Exhibit 10(q)

 

STORAGEAPPS INC.

 

2000 STOCK INCENTIVE PLAN

 

(Amended and Restated as of November 21, 2002)

(Amended and Restated as of September 12, 2002)

(Amended and Restated as of March 31, 2001)

 

ARTICLE 1.          ESTABLISHMENT, PURPOSE, AND DURATION

 

1.1           Establishment of the Plan.  StorageApps Inc., formerly known as
RAID Power Service, Inc., a Delaware corporation (hereinafter referred to as the
“Company”), hereby establishes a stock option and incentive award plan known as
the “StorageApps Inc. 2000 Stock Incentive Plan,” formerly knows as the “RAID
Power Service, Inc. 2000 Stock Incentive Plan” (the “Plan”), as set forth in
this document.  The Plan permits the grant of Incentive Stock Options,
Nonqualified Stock Options, Restricted Stock, Stock Awards, Performance Share
Awards and Stock Appreciation Rights.

 

The Plan shall become effective on the date it is approved by the Board of
Directors (the “Effective Date”), subject to approval of the Plan by the
Company’s shareholders within the 12-month period immediately thereafter, and
shall remain in effect as provided in Section 1.3.

 

1.2           Purpose of the Plan.  The purpose of the Plan is to secure for the
Company and its shareholders the benefits of the incentive inherent in stock
ownership in the Company by employees, directors, and consultants or other
persons who perform services for the Company, who are responsible for its future
growth and continued success.  The Plan promotes the success and enhances the
value of the Company by linking the personal interests of Participants (as
defined below) to those of the Company’s shareholders, and by providing
Participants with an incentive for outstanding performance. The Plan is further
intended to provide flexibility to the Company in its ability to motivate,
attract and retain the services of Participants upon whose judgment, interest
and special effort the successful conduct of its operation largely depends.

 

1.3           Duration of the Plan.  The Plan shall commence on the Effective
Date, and shall remain in effect, subject to the right of the Board of Directors
to amend or terminate the Plan at any time pursuant to Article 12, until the day
prior to the tenth (10th) anniversary of the Effective Date.

 

ARTICLE 2.          DEFINITIONS

 

                WHENEVER USED IN THE PLAN, THE FOLLOWING TERMS SHALL HAVE THE
MEANINGS SET FORTH BELOW:

 

 

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(a)                                  “Agreement” means an agreement entered into
by each Participant and the Company, setting forth the terms and provisions
applicable to Awards granted to Participants under this Plan.

 

(b)                                 “Award” means, individually or collectively,
a grant under this Plan of Incentive Stock Options, Nonqualified Stock Options,
Restricted Stock, Stock Awards, Performance Share Awards or Stock Appreciation
Rights.

 

(c)                                  “Beneficial Owner” or “Beneficial
Ownership” shall have the meaning ascribed to such term in Rule 13d-3 of the
Exchange Act.

 

(d)                                 “Board” or “Board of Directors” means the
Board of Directors of the Company.

 

(e)                                  “Cause” means:  (i) a Participant’s
commission of any act which, if prosecuted, would constitute a felony; (ii) a
Participant’s engaging in willful misconduct or any conduct which is in reckless
disregard of the Company’s business or materially injurious to the Company or
its affiliates; (iii) a Participant’s material or habitual neglect of his duties
to the Company; or (iv) a Participant’s failure to perform or observe any
provision of an existing employment agreement with the Company, any Company
policies of general application, from time to time, in effect, or any other
substantial lawful obligation of his employment with the Company, and such
failure has not been cured within two (2) weeks after written notice from the
Company to the Participant.  The existence of “Cause” shall be determined by the
Committee, in its sole discretion.

 

(f)                                    “Code” means the Internal Revenue Code of
1986, as amended from time to time, or any successor act thereto.

 

(g)                                 “Committee” means the committee appointed to
administer the Plan with respect to grants of Awards, as specified in Article 3,
and to perform the functions set forth therein.

 

(h)                                 “Common Stock” means the common stock of the
Company, par value $.01 per share.

 

(i)                                     “Company” means StorageApps, Inc., a
Delaware corporation, or any successor thereto.

 

(j)                                     “Corresponding SAR” means an SAR that is
granted in relation to a particular Option and that can be exercised only upon
the surrender to the Company, unexercised, of that portion of the Option to
which the SAR relates.

 

 

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(k)                                  “Director” means any individual who is a
member of the Board of Directors of the Company.

 

(l)                                     “Disability” shall have the meaning
ascribed to such term in the Company’s long-term disability plan covering the
Participant, or in the absence of such plan, a meaning consistent with Section
22(e)(3) of the Code.

 

(m)                               “Employee” means any employee of the Company
or the Company’s Subsidiaries.  Directors who are not otherwise employed by the
Company or the Company’s Subsidiaries are not considered Employees under this
Plan.

 

(n)                                 “Effective Date” shall have the meaning
ascribed to such term in Section 1.1.

 

(o)                                 “Exchange Act” means the Securities Exchange
Act of 1934, as amended from time to time, or any successor act thereto.

 

(p)                                 “Fair Market Value” shall be determined as
follows:

 

(i)                                     Publicly Traded.  If, on the relevant
date, the Shares are traded on a national or regional securities exchange or on
The Nasdaq Stock Market (“Nasdaq”) and closing sale prices for the Shares are
customarily quoted, on the basis of the closing sale price on the principal
securities exchange on which the Shares may then be traded or, if there is no
such sale on the relevant date, then on the immediately preceding day on which a
sale was reported;

 

(ii)                                  Not Listed but Traded.  If, on the
relevant date, the Shares are not listed on any securities exchange or traded on
Nasdaq, but nevertheless are publicly traded and reported on Nasdaq without
closing sale prices for the Shares being customarily quoted, on the basis of the
mean between the closing bid and asked quotations in such other over-the-counter
market as reported by Nasdaq; but, if there are no bid and asked quotations in
the over-the-counter market as reported by Nasdaq on that date, then the mean
between the closing bid and asked quotations in the over-the-counter market as
reported by Nasdaq on the immediately preceding day such bid and asked prices
were quoted; and

 

(iii)                               Not Traded.  If, on the relevant date, the
Shares are not publicly traded as described in (i) or (ii), on the basis of the

 

 

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good faith determination of the Committee, based on all relevant facts and
circumstances including any recent sales or purchases of the stock.

 

(q)                                 “Incentive Stock Option” or “ISO” means an
option to purchase Shares granted under the Plan which is designated as an
Incentive Stock Option and is intended to meet the requirements of Section 422
of the Code.

 

(r)                                    “Initial Value” means, with respect to a
Corresponding SAR, the Option Price per share of the related Option, and with
respect to an SAR granted independently of an Option, the Fair Market Value of
one share of Common Stock on the date of grant.

 

(s)                                  “Insider” shall mean an Employee who is, on
the relevant date, an officer or a director, or a ten percent (10%) beneficial
owner of any class of the Company’s equity securities that is registered
pursuant to Section 12 of the Exchange Act or any successor provision, as
“officer” and “director” are defined under Section 16 of the Exchange Act.

 

(t)                                    “Named Executive Officer” means a
Participant who, as of the date of vesting and/or payout of an Award is one of
the group of “covered employees,” as defined in the regulations promulgated
under Code Section 162(m), or any successor statute.

 

(u)                                 “Nonqualified Stock Option” or “NQSO” means
an option to purchase Shares granted under the Plan, and which is not intended
to meet the requirements of Code Section 422.

 

(v)                                 “Option” means an Incentive Stock Option or
a Nonqualified Stock Option.

 

(w)                               “Option Price” means the price at which a
Share may be purchased by a Participant pursuant to an Option, as determined by
the Committee.

 

(x)                                   “Participant” means an Employee, a
Director, a consultant or other person who performs services for the Company or
a Subsidiary, who has been determined by the Committee to contribute
significantly to the profits or growth of the Company and who has been granted
an Award under the Plan which is outstanding.

 

(y)                                 “Performance Share Award” means an Award,
which, in accordance with and subject to an Agreement, will entitle the
Participant, or his estate or beneficiary in the event of the

 

 

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Participant’s death, to receive cash, Common Stock or a combination thereof.

 

(z)                                   “Person” shall have the meaning ascribed
to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d)
and 14(d) thereof, including a “group” as defined in 13(d) thereof.

 

(aa)                            “Retirement” shall mean retiring from employment
with the Company or any Subsidiary on or after attaining age 65.

 

(bb)                          “Restricted Stock” means an Award of Common Stock
granted in accordance with the terms of the Plan, and which is nontransferable
and subject to a substantial risk of forfeiture. Shares of Common Stock shall
cease to be Restricted Stock when, in accordance with the terms hereof and the
applicable Agreement, they become transferable and free of substantial risk of
forfeiture.

 

(cc)                            “SAR” means a stock appreciation right that
entitles the holder to receive, with respect to each share of Common Stock
encompassed by the exercise of such SAR, the amount determined by the Committee
and specified in an Agreement. In the absence of such specification, the holder
shall be entitled to receive in cash, with respect to each share of Common Stock
encompassed by the exercise of such SAR, the excess of the Fair Market Value on
the date of exercise over the Initial Value. References to “SARs” include both
Corresponding SARs and SARs granted independently of Options, unless the context
requires otherwise.

 

(dd)                          “Shares” means the shares of Common Stock of the
Company (including any new, additional or different stock or securities
resulting from the changes described in Section 4.3).

 

(ee)                            “Stock Award” means a grant of Shares under the
Plan that is not generally subject to restrictions and pursuant to which a
certificate for the Shares is transferred to the Employee.

 

(ff)                                “Subsidiary” means any company during any
period in which it is a “subsidiary corporation” (as that term is defined in
Code Section 424(f)) with respect to the Company.

 

 

ARTICLE 3. ADMINISTRATION

3.1           The Committee.  The Plan shall be administered by the Board of
Directors or by a Committee designated by the Board from its members, or by any
other committee or subcommittee appointed by the Board that is granted authority
to administer the Plan (the “Committee”). The members of the Committee shall be

 

 

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appointed from time to time by, and shall serve at the discretion of, the Board
of Directors.

 

3.2           Authority of the Committee.  Subject to the provisions of the
Plan, the Committee shall have full power to select the Employees, Directors,
consultants and other persons who perform services for the Company or a
Subsidiary, who are responsible for the future growth and success of the Company
who shall participate in the Plan (who may change from year to year); determine
the size and types of Awards; determine the terms and conditions of Awards in a
manner consistent with the Plan (including conditions on the exercisability of
all or a part of an Option or SAR, restrictions on transferability and vesting
provisions on Restricted Stock or Performance Share Awards and the duration of
the Awards); construe and interpret the Plan and any agreement or instrument
entered into under the Plan; establish, amend or waive rules and regulations for
the Plan’s administration; and (subject to the provisions of Article 12) amend
the terms and conditions of any outstanding Award to the extent such terms and
conditions are within the discretion of the Committee as provided in the Plan,
including accelerating the time any Option or SAR may be exercised and
establishing different terms and conditions relating to the effect of the
termination of employment or other services to the Company. Further, the
committee shall make all other determinations which may be necessary or
advisable in the Committee’s opinion for the administration of the Plan. All
expenses of administering this Plan shall be borne by the Company.

 

3.3           Decisions Binding.  All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all Persons,
including the Company, the shareholders, Employees, Participants and their
estates and beneficiaries.

 

3.4           Delegation of Authority for the Day-to-Day Administration of the
Plan.  Except to the extent prohibited by applicable law or applicable rules of
a stock exchange, the Board or any of its committees as shall be administering
the Plan may delegate to one or more individuals the day-to-day administration
of the Plan and any of the functions assigned to it in this Plan. The delegation
may be revoked at any time.

 

ARTICLE 4.  SHARES SUBJECT TO THE PLAN

 

4.1           Number of Shares.  (a) Subject to adjustment as provided in
Section 4.3, the aggregate number of Shares available for grants of Awards under
the Plan shall not exceed (i) 30,000,000 plus (ii) the additional Shares
described in (b) below, provided, however, that no more than 30,000,000 Shares
of Common Stock may be issued hereunder pursuant to the exercise of ISOs.

 

(b)           As of January 1 of each year, commencing with the year 2001, the
aggregate number of Shares that may be awarded under the Plan shall
automatically increase by a number equal to the lesser of (i) 5% of the total
number of Shares then outstanding or (ii) 5,000,000 Shares. The Shares may, in
the discretion of the Company, be either authorized but unissued Shares or
Shares held as treasury shares, including Shares purchased by the Company,
whether on the market or otherwise. The following

 

 

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rules shall apply for purposes of the determination of the number of Shares
available for grant under the Plan:

 

(1)                                  The grant of an Option, SAR, Stock Award,
Restricted Stock Award or Performance Share Award shall reduce the Shares
available for grant under the Plan by the number of Shares subject to such
Award.

 

(2)                                  While an Option, SAR, Stock Award,
Restricted Stock Award or Performance Share Award is outstanding, it shall be
counted against the authorized pool of Shares, regardless of its vested status.

 

4.2           Lapsed Awards.  If any Award granted under this Plan is canceled,
terminates, expires or lapses for any reason, or if Shares are withheld in
payment of the Option Price or for withholding taxes, any Shares subject to such
Award or that are withheld shall again be available for the grant of an Award
under the Plan. However, in the event that prior to the Award’s cancellation,
termination, expiration or lapse, the holder of the Award at any time received
one or more “benefits of ownership” pursuant to such Award (as defined by the
Securities and Exchange Commission, pursuant to any rule or interpretation
promulgated under Section 16 of the Exchange Act), the Shares subject to such
Award shall not again be made available for regrant under the Plan.

 

4.3           Adjustments In Authorized Shares.  In the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction,
such as an merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Code Section
368) or any partial or complete liquidation of the Company, such adjustment
shall be made in the number and class of Shares which may be delivered under the
Plan, and in the number and class of and/or price of Shares subject to
outstanding Awards granted under the Plan, as may be determined to be
appropriate and equitable by the Committee, in its sole discretion, to prevent
dilution or enlargement of rights; provided, however, that the number of Shares
subject to any Award shall always be a whole number and the Committee shall make
such adjustments as are necessary to insure Awards of whole Shares.

 

ARTICLE 5.  ELIGIBILITY AND PARTICIPATION

 

ANY KEY EMPLOYEE OF THE COMPANY OR ANY SUBSIDIARY, INCLUDING ANY SUCH EMPLOYEE
WHO IS ALSO A DIRECTOR OF THE COMPANY OR ANY SUBSIDIARY, ANY NON-EMPLOYEE
DIRECTOR, AND ANY CONSULTANT OR OTHER PERSON WHO PERFORMS SERVICES OF THE
COMPANY OR A SUBSIDIARY, WHOSE JUDGMENT, INITIATIVE AND EFFORTS CONTRIBUTE OR
MAY BE EXPECTED TO CONTRIBUTE MATERIALLY TO THE SUCCESSFUL PERFORMANCE OF THE
COMPANY OR ANY SUBSIDIARY SHALL BE ELIGIBLE TO RECEIVE AN AWARD UNDER THE PLAN.
IN DETERMINING THE INDIVIDUALS TO WHOM SUCH AN AWARD SHALL BE GRANTED AND THE
NUMBER OF SHARES WHICH MAY BE GRANTED PURSUANT TO THAT AWARD, THE COMMITTEE
SHALL TAKE INTO ACCOUNT THE DUTIES OF THE RESPECTIVE INDIVIDUAL, HIS OR HER
PRESENT AND POTENTIAL CONTRIBUTIONS TO THE SUCCESS OF THE COMPANY OR ANY
SUBSIDIARY, AND SUCH OTHER FACTORS AS THE COMMITTEE SHALL DEEM RELEVANT IN
CONNECTION WITH ACCOMPLISHING THE PURPOSE OF THE PLAN.

 

 

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ARTICLE 6.  STOCK OPTIONS

 

6.1           Grant of Options.  Subject to the terms and provisions of the
Plan, Options may be granted to Participants at any time and from time to time
as shall be determined by the Committee. The Committee shall have discretion in
determining the number of Shares subject to Options granted to each Participant.
An Option may be granted with or without a Corresponding SAR. No Participant may
be granted ISOs (under the Plan and all other incentive stock option plans of
the Company and any Subsidiary) which are first exercisable in any calendar year
for Common Stock having an aggregate Fair Market Value (determined as of the
date an Option is granted) that exceeds $100,000. The preceding annual limit
shall not apply to NQSOs. The Committee may grant a Participant ISOs, NQSOs or a
combination thereof, and may vary such Awards among Participants; provided that
only an Employee may be granted ISOs.

 

6.2           Agreement.  Each Option grant shall be evidenced by an Agreement
that shall specify the Option Price, the duration of the Option, the number of
Shares to which the Option pertains and such other provisions as the Committee
shall determine. The Option Agreement shall further specify whether the Award is
intended to be an ISO or an NQSO. Any portion of an Option that is not
designated as an ISO or otherwise fails or is not qualified as an ISO (even if
designated as an ISO) shall be a NQSO. If the Option is granted in connection
with a Corresponding SAR, the Agreement shall also specify the terms that apply
to the exercise of the Option and Corresponding SAR.

6.3           Option Price.  The Option Price for each grant of an ISO shall not
be less than one hundred percent (100%) of the Fair Market Value of a Share on
the date the Option is granted. In no event, however, shall any Participant who
owns (within the meaning of Section 424(d) of the Code) stock of the Company
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company be eligible to receive an ISO at an Option Price
less than one hundred ten percent (110%) of the Fair Market Value of a share on
the date the ISO is granted. The Option Price for each grant of an NQSO shall be
established by the Committee and, in its discretion, may be less than the Fair
Market Value of a Share on the date the Option is granted.

 

6.4           Duration of Options.  Each Option shall expire at such time as the
Committee shall determine at the time of grant; provided, however, that no
option shall be exercisable later than the tenth (10th) anniversary date of its
grant; provided, further, however, that any ISO granted to any Participant who
at such time owns (within the meaning of Section 424(d) of the Code) stock of
the Company possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company, shall not be exercisable later
than the fifth (5th) anniversary date of its grant.

 

6.5           Exercise of Options.  Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, including conditions related to
the employment of the Participant with the Company or any Subsidiary, which need
not be the same for each grant or for each Participant. Each Option shall be
exercisable for such

 

 

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number of Shares and at such time or times, including periodic installments, as
may be determined by the Committee at the time of the grant. The Committee may
provide in the Agreement for automatic accelerated vesting and other rights upon
the occurrence of a Change in Control of the Company. Except as otherwise
provided in the Agreement, the right to purchase Shares that are exercisable in
periodic installments shall be cumulative so that when the right to purchase any
Shares has accrued, such Shares or any part thereof may be purchased at any time
thereafter until the expiration or termination of the Option. The exercise or
partial exercise of either an Option or its Corresponding SAR shall result in
the termination of the other to the extent of the number of Shares with respect
to which the Option or Corresponding SAR is exercised.

 

6.6           Payment.  Options shall be exercised by the delivery of a written
notice of exercise to the Company, setting forth the number of Shares with
respect to which the Option is to be exercised, accompanied by full payment for
the Shares. The Option Price upon exercise of any Option shall be payable to the
Company in full, either: (a) in cash, (b) cash equivalent approved by the
Committee, (c) if approved by the Committee, by delivering (on a form prescribed
by the Company) a full-recourse promissory note (however, the par value of the
Shares being purchased under the Plan, if newly issued, shall be paid in cash or
cash equivalents), (d) if approved by the Committee, by tendering previously
acquired Shares (or delivering a certification of ownership of such Shares)
having an aggregate Fair Market Value at the time of exercise equal to the total
Option Price (provided that the Shares which are tendered must have been held by
the Participant for six months, if required for accounting purposes, and for the
period required by law, if any, prior to their tender to satisfy the Option
Price), or (e) by a combination of (a), (b), (c) and (d). The Committee also may
allow cashless exercises as permitted under Federal Reserve Board’s Regulation
T, subject to applicable securities law restriction, or by any other means which
the Committee determines to be consistent with the Plan’s purpose and applicable
law. As soon as practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver to the Participant, in the
Participant’s name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Options(s), and may place appropriate
legends on the certificates representing such Shares.

 

6.7           Limited Transferability.  If permitted by the Committee in the
Agreement, a Participant may transfer an Option granted hereunder, including but
not limited to, transfer to members of his or her Immediate Family (as defined
below), to one or more trusts for the benefits of such Immediate Family members,
or to one or more partnerships where such Immediate Family members are the only
partners, if (i) the Participant does not receive any consideration in any form
whatsoever for such transfer, (ii) such transfer is permitted under applicable
lax laws, and (iii) the Participant is an Insider, such transfer is permitted
under Rule 16b-3 of the Exchange Act as in effect from time to time. Any Option
so transferred shall continue to be subject to the same terms and conditions in
the hands of the transferee as were applicable to said Option immediately prior
to the transfer thereof. Any reference in any such Agreement to the employment
by or performance of services for the Company by the Participant shall continue
to refer to the employment of, or performance by, the transferring Participant.
For purposes hereof,

 

 

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“Immediate Family” shall mean the Participant and the Participant’s spouse,
children and grandchildren. Any Option that is granted pursuant to any Agreement
that did not initially expressly allow the transfer of said Option and that has
not been amended to expressly permit such transfer, shall not be transferable by
the Participant other than by will or by the laws of descent and distribution
and such Option thus shall be exercisable in the Participant’s lifetime only by
the Participant.

 

6.8           Shareholder Rights.  No Participant shall have any rights as a
shareholder with respect to Shares subject to his Option until the issuance of
such Shares to the Participant pursuant to the exercise of such Option.

 

6.9           Buyout Provisions. At any time, the Committee may, but shall not
be required to, authorize the Company to offer to buy out for a payment in cash
or Shares an Option previously granted based on such terms and conditions as the
Committee shall establish and communicate to the Participant at the time in
connection with such offer.

 

ARTICLE 7.  STOCK APPRECIATION RIGHTS

 

7.1           Grants of SARs.  The Committee shall designate Participants to
whom SARs are granted, and will specify the number of Shares of Common Stock
subject to each grant. An SAR may be granted with or without a related Option.
All SARs granted under this Plan shall be subject to an Agreement in accordance
with the terms of this Plan. A payment to the Participant upon the exercise of a
Corresponding SAR may not be more than the difference between the Fair Market
Value of the Shares subject to the ISO on the date of grant and the Fair Market
Value of the Shares on the date of exercise of the Corresponding SAR.

 

7.2           Duration of SARs.  The duration of an SAR shall be set forth in
the Agreement as determined by the Committee. An SAR that is granted as a
Corresponding SAR shall have the same duration as the Option to which it
relates. An SAR shall terminate due to the Participant’s termination of
employment at the same time as the date specified in Article 6 with respect to
Options, regardless of whether the SAR was granted in connection with the grant
of an Option.

 

7.3           Exercise of SAR.  An SAR may be exercised in whole at any time or
in part from time to time and at such times and in compliance with such
requirements as the Committee shall determine as set forth in the Agreement;
provided, however, that a Corresponding SAR that is related to an Incentive
Stock Option may be exercised only to the extent that the related Option is
exercisable and only when the Fair Market Value of the Shares exceeds the Option
Price of the related ISO. An SAR granted under this Plan may be exercised with
respect to any number of whole shares less than the full number of shares for
which the SAR could be exercised. A partial exercise of an SAR shall not affect
the right to exercise the SAR from time to time in accordance with this Plan and
the applicable Agreement with respect to the remaining shares subject to the
SAR. The exercise of either an Option or Corresponding SAR shall result in the
termination of the

 

 

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other to the extent of the number of Shares with respect to which the Option or
its Corresponding SAR is exercised.

 

7.4           Determination of Payment of Cash and/or Common Stock Upon Exercise
of SAR.  At the Committee’s discretion, the amount payable as a result of the
exercise of an SAR may be settled in cash, Common Stock, or a combination of
cash and Common Stock. A fractional share shall not be deliverable upon the
exercise of an SAR, but a cash payment shall be made in lieu thereof.

 

7.5           Nontransferability.  Each SAR granted under the Plan shall be
nontransferable except by will or by the laws of descent and distribution.
During the lifetime of the Participant to whom the SAR is granted, the SAR may
be exercised only by the Participant. No right or interest of a Participant in
any SAR shall be liable for, or subject to any lien, obligation or liability of
such Participant. A Corresponding SAR shall be subject to the same restrictions
on transfer as the ISO to which it relates. Notwithstanding the foregoing, if
that Agreement so provides, a Participant may transfer an SAR (other than a
Corresponding SAR that relates to an Incentive Stock Option) under the same
rules and conditions as are set forth in Section 6.7.

 

7.6           Shareholder Rights.  No Participant shall have any rights as a
shareholder with respect to Shares subject to an SAR until the issuance of
Shares (if any) to the Participant pursuant to the exercise of such SAR.

 

7.7           Buyout Provisions. At any time, the Committee may, but shall not
be required to, authorize the Company to offer to buy out for a payment in cash
or Shares a SAR previously granted based on such terms and conditions as the
Committee shall establish and communicate to the Participant in connection with
such offer.

 

ARTICLE 8.  RESTRICTED STOCK; STOCK AWARDS

 

8.1           Grants.  The Committee may from time to time in its discretion
grant Restricted Stock and Stock Awards to Participants and may determine the
number of Shares of Restricted Stock or Stock Awards to be granted. The
Committee shall determine the terms and conditions of, and the amount of
payment, if any, to be made by the Employee for such Shares or Restricted Stock.
A grant of Restricted Stock may, in addition to other conditions, require the
Participant to pay for such Shares of Restricted Stock, but the Committee may
establish a price below Fair Market Value at which the Participant can purchase
the Shares of Restricted Stock. Each grant of Restricted Stock shall be
evidenced by an Agreement containing terms and conditions not inconsistent with
the Plan as the Committee shall determine to be appropriate in its sole
discretion.

 

8.2           Restricted Period; Lapse of Restrictions.  At the time a grant of
Restricted Stock is made, the Committee shall establish a period or periods of
time (the “Restricted Period”) applicable to such grant which, unless the
Committee otherwise provides, shall not be less than one year. Subject to the
other provisions of this Article 8, at the end of the Restricted Period all
restrictions shall lapse and the Restricted Stock

 

 

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shall vest in the Participant. At the time a grant is made, the Committee may,
in its discretion, prescribe conditions for the incremental lapse of
restrictions during the Restricted Period and for the lapse or termination of
restrictions upon the occurrence of other conditions in addition to or other
than the expiration of the Restricted Period with respect to all or any portion
of the Restricted Stock. Such conditions may, but need not, include the
following:

 

(a)                                  The death, Disability or Retirement of the
Employee to whom Restricted Stock is granted, or

 

(b)                                 The occurrence of a Change in Control (as
defined in Section 11.1)

 

The Committee may also, in its discretion, shorten or terminate the Restricted
Period, or waive any conditions for the lapse or termination of restrictions
with respect to all or any portion of the Restricted Stock at any time after the
date the grant is made.

 

8.3           Rights of Holder; Limitations Thereon.  Upon a grant of Restricted
Stock, a stock certificate (or certificates) representing the number of Shares
of Restricted Stock granted to the Participant shall be registered in the
Participant’s name and shall be held in custody by the Company or a bank
selected by the Committee for the Participant’s account. Following such
registration, the Participant shall have the rights and privileges of a
shareholder as to such Restricted Stock, including the right to receive
dividends, if and when declared by the Board of Directors, and to vote such
Restricted Stock, except that the right to receive cash dividends shall be the
right to receive such dividends either in cash currently or by payment in
Restricted Stock, as the Committee shall determine, and except further that,
following restrictions shall apply:

 

(a)                                  The Participant shall not be entitled to
delivery of a certificate until the expiration or termination of the Restricted
Period for the Shares represented by such certificate and the satisfaction of
any and all other conditions prescribed by the Committee;

 

(b)                                 None of the shares of Restricted Stock may
be sold, transferred, assigned, pledged, or otherwise encumbered or disposed of
during the Restricted Period and until the satisfaction of any and all other
conditions prescribed by the Committee; and

 

(c)                                  All of the Shares of Restricted Stock that
have not vested shall be forfeited and all rights of the Participant to such
Shares of Restricted Stock shall terminate without further obligation on the
part of the Company, unless the Participant has remained an employee of (or
non-Employee Director of or active consultant providing services to) the Company
or any of its Subsidiaries, until the expiration or termination of the
Restricted Period and the satisfaction of any and all other conditions
prescribed by the Committee applicable to such Shares of Restricted Stock. Upon
the

 

 

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forfeiture of any Shares of Restricted Stock, such forfeited Shares shall be
transferred to the Company without further action by the Participant and shall,
in accordance with Section 4.2, again be available for grant under the Plan. If
the Participant paid any amount for the Shares of Restricted Stock that are
forfeited, the Company shall pay the Participant the lesser of the Fair Market
Value of the Shares on the date they are forfeited or the amount paid by the
Participant.

 

With respect to any Shares received as a result of adjustments under Section 4.3
hereof and any Shares received with respect to cash dividends declared on
Restricted Stock, the Participant shall have the same rights and privileges, and
be subject to the same restrictions, as are set forth in this Article 8.

 

8.4           Delivery of Unrestricted Shares.  Upon the expiration or
termination of the Restricted Period for any Shares of Restricted Stock and the
satisfaction of any and all other conditions prescribed by the Committee, the
restrictions applicable to such Shares of Restricted Stock shall lapse and a
stock certificate for the number of Shares of Restricted Stock with respect to
which the restrictions have lapsed shall be delivered, free of all such
restrictions except any that may be imposed by law, to the holder of the
Restricted Stock. The Company shall not be required to deliver any fractional
Share but will pay, in lieu thereof, the Fair Market Value (determined as of the
date the restrictions lapse) of such fractional Share to the holder thereof.
Concurrently with the delivery of a certificate for Restricted Sock, the holder
shall be required to pay an amount necessary to satisfy any applicable federal,
state and local tax requirements as set out in Article 13 below.

 

8.5           Nonassignability of Restricted Stock.  Unless the Committee
provides otherwise in the Agreement, no grant of, nor any right or interest of a
Participant in or to, any Restricted Stock, or in any instrument evidencing any
grant of Restricted Stock under the Plan, may be assigned, encumbered or
transferred except, in the event of the death of a Participant, by will or the
laws of descent and distribution.

 

8.6           Buyout Provisions. At any time, the Committee may, but shall not
be required to, authorize the Company to offer to buy out for a payment in cash
or Shares Restricted Stock previously granted based on such terms and conditions
as the Committee shall establish and communicate to the Participant in
connection with such offer.

 

ARTICLE 9.  PERFORMANCE SHARE AWARDS

 

9.1           Award.  The Committee may designate Participants to whom
Performance Share Awards will be granted from time to time for no consideration
and specify the number of shares of Common Stock covered by the Award.

 

9.2           Earning the Award.  A Performance Stock Award, or portion thereof,
will be earned, and the Participant will be entitled to receive Common Stock, a

 

 

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cash payment or a combination thereof, only upon the achievement by the
Participant, the Company, or a Subsidiary of such performance objectives as the
Committee, in its discretion, shall prescribe on the date of grant. To the
extent required, the performance objectives applicable to awards to Named
Executive Officers intended to qualify under Code Section 162(m) shall be
selected from among the following measures: return on equity or assets, earning
per share, total earnings, earnings growth, return on capital, profit before
taxes, profit after taxes, economic value added and increase in Fair Market
Value of the Shares. The determination as to whether such objectives have been
achieved shall be made by the Committee, and such determination shall be
conclusive; provided, however, that the period in which such performance is
measured shall be at least one year.

 

The Committee may in determining whether performance targets have been met
adjust the Company’s financial results to exclude the effect of unusual charges
or income items or other events, including acquisitions or dispositions of
businesses or assets, restructurings, reductions in force, currency fluctuations
or changes in accounting, which are distortive of financial results (either on a
segment or consolidated basis); provided, that for purposes of determining the
Performance Share Awards of Named Executive Officers, the Committee shall
exclude unusual items whose exclusion has the effect of increasing income or
earnings if such items constitute “extraordinary items” under generally accepted
accounting principles or are significant unusual items. In addition, the
Committee will adjust its calculations to exclude the effect on financial
results of changes in the Code or other tax laws, or the regulations relating
thereto.

 

9.3           Payment.  In the discretion of the Committee, the amount payable
when a Performance Share Award is earned may be settled in cash, by the grant of
Common Stock or a combination of cash and Common Stock. The aggregate Fair
Market Value of the Common Stock received by the Participant pursuant to a
Performance Share Award, together with any cash paid to the Participant, shall
be equal to the aggregate Fair Market Value, on the date the Performance Shares
are earned, of the number of Shares of Common Stock equal to each Performance
Share earned. A fractional Share will not be deliverable when a Performance
Share Award is earned, but a cash payment will be made in lieu thereof.

 

9.4           Shareholder Rights.  No Participant shall have, as a result of
receiving a Performance Share Award, any rights as a shareholder until and to
the extent that the Performance Shares are earned and Common Stock is
transferred to such Participant. If the Agreement so provides, a Participant may
receive a cash payment equal to the dividends that would have been payable with
respect to the number of Shares of Common Stock covered by the Award between (a)
the date that the Performance Shares are awarded and (b) the date that a
transfer of Common Stock to the Participant, cash settlement, or combination
thereof is made pursuant to the Performance Share Award. A Participant may not
sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of a
Performance Share Award or the right to receive Common Stock thereunder other
than by will or the laws of descent and distribution. After a Performance Share
Award is

 

 

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earned and paid in Common Stock, a Participant will have all the rights of a
shareholder with respect to the Common Stock so awarded.

 

ARTICLE 10.  RIGHTS OF EMPLOYEES

 

10.1         Employment.  Nothing in the Plan shall interfere with or limit in
any way the right of the Company or a Subsidiary to terminate any Participant’s
employment by, or performance of services for, the Company at any time, nor
confer upon any Participant any right to continue in the employ or service of
the Company or a Subsidiary. For purposes of the Plan, transfer of employment of
a Participant between the Company and any one of its Subsidiaries (or between
Subsidiaries) shall not be deemed a termination of employment.

 

10.2         Participation.  No Employee shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.

 

ARTICLE 11.  CHANGE IN CONTROL

 

11.1         Definition.  For purposes of the Plan, a “Change in Control” means
any of the following events:

 

(a)                                  The acquisition (other than from the
Company) by any Person of Beneficial Ownership of fifty percent (50%) or more of
the combined voting power of the Company’s then outstanding voting securities;
provided, however, that for purposes of this Section 11.1, Person shall not
include any person who on the date hereof owns 25% or more of the Company’s
outstanding securities, and a Change in Control shall not be deemed to occur
solely because fifty percent (50%) or more of the combined voting power of the
Company’s then outstanding securities is acquired by (i) a trustee or other
fiduciary holding securities under one or more employee benefits plans
maintained by the Company or any of its subsidiaries, or (ii) any corporation,
which, immediately prior to such acquisition, is owned directly or indirectly by
the shareholders of the Company in the same proportion as their ownership of
stock in the Company immediately prior to such acquisition.

 

(b)                                 Approval by shareholders of the Company of
(1) a merger or consolidation involving the Company if the shareholders of the
Company, immediately before such merger or consolidation do not, as a result of
such merger or consolidation, own, directly or indirectly, more than fifty
percent (50%) of the combined voting power of the then outstanding voting
securities of the corporation resulting from such merger or consolidation in
substantially the

 

 

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same proportion as their ownership of the combined voting power of the voting
securities of the Company outstanding immediately before such merger or
consolidation, or (2) a complete liquidation or dissolution of the Company or an
agreement for the sale or other disposition of all or substantially all of the
assets of the Company (other than in an initial public offering of the Company’s
Common Stock.

 

(c)                                  When, during any period of 24 consecutive
months, the individuals who, at the beginning of such period, constitute the
Board (the “Incumbent Directors”) cease for any reason other than death to
constitute at least a majority thereof, provided that a director who was not a
director at the beginning of such 24-month period shall be deemed to have
satisfied such 24-month requirement (and be an Incumbent Director) if such
director was elected by, or on the recommendation of or with the approval of, at
least two-thirds of the directors who then qualified as Incumbent Directors
either actually (because they were directors at the beginning of such 24-month
period) or by prior operation of this paragraph (c).

 

11.2         Certain Parachute Payments:  A payment that would otherwise
constitute a “parachute payment” under Section 280G(b)(2) of the Code shall not,
to the extent permitted by such Section 280G and the regulations thereunder, be
considered a parachute payment if such payment is approved by a shareholder vote
of more than 75% of the voting power of all outstanding Shares of the Company.

 

ARTICLE 12.  AMENDMENT, MODIFICATION AND TERMINATION

 

12.1         Amendment, Modification and Termination.  The Board may, at any
time and from time to time, alter, amend, suspend or terminate the Plan in whole
or in part; provided, that, unless approved by the holders of a majority of the
total number of Shares of the Company represented and voted at a meeting at
which a quorum is present, no amendment shall be made to the Plan if such
amendment would (a) materially modify the eligibility requirements provided in
Article 5; (b) increase the total number of Shares (except as provided in
Section 4.3) which may be granted under the Plan; (c) extend the term of the
Plan; or (d) amend the Plan in any other manner which the Board, in its
discretion, determines should become effective only if approved by the
shareholders even if such shareholder approval is not expressly required by the
Plan or by law.

 

12.2         Awards Previously Granted.  No termination, amendment or
modification of the Plan shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the
Participant holding such Award. The Committee shall, with the written consent of
the Participant holding such Award, have the authority to cancel Awards
outstanding and grant replacement Awards therefore.

 

 

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12.3       Compliance With Code Section 162(m).  At all times when the Committee
determines that compliance with Code Section 162(m) is required or desired, all
Awards granted under this Plan to Named Executive Officers shall comply with the
requirements of Code Section 162(m). In addition, in the event that changes are
made to Code Section 162(m) to permit greater flexibility with respect to any
Award or Awards under the Plan, the Committee may, subject to this Article 12,
make any adjustments it deem appropriate.

 

ARTICLE 13.  WITHHOLDING

 

13.1       Tax Withholding.  The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state and local taxes (including the
Participant’s FICA obligation) required by law to be withheld with respect to
any taxable event arising in connection with an Award under this Plan.

 

13.2       Share Withholding.  With respect to withholding required upon the
exercise of Options, or upon any other taxable event arising as a result of
Awards granted hereunder which are to be paid in the form of Shares,
Participants may elect, subject to the approval of the Committee, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date the tax is to be determined equal
to the minimum statutory total tax which could be imposed on the transaction.
All elections shall be irrevocable, made in writing, signed by the Participant,
and elections by Insiders shall additionally comply with all legal requirements
applicable to Share transactions by such Participants.

 

ARTICLE 14.  INDEMNIFICATION

 

                Each person who is or shall have been a member of the Committee,
or the Board, shall be indemnified and held harmless by the Company against and
from any loss, cost, liability or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company’s approval, or paid by him in satisfaction of any judgment in
any such action, suit, or proceeding against him, provided he shall give the
Company an opportunity, at its own expense, to handle and defend the same before
he undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall be in addition to any other rights of indemnification to
which such person may be entitled under the Company’s Articles of Incorporation
or Bylaws, as a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.

 

 

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ARTICLE 15.  SUCCESSORS

 

                All obligations of the Company under the Plan, with respect to
Awards granted hereunder, shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation or otherwise, of all or substantially all of the
business and/or assets of the Company.

 

ARTICLE 16.  LEGAL CONSTRUCTION

 

16.1       Gender and Number.  Except when otherwise indicated by the context,
any masculine term used herein shall also include the feminine; the plural shall
include the singular and the singular shall include the plural.

 

16.2       Severability.  If any provision of the Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.

 

16.3       Requirements of Law.  The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

 

16.4       Regulatory Approvals and Listing.  The Company shall not be required
to issue any certificate or certificates for Shares under the Plan prior to (i)
obtaining any approval from any governmental agency which the Company shall, in
its discretion, determine to be necessary or advisable, (ii) the admission of
such shares to listing on any national securities exchange or Nasdaq on which
the Company’s Shares may be listed, and (iii) the completion of any registration
or other qualification of such Shares under any state or federal law or ruling
or regulation of any governmental body which the Company shall, in its sole
discretion, determine to be necessary or advisable.

 

                Notwithstanding any other provision set forth in the Plan, if
required by the then-current Section 16 of the Exchange Act, any “derivative
security” or “equity security” offered pursuant to the Plan to any Insider may
not be sold or transferred for at least six (6) months after the date of grant
of such Award. The terms “equity security” and “derivative security” shall have
the meanings ascribed to them in the then-current Rule 16(a) under the Exchange
Act.

 

16.5         Securities Law Compliance.  With respect to Insiders, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Exchange Act. To the extent any provision of
the Plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.

 

16.6         Governing Law.  To the extent not preempted by Federal law, the
Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Delaware.

 

 

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