Exhibit 10.1

 

IMPAC MORTGAGE HOLDINGS, INC.

 

OMNIBUS INCENTIVE PLAN

 

Effective July 20, 2010

 

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IMPAC MORTGAGE HOLDINGS, INC.

OMNIBUS INCENTIVE PLAN

 

ARTICLE I

 

PURPOSE AND ADOPTION OF THE PLAN

 

1.01         Purpose.  The purpose of the Impac Mortgage Holdings, Inc. Omnibus
Incentive Plan (as amended from time to time, the “Plan”) is to assist in
attracting and retaining highly competent employees, directors and consultants,
to act as an incentive in motivating selected employees, directors and
consultants of the Company and its Affiliates to achieve long-term corporate
objectives and to enable stock-based and cash-based incentive awards to qualify
as performance-based compensation for purposes of the tax deduction limitations
under Section 162(m) of the Code.

 

1.02         Adoption and Term.  The Plan shall be effective on July 20, 2010
upon and otherwise subject to approval of the stockholders of the Company (the
“Effective Date”).  The Plan shall remain in effect until the tenth anniversary
of the Effective Date, or until terminated by action of the Board, whichever
occurs sooner.

 

1.03         Assumption of Outstanding Awards under Prior Plans.  As of the
Effective Date, the Prior Plans of the Company shall be frozen and no new awards
shall be made under such Prior Plans.  Further, all awards outstanding under the
Prior Plans as of the Effective Date shall be assumed by this Plan and
thereafter deemed to be Awards granted and outstanding under this Plan;
provided, that such assumed awards shall continue to be subject to the same
terms and conditions as set forth in the applicable Award Agreement, except that
references in such Award Agreements to the “Plan” shall be deemed to refer to
this Plan and references to “Deferred Stock” shall be deemed to refer to
Restricted Stock Units.

 

ARTICLE II

 

DEFINITIONS

 

For the purpose of this Plan, capitalized terms shall have the following
meanings:

 

2.01         Affiliate means an entity in which, directly or indirectly through
one or more intermediaries, the Company has at least a fifty percent (50%)
ownership interest or, where permissible under Section 409A of the Code, at
least a twenty percent (20%) ownership interest; provided, however, for purposes
of any grant of an Incentive Stock Option, “Affiliate” means a corporation
which, for purposes of Section 424 of the Code, is a parent or subsidiary of the
Company, directly or indirectly.

 

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2.02         Award means any one or a combination of Non-Qualified Stock Options
or Incentive Stock Options described in Article VI, Stock Appreciation Rights
described in Article VI, Restricted Shares or Restricted Stock Units described
in Article VII, Performance Awards described in Article VIII, other stock-based
Awards described in Article IX, short-term cash incentive Awards described in
Article X or any other award made under the terms of the Plan.

 

2.03         Award Agreement means a written agreement between the Company and a
Participant or a written acknowledgment from the Company to a Participant
specifically setting forth the terms and conditions of an Award granted under
the Plan.

 

2.04         Award Period means, with respect to an Award, the period of time,
if any, set forth in the Award Agreement during which specified target
performance goals must be achieved or other conditions set forth in the Award
Agreement must be satisfied.

 

2.05         Beneficiary means an individual, trust or estate who or which, by a
written designation of the Participant filed with the Company, or if no such
written designation is filed, by operation of law, succeeds to the rights and
obligations of the Participant under the Plan and the Award Agreement upon the
Participant’s death.

 

2.06         Board means the Board of Directors of the Company.

 

2.07         Change in Control means, and shall be deemed to have occurred upon
the occurrence of, any one of the following events, unless an Award Agreement
specifically provides for a different definition of Change in Control:

 

(a)           Any “person” (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act (other than the Company; any trustee or other fiduciary holding
securities under an employee benefit plan of the Company; or any company owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of the Common Stock of the Company) is or
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person or any securities acquired directly
from the Company or its Affiliates) representing 30% or more of the combined
voting power of the Company’s then outstanding securities; or

 

(b)           during any period of two consecutive years (not including any
period prior to the Effective Date), individuals who at the beginning of such
period constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in clause (a), (c) or (d) of this Section 2.07)
whose election by the Board or nomination for election by the Company’s
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof; or

 

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(c)           the consummation of a Merger of the Company with any other
corporation, other than (i) a Merger which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, at
least 75% of the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such Merger, or (ii) a
Merger effected to implement a recapitalization of the Company (or similar
transaction) in which no person acquires more than 50% of the combined voting
power of the Company’s then outstanding securities;

 

(d)           the consummation of any sale, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all the
assets of the Company to an unrelated party; or

 

(e)           the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company.

 

2.08         Code means the Internal Revenue Code of 1986, as amended. 
References to a section of the Code shall include that section and any
comparable section or sections of any future legislation that amends,
supplements or supersedes said section.

 

2.09         Committee means the Compensation Committee of the Board.

 

2.10         Common Stock means the common stock of the Company, par value $0.01
per share.

 

2.11         Company means Impac Mortgage Holdings, Inc., a Maryland
corporation, and its successors.

 

2.12         Date of Grant means the date designated by the Committee as the
date as of which it grants an Award, which shall not be earlier than the date on
which the Committee approves the granting of such Award.

 

2.13         Disability means permanent and total disability as determined under
the Company’s disability program or policy, or if no disability program or
policy exists, then any physical or mental disability that renders a Participant
unable perform services for the Company in the capacity for which the
Participant served immediately prior to such disability and such disability is
reasonably expected to last for at least twelve (12) months.

 

2.14         Dividend Equivalent Account means a bookkeeping account in
accordance with Section 11.17 and related to an Award that is credited with the
amount of any cash dividends or stock distributions that would be payable with
respect to the shares of Common Stock subject to such Awards had such shares
been outstanding shares of Common Stock.

 

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2.15         Exchange Act means the Securities Exchange Act of 1934, as amended.

 

2.16         Exercise Price with respect to Options, the amount established by
the Committee in the Award Agreement in accordance with Section 6.01(b) which is
required to purchase each share of Common Stock upon exercise of the Option, or
with respect to a Stock Appreciation Right, the amount established by the
Committee in the Award Agreement in accordance with Section 6.02(b) which is to
be subtracted from the Fair Market Value on the date of exercise in order to
determine the amount of the payment to be made to the Participant.

 

2.17         Fair Market Value of the Common Stock means: the closing sales
price of the Common Stock on the applicable date, or if no sale of stock has
been recorded on such day, then on the next preceding day on which a sale was so
made.  In the event the Common Stock is not admitted to trade on a securities
exchange, the Fair Market Value as of any applicable date shall be as determined
in good faith by the Committee (but in any event not less than “fair market
value” within the meaning of Section 409A of the Code, and any regulations and
other guidance thereunder).  For purposes of this definition, when determining
the Fair Market Value for the grant of an Award, “applicable date” means the
date of grant of the Award.

 

2.18         Incentive Stock Option means a stock option within the meaning of
Section 422 of the Code.

 

2.19         Merger means any merger, reorganization, consolidation, exchange,
transfer of assets or other transaction having similar effect involving the
Company.

 

2.20         Non-Qualified Stock Option means a stock option which is not an
Incentive Stock Option.

 

2.21         Non-Vested Share means shares of Common Stock issued to a
Participant in respect of the non-vested portion of an Option in the event of
the early exercise of such Participant’s Options pursuant to such Participant’s
Award Agreement, as permitted in Section 6.06 below.

 

2.22         Options means all Non-Qualified Stock Options and Incentive Stock
Options granted at any time under the Plan.

 

2.23         Outstanding Common Stock means, at any time, the issued and
outstanding shares of Common Stock.

 

2.24         Participant means a person designated to receive an Award under the
Plan in accordance with Section 5.01.

 

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2.25         Performance Awards means Awards granted in accordance with
Article VIII.

 

2.26         Performance Goals means operating income, operating profit
(earnings from continuing operations before interest and taxes), earnings per
share, return on investment or working capital, return on stockholders’ equity,
economic value added (the amount, if any, by which net operating profit after
tax exceeds a reference cost of capital), Adjusted Net Earnings (as defined
below), net earnings (loss) attributable to common stockholders, stock price any
one of which may be measured with respect to the Company or any one or more of
its Affiliates, divisions, units and either in absolute terms or as compared to
another company or companies, and quantifiable, objective measures of individual
performance relevant to the particular individual’s job responsibilities

 

“Adjusted Net Earnings” means net earnings (loss) attributable to common
stockholders as reported in the Company’s periodic reports filed with the
Securities and Exchange Commission, provided that such amount shall be adjusted
by reversing the following, to the extent such adjustments were made in
calculating such net earnings (loss) attributable to common stockholders:

 

(a) any accrual already made with respect to the annual bonus, special bonus, or
incentive bonus applicable to such person:

 

(b) any adjustment relating to change in fair value of net trust assets;

 

(c) any adjustment relating to change in fair value of long term debt;

 

(d) any adjustment relating to noncash level yield long term debt;

 

(e) any charge relating to amortization of deferred charges; and

 

(f) any adjustment relating to the following items within earnings of
discontinued operations: (1) lower of cost or market and (2) repurchase
liability provision.

 

2.27         Plan has the meaning given to such term in Section 1.01.

 

2.28         Prior Plans means the Company’s 1995 Stock Option, Deferred Stock
and Restricted Stock Plan, as amended, and the Company’s 2001 Stock Option,
Deferred Stock and Restricted Stock Plan, as amended.

 

2.29         Restricted Shares means Common Stock subject to restrictions
imposed in connection with Awards granted under Article VII.

 

2.30         Restricted Stock Unit means a unit representing the right to
receive Common Stock or the value thereof in the future subject to restrictions
imposed in connection with Awards granted under Article VII.

 

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2.31         Rule 16b-3 means Rule 16b-3 promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act, as the same may be
amended from time to time, and any successor rule.

 

2.32         Stock Appreciation Rights means awards granted in accordance with
Article VI.

 

2.33         Termination of Service means the voluntary or involuntary
termination of a Participant’s service as an employee, director or consultant
with the Company or an Affiliate for any reason, including death, disability,
retirement or as the result of the divestiture of the Participant’s employer or
any similar transaction in which the Participant’s employer ceases to be the
Company or one of its Affiliates.  Whether entering military or other government
service shall constitute Termination of Service, or whether and when a
Termination of Service shall occur as a result of disability, shall be
determined in each case by the Committee in its sole discretion.

 

ARTICLE III

 

ADMINISTRATION

 

3.01         Committee.

 

(a)           Duties and Authority.  The Plan shall be administered by the
Committee and the Committee shall have exclusive and final authority in each
determination, interpretation or other action affecting the Plan and its
Participants.  The Committee shall have the sole discretionary authority to
interpret the Plan, to establish and modify administrative rules for the Plan,
to impose such conditions and restrictions on Awards as it determines
appropriate, and to make all factual determinations with respect to and take
such steps in connection with the Plan and Awards granted hereunder as it may
deem necessary or advisable.  The Committee shall not, however, have or exercise
any discretion that would disqualify amounts payable under Article X as
performance-based compensation for purposes of Section 162(m) of the Code.  The
Committee may delegate such of its powers and authority under the Plan as it
deems appropriate to a subcommittee of the Committee or designated officers or
employees of the Company.  In addition, the full Board may exercise any of the
powers and authority of the Committee under the Plan. In the event of such
delegation of authority or exercise of authority by the Board, references in the
Plan to the Committee shall be deemed to refer, as appropriate, to the delegate
of the Committee or the Board.  To the extent applicable, actions taken by the
Committee or any subcommittee thereof, and any delegation by the Committee to
designated officers or employees, under this Section 3.01 shall comply with
Section 16(b) of the Exchange Act, the performance-based provisions of
Section 162(m) of the Code, and the regulations promulgated under each of such
statutory provisions, or the respective successors to such statutory provisions
or regulations, as in effect from time to time.

 

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(b)           Indemnification.  Each person who is or shall have been a member
of the Board or the Committee, or an officer or employee of the Company to whom
authority was delegated in accordance with the Plan, 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 such individual 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 or her in satisfaction of any judgment in any such
action, suit, or proceeding against him or her, provided he or she shall give
the Company an opportunity, at its own expense, to handle and defend the same
before he or she undertakes to handle and defend it on his or her own behalf;
provided, however, that the foregoing indemnification shall not apply to any
loss, cost, liability, or expense that is a result of his or her own willful
misconduct.

 

ARTICLE IV

 

SHARES

 

4.01         Number of Shares Issuable.  The total number of shares of Common
Stock authorized to be issued under the Plan shall be 1,730,985 which consists
of (i) 1,280,585 shares allocated to outstanding Options granted under the Prior
Plans and being assumed by this Plan (the “Assumed Option Shares”), and
(ii) 450,000 shares of Common Stock reserved for future grants under this Plan. 
Shares of Common Stock underlying Awards issued under Articles VII, VIII and IX
of this Plan shall be charged as 2.0 shares against the number of shares of
Common Stock available for the grant of Awards hereunder.  The foregoing share
limits shall be subject to adjustment in accordance with Section 11.07.  The
shares to be offered under the Plan shall be authorized and unissued Common
Stock, or issued Common Stock that shall have been reacquired by the Company.

 

4.02         Shares Subject to Terminated Awards.  The Assumed Option Shares
shall only be available for issuance upon exercise of an Option granted under
the Prior Plans and assumed by this Plan and none of the Assumed Option Shares
shall be available for grants of new Options or other Awards under this Plan,
even if the assumed Options are forfeited, canceled or otherwise terminated
without issuance of any shares of Common Stock.  Except as provided in the
preceding sentence, Common Stock covered by any unexercised portions of
terminated or forfeited Options (including canceled Options) granted under the
Plan or any predecessor employee stock plan of the Company, Restricted Stock or
Restricted Stock Units (whether granted under this Plan or any predecessor
employee stock plan) that are forfeited or terminated for any reason prior to
the date that the restrictions on such Awards would otherwise have lapsed, other
stock-based Awards that are forfeited or terminated for any reason as provided
under the Plan, and Common Stock subject to any Awards that are otherwise
surrendered by the Participant may again be subject to new Awards under the
Plan.  Further, any Award settled in cash shall not be counted as shares of
Common Stock for any purpose under the Plan.

 

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ARTICLE V

 

PARTICIPATION

 

5.01         Eligible Participants.  Participants in the Plan shall be such
employees, directors and consultants of the Company and its Affiliates as the
Committee, in its sole discretion, may designate from time to time.  The
Committee’s designation of a Participant in any year shall not require the
Committee to designate such person to receive Awards or grants in any other
year.  The designation of a Participant to receive Awards or grants under one
portion of the Plan does not require the Committee to include such Participant
under other portions of the Plan.  The Committee shall consider such factors as
it deems pertinent in selecting Participants and in determining the type and
amount of their respective Awards.  Subject to adjustment in accordance with
Section 11.07, no Participant shall be granted Awards in any calendar year in
respect of more than 450,000 shares of Common Stock (whether through grants of
Options or Stock Appreciation Rights or other Awards of Common Stock or rights
with respect thereto) or cash-based Awards for more than $5,000,000; provided,
the Committee may grant Awards to a Participant in excess of these annual limits
if the Committee expressly determines that a particular Award shall not be
designed to qualify as “performance-based compensation” as defined under
Section 162(m) of the Code and the applicable treasury regulations thereunder.

 

ARTICLE VI

 

STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

 

6.01         Option Awards.

 

(a)           Grant of Options.  The Committee may grant, to such Participants
as the Committee may select, Options entitling the Participant to purchase
shares of Common Stock from the Company in such number, at such price, and on
such terms and subject to such conditions, not inconsistent with the terms of
this Plan, as may be established by the Committee.  The terms of any Option
granted under this Plan shall be set forth in an Award Agreement.

 

(b)           Exercise Price of Options.  The Exercise Price of each share of
Common Stock upon exercise of any Option granted under the Plan shall not be
less than 100% of the Fair Market Value of the Common Stock on the Date of
Grant; provided, however, that the Committee shall have discretion, with respect
to a Non-Qualified Stock Option, to establish an Exercise Price at less than the
Fair Market Value on the Date of Grant to the extent that such Option is
designed to comply with the requirements of Section 409A of the Code.

 

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(c)           Designation of Options.  The Committee shall designate, at the
time of the grant of each Option, the Option as an Incentive Stock Option or a
Non-Qualified Stock Option; provided, however, that an Option may be designated
as an Incentive Stock Option only if the applicable Participant is an employee
of the Company on the Date of Grant.

 

(d)           Special Incentive Stock Option Rules.  To the extent that the
aggregate Fair Market Value (determined as of the time the Option is granted) of
the shares of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by a Participant during any calendar year (under
all plans of the Company and its parent and subsidiary corporations) exceeds
$100,000, such Incentive Stock Options shall constitute Non-Qualified Stock
Options.  For purposes of this Section 6.01(d), Incentive Stock Options shall be
taken into account in the order in which they were granted.  If pursuant to the
above, an Incentive Stock Option is treated as an Incentive Stock Option in part
and a Non-Qualified Stock Option in part, the Participant may designate at the
time of exercise which portion shall be deemed to be exercised, and in the
absence of such express designation in writing, the portion of the Option
treated as an Incentive Stock Option shall be deemed to be exercised first. 
Notwithstanding any other provision of the Plan to the contrary, the Exercise
Price of each Incentive Stock Option shall be equal to or greater than the Fair
Market Value of the Common Stock subject to the Incentive Stock Option as of the
Date of Grant of the Incentive Stock Option; provided, however, that no
Incentive Stock Option shall be granted to any person who, at the time the
Option is granted, owns stock (including stock owned by application of the
constructive ownership rules in Section 424(d) of the Code) possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company, unless at the time the Incentive Stock Option is granted the
Exercise Price of the Option is at least one hundred ten percent (110%) of the
Fair Market Value of the Common Stock subject to the Incentive Stock Option and
the Incentive Stock Option, by its terms, is not exercisable for more than five
years from the Date of Grant.

 

(e)           Rights As a Stockholder.  A Participant or a transferee of an
Option pursuant to Section 11.04 shall have no rights as a stockholder with
respect to Common Stock covered by an Option until the Participant or transferee
shall have become the holder of record of any such shares, and no adjustment
shall be made for dividends in cash or other property or distributions or other
rights with respect to any such Common Stock for which the record date is prior
to the date on which the Participant or a transferee of the Option shall have
become the holder of record of any such shares covered by the Option; provided,
however, that Participants are entitled to share adjustments to reflect capital
changes under Section 11.07.

 

6.02         Stock Appreciation Rights.

 

(a)           Stock Appreciation Right Awards.  The Committee is authorized to
grant to any Participant one or more Stock Appreciation Rights.  Upon exercise
of a Stock Appreciation Right with respect to a share of Common Stock, the
Participant shall be entitled to receive an amount equal to the excess, if any,
of (i) the Fair Market Value of a share of Common Stock on the date of exercise
over (ii) the Exercise Price of such Stock Appreciation Right established in the
Award Agreement, which amount shall be payable as provided in Section 6.02(c).

 

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(b)           Exercise Price.  The Exercise Price of each share of Common Stock
upon exercise of any Stock Appreciation Right granted under the Plan shall not
be less than 100% of the Fair Market Value of the Common Stock on the Date of
Grant; provided, however, that the Committee shall have discretion to establish
an Exercise Price at less than the Fair Market Value on the Date of Grant to the
extent that such Stock Appreciation Right is designed to comply with the
requirements of Section 409A of the Code.

 

(c)           Payment of Incremental Value.  Any payment which may become due
from the Company by reason of a Participant’s exercise of a Stock Appreciation
Right may be paid to the Participant as determined by the Committee (i) all in
cash, (ii) all in Common Stock, or (iii) in any combination of cash and Common
Stock.  In the event that all or a portion of the payment is made in Common
Stock, the number of shares of Common Stock delivered in satisfaction of such
payment shall be determined by dividing the amount of such payment or portion
thereof by the Fair Market Value on the date of exercise.  No fractional share
of Common Stock shall be issued to make any payment in respect of Stock
Appreciation Rights; if any fractional share would be issuable, the combination
of cash and Common Stock payable to the Participant shall be adjusted as
directed by the Committee to avoid the issuance of any fractional share.

 

6.03         Terms of Stock Options and Stock Appreciation Rights.

 

(a)           Conditions on Exercise.  An Award Agreement with respect to
Options or Stock Appreciation Rights may contain such waiting periods, exercise
dates and restrictions on exercise (including, but not limited to, periodic
installments) as may be determined by the Committee at the time of grant.

 

(b)           Duration of Options and Stock Appreciation Rights.  Options and
Stock Appreciation Rights shall terminate upon the first to occur of the
following events:

 

(i)            Expiration of the Option or Stock Appreciation Right, as provided
in the Award Agreement; or

 

(ii)           Termination of the Award in the event of a Participant’s
disability, retirement, death or other Termination of Service, as provided in
the Award Agreement; or

 

(iii)          Ten years from the Date of Grant (five years in certain cases, as
described in Section 6.01(d)).

 

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(c)           Acceleration or Extension of Exercise Period.  The Committee, in
its sole discretion, shall have the right (but shall not be obligated),
exercisable on or at any time after the Date of Grant, to permit the exercise of
an Option or Stock Appreciation Right (i) prior to the time such Option or Stock
Appreciation Right would become exercisable under the terms of the Award
Agreement, or (ii) after the termination of the Option or Stock Appreciation
Right under the terms of the Award Agreement.

 

(d)           Exercise of Options or Stock Appreciation Rights Upon Termination
of Services.  Unless an Award Agreement provides otherwise, the following
rules shall govern the treatment of an Award of Options or Stock Appreciation
Rights upon a Participant’s Termination of Services:

 

(i)            Termination of Vested Options or Stock Appreciation Rights Upon
Termination of Services.

 

(A)          Termination Other Than Due to Death or Disability.  In the event of
a Participant’s Termination of Services for any reason other than due to the
Participant’s death or Disability, the right of the Participant to exercise any
vested Options or Stock Appreciation Rights shall, unless the exercise period is
extended by the Board in accordance with Section 6.03(c) above, terminate upon
the earlier of: (I) thirty (30) days after the date of the Termination of
Services; and (II) the date of expiration of the Options or Stock Appreciation
Rights determined pursuant to Sections 6.03(b)(i) or (iii) above.

 

(B)           Death or Disability.  In the event of a Participant’s Termination
of Services by reason of death or Disability, the right of the Participant to
exercise any vested Options or Stock Appreciation Rights shall, unless the
exercise period is extended by the Board in accordance with
Section 6.03(c) above, terminate upon the earlier of: (I) six (6) months after
the date of the Termination of Services; and (II) the date of expiration of the
Options or Stock Appreciation Rights determined pursuant to Sections
6.03(b)(i) or (iii) above.

 

(ii)           Termination of Unvested Options Upon Termination of Services.  To
the extent the right to exercise Options or Stock Appreciation Rights, or any
portion thereof, has not vested as of the date of Termination of Services, the
right shall expire on the date of Termination of Services regardless of the
reason for the Termination of Services.

 

6.04         Exercise Procedures.  Each Option and Stock Appreciation Right
granted under the Plan shall be exercised under such procedures and by such
methods as the Committee may establish or approve from time to time.  The
Exercise Price of shares purchased upon exercise of an Option granted under the
Plan shall be paid in full in cash by the Participant pursuant to the Award
Agreement; provided, however, that the

 

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Committee may (but shall not be required to) permit payment to be made (a) by
delivery to the Company of shares of Common Stock held by the Participant,
(b) by a “net exercise” method under which the Company reduces the number of
shares of Common Stock issued upon exercise by the largest whole number of
shares with a Fair Market Value that does not exceed the aggregate Exercise
Price, or (c) such other consideration as the Committee deems appropriate and in
compliance with applicable law (including payment under an arrangement
constituting a brokerage transaction as permitted under the provisions of
Regulation T applicable to cashless exercises promulgated by the Federal Reserve
Board, unless prohibited by Section 402 of the Sarbanes-Oxley Act of 2002).  In
the event that any Common Stock shall be transferred to the Company to satisfy
all or any part of the Exercise Price, the part of the Exercise Price deemed to
have been satisfied by such transfer of Common Stock shall be equal to the
product derived by multiplying the Fair Market Value as of the date of exercise
times the number of shares of Common Stock transferred to the Company.  The
Participant may not transfer to the Company in satisfaction of the Exercise
Price any fractional share of Common Stock.  Any part of the Exercise Price paid
in cash upon the exercise of any Option shall be added to the general funds of
the Company and may be used for any proper corporate purpose.  Unless the
Committee shall otherwise determine, any Common Stock transferred to the Company
as payment of all or part of the Exercise Price upon the exercise of any Option
shall be held as treasury shares.

 

6.05         Change in Control.  With respect to each Award of Options or Stock
Appreciation Rights, the Committee shall determine whether and to what extent
such Options or Stock Appreciation Rights shall become immediately and fully
exercisable in the event of a Change in Control or upon the occurrence of one or
more specified conditions following a Change in Control.  Notwithstanding the
foregoing, unless otherwise determined by the Committee, no Change in Control of
the Company shall be deemed to have occurred for purposes of determining a
Participant’s rights under this Plan if (a) the Participant is a member of a
group that first announces a proposal which, if successful, would result in a
Change in Control, which proposal (including any modifications thereof) is
ultimately successful, or (b) the Participant acquires a two percent (2%) or
more equity interest in the entity that ultimately acquires the Company pursuant
to the transaction described in clause (a) of this Section 6.05.

 

6.06         Early Exercise.  An Option may, but need not, include a provision
by which the Participant may elect to exercise the Option in whole or in part
prior to the date the Option is fully vested.  The provision may be included in
the Award Agreement at the time of grant of the Option or may be added to the
Award Agreement by amendment at a later time.  In the event of an early exercise
of an Option, any shares of Common Stock received shall be subject to a special
repurchase right in favor of the Company with terms established by the
Committee.  The Committee shall determine the time and/or the event that causes
the repurchase right to terminate and fully vest the Common Stock in the
Participant.

 

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ARTICLE VII

 

RESTRICTED SHARES AND RESTRICTED STOCK UNITS

 

7.01         Award of Restricted Stock and Restricted Stock Units.  The
Committee may grant to any Participant an Award of Restricted Shares consisting
of a specified number of shares of Common Stock issued to the Participant
subject to such terms, conditions and forfeiture and transfer restrictions,
whether based on performance standards, periods of service, retention by the
Participant of ownership of specified shares of Common Stock or other criteria,
as the Committee shall establish.  The Committee may also grant Restricted Stock
Units representing the right to receive shares of Common Stock in the future
subject to such terms, conditions and restrictions, whether based on performance
standards, periods of service, retention by the Participant of ownership of
specified shares of Common Stock or other criteria, as the Committee shall
establish.  With respect to performance-based Awards of Restricted Shares or
Restricted Stock Units intended to qualify as “performance-based” compensation
for purposes of Section 162(m) of the Code, performance targets will consist of
specified levels of one or more of the Performance Goals.  The terms of any
Restricted Share and Restricted Stock Unit Awards granted under this Plan shall
be set forth in an Award Agreement which shall contain provisions determined by
the Committee and not inconsistent with this Plan.

 

7.02         Restricted Shares.

 

(a)           Issuance of Restricted Shares.  As soon as practicable after the
Date of Grant of a Restricted Share Award by the Committee, the Company shall
cause to be transferred on the books of the Company, or its agent, Common Stock,
registered on behalf of the Participant, evidencing the Restricted Shares
covered by the Award, but subject to forfeiture to the Company as of the Date of
Grant if an Award Agreement with respect to the Restricted Shares covered by the
Award is not duly executed by the Participant and timely returned to the
Company.  All Common Stock covered by Awards under this Article VII shall be
subject to the restrictions, terms and conditions contained in the Plan and the
Award Agreement entered into by the Participant.  Until the lapse or release of
all restrictions applicable to an Award of Restricted Shares, the share
certificates representing such Restricted Shares may be held in custody by the
Company, its designee, or, if the certificates bear a restrictive legend, by the
Participant.  Upon the lapse or release of all restrictions with respect to an
Award as described in Section 7.02(d), one or more share certificates,
registered in the name of the Participant, for an appropriate number of shares
as provided in Section 7.02(d), free of any restrictions set forth in the Plan
and the Award Agreement shall be delivered to the Participant.

 

(b)           Stockholder Rights.  Beginning on the Date of Grant of the
Restricted Share Award and subject to execution of the Award Agreement as
provided in Section 7.02(a), the Participant shall become a stockholder of the
Company with respect to all shares subject to the Award Agreement and shall have
all of the rights of a stockholder, including, but not limited to, the right to
vote such shares and the right to receive dividends; provided, however, that the
Award Agreement may provide that any dividend distributed with respect to any
Restricted Shares as to which the restrictions have not yet lapsed shall be
subject to the same restrictions as such Restricted Shares and held or
restricted as provided in Section 7.02(a).

 

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(c)           Restriction on Transferability.  None of the Restricted Shares may
be assigned or transferred (other than by will or the laws of descent and
distribution, or to an inter vivos trust with respect to which the Participant
is treated as the owner under Sections 671 through 677 of the Code, except to
the extent that Section 16 of the Exchange Act limits a Participant’s right to
make such transfers), pledged or sold prior to lapse of the restrictions
applicable thereto.

 

(d)           Delivery of Shares Upon Vesting.  Upon expiration or earlier
termination of the forfeiture period without a forfeiture and the satisfaction
of or release from any other conditions prescribed by the Committee, or at such
earlier time as provided under the provisions of Section 7.04, the restrictions
applicable to the Restricted Shares shall lapse.  As promptly as
administratively feasible thereafter, subject to the requirements of
Section 11.05, the Company shall deliver to the Participant or, in case of the
Participant’s death, to the Participant’s Beneficiary, one or more share
certificates for the appropriate number of shares of Common Stock, free of all
such restrictions, except for any restrictions that may be imposed by law.

 

(e)           Forfeiture of Restricted Shares.  Subject to Sections 7.02(f) and
7.04, all Restricted Shares shall be forfeited and returned to the Company and
all rights of the Participant with respect to such Restricted Shares shall
terminate unless the Participant continues in the service of the Company or an
Affiliate as an employee until the expiration of the forfeiture period for such
Restricted Shares and satisfies any and all other conditions set forth in the
Award Agreement.  The Committee shall determine the forfeiture period (which
may, but need not, lapse in installments) and any other terms and conditions
applicable with respect to any Restricted Share Award.

 

(f)            Waiver of Forfeiture Period.  Notwithstanding anything contained
in this Article VII to the contrary, the Committee may, in its sole discretion,
waive the forfeiture period and any other conditions set forth in any Award
Agreement under appropriate circumstances (including the death, disability or
retirement of the Participant or a material change in circumstances arising
after the date of an Award) and subject to such terms and conditions (including
forfeiture of a proportionate number of the Restricted Shares) as the Committee
shall deem appropriate.

 

7.03         Restricted Stock Units.

 

(a)           Settlement of Restricted Stock Units.  Payments shall be made to
Participants with respect to their Restricted Stock Units as soon as practicable
after the Committee has determined that the terms and conditions applicable to
such Award have been satisfied or at a later date if distribution has been
deferred.  Payments to Participants with respect to Restricted Stock Units shall
be made in the form of Common Stock, or cash or a combination of both, as the
Committee may determine.  The amount of any cash

 

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to be paid in lieu of Common Stock shall be determined on the basis of the Fair
Market Value of the Common Stock on the date any such payment is processed.  As
to shares of Common Stock which constitute all or any part of such payment, the
Committee may impose such restrictions concerning their transferability and/or
their forfeiture as may be provided in the applicable Award Agreement or as the
Committee may otherwise determine, provided such determination is made on or
before the date certificates for such shares are first delivered to the
applicable Participant.

 

(b)           Shareholder Rights.  Until the lapse or release of all
restrictions applicable to an Award of Restricted Stock Units, no shares of
Common Stock shall be issued in respect of such Awards and no Participant shall
have any rights as a shareholder of the Company with respect to the shares of
Common Stock covered by such Award of Restricted Stock Units.

 

(c)           Waiver of Forfeiture Period.  Notwithstanding anything contained
in this Section 7.03 to the contrary, the Committee may, in its sole discretion,
waive the forfeiture period and any other conditions set forth in any Award
Agreement under appropriate circumstances (including the death, Disability or
retirement of the Participant or a material change in circumstances arising
after the date of an Award) and subject to such terms and conditions (including
forfeiture of a proportionate number of shares issuable upon settlement of the
Restricted Stock Units constituting an Award) as the Committee shall deem
appropriate.

 

(d)           Deferral of Payment.  If approved by the Committee and set forth
in the applicable Award Agreement, a Participant may elect to defer the amount
payable with respect to the Participant’s Restricted Stock Units in accordance
with such terms as may be established by the Committee, subject to the
requirements of Section 409A of the Code.

 

7.04         Change in Control.  With respect to each Award of Restricted Stock
or Restricted Stock Units, the Committee shall determine whether and to what
extent such Restricted Stock or Restricted Stock Units shall become immediately
and fully exercisable in the event of a Change in Control or upon the occurrence
of one or more specified conditions following a Change in Control. 
Notwithstanding the foregoing, unless otherwise determined by the Committee, no
Change in Control of the Company shall be deemed to have occurred for purposes
of determining a Participant’s rights under this Plan if (a) the Participant is
a member of a group that first announces a proposal which, if successful, would
result in a Change in Control, which proposal (including any modifications
thereof) is ultimately successful, or (b) the Participant acquires a two percent
(2%) or more equity interest in the entity that ultimately acquires the Company
pursuant to the transaction described in clause (a) of this Section 7.04.

 

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ARTICLE VIII

 

PERFORMANCE AWARDS

 

8.01         Performance Awards.

 

(a)           Award Periods and Calculations of Potential Incentive Amounts. 
The Committee may grant Performance Awards to Participants.  A Performance Award
shall consist of the right to receive a payment (measured by the Fair Market
Value of a specified number of shares of Common Stock, increases in such Fair
Market Value during the Award Period and/or a fixed cash amount) contingent upon
the extent to which certain predetermined performance targets have been met
during an Award Period.  The Award Period shall be one or more fiscal or
calendar years as determined by the Committee.  The Committee, in its discretion
and under such terms as it deems appropriate, may permit newly eligible
Participants, such as those who are promoted or newly hired, to receive
Performance Awards after an Award Period has commenced.

 

(b)           Performance Targets.  Subject to Section 11.18, the performance
targets applicable to a Performance Award may include such goals related to the
performance of the Company or, where relevant, any one or more of its Affiliates
or divisions and/or the performance of a Participant as may be established by
the Committee in its discretion.  In the case of Performance Awards to “covered
employees” (as defined in Section 162(m) of the Code), the targets will be
limited to specified levels of one or more of the Performance Goals.  The
performance targets established by the Committee may vary for different Award
Periods and need not be the same for each Participant receiving a Performance
Award in an Award Period.

 

(c)           Earning Performance Awards.  The Committee, at or as soon as
practicable after the Date of Grant, shall prescribe a formula to determine the
percentage of the Performance Award to be earned based upon the degree of
attainment of the applicable performance targets.

 

(d)           Payment of Earned Performance Awards.  Subject to the requirements
of Section 11.05, payments of earned Performance Awards shall be made in cash or
Common Stock, or a combination of cash and Common Stock, in the discretion of
the Committee.  The Committee, in its sole discretion, may define, and set forth
in the applicable Award Agreement, such terms and conditions with respect to the
payment of earned Performance Awards as it may deem desirable.

 

8.02         Termination of Service or Change in Control.  The Award Agreement
with respect to any Performance Award shall contain provisions dealing with the
disposition of such Award in the event of a Change in Control or in the event of
a Termination of Services prior to the exercise, realization or payment of such
Award, with such provisions to take account of the specific nature and purpose
of the Award.

 

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ARTICLE IX

 

OTHER STOCK-BASED AWARDS

 

9.01         Grant of Other Stock-Based Awards.  Other stock-based awards,
consisting of stock purchase rights (with or without loans to Participants by
the Company containing such terms as the Committee shall determine), Awards of
Common Stock, or Awards valued in whole or in part by reference to, or otherwise
based on, Common Stock, may be granted either alone or in addition to or in
conjunction with other Awards under the Plan. Subject to the provisions of the
Plan, the Committee shall have sole and complete authority to determine the
persons to whom and the time or times at which such Awards shall be made, the
number of shares of Common Stock to be granted pursuant to such Awards, and all
other conditions of the Awards.  Any such Award shall be confirmed by an Award
Agreement executed by the Committee and the Participant, which Award Agreement
shall contain such provisions as the Committee determines to be necessary or
appropriate to carry out the intent of this Plan with respect to such Award.

 

9.02         Terms of Other Stock-Based Awards.  In addition to the terms and
conditions specified in the Award Agreement, Awards made pursuant to this
Article IX shall be subject to the following:

 

(a)           Any Common Stock subject to Awards made under this Article IX may
not be sold, assigned, transferred, pledged or otherwise encumbered prior to the
date on which the shares are issued, or, if later, the date on which any
applicable restriction, performance or deferral period lapses; and

 

(b)           If specified by the Committee in the Award Agreement, the
recipient of an Award under this Article IX shall be entitled to receive,
currently or on a deferred basis, interest or dividends or dividend equivalents
with respect to the Common Stock or other securities covered by the Award; and

 

(c)           The Award Agreement with respect to any Award shall contain
provisions dealing with the disposition of such Award in the event of a
Termination of Service prior to the exercise, payment or other settlement of
such Award, whether such termination occurs because of retirement, disability,
death or other reason, with such provisions to take account of the specific
nature and purpose of the Award.

 

ARTICLE X

 

SHORT-TERM CASH INCENTIVE AWARDS

 

10.01       Eligibility.  Executive officers of the Company who are from time to
time determined by the Committee to be “covered employees” for purposes of
Section 162(m) of the Code will be eligible to receive short-term cash incentive
awards under this Article X.

 

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10.02       Awards.

 

(a)           Performance Targets.  The Committee shall establish objective
performance targets based on specified levels of one or more of the Performance
Goals.  Such performance targets shall be established by the Committee on a
timely basis to ensure that the targets are considered “preestablished” for
purposes of Section 162(m) of the Code.

 

(b)           Amounts of Awards.  In conjunction with the establishment of
performance targets for a fiscal year or such other short-term performance
period established by the Committee, the Committee shall adopt an objective
formula (on the basis of percentages of Participants’ salaries, shares in a
bonus pool or otherwise) for computing the respective amounts payable under the
Plan to Participants if and to the extent that the performance targets are
attained.  Such formula shall comply with the requirements applicable to
performance-based compensation plans under Section 162(m) of the Code and, to
the extent based on percentages of a bonus pool, such percentages shall not
exceed 100% in the aggregate.

 

(c)           Payment of Awards.  Awards will be payable to Participants in cash
each year upon prior written certification by the Committee of attainment of the
specified performance targets for the preceding fiscal year or other applicable
performance period.

 

(d)           Negative Discretion.  Notwithstanding the attainment by the
Company of the specified performance targets, the Committee shall have the
discretion, which need not be exercised uniformly among the Participants, to
reduce or eliminate the award that would be otherwise paid.

 

(e)           Guidelines.  The Committee may adopt from time to time written
policies for its implementation of this Article X.  Such guidelines shall
reflect the intention of the Company that all payments hereunder qualify as
performance-based compensation under Section 162(m) of the Code.

 

(f)            Non-Exclusive Arrangement.  The adoption and operation of this
Article X shall not preclude the Board or the Committee from approving other
short-term incentive compensation arrangements for the benefit of individuals
who are Participants hereunder as the Board or Committee, as the case may be,
deems appropriate and in the best interests of the Company.

 

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ARTICLE XI

 

TERMS APPLICABLE GENERALLY TO AWARDS

GRANTED UNDER THE PLAN

 

11.01       Plan Provisions Control Award Terms.  Except as provided in
Section 11.16, the terms of the Plan shall govern all Awards granted under the
Plan, and in no event shall the Committee have the power to grant any Award
under the Plan which is contrary to any of the provisions of the Plan.  In the
event any provision of any Award granted under the Plan shall conflict with any
term in the Plan as constituted on the Date of Grant of such Award, the term in
the Plan as constituted on the Date of Grant of such Award shall control. 
Except as provided in Section 11.03 and Section 11.07, the terms of any Award
granted under the Plan may not be changed after the Date of Grant of such Award
so as to materially decrease the value of the Award without the express written
approval of the holder.

 

11.02       Award Agreement.  No person shall have any rights under any Award
granted under the Plan unless and until the Company and the Participant to whom
such Award shall have been granted shall have executed and delivered an Award
Agreement or received any other Award acknowledgment authorized by the Committee
expressly granting the Award to such person and containing provisions setting
forth the terms of the Award.

 

11.03       Modification of Award After Grant.  No Award granted under the Plan
to a Participant may be modified (unless such modification does not materially
decrease the value of the Award) after the Date of Grant except by express
written agreement between the Company and the Participant, provided that any
such change (a) shall not be inconsistent with the terms of the Plan, and
(b) shall be approved by the Committee.

 

11.04       Limitation on Transfer.  Except as provided in Section 7.02(c) in
the case of Restricted Shares, a Participant’s rights and interest under the
Plan may not be assigned or transferred other than by will or the laws of
descent and distribution, and during the lifetime of a Participant, only the
Participant personally (or the Participant’s personal representative) may
exercise rights under the Plan.  The Participant’s Beneficiary may exercise the
Participant’s rights to the extent they are exercisable under the Plan following
the death of the Participant. Notwithstanding the foregoing, to the extent
permitted under Section 16(b) of the Exchange Act with respect to Participants
subject to such Section, the Committee may grant Non-Qualified Stock Options
that are transferable, without payment of consideration, to immediate family
members of the Participant or to trusts or partnerships for such family members,
and the Committee may also amend outstanding Non-Qualified Stock Options to
provide for such transferability.

 

11.05       Taxes.  The Company shall be entitled, if the Committee deems it
necessary or desirable, to withhold (or secure payment from the Participant in
lieu of withholding) the amount of any withholding or other tax required by law
to be withheld or paid by the Company with respect to any amount payable and/or
shares issuable under

 

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such Participant’s Award, and the Company may defer payment or issuance of the
cash or shares upon exercise or vesting of an Award unless indemnified to its
satisfaction against any liability for any such tax. The amount of such
withholding or tax payment shall be determined by the Committee and shall be
payable by the Participant at such time as the Committee determines in
accordance with the following rules:

 

(a)           The Participant shall have the right to elect to meet his or her
withholding requirement (i) by having withheld from such Award at the
appropriate time that number of shares of Common Stock, rounded down to the
nearest whole share, whose Fair Market Value is equal to the amount of
withholding taxes due, (ii) by direct payment to the Company in cash of the
amount of any taxes required to be withheld with respect to such Award or
(iii) by a combination of shares and cash.

 

(b)           In the case of Participants who are subject to Section 16 of the
Exchange Act, the Committee may impose such limitations and restrictions as it
deems necessary or appropriate with respect to the delivery or withholding of
shares of Common Stock to meet tax withholding obligations.

 

11.06       Surrender of Awards.  Any Award granted under the Plan may be
surrendered to the Company for cancellation on such terms as the Committee and
the holder approve.  With the consent of the Participant, the Committee may
substitute a new Award under this Plan in connection with the surrender by the
Participant of an equity compensation award previously granted under this Plan
or any other plan sponsored by the Company.

 

11.07       Adjustments to Reflect Capital Changes.

 

(a)           Recapitalization.  In the event of any corporate event or
transaction (including, but not limited to, a change in the Common Stock or the
capitalization of the Company) such as a merger, consolidation, reorganization,
recapitalization, separation, partial or complete liquidation, stock dividend,
stock split, reverse stock split, spin-off, or other distribution of stock or
property of the Company, a combination or exchange of Common Stock, dividend in
kind, or other like change in capital structure, number of outstanding shares of
Common Stock, distribution (other than normal cash dividends) to shareholders of
the Company, or any similar corporate event or transaction, the Committee, in
order to prevent dilution or enlargement of Participants’ rights under this
Plan, shall make equitable and appropriate adjustments and substitutions, as
applicable, to or of the number and kind of shares subject to outstanding
Awards, the Exercise Price for such shares, the number and kind of shares
available for future issuance under the Plan and the maximum number of shares in
respect of which Awards can be made to any Participant in any calendar year, and
other determinations applicable to outstanding Awards.  The Committee shall have
the power and sole discretion to determine the amount of the adjustment to be
made in each case.

 

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(b)           Merger.  In the event that the Company is a party to a Merger,
outstanding Awards shall be subject to the agreement of merger or
reorganization.  Such agreement may provide, without limitation, for the
continuation of outstanding Awards by the Company (if the Company is a surviving
corporation), for their assumption by the surviving corporation or its parent or
subsidiary, for the substitution by the surviving corporation or its parent or
subsidiary of its own awards for such Awards, for accelerated vesting and
accelerated expiration, or for settlement in cash or cash equivalents.

 

(c)           Options to Purchase Shares or Stock of Acquired Companies.  After
any Merger in which the Company or an Affiliate shall be a surviving
corporation, the Committee may grant substituted options under the provisions of
the Plan, pursuant to Section 424 of the Code, replacing old options granted
under a plan of another party to the Merger whose shares or stock subject to the
old options may no longer be issued following the Merger.  The foregoing
adjustments and manner of application of the foregoing provisions shall be
determined by the Committee in its sole discretion.  Any such adjustments may
provide for the elimination of any fractional shares which might otherwise
become subject to any Options.

 

11.08       No Right to Continued Service.  No person shall have any claim of
right to be granted an Award under this Plan. Neither the Plan nor any action
taken hereunder shall be construed as giving any Participant any right to be
retained in the service of the Company or any of its Affiliates.

 

11.09       Awards Not Includable for Benefit Purposes.  Payments received by a
Participant pursuant to the provisions of the Plan shall not be included in the
determination of benefits under any pension, group insurance or other benefit
plan applicable to the Participant which is maintained by the Company or any of
its Affiliates, except as may be provided under the terms of such plans or
determined by the Committee.

 

11.10       Governing Law.  All determinations made and actions taken pursuant
to the Plan shall be governed by the laws of the State of California and
construed in accordance therewith.

 

11.11       No Strict Construction.  No rule of strict construction shall be
implied against the Company, the Committee, or any other person in the
interpretation of any of the terms of the Plan, any Award granted under the Plan
or any rule or procedure established by the Committee.

 

11.12       Compliance with Rule 16b-3.  It is intended that, unless the
Committee determines otherwise, Awards under the Plan be eligible for exemption
under Rule 16b-3.  The Board is authorized to amend the Plan and to make any
such modifications to Award Agreements to comply with Rule 16b-3, as it may be
amended from time to time, and to make any other such amendments or
modifications as it deems necessary or appropriate to better accomplish the
purposes of the Plan in light of any amendments made to Rule 16b-3.

 

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11.13       Captions.  The captions (i.e., all Section headings) used in the
Plan are for convenience only, do not constitute a part of the Plan, and shall
not be deemed to limit, characterize or affect in any way any provisions of the
Plan, and all provisions of the Plan shall be construed as if no captions have
been used in the Plan.

 

11.14       Severability.  Whenever possible, each provision in the Plan and
every Award at any time granted under the Plan shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of the Plan or any Award at any time granted under the Plan shall be held to be
prohibited by or invalid under applicable law, then (a) such provision shall be
deemed amended to accomplish the objectives of the provision as originally
written to the fullest extent permitted by law and (b) all other provisions of
the Plan and every other Award at any time granted under the Plan shall remain
in full force and effect.

 

11.15       Amendment and Termination.

 

(a)           Amendment.  The Board shall have complete power and authority to
amend the Plan at any time; provided, however, that the Board shall not, without
the requisite affirmative approval of stockholders of the Company, make any
amendment which requires stockholder approval under the Code or under any other
applicable law or rule of any stock exchange or listing service which lists
Common Stock or Company Voting Securities.  No termination or amendment of the
Plan may, without the consent of the Participant to whom any Award shall
theretofore have been granted under the Plan, adversely affect the right of such
individual under such Award.

 

(b)           Termination.  The Board shall have the right and the power to
terminate the Plan at any time. No Award shall be granted under the Plan after
the termination of the Plan, but the termination of the Plan shall not have any
other effect on any Award outstanding at the time of the termination of the Plan
and any such outstanding Award will continue in accordance with its terms and
conditions.

 

11.16       Foreign Qualified Awards.  Awards under the Plan may be granted to
such employees, directors and consultants of the Company and its Affiliates who
are residing in foreign jurisdictions as the Committee in its sole discretion
may determine from time to time. The Committee may adopt such supplements to the
Plan as may be necessary or appropriate to comply with the applicable laws of
such foreign jurisdictions and to afford Participants favorable treatment under
such laws.

 

11.17       Dividend Equivalents.  For any Award granted under the Plan, the
Committee shall have the discretion, upon the Date of Grant or thereafter, to
establish a Dividend Equivalent Account with respect to the Award, and the
applicable Award Agreement or an amendment thereto shall confirm such
establishment.  If a Dividend Equivalent Account is established, the following
terms shall apply:

 

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(a)           Terms and Conditions.  Dividend Equivalent Accounts shall be
subject to such terms and conditions as the Committee shall determine and as
shall be set forth in the applicable Award Agreement.  Such terms and conditions
may include, without limitation, for the Participant’s Account to be credited as
of the record date of each cash dividend on the Common Stock with an amount
equal to the cash dividends which would be paid with respect to the number of
shares of Common Stock then covered by the related Award if such shares of
Common Stock had been owned of record by the Participant on such record date.

 

(b)           Unfunded Obligation.  Dividend Equivalent Accounts shall be
established and maintained only on the books and records of the Company and no
assets or funds of the Company shall be set aside, placed in trust, removed from
the claims of the Company’s general creditors, or otherwise made available until
such amounts are actually payable as provided hereunder.

 

11.18       Adjustment of Performance Goals and Targets.  Notwithstanding any
provision of the Plan to the contrary, the Committee shall have the authority to
adjust any Performance Goal, performance target or other performance-based
criteria established with respect to any Award under the Plan if circumstances
occur (including, but not limited to, unusual or nonrecurring events, changes in
tax laws or accounting principles or practices or changed business or economic
conditions) that cause any such Performance Goal, performance target or
performance-based criteria to be inappropriate in the judgment of the Committee;
provided, that with respect to any Award that is intended to qualify for the
“performance-based compensation” exception under Section 162(m) of the Code and
the regulations thereunder, any adjustment by the Committee shall be consistent
with the requirements of Section 162(m) and the regulations thereunder.

 

11.19       Legality of Issuance.  Notwithstanding any provision of this Plan or
any applicable Award Agreement to the contrary, the Committee shall have the
sole discretion to impose such conditions, restrictions and limitations
(including suspending exercises of Options or Stock Appreciation Rights and the
tolling of any applicable exercise period during such suspension) on the
issuance of Common Stock with respect to any Award unless and until the
Committee determines that such issuance complies with (a) any applicable
registration requirements under the Securities Act of 1933 or the Committee has
determined that an exemption therefrom is available, (b) any applicable listing
requirement of any stock exchange on which the Common Stock is listed, (c) any
applicable Company policy or administrative rules, and (d) any other applicable
provision of state, federal or foreign law, including foreign securities laws
where applicable.

 

11.20       Restrictions on Transfer.  Regardless of whether the offering and
sale of Common Stock under the Plan have been registered under the Securities
Act of 1933 or have been registered or qualified under the securities laws of
any state, the Company may impose restrictions upon the sale, pledge, or other
transfer of such Common Stock (including the placement of appropriate legends on
stock certificates) if, in the judgment of the Company and its counsel, such
restrictions are necessary or desirable to achieve compliance with the
provisions of the Securities Act of 1933, the securities laws of any state, the
United States or any other applicable foreign law.

 

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11.21       Further Assurances.  As a condition to receipt of any Award under
the Plan, a Participant shall agree, upon demand of the Company, to do all acts
and execute, deliver and perform all additional documents, instruments and
agreements which may be reasonably required by the Company, to implement the
provisions and purposes of the Plan.

 

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