Exhibit 10.27

 

AMNET MORTGAGE, INC.

 

2004 EQUITY INCENTIVE PLAN

 

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TABLE OF CONTENTS

 

1.

Establishment, Purpose and Term of Plan

 

 

1.1

Establishment

 

 

1.2

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

Committee Complying with Section 162(m)

 

 

3.5

Powers of the Committee

 

 

3.6

No Repricing

 

 

3.7

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

Incentive Stock Option Limitations

 

 

5.4

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

 

 

 

 

 

8.

Terms and Conditions of Restricted Stock Awards

 

 

8.1

Types of Restricted 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

 

 

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8.7

Effect of Termination of Service

 

 

8.8

Nontransferability of Restricted 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

Voting Rights; Dividend Equivalent Rights and Distributions

 

 

9.7

Effect of Termination of Service

 

 

9.8

Nontransferability of Performance Awards

 

 

 

 

 

10.

Terms and Conditions of Restricted Stock Unit Awards

 

 

10.1

Grant of Restricted Stock Unit Awards

 

 

10.2

Purchase Price

 

 

10.3

Vesting

 

 

10.4

Voting Rights, Dividend Equivalent Rights and Distributions

 

 

10.5

Effect of Termination of Service

 

 

10.6

Settlement of Restricted Stock Unit Awards

 

 

10.7

Nontransferability of Restricted Stock Unit Awards

 

 

 

 

 

11.

Deferred Stock Units

 

 

11.1

Establishment of Deferred Stock Unit Program

 

 

11.2

Terms and Conditions of Deferred Stock Units

 

 

 

 

 

12.

Standard Forms of Award Agreement

 

 

12.1

Award Agreements

 

 

12.2

Authority to Vary Terms

 

 

 

 

 

13.

Change in Control

 

 

13.1

Definitions

 

 

13.2

Effect of Change in Control on Options and SARs

 

 

13.3

Effect of Change in Control on Restricted Stock Awards

 

 

13.4

Effect of Change in Control on Performance Awards

 

 

13.5

Effect of Change in Control on Restricted Stock Unit Awards

 

 

13.6

Effect of Change in Control on Deferred Stock Units

 

 

 

 

 

14.

Compliance with Securities Law

 

 

 

 

15.

Tax Withholding

 

 

15.1

Tax Withholding in General

 

 

15.2

Withholding in Shares

 

 

 

 

 

16.

Amendment or Termination of Plan

 

 

 

 

17.

Miscellaneous Provisions

 

 

17.1

Repurchase Rights

 

 

17.2

Provision of Information

 

 

17.3

Rights as Employee, Consultant or Director

 

 

17.4

Rights as a Stockholder

 

 

17.5

Fractional Shares

 

 

17.6

Severability

 

 

17.7

Beneficiary Designation

 

 

17.8

Unfunded Obligation

 

 

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AMNET MORTGAGE, INC.

2004 EQUITY INCENTIVE PLAN

 

1.                                      Establishment, Purpose and Term of Plan.

 

1.1                                 Establishment.  The AmNet Mortgage, Inc.
2004 Equity Incentive Plan (the “Plan”) is hereby established effective as
of                    , 2004, the date of its approval by the stockholders of
the Company (the “Effective Date”).

 

1.2                                 Purpose.  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,
Indexed Options, Stock Appreciation Rights, Restricted Stock Purchase Rights,
Restricted Stock Bonuses, Performance Shares, Performance Units, Restricted
Stock Units and Deferred Stock Units. After the Effective Date, the Company
shall terminate, and no longer issue any awards from under, the Company’s 1997
Stock Incentive Plan, 1997 Stock Option Plan and 1997 Outside Director Stock
Option 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. However, all
Incentive Stock Options shall be granted, if at all, within ten (10) years from
the Effective Date.

 

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, Indexed Option,
SAR, Restricted Stock Purchase Right, Restricted Stock Bonus, Performance Share,
Performance Unit, Restricted Stock Unit or Deferred Stock Unit granted under the
Plan.

 

(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 “Indexed Option Agreement,” a “SAR Agreement,” a
“Restricted Stock Purchase Agreement,” a “Restricted Stock Bonus Agreement,” a
“Performance Share Agreement,” a “Performance Unit Agreement,” a “Restricted
Stock Unit Agreement,” or a “Deferred Stock 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.

 

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(f)                                    “Committee” means the 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 AmNet Mortgage, Inc., a
Maryland corporation, or any successor corporation thereto.

 

(h)                                 “Consultant” means a person engaged to
provide consulting or advisory services (other than as an Employee or a member
of the Board) to a Participating Company, provided that the identity of such
person, the nature of such services or the entity to which such services are
provided would not preclude the Company from offering or selling securities to
such person pursuant to the Plan in reliance on a Form S-8 Registration
Statement under the Securities Act.

 

(i)                                     “Deferred Stock Unit” means a
bookkeeping entry representing a right granted to a Participant pursuant to
Section 11 of the Plan to receive a share of Stock on a date determined in
accordance with the provisions of Section 11 and the Participant’s Award
Agreement.

 

(j)                                     “Director” means a member of the Board.

 

(k)                                  “Disability” means the permanent and total
disability of the Participant, within the meaning of Section 22(e)(3) of the
Code.

 

(l)                                     “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.

 

(m)                               “Employee” means any person treated as an
employee (including an Officer or a Director who is also treated as an employee)
in the records of a Participating Company and, with respect to any Incentive
Stock Option granted to such person, who is an employee for purposes of
Section 422 of the Code; provided, however, that neither service as a Director
nor payment of a Director’s fee shall be sufficient to constitute employment for
purposes of the Plan. The Company shall determine in good faith and in the
exercise of its discretion whether an individual has become or has ceased to be
an Employee and the effective date of such individual’s employment or
termination of employment, as the case may be. For purposes of an individual’s
rights, if any, under the Plan as of the time of the Company’s determination,
all such determinations by the Company shall be final, binding and conclusive,
notwithstanding that the Company or any court of law or governmental agency
subsequently makes a contrary determination.

 

(n)                                 “Exchange Act” means the Securities Exchange
Act of 1934, as amended.

 

(o)                                 “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 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

 

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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.

 

(p)                                 “Incentive Stock Option” means an Option
intended to be (as set forth in the Award Agreement) and which qualifies as an
incentive stock option within the meaning of Section 422(b) of the Code.

 

(q)                                 “Indexed Option” means an Option with an
exercise price which either increases by a fixed percentage over time or changes
by reference to a published index, as determined by the Committee and set forth
in the Option Agreement.

 

(r)                                    “Insider” means an Officer, a Director or
any other person whose transactions in Stock are subject to Section 16 of the
Exchange Act.

 

(s)                                  “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.

 

(t)                                    “Officer” means any person designated by
the Board as an officer of the Company.

 

(u)                                 “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. An Option may be either an Incentive Stock
Option, a Nonstatutory Stock Option or an Indexed Option.

 

(v)                                 “Parent Corporation” means any present or
future “parent corporation” of the Company, as defined in Section 424(e) of the
Code.

 

(w)                               “Participant” means any eligible person who
has been granted one or more Awards.

 

(x)                                   “Participating Company” means the Company
or any Parent Corporation, Subsidiary Corporation or Affiliate.

 

(y)                                 “Participating Company Group” means, at any
point in time, all entities collectively which are then Participating Companies.

 

(z)                                   “Performance Award” means an Award of
Performance Shares or Performance Units.

 

(aa)                            “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 threshold levels of attainment of the
applicable Performance Goal(s) measured as of the end of the applicable
Performance Period.

 

(bb)                          “Performance Goal” means a performance goal
established by the Committee pursuant to Section 9.3 of the Plan.

 

(cc)                            “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.

 

(dd)                          “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.

 

(ee)                            “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.

 

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(ff)                                “Prior Plan Options” means any option or
other award granted by the Company which is subject to vesting or repurchase by
the Company, including specifically, all such options and awards granted
pursuant to the Company’s 1997 Stock Incentive Plan, 1997 Stock Option Plan and
1997 Outside Director Stock Option Plan which is outstanding on or after the
Effective Date.

 

(gg)                          “Restricted Stock Award” means an Award of a
Restricted Stock Bonus or a Restricted Stock Purchase Right.

 

(hh)                          “Restricted Stock Bonus” means Stock granted to a
Participant pursuant to Section 8 of the Plan.

 

(ii)                                  “Restricted Stock Purchase Right” means a
right to purchase Stock granted to a Participant pursuant to Section 8 of the
Plan.

 

(jj)                                  “Restricted Stock Unit” or “Stock Unit”
means a bookkeeping entry representing a right granted to a Participant pursuant
to Section 10 of the Plan to receive a share of Stock on a date determined in
accordance with the provisions of Section 10 and the Participant’s Award
Agreement.

 

(kk)                            “Restriction Period” means the period
established in accordance with Section 8.5 of the Plan during which shares
subject to a Restricted Stock Award are subject to Vesting Conditions.

 

(ll)                                  “Rule 16b-3” means Rule 16b-3 under the
Exchange Act, as amended from time to time, or any successor rule or regulation.

 

(mm)                      “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.

 

(nn)                          “Section 162(m)” means Section 162(m) of the Code.

 

(oo)                          “Securities Act” means the Securities Act of 1933,
as amended.

 

(pp)                          “Service” means a Participant’s employment or
service with the Participating Company Group, whether in the capacity of an
Employee, a Director or a Consultant. A Participant’s Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders such Service or a change in the Participating Company
for which the Participant renders such Service, provided that there is no
interruption or termination of the Participant’s Service. Furthermore, a
Participant’s Service shall not be deemed to have terminated if the Participant
takes any military leave, sick leave, or other bona fide leave of absence
approved by the Company. However, if any such leave taken by a Participant
exceeds ninety (90) days, then on the one hundred eighty-first (181st) day
following the commencement of such leave any Incentive Stock Option held by the
Participant shall cease to be treated as an Incentive Stock Option and instead
shall be treated thereafter as a Nonstatutory Stock Option, unless the
Participant’s right to return to Service with the Participating Company Group 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 entity for
which the Participant performs Service ceasing to be a Participating Company. In
addition, a Participant’s Service shall be deemed to have terminated if, in the
Committee’s sole discretion, the Participant’s employment relationship is
transferred to an Affiliate or Subsidiary Corporation and the Participant is
offered a replacement equity award from the Affiliate or Subsidiary Corporation.
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.

 

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(qq)                          “Stock” means the common stock of the Company, as
adjusted from time to time in accordance with Section 4.2 of the Plan.

 

(rr)                                “Subsidiary Corporation” means any present
or future “subsidiary corporation” of the Company, as defined in Section 424(f)
of the Code.

 

(ss)                            “Ten Percent Owner” means a Participant who, at
the time an Incentive Stock Option is granted to the Participant, owns stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of a Participating Company (other than an Affiliate) within the
meaning of Section 422(b)(6) of the Code.

 

(tt)                                “Vesting Conditions” mean those conditions
established in accordance with Section 8.5 or Section 10.3 of the Plan prior to
the satisfaction of which shares subject to a Restricted Stock Award or
Restricted Stock Unit Award, respectively, remain subject to forfeiture or a
repurchase option in favor of the Company upon the Participant’s termination of
Service.

 

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. The Board may, in its discretion, delegate to a committee comprised of
one or more Officers the authority to grant one or more Awards, 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 (a) 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, (b) 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                                 Committee Complying with Section 162(m).  If
the Company is a “publicly held corporation” within the meaning of
Section 162(m), the Board may establish a Committee of “outside directors”
within the meaning of Section 162(m) to approve the grant of any Award which
might reasonably be anticipated to result in the payment of employee
remuneration that would otherwise exceed the limit on employee remuneration
deductible for income tax purposes pursuant to Section 162(m).

 

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3.5                                 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 and
to designate Options as Incentive Stock Options, Nonstatutory Stock Options or
Indexed Options;

 

(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 Restricted
Stock Units, 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;

 

(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 or regulations of or to accommodate the tax policy, accounting principles
or custom of, foreign jurisdictions whose citizens may be granted Awards;

 

(j)                                     to authorize, in conjunction with any
applicable Company deferred compensation plan, that the receipt of cash or Stock
subject to any Award under this Plan, may be deferred under the terms and
conditions of such Company deferred compensation plan; and

 

(k)                                  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.

 

3.6                                 No 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 the amendment of outstanding
Options and/or SARs to reduce the exercise price thereof. This paragraph shall
not be construed to apply to “issuing or

 

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assuming a stock option in a transaction to which section 424(a) applies,”
within the meaning of Section 424 of the Code.

 

3.7                                 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.

 

4.                                      Shares Subject to Plan.

 

4.1                                 Maximum Number of Shares Issuable.  Subject
to adjustment as provided in Section 4.2, the maximum aggregate number of shares
of Stock that may be granted under the Plan shall be 2,441,867, reduced at any
time by the number of shares subject to the Prior Plan Options (which as of the
Effective Date equaled approximately 1,827,217). Such shares shall consist of
authorized but unissued or reacquired shares of Stock or any combination
thereof. If any outstanding Award, including any Prior Plan Options, 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, including any Prior Plan Options, are forfeited or
repurchased by the Company, the shares of Stock allocable to the terminated
portion of such Award, including any Prior Plan Options, or such forfeited or
repurchased shares of Stock shall again be available for grant under the Plan.
Shares of Stock shall not be deemed to have been granted pursuant to the Plan
(a) with respect to any portion of an Award that is settled in cash or (b) to
the extent such shares are withheld in satisfaction of tax withholding
obligations pursuant to Section 15.2. Upon payment in shares of Stock pursuant
to the exercise of a SAR, the number of shares available for grant under the
Plan shall be reduced only by the number of shares actually issued in such
payment. 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 grant under the Plan shall be reduced by the net
number of shares for which the Option is exercised.

 

4.2                                 Adjustments for Changes in Capital
Structure.  Subject to any required action by the stockholders of the Company,
in the event of any change in the Stock effected without receipt of
consideration by the Company, whether 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 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 and to any outstanding Awards, and in
the exercise or purchase price per share under any outstanding Award in order to
prevent dilution or enlargement of Participants’ rights under the Plan. For
purposes of the foregoing, conversion of any convertible securities of the
Company shall not be treated as “effected without receipt of consideration by
the Company.” 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.

 

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5.                                      Eligibility and Award Limitations.

 

5.1                                 Persons Eligible for Awards.  Awards may be
granted only to Employees, Consultants and Directors. For purposes of the
foregoing sentence, “Employees,” “Consultants” and “Directors” shall include
prospective Employees, prospective Consultants and prospective Directors to whom
Awards are granted in connection with written offers of an employment or other
service relationship 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                                 Incentive Stock Option Limitations.

 

(a)                                  Persons Eligible.  An Incentive Stock
Option may be granted only to a person who, on the effective date of grant, is
an Employee of the Company, a Parent Corporation or a Subsidiary Corporation
(each being an “ISO-Qualifying Corporation”). Any person who is not an Employee
of an ISO-Qualifying Corporation on the effective date of the grant of an Option
to such person may be granted only a Nonstatutory Stock Option. An Incentive
Stock Option granted to a prospective Employee upon the condition that such
person become an Employee of an ISO-Qualifying Corporation shall be deemed
granted effective on the date such person commences Service with an
ISO-Qualifying Corporation, with an exercise price determined as of such date in
accordance with Section 6.1.

 

(b)                                 Fair Market Value Limitation.  To the extent
that options designated as Incentive Stock Options (granted under all stock
option plans of the Participating Company Group, including the Plan) become
exercisable by a Participant for the first time during any calendar year for
stock having a Fair Market Value greater than One Hundred Thousand dollars
($100,000), the portion of such options which exceeds such amount shall be
treated as Nonstatutory Stock Options. For purposes of this Section, options
designated as Incentive Stock Options shall be taken into account in the order
in which they were granted, and the Fair Market Value of stock shall be
determined as of the time the option with respect to such stock is granted. If
the Code is amended to provide for a different limitation from that set forth in
this Section, such different limitation shall be deemed incorporated herein
effective as of the date and with respect to such Options as required or
permitted by such amendment to the Code. If an Option is treated as an Incentive
Stock Option in part and as a Nonstatutory Stock Option in part by reason of the
limitation set forth in this Section, the Participant may designate which
portion of such Option the Participant is exercising. In the absence of such
designation, the Participant shall be deemed to have exercised the Incentive
Stock Option portion of the Option first. Upon exercise, shares issued pursuant
to each such portion shall be separately identified.

 

5.4                                 Award Limits.

 

(i)                                     Options and SARs.  Subject to adjustment
as provided in Section 4.2, no Employee shall be granted within any fiscal year
of the Company one or more Options or Freestanding SARs which in the aggregate
are for more than Three Hundred Thousand (300,000) shares of Stock, provided,
however, that the Company may make an additional one-time grant to any
newly-hired Employee of an Option and/or SAR for the purchase of up to an
additional One Hundred and Fifty Thousand (150,000) shares of Stock. An Option
which is canceled (or a Freestanding SAR as to which the exercise price is
reduced to reflect a reduction in the Fair Market Value of the Stock) in the
same fiscal year of the Company in which it was granted shall continue to be
counted against such limit for such fiscal year.

 

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(ii)                                  Restricted Stock Awards and Restricted
Stock Units.  Subject to adjustment as provided in Section 4.2, no Employee
shall be granted within any fiscal year of the Company one or more Restricted
Stock Awards or Restricted Stock Units, subject to Vesting Conditions based on
the attainment of Performance Goals, for more than One Hundred and Fifty
Thousand (150,000) shares of Stock, provided, however, that the Company may make
an additional one-time grant to any newly-hired Employee of a Restricted Stock
Award or Restricted Stock Units of up to an additional Seventy-Five Thousand
(75,000) shares of Stock.

 

(iii)                               Performance Awards.  Subject to adjustment
as provided in Section 4.2, no Employee shall be granted (A) Performance Shares
which could result in such Employee receiving more than One Hundred and Fifty
Thousand (150,000) shares of Stock for each full fiscal year of the Company
contained in the Performance Period for such Award, or (B) Performance Units
which could result in such Employee receiving more than Two Million Five Hundred
Thousand ($2,500,000) for each full fiscal year of the Company contained in the
Performance Period for such Award. No Participant may be granted more than one
Performance Award for the same Performance Period.

 

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 (a) 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,
(b) no Incentive Stock Option granted to a Ten Percent Owner shall have an
exercise price per share less than one hundred ten percent (110%) of the Fair
Market Value of a share of Stock on the effective date of grant of the Option,
and (c) notwithstanding anything to the contrary in this Section 6.1, in the
case of an Indexed Option, the Committee shall determine the exercise price of
such Indexed Option and the terms and conditions that affect, if any, any
adjustments to the exercise price of such Indexed 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, 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 ten (10) years after the effective date of
grant of such Option, (b) no Incentive Stock Option granted to a Ten Percent
Owner shall be exercisable after the expiration of five (5) years after the
effective date of grant of such Option, and (c) no Option granted to a
prospective Employee, prospective Consultant or prospective Director 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 ten (10) years after the
effective date of grant of the Option, unless earlier terminated in accordance
with its provisions.

 

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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 in 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 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, including with respect to
one or more Participants specified by the Company notwithstanding that such
program or procedures may be available to other Participants.

 

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.

 

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. Prior to the
issuance of shares of Stock upon the exercise of an Option, the Option shall 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 transfer 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, a Nonstatutory Stock 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. Notwithstanding any of the foregoing, the Board may permit further
transferability of any Option, on a general or specific basis, and may impose
conditions and limitations on any permitted transferability.

 

7.                                      Terms and Conditions of Stock
Appreciation Rights.

 

Stock Appreciation Rights 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

 

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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.

 

(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 ten (10) 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 a 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, a 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 a SAR would otherwise terminate or expire, the SAR by its terms remains
exercisable immediately prior to such termination or expiration

 

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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.  Subject
to earlier termination of the SAR as otherwise provided herein a 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 and thereafter shall terminate.

 

7.7                                 Nontransferability of SARs.  During the
lifetime of the Participant, a SAR shall be exercisable only by the Participant
or the Participant’s guardian or legal representative. Prior to the exercise of
a SAR, the SAR shall 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 transfer
by will or by the laws of descent and distribution. Notwithstanding any of the
foregoing, the Board may permit further transferability of any SAR, on a general
or specific basis, and may impose conditions and limitations on any permitted
transferability.

 

8.                                      Terms and Conditions of Restricted Stock
Awards.

 

Restricted Stock Awards shall be evidenced by Award Agreements specifying
whether the Award is a Restricted Stock Bonus or a Restricted 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 Restricted Stock Award or
purported Restricted Stock Award shall be a valid and binding obligation of the
Company unless evidenced by a fully executed Award Agreement. Award Agreements
evidencing Restricted 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:

 

8.1                                 Types of Restricted Stock Awards
Authorized.  Restricted Stock Awards may be in the form of either a Restricted
Stock Bonus or a Restricted Stock Purchase Right. Restricted 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 Restricted 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 Restricted 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 Restricted 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 Restricted Stock Award.

 

8.3                                 Purchase Period.  A Restricted 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 Restricted Stock Purchase Right; provided, however,
that no Restricted Stock Purchase Right granted to a prospective Employee,
prospective Consultant or prospective Director 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 Restricted Stock Purchase Right shall
be made (a) in cash, by check, or in cash equivalent, (b) 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

 

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any combination thereof. The Committee may at any time or from time to time
grant Restricted 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. Restricted 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 Restricted Stock Award may or may not be made
subject to Vesting Conditions based upon the satisfaction of such Service
requirements, conditions, restrictions or performance criteria, including,
without limitation, Performance Goals as described in Section 9.4, as shall be
established by the Committee and set forth in the Award Agreement evidencing
such Award. During any Restriction Period in which shares acquired pursuant to a
Restricted 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 13.1, 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.

 

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 Restricted 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 Restricted Stock Award
shall be immediately subject to the same Vesting Conditions as the shares
subject to the Restricted 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 Restricted 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 (a) 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 Restricted Stock Purchase Right which remain subject to Vesting
Conditions as of the date of the Participant’s termination of Service and
(b) the Participant shall forfeit to the Company any shares acquired by the
Participant pursuant to a Restricted 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 Restricted Stock Award
Rights.  Prior to the issuance of shares of Stock pursuant to a Restricted Stock
Award, rights to acquire such shares shall 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 transfer by will or the laws of descent and distribution.
All rights with respect to a Restricted Stock 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.

 

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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.

 

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. 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.

 

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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 Committee, occurring after the establishment of the
Performance Goals applicable to the Performance Award. Performance Measures may
be one or more of the following, or a combination of the any of the following,
as determined by the Committee:

 

(i)                                     revenue;

 

(ii)                                  gross margin;

 

(iii)                               operating margin;

 

(iv)                              operating income;

 

(v)                                 pre-tax profit;

 

(vi)                              earnings before interest, taxes and
depreciation;

 

(vii)                           net income;

 

(viii)                        cash flow;

 

(ix)                                expenses;

 

(x)                                   the market price of the Stock;

 

(xi)                                earnings per share;

 

(xii)                             return on stockholder equity;

 

(xiii)                          return on capital;

 

(xiv)                         return on net assets;

 

(xv)                            economic value added;

 

(xvi)                         number of customers;

 

(xvii)                      market share;

 

(xviii)                   return on investment

 

(xix)                           profit after tax

 

(xx)                              product approval

 

(xxi)                           volume and/or origination;

 

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(xxii)                        strategic benchmarks; and

 

(xxiii)                     customer satisfaction.

 

(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.

 

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 in
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

 

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Award by the value of a share of Stock determined by the method 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                                 Voting Rights; Dividend Equivalent Rights
and Distributions.  Participants shall have no voting rights with respect to
shares of Stock represented by Performance Share Awards until the date of the
issuance of such shares, if any (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company).
However, the Committee, in its discretion, 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. Such Dividend Equivalents, if any, shall be credited to
the Participant in the form of additional whole Performance Shares as of the
date of payment of such cash dividends on Stock. The number of additional
Performance Shares (rounded to the nearest whole number) to be so credited shall
be determined by dividing (a) the amount of cash dividends paid on such date
with respect to the number of shares of Stock represented by the Performance
Shares previously credited to the Participant by (b) the Fair Market Value per
share of Stock on such date. 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. 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,
appropriate adjustments shall be made in the Participant’s Performance Share
Award so that it represents the right to receive upon settlement any and all
new, substituted or additional securities or other property (other than normal
cash dividends) to which the Participant would entitled by reason of the shares
of Stock issuable upon settlement of the Performance Share Award, and all such
new, substituted or additional securities or other property shall be immediately
subject to the same Performance Goals as are applicable to the Award.

 

9.7                                 Effect of Termination of Service.  The
effect of a Participant’s termination of Service on the Performance Award shall
be 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 shall 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 transfer
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.                               Terms and Conditions of Restricted Stock Unit
Awards.

 

Restricted Stock Unit Awards shall be evidenced by Award Agreements specifying
the number of Restricted Stock Units subject to the Award, in such form as the
Committee shall from time to time establish. No Restricted Stock Unit Award or
purported Restricted Stock Unit Award shall be a valid and binding obligation of
the Company unless evidenced by a fully executed Award Agreement. Award

 

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Agreements evidencing Restricted Stock Units 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:

 

10.1                           Grant of Restricted Stock Unit Awards. 
Restricted Stock Unit 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
Restricted Stock Unit Award or the Vesting Conditions with respect to such Award
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).

 

10.2                           Purchase Price.  No monetary payment (other than
applicable tax withholding, if any) shall be required as a condition of
receiving a Restricted Stock Unit Award, the consideration for which shall be
services actually rendered to a Participating Company or for its benefit.

 

10.3                           Vesting.  Restricted Stock Units may or may not
be made subject to Vesting Conditions based upon the satisfaction of such
Service requirements, conditions, restrictions or performance criteria,
including, without limitation, Performance Goals as described in Section 9.4, as
shall be established by the Committee and set forth in the Award Agreement
evidencing such Award.

 

10.4                           Voting Rights, Dividend Equivalent Rights and
Distributions.  Participants shall have no voting rights with respect to shares
of Stock represented by Restricted Stock Units 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). However, the Committee,
in its discretion, may provide in the Award Agreement evidencing any Restricted
Stock Unit 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 date on which Restricted Stock Units held by such
Participant are settled. Such Dividend Equivalents, if any, shall be paid by
crediting the Participant with additional whole Restricted Stock Units as of the
date of payment of such cash dividends on Stock. The number of additional
Restricted Stock Units (rounded to the nearest whole number) to be so credited
shall be determined by dividing (a) the amount of cash dividends paid on such
date with respect to the number of shares of Stock represented by the Restricted
Stock Units previously credited to the Participant by (b) the Fair Market Value
per share of Stock on such date. Such additional Restricted Stock Units shall be
subject to the same terms and conditions and shall be settled in the same manner
and at the same time (or as soon thereafter as practicable) as the Restricted
Stock Units originally subject to the Restricted Stock Unit Award. 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, appropriate adjustments shall be made in the Participant’s
Restricted Stock Unit Award so that it represents the right to receive upon
settlement any and all new, substituted or additional securities or other
property (other than normal cash dividends) to which the Participant would
entitled by reason of the shares of Stock issuable upon settlement of the Award,
and all such new, substituted or additional securities or other property shall
be immediately subject to the same Vesting Conditions as are applicable to the
Award.

 

10.5                           Effect of Termination of Service.  Unless
otherwise provided by the Committee in the grant of a Restricted Stock Unit
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 the Participant shall forfeit to the
Company any Restricted Stock Units pursuant to the Award which remain subject to
Vesting Conditions as of the date of the Participant’s termination of Service.

 

10.6                           Settlement of Restricted Stock Unit Awards.  The
Company shall issue to a Participant on the date on which Restricted Stock Units
subject to the Participant’s Restricted Stock Unit Award vest or on such other
date determined by the Committee, in its discretion, and set forth in the Award
Agreement one (1) share of Stock (and/or any other new, substituted or
additional securities or other

 

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property pursuant to an adjustment described in Section 10.4) for each
Restricted Stock Unit then becoming vested or otherwise to be settled on such
date, subject to the withholding of applicable taxes. Notwithstanding the
foregoing, if permitted by the Committee and set forth in the Award Agreement,
the Participant may elect in accordance with terms specified in the Award
Agreement to defer receipt of all or any portion of the shares of Stock or other
property otherwise issuable to the Participant pursuant to this Section.

 

10.7                           Nontransferability of Restricted Stock Unit
Awards.  Prior to the issuance of shares of Stock in settlement of a Restricted
Stock Unit Award, the Award shall 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 transfer by will or by the laws of descent and distribution. All rights
with respect to a Restricted Stock Unit 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.

 

11.                               Deferred Stock Units.

 

11.1                           Establishment of Deferred Stock Unit Program. 
The Committee, in its discretion and upon such terms and conditions as it may
determine, may establish one or more programs pursuant to the Plan under which:

 

(a)                                  Participants designated by the Committee
who are Insiders or otherwise among a select group of highly compensated
Employees may irrevocably elect, prior to a date specified by the Committee, to
reduce such Participant’s compensation otherwise payable in cash (subject to any
minimum or maximum reductions imposed by the Committee) and to be granted
automatically at such time or times as specified by the Committee one or more
Awards of Deferred Stock Units with respect to such numbers of shares of Stock
as determined in accordance with the rules of the program established by the
Committee and having such other terms and conditions as established by the
Committee.

 

(b)                                 Participants designated by the Committee who
are Insiders or otherwise among a select group of highly compensated Employees
may irrevocably elect, prior to a date specified by the Committee, to be granted
automatically an Award of Deferred Stock Units with respect to such number of
shares of Stock and upon such other terms and conditions as established by the
Committee in lieu of:

 

(i)                                     shares of Stock otherwise issuable to
such Participant upon the exercise of an Option;

 

(ii)                                  cash or shares of Stock otherwise issuable
to such Participant upon the exercise of a SAR; or

 

(iii)                               cash or shares of Stock otherwise issuable
to such Participant upon the settlement of a Performance Award.

 

11.2                           Terms and Conditions of Deferred Stock Units. 
Deferred Stock Units granted pursuant to this Section 11 shall be evidenced by
Award Agreements in such form as the Committee shall from time to time
establish. No such Deferred Stock Unit or purported Deferred Stock Unit shall be
a valid and binding obligation of the Company unless evidenced by a fully
executed Award Agreement. Award Agreements evidencing Deferred Stock Units 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:

 

(a)                                  Vesting Conditions.  Deferred Stock Units
shall not be subject to any vesting conditions.

 

(b)                                 Terms and Conditions of Deferred Stock
Units.

 

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(i)                                     Voting Rights; Dividend Equivalent
Rights and Distributions.  Participants shall have no voting rights with respect
to shares of Stock represented by Deferred Stock Units 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). However, a
Participant shall be entitled to receive Dividend Equivalents with respect to
the payment of cash dividends on Stock having a record date prior to date on
which Deferred Stock Units held by such Participant are settled. Such Dividend
Equivalents shall be paid by crediting the Participant with additional whole
and/or fractional Deferred Stock Units as of the date of payment of such cash
dividends on Stock. The method of determining the number of additional Deferred
Stock Units to be so credited shall be specified by the Committee and set forth
in the Award Agreement. Such additional Deferred Stock Units shall be subject to
the same terms and conditions and shall be settled in the same manner and at the
same time (or as soon thereafter as practicable) as the Deferred Stock Units
originally subject to the Deferred Stock Unit Award. 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,
appropriate adjustments shall be made in the Participant’s Deferred Stock Unit
Award so that it represent the right to receive upon settlement any and all new,
substituted or additional securities or other property (other than normal cash
dividends) to which the Participant would entitled by reason of the shares of
Stock issuable upon settlement of the Award.

 

(ii)                                  Settlement of Deferred Stock Unit Awards. 
A Participant electing to receive an Award of Deferred Stock Units pursuant to
this Section 11, shall specify at the time of such election a settlement date
with respect to such Award. The Company shall issue to the Participant as soon
as practicable following the earlier of the settlement date elected by the
Participant or the date of termination of the Participant’s Service, a number of
whole shares of Stock equal to the number of whole Deferred Stock Units subject
to the Deferred Stock Unit Award. Such shares of Stock shall be fully vested,
and the Participant shall not be required to pay any additional consideration
(other than applicable tax withholding) to acquire such shares. Any fractional
Deferred Stock Unit subject to the Deferred Stock Unit Award shall be settled by
the Company by payment in cash of an amount equal to the Fair Market Value as of
the payment date of such fractional share.

 

(iii)                               Nontransferability of Deferred Stock Unit
Awards.  Prior to their settlement in accordance with the provision of the Plan,
no Deferred Stock Unit Award shall 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 transfer by will or by the laws of descent and distribution. All rights
with respect to a Deferred Stock Unit 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.

 

12.                               Standard Forms of Award Agreement.

 

12.1                           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.

 

12.2                           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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13.                               Change in Control.

 

13.1                           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 in a single or series of related
transactions by the stockholders of the Company of more than fifty percent (50%)
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, in substantially the same proportions as their ownership of shares
of the Company’s voting stock immediately before 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 13.1(a)(iii), the
entity to which the assets of the Company were transferred (the “Transferee”),
as the case may be. For purposes of the preceding sentence, indirect beneficial
ownership shall include, without limitation, an interest resulting from
ownership of the voting securities of one or more corporations or other business
entities which own the Company or the Transferee, as the case may be, either
directly or through one or more subsidiary corporations or other business
entities. The Committee shall have the right to determine whether multiple sales
or exchanges of the voting securities of the Company or multiple Ownership
Change Events are related, and its determination shall be final, binding and
conclusive.

 

13.2                           Effect of Change in Control on Options and SARs.

 

(a)                                  Accelerated Vesting.  Notwithstanding any
other provision of the Plan to the contrary, the Committee, in its sole
discretion, may provide in any Award Agreement or, in the event of a Change in
Control, may take such actions as it deems appropriate to provide for the
acceleration of the exercisability and vesting in connection with such Change in
Control of any or all outstanding Options and SARs and shares acquired upon the
exercise of such Options and SARs upon such conditions and to such extent as the
Committee shall determine.

 

(b)                                 Assumption or Substitution.  In the event of
a Change in Control, the surviving, continuing, successor, or purchasing
corporation or other business entity or parent corporation thereof, as the case
may be (the “Acquiring Corporation”), may, without the consent of the
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 stock appreciation rights for the Acquiring
Corporation’s stock. In the event that the Acquiring Corporation elects not to
assume or substitute for outstanding Options and SARs in connection with a
Change in Control, or if the Acquiring Corporation is not a “publicly held
corporation” within the meaning of Section 162(m), the exercisability and
vesting of each such outstanding Option, SAR and any shares acquired upon the
exercise thereof held by a Participant whose Service has not terminated prior to
such date shall be accelerated, effective as of the date ten (10) days prior to
the date of the Change in Control. The exercise or vesting of any Option, SAR
and any shares acquired upon the exercise thereof that was permissible solely by
reason of this Section 13.2 and the provisions of such applicable Award
Agreement shall be conditioned upon the consummation of the Change in Control.
Any Options and SARs which are neither assumed or substituted for by the
Acquiring Corporation in connection with the Change in Control nor exercised as
of the date of the Change in Control shall terminate and cease to be outstanding

 

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effective as of the date of the Change in Control. Notwithstanding the
foregoing, shares acquired upon exercise of an Option or SAR prior to the Change
in Control and any consideration received pursuant to the Change in Control with
respect to such shares shall continue to be subject to all applicable provisions
of the applicable Award Agreement evidencing such Option or SAR except as
otherwise provided in such applicable Award Agreement. Furthermore,
notwithstanding the foregoing, if the corporation the stock of which is subject
to the outstanding Options and SARs immediately prior to an Ownership Change
Event described in Section 13.1(a)(i) constituting a Change in Control is the
surviving or continuing corporation and immediately after such Ownership Change
Event less than fifty percent (50%) of the total combined voting power of its
voting stock is held by another corporation or by other corporations that are
members of an affiliated group within the meaning of Section 1504(a) of the Code
without regard to the provisions of Section 1504(b) of the Code, the outstanding
Options and SARs shall not terminate unless the Committee otherwise provides in
its discretion.

 

(c)                                  Cash-Out.  The Committee may, in its sole
discretion and without the consent of any Participant, determine that, upon the
occurrence of a Change in Control, each or any Option or SAR outstanding
immediately prior to the Change in Control shall be canceled in exchange for a
payment with respect to each vested share of Stock subject to such canceled
Option or SAR in (i) cash, (ii) stock of the Company or of a corporation or
other business entity a party to the Change in Control, or (iii) other property
which, in any such case, shall be in an amount having a Fair Market Value equal
to the excess of the Fair Market Value of the consideration to be paid per share
of Stock in the Change in Control over the exercise price per share under such
Option or SAR (the “Spread”). In the event such determination is made by the
Committee, the Spread (reduced by applicable withholding taxes, if any) shall be
paid to Participants in respect of their canceled Options and SARs as soon as
practicable following the date of the Change in Control.

 

13.3                           Effect of Change in Control on Restricted Stock
Awards.  The Committee may, in its discretion, provide in any Award Agreement
evidencing a Restricted Stock Award that, in the event of a Change in Control,
the lapsing of the Restriction Period applicable to the shares subject to the
Restricted Stock Award held by a Participant whose Service has not terminated
prior to the Change in Control shall be accelerated effective immediately prior
to the consummation 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 13.3 and the provisions of such
Award Agreement shall be conditioned upon the consummation of the Change in
Control.

 

13.4                           Effect of Change in Control on Performance
Awards.  The Committee may, in its discretion, provide in any Award Agreement
evidencing a Performance Award that, in the event of a Change in Control, the
Performance Award held by a Participant whose Service has not terminated prior
to the Change in Control shall become payable effective as of the date of the
Change in Control to such extent as specified in such Award Agreement.

 

13.5                           Effect of Change in Control on Restricted Stock
Unit Awards.  The Committee may, in its discretion, provide in any Award
Agreement evidencing a Restricted Stock Unit Award that, in the event of a
Change in Control, the Restricted Stock Unit Award held by a Participant whose
Service has not terminated prior to such date shall be settled effective as of
the date of the Change in Control to such extent as specified in such Award
Agreement.

 

13.6                           Effect of Change in Control on Deferred Stock
Units.  The Committee may, in its discretion, provide in any Award Agreement
evidencing a Deferred Stock Unit Award that, in the event of a Change in
Control, the Deferred Stock Units pursuant to such Award shall be settled
effective as of the date of the Change in Control to such extent as specified in
such Award Agreement.

 

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14.                               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
(a) 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 (b) 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.

 

15.                               Tax Withholding.

 

15.1                           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.

 

15.2                           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.

 

16.                               Amendment or Termination of Plan.

 

The Committee may amend, suspend or terminate the Plan at any time. However,
without the approval of the Company’s stockholders, there shall be (a) no
increase in the maximum 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 Incentive Stock Options,
(c) no Option and/or SAR repricing as described in Section 3.6, (d) no amendment
to permit the granting of Options (other than Indexed Options) with exercise
prices less than Fair Market Value on the date of grant, and (e) no other
amendment of the Plan that would require approval of the Company’s stockholders
under any applicable law, regulation or rule. No amendment, suspension or
termination of the Plan shall affect any then outstanding Award unless expressly
provided by the Committee. In any event, no amendment, suspension or termination
of the Plan may adversely affect any then outstanding Award without the consent
of the Participant unless necessary to comply with any applicable law,
regulation or rule.

 

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17.                               Miscellaneous Provisions.

 

17.1                           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.

 

17.2                           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.

 

17.3                           Rights as Employee, Consultant or Director.  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, Consultant or Director
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 shall 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.

 

17.4                           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.

 

17.5                           Fractional Shares.  The Company shall not be
required to issue fractional shares upon the exercise or settlement of any
Award.

 

17.6                           Severability.  If any one or more of the
provisions (or any part thereof) of this Plan or of any Award Agreement issued
hereunder, shall be held to be invalid, illegal or unenforceable in any respect,
such provision shall be modified so as to make it valid, legal and enforceable,
and the validity, legality and enforceability of the remaining provisions (or
any part thereof) of the Plan or of any Award Agreement shall not in any way be
affected or impaired thereby. The Company may, without the consent of any
Participant, and in a manner determined necessary solely in the discretion of
the Company, amend the Plan and any outstanding Award Agreement as the Company
deems necessary to ensure the Plan and all Awards remain valid, legal or
enforceable in all respects.

 

17.7                           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.

 

B-24

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17.8                           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.

 

B-25

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