Exhibit 10.2

 

ADOBE SYSTEMS INCORPORATED

 

2005 EQUITY INCENTIVE
ASSUMPTION PLAN

 

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1.

Establishment, Purpose and Term of Plan

 

 

 

 

 

 

1.1

Establishment

 

 

1.2

Background and Purpose

 

 

1.3

Term of Plan

 

 

 

 

 

2.

Definitions and Construction

 

 

 

 

 

 

2.1

Definitions

 

 

2.2

Construction

 

 

 

 

 

3.

Administration

 

 

 

 

 

 

3.1

Administration by the Committee

 

 

3.2

Authority of Officers

 

 

3.3

Administration with Respect to Insiders

 

 

3.4

Powers of the Committee

 

 

3.5

Option Repricing

 

 

3.6

Indemnification

 

 

 

 

 

4.

Shares Subject to Plan

 

 

 

 

 

 

4.1

Maximum Number of Shares Issuable

 

 

4.2

Adjustments for Changes in Capital Structure

 

 

 

 

 

5.

Eligibility and Award Limitations

 

 

 

 

 

 

5.1

Persons Eligible for Awards

 

 

5.2

Participation

 

 

5.3

Award Limits

 

 

 

 

 

6.

Terms and Conditions of Options

 

 

 

 

 

 

6.1

Exercise Price

 

 

6.2

Exercisability and Term of Options

 

 

6.3

Payment of Exercise Price

 

 

6.4

Effect of Termination of Service

 

 

6.5

Transferability of Options

 

 

 

 

 

7.

Terms and Conditions of Stock Appreciation Rights

 

 

 

 

 

 

7.1

Types of SARs Authorized

 

 

7.2

Exercise Price

 

 

7.3

Exercisability and Term of SARs

 

 

7.4

Exercise of SARs

 

 

7.5

Deemed Exercise of SARs

 

 

7.6

Effect of Termination of Service

 

 

7.7

Nontransferability of SARs

 

 

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8.

Terms and Conditions of Stock Awards

 

 

 

 

 

 

8.1

Types of Stock Awards Authorized

 

 

8.2

Purchase Price

 

 

8.3

Purchase Period

 

 

8.4

Payment of Purchase Price

 

 

8.5

Vesting and Restrictions on Transfer

 

 

8.6

Voting Rights; Dividends and Distributions

 

 

8.7

Effect of Termination of Service

 

 

8.8

Nontransferability of Stock Award Rights

 

 

 

 

 

9.

Terms and Conditions of Performance Awards

 

 

 

 

 

 

9.1

Types of Performance Awards Authorized

 

 

9.2

Initial Value of Performance Shares and Performance Units

 

 

9.3

Establishment of Performance Period, Performance Goals and Performance Award
Formula

 

 

9.4

Measurement of Performance Goals

 

 

9.5

Settlement of Performance Awards

 

 

9.6

Dividend Equivalents

 

 

9.7

Effect of Termination of Service

 

 

9.8

Nontransferability of Performance Awards

 

 

 

 

 

10.

Standard Forms of Award Agreement

 

 

 

 

 

 

10.1

Award Agreements

 

 

10.2

Authority to Vary Terms

 

 

 

 

 

11.

Change in Control

 

 

 

 

 

 

11.1

Definitions

 

 

11.2

Effect of Change in Control on Options and SARs

 

 

11.3

Effect of Change in Control on Stock Awards

 

 

11.4

Effect of Change in Control on Performance Awards

 

 

 

 

 

12.

Compliance with Securities Law

 

 

 

 

 

13.

Tax Withholding

 

 

 

 

 

 

13.1

Tax Withholding in General

 

 

13.2

Withholding in Shares

 

 

 

 

 

14.

Termination or Amendment of Plan

 

 

 

 

 

15.

Miscellaneous Provisions

 

 

 

 

 

 

15.1

Repurchase Rights

 

 

15.2

Provision of Information

 

 

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15.3

Rights as Employee

 

 

15.4

Rights as a Stockholder

 

 

15.5

Fractional Shares

 

 

15.6

Beneficiary Designation

 

 

15.7

Unfunded Obligation

 

 

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ADOBE SYSTEMS INCORPORATED

2005 EQUITY INCENTIVE ASSUMPTION PLAN

 

1.                                       ESTABLISHMENT, PURPOSE AND TERM OF
PLAN.

 

1.1                                 ESTABLISHMENT.  ADOBE SYSTEMS INCORPORATED,
A DELAWARE CORPORATION, HEREBY ESTABLISHES THE ADOBE SYSTEMS INCORPORATED 2005
EQUITY INCENTIVE ASSUMPTION PLAN (THE “PLAN”) EFFECTIVE AS OF DECEMBER 3, 2005
(THE “EFFECTIVE DATE”).

 

1.2                                 BACKGROUND AND PURPOSE.  THE PLAN IS
ESTABLISHED IN CONNECTION WITH THE ACQUISITION BY THE COMPANY OF
MACROMEDIA, INC. AND IS INTENDED TO COMPLY WITH RULE 4350(I)(1)(A)(III) OF THE
NASDAQ QUALITATIVE LISTING REQUIREMENTS.  THE PURPOSE OF THE PLAN IS TO ADVANCE
THE INTERESTS OF THE PARTICIPATING COMPANY GROUP AND ITS STOCKHOLDERS BY
PROVIDING AN INCENTIVE TO ATTRACT, RETAIN AND REWARD PERSONS PERFORMING SERVICES
FOR THE PARTICIPATING COMPANY GROUP AND BY MOTIVATING SUCH PERSONS TO CONTRIBUTE
TO THE GROWTH AND PROFITABILITY OF THE PARTICIPATING COMPANY GROUP.  THE PLAN
SEEKS TO ACHIEVE THIS PURPOSE BY PROVIDING FOR AWARDS IN THE FORM OF OPTIONS,
STOCK APPRECIATION RIGHTS, STOCK PURCHASE RIGHTS, STOCK BONUSES, PERFORMANCE
SHARES AND PERFORMANCE UNITS.  OUTSTANDING AWARDS SHALL CONTINUE TO BE GOVERNED
BY AND ADMINISTERED UNDER THE TERMS OF THE MACROMEDIA PLANS PURSUANT TO WHICH
THEY ORIGINALLY WERE GRANTED.  AWARDS GRANTED ON OR AFTER THE EFFECTIVE DATE
SHALL BE SUBJECT TO THE TERMS OF THIS PLAN.

 

1.3                                 TERM OF PLAN.  THE PLAN SHALL CONTINUE IN
EFFECT UNTIL THE EARLIER OF ITS TERMINATION BY THE BOARD OR THE DATE ON WHICH
ALL OF THE SHARES OF STOCK AVAILABLE FOR ISSUANCE UNDER THE PLAN HAVE BEEN
ISSUED AND ALL RESTRICTIONS ON SUCH SHARES UNDER THE TERMS OF THE PLAN AND THE
AGREEMENTS EVIDENCING AWARDS GRANTED UNDER THE PLAN HAVE LAPSED; PROVIDED,
HOWEVER, THAT NO AWARDS MAY BE MADE FROM RESERVE A AFTER AUGUST 1, 2009, AND NO
AWARDS MAY BE MADE FROM RESERVE B AFTER NOVEMBER 10, 2014.

 

2.                                       DEFINITIONS AND CONSTRUCTION.

 

2.1                                 DEFINITIONS.  WHENEVER USED HEREIN, THE
FOLLOWING TERMS SHALL HAVE THEIR RESPECTIVE MEANINGS SET FORTH BELOW:

 

(A)                                  “AFFILIATE” MEANS (I) AN ENTITY, OTHER THAN
A PARENT CORPORATION, THAT DIRECTLY, OR INDIRECTLY THROUGH ONE OR MORE
INTERMEDIARY ENTITIES, CONTROLS THE COMPANY OR (II) AN ENTITY, OTHER THAN A
SUBSIDIARY CORPORATION, THAT IS CONTROLLED BY THE COMPANY DIRECTLY, OR
INDIRECTLY THROUGH ONE OR MORE INTERMEDIARY ENTITIES.  FOR THIS PURPOSE, THE
TERM “CONTROL” (INCLUDING THE TERM “CONTROLLED BY”) MEANS THE POSSESSION, DIRECT
OR INDIRECT, OF THE POWER TO DIRECT OR CAUSE THE DIRECTION OF THE MANAGEMENT AND
POLICIES OF THE RELEVANT ENTITY, WHETHER THROUGH THE OWNERSHIP OF VOTING
SECURITIES, BY CONTRACT OR OTHERWISE; OR SHALL HAVE SUCH OTHER MEANING ASSIGNED
SUCH TERM FOR THE PURPOSES OF REGISTRATION ON FORM S-8 UNDER THE SECURITIES ACT.

 

(B)                                 “AWARD” MEANS ANY OPTION, SAR, STOCK
PURCHASE RIGHT, STOCK BONUS, PERFORMANCE SHARE OR PERFORMANCE UNIT GRANTED UNDER
THE PLAN.

 

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(C)                                  “AWARD AGREEMENT” MEANS A WRITTEN AGREEMENT
BETWEEN THE COMPANY AND A PARTICIPANT SETTING FORTH THE TERMS, CONDITIONS AND
RESTRICTIONS OF THE AWARD GRANTED TO THE PARTICIPANT.  AN AWARD AGREEMENT MAY BE
AN “OPTION AGREEMENT,” AN “SAR AGREEMENT,” A “STOCK PURCHASE AGREEMENT,” A
“STOCK BONUS AGREEMENT,” A “PERFORMANCE SHARE AGREEMENT” OR A “PERFORMANCE UNIT
AGREEMENT.”

 

(D)                                 “BOARD” MEANS THE BOARD OF DIRECTORS OF THE
COMPANY.

 

(E)                                  “CODE” MEANS THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, AND ANY APPLICABLE REGULATIONS PROMULGATED THEREUNDER.

 

(F)                                    “COMMITTEE” MEANS THE EXECUTIVE
COMPENSATION COMMITTEE OR OTHER COMMITTEE OF THE BOARD DULY APPOINTED TO
ADMINISTER THE PLAN AND HAVING SUCH POWERS AS SHALL BE SPECIFIED BY THE BOARD. 
IF NO COMMITTEE OF THE BOARD HAS BEEN APPOINTED TO ADMINISTER THE PLAN, THE
BOARD SHALL EXERCISE ALL OF THE POWERS OF THE COMMITTEE GRANTED HEREIN, AND, IN
ANY EVENT, THE BOARD MAY IN ITS DISCRETION EXERCISE ANY OR ALL OF SUCH POWERS.

 

(G)                                 “COMPANY” MEANS ADOBE SYSTEMS INCORPORATED,
A DELAWARE CORPORATION, OR ANY SUCCESSOR CORPORATION THERETO.

 

(H)                                 “DISABILITY” MEANS THE PERMANENT AND TOTAL
DISABILITY OF THE PARTICIPANT, WITHIN THE MEANING OF SECTION 22(E)(3) OF THE
CODE.

 

(I)                                     “DIVIDEND EQUIVALENT” MEANS A CREDIT,
MADE AT THE DISCRETION OF THE COMMITTEE OR AS OTHERWISE PROVIDED BY THE PLAN, TO
THE ACCOUNT OF A PARTICIPANT IN AN AMOUNT EQUAL TO THE CASH DIVIDENDS PAID ON
ONE SHARE OF STOCK FOR EACH SHARE OF STOCK REPRESENTED BY AN AWARD HELD BY SUCH
PARTICIPANT.

 

(J)                                     “EMPLOYEE” MEANS ANY PERSON TREATED AS
AN EMPLOYEE IN THE RECORDS OF A PARTICIPATING COMPANY (INCLUDING AN OFFICER OR A
MEMBER OF THE BOARD WHO IS ALSO AN EMPLOYEE); PROVIDED, HOWEVER, THAT NEITHER
SERVICE AS A MEMBER OF THE BOARD NOR PAYMENT OF A DIRECTOR’S FEE SHALL BE
SUFFICIENT TO CONSTITUTE EMPLOYMENT FOR PURPOSES OF THE PLAN.

 

(K)                                  “EXCHANGE ACT” MEANS THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

 

(L)                                     “FAIR MARKET VALUE” MEANS, AS OF ANY
DATE, THE VALUE OF A SHARE OF STOCK OR OTHER PROPERTY AS DETERMINED BY THE
COMMITTEE, IN ITS DISCRETION, OR BY THE COMPANY, IN ITS DISCRETION, IF SUCH
DETERMINATION IS EXPRESSLY ALLOCATED TO THE COMPANY HEREIN, SUBJECT TO THE
FOLLOWING:

 

(I)                                     IF, ON SUCH DATE, THE STOCK IS LISTED ON
A NATIONAL OR REGIONAL SECURITIES EXCHANGE OR MARKET SYSTEM, THE FAIR MARKET
VALUE OF A SHARE OF STOCK SHALL BE THE CLOSING PRICE OF A SHARE OF STOCK (OR THE
MEAN OF THE CLOSING BID AND ASKED PRICES OF A SHARE OF STOCK IF THE STOCK IS SO
QUOTED INSTEAD) AS QUOTED ON THE NASDAQ NATIONAL MARKET, THE NASDAQ SMALLCAP
MARKET OR SUCH OTHER NATIONAL OR REGIONAL SECURITIES EXCHANGE OR MARKET SYSTEM
CONSTITUTING THE PRIMARY MARKET FOR THE STOCK, AS REPORTED IN THE WALL STREET
JOURNAL OR SUCH OTHER SOURCE AS THE COMPANY DEEMS RELIABLE.  IF THE RELEVANT
DATE DOES NOT FALL ON A DAY ON WHICH

 

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THE STOCK HAS TRADED ON SUCH SECURITIES EXCHANGE OR MARKET SYSTEM, THE DATE ON
WHICH THE FAIR MARKET VALUE SHALL BE ESTABLISHED SHALL BE THE LAST DAY ON WHICH
THE STOCK WAS SO TRADED PRIOR TO THE RELEVANT DATE, OR SUCH OTHER APPROPRIATE
DAY AS SHALL BE DETERMINED BY THE COMMITTEE, IN ITS DISCRETION.

 

(II)                                  IF, ON SUCH DATE, THE STOCK IS NOT LISTED
ON A NATIONAL OR REGIONAL SECURITIES EXCHANGE OR MARKET SYSTEM, THE FAIR MARKET
VALUE OF A SHARE OF STOCK SHALL BE AS DETERMINED BY THE COMMITTEE IN GOOD FAITH
WITHOUT REGARD TO ANY RESTRICTION OTHER THAN A RESTRICTION WHICH, BY ITS TERMS,
WILL NEVER LAPSE.

 

(M)                               “INSIDER” MEANS AN OFFICER, A MEMBER OF THE
BOARD OR ANY OTHER PERSON WHOSE TRANSACTIONS IN STOCK ARE SUBJECT TO SECTION 16
OF THE EXCHANGE ACT.

 

(N)                                 “MACROMEDIA PLANS” MEANS THE EQUITY
INCENTIVE PLANS OF MACROMEDIA, INC DESCRIBED IN SECTION 4.1 OF THE PLAN.

 

(O)                                 “NONSTATUTORY STOCK OPTION” MEANS AN OPTION
NOT INTENDED TO BE (AS SET FORTH IN THE AWARD AGREEMENT) AN INCENTIVE STOCK
OPTION WITHIN THE MEANING OF SECTION 422(B) OF THE CODE.

 

(P)                                 “OFFICER” MEANS ANY PERSON DESIGNATED BY THE
BOARD AS AN OFFICER OF THE COMPANY.

 

(Q)                                 “OPTION” MEANS THE RIGHT TO PURCHASE STOCK
AT A STATED PRICE FOR A SPECIFIED PERIOD OF TIME GRANTED TO A PARTICIPANT
PURSUANT TO SECTION 6 OF THE PLAN.  ALL OPTIONS SHALL BE NONSTATUTORY STOCK
OPTIONS.

 

(R)                                    “OUTSTANDING AWARD” MEANS AN AWARD
OUTSTANDING IMMEDIATELY PRIOR TO THE EFFECTIVE DATE UNDER THE MACROMEDIA PLANS.

 

(S)                                  “PARENT CORPORATION” MEANS ANY PRESENT OR
FUTURE “PARENT CORPORATION” OF THE COMPANY, AS DEFINED IN SECTION 424(E) OF THE
CODE.

 

(T)                                    “PARTICIPANT” MEANS ANY ELIGIBLE PERSON
WHO HAS BEEN GRANTED ONE OR MORE AWARDS.

 

(U)                                 “PARTICIPATING COMPANY” MEANS THE COMPANY OR
ANY PARENT CORPORATION, SUBSIDIARY CORPORATION OR AFFILIATE.

 

(V)                                 “PARTICIPATING COMPANY GROUP” MEANS, AT ANY
POINT IN TIME, ALL CORPORATIONS COLLECTIVELY WHICH ARE THEN PARTICIPATING
COMPANIES.

 

(W)                               “PERFORMANCE AWARD” MEANS AN AWARD OF
PERFORMANCE SHARES OR PERFORMANCE UNITS.

 

(X)                                   “PERFORMANCE AWARD FORMULA” MEANS, FOR ANY
PERFORMANCE AWARD, A FORMULA OR TABLE ESTABLISHED BY THE COMMITTEE PURSUANT TO
SECTION 9.3 OF THE PLAN WHICH PROVIDES THE BASIS FOR COMPUTING THE VALUE OF A
PERFORMANCE AWARD AT ONE OR MORE

 

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THRESHOLD LEVELS OF ATTAINMENT OF THE APPLICABLE PERFORMANCE GOAL(S) MEASURED AS
OF THE END OF THE APPLICABLE PERFORMANCE PERIOD.

 

(Y)                                 “PERFORMANCE GOAL” MEANS A PERFORMANCE GOAL
ESTABLISHED BY THE COMMITTEE PURSUANT TO SECTION 9.3 OF THE PLAN.

 

(Z)                                   “PERFORMANCE PERIOD” MEANS A PERIOD
ESTABLISHED BY THE COMMITTEE PURSUANT TO SECTION 9.3 OF THE PLAN AT THE END OF
WHICH ONE OR MORE PERFORMANCE GOALS ARE TO BE MEASURED.

 

(AA)                            “PERFORMANCE SHARE” MEANS A BOOKKEEPING ENTRY
REPRESENTING A RIGHT GRANTED TO A PARTICIPANT PURSUANT TO SECTION 9 OF THE PLAN
TO RECEIVE A PAYMENT EQUAL TO THE VALUE OF A PERFORMANCE SHARE, AS DETERMINED BY
THE COMMITTEE, BASED ON PERFORMANCE.

 

(BB)                          “PERFORMANCE UNIT” MEANS A BOOKKEEPING ENTRY
REPRESENTING A RIGHT GRANTED TO A PARTICIPANT PURSUANT TO SECTION 9 OF THE PLAN
TO RECEIVE A PAYMENT EQUAL TO THE VALUE OF A PERFORMANCE UNIT, AS DETERMINED BY
THE COMMITTEE, BASED UPON PERFORMANCE.

 

(CC)                            “RESERVE A” MEANS THE SHARES OF STOCK DESCRIBED
IN SECTION 4.1 OF THE PLAN AS BEING ALLOCATED TO SUCH RESERVE.

 

(DD)                          “RESERVE B” MEANS THE SHARES OF STOCK DESCRIBED IN
SECTION 4.1 OF THE PLAN AS BEING ALLOCATED TO SUCH RESERVE.

 

(EE)                            “RESTRICTION PERIOD” MEANS THE PERIOD
ESTABLISHED IN ACCORDANCE WITH SECTION 8.5 OF THE PLAN DURING WHICH SHARES
SUBJECT TO A STOCK AWARD ARE SUBJECT TO VESTING CONDITIONS.

 

(FF)                                “RULE 16B-3” MEANS RULE 16B-3 UNDER THE
EXCHANGE ACT, AS AMENDED FROM TIME TO TIME, OR ANY SUCCESSOR RULE OR REGULATION.

 

(GG)                          “SAR” OR “STOCK APPRECIATION RIGHT” MEANS A
BOOKKEEPING ENTRY REPRESENTING, FOR EACH SHARE OF STOCK SUBJECT TO SUCH SAR, A
RIGHT GRANTED TO A PARTICIPANT PURSUANT TO SECTION 7 OF THE PLAN TO RECEIVE
PAYMENT OF AN AMOUNT EQUAL TO THE EXCESS, IF ANY, OF THE FAIR MARKET VALUE OF A
SHARE OF STOCK ON THE DATE OF EXERCISE OF THE SAR OVER THE EXERCISE PRICE.

 

(HH)                          “SECTION 162(M)” MEANS SECTION 162(M) OF THE CODE.

 

(II)                                  “SECURITIES ACT” MEANS THE SECURITIES ACT
OF 1933, AS AMENDED.

 

(JJ)                                  “SERVICE” MEANS A PARTICIPANT’S EMPLOYMENT
WITH THE PARTICIPATING COMPANY GROUP AS AN EMPLOYEE.  UNLESS OTHERWISE
DETERMINED BY THE BOARD, A PARTICIPANT’S SERVICE SHALL BE DEEMED TO HAVE
TERMINATED IF THE PARTICIPANT CEASES TO RENDER SERVICE TO THE PARTICIPATING
COMPANY GROUP AS AN EMPLOYEE.  HOWEVER, A PARTICIPANT’S SERVICE SHALL NOT BE
DEEMED TO HAVE TERMINATED MERELY BECAUSE OF A CHANGE IN THE PARTICIPATING
COMPANY FOR WHICH THE PARTICIPANT RENDERS SUCH SERVICE AS AN EMPLOYEE, PROVIDED
THAT THERE IS NO INTERRUPTION OR TERMINATION OF THE PARTICIPANT’S SERVICE. 
FURTHERMORE, A PARTICIPANT’S SERVICE

 

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SHALL NOT BE DEEMED TO HAVE TERMINATED IF THE PARTICIPANT TAKES ANY BONA FIDE
LEAVE OF ABSENCE APPROVED BY THE COMPANY OF NINETY (90) DAYS OR LESS.  IN THE
EVENT OF A LEAVE IN EXCESS OF NINETY (90) DAYS, THE PARTICIPANT’S SERVICE SHALL
BE DEEMED TO TERMINATE ON THE NINETY-FIRST (91ST) DAY OF THE LEAVE UNLESS THE
PARTICIPANT’S RIGHT TO RETURN TO SERVICE IS GUARANTEED BY STATUTE OR CONTRACT. 
NOTWITHSTANDING THE FOREGOING, UNLESS OTHERWISE DESIGNATED BY THE COMPANY OR
REQUIRED BY LAW, A LEAVE OF ABSENCE SHALL NOT BE TREATED AS SERVICE FOR PURPOSES
OF DETERMINING VESTING UNDER THE PARTICIPANT’S AWARD AGREEMENT.  A PARTICIPANT’S
SERVICE SHALL BE DEEMED TO HAVE TERMINATED EITHER UPON AN ACTUAL TERMINATION OF
SERVICE OR UPON THE CORPORATION FOR WHICH THE PARTICIPANT PERFORMS SERVICE
CEASING TO BE A PARTICIPATING COMPANY.  SUBJECT TO THE FOREGOING, THE COMPANY,
IN ITS DISCRETION, SHALL DETERMINE WHETHER THE PARTICIPANT’S SERVICE HAS
TERMINATED AND THE EFFECTIVE DATE OF SUCH TERMINATION.

 

(KK)                            “STOCK” MEANS THE COMMON STOCK OF THE COMPANY,
AS ADJUSTED FROM TIME TO TIME IN ACCORDANCE WITH SECTION 4.2 OF THE PLAN.

 

(LL)                                  “STOCK AWARD” MEANS AN AWARD OF A STOCK
BONUS OR A STOCK PURCHASE RIGHT.

 

(MM)                      “STOCK BONUS” MEANS STOCK GRANTED TO A PARTICIPANT
PURSUANT TO SECTION 8 OF THE PLAN.

 

(NN)                          “STOCK PURCHASE RIGHT” MEANS A RIGHT TO PURCHASE
STOCK GRANTED TO A PARTICIPANT PURSUANT TO SECTION 8 OF THE PLAN.

 

(OO)                          “SUBSIDIARY CORPORATION” MEANS ANY PRESENT OR
FUTURE “SUBSIDIARY CORPORATION” OF THE COMPANY, AS DEFINED IN SECTION 424(F) OF
THE CODE.

 

(PP)                          “VESTING CONDITIONS” MEAN THOSE CONDITIONS
ESTABLISHED IN ACCORDANCE WITH SECTION 8.5 OF THE PLAN PRIOR TO THE SATISFACTION
OF WHICH SHARES SUBJECT TO A STOCK AWARD REMAIN SUBJECT TO FORFEITURE OR A
REPURCHASE OPTION IN FAVOR OF THE COMPANY.

 

2.2                                 CONSTRUCTION.  CAPTIONS AND TITLES CONTAINED
HEREIN ARE FOR CONVENIENCE ONLY AND SHALL NOT AFFECT THE MEANING OR
INTERPRETATION OF ANY PROVISION OF THE PLAN.  EXCEPT WHEN OTHERWISE INDICATED BY
THE CONTEXT, THE SINGULAR SHALL INCLUDE THE PLURAL AND THE PLURAL SHALL INCLUDE
THE SINGULAR.  USE OF THE TERM “OR” IS NOT INTENDED TO BE EXCLUSIVE, UNLESS THE
CONTEXT CLEARLY REQUIRES OTHERWISE.

 

3.                                       ADMINISTRATION.

 

3.1                                 ADMINISTRATION BY THE COMMITTEE.  THE PLAN
SHALL BE ADMINISTERED BY THE COMMITTEE.  ALL QUESTIONS OF INTERPRETATION OF THE
PLAN OR OF ANY AWARD SHALL BE DETERMINED BY THE COMMITTEE, AND SUCH
DETERMINATIONS SHALL BE FINAL AND BINDING UPON ALL PERSONS HAVING AN INTEREST IN
THE PLAN OR SUCH AWARD.

 

3.2                                 AUTHORITY OF OFFICERS.  ANY OFFICER SHALL
HAVE THE AUTHORITY TO ACT ON BEHALF OF THE COMPANY WITH RESPECT TO ANY MATTER,
RIGHT, OBLIGATION, DETERMINATION OR ELECTION WHICH IS THE RESPONSIBILITY OF OR
WHICH IS ALLOCATED TO THE COMPANY HEREIN, PROVIDED THE OFFICER HAS APPARENT
AUTHORITY WITH RESPECT TO SUCH MATTER, RIGHT, OBLIGATION, DETERMINATION OR
ELECTION. 

 

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THE BOARD MAY, IN ITS DISCRETION, DELEGATE TO A COMMITTEE COMPRISED OF ONE OR
MORE OFFICERS THE AUTHORITY TO GRANT ONE OR MORE OPTIONS, WITHOUT FURTHER
APPROVAL OF THE BOARD OR THE COMMITTEE, TO ANY EMPLOYEE, OTHER THAN A PERSON
WHO, AT THE TIME OF SUCH GRANT, IS AN INSIDER; PROVIDED, HOWEVER, THAT (I) SUCH
AWARDS SHALL NOT BE GRANTED FOR SHARES IN EXCESS OF THE MAXIMUM AGGREGATE NUMBER
OF SHARES OF STOCK AUTHORIZED FOR ISSUANCE PURSUANT TO SECTION 4.1, (II) THE
EXERCISE PRICE PER SHARE OF EACH OPTION SHALL BE NOT LESS THAN THE FAIR MARKET
VALUE PER SHARE OF THE STOCK ON THE EFFECTIVE DATE OF GRANT (OR, IF THE STOCK
HAS NOT TRADED ON SUCH DATE, ON THE LAST DAY PRECEDING THE EFFECTIVE DATE OF
GRANT ON WHICH THE STOCK WAS TRADED), AND (III) EACH SUCH AWARD SHALL BE SUBJECT
TO THE TERMS AND CONDITIONS OF THE APPROPRIATE STANDARD FORM OF AWARD AGREEMENT
APPROVED BY THE BOARD OR THE COMMITTEE AND SHALL CONFORM TO THE PROVISIONS OF
THE PLAN AND SUCH OTHER GUIDELINES AS SHALL BE ESTABLISHED FROM TIME TO TIME BY
THE BOARD OR THE COMMITTEE.

 

3.3                                 ADMINISTRATION WITH RESPECT TO INSIDERS. 
WITH RESPECT TO PARTICIPATION BY INSIDERS IN THE PLAN, AT ANY TIME THAT ANY
CLASS OF EQUITY SECURITY OF THE COMPANY IS REGISTERED PURSUANT TO SECTION 12 OF
THE EXCHANGE ACT, THE PLAN SHALL BE ADMINISTERED IN COMPLIANCE WITH THE
REQUIREMENTS, IF ANY, OF RULE 16B-3.

 

3.4                                 POWERS OF THE COMMITTEE.  IN ADDITION TO ANY
OTHER POWERS SET FORTH IN THE PLAN AND SUBJECT TO THE PROVISIONS OF THE PLAN,
THE COMMITTEE SHALL HAVE THE FULL AND FINAL POWER AND AUTHORITY, IN ITS
DISCRETION:

 

(A)                                  TO DETERMINE THE PERSONS TO WHOM, AND THE
TIME OR TIMES AT WHICH, AWARDS SHALL BE GRANTED AND THE NUMBER OF SHARES OF
STOCK OR UNITS TO BE SUBJECT TO EACH AWARD;

 

(B)                                 TO DETERMINE THE TYPE OF AWARD GRANTED;

 

(C)                                  TO DETERMINE THE FAIR MARKET VALUE OF
SHARES OF STOCK OR OTHER PROPERTY;

 

(D)                                 TO DETERMINE THE TERMS, CONDITIONS AND
RESTRICTIONS APPLICABLE TO EACH AWARD (WHICH NEED NOT BE IDENTICAL) AND ANY
SHARES ACQUIRED PURSUANT THERETO, INCLUDING, WITHOUT LIMITATION, (I) THE
EXERCISE OR PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO ANY AWARD, (II) THE
METHOD OF PAYMENT FOR SHARES PURCHASED PURSUANT TO ANY AWARD, (III) THE METHOD
FOR SATISFACTION OF ANY TAX WITHHOLDING OBLIGATION ARISING IN CONNECTION WITH
AWARD, INCLUDING BY THE WITHHOLDING OR DELIVERY OF SHARES OF STOCK, (IV) THE
TIMING, TERMS AND CONDITIONS OF THE EXERCISABILITY OR VESTING OF ANY AWARD OR
ANY SHARES ACQUIRED PURSUANT THERETO, (V) THE PERFORMANCE AWARD FORMULA AND
PERFORMANCE GOALS APPLICABLE TO ANY AWARD AND THE EXTENT TO WHICH SUCH
PERFORMANCE GOALS HAVE BEEN ATTAINED, (VI) THE TIME OF THE EXPIRATION OF ANY
AWARD, (VII) THE EFFECT OF THE PARTICIPANT’S TERMINATION OF SERVICE ON ANY OF
THE FOREGOING, AND (VIII) ALL OTHER TERMS, CONDITIONS AND RESTRICTIONS
APPLICABLE TO ANY AWARD OR SHARES ACQUIRED PURSUANT THERETO NOT INCONSISTENT
WITH THE TERMS OF THE PLAN;

 

(E)                                  TO DETERMINE WHETHER AN AWARD OF SARS,
PERFORMANCE SHARES OR PERFORMANCE UNITS WILL BE SETTLED IN SHARES OF STOCK,
CASH, OR IN ANY COMBINATION THEREOF;

 

(F)                                    TO APPROVE ONE OR MORE FORMS OF AWARD
AGREEMENT;

 

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(G)                                 TO AMEND, MODIFY, EXTEND, CANCEL OR RENEW
ANY AWARD OR TO WAIVE ANY RESTRICTIONS OR CONDITIONS APPLICABLE TO ANY AWARD OR
ANY SHARES ACQUIRED PURSUANT THERETO;

 

(H)                                 TO ACCELERATE, CONTINUE, EXTEND OR DEFER THE
EXERCISABILITY OR VESTING OF ANY AWARD OR ANY SHARES ACQUIRED PURSUANT THERETO,
INCLUDING WITH RESPECT TO THE PERIOD FOLLOWING A PARTICIPANT’S TERMINATION OF
SERVICE;

 

(I)                                     TO PRESCRIBE, AMEND OR RESCIND RULES,
GUIDELINES AND POLICIES RELATING TO THE PLAN, OR TO ADOPT SUB-PLANS OR
SUPPLEMENTS TO, OR ALTERNATIVE VERSIONS OF, THE PLAN, INCLUDING, WITHOUT
LIMITATION, AS THE COMMITTEE DEEMS NECESSARY OR DESIRABLE TO COMPLY WITH THE
LAWS OF OR TO ACCOMMODATE THE LAWS, REGULATIONS, TAX OR ACCOUNTING
EFFECTIVENESS, ACCOUNTING PRINCIPLES OR CUSTOM OF, FOREIGN JURISDICTIONS WHOSE
CITIZENS MAY BE GRANTED AWARDS; AND

 

(J)                                     TO CORRECT ANY DEFECT, SUPPLY ANY
OMISSION OR RECONCILE ANY INCONSISTENCY IN THE PLAN OR ANY AWARD AGREEMENT AND
TO MAKE ALL OTHER DETERMINATIONS AND TAKE SUCH OTHER ACTIONS WITH RESPECT TO THE
PLAN OR ANY AWARD AS THE COMMITTEE MAY DEEM ADVISABLE TO THE EXTENT NOT
INCONSISTENT WITH THE PROVISIONS OF THE PLAN OR APPLICABLE LAW.

 

3.5                                 OPTION REPRICING.  WITHOUT THE AFFIRMATIVE
VOTE OF HOLDERS OF A MAJORITY OF THE SHARES OF STOCK CAST IN PERSON OR BY PROXY
AT A MEETING OF THE STOCKHOLDERS OF THE COMPANY AT WHICH A QUORUM REPRESENTING A
MAJORITY OF ALL OUTSTANDING SHARES OF STOCK IS PRESENT OR REPRESENTED BY PROXY,
THE BOARD SHALL NOT APPROVE A PROGRAM PROVIDING FOR EITHER (A) THE CANCELLATION
OF OUTSTANDING OPTIONS AND THE GRANT IN SUBSTITUTION THEREFORE OF NEW OPTIONS
HAVING A LOWER EXERCISE PRICE OR (B) THE AMENDMENT OF OUTSTANDING OPTIONS TO
REDUCE THE EXERCISE PRICE THEREOF.  THIS PARAGRAPH SHALL NOT BE CONSTRUED TO
APPLY TO “ISSUING OR ASSUMING A STOCK OPTION IN A TRANSACTION TO WHICH
SECTION 424(A) APPLIES,” WITHIN THE MEANING OF SECTION 424 OF THE CODE.

 

3.6                                 INDEMNIFICATION.  IN ADDITION TO SUCH OTHER
RIGHTS OF INDEMNIFICATION AS THEY MAY HAVE AS MEMBERS OF THE BOARD OR THE
COMMITTEE OR AS OFFICERS OR EMPLOYEES OF THE PARTICIPATING COMPANY GROUP,
MEMBERS OF THE BOARD OR THE COMMITTEE AND ANY OFFICERS OR EMPLOYEES OF THE
PARTICIPATING COMPANY GROUP TO WHOM AUTHORITY TO ACT FOR THE BOARD, THE
COMMITTEE OR THE COMPANY IS DELEGATED SHALL BE INDEMNIFIED BY THE COMPANY
AGAINST ALL REASONABLE EXPENSES, INCLUDING ATTORNEYS’ FEES, ACTUALLY AND
NECESSARILY INCURRED IN CONNECTION WITH THE DEFENSE OF ANY ACTION, SUIT OR
PROCEEDING, OR IN CONNECTION WITH ANY APPEAL THEREIN, TO WHICH THEY OR ANY OF
THEM MAY BE A PARTY BY REASON OF ANY ACTION TAKEN OR FAILURE TO ACT UNDER OR IN
CONNECTION WITH THE PLAN, OR ANY RIGHT GRANTED HEREUNDER, AND AGAINST ALL
AMOUNTS PAID BY THEM IN SETTLEMENT THEREOF (PROVIDED SUCH SETTLEMENT IS APPROVED
BY INDEPENDENT LEGAL COUNSEL SELECTED BY THE COMPANY) OR PAID BY THEM IN
SATISFACTION OF A JUDGMENT IN ANY SUCH ACTION, SUIT OR PROCEEDING, EXCEPT IN
RELATION TO MATTERS AS TO WHICH IT SHALL BE ADJUDGED IN SUCH ACTION, SUIT OR
PROCEEDING THAT SUCH PERSON IS LIABLE FOR GROSS NEGLIGENCE, BAD FAITH OR
INTENTIONAL MISCONDUCT IN DUTIES; PROVIDED, HOWEVER, THAT WITHIN SIXTY (60) DAYS
AFTER THE INSTITUTION OF SUCH ACTION, SUIT OR PROCEEDING, SUCH PERSON SHALL
OFFER TO THE COMPANY, IN WRITING, THE OPPORTUNITY AT ITS OWN EXPENSE TO HANDLE
AND DEFEND THE SAME.

 

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4.                                       SHARES SUBJECT TO PLAN.

 

4.1                                 MAXIMUM NUMBER OF SHARES ISSUABLE.  THE PLAN
SHALL HAVE TWO SEPARATE SHARE RESERVES (“RESERVE A” AND “RESERVE B”) REFLECTING
THE UNUSED SHARE RESERVES AND POTENTIAL REVERSIONS TO SUCH RESERVES, AS OF THE
EFFECTIVE DATE, WITH RESPECT TO THE FOLLOWING EQUITY INCENTIVE PLANS THAT WERE
MAINTAINED BY MACROMEDIA, INC. PRIOR TO THE EFFECTIVE DATE:

 

Reserve A:                                     Andromedia, Inc. 1999 Stock Plan

 

Reserve B:                                       Macromedia, Inc. 2002 Equity
Incentive Plan; Allaire Corp. 1997 Stock Incentive Plan; Allaire Corporation
1998 Stock Incentive Plan; Allaire Corporation 2000 Stock Incentive Plan

 

Accordingly, as of the Effective Date, Reserve A consists of 190,678 shares of
Stock, of which there are Outstanding Awards covering 186,279 shares of Stock
and 4,399 shares of Stock remaining available for Awards; and Reserve B consists
of 8,648,196 shares of Stock, of which there are Outstanding Awards covering
8,382,090 shares of Stock and 266,106 shares of Stock remaining available for
Awards.  Outstanding Awards shall continue to be governed by and administered
under the terms of the Macromedia Plans pursuant to which they originally were
granted, but in the event of their forfeiture or expiration unexercised, the
shares of Stock associated with such forfeited or expired Outstanding Awards
shall become available for award pursuant to the terms of this Plan from Reserve
A or Reserve B, as applicable.  Reserve A and Reserve B shall both be subject to
adjustment as provided in Section 4.2 of the Plan.  Such shares shall consist of
authorized but unissued or reacquired shares of Stock or any combination
thereof.  If an Award for any reason expires or is terminated or canceled
without having been exercised or settled in full, or if shares of Stock acquired
pursuant to an Award subject to forfeiture or repurchase are forfeited or
repurchased by the Company at the Participant’s purchase price to effect a
forfeiture of unvested shares upon termination of Service, the shares of Stock
allocable to the terminated portion of such Award or such forfeited or
repurchased shares of Stock shall again be available for issuance under the Plan
from Reserve A or Reserve B, as applicable.  Shares of Stock shall not be deemed
to have been issued pursuant to the Plan with respect to any portion of an Award
(other than an SAR that may be settled in shares of Stock or cash) that is
settled in cash.  Shares withheld in satisfaction of tax withholding obligations
pursuant to Section 13.2 shall not again become available for issuance under the
Plan.  Upon payment in shares of Stock pursuant to the exercise of an SAR, the
number of shares available for issuance under the Plan shall be reduced by the
gross number of shares for which the SAR is exercised.  If the exercise price of
an Option is paid by tender to the Company, or attestation to the ownership, of
shares of Stock owned by the Participant, the number of shares available for
issuance under the Plan shall be reduced by the gross number of shares for which
the Option is exercised.

 

4.2                                 ADJUSTMENTS FOR CHANGES IN CAPITAL
STRUCTURE.  IN THE EVENT OF ANY CHANGE IN THE STOCK THROUGH MERGER,
CONSOLIDATION, REORGANIZATION, REINCORPORATION, RECAPITALIZATION,
RECLASSIFICATION, STOCK DIVIDEND, STOCK SPLIT, REVERSE STOCK SPLIT, SPLIT-UP,
SPLIT-OFF, SPIN-OFF, COMBINATION OF SHARES, EXCHANGE OF SHARES OR SIMILAR CHANGE
IN THE CAPITAL STRUCTURE OF THE COMPANY, OR IN THE EVENT OF PAYMENT OF A
DIVIDEND OR DISTRIBUTION TO THE STOCKHOLDERS OF THE COMPANY IN A FORM OTHER THAN
STOCK (EXCEPTING NORMAL CASH DIVIDENDS) THAT HAS A MATERIAL EFFECT

 

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ON THE FAIR MARKET VALUE OF SHARES OF STOCK, APPROPRIATE ADJUSTMENTS SHALL BE
MADE IN THE NUMBER AND CLASS OF SHARES SUBJECT TO THE PLAN, IN THE AWARD LIMITS
SET FORTH IN SECTION 5.3 AND IN THE NUMBER OF SHARES OF STOCK SUBJECT TO, AND
THE EXERCISE OR PURCHASE PRICE PER SHARE UNDER, ANY AWARD THEN OUTSTANDING UNDER
THIS PLAN.  NOTWITHSTANDING THE FOREGOING, ANY FRACTIONAL SHARE RESULTING FROM
AN ADJUSTMENT PURSUANT TO THIS SECTION 4.2 SHALL BE ROUNDED DOWN TO THE NEAREST
WHOLE NUMBER, AND IN NO EVENT MAY THE EXERCISE OR PURCHASE PRICE UNDER ANY AWARD
BE DECREASED TO AN AMOUNT LESS THAN THE PAR VALUE, IF ANY, OF THE STOCK SUBJECT
TO SUCH AWARD.  THE ADJUSTMENTS DETERMINED BY THE COMMITTEE PURSUANT TO THIS
SECTION 4.2 SHALL BE FINAL, BINDING AND CONCLUSIVE.

 

5.                                       ELIGIBILITY AND AWARD LIMITATIONS.

 

5.1                                 PERSONS ELIGIBLE FOR AWARDS.  AWARDS MAY BE
GRANTED ONLY TO EMPLOYEES WHO WERE NOT EMPLOYED BY OR PROVIDING SERVICE TO ANY
PARTICIPATING COMPANY (OTHER THAN MACROMEDIA, INC. AND ITS AFFILIATES AND
SUBSIDIARIES) PRIOR TO THE EFFECTIVE DATE.  FOR PURPOSES OF THE FOREGOING
SENTENCE, “EMPLOYEES” SHALL INCLUDE PROSPECTIVE EMPLOYEES TO WHOM AWARDS ARE
GRANTED IN CONNECTION WITH WRITTEN OFFERS OF AN EMPLOYMENT WITH THE
PARTICIPATING COMPANY GROUP; PROVIDED, HOWEVER, THAT NO STOCK SUBJECT TO ANY
SUCH AWARD SHALL VEST, BECOME EXERCISABLE OR BE ISSUED PRIOR TO THE DATE ON
WHICH SUCH PERSON COMMENCES SERVICE.

 

5.2                                 PARTICIPATION.  AWARDS ARE GRANTED SOLELY AT
THE DISCRETION OF THE COMMITTEE.  ELIGIBLE PERSONS MAY BE GRANTED MORE THAN ONE
(1) AWARD.  HOWEVER, ELIGIBILITY IN ACCORDANCE WITH THIS SECTION SHALL NOT
ENTITLE ANY PERSON TO BE GRANTED AN AWARD, OR, HAVING BEEN GRANTED AN AWARD, TO
BE GRANTED AN ADDITIONAL AWARD.

 

5.3                                 AWARD LIMITS.  SUBJECT TO ADJUSTMENT AS
PROVIDED IN SECTION 4.2, IN NO EVENT SHALL MORE THAN ONE HUNDRED THOUSAND
(100,000) SHARES OF STOCK IN THE AGGREGATE BE ISSUED UNDER THE PLAN PURSUANT TO
THE EXERCISE OR SETTLEMENT OF STOCK AWARDS AND PERFORMANCE AWARDS.

 

6.                                       TERMS AND CONDITIONS OF OPTIONS.

 

Options shall be evidenced by Award Agreements specifying the number of shares
of Stock covered thereby, in such form as the Committee shall from time to time
establish.  No Option or purported Option shall be a valid and binding
obligation of the Company unless evidenced by a fully executed Award Agreement. 
Award Agreements evidencing Options may incorporate all or any of the terms of
the Plan by reference and shall comply with and be subject to the following
terms and conditions:

 

6.1                                 EXERCISE PRICE.  THE EXERCISE PRICE FOR EACH
OPTION SHALL BE ESTABLISHED IN THE DISCRETION OF THE COMMITTEE; PROVIDED,
HOWEVER, THAT THE EXERCISE PRICE PER SHARE SHALL BE NOT LESS THAN THE FAIR
MARKET VALUE OF A SHARE OF STOCK ON THE EFFECTIVE DATE OF GRANT OF THE OPTION.
 NOTWITHSTANDING THE FOREGOING, AN OPTION MAY BE GRANTED WITH AN EXERCISE PRICE
LOWER THAN THE MINIMUM EXERCISE PRICE SET FORTH ABOVE IF SUCH OPTION IS GRANTED
PURSUANT TO AN ASSUMPTION OR SUBSTITUTION FOR ANOTHER OPTION IN A MANNER
QUALIFYING UNDER THE PROVISIONS OF SECTION 424(A) OF THE CODE.

 

6.2                                 EXERCISABILITY AND TERM OF OPTIONS.  OPTIONS
SHALL BE EXERCISABLE AT SUCH TIME OR TIMES, OR UPON SUCH EVENT OR EVENTS, AND
SUBJECT TO SUCH TERMS, CONDITIONS,

 

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PERFORMANCE CRITERIA AND RESTRICTIONS AS SHALL BE DETERMINED BY THE COMMITTEE
AND SET FORTH IN THE AWARD AGREEMENT EVIDENCING SUCH OPTION; PROVIDED, HOWEVER,
THAT (A) NO OPTION SHALL BE EXERCISABLE AFTER THE EXPIRATION OF EIGHT (8) YEARS
AFTER THE EFFECTIVE DATE OF GRANT OF SUCH OPTION, AND (B) NO OPTION GRANTED TO A
PROSPECTIVE EMPLOYEE MAY BECOME EXERCISABLE PRIOR TO THE DATE ON WHICH SUCH
PERSON COMMENCES SERVICE.  SUBJECT TO THE FOREGOING, UNLESS OTHERWISE SPECIFIED
BY THE COMMITTEE IN THE GRANT OF AN OPTION, ANY OPTION GRANTED HEREUNDER SHALL
TERMINATE EIGHT (8) YEARS AFTER THE EFFECTIVE DATE OF GRANT OF THE OPTION,
UNLESS EARLIER TERMINATED IN ACCORDANCE WITH ITS PROVISIONS.

 

6.3                                 PAYMENT OF EXERCISE PRICE.

 

(A)                                  FORMS OF CONSIDERATION AUTHORIZED.  EXCEPT
AS OTHERWISE PROVIDED BELOW, PAYMENT OF THE EXERCISE PRICE FOR THE NUMBER OF
SHARES OF STOCK BEING PURCHASED PURSUANT TO ANY OPTION SHALL BE MADE (I) IN
CASH, BY CHECK OR CASH EQUIVALENT, (II) BY TENDER TO THE COMPANY, OR ATTESTATION
TO THE OWNERSHIP, OF SHARES OF STOCK OWNED BY THE PARTICIPANT HAVING A FAIR
MARKET VALUE NOT LESS THAN THE EXERCISE PRICE, (III) BY DELIVERY OF A PROPERLY
EXECUTED NOTICE OF EXERCISE TOGETHER WITH IRREVOCABLE INSTRUCTIONS TO A BROKER
PROVIDING FOR THE ASSIGNMENT TO THE COMPANY OF THE PROCEEDS OF A SALE OR LOAN
WITH RESPECT TO SOME OR ALL OF THE SHARES BEING ACQUIRED UPON THE EXERCISE OF
THE OPTION (INCLUDING, WITHOUT LIMITATION, THROUGH AN EXERCISE COMPLYING WITH
THE PROVISIONS OF REGULATION T AS PROMULGATED FROM TIME TO TIME BY THE BOARD OF
GOVERNORS OF THE FEDERAL RESERVE SYSTEM) (A “CASHLESS EXERCISE”), (IV) BY SUCH
OTHER CONSIDERATION (INCLUDING, WITHOUT LIMITATION, A NET EXERCISE) AS MAY BE
APPROVED BY THE COMMITTEE FROM TIME TO TIME TO THE EXTENT PERMITTED BY
APPLICABLE LAW, OR (V) BY ANY COMBINATION THEREOF.  THE COMMITTEE MAY AT ANY
TIME OR FROM TIME TO TIME GRANT OPTIONS WHICH DO NOT PERMIT ALL OF THE FOREGOING
FORMS OF CONSIDERATION TO BE USED IN PAYMENT OF THE EXERCISE PRICE OR WHICH
OTHERWISE RESTRICT ONE OR MORE FORMS OF CONSIDERATION.

 

(B)                                 LIMITATIONS ON FORMS OF CONSIDERATION.

 

(I)                                     TENDER OF STOCK.  NOTWITHSTANDING THE
FOREGOING, AN OPTION MAY NOT BE EXERCISED BY TENDER TO THE COMPANY, OR
ATTESTATION TO THE OWNERSHIP, OF SHARES OF STOCK TO THE EXTENT SUCH TENDER OR
ATTESTATION WOULD CONSTITUTE A VIOLATION OF THE PROVISIONS OF ANY LAW,
REGULATION OR AGREEMENT RESTRICTING THE REDEMPTION OF THE COMPANY’S STOCK. 
UNLESS OTHERWISE PROVIDED BY THE COMMITTEE, AN OPTION MAY NOT BE EXERCISED BY
TENDER TO THE COMPANY, OR ATTESTATION TO THE OWNERSHIP, OF SHARES OF STOCK
UNLESS SUCH SHARES EITHER HAVE BEEN OWNED BY THE PARTICIPANT FOR MORE THAN SIX
(6) MONTHS (AND NOT USED FOR ANOTHER OPTION EXERCISE BY ATTESTATION DURING SUCH
PERIOD) OR WERE NOT ACQUIRED, DIRECTLY OR INDIRECTLY, FROM THE COMPANY.

 

(II)                                  CASHLESS EXERCISE.  THE COMPANY RESERVES,
AT ANY AND ALL TIMES, THE RIGHT, IN THE COMPANY’S SOLE AND ABSOLUTE DISCRETION,
TO ESTABLISH, DECLINE TO APPROVE OR TERMINATE ANY PROGRAM OR PROCEDURES FOR THE
EXERCISE OF OPTIONS BY MEANS OF A CASHLESS EXERCISE.

 

6.4                                 EFFECT OF TERMINATION OF SERVICE.  AN OPTION
SHALL BE EXERCISABLE AFTER A PARTICIPANT’S TERMINATION OF SERVICE TO SUCH EXTENT
AND DURING SUCH PERIOD AS DETERMINED BY THE COMMITTEE, IN ITS DISCRETION, AND
SET FORTH IN THE AWARD AGREEMENT EVIDENCING SUCH OPTION.

 

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6.5                                 TRANSFERABILITY OF OPTIONS.  DURING THE
LIFETIME OF THE PARTICIPANT, AN OPTION SHALL BE EXERCISABLE ONLY BY THE
PARTICIPANT OR THE PARTICIPANT’S GUARDIAN OR LEGAL REPRESENTATIVE.  NO OPTION
SHALL BE ASSIGNABLE OR TRANSFERABLE BY THE PARTICIPANT, EXCEPT BY WILL OR BY THE
LAWS OF DESCENT AND DISTRIBUTION.  NOTWITHSTANDING THE FOREGOING, TO THE EXTENT
PERMITTED BY THE COMMITTEE, IN ITS DISCRETION, AND SET FORTH IN THE AWARD
AGREEMENT EVIDENCING SUCH OPTION, AN OPTION SHALL BE ASSIGNABLE OR TRANSFERABLE
SUBJECT TO THE APPLICABLE LIMITATIONS, IF ANY, DESCRIBED IN THE GENERAL
INSTRUCTIONS TO FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT.

 

7.                                       TERMS AND CONDITIONS OF STOCK
APPRECIATION RIGHTS.

 

SARs shall be evidenced by Award Agreements specifying the number of shares of
Stock subject to the Award, in such form as the Committee shall from time to
time establish.  No SAR or purported SAR shall be a valid and binding obligation
of the Company unless evidenced by a fully executed Award Agreement.  Award
Agreements evidencing SARs may incorporate all or any of the terms of the Plan
by reference and shall comply with and be subject to the following terms and
conditions:

 

7.1                                 TYPES OF SARS AUTHORIZED.  SARS MAY BE
GRANTED IN TANDEM WITH ALL OR ANY PORTION OF A RELATED OPTION (A “TANDEM SAR”)
OR MAY BE GRANTED INDEPENDENTLY OF ANY OPTION (A “FREESTANDING SAR”).  A TANDEM
SAR MAY BE GRANTED EITHER CONCURRENTLY WITH THE GRANT OF THE RELATED OPTION OR
AT ANY TIME THEREAFTER PRIOR TO THE COMPLETE EXERCISE, TERMINATION, EXPIRATION
OR CANCELLATION OF SUCH RELATED OPTION.

 

7.2                                 EXERCISE PRICE.  THE EXERCISE PRICE FOR EACH
SAR SHALL BE ESTABLISHED IN THE DISCRETION OF THE COMMITTEE; PROVIDED, HOWEVER,
THAT (A) THE EXERCISE PRICE PER SHARE SUBJECT TO A TANDEM SAR SHALL BE THE
EXERCISE PRICE PER SHARE UNDER THE RELATED OPTION AND (B) THE EXERCISE PRICE PER
SHARE SUBJECT TO A FREESTANDING SAR SHALL BE NOT LESS THAN THE FAIR MARKET VALUE
OF A SHARE OF STOCK ON THE EFFECTIVE DATE OF GRANT OF THE SAR.

 

7.3                                 EXERCISABILITY AND TERM OF SARS.

 

(A)                                  TANDEM SARS.  TANDEM SARS SHALL BE
EXERCISABLE ONLY AT THE TIME AND TO THE EXTENT, AND ONLY TO THE EXTENT, THAT THE
RELATED OPTION IS EXERCISABLE, SUBJECT TO SUCH PROVISIONS AS THE COMMITTEE MAY
SPECIFY WHERE THE TANDEM SAR IS GRANTED WITH RESPECT TO LESS THAN THE FULL
NUMBER OF SHARES OF STOCK SUBJECT TO THE RELATED OPTION.  THE COMMITTEE MAY, IN
ITS DISCRETION, PROVIDE IN ANY AWARD AGREEMENT EVIDENCING A TANDEM SAR THAT SUCH
SAR MAY NOT BE EXERCISED WITHOUT THE ADVANCE APPROVAL OF THE COMPANY AND, IF
SUCH APPROVAL IS NOT GIVEN, THEN THE OPTION SHALL NEVERTHELESS REMAIN
EXERCISABLE IN ACCORDANCE WITH ITS TERMS.  A TANDEM SAR SHALL TERMINATE AND
CEASE TO BE EXERCISABLE NO LATER THAN THE DATE ON WHICH THE RELATED OPTION
EXPIRES OR IS TERMINATED OR CANCELED.  UPON THE EXERCISE OF A TANDEM SAR WITH
RESPECT TO SOME OR ALL OF THE SHARES SUBJECT TO SUCH SAR, THE RELATED OPTION
SHALL BE CANCELED AUTOMATICALLY AS TO THE NUMBER OF SHARES WITH RESPECT TO WHICH
THE TANDEM SAR WAS EXERCISED.  UPON THE EXERCISE OF AN OPTION RELATED TO A
TANDEM SAR AS TO SOME OR ALL OF THE SHARES SUBJECT TO SUCH OPTION, THE RELATED
TANDEM SAR SHALL BE CANCELED AUTOMATICALLY AS TO THE NUMBER OF SHARES WITH
RESPECT TO WHICH THE RELATED OPTION WAS EXERCISED.

 

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(B)                                 FREESTANDING SARS.  FREESTANDING SARS SHALL
BE EXERCISABLE AT SUCH TIME OR TIMES, OR UPON SUCH EVENT OR EVENTS, AND SUBJECT
TO SUCH TERMS, CONDITIONS, PERFORMANCE CRITERIA AND RESTRICTIONS AS SHALL BE
DETERMINED BY THE COMMITTEE AND SET FORTH IN THE AWARD AGREEMENT EVIDENCING SUCH
SAR; PROVIDED, HOWEVER, THAT NO FREESTANDING SAR SHALL BE EXERCISABLE AFTER THE
EXPIRATION OF EIGHT (8) YEARS AFTER THE EFFECTIVE DATE OF GRANT OF SUCH SAR.

 

7.4                                 EXERCISE OF SARS.  UPON THE EXERCISE (OR
DEEMED EXERCISE PURSUANT TO SECTION 7.5) OF AN SAR, THE PARTICIPANT (OR THE
PARTICIPANT’S LEGAL REPRESENTATIVE OR OTHER PERSON WHO ACQUIRED THE RIGHT TO
EXERCISE THE SAR BY REASON OF THE PARTICIPANT’S DEATH) SHALL BE ENTITLED TO
RECEIVE PAYMENT OF AN AMOUNT FOR EACH SHARE WITH RESPECT TO WHICH THE SAR IS
EXERCISED EQUAL TO THE EXCESS, IF ANY, OF THE FAIR MARKET VALUE OF A SHARE OF
STOCK ON THE DATE OF EXERCISE OF THE SAR OVER THE EXERCISE PRICE.  PAYMENT OF
SUCH AMOUNT SHALL BE MADE IN CASH, SHARES OF STOCK, OR ANY COMBINATION THEREOF
AS DETERMINED BY THE COMMITTEE.  UNLESS OTHERWISE PROVIDED IN THE AWARD
AGREEMENT EVIDENCING SUCH SAR, PAYMENT SHALL BE MADE IN A LUMP SUM AS SOON AS
PRACTICABLE FOLLOWING THE DATE OF EXERCISE OF THE SAR.  THE AWARD AGREEMENT
EVIDENCING ANY SAR MAY PROVIDE FOR DEFERRED PAYMENT IN A LUMP SUM OR IN
INSTALLMENTS.  WHEN PAYMENT IS TO BE MADE IN SHARES OF STOCK, THE NUMBER OF
SHARES TO BE ISSUED SHALL BE DETERMINED ON THE BASIS OF THE FAIR MARKET VALUE OF
A SHARE OF STOCK ON THE DATE OF EXERCISE OF THE SAR.  FOR PURPOSES OF SECTION 7,
AN SAR SHALL BE DEEMED EXERCISED ON THE DATE ON WHICH THE COMPANY RECEIVES
NOTICE OF EXERCISE FROM THE PARTICIPANT.

 

7.5                                 DEEMED EXERCISE OF SARS.  IF, ON THE DATE ON
WHICH AN SAR WOULD OTHERWISE TERMINATE OR EXPIRE, THE SAR BY ITS TERMS REMAINS
EXERCISABLE IMMEDIATELY PRIOR TO SUCH TERMINATION OR EXPIRATION AND, IF SO
EXERCISED, WOULD RESULT IN A PAYMENT TO THE HOLDER OF SUCH SAR, THEN ANY PORTION
OF SUCH SAR WHICH HAS NOT PREVIOUSLY BEEN EXERCISED SHALL AUTOMATICALLY BE
DEEMED TO BE EXERCISED AS OF SUCH DATE WITH RESPECT TO SUCH PORTION.

 

7.6                                 EFFECT OF TERMINATION OF SERVICE.  AN SAR
SHALL BE EXERCISABLE AFTER A PARTICIPANT’S TERMINATION OF SERVICE TO SUCH EXTENT
AND DURING SUCH PERIOD AS DETERMINED BY THE COMMITTEE, IN ITS DISCRETION, AND
SET FORTH IN THE AWARD AGREEMENT EVIDENCING SUCH SAR.

 

7.7                                 NONTRANSFERABILITY OF SARS.  SARS MAY NOT BE
ASSIGNED OR TRANSFERRED IN ANY MANNER EXCEPT BY WILL OR THE LAWS OF DESCENT AND
DISTRIBUTION, AND, DURING THE LIFETIME OF THE PARTICIPANT, SHALL BE EXERCISABLE
ONLY BY THE PARTICIPANT OR THE PARTICIPANT’S GUARDIAN OR LEGAL REPRESENTATIVE.

 

8.                                       TERMS AND CONDITIONS OF STOCK AWARDS.

 

Stock Awards shall be evidenced by Award Agreements specifying whether the Award
is a Stock Bonus or a Stock Purchase Right and the number of shares of Stock
subject to the Award, in such form as the Committee shall from time to time
establish.  No Stock Award or purported Stock Award shall be a valid and binding
obligation of the Company unless evidenced by a fully executed Award Agreement. 
Award Agreements evidencing Stock Awards may incorporate all or any of the terms
of the Plan by reference and shall comply with and be subject to the following
terms and conditions:

 

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8.1                                 TYPES OF STOCK AWARDS AUTHORIZED.  STOCK
AWARDS MAY BE IN THE FORM OF EITHER A STOCK BONUS OR A STOCK PURCHASE RIGHT. 
STOCK AWARDS MAY BE GRANTED UPON SUCH CONDITIONS AS THE COMMITTEE SHALL
DETERMINE, INCLUDING, WITHOUT LIMITATION, UPON THE ATTAINMENT OF ONE OR MORE
PERFORMANCE GOALS DESCRIBED IN SECTION 9.4.  IF EITHER THE GRANT OF A STOCK
AWARD OR THE LAPSING OF THE RESTRICTION PERIOD IS TO BE CONTINGENT UPON THE
ATTAINMENT OF ONE OR MORE PERFORMANCE GOALS, THE COMMITTEE SHALL FOLLOW
PROCEDURES SUBSTANTIALLY EQUIVALENT TO THOSE SET FORTH IN SECTIONS 9.3 THROUGH
9.5(A).

 

8.2                                 PURCHASE PRICE.  THE PURCHASE PRICE FOR
SHARES OF STOCK ISSUABLE UNDER EACH STOCK PURCHASE RIGHT SHALL BE ESTABLISHED BY
THE COMMITTEE IN ITS DISCRETION.  NO MONETARY PAYMENT (OTHER THAN APPLICABLE TAX
WITHHOLDING) SHALL BE REQUIRED AS A CONDITION OF RECEIVING SHARES OF STOCK
PURSUANT TO A STOCK BONUS, THE CONSIDERATION FOR WHICH SHALL BE SERVICES
ACTUALLY RENDERED TO A PARTICIPATING COMPANY OR FOR ITS BENEFIT. 
NOTWITHSTANDING THE FOREGOING, THE PARTICIPANT SHALL FURNISH CONSIDERATION IN
THE FORM OF CASH OR PAST SERVICES RENDERED TO A PARTICIPATING COMPANY OR FOR ITS
BENEFIT HAVING A VALUE NOT LESS THAN THE PAR VALUE OF THE SHARES OF STOCK
SUBJECT TO SUCH STOCK AWARD.

 

8.3                                 PURCHASE PERIOD.  A STOCK PURCHASE RIGHT
SHALL BE EXERCISABLE WITHIN A PERIOD ESTABLISHED BY THE COMMITTEE, WHICH SHALL
IN NO EVENT EXCEED THIRTY (30) DAYS FROM THE EFFECTIVE DATE OF THE GRANT OF THE
STOCK PURCHASE RIGHT; PROVIDED, HOWEVER, THAT NO STOCK PURCHASE RIGHT GRANTED TO
A PROSPECTIVE EMPLOYEE MAY BECOME EXERCISABLE PRIOR TO THE DATE ON WHICH SUCH
PERSON COMMENCES SERVICE.

 

8.4                                 PAYMENT OF PURCHASE PRICE.  EXCEPT AS
OTHERWISE PROVIDED BELOW, PAYMENT OF THE PURCHASE PRICE FOR THE NUMBER OF SHARES
OF STOCK BEING PURCHASED PURSUANT TO ANY STOCK PURCHASE RIGHT SHALL BE MADE
(I) IN CASH, BY CHECK, OR CASH EQUIVALENT, (II) BY SUCH OTHER CONSIDERATION AS
MAY BE APPROVED BY THE COMMITTEE FROM TIME TO TIME TO THE EXTENT PERMITTED BY
APPLICABLE LAW, OR (III) BY ANY COMBINATION THEREOF.  THE COMMITTEE MAY AT ANY
TIME OR FROM TIME TO TIME GRANT STOCK PURCHASE RIGHTS WHICH DO NOT PERMIT ALL OF
THE FOREGOING FORMS OF CONSIDERATION TO BE USED IN PAYMENT OF THE PURCHASE PRICE
OR WHICH OTHERWISE RESTRICT ONE OR MORE FORMS OF CONSIDERATION.  STOCK BONUSES
SHALL BE ISSUED IN CONSIDERATION FOR PAST SERVICES ACTUALLY RENDERED TO A
PARTICIPATING COMPANY OR FOR ITS BENEFIT.

 

8.5                                 VESTING AND RESTRICTIONS ON TRANSFER. 
SHARES ISSUED PURSUANT TO ANY STOCK AWARD MAY OR MAY NOT BE MADE SUBJECT TO
VESTING CONDITIONED UPON THE SATISFACTION OF SUCH SERVICE REQUIREMENTS,
CONDITIONS, RESTRICTIONS OR PERFORMANCE CRITERIA, INCLUDING, WITHOUT LIMITATION,
PERFORMANCE GOALS AS DESCRIBED IN SECTION 9.4 (THE “VESTING CONDITIONS”), AS
SHALL BE ESTABLISHED BY THE COMMITTEE AND SET FORTH IN THE AWARD AGREEMENT
EVIDENCING SUCH AWARD.  DURING ANY PERIOD (THE “RESTRICTION PERIOD”) IN WHICH
SHARES ACQUIRED PURSUANT TO A STOCK AWARD REMAIN SUBJECT TO VESTING CONDITIONS,
SUCH SHARES MAY NOT BE SOLD, EXCHANGED, TRANSFERRED, PLEDGED, ASSIGNED OR
OTHERWISE DISPOSED OF OTHER THAN PURSUANT TO AN OWNERSHIP CHANGE EVENT, AS
DEFINED IN SECTION 11.1, OR AS PROVIDED IN SECTION 8.8.  UPON REQUEST BY THE
COMPANY, EACH PARTICIPANT SHALL EXECUTE ANY AGREEMENT EVIDENCING SUCH TRANSFER
RESTRICTIONS PRIOR TO THE RECEIPT OF SHARES OF STOCK HEREUNDER AND SHALL
PROMPTLY PRESENT TO THE COMPANY ANY AND ALL CERTIFICATES REPRESENTING SHARES OF
STOCK ACQUIRED HEREUNDER FOR THE PLACEMENT ON SUCH CERTIFICATES OF APPROPRIATE
LEGENDS EVIDENCING ANY SUCH TRANSFER RESTRICTIONS.

 

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8.6                                 VOTING RIGHTS; DIVIDENDS AND DISTRIBUTIONS. 
EXCEPT AS PROVIDED IN THIS SECTION, SECTION 8.5 AND ANY AWARD AGREEMENT, DURING
THE RESTRICTION PERIOD APPLICABLE TO SHARES SUBJECT TO A STOCK AWARD, THE
PARTICIPANT SHALL HAVE ALL OF THE RIGHTS OF A STOCKHOLDER OF THE COMPANY HOLDING
SHARES OF STOCK, INCLUDING THE RIGHT TO VOTE SUCH SHARES AND TO RECEIVE ALL
DIVIDENDS AND OTHER DISTRIBUTIONS PAID WITH RESPECT TO SUCH SHARES.  HOWEVER, IN
THE EVENT OF A DIVIDEND OR DISTRIBUTION PAID IN SHARES OF STOCK OR ANY OTHER
ADJUSTMENT MADE UPON A CHANGE IN THE CAPITAL STRUCTURE OF THE COMPANY AS
DESCRIBED IN SECTION 4.2, THEN ANY AND ALL NEW, SUBSTITUTED OR ADDITIONAL
SECURITIES OR OTHER PROPERTY (OTHER THAN NORMAL CASH DIVIDENDS) TO WHICH THE
PARTICIPANT IS ENTITLED BY REASON OF THE PARTICIPANT’S STOCK AWARD SHALL BE
IMMEDIATELY SUBJECT TO THE SAME VESTING CONDITIONS AS THE SHARES SUBJECT TO THE
STOCK AWARD WITH RESPECT TO WHICH SUCH DIVIDENDS OR DISTRIBUTIONS WERE PAID OR
ADJUSTMENTS WERE MADE.

 

8.7                                 EFFECT OF TERMINATION OF SERVICE.  UNLESS
OTHERWISE PROVIDED BY THE COMMITTEE IN THE GRANT OF A STOCK AWARD AND SET FORTH
IN THE AWARD AGREEMENT, IF A PARTICIPANT’S SERVICE TERMINATES FOR ANY REASON,
WHETHER VOLUNTARY OR INVOLUNTARY (INCLUDING THE PARTICIPANT’S DEATH OR
DISABILITY), THEN (I) THE COMPANY SHALL HAVE THE OPTION TO REPURCHASE FOR THE
PURCHASE PRICE PAID BY THE PARTICIPANT ANY SHARES ACQUIRED BY THE PARTICIPANT
PURSUANT TO A STOCK PURCHASE RIGHT WHICH REMAIN SUBJECT TO VESTING CONDITIONS AS
OF THE DATE OF THE PARTICIPANT’S TERMINATION OF SERVICE AND (II) THE PARTICIPANT
SHALL FORFEIT TO THE COMPANY ANY SHARES ACQUIRED BY THE PARTICIPANT PURSUANT TO
A STOCK BONUS WHICH REMAIN SUBJECT TO VESTING CONDITIONS AS OF THE DATE OF THE
PARTICIPANT’S TERMINATION OF SERVICE.  THE COMPANY SHALL HAVE THE RIGHT TO
ASSIGN AT ANY TIME ANY REPURCHASE RIGHT IT MAY HAVE, WHETHER OR NOT SUCH RIGHT
IS THEN EXERCISABLE, TO ONE OR MORE PERSONS AS MAY BE SELECTED BY THE COMPANY.

 

8.8                                 NONTRANSFERABILITY OF STOCK AWARD RIGHTS. 
RIGHTS TO ACQUIRE SHARES OF STOCK PURSUANT TO A STOCK AWARD MAY NOT BE SUBJECT
IN ANY MANNER TO ANTICIPATION, ALIENATION, SALE, EXCHANGE, TRANSFER, ASSIGNMENT,
PLEDGE, ENCUMBRANCE OR GARNISHMENT BY CREDITORS OF THE PARTICIPANT OR THE
PARTICIPANT’S BENEFICIARY, EXCEPT BY WILL OR THE LAWS OF DESCENT AND
DISTRIBUTION, AND, DURING THE LIFETIME OF THE PARTICIPANT, SHALL BE EXERCISABLE
ONLY BY THE PARTICIPANT OR THE PARTICIPANT’S GUARDIAN OR LEGAL REPRESENTATIVE.

 

9.                                       TERMS AND CONDITIONS OF PERFORMANCE
AWARDS.

 

Performance Awards shall be evidenced by Award Agreements in such form as the
Committee shall from time to time establish.  No Performance Award or purported
Performance Award shall be a valid and binding obligation of the Company unless
evidenced by a fully executed Award Agreement.  Award Agreements evidencing
Performance Awards may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and
conditions:

 

9.1                                 TYPES OF PERFORMANCE AWARDS AUTHORIZED. 
PERFORMANCE AWARDS MAY BE IN THE FORM OF EITHER PERFORMANCE SHARES OR
PERFORMANCE UNITS.  EACH AWARD AGREEMENT EVIDENCING A PERFORMANCE AWARD SHALL
SPECIFY THE NUMBER OF PERFORMANCE SHARES OR PERFORMANCE UNITS SUBJECT THERETO,
THE PERFORMANCE AWARD FORMULA, THE PERFORMANCE GOAL(S) AND PERFORMANCE PERIOD
APPLICABLE TO THE AWARD, AND THE OTHER TERMS, CONDITIONS AND RESTRICTIONS OF THE
AWARD.

 

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9.2                                 INITIAL VALUE OF PERFORMANCE SHARES AND
PERFORMANCE UNITS.  UNLESS OTHERWISE PROVIDED BY THE COMMITTEE IN GRANTING A
PERFORMANCE AWARD, EACH PERFORMANCE SHARE SHALL HAVE AN INITIAL VALUE EQUAL TO
THE FAIR MARKET VALUE OF ONE (1) SHARE OF STOCK, SUBJECT TO ADJUSTMENT AS
PROVIDED IN SECTION 4.2, ON THE EFFECTIVE DATE OF GRANT OF THE PERFORMANCE
SHARE, AND EACH PERFORMANCE UNIT SHALL HAVE AN INITIAL VALUE OF ONE HUNDRED
DOLLARS ($100).  THE FINAL VALUE PAYABLE TO THE PARTICIPANT IN SETTLEMENT OF A
PERFORMANCE AWARD DETERMINED ON THE BASIS OF THE APPLICABLE PERFORMANCE AWARD
FORMULA WILL DEPEND ON THE EXTENT TO WHICH PERFORMANCE GOALS ESTABLISHED BY THE
COMMITTEE ARE ATTAINED WITHIN THE APPLICABLE PERFORMANCE PERIOD ESTABLISHED BY
THE COMMITTEE.

 

9.3                                 ESTABLISHMENT OF PERFORMANCE PERIOD,
PERFORMANCE GOALS AND PERFORMANCE AWARD FORMULA.  IN GRANTING EACH PERFORMANCE
AWARD, THE COMMITTEE SHALL ESTABLISH IN WRITING THE APPLICABLE PERFORMANCE
PERIOD, PERFORMANCE AWARD FORMULA AND ONE OR MORE PERFORMANCE GOALS WHICH, WHEN
MEASURED AT THE END OF THE PERFORMANCE PERIOD, SHALL DETERMINE ON THE BASIS OF
THE PERFORMANCE AWARD FORMULA THE FINAL VALUE OF THE PERFORMANCE AWARD TO BE
PAID TO THE PARTICIPANT.  ALTHOUGH PERFORMANCE AWARDS UNDER THE PLAN WILL NOT
QUALIFY AS PERFORMANCE-BASED COMPENSATION FOR PURPOSES OF SECTION 162(M) BECAUSE
STOCKHOLDERS OF THE COMPANY HAVE NOT APPROVED CERTAIN PROVISIONS OF THE PLAN AS
REQUIRED BY SECTION 162(M), THE COMMITTEE SHALL SEEK TO COMPLY WITH
SECTION 162(M) WITH RESPECT TO PERFORMANCE AWARDS, EXCEPT AS OTHERWISE PROVIDED
HEREIN.  ACCORDINGLY, UNLESS OTHERWISE PERMITTED IN COMPLIANCE WITH THE
REQUIREMENTS UNDER SECTION 162(M) WITH RESPECT TO “PERFORMANCE-BASED
COMPENSATION,” THE COMMITTEE SHALL ESTABLISH THE PERFORMANCE GOAL(S) AND
PERFORMANCE AWARD FORMULA APPLICABLE TO EACH PERFORMANCE AWARD NO LATER THAN THE
EARLIER OF (A) THE DATE NINETY (90) DAYS AFTER THE COMMENCEMENT OF THE
APPLICABLE PERFORMANCE PERIOD OR (B) THE DATE ON WHICH 25% OF THE PERFORMANCE
PERIOD HAS ELAPSED, AND, IN ANY EVENT, AT A TIME WHEN THE OUTCOME OF THE
PERFORMANCE GOALS REMAINS SUBSTANTIALLY UNCERTAIN.  ONCE ESTABLISHED, THE
PERFORMANCE GOALS AND PERFORMANCE AWARD FORMULA SHALL NOT BE CHANGED DURING THE
PERFORMANCE PERIOD.  THE COMPANY SHALL NOTIFY EACH PARTICIPANT GRANTED A
PERFORMANCE AWARD OF THE TERMS OF SUCH AWARD, INCLUDING THE PERFORMANCE PERIOD,
PERFORMANCE GOAL(S) AND PERFORMANCE AWARD FORMULA.

 

9.4                                 MEASUREMENT OF PERFORMANCE GOALS. 
PERFORMANCE GOALS SHALL BE ESTABLISHED BY THE COMMITTEE ON THE BASIS OF TARGETS
TO BE ATTAINED (“PERFORMANCE TARGETS”) WITH RESPECT TO ONE OR MORE MEASURES OF
BUSINESS OR FINANCIAL PERFORMANCE (EACH, A “PERFORMANCE MEASURE”), SUBJECT TO
THE FOLLOWING:

 

(A)                                  PERFORMANCE MEASURES.  PERFORMANCE MEASURES
SHALL HAVE THE SAME MEANINGS AS USED IN THE COMPANY’S FINANCIAL STATEMENTS, OR,
IF SUCH TERMS ARE NOT USED IN THE COMPANY’S FINANCIAL STATEMENTS, THEY SHALL
HAVE THE MEANING APPLIED PURSUANT TO GENERALLY ACCEPTED ACCOUNTING PRINCIPLES,
OR AS USED GENERALLY IN THE COMPANY’S INDUSTRY.  PERFORMANCE MEASURES SHALL BE
CALCULATED WITH RESPECT TO THE COMPANY AND EACH SUBSIDIARY CORPORATION
CONSOLIDATED THEREWITH FOR FINANCIAL REPORTING PURPOSES OR SUCH DIVISION OR
OTHER BUSINESS UNIT AS MAY BE SELECTED BY THE COMMITTEE.  FOR PURPOSES OF THE
PLAN, THE PERFORMANCE MEASURES APPLICABLE TO A PERFORMANCE AWARD SHALL BE
CALCULATED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, BUT
PRIOR TO THE ACCRUAL OR PAYMENT OF ANY PERFORMANCE AWARD FOR THE SAME
PERFORMANCE PERIOD AND EXCLUDING THE EFFECT (WHETHER POSITIVE OR NEGATIVE) OF
ANY CHANGE IN ACCOUNTING STANDARDS OR ANY EXTRAORDINARY, UNUSUAL OR NONRECURRING
ITEM, AS DETERMINED BY THE

 

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COMMITTEE, OCCURRING AFTER THE ESTABLISHMENT OF THE PERFORMANCE GOALS APPLICABLE
TO THE PERFORMANCE AWARD.  PERFORMANCE MEASURES MAY BE ONE OR MORE OF THE
FOLLOWING, AS DETERMINED BY THE COMMITTEE:

 

(I)                                     GROWTH IN REVENUE;

 

(II)                                  GROWTH IN THE MARKET PRICE OF THE STOCK;

 

(III)                               OPERATING MARGIN;

 

(IV)                              GROSS MARGIN;

 

(V)                                 OPERATING INCOME;

 

(VI)                              PRE-TAX PROFIT;

 

(VII)                           EARNINGS BEFORE INTEREST, TAXES AND
DEPRECIATION;

 

(VIII)                        NET INCOME;

 

(IX)                                TOTAL RETURN ON SHARES OF STOCK RELATIVE TO
THE INCREASE IN AN APPROPRIATE INDEX AS MAY BE SELECTED BY THE COMMITTEE;

 

(X)                                   EARNINGS PER SHARE;

 

(XI)                                RETURN ON STOCKHOLDER EQUITY;

 

(XII)                             RETURN ON NET ASSETS;

 

(XIII)                          EXPENSES;

 

(XIV)                         RETURN ON CAPITAL;

 

(XV)                            ECONOMIC VALUE ADDED;

 

(XVI)                         MARKET SHARE; AND

 

(XVII)                      CASH FLOW, AS INDICATED BY BOOK EARNINGS BEFORE
INTEREST, TAXES, DEPRECIATION AND AMORTIZATION.

 

(B)                                 PERFORMANCE TARGETS.  PERFORMANCE TARGETS
MAY INCLUDE A MINIMUM, MAXIMUM, TARGET LEVEL AND INTERMEDIATE LEVELS OF
PERFORMANCE, WITH THE FINAL VALUE OF A PERFORMANCE AWARD DETERMINED UNDER THE
APPLICABLE PERFORMANCE AWARD FORMULA BY THE LEVEL ATTAINED DURING THE APPLICABLE
PERFORMANCE PERIOD.  A PERFORMANCE TARGET MAY BE STATED AS AN ABSOLUTE VALUE OR
AS A VALUE DETERMINED RELATIVE TO A STANDARD SELECTED BY THE COMMITTEE.

 

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9.5                                 SETTLEMENT OF PERFORMANCE AWARDS.

 

(A)                                  DETERMINATION OF FINAL VALUE.  AS SOON AS
PRACTICABLE FOLLOWING THE COMPLETION OF THE PERFORMANCE PERIOD APPLICABLE TO A
PERFORMANCE AWARD, THE COMMITTEE SHALL CERTIFY IN WRITING THE EXTENT TO WHICH
THE APPLICABLE PERFORMANCE GOALS HAVE BEEN ATTAINED AND THE RESULTING FINAL
VALUE OF THE AWARD EARNED BY THE PARTICIPANT AND TO BE PAID UPON ITS SETTLEMENT
IN ACCORDANCE WITH THE APPLICABLE PERFORMANCE AWARD FORMULA.

 

(B)                                 DISCRETIONARY ADJUSTMENT OF AWARD FORMULA. 
IN ITS DISCRETION, THE COMMITTEE MAY, EITHER AT THE TIME IT GRANTS A PERFORMANCE
AWARD OR AT ANY TIME THEREAFTER, PROVIDE FOR THE POSITIVE OR NEGATIVE ADJUSTMENT
OF THE PERFORMANCE AWARD FORMULA APPLICABLE TO A PERFORMANCE AWARD GRANTED TO
ANY PARTICIPANT WHO IS NOT A “COVERED EMPLOYEE” WITHIN THE MEANING OF
SECTION 162(M) (A “COVERED EMPLOYEE”) TO REFLECT SUCH PARTICIPANT’S INDIVIDUAL
PERFORMANCE IN HIS OR HER POSITION WITH THE COMPANY OR SUCH OTHER FACTORS AS THE
COMMITTEE MAY DETERMINE.  IF PERMITTED UNDER A COVERED EMPLOYEE’S AWARD
AGREEMENT, THE COMMITTEE SHALL HAVE THE DISCRETION, ON THE BASIS OF SUCH
CRITERIA AS MAY BE ESTABLISHED BY THE COMMITTEE, TO REDUCE SOME OR ALL OF THE
VALUE OF THE PERFORMANCE AWARD THAT WOULD OTHERWISE BE PAID TO THE COVERED
EMPLOYEE UPON ITS SETTLEMENT NOTWITHSTANDING THE ATTAINMENT OF ANY PERFORMANCE
GOAL AND THE RESULTING VALUE OF THE PERFORMANCE AWARD DETERMINED IN ACCORDANCE
WITH THE PERFORMANCE AWARD FORMULA.  NO SUCH REDUCTION MAY RESULT IN AN INCREASE
IN THE AMOUNT PAYABLE UPON SETTLEMENT OF ANOTHER PARTICIPANT’S PERFORMANCE
AWARD.

 

(C)                                  EFFECT OF LEAVES OF ABSENCE.  UNLESS
OTHERWISE REQUIRED BY LAW, PAYMENT OF THE FINAL VALUE, IF ANY, OF A PERFORMANCE
AWARD HELD BY A PARTICIPANT WHO HAS TAKEN IN EXCESS OF THIRTY (30) DAYS OF
LEAVES OF ABSENCE DURING A PERFORMANCE PERIOD SHALL BE PRORATED ON THE BASIS OF
THE NUMBER OF DAYS OF THE PARTICIPANT’S SERVICE DURING THE PERFORMANCE PERIOD
DURING WHICH THE PARTICIPANT WAS NOT ON A LEAVE OF ABSENCE.

 

(D)                                 NOTICE TO PARTICIPANTS.  AS SOON AS
PRACTICABLE FOLLOWING THE COMMITTEE’S DETERMINATION AND CERTIFICATION IN
ACCORDANCE WITH SECTIONS 9.5(A) AND (B), THE COMPANY SHALL NOTIFY EACH
PARTICIPANT OF THE DETERMINATION OF THE COMMITTEE.

 

(E)                                  PAYMENT IN SETTLEMENT OF PERFORMANCE
AWARDS.  AS SOON AS PRACTICABLE FOLLOWING THE COMMITTEE’S DETERMINATION AND
CERTIFICATION IN ACCORDANCE WITH SECTIONS 9.5(A) AND (B), PAYMENT SHALL BE MADE
TO EACH ELIGIBLE PARTICIPANT (OR SUCH PARTICIPANT’S LEGAL REPRESENTATIVE OR
OTHER PERSON WHO ACQUIRED THE RIGHT TO RECEIVE SUCH PAYMENT BY REASON OF THE
PARTICIPANT’S DEATH) OF THE FINAL VALUE OF THE PARTICIPANT’S PERFORMANCE AWARD. 
PAYMENT OF SUCH AMOUNT SHALL BE MADE IN CASH, SHARES OF STOCK, OR A COMBINATION
THEREOF AS DETERMINED BY THE COMMITTEE.  UNLESS OTHERWISE PROVIDED IN THE AWARD
AGREEMENT EVIDENCING A PERFORMANCE AWARD, PAYMENT SHALL BE MADE IN A LUMP SUM. 
AN AWARD AGREEMENT MAY PROVIDE FOR DEFERRED PAYMENT IN A LUMP SUM OR IN
INSTALLMENTS.  IF ANY PAYMENT IS TO BE MADE ON A DEFERRED BASIS, THE COMMITTEE
MAY, BUT SHALL NOT BE OBLIGATED TO, PROVIDE FOR THE PAYMENT DURING THE DEFERRAL
PERIOD OF DIVIDEND EQUIVALENTS OR INTEREST.

 

(F)                                    PROVISIONS APPLICABLE TO PAYMENT IN
SHARES.  IF PAYMENT IS TO BE MADE IN SHARES OF STOCK, THE NUMBER OF SUCH SHARES
SHALL BE DETERMINED BY DIVIDING THE FINAL VALUE OF THE PERFORMANCE AWARD BY THE
VALUE OF A SHARE OF STOCK DETERMINED BY THE METHOD

 

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SPECIFIED IN THE AWARD AGREEMENT.  SUCH METHODS MAY INCLUDE, WITHOUT LIMITATION,
THE CLOSING MARKET PRICE ON A SPECIFIED DATE (SUCH AS THE SETTLEMENT DATE) OR AN
AVERAGE OF MARKET PRICES OVER A SERIES OF TRADING DAYS.  SHARES OF STOCK ISSUED
IN PAYMENT OF ANY PERFORMANCE AWARD MAY BE FULLY VESTED AND FREELY TRANSFERABLE
SHARES OR MAY BE SHARES OF STOCK SUBJECT TO VESTING CONDITIONS AS PROVIDED IN
SECTION 8.5.  ANY SHARES SUBJECT TO VESTING CONDITIONS SHALL BE EVIDENCED BY AN
APPROPRIATE AWARD AGREEMENT AND SHALL BE SUBJECT TO THE PROVISIONS OF
SECTIONS 8.5 THROUGH 8.8 ABOVE.

 

9.6                                 DIVIDEND EQUIVALENTS.  IN ITS DISCRETION,
THE COMMITTEE MAY PROVIDE IN THE AWARD AGREEMENT EVIDENCING ANY PERFORMANCE
SHARE AWARD THAT THE PARTICIPANT SHALL BE ENTITLED TO RECEIVE DIVIDEND
EQUIVALENTS WITH RESPECT TO THE PAYMENT OF CASH DIVIDENDS ON STOCK HAVING A
RECORD DATE PRIOR TO THE DATE ON WHICH THE PERFORMANCE SHARES ARE SETTLED OR
FORFEITED.  DIVIDEND EQUIVALENTS MAY BE PAID CURRENTLY OR MAY BE ACCUMULATED AND
PAID TO THE EXTENT THAT PERFORMANCE SHARES BECOME NONFORFEITABLE, AS DETERMINED
BY THE COMMITTEE.  SETTLEMENT OF DIVIDEND EQUIVALENTS MAY BE MADE IN CASH,
SHARES OF STOCK, OR A COMBINATION THEREOF AS DETERMINED BY THE COMMITTEE, AND
MAY BE PAID ON THE SAME BASIS AS SETTLEMENT OF THE RELATED PERFORMANCE SHARE AS
PROVIDED IN SECTION 9.5.  DIVIDEND EQUIVALENTS SHALL NOT BE PAID WITH RESPECT TO
PERFORMANCE UNITS.

 

9.7                                 EFFECT OF TERMINATION OF SERVICE.  THE
EFFECT OF A PARTICIPANT’S TERMINATION OF SERVICE ON THE PARTICIPANT’S
PERFORMANCE AWARD SHALL BE AS DETERMINED BY THE COMMITTEE, IN ITS DISCRETION,
AND SET FORTH IN THE AWARD AGREEMENT EVIDENCING SUCH PERFORMANCE AWARD.

 

9.8                                 NONTRANSFERABILITY OF PERFORMANCE AWARDS. 
PRIOR TO SETTLEMENT IN ACCORDANCE WITH THE PROVISIONS OF THE PLAN, NO
PERFORMANCE AWARD MAY BE SUBJECT IN ANY MANNER TO ANTICIPATION, ALIENATION,
SALE, EXCHANGE, TRANSFER, ASSIGNMENT, PLEDGE, ENCUMBRANCE, OR GARNISHMENT BY
CREDITORS OF THE PARTICIPANT OR THE PARTICIPANT’S BENEFICIARY, EXCEPT BY WILL OR
BY THE LAWS OF DESCENT AND DISTRIBUTION.  ALL RIGHTS WITH RESPECT TO A
PERFORMANCE AWARD GRANTED TO A PARTICIPANT HEREUNDER SHALL BE EXERCISABLE DURING
HIS OR HER LIFETIME ONLY BY SUCH PARTICIPANT OR THE PARTICIPANT’S GUARDIAN OR
LEGAL REPRESENTATIVE.

 

10.                                 STANDARD FORMS OF AWARD AGREEMENT.

 

10.1                           AWARD AGREEMENTS.  EACH AWARD SHALL COMPLY WITH
AND BE SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE APPROPRIATE FORM OF
AWARD AGREEMENT APPROVED BY THE COMMITTEE AND AS AMENDED FROM TIME TO TIME.  ANY
AWARD AGREEMENT MAY CONSIST OF AN APPROPRIATE FORM OF NOTICE OF GRANT AND A FORM
OF AGREEMENT INCORPORATED THEREIN BY REFERENCE, OR SUCH OTHER FORM OR FORMS AS
THE COMMITTEE MAY APPROVE FROM TIME TO TIME.

 

10.2                           AUTHORITY TO VARY TERMS.  THE COMMITTEE SHALL
HAVE THE AUTHORITY FROM TIME TO TIME TO VARY THE TERMS OF ANY STANDARD FORM OF
AWARD AGREEMENT EITHER IN CONNECTION WITH THE GRANT OR AMENDMENT OF AN
INDIVIDUAL AWARD OR IN CONNECTION WITH THE AUTHORIZATION OF A NEW STANDARD FORM
OR FORMS; PROVIDED, HOWEVER, THAT THE TERMS AND CONDITIONS OF ANY SUCH NEW,
REVISED OR AMENDED STANDARD FORM OR FORMS OF AWARD AGREEMENT ARE NOT
INCONSISTENT WITH THE TERMS OF THE PLAN.

 

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11.                                 CHANGE IN CONTROL.

 

11.1                           DEFINITIONS.

 

(A)                                  AN “OWNERSHIP CHANGE EVENT” SHALL BE DEEMED
TO HAVE OCCURRED IF ANY OF THE FOLLOWING OCCURS WITH RESPECT TO THE COMPANY: 
(I) THE DIRECT OR INDIRECT SALE OR EXCHANGE BY THE STOCKHOLDERS OF THE COMPANY
OF ALL OR SUBSTANTIALLY ALL OF THE VOTING STOCK OF THE COMPANY; (II) A MERGER OR
CONSOLIDATION IN WHICH THE COMPANY IS A PARTY; (III) THE SALE, EXCHANGE, OR
TRANSFER OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY (OTHER THAN A
SALE, EXCHANGE OR TRANSFER TO ONE OR MORE SUBSIDIARIES OF THE COMPANY); OR
(IV) A LIQUIDATION OR DISSOLUTION OF THE COMPANY.

 

(B)                                 A “CHANGE IN CONTROL” SHALL MEAN AN
OWNERSHIP CHANGE EVENT OR SERIES OF RELATED OWNERSHIP CHANGE EVENTS
(COLLECTIVELY, A “TRANSACTION”) IN WHICH THE STOCKHOLDERS OF THE COMPANY
IMMEDIATELY BEFORE THE TRANSACTION DO NOT RETAIN IMMEDIATELY AFTER THE
TRANSACTION, DIRECT OR INDIRECT BENEFICIAL OWNERSHIP OF MORE THAN FIFTY PERCENT
(50%) OF THE TOTAL COMBINED VOTING POWER OF THE OUTSTANDING VOTING SECURITIES OF
THE COMPANY OR, IN THE CASE OF AN OWNERSHIP CHANGE EVENT DESCRIBED IN
SECTION 11.1(A)(III), THE ENTITY TO WHICH THE ASSETS OF THE COMPANY WERE
TRANSFERRED.

 

11.2                           EFFECT OF CHANGE IN CONTROL ON OPTIONS AND SARS. 
IN THE EVENT OF A CHANGE IN CONTROL, THE SURVIVING, CONTINUING, SUCCESSOR, OR
PURCHASING ENTITY OR PARENT THEREOF, AS THE CASE MAY BE (THE “ACQUIROR”), MAY,
WITHOUT THE CONSENT OF ANY PARTICIPANT, EITHER ASSUME THE COMPANY’S RIGHTS AND
OBLIGATIONS UNDER OUTSTANDING OPTIONS AND SARS OR SUBSTITUTE FOR OUTSTANDING
OPTIONS AND SARS SUBSTANTIALLY EQUIVALENT OPTIONS AND SARS (AS THE CASE MAY BE)
FOR THE ACQUIROR’S STOCK.  IN THE EVENT THE ACQUIROR ELECTS NOT TO ASSUME OR
SUBSTITUTE FOR OUTSTANDING OPTIONS OR SARS IN CONNECTION WITH A CHANGE IN
CONTROL, THE COMMITTEE SHALL PROVIDE THAT ANY UNEXERCISED AND/OR UNVESTED
PORTIONS OF OUTSTANDING OPTIONS AND SARS SHALL BE IMMEDIATELY EXERCISABLE AND
VESTED IN FULL AS OF THE DATE THIRTY (30) DAYS PRIOR TO THE DATE OF THE CHANGE
IN CONTROL.  THE EXERCISE AND/OR VESTING OF ANY OPTION OR SAR THAT WAS
PERMISSIBLE SOLELY BY REASON OF THIS PARAGRAPH 11.2 SHALL BE CONDITIONED UPON
THE CONSUMMATION OF THE CHANGE IN CONTROL.  ANY OPTIONS OR SARS WHICH ARE NOT
ASSUMED BY THE ACQUIROR IN CONNECTION WITH THE CHANGE IN CONTROL NOR EXERCISED
AS OF THE TIME OF CONSUMMATION OF THE CHANGE IN CONTROL SHALL TERMINATE AND
CEASE TO BE OUTSTANDING EFFECTIVE AS OF THE TIME OF CONSUMMATION OF THE CHANGE
IN CONTROL.

 

11.3                           EFFECT OF CHANGE IN CONTROL ON STOCK AWARDS.  THE
COMMITTEE MAY, IN ITS DISCRETION, PROVIDE IN ANY AWARD AGREEMENT EVIDENCING A
STOCK AWARD THAT, IN THE EVENT OF A CHANGE IN CONTROL, THE LAPSING OF THE
RESTRICTION PERIOD APPLICABLE TO THE SHARES SUBJECT TO THE STOCK AWARD HELD BY A
PARTICIPANT WHOSE SERVICE HAS NOT TERMINATED PRIOR TO SUCH DATE SHALL BE
ACCELERATED EFFECTIVE AS OF THE DATE OF THE CHANGE IN CONTROL TO SUCH EXTENT AS
SPECIFIED IN SUCH AWARD AGREEMENT.  ANY ACCELERATION OF THE LAPSING OF THE
RESTRICTION PERIOD THAT WAS PERMISSIBLE SOLELY BY REASON OF THIS SECTION 11.3
AND THE PROVISIONS OF SUCH AWARD AGREEMENT SHALL BE CONDITIONED UPON THE
CONSUMMATION OF THE CHANGE IN CONTROL.

 

11.4                           EFFECT OF CHANGE IN CONTROL ON PERFORMANCE
AWARDS.  THE COMMITTEE MAY, IN ITS DISCRETION, PROVIDE IN ANY AWARD AGREEMENT
EVIDENCING A PERFORMANCE AWARD THAT,

 

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IN THE EVENT OF A CHANGE IN CONTROL, THE PERFORMANCE AWARD HELD BY A PARTICIPANT
WHOSE SERVICE HAS NOT TERMINATED PRIOR TO SUCH DATE SHALL BECOME PAYABLE
EFFECTIVE AS OF THE DATE OF THE CHANGE IN CONTROL TO SUCH EXTENT AS SPECIFIED IN
SUCH AWARD AGREEMENT.

 

12.                                 COMPLIANCE WITH SECURITIES LAW.

 

The grant of Awards and the issuance of shares of Stock pursuant to any Award
shall be subject to compliance with all applicable requirements of federal,
state and foreign law with respect to such securities and the requirements of
any stock exchange or market system upon which the Stock may then be listed.  In
addition, no Award may be exercised or shares issued pursuant to an Award unless
(i) a registration statement under the Securities Act shall at the time of such
exercise or issuance be in effect with respect to the shares issuable pursuant
to the Award or (ii) in the opinion of legal counsel to the Company, the shares
issuable pursuant to the Award may be issued in accordance with the terms of an
applicable exemption from the registration requirements of the Securities Act. 
The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company’s legal counsel to be
necessary to the lawful issuance and sale of any shares hereunder shall relieve
the Company of any liability in respect of the failure to issue or sell such
shares as to which such requisite authority shall not have been obtained.  As a
condition to issuance of any Stock, the Company may require the Participant to
satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation and to make any representation
or warranty with respect thereto as may be requested by the Company.

 

13.                                 TAX WITHHOLDING.

 

13.1                           TAX WITHHOLDING IN GENERAL.  THE COMPANY SHALL
HAVE THE RIGHT TO DEDUCT FROM ANY AND ALL PAYMENTS MADE UNDER THE PLAN, OR TO
REQUIRE THE PARTICIPANT, THROUGH PAYROLL WITHHOLDING, CASH PAYMENT OR OTHERWISE,
INCLUDING BY MEANS OF A CASHLESS EXERCISE OF AN OPTION, TO MAKE ADEQUATE
PROVISION FOR, THE FEDERAL, STATE, LOCAL AND FOREIGN TAXES, IF ANY, REQUIRED BY
LAW TO BE WITHHELD BY THE PARTICIPATING COMPANY GROUP WITH RESPECT TO AN AWARD
OR THE SHARES ACQUIRED PURSUANT THERETO.  THE COMPANY SHALL HAVE NO OBLIGATION
TO DELIVER SHARES OF STOCK, TO RELEASE SHARES OF STOCK FROM AN ESCROW
ESTABLISHED PURSUANT TO AN AWARD AGREEMENT, OR TO MAKE ANY PAYMENT IN CASH UNDER
THE PLAN UNTIL THE PARTICIPATING COMPANY GROUP’S TAX WITHHOLDING OBLIGATIONS
HAVE BEEN SATISFIED BY THE PARTICIPANT.

 

13.2                           WITHHOLDING IN SHARES.  THE COMPANY SHALL HAVE
THE RIGHT, BUT NOT THE OBLIGATION, TO DEDUCT FROM THE SHARES OF STOCK ISSUABLE
TO A PARTICIPANT UPON THE EXERCISE OR SETTLEMENT OF AN AWARD, OR TO ACCEPT FROM
THE PARTICIPANT THE TENDER OF, A NUMBER OF WHOLE SHARES OF STOCK HAVING A FAIR
MARKET VALUE, AS DETERMINED BY THE COMPANY, EQUAL TO ALL OR ANY PART OF THE TAX
WITHHOLDING OBLIGATIONS OF THE PARTICIPATING COMPANY GROUP.  THE FAIR MARKET
VALUE OF ANY SHARES OF STOCK WITHHELD OR TENDERED TO SATISFY ANY SUCH TAX
WITHHOLDING OBLIGATIONS SHALL NOT EXCEED THE AMOUNT DETERMINED BY THE APPLICABLE
MINIMUM STATUTORY WITHHOLDING RATES.

 

14.                                 TERMINATION OR AMENDMENT OF PLAN.

 

The Committee may terminate or amend the Plan at any time.  However, without the
approval of the Company’s stockholders, there shall be (a) no increase in the
maximum

 

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aggregate number of shares of Stock that may be issued under the Plan (except by
operation of the provisions of Section 4.2), (b) no change in the class of
persons eligible to receive Awards, and (c)  no other amendment of the Plan that
would require approval of the Company’s stockholders under any applicable law,
regulation or rule; provided, however, that the maximum aggregate number of
shares of Stock that may be issued under the Plan may be increased without
stockholder approval in accordance with Rule 4350(i)(1)(A)(iii) of the Nasdaq
Qualitative Listing Requirements (or any other applicable rule of the securities
exchange on which shares of Stock are then trading) in connection with business
acquisitions by the Company following the Effective Date.  No termination or
amendment of the Plan shall affect any then outstanding Award unless expressly
provided by the Committee.  In any event, no termination or amendment of the
Plan may adversely affect any then outstanding Award without the consent of the
Participant, unless such termination or amendment is necessary to comply with
any applicable law, regulation or rule.

 

15.                                 MISCELLANEOUS PROVISIONS.

 

15.1                           REPURCHASE RIGHTS.  SHARES ISSUED UNDER THE PLAN
MAY BE SUBJECT TO ONE OR MORE REPURCHASE OPTIONS, OR OTHER CONDITIONS AND
RESTRICTIONS AS DETERMINED BY THE COMMITTEE IN ITS DISCRETION AT THE TIME THE
AWARD IS GRANTED.  THE COMPANY SHALL HAVE THE RIGHT TO ASSIGN AT ANY TIME ANY
REPURCHASE RIGHT IT MAY HAVE, WHETHER OR NOT SUCH RIGHT IS THEN EXERCISABLE, TO
ONE OR MORE PERSONS AS MAY BE SELECTED BY THE COMPANY.  UPON REQUEST BY THE
COMPANY, EACH PARTICIPANT SHALL EXECUTE ANY AGREEMENT EVIDENCING SUCH TRANSFER
RESTRICTIONS PRIOR TO THE RECEIPT OF SHARES OF STOCK HEREUNDER AND SHALL
PROMPTLY PRESENT TO THE COMPANY ANY AND ALL CERTIFICATES REPRESENTING SHARES OF
STOCK ACQUIRED HEREUNDER FOR THE PLACEMENT ON SUCH CERTIFICATES OF APPROPRIATE
LEGENDS EVIDENCING ANY SUCH TRANSFER RESTRICTIONS.

 

15.2                           PROVISION OF INFORMATION.  EACH PARTICIPANT SHALL
BE GIVEN ACCESS TO INFORMATION CONCERNING THE COMPANY EQUIVALENT TO THAT
INFORMATION GENERALLY MADE AVAILABLE TO THE COMPANY’S COMMON STOCKHOLDERS.

 

15.3                           RIGHTS AS EMPLOYEE.  NO PERSON, EVEN THOUGH
ELIGIBLE PURSUANT TO SECTION 5, SHALL HAVE A RIGHT TO BE SELECTED AS A
PARTICIPANT, OR, HAVING BEEN SO SELECTED, TO BE SELECTED AGAIN AS A
PARTICIPANT.  NOTHING IN THE PLAN OR ANY AWARD GRANTED UNDER THE PLAN SHALL
CONFER ON ANY PARTICIPANT A RIGHT TO REMAIN AN EMPLOYEE, OR INTERFERE WITH OR
LIMIT IN ANY WAY ANY RIGHT OF A PARTICIPATING COMPANY TO TERMINATE THE
PARTICIPANT’S SERVICE AT ANY TIME.  TO THE EXTENT THAT AN EMPLOYEE OF A
PARTICIPATING COMPANY OTHER THAN THE COMPANY RECEIVES AN AWARD UNDER THE PLAN,
THAT AWARD CAN IN NO EVENT BE UNDERSTOOD OR INTERPRETED TO MEAN THAT THE COMPANY
IS THE EMPLOYEE’S EMPLOYER OR THAT THE EMPLOYEE HAS AN EMPLOYMENT RELATIONSHIP
WITH THE COMPANY.

 

15.4                           RIGHTS AS A STOCKHOLDER.  A PARTICIPANT SHALL
HAVE NO RIGHTS AS A STOCKHOLDER WITH RESPECT TO ANY SHARES COVERED BY AN AWARD
UNTIL THE DATE OF THE ISSUANCE OF SUCH SHARES (AS EVIDENCED BY THE APPROPRIATE
ENTRY ON THE BOOKS OF THE COMPANY OR OF A DULY AUTHORIZED TRANSFER AGENT OF THE
COMPANY).  NO ADJUSTMENT SHALL BE MADE FOR DIVIDENDS, DISTRIBUTIONS OR OTHER
RIGHTS FOR WHICH THE RECORD DATE IS PRIOR TO THE DATE SUCH SHARES ARE ISSUED,
EXCEPT AS PROVIDED IN SECTION 4.2 OR ANOTHER PROVISION OF THE PLAN.

 

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15.5                           FRACTIONAL SHARES.  THE COMPANY SHALL NOT BE
REQUIRED TO ISSUE FRACTIONAL SHARES UPON THE EXERCISE OR SETTLEMENT OF ANY
AWARD.

 

15.6                           BENEFICIARY DESIGNATION.  SUBJECT TO LOCAL LAWS
AND PROCEDURES, EACH PARTICIPANT MAY FILE WITH THE COMPANY A WRITTEN DESIGNATION
OF A BENEFICIARY WHO IS TO RECEIVE ANY BENEFIT UNDER THE PLAN TO WHICH THE
PARTICIPANT IS ENTITLED IN THE EVENT OF SUCH PARTICIPANT’S DEATH BEFORE HE OR
SHE RECEIVES ANY OR ALL OF SUCH BENEFIT.  EACH DESIGNATION WILL REVOKE ALL PRIOR
DESIGNATIONS BY THE SAME PARTICIPANT, SHALL BE IN A FORM PRESCRIBED BY THE
COMPANY, AND WILL BE EFFECTIVE ONLY WHEN FILED BY THE PARTICIPANT IN WRITING
WITH THE COMPANY DURING THE PARTICIPANT’S LIFETIME.  IF A MARRIED PARTICIPANT
DESIGNATES A BENEFICIARY OTHER THAN THE PARTICIPANT’S SPOUSE, THE EFFECTIVENESS
OF SUCH DESIGNATION MAY BE SUBJECT TO THE CONSENT OF THE PARTICIPANT’S SPOUSE. 
IF A PARTICIPANT DIES WITHOUT AN EFFECTIVE DESIGNATION OF A BENEFICIARY WHO IS
LIVING AT THE TIME OF THE PARTICIPANT’S DEATH, THE COMPANY WILL PAY ANY
REMAINING UNPAID BENEFITS TO THE PARTICIPANT’S LEGAL REPRESENTATIVE.

 

15.7                           UNFUNDED OBLIGATION.  PARTICIPANTS SHALL HAVE THE
STATUS OF GENERAL UNSECURED CREDITORS OF THE COMPANY.  ANY AMOUNTS PAYABLE TO
PARTICIPANTS PURSUANT TO THE PLAN SHALL BE UNFUNDED AND UNSECURED OBLIGATIONS
FOR ALL PURPOSES, INCLUDING, WITHOUT LIMITATION, TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974.  NO PARTICIPATING COMPANY SHALL BE
REQUIRED TO SEGREGATE ANY MONIES FROM ITS GENERAL FUNDS, OR TO CREATE ANY
TRUSTS, OR ESTABLISH ANY SPECIAL ACCOUNTS WITH RESPECT TO SUCH OBLIGATIONS.  THE
COMPANY SHALL RETAIN AT ALL TIMES BENEFICIAL OWNERSHIP OF ANY INVESTMENTS,
INCLUDING TRUST INVESTMENTS, WHICH THE COMPANY MAY MAKE TO FULFILL ITS PAYMENT
OBLIGATIONS HEREUNDER.  ANY INVESTMENTS OR THE CREATION OR MAINTENANCE OF ANY
TRUST OR ANY PARTICIPANT ACCOUNT SHALL NOT CREATE OR CONSTITUTE A TRUST OR
FIDUCIARY RELATIONSHIP BETWEEN THE COMMITTEE OR ANY PARTICIPATING COMPANY AND A
PARTICIPANT, OR OTHERWISE CREATE ANY VESTED OR BENEFICIAL INTEREST IN ANY
PARTICIPANT OR THE PARTICIPANT’S CREDITORS IN ANY ASSETS OF ANY PARTICIPATING
COMPANY.  THE PARTICIPANTS SHALL HAVE NO CLAIM AGAINST ANY PARTICIPATING COMPANY
FOR ANY CHANGES IN THE VALUE OF ANY ASSETS WHICH MAY BE INVESTED OR REINVESTED
BY THE COMPANY WITH RESPECT TO THE PLAN.

 

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