acquired business;

(xiii) To correct any defect, supply any omission, or reconcile any
inconsistency in the Plan or any Award agreement; and

(xiv) To take any other actions deemed necessary or advisable for the
administration of the Plan.

Subject to the requirements of applicable law, the Committee may designate
persons other than members of the Committee to carry out its responsibilities
and may prescribe such conditions and limitations as it may deem appropriate,
except that the Committee may not delegate its authority with regard to the
selection for participation of or the granting of Options or other rights under
the Plan to persons subject to Section 16 of the Exchange Act. All decisions,
interpretations and other actions of the Committee shall be final and binding on
all Offerees, all Optionees, and all persons deriving their rights from an
Offeree or Optionee. No member of the Committee shall be liable for any action
that he has taken or has failed to take in good faith with respect to the Plan,
any Option, or any right to acquire Shares under the Plan.

SECTION 4. ELIGIBILITY.

(a) General Rule. Only Employees shall be eligible for the grant of ISOs. Only
Employees, Consultants and Outside Directors shall be eligible for the grant of
Restricted Shares, Stock Units, Nonstatutory Options or SARs.

(b) Automatic Grants to Outside Directors.

(i) Each Outside Director who first joins the Board of Directors on or after the
Effective Date shall receive a Nonstatutory Option, subject to approval of the
Plan by the Company’s stockholders, to purchase 20,000 Shares (subject to
adjustment under Section 11) on the Effective Date or, if later, on his or her
appointment or election to the Board of Directors.

(ii) As of the date of each regular annual meeting of the Company’s
stockholders, commencing with the annual meeting occurring on the Effective
Date, each Outside Director who is not eligible for the grant of an initial
option under Section 4(b)(i) and who has been elected or reelected or is
continuing to serve as a member of the Board of Directors as of the adjournment
of such meeting shall receive an Option to purchase 10,000 Shares (subject to
adjustment under Section 11), provided that such Outside Director has served on
the Board of Directors for at least six months.

(iii) Each Option granted under Section 4(b)(i) shall vest and become
exercisable as to one fourth of the Shares at the end of the 4th full calendar
quarter following the date the Option was granted and as to an additional 1/16th
of the Shares at the end of each subsequent full calendar quarter commencing
with the 5th full calendar quarter following the date the Option was granted and
each Option granted under Section 4(b)(ii) shall vest and become exercisable as
to one-twelfth of the Shares on the date of grant and as to an additional
one-twelfth on each of the next eleven (11) monthly anniversaries of the date of
grant; provided, however, that each such Option shall become fully vested if a
Change in

 

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Control occurs with respect to the Company during the Outside Director’s Service
(unless otherwise provided by the Board in the Outside Director’s Nonstatutory
Option agreement). If a newly-appointed director stands for re-election at an
annual stockholder meeting but is not elected prior to the vesting of the
initial 5,000 share installment of an Option granted under Section 4(b)(i), then
such installment shall become fully vested as of such annual stockholders
meeting.

(iv) The Exercise Price of all Nonstatutory Options granted to an Outside
Director under this Section 4(b) shall be equal to 100% of the Fair Market Value
of a Share on the date of grant, payable in one of the forms described in
Section 8(a), (b) or (d).

(v) All Nonstatutory Options granted to an Outside Director under this
Section 4(b) shall terminate on the earlier of (A) the tenth anniversary of the
date of grant of such Options, (B) the first anniversary of the date of
termination of such Outside Director’s Service by reason of death or Total and
Permanent Disability, (C) the date 90 days after the termination of such Outside
Director’s Service for any reason other than death or Total and Permanent
Disability, (D) the first anniversary of the Outside Director’s death during the
90 day period specified in Section 4(b)(v)(C), or (E) that date that such
Outside Director files or has filed against him or her a petition in bankruptcy;
provided, however, that any such Options that are not vested upon the
termination of the Outside Director’s Service for any reason shall terminate
immediately and may not be exercised. The Board may also provide for earlier
termination in the Outside Director’s Nonstatutory Option agreement.

(c) Ten-Percent Stockholders. An Employee who owns more than 10% of the total
combined voting power of all classes of outstanding stock of the Company, a
Parent or Subsidiary shall not be eligible for the grant of an ISO unless such
grant satisfies the requirements of Section 422(c)(5) of the Code.

(d) Attribution Rules. For purposes of Section 4(c) above, in determining stock
ownership, an Employee shall be deemed to own the stock owned, directly or
indirectly, by or for such Employee’s brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its shareholders, partners or beneficiaries.

(e) Outstanding Stock. For purposes of Section 4(c) above, “outstanding stock”
shall include all stock actually issued and outstanding immediately after the
grant. “Outstanding stock” shall not include shares authorized for issuance
under outstanding options held by the Employee or by any other person.

SECTION 5. STOCK SUBJECT TO PLAN.

(a) Basic Limitation. Shares offered under the Plan shall be authorized but
unissued Shares. The maximum aggregate number of Shares that may be subject to
Awards granted under the Plan shall not exceed 4,100,000 Shares, plus any Shares
remaining available for grant of awards under the Prior Plans on the Effective
Date (including Shares subject to outstanding options under the Prior Plans on
the Effective Date that are subsequently forfeited or terminate for any other
reason before being exercised and unvested Shares that are forfeited pursuant to
such Prior Plans after the Effective Date). Any Shares granted as Options or
SARs shall be counted against this limit as one (1) Share for every one
(1) Share granted. In these regards, the number of Shares counted against this
limit shall be reduced by the number of Shares covered by an SAR which is
settled in Shares and by the number Shares covered by an Option for which there
is a net exercise or withholding in Shares (rather than the number of Shares
actually issued). Any Shares granted as Awards other than Options or SARs shall
be counted against this limit as two (2) Shares for every one (1) Share granted.
The limitations of this Section 5(a) shall be subject to adjustment pursuant to
Section 12. The number of Shares that are subject to Options or other Awards
outstanding at any

 

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time under the Plan shall not exceed the number of Shares which then remain
available for issuance under the Plan. The Company, during the term of the Plan,
shall at all times reserve and keep available sufficient Shares to satisfy the
requirements of the Plan.

(b) Individual Award Limitation. Subject to the provisions of Section 12, no
Participant may receive Options, SARs, Restricted Shares or Stock Units under
the Plan in any one fiscal year of the Company that relate to more than 500,000
Shares.

(c) Additional Shares. If Restricted Shares or Shares issued upon the exercise
of Options are forfeited, then such Shares shall again become available for
Awards under the Plan. If Stock Units, Options or SARs are forfeited or
terminate for any other reason before being settled or exercised, then the
corresponding Shares shall again become available for Awards under the Plan. If
Stock Units are settled, then only the number of Shares (if any) actually issued
in settlement of such Stock Units (multiplied by 2) shall reduce the number
available under Section 5(a) and the balance shall again become available for
Awards under the Plan.

SECTION 6. RESTRICTED SHARES.

(a) Restricted Stock Agreement. Each grant of Restricted Shares under the Plan
shall be evidenced by a Restricted Stock Agreement between the recipient and the
Company. Such Restricted Shares shall be subject to all applicable terms of the
Plan and may be subject to any other terms that are not inconsistent with the
Plan. The provisions of the various Restricted Stock Agreements entered into
under the Plan need not be identical.

(b) Payment for Awards. Subject to the following sentence, Restricted Shares may
be sold or awarded under the Plan for such consideration as the Committee may
determine, including (without limitation) cash, cash equivalents, past services
and future services.

(c) Vesting. Each Award of Restricted Shares shall be subject to vesting.
Vesting shall occur, in full or in installments, upon satisfaction of the
conditions specified in the Restricted Stock Agreement; provided, however, that
an Award of Restricted Shares will have at least one-year vesting if such Award
includes performance conditions and if the Award does not include performance
conditions, vesting no more rapidly than pro rata installments over three years
from the date the Award is made, other than upon the death, disability or
retirement of the Participant or with respect to such Awards that are issued
upon exercise or settlement of Stock Options or SARs, in each case as specified
in the agreement evidencing such Award. A Restricted Stock Agreement may provide
for accelerated vesting in the event of the Participant’s death, disability or
retirement or other events. The Committee may determine, at the time of granting
Restricted Shares of thereafter, that all or part of such Restricted Shares
shall become vested in the event that a Change in Control occurs with respect to
the Company.

(d) Voting and Dividend Rights. The holders of Restricted Shares awarded under
the Plan shall have the same voting, dividend and other rights as the Company’s
other shareholders. A Restricted Stock Agreement, however, may require that the
holders of Restricted Shares invest any cash dividends received in additional
Restricted Shares. Such additional Restricted Shares shall be subject to the
same conditions and restrictions as the Award with respect to which the
dividends were paid.

(e) Restrictions on Transfer of Shares. Restricted Shares shall be subject to
such rights of repurchase, rights of first refusal or other restrictions as the
Committee may determine. Such restrictions shall be set forth in the applicable
Restricted Stock Agreement and shall apply in addition to any general
restrictions that may apply to all holders of Shares.

 

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SECTION 7. TERMS AND CONDITIONS OF OPTIONS.

(a) Stock Option Agreement. Each grant of an Option under the Plan shall be
evidenced by a Stock Option Agreement between the Optionee and the Company. Such
Option shall be subject to all applicable terms and conditions of the Plan and
may be subject to any other terms and conditions which are not inconsistent with
the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. The Stock Option Agreement shall specify whether the Option is
an ISO or an NSO. The provisions of the various Stock Option Agreements entered
into under the Plan need not be identical. Options may be granted in
consideration of a reduction in the Optionee’s other compensation.

(b) Number of Shares. Each Stock Option Agreement shall specify the number of
Shares that are subject to the Option and shall provide for the adjustment of
such number in accordance with Section 12.

(c) Exercise Price. Each Stock Option Agreement shall specify the Exercise
Price. The Exercise Price of an ISO shall not be less than 100% of the Fair
Market Value of a Share on the date of grant, except as otherwise provided in
Section 4(c), and the Exercise Price of an NSO shall not be less 100% of the
Fair Market Value of a Share on the date of grant. Subject to the foregoing in
this Section 7(c), the Exercise Price under any Option shall be determined by
the Committee at its sole discretion. The Exercise Price shall be payable in one
of the forms described in Section 8.

(d) Withholding Taxes. As a condition to the exercise of an Option, the Optionee
shall make such arrangements as the Committee may require for the satisfaction
of any federal, state, local or foreign withholding tax obligations that may
arise in connection with such exercise. The Optionee shall also make such
arrangements as the Committee may require for the satisfaction of any federal,
state, local or foreign withholding tax obligations that may arise in connection
with the disposition of Shares acquired by exercising an Option.

(e) Exercisability and Term. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is to become exercisable. The Stock
Option Agreement shall also specify the term of the Option; provided that the
term of Option shall in no event exceed 10 years from the date of grant (five
years for ISOs granted to Employees described in Section 4(c)). A Stock Option
Agreement may provide for accelerated exercisability in the event of the
Optionee’s death, disability, or retirement or other events and may provide for
expiration prior to the end of its term in the event of the termination of the
Optionee’s Service. Options may be awarded in combination with SARs, and such an
Award may provide that the Options will not be exercisable unless the related
SARs are forfeited. Subject to the foregoing in this Section 7(e), the Committee
at its sole discretion shall determine when all or any installment of an Option
is to become exercisable and when an Option is to expire.

(f) Exercise of Options Upon Termination of Service. Each Stock Option Agreement
shall set forth the extent to which the Optionee shall have the right to
exercise the Option following termination of the Optionee’s Service with the
Company and its Subsidiaries, and the right to exercise the Option of any
executors or administrators of the Optionee’s estate or any person who has
acquired such Option(s) directly from the Optionee by bequest or inheritance.
Such provisions shall be determined in the sole discretion of the Committee,
need not be uniform among all Options issued pursuant to the Plan, and may
reflect distinctions based on the reasons for termination of Service.

(g) Effect of Change in Control. The Committee may determine, at the time of
granting an Option or thereafter, that such Option shall become exercisable as
to all or part of the Shares subject to such Option in the event that a Change
in Control occurs with respect to the Company.

 

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(h) Leaves of Absence. An Employee’s Service shall cease when such Employee
ceases to be actively employed by, or a Consultant to, the Company (or any
subsidiary) as determined in the sole discretion of the Board of Directors. For
purposes of Options, Service does not terminate when an Employee goes on a bona
fide leave of absence, that was approved by the Company in writing, if the terms
of the leave provide for continued service crediting, or when continued service
crediting is required by applicable law. However, for purposes of determining
whether an Option is entitled to ISO status, an Employee’s Service will be
treated as terminating 90 days after such Employee went on leave, unless such
Employee’s right to return to active work is guaranteed by law or by a contract.
Service terminates in any event when the approved leave ends, unless such
Employee immediately returns to active work. The Company determines which leaves
count toward Service, and when Service terminates for all purposes under the
Plan.

(i) No Rights as a Shareholder. An Optionee, or a transferee of an Optionee,
shall have no rights as a shareholder with respect to any Shares covered by his
Option until the date of the issuance of a stock certificate for such Shares. No
adjustments shall be made, except as provided in Section 12.

(j) Modification, Extension and Renewal of Options. Within the limitations of
the Plan, the Committee may modify, extend or renew outstanding options or may
accept the cancellation of outstanding options (to the extent not previously
exercised), whether or not granted hereunder, in return for the grant of new
Options for the same or a different number of Shares and at the same or a
different exercise price, or in return for the grant of the same or a different
number of Shares. The foregoing notwithstanding, no modification of an Option
shall, without the consent of the Optionee, adversely affect his or her rights
or obligations under such Option. In addition, notwithstanding any other
provision of the Plan, in no event shall the Committee cancel any outstanding
Option for the purpose of reissuing the Option to the Optionee at a lower
exercise price or reduce the exercise price of an outstanding Option.

(k) Restrictions on Transfer of Shares. Any Shares issued upon exercise of an
Option shall be subject to such special forfeiture conditions, rights of
repurchase, rights of first refusal and other transfer restrictions as the
Committee may determine. Such restrictions shall be set forth in the applicable
Stock Option Agreement and shall apply in addition to any general restrictions
that may apply to all holders of Shares.

SECTION 8. PAYMENT FOR SHARES.

(a) General Rule. The entire Exercise Price or Purchase Price of Shares issued
under the Plan shall be payable in lawful money of the United States of America
at the time when such Shares are purchased, except as provided in Section 8(b)
through Section 8(f) below.

(b) Surrender of Stock. To the extent that a Stock Option Agreement so provides,
payment may be made all or in part by surrendering, or attesting to the
ownership of, Shares which have already been owned by the Optionee or his
representative. Such Shares shall be valued at their Fair Market Value on the
date when the new Shares are purchased under the Plan. The Optionee shall not
surrender, or attest to the ownership of, Shares in payment of the Exercise
Price if such action would cause the Company to recognize compensation expense
(or additional compensation expense) with respect to the Option for financial
reporting purposes.

(c) Services Rendered. At the discretion of the Committee, Shares may be awarded
under the Plan in consideration of services rendered to the Company or a
Subsidiary prior to the award. If Shares are awarded without the payment of a
Purchase Price in cash, the Committee shall make a determination (at the time of
the award) of the value of the services rendered by the Offeree and the
sufficiency of the consideration to meet the requirements of Section 6(b).

 

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(d) Cashless Exercise. To the extent that a Stock Option Agreement so provides,
payment may be made all or in part by delivery (on a form prescribed by the
Committee) of an irrevocable direction to a securities broker to sell Shares and
to deliver all or part of the sale proceeds to the Company in payment of the
aggregate Exercise Price.

(e) Exercise/Pledge. To the extent that a Stock Option Agreement so provides,
payment may be made all or in part by delivery (on a form prescribed by the
Committee) of an irrevocable direction to a securities broker or lender to
pledge Shares, as security for a loan, and to deliver all or part of the loan
proceeds to the Company in payment of the aggregate Exercise Price.

(f) Other Forms of Payment. To the extent that a Stock Option Agreement or
Restricted Stock Agreement so provides, payment may be made in any other form
that is consistent with applicable laws, regulations and rules; provided that
payment may not be made by delivery of a promissory note.

(g) Limitations under Applicable Law. Notwithstanding anything herein or in a
Stock Option Agreement or Restricted Stock Agreement to the contrary, payment
may not be made in any form that is unlawful, as determined by the Committee in
its sole discretion.

SECTION 9. STOCK APPRECIATION RIGHTS.

(a) SAR Agreement. Each grant of a SAR under the Plan shall be evidenced by a
SAR Agreement between the Optionee and the Company. Such SAR shall be subject to
all applicable terms of the Plan and may be subject to any other terms that are
not inconsistent with the Plan. The provisions of the various SAR Agreements
entered into under the Plan need not be identical. SARs may be granted in
consideration of a reduction in the Optionee’s other compensation.

(b) Number of Shares. Each SAR Agreement shall specify the number of Shares to
which the SAR pertains and shall provide for the adjustment of such number in
accordance with Section 12.

(c) Exercise Price. Each SAR Agreement shall specify the Exercise Price. A SAR
Agreement may specify an Exercise Price that varies in accordance with a
predetermined formula while the SAR is outstanding.

(d) Exercisability and Term. Each SAR Agreement shall specify the date when all
or any installment of the SAR is to become exercisable. The SAR Agreement shall
also specify the term of the SAR. A SAR Agreement may provide for accelerated
exercisability in the event of the Optionee’s death, disability or retirement or
other events and may provide for expiration prior to the end of its term in the
event of the termination of the Optionee’s service. SARs may be awarded in
combination with Options, and such an Award may provide that the SARs will not
be exercisable unless the related Options are forfeited. A SAR may be included
in an ISO only at the time of grant but may be included in an NSO at the time of
grant or thereafter. A SAR granted under the Plan may provide that it will be
exercisable only in the event of a Change in Control.

(e) Effect of Change in Control. The Committee may determine, at the time of
granting a SAR or thereafter, that such SAR shall become fully exercisable as to
all Common Shares subject to such SAR in the event that a Change in Control
occurs with respect to the Company.

(f) Exercise of SARs. Upon exercise of a SAR, the Optionee (or any person having
the right to exercise the SAR after his or her death) shall receive from the
Company (a) Shares, (b) cash or (c) a combination of Shares and cash, as the
Committee shall determine. The amount of cash and/or the Fair Market Value of
Shares received upon exercise of SARs shall, in the aggregate, be equal to the
amount by

 

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which the Fair Market Value (on the date of surrender) of the Shares subject to
the SARs exceeds the Exercise Price.

(g) Modification or Assumption of SARs. Within the limitations of the Plan, the
Committee may modify, extend or assume outstanding SARs or may accept the
cancellation of outstanding SARs (whether granted by the Company or by another
issuer) in return for the grant of new SARs for the same or a different number
of shares and at the same or a different exercise price. The foregoing
notwithstanding, no modification of a SAR shall, without the consent of the
holder, may alter or impair his or her rights or obligations under such SAR. In
addition, notwithstanding any other provision of the Plan, in no event shall the
Committee cancel any outstanding SAR for the purpose of reissuing the SAR to the
Optionee at a lower exercise price or reduce the exercise price of an
outstanding SAR.

SECTION 10. STOCK UNITS.

(a) Stock Unit Agreement. Each grant of Stock Units under the Plan shall be
evidenced by a Stock Unit Agreement between the recipient and the Company. Such
Stock Units shall be subject to all applicable terms of the Plan and may be
subject to any other terms that are not inconsistent with the Plan. The
provisions of the various Stock Unit Agreements entered into under the Plan need
not be identical. Stock Units may be granted in consideration of a reduction in
the recipient’s other compensation.

(b) Payment for Awards. To the extent that an Award is granted in the form of
Stock Units, no cash consideration shall be required of the Award recipients.

(c) Vesting Conditions. Each Award of Stock Units may or may not be subject to
vesting. Vesting shall occur, in full or in installments, upon satisfaction of
the conditions specified in the Stock Unit Agreement; provided, however, that an
Award of Stock Units will have at least one-year vesting if such Award includes
performance conditions and if the Award does not include performance conditions,
vesting no more rapidly than pro rata installments over three years from the
date the Award is made, other than upon the death, disability or retirement of
the Participant or with respect to such Awards that are issued upon exercise or
settlement of Stock Options or SARs, in each case as specified in the agreement
evidencing such Award. A Stock Unit Agreement may provide for accelerated
vesting in the event of the Participant’s death, disability or retirement or
other events. The Committee may determine, at the time of granting Stock Units
or thereafter, that all or part of such Stock Units shall become vested in the
event that a Change in Control occurs with respect to the Company.

(d) Voting and Dividend Rights. The holders of Stock Units shall have no voting
rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan
may, at the Committee’s discretion, carry with it a right to dividend
equivalents. Such right entitles the holder to be credited with an amount equal
to all cash dividends paid on one Share while the Stock Unit is outstanding.
Dividend equivalents may be converted into additional Stock Units. Settlement of
dividend equivalents may be made in the form of cash, in the form of Shares, or
in a combination of both. Prior to distribution, any dividend equivalents which
are not paid shall be subject to the same conditions and restrictions (including
without limitation, any forfeiture conditions) as the Stock Units to which they
attach.

(e) Form and Time of Settlement of Stock Units. Settlement of vested Stock Units
may be made in the form of (a) cash, (b) Shares or (c) any combination of both,
as determined by the Committee. The actual number of Stock Units eligible for
settlement may be larger or smaller than the number included in the original
Award, based on predetermined performance factors. Methods of converting Stock
Units into cash may include (without limitation) a method based on the average
Fair Market Value of Shares over a series of trading days. Vested Stock Units
may be settled in a lump sum or in installments. The distribution may occur or
commence when all vesting conditions applicable to the

 

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Stock Units have been satisfied or have lapsed, or it may be deferred to any
later date. The amount of a deferred distribution may be increased by an
interest factor or by dividend equivalents. Until an Award of Stock Units is
settled, the number of such Stock Units shall be subject to adjustment pursuant
to Section 12.

(f) Death of Recipient. Any Stock Unit Award that becomes payable after the
recipient’s death shall be distributed to the recipient’s beneficiary or
beneficiaries. Each recipient of a Stock Unit Award under the Plan shall
designate one or more beneficiaries for this purpose by filing the prescribed
form with the Company. A beneficiary designation may be changed by filing the
prescribed form with the Company at any time before the Award recipient’s death.
If no beneficiary was designated or if no designated beneficiary survives the
Award recipient, then any Stock Unit Award that becomes payable after the
recipient’s death shall be distributed to the recipient’s estate.

(g) Creditors’ Rights. A holder of Stock Units shall have no rights other than
those of a general creditor of the Company. Stock Units represent an unfunded
and unsecured obligation of the Company, subject to the terms and conditions of
the applicable Stock Unit Agreement.

SECTION 11. TRANSFERABILITY; PERFORMANCE GOALS.

(a) Transferability. Except to the extent determined by the Committee, no Award
shall be assigned or transferred by a Participant other than by will or the laws
of descent and distribution, and during the lifetime of the Participant may be
exercised only by such Participant or his or her guardian or legal
representative.

(b) Performance Goals. The number of Shares or other benefits granted, issued,
retainable and/or vested under an Award may be made subject to the attainment of
performance goals for a specified period of time relating to one or more of the
following performance criteria, either individually, alternatively or in any
combination, applied to either the Company as a whole or to a business unit or
Subsidiary, either individually, alternatively or in any combination, and
measured either annually or cumulatively over a period of years, on an absolute
basis or relative to a pre-established target, to previous years’ results or to
a designated comparison group or index, in each case as specified by the
Committee in the Award: (a) cash flow, (b) earnings per share, (c) earnings
before interest, taxes and amortization, (d) return on equity, (e) total
shareholder return, (f) share price performance, (g) return on capital,
(h) return on assets or net assets, (i) revenue, (j) income or net income,
(k) operating income or net operating income, (l) operating profit or net
operating profit, (m) operating margin or profit margin, (n) return on operating
revenue, (o) return on invested capital, (p) market segment shares, (q) sales,
(r) unit openings or (s) customer satisfaction (“Qualifying Performance
Criteria”). The Committee may appropriately adjust any evaluation of performance
under a Qualifying Performance Criteria to exclude any of the following events
that occurs during a performance period: (i) asset write-downs, (ii) litigation
or claim judgments or settlements, (iii) the effect of changes in tax law,
accounting principles or other such laws or provisions affecting reported
results, (iv) accruals for reorganization and restructuring programs and (v) any
extraordinary nonrecurring items as described in Accounting Principles Board
Opinion No. 30 and/or in managements’ discussion and analysis of financial
condition and results of operations appearing in the Company’s annual report to
shareholders for the applicable year. The Committee shall determine the
Qualifying Performance Criteria not later than the 90th day of the performance
period, and shall determine and certify, for each Participant, the extent to
which the Qualifying Performance Criteria have been met. The Committee may not
in any event increase the amount of compensation payable under the Plan upon the
attainment of a Qualifying Performance Goal to a Participant who is a “covered
employee” within the meaning of Section 162(m) of the Code.

 

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SECTION 12. ADJUSTMENT OF SHARES.

(a) Adjustments. Notwithstanding any other provision of the Plan (except
Section 11(a)), in the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the price
of Shares, a combination or consolidation of the outstanding Stock (by
reclassification or otherwise) into a lesser number of Shares, a
recapitalization, a spin-off or a similar occurrence, the Committee shall make
such adjustments as it, in its sole discretion, deems appropriate in one or more
of:

(i) The number of Options, SARs, Restricted Shares and Stock Units available for
future Awards under Section 5;

(ii) The limitations set forth in Section 5(a) and (b);

(iii) The number of Shares covered by each outstanding Option and SAR;

(iv) The Exercise Price under each outstanding Option and SAR; or

(v) The number of Stock Units included in any prior Award which has not yet been
settled.

Except as provided in this Section 12, a Participant shall have no rights by
reason of any issue by the Company of stock of any class or securities
convertible into stock of any class, any subdivision or consolidation of shares
of stock of any class, the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class.

(b) Dissolution or Liquidation. To the extent not previously exercised or
settled, Options, SARs and Stock Units shall terminate immediately prior to the
dissolution or liquidation of the Company.

(c) Reorganizations. In the event that the Company is a party to a merger or
other reorganization, outstanding Awards shall be subject to the agreement of
merger or reorganization. Such agreement shall provide for:

(i) The continuation of the outstanding Awards by the Company, if the Company is
a surviving corporation;

(ii) The assumption of the outstanding Awards by the surviving corporation or
its parent or subsidiary;

(iii) The substitution by the surviving corporation or its parent or subsidiary
of its own awards for the outstanding Awards;

(iv) Full exercisability or vesting and accelerated expiration of the
outstanding Awards; or

(v) Settlement of the full value of the outstanding Awards in cash or cash
equivalents followed by cancellation of such Awards.

(d) Reservation of Rights. Except as provided in this Section 12, an Optionee or
Offeree shall have no rights by reason of any subdivision or consolidation of
shares of stock of any class, the payment of any dividend or any other increase
or decrease in the number of shares of stock of any class. Any issue by the

 

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Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number or Exercise Price of Shares subject to
an Option. The grant of an Option pursuant to the Plan shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.

SECTION 13. DEFERRAL OF AWARDS.

The Committee (in its sole discretion) may permit or require a Participant to:

(a) Have cash that otherwise would be paid to such Participant as a result of
the exercise of a SAR or the settlement of Stock Units 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 Option or SAR converted into an equal number of
Stock Units; or

(c) Have Shares that otherwise would be delivered to such Participant as a
result of the exercise of an Option or SAR or the settlement of Stock Units
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 such Shares
as of the date when they otherwise would have been delivered to such
Participant.

A deferred compensation account established under this Section 13 may be
credited with interest or other forms of investment return, as determined by the
Committee. 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 (in its sole discretion) may establish
rules, procedures and forms pertaining to such Awards, including (without
limitation) the settlement of deferred compensation accounts established under
this Section 13.

SECTION 14. AWARDS UNDER OTHER PLANS.

The Company may grant awards under other plans or programs. Such awards may be
settled in the form of Shares issued under this Plan. Such Shares shall be
treated for all purposes under the Plan like Shares issued in settlement of
Stock Units and shall, when issued, reduce the number of Shares available under
Section 5.

SECTION 15. PAYMENT OF DIRECTOR’S FEES IN SECURITIES.

(a) Effective Date. No provision of this Section 15 shall be effective unless
and until the Board has determined to implement such provision.

(b) Elections to Receive NSOs, Restricted Shares or Stock Units. An Outside
Director may elect to receive his or her annual retainer payments and/or meeting
fees from the Company in the form of cash, NSOs, Restricted Shares or Stock
Units, or a combination thereof, as determined by the Board. Such NSOs,
Restricted Shares and Stock Units shall be issued under the Plan. An election
under this Section 15 shall be filed with the Company on the prescribed form.

 

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(c) Number and Terms of NSOs, Restricted Shares or Stock Units. The number of
NSOs, Restricted Shares or Stock Units to be granted to Outside Directors in
lieu of annual retainers and meeting fees that would otherwise be paid in cash
shall be calculated in a manner determined by the Board. The terms of such NSOs,
Restricted Shares or Stock Units shall also be determined by the Board.

SECTION 16. LEGAL AND REGULATORY REQUIREMENTS.

Shares shall not be issued under the Plan unless the issuance and delivery of
such Shares complies with (or is exempt from) all applicable requirements of
law, including (without limitation) the Securities Act of 1933, as amended, the
rules and regulations promulgated thereunder, state securities laws and
regulations and the regulations of any stock exchange on which the Company’s
securities may then be listed, and the Company has obtained the approval or
favorable ruling from any governmental agency which the Company determines is
necessary or advisable.

SECTION 17. WITHHOLDING TAXES.

(a) General. To the extent required by applicable federal, state, local or
foreign law, a Participant or his or her successor shall make arrangements
satisfactory to the Company for the satisfaction of any withholding tax
obligations that arise in connection with the Plan. The Company shall not be
required to issue any Shares or make any cash payment under the Plan until such
obligations are satisfied.

(b) Share Withholding. The Committee may permit a Participant to satisfy all or
part of his or her withholding or income tax obligations by having the Company
withhold all or a portion of any Shares that otherwise would be issued to him or
her or by surrendering all or a portion of any Shares that he or she previously
acquired. Such Shares shall be valued at their Fair Market Value on the date
when taxes otherwise would be withheld in cash. In no event may a Participant
have Shares withheld that would otherwise be issued to him or her in excess of
the number necessary to satisfy the legally required minimum tax withholding.

SECTION 18. NO EMPLOYMENT RIGHTS.

No provision of the Plan, nor any right or Option granted under the Plan, shall
be construed to give any person any right to become, to be treated as, or to
remain an Employee. The Company and its Subsidiaries reserve the right to
terminate any person’s Service at any time and for any reason, with or without
notice.

SECTION 19. DURATION AND AMENDMENTS.

(a) Term of the Plan. The Plan, as set forth herein, shall terminate
automatically ten (10) years after its adoption by the Board. The Plan may be
terminated on any earlier date pursuant to Subsection (b) below.

(b) Right to Amend or Terminate the Plan. The Board of Directors may amend the
Plan at any time and from time to time. Rights and obligations under any Award
granted before amendment of the Plan shall not be materially impaired by such
amendment, except with consent of the Participant. An amendment of the Plan
shall be subject to the approval of the Company’s shareholders only to the
extent required by applicable laws, regulations or rules; provided, however,
that an amendment of the Plan to increase the maximum aggregate number of Shares
that may be subject to Awards granted under the Plan shall require the approval
of the Company’s shareholders.

 

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(c) Effect of Termination. No Awards shall be granted under the Plan after the
termination thereof. The termination of the Plan shall not affect any Award
previously granted under the Plan.

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SECTION 20. EXECUTION.

To record the amendment and restatement of the Plan by the Board of Directors,
the Company has caused its authorized officer to execute the same.

 

CALIFORNIA MICRO DEVICES CORPORATION By   /s/ Robert V. Dickinson Name    Robert
V. Dickinson Title   President and CEO

 

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