Exhibit 10.3

CHARLOTTE RUSSE HOLDING, INC.

1999 EQUITY INCENTIVE PLAN

1. PURPOSE

The purpose of this Equity Incentive Plan (the “Plan”) is to advance the
interests of Charlotte Russe Holding, Inc. (the “Company”) and its subsidiaries
by enhancing their ability to attract and retain employees and other persons or
entities who are in a position to make significant contributions to the success
of the Company and its subsidiaries through ownership of shares of the common
stock, par value $0.01 per share (“Stock”), of the Company and cash incentives.

The Plan is intended to accomplish these goals by enabling the Company to grant
Awards in the form of Options, Stock Appreciation Rights, Restricted Stock or
Unrestricted Stock Awards, Deferred Stock Awards or Performance Awards, or
combinations thereof, all as more fully described below.

2. ADMINISTRATION

Unless otherwise determined by the Board of Directors of the Company (the
“Board”), the Plan will be administered by a Committee of the Board designated
for such purpose (the “Committee”). The Committee shall consist of at least two
directors. A majority of the members of the Committee shall constitute a quorum,
and all determinations of the Committee shall be made by a majority of its
members. Any determination of the Committee under the Plan may be made without
notice or meeting of the Committee by a writing signed by a majority of the
Committee members. During such times as the Stock is registered under the
Securities Exchange Act of 1934 (the “1934 Act”), all members of the Committee
shall be “non-employee directors” within the meaning of Rule 16b-3 promulgated
under the 1934 Act and “outside directors” within the meaning of
Section 162(m)(4)(C)(i) of the Internal Revenue Code of 1986, as amended (the
“Code”).

The Committee will have authority, not inconsistent with the express provisions
of the Plan and in addition to other authority granted under the Plan, to
(a) grant Awards at such time or times as it may choose; (b) determine the size
of each Award, including the number of shares of Stock subject to the Award;
(c) determine the type or types of each Award; (d) determine the terms and
conditions of each Award; (e) waive compliance by a holder of an Award with any
obligations to be performed by such holder under an Award and waive any terms or
conditions of an Award (except that the Minimum Restricted Period (as defined in
Section 6.3(c)) shall not be waived except as provided in Section 6.3(d));
(f) amend an existing Award, except that the Committee may not, without the
consent of the holder of an Award, take any action under this clause with
respect to such Award if such action would adversely affect the rights of such
holder; (g) prescribe the form or forms of instruments that are required or
deemed appropriate under the Plan, including any written notices and elections
required of Participants (as defined below), and change such forms from time to
time; (h) adopt, amend and rescind rules and regulations for the administration
of the Plan; and (i) interpret the Plan and decide any questions and settle all
controversies and disputes that may arise in connection with the Plan. Such
determinations and actions of the Committee, and all other determinations and
actions of the Committee made or taken under authority granted by any provision
of the Plan, will be conclusive and will bind all parties. Nothing in this
paragraph shall be construed as limiting the power of the Committee to make
adjustments under Section 7.3 or Section 8.6.

 

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Neither the Board nor the Committee shall have the authority to (a) reprice any
outstanding Award under the Plan or (b) cancel and re-grant any outstanding
Award under the Plan, unless the stockholders of the Company have approved such
an action within twelve months prior to such an event.

3. EFFECTIVE DATE AND TERM OF PLAN

The Plan will become effective on the date on which it is approved by the
stockholders of the Company. Awards may be made prior to such stockholder
approval if made subject thereto. No Award may be granted under the Plan after
August 1, 2009, but Awards previously granted may extend beyond that date.

4. SHARES SUBJECT TO THE PLAN

Subject to adjustment as provided in Section 8.6, the aggregate number of shares
of Stock that may be delivered under the Plan will be 3,250,000. If any Award
requiring exercise by the Participant for delivery of Stock terminates without
having been exercised in full, or if any Award payable in Stock or cash is
satisfied in cash rather than Stock, the number of shares of Stock as to which
such Award was not exercised or for which cash was substituted will be available
for future grants.

Subject to Section 8.6(a), the maximum number of shares of Stock as to which
Options or Stock Appreciation Rights may be granted to any Participant in any
one calendar year is 200,000, which limitation shall be construed and applied
consistently with the rules under Section 162(m) of the Code.

Stock delivered under the Plan may be either authorized but unissued Stock or
previously issued Stock acquired by the Company and held in treasury. No
fractional shares of Stock will be delivered under the Plan.

5. ELIGIBILITY AND PARTICIPATION

Each key employee of the Company or any of its subsidiaries (an “Employee”) and
each other person or entity (including without limitation non-Employee directors
of the Company or a subsidiary of the Company) who, in the opinion of the
Committee, is in a position to make a significant contribution to the success of
the Company or its subsidiaries will be eligible to receive Awards under the
Plan (each such Employee, person or entity receiving an Award, “a Participant”).
A “subsidiary” for purposes of the Plan will be a corporation in which the
Company owns, directly or indirectly, stock possessing 50% or more of the total
combined voting power of all classes of stock.

6. TYPES OF AWARDS

6.1 OPTIONS

(a) NATURE OF OPTIONS. An Option is an Award giving the recipient the right on
exercise thereof to purchase Stock.

Both “incentive stock options,” as defined in Section 422(b) of the Code (any
Option intended to qualify as an incentive stock option being hereinafter
referred to as an “ISO”), and Options that are not ISOs, may be granted under
the Plan. ISOs shall be awarded only to Employees. An Option awarded under the
Plan shall be a non-ISO unless it is expressly designated as an ISO at time of
grant.

 

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(b) EXERCISE PRICE. The exercise price of an Option will be determined by the
Committee subject to the following:

(1) The exercise price of an ISO or an Option intended to qualify as performance
based compensation under Section 162(m) of the Code shall not be less than 100%
of the fair market value of the Stock subject to the Option, determined as of
the time the Option is granted.

(2) In no case may the exercise price paid for Stock which is part of an
original issue of authorized Stock be less than the par value per share of the
Stock.

(c) DURATION OF OPTIONS. The latest date on which an Option may be exercised
will be the tenth anniversary of the day immediately preceding the date the
Option was granted, or such earlier date as may have been specified by the
Committee at the time the Option was granted.

(d) EXERCISE OF OPTIONS. An Option will become exercisable at such time or
times, and on such conditions, as the Committee may specify. The Committee may
at any time and from time to time accelerate the time at which all or any part
of the Option may be exercised. Any exercise of an Option must be in writing,
signed by the proper person and delivered or mailed to the Company, accompanied
by (1) any documents required by the Committee and (2) payment in full in
accordance with paragraph (e) below for the number of shares for which the
Option is exercised.

(e) PAYMENT FOR STOCK. Stock purchased on exercise of an Option must be paid for
as follows: (1) in cash or by check (acceptable to the Company in accordance
with guidelines established for this purpose), bank draft or money order payable
to the order of the Company or (2) if so permitted by the Committee at or after
the grant of the Option or by the instrument evidencing the Option, (i) through
the delivery of shares of Stock which have been held for at least six months
(unless the Committee approves a shorter period) and which have a fair market
value equal to the exercise price, (ii) by delivery of an unconditional and
irrevocable undertaking by a broker to deliver promptly to the Company
sufficient funds to pay the exercise price, or (iii) by any combination of the
foregoing permissible forms of payment.

(f) DISCRETIONARY PAYMENTS. If (i) the market price of shares of Stock subject
to an Option (other than an Option which is in tandem with a Stock Appreciation
Right as described in Section 6.2) exceeds the exercise price of the Option at
the time of its exercise, and (ii) the person exercising the Option so requests
the Committee in writing, the Committee may in its sole discretion cancel the
Option and cause the Company to pay in cash or in shares of Stock (at a price
per share equal to the fair market value per share) to the person exercising the
Option an amount equal to the difference between the fair market value of the
Stock which would have been purchased pursuant to the exercise (determined on
the date the Option is canceled) and the aggregate exercise price which would
have been paid.

6.2 STOCK APPRECIATION RIGHTS.

(a) NATURE OF STOCK APPRECIATION RIGHTS. A Stock Appreciation Right (or “SAR”)
is an Award entitling the holder on exercise to receive an amount in cash or
Stock or a combination thereof (such form to be determined by the Committee)

 

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determined in whole or in part by reference to appreciation, from and after the
date of grant, in the fair market value of a share of Stock. SARs may be based
solely on appreciation in the fair market value of Stock or on a comparison of
such appreciation with some other measure of market growth such as (but not
limited) to appreciation in a recognized market index. The date as of which such
appreciation or other measure is determined shall be the exercise date unless
another date is specified by the Committee.

(b) GRANT OF STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be granted
in tandem with, or independently of, Options granted under the Plan.

(1) RULES APPLICABLE TO TANDEM AWARDS. When Stock Appreciation Rights are
granted in tandem with Options, (a) the Stock Appreciation Right will be
exercisable only at such time or times, and to the extent, that the related
Option is exercisable and will be exercisable in accordance with the procedure
required for exercise of the related Option; (b) the Stock Appreciation Right
will terminate and no longer be exercisable upon the termination or exercise of
the related Option, except that a Stock Appreciation Right granted with respect
to less than the full number of shares covered by an Option will not be reduced
until the number of shares as to which the related Option has been exercised or
has terminated exceeds the number of shares not covered by the Stock
Appreciation Right; (c) the Option will terminate and no longer be exercisable
upon the exercise of the related Stock Appreciation Right; and (d) the Stock
Appreciation Right will be transferable only with the related Option.

(2) EXERCISE OF INDEPENDENT STOCK APPRECIATION RIGHTS. A Stock Appreciation
Right not granted in tandem with an Option will become exercisable at such time
or times, and on such conditions, as the Committee may specify. The Committee
may at any time accelerate the time at which all or any part of the Right may be
exercised.

Any exercise of an independent Stock Appreciation Right must be in writing,
signed by the proper person and delivered or mailed to the Company, accompanied
by any other documents required by the Committee.

6.3 RESTRICTED STOCK.

(a) GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of the Plan,
the Committee may grant shares of Stock in such amounts and upon such terms and
conditions as the Committee shall determine subject to the restrictions
described below (“Restricted Stock”).

(b) RESTRICTED STOCK AGREEMENT. The Committee may require, as a condition to an
Award, that a recipient of a Restricted Stock Award enter into a Restricted
Stock Award Agreement, setting forth the terms and conditions of the Award. In
lieu of a Restricted Stock Award Agreement, the Committee may provide the terms
and conditions of an Award in a notice to the Participant of the Award, on the
stock certificate representing the Restricted Stock, in the resolution approving
the Award, or in such other manner as it deems appropriate.

(c) TRANSFERABILITY AND OTHER RESTRICTIONS. Except as otherwise provided in this
Section 6.3, the shares of Restricted Stock granted herein may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until the
end of the applicable period or periods established by the Committee and the
satisfaction of any other

 

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conditions or restrictions established by the Committee (such period during
which a share of Restricted Stock is subject to such restrictions and conditions
is referred to as the “Restricted Period”). The Restricted Period shall not be
less than one year for a Restricted Stock Award that is also a Performance Award
(as described in Section 6.5) or less than three years for any other Restricted
Stock Award (the “Minimum Restricted Period”). Except as the Committee may
otherwise determine under Section 7.1 or Section 7.2, if a Participant dies or
suffers a Status Change (as defined at Section 7.2(a)) for any reason during the
Restricted Period, the Company may purchase the shares of Restricted Stock
subject to such restrictions and conditions for the amount of cash paid by the
Participant for such shares; PROVIDED, that if no cash was paid by the
Participant such shares of Restricted Stock shall be automatically forfeited to
the Company.

During the Restricted Period with respect to any shares of Restricted Stock, the
Company shall have the right to retain in the Company’s possession the
certificate or certificates representing such shares.

(d) REMOVAL OF RESTRICTIONS. Except as otherwise provided in this Section 6.3, a
share of Restricted Stock covered by a Restricted Stock grant shall become
freely transferable by the Participant upon completion of the Restricted Period,
including the passage of any applicable period of time and satisfaction of any
conditions to vesting. The Committee, in its sole discretion, shall have the
right to waive all or any part of the restrictions and conditions with regard to
all or any part of the shares held by any Participant in the event of a Change
of Control (as defined in Section 7.4(b)), a covered transaction (as described
in Section 7.3) in which such Restricted Stock Award is not assumed or
continued, the Participant’s death or disability (as determined by the Company),
or upon the Participant’s involuntary termination of service without cause or
resignation with good reason (as defined by the Company in its sole discretion)
in accordance with a negotiated severance arrangement.

(e) VOTING RIGHTS, DIVIDENDS AND OTHER DISTRIBUTIONS. During the Restricted
Period, Participants holding shares of Restricted Stock granted hereunder may
exercise full voting rights and shall receive all regular cash dividends paid
with respect to such shares. Except as the Committee shall otherwise determine,
any other cash dividends and other distributions paid to Participants with
respect to shares of Restricted Stock, including any dividends and distributions
paid in shares, shall be subject to the same restrictions and conditions as the
shares of Restricted Stock with respect to which they were paid.

(f) OTHER AWARDS SETTLED WITH RESTRICTED STOCK. The Committee may, at the time
any Award described in this Section 6 is granted, provide that any or all the
Stock delivered pursuant to the Award will be Restricted Stock.

(g) NOTICE OF SECTION 83(B) ELECTION. Any Participant making an election under
Section 83(b) of the Code with respect to Restricted Stock must provide a copy
thereof to the Company within 10 days of filing such election with the Internal
Revenue Service.

6.4 DEFERRED STOCK.

A Deferred Stock Award entitles the recipient to receive shares of Stock to be
delivered in the future. Delivery of the Stock will take place at such time or
times, and on such conditions, as the Committee may specify. The Committee may
at any time accelerate the time at which delivery of all or any part of the
Stock will take place. At the time any Award described in this Section 6.4 is
granted, the Committee may provide that, at the time Stock would otherwise be
delivered pursuant to the Award, the Participant will instead receive an
instrument evidencing the Participant’s right to future delivery of Deferred
Stock.

 

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6.5 PERFORMANCE AWARDS; PERFORMANCE GOALS.

(a) NATURE OF PERFORMANCE AWARDS. A Performance Award entitles the recipient to
receive, without payment, an amount in cash or Stock or combination thereof
(such form to be determined by the Committee) following the attainment of
Performance Goals (as hereinafter defined). Performance Goals may be related to
personal performance, corporate performance, departmental performance or any
other category of performance established by the Committee.

The Committee will determine the Performance Goals, the period or periods during
which performance is to be measured and all other terms and conditions
applicable to the Award; PROVIDED, that if a Performance Award is a Restricted
Stock Award, the Restricted Period shall not be less than one year.

(b) OTHER AWARDS SUBJECT TO PERFORMANCE CONDITION. The Committee may, at the
time any Award described in this Section 6.5 is granted, impose the condition
(in addition to any conditions specified or authorized in this Section 6 or any
other provision of the Plan) that Performance Goals be met prior to the
Participant’s realization of any payment or benefit under the Award. Any such
Award made subject to the achievement of Performance Goals (other than an Option
or SAR) shall be treated as a Performance Award for purposes of Section 6.5(c)
below.

(c) LIMITATIONS AND SPECIAL RULES. In the case of any Performance Award intended
to qualify for the performance-based remuneration exception described in Section
162(m)(4)(C) of the Code and the regulations thereunder (an “Exempt Award”), the
Committee shall in writing preestablish specific Performance Goals. A
Performance Goal must be established prior to passage of 25% of the period of
time over which attainment of such goal is to be measured. “Performance Goal”
means criteria based upon any one or more of the following (on a consolidated,
divisional, subsidiary, line of business or geographical basis or in
combinations thereof): (i) sales; revenues; assets; expenses; earnings before or
after deduction for all or any portion of interest, taxes, depreciation or
amortization, whether or not on a continuing operations or an aggregate or per
share basis; return on equity, investment, capital or assets; inventory level or
turns; one or more operating ratios; borrowing levels, leverage ratios or credit
rating; market share; capital expenditures; cash flow; stock price; stockholder
return; or any combination of the foregoing; or (ii) acquisitions and
divestitures (in whole or in part); joint ventures and strategic alliances;
spin-offs, split-ups and the like; reorganizations; recapitalizations,
restructurings, financings (issuance of debt or equity) and refinancings;
transactions that would constitute a Change of Control; or any combination of
the foregoing. A Performance Goal and targets with respect thereto determined by
the Committee need not be based upon an increase, a positive or improved result
or avoidance of loss. The maximum Exempt Award payable to any Participant in
respect of any such Performance Goal for any year shall not exceed $2,500,000.
Payment of Exempt Awards based upon a Performance Goal for the year ending
September 24, 2005 and thereafter is conditioned upon reapproval by Employer’s
shareholders no later than Employer’s first meeting of shareholders in the year
ending September 25, 2004.

 

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7. EVENTS AFFECTING OUTSTANDING AWARDS

7.1 DEATH.

If a Participant dies, the following will apply:

(a) All Options and Stock Appreciation Rights held by the Participant
immediately prior to death, to the extent then exercisable, may be exercised by
the Participant’s executor or administrator or the person or persons to whom the
Option or Right is transferred by will or the applicable laws of descent and
distribution, at any time within the one year period ending with the first
anniversary of the Participant’s death (or such shorter or longer period as the
Committee may determine), and shall thereupon terminate. In no event, however,
shall an Option or Stock Appreciation Right remain exercisable beyond the latest
date on which it could have been exercised without regard to this Section 7.
Except as otherwise determined by the Committee, all Options and Stock
Appreciation Rights held by a Participant immediately prior to death that are
not then exercisable shall terminate at death.

(b) Except as otherwise determined by the Committee, all Restricted Stock held
by the Participant must be transferred to the Company (and, in the event the
certificates representing such Restricted Stock are held by the Company, such
Restricted Stock will be so transferred without any further action by the
Participant) in accordance with Section 6.3(c).

(c) Any payment or benefit under a Deferred Stock Award or Performance Award to
which the Participant was not irrevocably entitled prior to death will be
forfeited and the Award canceled as of the time of death, except as otherwise
determined the Committee.

7.2 TERMINATION OF SERVICE (OTHER THAN BY DEATH).

If a Participant who is an Employee ceases to be an Employee for any reason
other than death or retirement with consent of the Company after attainment of
age 65, or if there is a termination (other than by reason of death) of the
consulting, service or similar relationship in respect of which a non-Employee
Participant was granted an Award hereunder (such termination of the employment
or other relationship being hereinafter referred to as a “Status Change”), the
following will apply:

(a) Except as otherwise determined by the Committee, all Options and Stock
Appreciation Rights held by the Participant that were not exercisable
immediately prior to the Status Change shall terminate at the time of the Status
Change. Any Options or Rights that were exercisable immediately prior to the
Status Change will continue to be exercisable for a period of three months (or
such longer period as the Committee may determine), and shall thereupon
terminate, unless the Award provides by its terms for immediate termination in
the event of a Status Change (unless otherwise determined by the Committee) or
unless the Status Change results from a discharge for cause which in the opinion
of the Committee casts such discredit on the Participant as to justify immediate
termination of the Award. In no event, however, shall an Option or Stock
Appreciation Right remain exercisable beyond the latest date on which it could
have been exercised without regard to this Section 7. For purposes of this
paragraph, in the case of a Participant who is an Employee, a Status Change
shall not be deemed to have resulted by reason of (i) a sick leave or other bona
fide leave of absence approved for purposes of the Plan by the Committee, so
long as the Employee’s right to reemployment is guaranteed either by statute or
by contract, or (ii) a transfer of employment between the Company and a
subsidiary or between subsidiaries, or to the employment of a corporation (or a
parent or subsidiary corporation of such corporation) issuing or assuming an
option in a transaction to which Section 424(a) of the Code applies.

 

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(b) Except as otherwise determined by the Committee, all Restricted Stock held
by the Participant at the time of the Status Change must be transferred to the
Company (and, in the event the certificates representing such Restricted Stock
are held by the Company, such Restricted Stock will be so transferred without
any further action by the Participant) in accordance with Section 6.3(c) above.

(c) Any payment or benefit under a Deferred Stock Award or Performance Award to
which the Participant was not irrevocably entitled prior to the Status Change
will be forfeited and the Award cancelled as of the date of such Status Change
unless otherwise determined by the Committee.

7.3 CERTAIN CORPORATE TRANSACTIONS.

Except as otherwise provided by the Committee at the time of grant, in the event
of a consolidation or merger in which the Company is not the surviving
corporation or which results in the acquisition of substantially all the
Company’s outstanding Stock by a single person or entity or by a group of
persons and/or entities acting in concert, or in the event of the sale or
transfer of substantially all the Company’s assets or a dissolution or
liquidation of the Company (a “covered transaction”), the following rules shall
apply:

(a) Subject to paragraph (b) below, all outstanding Awards requiring exercise
will cease to be exercisable, and all other Awards to the extent not fully
vested (including Awards subject to conditions not yet satisfied or determined)
will be forfeited, as of the effective time of the covered transaction, provided
that the Committee may in its sole discretion (but subject to Section 7.4), on
or prior to the effective date of the covered transaction, (1) make any
outstanding Option and Stock Appreciation Right exercisable in full, (2) remove
the restrictions from any Restricted Stock, (3) cause the Company to make any
payment and provide any benefit under any Deferred Stock Award or Performance
Award and (4) remove any performance or other conditions or restrictions on any
Award; or

(b) With respect to an outstanding Award held by a participant who, following
the covered transaction, will be employed by or otherwise providing services to
an entity which is a surviving or acquiring entity in the covered transaction or
an affiliate of such an entity, the Committee may at or prior to the effective
time of the covered transaction, in its sole discretion and in lieu of the
action described in paragraph (a) above, arrange to have such surviving or
acquiring entity or affiliate assume any Award held by such participant
outstanding hereunder or grant a replacement award which, in the judgment of the
Committee, is substantially equivalent to any Award being replaced.

7.4 CHANGE OF CONTROL PROVISIONS.

(a) IMPACT OF EVENT. Notwithstanding any other provision of the Plan to the
contrary, in the event of a Change of Control:

(1) ACCELERATION OF OPTIONS AND SARS. Any Options and SARs outstanding as of the
date such Change of Control is determined to have occurred and which are not
then exercisable shall become exercisable to the full extent of the original
grant, and all shares of Restricted Stock which are not otherwise vested shall
vest. Holders of Performance Awards granted hereunder as to which the relevant
performance period has not

 

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ended as of the date such Change of Control is determined to have occurred shall
be entitled at the time of such Change of Control to receive a cash payment per
Performance Award equal to the full value of the cash component of such Award
(if any) plus the fair market value of Stock included in such Award.

(2) RESTRICTION ON APPLICATION OF PLAN PROVISIONS APPLICABLE IN THE EVENT OF
TERMINATION OF EMPLOYMENT. After a Change of Control, Options and SARs shall not
be terminated as a result of a termination of employment other than by reason of
death, disability (as determined by the Company) or retirement for seven months
following such termination of employment or until expiration of the original
terms of the Option or SAR, whichever period is shorter.

(3) RESTRICTION ON AMENDMENT. In connection with or following a Change of
Control, neither the Committee nor the Board may impose additional conditions
upon exercise or otherwise amend or restrict an Option, SAR, share of Restricted
Stock or Performance Award, or amend the terms of the Plan in any manner adverse
to the holder thereof, without the written consent of such holder.

Notwithstanding the foregoing, if any right granted pursuant to this Section 7.4
would make a Change of Control transaction ineligible for pooling of interests
accounting under applicable accounting principles that but for this Section 7.4
would otherwise be eligible for such accounting treatment, the Committee shall
have the authority to substitute stock for the cash which would otherwise be
payable pursuant to this Section 7.4 having a fair market value equal to such
cash.

(b) DEFINITION OF CHANGE OF CONTROL. A “Change of Control” shall be deemed to
have occurred if (i) any corporation, person or other entity (other than the
Company, a majority-owned subsidiary of the Company, any employee benefit plan
maintained by the Company or any of its subsidiaries or members of the Board on
the date the Plan is approved by the stockholders of the Company), including a
“group” as defined in Section 13(d)(3) of the 1934 Act becomes the beneficial
owner of Stock representing more than twenty-five percent of the voting power of
the Company (other than by consolidation or merger) or (ii) within any 24
consecutive month period, persons who were members of the Board immediately
prior to such 24-month period, together with any persons who were first elected
as directors (other than as a result of any settlement of a proxy or consent
solicitation contest or any action taken to avoid such a contest) during such
24-month period by or upon the recommendation of persons who were members of the
Board immediately prior to such 24-month period and who constituted a majority
of the Board at the time of such election, cease to constitute a majority of the
Board.

8. GENERAL PROVISIONS

8.1 DOCUMENTATION OF AWARDS.

Awards will be evidenced by such written instruments, if any, as may be
prescribed by the Committee from time to time. Such instruments may be in the
form of agreements to be executed by both the Participant and the Company, or
certificates, letters or similar instruments, which need not be executed by the
Participant but acceptance of which will evidence agreement to the terms
thereof.

 

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8.2 RIGHTS AS A STOCKHOLDER, DIVIDEND EQUIVALENTS.

Except as specifically provided by the Plan, the receipt of an Award will not
give a Participant rights as a stockholder; the Participant will obtain such
rights, subject to any limitations imposed by the Plan or the instrument
evidencing the Award, only upon the issuance of Stock. However, the Committee
may, on such conditions as it deems appropriate, provide that a Participant will
receive a benefit in lieu of cash dividends that would have been payable on any
or all Stock subject to the Participant’s Award had such Stock been outstanding.
Without limitation, the Committee may provide for payment to the Participant of
amounts representing such dividends, either currently or in the future, or for
the investment of such amounts on behalf of the Participant.

8.3 CONDITIONS ON DELIVERY OF STOCK.

The Company will not be obligated to deliver any shares of Stock pursuant to the
Plan or to remove restriction from shares previously delivered under the Plan
(a) until all conditions of the Award have been satisfied or removed, (b) until,
in the opinion of the Company’s counsel, all applicable federal and state laws
and regulation have been complied with, (c) if the outstanding Stock is at the
time listed on any stock exchange, until the shares to be delivered have been
listed or authorized to be listed on such exchange or market upon official
notice of notice of issuance, and (d) until all other legal matters in
connection with the issuance and delivery of such shares have been approved by
the Company’s counsel. If the sale of Stock has not been registered under the
Securities Act of 1933, as amended, the Company may require, as a condition to
exercise of the Award, such representations or agreements as counsel for the
Company may consider appropriate to avoid violation of such Act and may require
that the certificates evidencing such Stock bear an appropriate legend
restricting transfer.

If an Award is exercised by the Participant’s legal representative, the Company
will be under no obligation to deliver Stock pursuant to such exercise until the
Company is satisfied as to the authority of such representative.

8.4 TAX WITHHOLDING.

The Company will withhold from any cash payment made pursuant to an Award an
amount sufficient to satisfy all federal, state and local withholding tax
requirements (the “withholding requirements”).

In the case of an Award pursuant to which Stock may be delivered, the Committee
will have the right to require that the Participant or other appropriate person
remit to the Company an amount sufficient to satisfy the withholding
requirements, or make other arrangements satisfactory to the Committee with
regard to such requirements, prior to the delivery of any Stock or removal of
restrictions thereon. If and to the extent that such withholding is required,
the Committee may permit the Participant or such other person to elect at such
time and in such manner as the Committee provides to have the Company hold back
from the shares to be delivered, or to deliver to the Company, Stock having a
value calculated to satisfy the withholding requirement. The Committee may make
such share withholding mandatory with respect to any Award at the time such
Award is made to a Participant.

If at the time an ISO is exercised the Committee determines that the Company
could be liable for withholding requirements with respect to the exercise or
with respect to a disposition of the Stock received upon exercise, the Committee
may require as a condition of

 

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exercise that the person exercising the ISO agree (a) to provide for withholding
under the preceding paragraph of this Section 8.4, if the Committee determines
that a withholding responsibility may arise in connection with tax exercise,
(b) to inform the Company promptly of any disposition (within the meaning of
section 424(c) of the Code) of Stock received upon exercise, and (c) to give
such security as the Committee deems adequate to meet the potential liability of
the Company for the withholding requirements and to augment such security from
time to time in any amount reasonably deemed necessary by the Committee to
preserve the adequacy of such security.

8.5 TRANSFERABILITY OF AWARDS.

Unless otherwise permitted by the Committee, no Award (other than an Award in
the form of an outright transfer of cash or Unrestricted Stock) may be
transferred other than by will or by the laws of descent and distribution.

8.6 ADJUSTMENTS IN THE EVENT OF CERTAIN TRANSACTIONS.

(a) In the event of a stock dividend, stock split or combination of shares,
recapitalization or other change in the Company’s capitalization, or other
distribution to holders of Stock other than normal cash dividends, after the
effective date of the Plan, the Committee will make any appropriate adjustments
to the maximum number of shares that may be delivered under the Plan under the
first paragraph of Section 4 above and to the limits described in the second
paragraph of Section 4 and in Section 6.5(c).

(b) In any event referred to in paragraph (a), the Committee will also make any
appropriate adjustments to the number and kind of shares of Stock or securities
subject to Awards then outstanding or subsequently granted, any exercise prices
relating to Awards and any other provision of Awards affected by such change.
The Committee may also make such adjustments to take into account material
changes in law or in accounting practices or principles, mergers,
consolidations, acquisitions, dispositions or similar corporate transactions, or
any other event, if it is determined by the Committee that adjustments are
appropriate to avoid distortion in the operation of the Plan; PROVIDED, that
adjustments pursuant to this sentence shall not be made to the extent it would
cause any Award intended to be exempt under Section 162(m)(4)(c) of the Code to
fail to be so exempt.

(c) In the case of ISOs, the adjustments described in (a) and (b) will be made
only to the extent consistent with continued qualification of the Option under
Section 422 of the Code (in the case of an ISO) or Section 162(m) of the Code.

8.7 EMPLOYMENT RIGHTS, ETC.

Neither the adoption of the Plan nor the grant of Awards will confer upon any
person any right to continued retention by the Company or any subsidiary as an
Employee or otherwise, or affect in any way the right of the Company or
subsidiary to terminate an employment, service or similar relationship at any
time. Except as specifically provided by the Committee in any particular case,
the loss of existing or potential profit in Awards granted under the Plan will
not constitute an element of damages in the event of termination of an
employment, service or similar relationship even if the termination is in
violation of an obligation of the Company to the Participant.

 

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8.8 DEFERRAL OF PAYMENTS.

The Committee may agree at any time, upon request of the Participant, to defer
the date on which any payment under an Award will be made.

8.9 PAST SERVICES AS CONSIDERATION.

Where a Participant purchases Stock under an Award for a price equal to the par
value of the Stock the Committee may determine that such price has been
satisfied by past services rendered by the Participant.

9. EFFECT, AMENDMENT AND TERMINATION

Neither adoption of the Plan nor the grant of Awards to a Participant will
affect the Company’s right to grant to such Participant awards that are not
subject to the Plan, to issue to such Participant Stock as a bonus or otherwise,
or to adopt other plans or arrangements under which Stock may be issued to
Employees.

The Committee may at any time or times amend the Plan or any outstanding Award
for any purpose which may at the time be permitted by law, or may at any time
terminate the Plan as to any further grants of Awards, provided that (except to
the extent expressly required or permitted by the Plan) no such amendment will,
without the approval of the stockholders of the Company, effectuate a change for
which stockholder approval is required in order for the Plan to continue to
qualify for the award of ISOs under Section 422 of the Code or for the award of
performance-based compensation under Section 162(m) of the Code. However, except
as provided in Section 8.6 relating to capitalization adjustments, stockholder
approval shall be required for any amendment of the Plan that either
(a) materially increases the number of shares of Stock available for issuance
under the Plan, (b) materially expands the class of individuals eligible to
receive Awards under the Plan, (c) materially increases the benefits accruing to
Participants under the Plan or materially reduces the price at which shares of
Stock may be issued or purchased under the Plan, (d) materially extends the term
of the Plan, or (e) expands the types of Awards available for issuance under the
Plan, but only to the extent required by applicable law or listing requirements.
Except as provided above, rights under any Award granted before amendment of the
Plan shall not be impaired by any amendment of the Plan unless (i) the Company
requests the consent of the affected Participant, and (ii) such Participant
consents in writing.

 

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