Exhibit 10.4

 

MUELLER WATER PRODUCTS, INC.

 

2006 STOCK INCENTIVE PLAN

 

Approved by the Board of Directors on May 24, 2006

 

Approved by Stockholders on May 25, 2006

 

Effective Date: May 25, 2006

 

Termination Date: May 23, 2016

 

I. PURPOSE.

 

1.1.                                                 THE PURPOSE OF THIS PLAN IS
TO AID THE COMPANY AND ITS AFFILIATES IN RECRUITING AND RETAINING KEY EMPLOYEES
(INCLUDING OFFICERS), DIRECTORS, AND CONSULTANTS OF OUTSTANDING ABILITY AND TO
MOTIVATE SUCH PERSONS TO EXERT THEIR BEST EFFORTS ON BEHALF OF THE COMPANY AND
ITS AFFILIATES BY PROVIDING INCENTIVES THROUGH THE GRANTING OF STOCK AWARDS. THE
COMPANY EXPECTS THAT IT WILL BENEFIT FROM THE ADDED INTEREST WHICH SUCH KEY
EMPLOYEES, DIRECTORS AND CONSULTANTS WILL HAVE IN THE WELFARE OF THE COMPANY AS
A RESULT OF THEIR PROPRIETARY INTEREST IN THE COMPANY’S SUCCESS.

 

II. DEFINITIONS.

 

2.1.                                                 “AFFILIATE” MEANS, WITH
RESPECT TO THE COMPANY, ANY ENTITY DIRECTLY OR INDIRECTLY CONTROLLING,
CONTROLLED BY, OR UNDER COMMON CONTROL WITH, THE COMPANY OR ANY OTHER ENTITY
DESIGNATED BY THE BOARD IN WHICH THE COMPANY OR ANY AFFILIATE HAS AN INTEREST.

 

2.2.                                                 “APPLICABLE LAW” MEANS THE
LEGAL REQUIREMENTS RELATING TO THE ADMINISTRATION OF AN EQUITY COMPENSATION PLAN
UNDER APPLICABLE U.S. FEDERAL AND STATE CORPORATE AND SECURITIES LAWS, THE CODE,
ANY STOCK EXCHANGE RULES OR REGULATIONS, AND THE APPLICABLE LAWS OF ANY OTHER
COUNTRY OR JURISDICTION, AS SUCH LAWS, RULES, REGULATIONS AND REQUIREMENTS SHALL
BE IN PLACE FROM TIME TO TIME.

 

2.3.                                                 “BENEFICIAL OWNER” MEANS
THE DEFINITION GIVEN IN RULE 13D-3 PROMULGATED UNDER THE EXCHANGE ACT.

 

2.4.                                                 “BOARD” MEANS THE BOARD OF
DIRECTORS OF THE COMPANY.

 

2.5.                                                 “CAUSE” MEANS ANY OF THE
FOLLOWING: (1) THE PARTICIPANT’S THEFT, DISHONESTY, OR FALSIFICATION OF ANY
DOCUMENTS OR RECORDS RELATED TO THE COMPANY OR ANY OF ITS AFFILIATES; (2) THE
PARTICIPANT’S IMPROPER USE OR DISCLOSURE OF THE COMPANY’S OR ANY OF ITS
AFFILIATE’S CONFIDENTIAL OR PROPRIETARY INFORMATION; (3) ANY ACTION BY THE
PARTICIPANT WHICH HAS A MATERIAL DETRIMENTAL EFFECT ON THE REPUTATION OR
BUSINESS OF THE COMPANY OR ANY OF ITS AFFILIATES; (4) THE PARTICIPANT’S FAILURE
OR INABILITY TO PERFORM ANY REASONABLE ASSIGNED DUTIES, IF SUCH FAILURE OR
INABILITY IS REASONABLY CAPABLE OF CURE, AFTER BEING PROVIDED WITH A REASONABLE
OPPORTUNITY TO CURE, SUCH FAILURE OR INABILITY; (5) ANY MATERIAL BREACH BY THE
PARTICIPANT OF ANY EMPLOYMENT OR SERVICE AGREEMENT BETWEEN THE PARTICIPANT AND
THE

 

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COMPANY OR ANY OF ITS AFFILIATES OR APPLICABLE POLICY OF THE COMPANY OR ANY OF
ITS AFFILIATES, WHICH BREACH IS NOT CURED PURSUANT TO THE TERMS OF SUCH
AGREEMENT; OR (6) THE PARTICIPANT’S INDICTMENT OR PLEA OF GUILTY OR NOLO
CONTENDERE WITH RESPECT TO ANY CRIMINAL ACT WHICH IMPAIRS THE PARTICIPANT’S
ABILITY TO PERFORM HIS OR HER DUTIES WITH THE COMPANY OR ANY OF ITS AFFILIATES.
NOTWITHSTANDING THE FOREGOING, THE DEFINITION OF “CAUSE” IN AN INDIVIDUAL
WRITTEN AGREEMENT BETWEEN THE COMPANY OR ANY OF ITS AFFILIATES AND THE
PARTICIPANT SHALL SUPERSEDE THE FOREGOING DEFINITION WITH RESPECT TO STOCK
AWARDS SUBJECT TO SUCH INDIVIDUAL AGREEMENT TO THE EXTENT EXPRESSLY PROVIDED FOR
IN SUCH INDIVIDUAL WRITTEN AGREEMENT (IT BEING UNDERSTOOD, HOWEVER, THAT IF NO
DEFINITION OF THE TERM “CAUSE” IS SET FORTH IN SUCH AN INDIVIDUAL WRITTEN
AGREEMENT, THE FOREGOING DEFINITION SHALL APPLY).

 

2.6.                                                 “CHANGE OF CONTROL” MEANS
THE OCCURRENCE OF ANY OF THE FOLLOWING EVENTS:

 

(I)                                     THE SALE, EXCHANGE, LEASE OR OTHER
DISPOSITION, IN ONE OR A SERIES OF RELATED TRANSACTIONS, OF ALL OR SUBSTANTIALLY
ALL OF THE ASSETS OF THE COMPANY TO A PERSON OR GROUP OF RELATED PERSONS, AS
SUCH TERMS ARE DEFINED OR DESCRIBED IN SECTIONS 3(A)(9) AND 13(D)(3) OF THE
EXCHANGE ACT;

 

(II)                                  A MERGER OR CONSOLIDATION OR SIMILAR
TRANSACTION INVOLVING THE COMPANY IF THE STOCKHOLDERS OF THE COMMON STOCK OF THE
COMPANY IMMEDIATELY PRIOR TO SUCH TRANSACTION DO NOT OWN A MAJORITY OF THE
OUTSTANDING COMMON STOCK OF THE SURVIVING COMPANY OR ITS PARENT IMMEDIATELY
AFTER THE TRANSACTION IN SUBSTANTIALLY THE SAME PROPORTIONS RELATIVE TO EACH
OTHER AS IMMEDIATELY PRIOR TO SUCH TRANSACTION;

 

(iii)                               Any person or group becomes the Beneficial
Owner, directly or indirectly, of more than 50% of the total voting power of the
voting stock of the Company, including by way of merger, consolidation or
otherwise (for the purposes of this clause (iii), a member of a group will not
be considered to be the Beneficial Owner of the securities owned by other
members of the group other than in response to a contested proxy or other
control battle); or

 

(IV)                              DURING ANY PERIOD OF TWO (2) CONSECUTIVE
YEARS, INDIVIDUALS WHO AT THE BEGINNING OF SUCH PERIOD CONSTITUTED THE BOARD
(TOGETHER WITH ANY NEW DIRECTORS WHOSE ELECTION BY SUCH BOARD OR WHOSE
NOMINATION FOR ELECTION BY THE STOCKHOLDERS OF THE COMPANY WAS APPROVED BY A
VOTE OF A MAJORITY OF THE DIRECTORS OF THE COMPANY THEN STILL IN OFFICE, WHO
WERE EITHER DIRECTORS AT THE BEGINNING OF SUCH PERIOD OR WHOSE ELECTION OR
NOMINATION FOR ELECTION WAS PREVIOUSLY SO APPROVED) CEASE FOR ANY REASON TO
CONSTITUTE A MAJORITY OF THE BOARD THEN IN OFFICE.

 

2.7.                                                 “CODE” MEANS THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED FROM TIME TO TIME.

 

2.8.                                                 “COMMITTEE” MEANS THE
BOARD, OR A COMMITTEE OF ONE OR MORE MEMBERS OF THE BOARD (OR OTHER INDIVIDUALS
WHO ARE NOT MEMBERS OF THE BOARD TO THE EXTENT ALLOWED BY LAW) DULY APPOINTED BY
THE BOARD IN ACCORDANCE WITH THE PLAN AND APPLICABLE LAW. AT ANY TIME THAT NO
SUCH COMMITTEE HAS BEEN APPOINTED, THE BOARD SHALL CONSTITUTE THE “COMMITTEE”
HEREUNDER.

 

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2.9.                                                 “COMMON STOCK” MEANS THE
SERIES A COMMON STOCK OF THE COMPANY, PAR VALUE $0.01 PER SHARE.

 

2.10.                                           “COMPANY” MEANS MUELLER WATER
PRODUCTS, INC., A DELAWARE CORPORATION.

 

2.11.                                           “CONSULTANT” MEANS ANY PERSON
(I) ENGAGED BY THE COMPANY OR AN AFFILIATE TO RENDER CONSULTING OR ADVISORY
SERVICES AND WHO IS COMPENSATED FOR SUCH SERVICES OR (II) WHO IS A MEMBER OF THE
BOARD OF DIRECTORS OF AN AFFILIATE. FOR PURPOSES OF DETERMINING ELIGIBILITY TO
PARTICIPATE IN THE PLAN, THE TERM CONSULTANT SHALL BE CLARIFIED PURSUANT TO THE
PROVISIONS OF SECTION 5.4.

 

2.12.                                           “CONTINUOUS SERVICE” MEANS THAT
THE PARTICIPANT’S SERVICE WITH THE COMPANY OR AN AFFILIATE, WHETHER AS AN
EMPLOYEE, DIRECTOR, OR CONSULTANT, AS APPLICABLE, IS NOT INTERRUPTED OR
TERMINATED. UNLESS OTHERWISE EXPRESSLY PROVIDED IN THE STOCK AWARD, THE
PARTICIPANT’S CONTINUOUS SERVICE SHALL BE DEEMED TO HAVE TERMINATED IN THE EVENT
OF A TERMINATION OF ALL POSITIONS A PARTICIPANT HOLDS WITH THE COMPANY AND ITS
AFFILIATES, EXCEPT IN THE CASE OF A TRANSITION FROM STATUS AS A CONSULTANT TO
STATUS AS AN EMPLOYEE IF AND ONLY IF THERE IS NO INTERRUPTION OR TERMINATION OF
THE PARTICIPANT’S SERVICE IN CONNECTION WITH SUCH TRANSITION. FOR EXAMPLE,
UNLESS OTHERWISE EXPRESSLY PROVIDED IN THE STOCK AWARD, A TERMINATION IN A
PARTICIPANT’S STATUS AS AN EMPLOYEE AND THE IMMEDIATE COMMENCEMENT OF SERVICE AS
A CONSULTANT OF THE COMPANY WILL CONSTITUTE A TERMINATION OF CONTINUOUS SERVICE.
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE COMMITTEE, IN ITS SOLE
DISCRETION, MAY DETERMINE WHETHER CONTINUOUS SERVICE SHALL BE CONSIDERED
INTERRUPTED IN THE CASE OF ANY LEAVE OF ABSENCE APPROVED BY THE COMPANY OR AN
AFFILIATE, INCLUDING SICK LEAVE, MILITARY LEAVE OR ANY OTHER PERSONAL LEAVE.

 

2.13.                                           “COVERED EMPLOYEE” MEANS A
“COVERED EMPLOYEE” AS DETERMINED FOR PURPOSES OF SECTION 162(M) OF THE CODE.

 

2.14.                                           “DIRECTOR” MEANS A MEMBER OF THE
BOARD OF DIRECTORS OF THE COMPANY.

 

2.15.                                           “DISABILITY” (A) MEANS WITH
RESPECT TO ALL INCENTIVE STOCK OPTIONS, THE PERMANENT AND TOTAL DISABILITY OF A
PERSON WITHIN THE MEANING OF SECTION 22(E)(3) OF THE CODE, (B) FOR ALL OTHER
PURPOSES, HAS THE MEANING UNDER SECTION 409A(A)(2)(C)(I) OF THE CODE, THAT IS,
THE PARTICIPANT (A) IS UNABLE TO ENGAGE IN ANY SUBSTANTIAL GAINFUL ACTIVITY BY
REASON OF ANY MEDICALLY DETERMINABLE PHYSICAL OR MENTAL IMPAIRMENT WHICH CAN BE
EXPECTED TO RESULT IN DEATH OR CAN BE EXPECTED TO LAST FOR A CONTINUOUS PERIOD
OF NOT LESS THAN 12 MONTHS OR (B) IS, BY REASON OF ANY MEDICALLY DETERMINABLE
PHYSICAL OR MENTAL IMPAIRMENT WHICH CAN BE EXPECTED TO RESULT IN DEATH, OR CAN
BE EXPECTED TO LAST FOR A CONTINUOUS PERIOD OF NOT LESS THAN 12 MONTHS,
RECEIVING INCOME REPLACEMENT BENEFITS FOR A PERIOD OF NOT LESS THAN THREE
(3) MONTHS UNDER AN ACCIDENT AND HEALTH PLAN COVERING EMPLOYEES OF THE
PARTICIPANT’S EMPLOYER.

 

2.16.                                           “EMPLOYEE” MEANS ANY PERSON
EMPLOYED BY THE COMPANY OR AN AFFILIATE. COMPENSATION BY THE COMPANY OR AN
AFFILIATE SOLELY FOR SERVICES AS A DIRECTOR OR AS A CONSULTANT SHALL NOT BE
SUFFICIENT TO CONSTITUTE “EMPLOYMENT” BY THE COMPANY OR AN AFFILIATE.

 

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2.17.                                           “EXCHANGE ACT” MEANS THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED FROM TIME TO TIME.

 

2.18.                                           “FAIR MARKET VALUE” MEANS, AS OF
ANY DATE, THE VALUE OF THE COMMON STOCK DETERMINED AS FOLLOWS:

 

(I)                                     IF THE COMMON STOCK IS LISTED ON ANY
ESTABLISHED STOCK EXCHANGE OR TRADED ON THE NASDAQ NATIONAL MARKET OR THE NASDAQ
SMALLCAP MARKET, THE FAIR MARKET VALUE OF A SHARE OF COMMON STOCK SHALL BE THE
CLOSING SALES PRICE FOR SUCH STOCK (OR THE CLOSING BID, IF NO SUCH SALES WERE
REPORTED) AS QUOTED ON SUCH EXCHANGE OR MARKET (OR THE EXCHANGE OR MARKET WITH
THE GREATEST VOLUME OF TRADING IN THE COMMON STOCK) ON THE DATE OF
DETERMINATION, AS REPORTED IN THE WALL STREET JOURNAL OR SUCH OTHER SOURCE AS
THE BOARD DEEMS RELIABLE;

 

(II)                                  IF THE COMMON STOCK IS REGULARLY QUOTED BY
A RECOGNIZED SECURITIES DEALER BUT SELLING PRICES ARE NOT REPORTED, THE FAIR
MARKET VALUE OF A SHARE OF COMMON STOCK SHALL BE THE MEAN BETWEEN THE HIGH BID
AND LOW ASKED PRICES FOR THE COMMON STOCK ON THE DAY OF DETERMINATION, AS
REPORTED IN THE WALL STREET JOURNAL OR SUCH OTHER SOURCE AS THE BOARD DEEMS
RELIABLE; OR

 

(III)                               IN THE ABSENCE OF SUCH MARKETS FOR THE
COMMON STOCK, THE FAIR MARKET VALUE SHALL BE DETERMINED IN GOOD FAITH BY THE
BOARD.

 

(IV)                              NOTWITHSTANDING THE FOREGOING, TO THE EXTENT
REQUIRED TO COMPLY WITH SECTION 409A OF THE CODE IN ORDER TO AVOID THE
IMPOSITION OF PENALTIES OR INTEREST IN RESPECT THEREOF, THE VALUE OF THE COMMON
STOCK SHALL BE DETERMINED IN A MANNER CONSISTENT WITH SECTION 409A (AND THE
REGULATIONS AND GUIDANCE PROMULGATED THEREUNDER).

 

2.19.                                           “FULL-VALUE STOCK AWARD” SHALL
MEAN ANY OF A RESTRICTED STOCK BONUS, RESTRICTED STOCK UNITS, PHANTOM STOCK
UNITS, PERFORMANCE SHARE BONUS, OR PERFORMANCE SHARE UNITS.

 

2.20.                                           “INCENTIVE STOCK OPTION” MEANS
AN OPTION INTENDED TO QUALIFY AS AN INCENTIVE STOCK OPTION WITHIN THE MEANING OF
SECTION 422 OF THE CODE AND THE REGULATIONS PROMULGATED THEREUNDER.

 

2.21.                                           “NONSTATUTORY STOCK OPTION”
MEANS AN OPTION NOT INTENDED TO QUALIFY AS AN INCENTIVE STOCK OPTION.

 

2.22.                                           “OPTION” MEANS AN INCENTIVE
STOCK OPTION OR A NONSTATUTORY STOCK OPTION GRANTED PURSUANT TO THE PLAN.

 

2.23.                                           “OPTIONHOLDER” MEANS A PERSON TO
WHOM AN OPTION IS GRANTED PURSUANT TO THE PLAN OR, IF APPLICABLE, SUCH OTHER
PERSON WHO HOLDS AN OUTSTANDING OPTION.

 

2.24.                                           “PARTICIPANT” MEANS AN EMPLOYEE,
DIRECTOR OR CONSULTANT TO WHOM A STOCK AWARD IS GRANTED PURSUANT TO THE PLAN OR,
IF APPLICABLE, SUCH OTHER PERSON WHO HOLDS AN OUTSTANDING STOCK AWARD.

 

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2.25.                                           “PERFORMANCE SHARE BONUS” MEANS
A GRANT OF SHARES OF THE COMPANY’S COMMON STOCK NOT REQUIRING A PARTICIPANT TO
PAY ANY AMOUNT OF MONETARY CONSIDERATION (OTHER THAN PAR VALUE TO THE EXTENT
REQUIRED BY APPLICABLE LAW), AND SUBJECT TO THE PROVISIONS OF SECTION 8.2 OF THE
PLAN.

 

2.26.                                           “PERFORMANCE SHARE UNIT” MEANS
THE RIGHT TO RECEIVE THE VALUE OF ONE (1) SHARE OF THE COMPANY’S COMMON STOCK AT
THE TIME THE PERFORMANCE SHARE UNIT VESTS, WITH THE FURTHER RIGHT TO ELECT TO
DEFER RECEIPT OF THAT VALUE OTHERWISE DELIVERABLE UPON THE VESTING OF AN AWARD
OF PERFORMANCE SHARE UNITS TO THE EXTENT PERMITTED IN THE PARTICIPANT’S
AGREEMENT. THESE PERFORMANCE SHARE UNITS ARE SUBJECT TO THE PROVISIONS OF
SECTION 8.2 OF THE PLAN.

 

2.27.                                           “PHANTOM STOCK UNIT” MEANS THE
RIGHT TO RECEIVE THE VALUE OF ONE (1) SHARE OF THE COMPANY’S COMMON STOCK,
SUBJECT TO THE PROVISIONS OF SECTION 8.2 OF THE PLAN.

 

2.28.                                           “PLAN” MEANS THIS MUELLER WATER
PRODUCTS, INC. 2006 STOCK INCENTIVE PLAN, AS AMENDED AND IN EFFECT FROM TIME TO
TIME.

 

2.29.                                           “RETIREMENT” MEANS THE VOLUNTARY
TERMINATION OF A PARTICIPANT’S CONTINUOUS SERVICE IN ALL CAPACITIES WITH THE
COMPANY AND ALL OF ITS AFFILIATES AT SUCH TIME THAT THE PARTICIPANT’S AGE AND
YEARS OF SERVICE EQUAL OR EXCEED 70.

 

2.30.                                           “RESTRICTED STOCK BONUS” MEANS A
GRANT OF SHARES OF THE COMPANY’S COMMON STOCK NOT REQUIRING A PARTICIPANT TO PAY
ANY AMOUNT OF MONETARY CONSIDERATION (OTHER THAN PAR VALUE TO THE EXTENT
REQUIRED BY APPLICABLE LAW), AND SUBJECT TO THE PROVISIONS OF SECTION 8.2 OF THE
PLAN.

 

2.31.                                           “RESTRICTED STOCK PURCHASE
RIGHT” MEANS THE RIGHT TO ACQUIRE SHARES OF THE COMPANY’S COMMON STOCK UPON THE
PAYMENT OF THE AGREED-UPON MONETARY CONSIDERATION, SUBJECT TO THE PROVISIONS OF
SECTION 8.2 OF THE PLAN.

 

2.32.                                           “RESTRICTED STOCK UNIT” MEANS
THE RIGHT TO RECEIVE THE VALUE OF ONE (1) SHARE OF THE COMPANY’S COMMON STOCK AT
THE TIME THE RESTRICTED STOCK UNIT VESTS, WITH THE FURTHER RIGHT TO ELECT TO
DEFER RECEIPT OF THAT VALUE OTHERWISE DELIVERABLE UPON THE VESTING OF AN AWARD
OF RESTRICTED STOCK TO THE EXTENT PERMITTED IN THE PARTICIPANT’S AGREEMENT.
THESE RESTRICTED STOCK UNITS ARE SUBJECT TO THE PROVISIONS OF SECTION 8.2 OF THE
PLAN.

 

2.33.                                           “RULE 16B-3” MEANS RULE 16B-3
PROMULGATED UNDER THE EXCHANGE ACT OR ANY SUCCESSOR TO RULE L6B-3, AS IN EFFECT
FROM TIME TO TIME.

 

2.34.                                           “SECURITIES ACT” MEANS THE
SECURITIES ACT OF 1933, AS AMENDED FROM TIME TO TIME.

 

2.35.                                           “STOCK APPRECIATION RIGHT” MEANS
THE RIGHT TO RECEIVE AN AMOUNT EQUAL TO THE FAIR MARKET VALUE OF ONE (1) SHARE
OF THE COMPANY’S COMMON STOCK ON THE DAY THE STOCK APPRECIATION RIGHT IS
REDEEMED, REDUCED BY THE DEEMED EXERCISE PRICE OR BASE PRICE OF SUCH RIGHT,
SUBJECT TO THE PROVISIONS OF SECTION 8.1 OF THE PLAN.

 

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2.36.                                           “STOCK AWARD” MEANS ANY AWARD OF
AN OPTION, RESTRICTED STOCK BONUS, RESTRICTED STOCK PURCHASE RIGHT, STOCK
APPRECIATION RIGHT, PHANTOM STOCK UNIT, RESTRICTED STOCK UNIT, PERFORMANCE SHARE
BONUS, PERFORMANCE SHARE UNIT, OR OTHER STOCK-BASED AWARD.

 

2.37.                                           “STOCK AWARD AGREEMENT” MEANS A
WRITTEN AGREEMENT BETWEEN THE COMPANY AND A HOLDER OF A STOCK AWARD SETTING
FORTH THE TERMS AND CONDITIONS OF AN INDIVIDUAL STOCK AWARD GRANT. EACH STOCK
AWARD AGREEMENT SHALL BE SUBJECT TO THE TERMS AND CONDITIONS OF THE PLAN.

 

2.38.                                           “SUBSIDIARY” MEANS A SUBSIDIARY
CORPORATION, AS DEFINED IN SECTION 424(F) OF THE CODE.

 

2.39.                                           “TEN PERCENT SHAREHOLDER” MEANS
A PERSON WHO OWNS (OR IS DEEMED TO OWN PURSUANT TO SECTION 424(D) OF THE CODE)
STOCK POSSESSING MORE THAN TEN PERCENT (10%) OF THE TOTAL COMBINED VOTING POWER
OF ALL CLASSES OF STOCK OF THE COMPANY OR OF ITS PARENT OR SUBSIDIARY
CORPORATION.

 

III. ADMINISTRATION.

 

3.1.                                                 ADMINISTRATION. THE
COMMITTEE SHALL ADMINISTER THE PLAN AND SHALL HAVE THE POWER, SUBJECT TO, AND
WITHIN THE LIMITATIONS OF, THE EXPRESS PROVISIONS OF THE PLAN:

 

(I)                                     TO DETERMINE FROM TIME TO TIME WHICH OF
THE PERSONS ELIGIBLE UNDER THE PLAN SHALL BE GRANTED STOCK AWARDS; WHEN AND HOW
EACH STOCK AWARD SHALL BE GRANTED; WHAT TYPE OR COMBINATION OF TYPES OF STOCK
AWARDS SHALL BE GRANTED; THE TERMS AND CONDITIONS OF EACH STOCK AWARD GRANTED
(WHICH NEED NOT BE IDENTICAL), INCLUDING THE TIME OR TIMES WHEN A PERSON SHALL
BE PERMITTED TO RECEIVE CASH AND/OR COMMON STOCK PURSUANT TO A STOCK AWARD; THE
NUMBER OF SHARES OF COMMON STOCK WITH RESPECT TO WHICH A STOCK AWARD SHALL BE
GRANTED TO EACH SUCH PERSON; AND WHETHER A STOCK AWARD WILL BE ADJUSTED TO
ACCOUNT FOR DIVIDENDS PAID WITH RESPECT TO THE COMPANY’S COMMON STOCK.

 

(II)                                  TO CONSTRUE AND INTERPRET THE PLAN AND
STOCK AWARDS GRANTED UNDER IT, AND TO ESTABLISH, AMEND AND REVOKE RULES AND
REGULATIONS FOR THE ADMINISTRATION OF THE PLAN. THE COMMITTEE, IN THE EXERCISE
OF THIS POWER, MAY CORRECT ANY DEFECT, OMISSION OR INCONSISTENCY IN THE PLAN OR
IN ANY STOCK AWARD AGREEMENT, IN A MANNER AND TO THE EXTENT IT SHALL DEEM
NECESSARY OR EXPEDIENT TO MAKE THE PLAN AND THE TERMS OF THE STOCK AWARD FULLY
EFFECTIVE.

 

(III)                               TO AMEND THE PLAN OR A STOCK AWARD AS
PROVIDED IN THE PLAN.

 

(IV)                              GENERALLY, TO EXERCISE SUCH POWERS AND TO
PERFORM SUCH ACTS AS THE COMMITTEE DEEMS NECESSARY, DESIRABLE, CONVENIENT OR
EXPEDIENT TO PROMOTE THE BEST INTERESTS OF THE COMPANY CONSISTENT WITH THE
PROVISIONS OF THE PLAN.

 

(V)                                 TO ADOPT SUB-PLANS AND/OR SPECIAL PROVISIONS
APPLICABLE TO STOCK AWARDS REGULATED BY THE LAWS OF A JURISDICTION OTHER THAN
AND OUTSIDE OF THE UNITED STATES. EXCEPT WITH RESPECT TO SECTION 4 OF THE PLAN
AND SUCH OTHER SECTIONS AS REQUIRED BY APPLICABLE LAW, THE SUB-PLANS AND/OR
SPECIAL PROVISIONS MAY TAKE PRECEDENCE OVER OTHER PROVISIONS

 

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OF THE PLAN TO THE EXTENT EXPRESSLY SET FORTH IN THE TERMS OF SUCH SUB-PLANS
AND/OR SPECIAL PROVISIONS.

 

(VI)                              TO AUTHORIZE ANY PERSON TO EXECUTE ON BEHALF
OF THE COMPANY ANY INSTRUMENT REQUIRED TO EFFECTUATE THE GRANT OF A STOCK AWARD
PREVIOUSLY GRANTED BY THE COMMITTEE.

 

(vii)                           To impose such restrictions, conditions or
limitations as it determines appropriate as to the timing and manner of any
resales by a Participant or other subsequent transfers by the Participant of any
shares of Common Stock issued as a result of or under a Stock Award, including,
without limitation, (A) restrictions under an insider trading policy and
(B) restrictions as to the use of a specified brokerage firm for such resales or
other transfers.

 

(viii)                        To provide, either at the time a Stock Award is
granted or by subsequent action, that a Stock Award shall contain as a term
thereof, a right, either in tandem with the other rights under the Stock Award
or as an alternative thereto, of the Participant to receive, without payment to
the Company, a number of shares of Common Stock, cash or a combination thereof,
the amount of which is determined by reference to the value of the Stock Award.

 

(ix)                                To assume, or provide for the issuance of
substitute Stock Awards that will substantially preserve the otherwise
applicable terms of, stock options and other stock-based awards previously
granted by an Affiliate to an award holder who is or becomes eligible to
participate in the Plan, as determined by the Committee in its sole discretion;
provided, however, that any such assumption or substitution shall comply with
Applicable Law, including but not limited to Sections 409A and 424 of the Code,
and any such substitute Stock Awards may be granted at a price below Fair Market
Value only to the extent that such grants would otherwise comply with the terms
of this Plan, including but not limited to Section 10.10 hereof.

 

3.2.                                                 DELEGATION BY THE
COMMITTEE. IN NO WAY LIMITING ANY OTHER PROVISION OF THE PLAN, THE COMMITTEE
MAY DELEGATE ITS DUTIES AND POWERS HEREUNDER IN WHOLE OR IN PART TO ANY
SUBCOMMITTEE THEREOF CONSISTING SOLELY OF AT LEAST TWO INDIVIDUALS WHO ARE
INTENDED TO QUALIFY AS “NON-EMPLOYEE DIRECTORS” WITHIN THE MEANING OF RULE 16B-3
UNDER THE EXCHANGE ACT AND “OUTSIDE DIRECTORS” WITHIN THE MEANING OF
SECTION 162(M) OF THE CODE.

 

3.3.                                                 EFFECT OF THE COMMITTEE’S
DECISION. ALL DETERMINATIONS, INTERPRETATIONS AND CONSTRUCTIONS MADE BY THE
COMMITTEE OR ITS DULY AUTHORIZED SUB-COMMITTEE(S) IN GOOD FAITH SHALL NOT BE
SUBJECT TO REVIEW BY ANY PERSON AND SHALL BE FINAL, BINDING AND CONCLUSIVE ON
ALL PERSONS.

 

IV. SHARES SUBJECT TO THE PLAN.

 

4.1.                                                 SHARE RESERVE. SUBJECT TO
THE PROVISIONS OF SECTION 11 OF THE PLAN RELATING TO ADJUSTMENTS UPON CHANGES IN
COMMON STOCK, THE MAXIMUM AGGREGATE NUMBER OF SHARES OF COMMON STOCK THAT MAY BE
ISSUED PURSUANT TO STOCK AWARDS SHALL NOT EXCEED 8,000,000

 

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SHARES OF COMMON STOCK (“SHARE RESERVE”), PROVIDED THAT EACH SHARE OF COMMON
STOCK ISSUED PURSUANT TO AN OPTION OR RESTRICTED STOCK PURCHASE RIGHT SHALL
REDUCE THE SHARE RESERVE BY ONE (1) SHARE AND EACH SHARE OF COMMON STOCK SUBJECT
TO THE REDEEMED PORTION OF A STOCK APPRECIATION RIGHT (WHETHER THE DISTRIBUTION
UPON REDEMPTION IS MADE IN CASH, STOCK OR A COMBINATION OF THE TWO) SHALL REDUCE
THE SHARE RESERVE BY ONE (1) SHARE. EACH SHARE OF COMMON STOCK ISSUED PURSUANT
TO A FULL-VALUE STOCK AWARD SHALL REDUCE THE SHARE RESERVE BY ONE (1) SHARE. TO
THE EXTENT THAT A DISTRIBUTION PURSUANT TO A STOCK AWARD IS MADE IN CASH, THE
SHARE RESERVE SHALL BE REDUCED BY THE NUMBER OF SHARES OF COMMON STOCK SUBJECT
TO THE REDEEMED OR EXERCISED PORTION OF THE STOCK AWARD. NOTWITHSTANDING ANY
OTHER PROVISION OF THE PLAN TO THE CONTRARY, THE MAXIMUM AGGREGATE NUMBER OF
SHARES OF COMMON STOCK THAT MAY BE ISSUED UNDER THE PLAN PURSUANT TO INCENTIVE
STOCK OPTIONS IS 1,250,000 SHARES OF COMMON STOCK (“ISO LIMIT”), SUBJECT TO THE
ADJUSTMENTS PROVIDED FOR IN SECTION 11 OF THE PLAN.

 

4.2.                                                 REVERSION OF SHARES TO THE
SHARE RESERVE. IF ANY STOCK AWARD GRANTED UNDER THIS PLAN SHALL FOR ANY REASON
(I) EXPIRE, BE CANCELLED OR OTHERWISE TERMINATE, IN WHOLE OR IN PART, WITHOUT
HAVING BEEN EXERCISED OR REDEEMED IN FULL, (II) BE REACQUIRED BY THE COMPANY
PRIOR TO VESTING, OR (III) BE REPURCHASED AT COST BY THE COMPANY PRIOR TO
VESTING, THE SHARES OF COMMON STOCK NOT ACQUIRED UNDER SUCH STOCK AWARD SHALL
REVERT OR BE ADDED TO THE SHARE RESERVE AND BECOME AVAILABLE FOR ISSUANCE UNDER
THE PLAN; PROVIDED, HOWEVER, THAT SUCH SHARES OF COMMON STOCK SHALL NOT BE
AVAILABLE FOR ISSUANCE PURSUANT TO THE EXERCISE OF INCENTIVE STOCK OPTIONS.

 

4.3.                                                 SOURCE OF SHARES. THE
SHARES OF COMMON STOCK SUBJECT TO THE PLAN MAY BE UNISSUED SHARES OR REACQUIRED
SHARES (WHETHER PURCHASED ON THE MARKET OR OTHERWISE REACQUIRED).

 

V. ELIGIBILITY.

 

5.1.                                                 ELIGIBILITY FOR SPECIFIC
STOCK AWARDS. INCENTIVE STOCK OPTIONS MAY BE GRANTED ONLY TO EMPLOYEES. STOCK
AWARDS OTHER THAN INCENTIVE STOCK OPTIONS MAY BE GRANTED TO EMPLOYEES,
DIRECTORS, AND CONSULTANTS.

 

5.2.                                                 TEN PERCENT SHAREHOLDERS. A
TEN PERCENT SHAREHOLDER SHALL NOT BE GRANTED AN INCENTIVE STOCK OPTION UNLESS
THE EXERCISE PRICE OF SUCH OPTION IS AT LEAST ONE HUNDRED TEN PERCENT (110%) OF
THE FAIR MARKET VALUE OF THE COMMON STOCK AT THE DATE OF GRANT AND THE OPTION IS
NOT EXERCISABLE AFTER THE EXPIRATION OF FIVE (5) YEARS FROM THE DATE OF GRANT,
EXCEPT AS PROVIDED IN SECTION 3.1(IX) ABOVE.

 

5.3.                                                 ANNUAL SECTION 162(M)
LIMITATION. SUBJECT TO THE PROVISIONS OF SECTION 11 OF THE PLAN RELATING TO
ADJUSTMENTS UPON CHANGES IN THE SHARES OF COMMON STOCK, AND TO THE EXTENT
REQUIRED FOR COMPLIANCE WITH SECTION 162(M) OF THE CODE, NO EMPLOYEE SHALL BE
ELIGIBLE TO BE GRANTED OPTIONS AND OTHER STOCK AWARDS COVERING MORE THAN
1,000,000 SHARES OF COMMON STOCK (WITH RESPECT TO STOCK AWARDS PAYABLE IN
SHARES) OR WITH A VALUE IN EXCESS OF $5,000,000 (WITH RESPECT TO STOCK AWARDS
PAYABLE IN CASH) DURING ANY FISCAL YEAR; PROVIDED THAT IN CONNECTION WITH HIS OR
HER INITIAL SERVICE, AN EMPLOYEE MAY BE GRANTED OPTIONS AND OTHER STOCK AWARDS
COVERING NOT MORE THAN AN ADDITIONAL 300,000 SHARES OF

 

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COMMON STOCK (WITH RESPECT TO STOCK AWARDS PAYABLE IN SHARES) OR WITH A VALUE IN
EXCESS OF $5,000,000 (WITH RESPECT TO STOCK AWARDS PAYABLE IN CASH), WHICH SHALL
NOT COUNT AGAINST THE LIMIT SET FORTH IN THE PRECEDING SENTENCE.

 

5.4.                                                 CONSULTANTS. A CONSULTANT
SHALL NOT BE ELIGIBLE FOR THE GRANT OF A STOCK AWARD IF, AT THE TIME OF GRANT, A
FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT (“FORM S-8”) IS NOT
AVAILABLE TO REGISTER EITHER THE OFFER OR THE SALE OF THE COMPANY’S SECURITIES
TO SUCH CONSULTANT BECAUSE OF THE NATURE OF THE SERVICES THAT THE CONSULTANT IS
PROVIDING TO THE COMPANY, OR BECAUSE THE CONSULTANT IS NOT A NATURAL PERSON, OR
AS OTHERWISE PROVIDED BY THE RULES GOVERNING THE USE OF FORM S-8, UNLESS THE
COMPANY DETERMINES BOTH (1) THAT SUCH GRANT (A) SHALL BE REGISTERED IN ANOTHER
MANNER UNDER THE SECURITIES ACT (E.G., ON A FORM S-3 REGISTRATION STATEMENT) OR
(B) DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT IN ORDER TO COMPLY
WITH THE REQUIREMENTS OF THE SECURITIES ACT, IF APPLICABLE, AND (2) THAT SUCH
GRANT COMPLIES WITH THE SECURITIES LAWS OF ALL OTHER RELEVANT JURISDICTIONS.

 

VI. OPTION PROVISIONS.

 

6.1                                                    FORM OF OPTIONS. EACH
OPTION SHALL BE IN SUCH FORM AND SHALL CONTAIN SUCH TERMS AND CONDITIONS AS THE
COMMITTEE SHALL DEEM APPROPRIATE. ALL OPTIONS SHALL BE SEPARATELY DESIGNATED
INCENTIVE STOCK OPTIONS OR NONSTATUTORY STOCK OPTIONS AT THE TIME OF GRANT, AND,
IF CERTIFICATES ARE ISSUED, A SEPARATE CERTIFICATE OR CERTIFICATES WILL BE
ISSUED FOR SHARES OF COMMON STOCK PURCHASED UPON EXERCISE OF EACH TYPE OF
OPTION. THE PROVISIONS OF SEPARATE OPTIONS NEED NOT BE IDENTICAL, BUT EACH
OPTION SHALL INCLUDE (THROUGH INCORPORATION OF PROVISIONS HEREOF BY REFERENCE IN
THE OPTION OR OTHERWISE) THE SUBSTANCE OF EACH OF THE FOLLOWING PROVISIONS:

 

6.2                                                    TERM. IN THE ABSENCE OF A
PROVISION TO THE CONTRARY IN THE INDIVIDUAL OPTIONHOLDER’S STOCK AWARD
AGREEMENT, AND SUBJECT TO THE PROVISIONS OF SECTION 5.2 OF THE PLAN REGARDING
GRANTS OF INCENTIVE STOCK OPTIONS TO TEN PERCENT SHAREHOLDERS, THE TERM OF THE
OPTION SHALL BE TEN (10) YEARS FROM THE DATE IT WAS GRANTED.

 

6.3                                                    INCENTIVE STOCK OPTION
$100,000 LIMITATION. TO THE EXTENT THAT THE AGGREGATE FAIR MARKET VALUE
(DETERMINED AT THE TIME OF GRANT) OF COMMON STOCK WITH RESPECT TO WHICH
INCENTIVE STOCK OPTIONS ARE EXERCISABLE FOR THE FIRST TIME BY ANY OPTIONHOLDER
DURING ANY CALENDAR YEAR (UNDER ALL PLANS OF THE COMPANY AND ITS AFFILIATES)
EXCEEDS ONE HUNDRED THOUSAND DOLLARS ($100,000), OR SUCH OTHER LIMIT AS MAY BE
SET BY APPLICABLE LAW, THE OPTIONS OR PORTIONS THEREOF WHICH EXCEED SUCH LIMIT
(ACCORDING TO THE ORDER IN WHICH THEY WERE GRANTED) SHALL BE TREATED AS
NONSTATUTORY STOCK OPTIONS.

 

6.4                                                    EXERCISE PRICE OF AN
INCENTIVE STOCK OPTION. THE EXERCISE PRICE OF EACH INCENTIVE STOCK OPTION SHALL
BE NOT LESS THAN ONE HUNDRED PERCENT (100%) OF THE FAIR MARKET VALUE OF THE
COMMON STOCK SUBJECT TO THE OPTION ON THE DATE THE OPTION IS GRANTED (OR LESS
THAN ONE HUNDRED AND TEN PERCENT (110%) IN THE CASE OF A TEN PERCENT
SHAREHOLDER), EXCEPT AS PROVIDED IN SECTION 3.1(IX) ABOVE.

 

6.5                                                    EXERCISE PRICE OF A
NONSTATUTORY STOCK OPTION. THE EXERCISE PRICE OF EACH NONSTATUTORY STOCK OPTION
SHALL BE NOT LESS THAN ONE HUNDRED PERCENT (100%) OF THE FAIR

 

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MARKET VALUE OF THE COMMON STOCK SUBJECT TO THE OPTION ON THE DATE THE OPTION IS
GRANTED, EXCEPT AS PROVIDED IN SECTION 3.1(IX) ABOVE.

 

6.6                                                    CONSIDERATION.

 

(I)                                     THE PURCHASE PRICE OF COMMON STOCK
ACQUIRED PURSUANT TO AN OPTION SHALL BE PAID, TO THE EXTENT PERMITTED BY
APPLICABLE STATUTES AND REGULATIONS, EITHER (A) IN CASH OR BY CHECK AT THE TIME
THE OPTION IS EXERCISED OR (B) AT THE DISCRETION OF THE COMMITTEE (IN THE CASE
OF INCENTIVE STOCK OPTIONS, AT THE TIME OF THE GRANT OF THE OPTION): (1) BY
DELIVERY TO THE COMPANY OF OTHER SHARES OF COMMON STOCK (SUBJECT TO SUCH
REQUIREMENTS AS MAY BE IMPOSED BY THE COMMITTEE), (2) IF THERE IS A PUBLIC
MARKET FOR THE COMMON STOCK AT SUCH TIME, AND TO THE EXTENT PERMITTED BY
APPLICABLE LAW, PURSUANT TO A “SAME DAY SALE” PROGRAM THAT RESULTS IN EITHER THE
RECEIPT OF CASH (OR CHECK) BY THE COMPANY OR THE RECEIPT OF IRREVOCABLE
INSTRUCTIONS TO PAY THE AGGREGATE EXERCISE PRICE TO THE COMPANY FROM THE SALES
PROCEEDS, (3) REDUCTION OF THE COMPANY’S LIABILITY TO THE OPTIONHOLDER, (4) BY
ANY OTHER FORM OF CONSIDERATION PERMITTED BY LAW, BUT IN NO EVENT SHALL A
PROMISSORY NOTE OR OTHER FORM OF DEFERRED PAYMENT CONSTITUTE A PERMISSIBLE
FORM OF CONSIDERATION FOR AN OPTION GRANTED UNDER THE PLAN, OR (5) BY SOME
COMBINATION OF THE FOREGOING.

 

(II)                                  UNLESS OTHERWISE SPECIFICALLY PROVIDED IN
THE STOCK AWARD AGREEMENT, THE PURCHASE PRICE OF COMMON STOCK ACQUIRED PURSUANT
TO A STOCK AWARD THAT IS PAID BY DELIVERY TO THE COMPANY OF OTHER COMMON STOCK,
WHICH COMMON STOCK WAS ACQUIRED, DIRECTLY OR INDIRECTLY FROM THE COMPANY, SHALL
BE PAID ONLY BY SHARES OF THE COMMON STOCK THAT HAVE BEEN HELD FOR MORE THAN SIX
(6) MONTHS (OR SUCH LONGER OR SHORTER PERIOD OF TIME REQUIRED TO AVOID A
SUPPLEMENTAL CHARGE TO EARNINGS FOR FINANCIAL ACCOUNTING PURPOSES).

 

(III)                               WHENEVER A PARTICIPANT IS PERMITTED TO PAY
THE EXERCISE PRICE OF A STOCK AWARD AND/OR TAXES RELATING TO THE EXERCISE OF A
STOCK AWARD BY DELIVERING COMMON STOCK, THE PARTICIPANT MAY, SUBJECT TO
PROCEDURES SATISFACTORY TO THE COMMITTEE, SATISFY SUCH DELIVERY REQUIREMENTS BY
PRESENTING PROOF OF BENEFICIAL OWNERSHIP OF SUCH COMMON STOCK, IN WHICH CASE THE
COMPANY SHALL TREAT THE STOCK AWARD AS EXERCISED OR REDEEMED WITHOUT FURTHER
PAYMENT AND SHALL WITHHOLD SUCH NUMBER OF SHARES OF COMMON STOCK FROM THE COMMON
STOCK ACQUIRED UNDER THE STOCK AWARD. WHEN NECESSARY TO AVOID A SUPPLEMENTAL
CHARGE TO EARNINGS FOR FINANCIAL ACCOUNTING PURPOSES, ANY SUCH WITHHOLDING FOR
TAX PURPOSES SHALL BE MADE AT THE STATUTORY MINIMUM RATE OF WITHHOLDING.

 

6.7                                                    TRANSFERABILITY OF AN
INCENTIVE STOCK OPTION. AN INCENTIVE STOCK OPTION SHALL NOT BE TRANSFERABLE
EXCEPT BY WILL OR BY THE LAWS OF DESCENT AND DISTRIBUTION AND SHALL BE
EXERCISABLE DURING THE LIFETIME OF THE OPTIONHOLDER ONLY BY THE OPTIONHOLDER.

 

6.8                                                    TRANSFERABILITY OF A
NONSTATUTORY STOCK OPTION. EXCEPT AS OTHERWISE PROVIDED IN THE STOCK AWARD
AGREEMENT, A NONSTATUTORY STOCK OPTION SHALL NOT BE TRANSFERABLE EXCEPT BY WILL
OR BY THE LAWS OF DESCENT AND DISTRIBUTION AND SHALL BE EXERCISABLE DURING THE
LIFETIME OF THE OPTIONHOLDER ONLY BY THE OPTIONHOLDER.

 

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6.9                                                    VESTING GENERALLY.
OPTIONS GRANTED UNDER THE PLAN SHALL BE EXERCISABLE AT SUCH TIMES AND UPON SUCH
TERMS AND CONDITIONS AS MAY BE DETERMINED BY THE COMMITTEE. THE VESTING
PROVISIONS OF INDIVIDUAL OPTIONS MAY VARY. THE PROVISIONS OF THIS SECTION 6.9
ARE SUBJECT TO ANY OPTION PROVISIONS GOVERNING THE MINIMUM NUMBER OF SHARES OF
COMMON STOCK AS TO WHICH AN OPTION MAY BE EXERCISED.

 

6.10                                              TERMINATION OF UNVESTED
OPTIONS. ANY OPTION OR PORTION THEREOF THAT IS NOT VESTED AT THE TIME OF
TERMINATION OF CONTINUOUS SERVICE SHALL LAPSE AND TERMINATE, AND SHALL NOT BE
EXERCISABLE BY THE OPTIONEE OR ANY OTHER PERSON, UNLESS OTHERWISE PROVIDED FOR
IN THE STOCK AWARD AGREEMENT.

 

6.11                                              TERMINATION OF CONTINUOUS
SERVICE. IN THE EVENT AN OPTIONHOLDER’S CONTINUOUS SERVICE TERMINATES (OTHER
THAN UPON THE OPTIONHOLDER’S DEATH, DISABILITY OR RETIREMENT OR TERMINATION FOR
CAUSE), THE OPTION SHALL REMAIN EXERCISABLE FOR THREE (3) MONTHS FOLLOWING THE
DATE OF TERMINATION (TO THE EXTENT THAT THE OPTION WAS EXERCISABLE AT THAT
TIME), OR SUCH OTHER PERIOD SPECIFIED IN THE STOCK AWARD AGREEMENT. IN NO EVENT
MAY THE OPTION BE EXERCISED AFTER THE EXPIRATION OF THE TERM OF THE OPTION AS
SET FORTH IN THE STOCK AWARD AGREEMENT. IF THE OPTIONHOLDER DOES NOT EXERCISE
HIS OR HER OPTION WITHIN THE SPECIFIED TIME, THE OPTION SHALL TERMINATE.

 

6.12                                              EXTENSION OF TERMINATION DATE.
AN OPTIONHOLDER’S STOCK AWARD AGREEMENT MAY ALSO PROVIDE THAT IF THE EXERCISE OF
THE OPTION FOLLOWING THE TERMINATION OF THE OPTIONHOLDER’S CONTINUOUS SERVICE
(OTHER THAN UPON THE OPTIONHOLDER’S DEATH OR TERMINATION FOR CAUSE) WOULD BE
PROHIBITED AT ANY TIME SOLELY BECAUSE THE ISSUANCE OF SHARES OF COMMON STOCK
WOULD VIOLATE THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT OR OTHER
APPLICABLE SECURITIES LAW, THEN THE OPTION SHALL TERMINATE ON THE EARLIER OF
(I) THE EXPIRATION OF THE TERM OF THE OPTION SET FORTH IN THE STOCK AWARD
AGREEMENT OR (II) THE EXPIRATION OF A PERIOD OF THREE (3) MONTHS AFTER THE
TERMINATION OF THE OPTIONHOLDER’S CONTINUOUS SERVICE DURING WHICH THE EXERCISE
OF THE OPTION WOULD NOT BE IN VIOLATION OF SUCH REGISTRATION REQUIREMENTS OR
OTHER APPLICABLE SECURITIES LAW. THE PROVISIONS OF THIS SECTION 6.12
NOTWITHSTANDING, IN THE EVENT THAT A SALE OF THE SHARES OF COMMON STOCK RECEIVED
UPON EXERCISE OF HIS OR HER OPTION WOULD SUBJECT THE OPTIONHOLDER TO LIABILITY
UNDER SECTION 16(B) OF THE EXCHANGE ACT, THEN THE OPTION WILL TERMINATE ON THE
EARLIER OF (1) THE FIFTEENTH (15TH) DAY AFTER THE LAST DATE UPON WHICH SUCH SALE
WOULD RESULT IN LIABILITY, OR (2) TWO HUNDRED TEN (210) DAYS FOLLOWING THE DATE
OF TERMINATION OF THE OPTIONHOLDER’S EMPLOYMENT OR OTHER SERVICE TO THE COMPANY
(AND IN NO EVENT LATER THAN THE EXPIRATION OF THE TERM OF THE OPTION).

 

6.13                                              DISABILITY OR RETIREMENT OF
OPTIONHOLDER. IN THE EVENT AN OPTIONHOLDER’S CONTINUOUS SERVICE TERMINATES UPON
THE OPTIONHOLDER’S DISABILITY OR RETIREMENT, THE OPTION SHALL REMAIN EXERCISABLE
FOR TWO (2) YEARS FOLLOWING THE DATE OF TERMINATION (TO THE EXTENT THAT THE
OPTION WAS EXERCISABLE AT THAT TIME), OR SUCH OTHER PERIOD SPECIFIED IN THE
STOCK AWARD AGREEMENT. IN NO EVENT MAY THE OPTION BE EXERCISED AFTER THAN THE
EXPIRATION OF THE TERM OF THE OPTION AS SET FORTH IN THE STOCK AWARD AGREEMENT.
IF THE OPTIONHOLDER DOES NOT EXERCISE HIS OR HER OPTION WITHIN THE SPECIFIED
TIME, THE OPTION SHALL TERMINATE.

 

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6.14                                              DEATH OF OPTIONHOLDER. IN THE
EVENT (I) AN OPTIONHOLDER’S CONTINUOUS SERVICE TERMINATES AS A RESULT OF THE
OPTIONHOLDER’S DEATH OR (II) THE OPTIONHOLDER DIES AFTER THE TERMINATION OF HIS
OR HER CONTINUOUS SERVICE BUT WITHIN THE POST-TERMINATION EXERCISE PERIOD
APPLICABLE TO THE OPTION, THEN, EXCEPT AS OTHERWISE PROVIDED IN THE STOCK AWARD
AGREEMENT, THE OPTION SHALL REMAIN EXERCISABLE FOR TWO (2) YEARS FOLLOWING THE
DATE OF DEATH (TO THE EXTENT THAT THE OPTION WAS EXERCISABLE AT THAT TIME). IN
NO EVENT MAY THE OPTION BE EXERCISED AFTER THE EXPIRATION OF THE TERM OF THE
OPTION AS SET FORTH IN THE STOCK AWARD AGREEMENT. IF THE OPTION IS NOT EXERCISED
BY THE PERSON ENTITLED TO DO SO WITHIN THE SPECIFIED TIME, THE OPTION SHALL
TERMINATE.

 

6.15                                              TERMINATION FOR CAUSE. UNLESS
OTHERWISE PROVIDED IN THE APPLICABLE STOCK AWARD AGREEMENT, THE OPTION SHALL
CEASE TO BE EXERCISABLE AS TO ALL UNEXERCISED SHARES OF COMMON STOCK (INCLUDING
ANY VESTED SHARES) IMMEDIATELY UPON THE TERMINATION OF THE OPTIONHOLDER’S
CONTINUOUS SERVICE FOR CAUSE.

 

6.16                                              EARLY EXERCISE GENERALLY NOT
PERMITTED. THE COMPANY MAY GRANT OPTIONS WHICH PERMIT THE OPTIONHOLDER TO
EXERCISE THE OPTION AS TO ANY PART OR ALL OF THE SHARES OF COMMON STOCK SUBJECT
TO THE OPTION PRIOR TO THE VESTING OF THE OPTION. IF A STOCK AWARD AGREEMENT
DOES PERMIT SUCH EARLY EXERCISE, ANY UNVESTED SHARES OF COMMON STOCK SO
PURCHASED MAY BE SUBJECT TO A REPURCHASE OPTION IN FAVOR OF THE COMPANY OR TO
ANY OTHER RESTRICTION THE COMMITTEE DETERMINES TO BE APPROPRIATE.

 

VII. NON-DISCRETIONARY STOCK AWARDS FOR ELIGIBLE DIRECTORS.

 

7.1                                                    STOCK AWARDS FOR ELIGIBLE
DIRECTORS. IN ADDITION TO ANY OTHER STOCK AWARDS THAT DIRECTORS MAY BE GRANTED
ON A DISCRETIONARY BASIS UNDER THE PLAN, EACH DIRECTOR OF THE COMPANY WHO IS NOT
AN EMPLOYEE OF THE COMPANY OR ANY AFFILIATE (EACH, AN “ELIGIBLE DIRECTOR”) SHALL
BE AUTOMATICALLY GRANTED, WITHOUT THE NECESSITY OF ACTION BY THE COMMITTEE, THE
FOLLOWING STOCK AWARDS:

 

(I)                                     INITIAL GRANT. ON THE FIRST DAY
FOLLOWING THE DATE THAT A DIRECTOR COMMENCES SERVICE ON THE BOARD AND SATISFIES
THE DEFINITION OF AN ELIGIBLE DIRECTOR, AN INITIAL GRANT OF A STOCK AWARD (THE
“INITIAL GRANT”) SHALL AUTOMATICALLY BE MADE TO THAT ELIGIBLE DIRECTOR. THE TYPE
OF STOCK AWARD, THE NUMBER OF SHARES SUBJECT TO THIS INITIAL GRANT AND OTHER
TERMS GOVERNING THIS INITIAL GRANT SHALL BE AS DETERMINED BY THE COMMITTEE IN
ITS SOLE DISCRETION. IF THE COMMITTEE DOES NOT ESTABLISH THE TERMS AND
CONDITIONS OF THE INITIAL GRANT FOR A GIVEN NEWLY-ELECTED ELIGIBLE DIRECTOR
PRIOR TO THE DATE OF GRANT, THEN THE STOCK AWARD SHALL BE OF THE SAME TYPE, AND
FOR THE SAME NUMBER OF SHARES, AS THE INITIAL GRANT MADE TO THE IMMEDIATELY
PRECEDING NEWLY-ELECTED ELIGIBLE DIRECTOR. IF AT THE TIME A DIRECTOR FIRST
COMMENCES SERVICE ON THE BOARD, THE DIRECTOR DOES NOT SATISFY THE DEFINITION OF
AN ELIGIBLE DIRECTOR, SUCH DIRECTOR SHALL NOT BE ENTITLED TO AN INITIAL GRANT AT
ANY TIME, EVEN IF SUCH DIRECTOR SUBSEQUENTLY BECOMES AN ELIGIBLE DIRECTOR.

 

(II)                                  ANNUAL GRANT. AN ANNUAL STOCK AWARD GRANT
(THE “ANNUAL AWARD”) SHALL AUTOMATICALLY BE MADE TO EACH DIRECTOR WHO (1) IS
RE-ELECTED TO THE BOARD, (2) IS AN ELIGIBLE DIRECTOR ON THE RELEVANT GRANT DATE,
AND (3) HAS SERVED AS A DIRECTOR FOR A PERIOD

 

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OF AT LEAST SIX (6) MONTHS ON THE RELEVANT GRANT DATE. THE TYPE OF STOCK AWARD,
THE NUMBER OF SHARES SUBJECT TO THE ANNUAL GRANT AND OTHER TERMS GOVERNING THE
ANNUAL GRANT SHALL BE AS DETERMINED BY THE COMMITTEE IN ITS SOLE DISCRETION. IF
THE COMMITTEE DOES NOT ESTABLISH THE TERMS AND CONDITIONS OF THE ANNUAL GRANT
PRIOR TO THE DATE OF GRANT, THEN THE ANNUAL GRANT SHALL BE OF THE SAME TYPE, AND
FOR THE SAME NUMBER OF SHARES OF COMMON STOCK, AS THE ANNUAL GRANTS MADE FOR THE
IMMEDIATELY PRECEDING YEAR. THE DATE OF GRANT OF AN ANNUAL GRANT IS THE DATE ON
WHICH THE DIRECTOR IS RE-ELECTED TO SERVE ON THE BOARD.

 

(III)                               VESTING ON RETIREMENT. ALL INITIAL GRANTS
AND ANNUAL GRANTS HELD BY AN ELIGIBLE DIRECTOR SHALL BECOME FULLY VESTED AND
EXERCISABLE UPON THE TERMINATION OF THE ELIGIBLE DIRECTOR’S CONTINUOUS SERVICE
BY REASON OF RETIREMENT, UNLESS OTHERWISE EXPRESSLY SET FORTH IN THE APPLICABLE
STOCK AWARD AGREEMENT(S).

 

VIII. PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

 

8.1.                                                 STOCK APPRECIATION RIGHTS.
EACH AWARD OF STOCK APPRECIATION RIGHTS (“SARS”) GRANTED UNDER THE PLAN SHALL BE
SUBJECT TO SUCH TERMS AND CONDITIONS AS THE COMMITTEE SHALL DEEM APPROPRIATE.
THE TERMS AND CONDITIONS OF SAR AGREEMENTS NEED NOT BE IDENTICAL, BUT EACH SAR
AGREEMENT SHALL INCLUDE THE SUBSTANCE OF EACH OF THE APPLICABLE PROVISIONS OF
THIS SECTION 8.1. THE TWO TYPES OF SARS THAT ARE AUTHORIZED FOR ISSUANCE UNDER
THIS PLAN ARE:

 

(I)                                     STAND-ALONE SARS. THE FOLLOWING TERMS
AND CONDITIONS SHALL GOVERN THE GRANT AND REDEEMABILITY OF STAND-ALONE SARS:

 

(A)                              THE STAND-ALONE SAR SHALL COVER A SPECIFIED
NUMBER OF UNDERLYING SHARES OF COMMON STOCK AND SHALL BE REDEEMABLE UPON SUCH
TERMS AND CONDITIONS AS THE COMMITTEE MAY ESTABLISH. UPON REDEMPTION OF THE
STAND-ALONE SAR, THE HOLDER SHALL BE ENTITLED TO RECEIVE A DISTRIBUTION FROM THE
COMPANY IN AN AMOUNT EQUAL TO THE EXCESS OF (I) THE AGGREGATE FAIR MARKET VALUE
(ON THE REDEMPTION DATE) OF THE SHARES OF COMMON STOCK UNDERLYING THE REDEEMED
RIGHT OVER (II) THE AGGREGATE BASE PRICE IN EFFECT FOR THOSE SHARES.

 

(B)                                THE NUMBER OF SHARES OF COMMON STOCK
UNDERLYING EACH STAND-ALONE SAR AND THE BASE PRICE IN EFFECT FOR THOSE SHARES
SHALL BE DETERMINED BY THE COMMITTEE IN ITS SOLE DISCRETION AT THE TIME THE
STAND-ALONE SAR IS GRANTED. IN NO EVENT, HOWEVER, MAY THE BASE PRICE PER SHARE
BE LESS THAN ONE HUNDRED PERCENT (100%) OF THE FAIR MARKET VALUE PER UNDERLYING
SHARE OF COMMON STOCK ON THE GRANT DATE.

 

(C)                                THE DISTRIBUTION WITH RESPECT TO ANY REDEEMED
STAND-ALONE SAR MAY BE MADE IN SHARES OF COMMON STOCK VALUED AT FAIR MARKET
VALUE ON THE REDEMPTION DATE, IN CASH, OR PARTLY IN SHARES AND PARTLY IN CASH,
AS THE COMMITTEE SHALL IN ITS SOLE DISCRETION DEEM APPROPRIATE.

 

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(II)                                  STAPLED SARS. THE FOLLOWING TERMS AND
CONDITIONS SHALL GOVERN THE GRANT AND REDEMPTION OF STAPLED SARS:

 

(A)                              STAPLED SARS MAY ONLY BE GRANTED CONCURRENTLY
WITH AN OPTION TO ACQUIRE THE SAME NUMBER OF SHARES OF COMMON STOCK AS THE
NUMBER OF SUCH SHARES UNDERLYING THE STAPLED SARS.

 

(B)                                STAPLED SARS SHALL BE REDEEMABLE UPON SUCH
TERMS AND CONDITIONS AS THE COMMITTEE MAY ESTABLISH AND SHALL GRANT A HOLDER THE
RIGHT TO ELECT AMONG (I) THE EXERCISE OF THE CONCURRENTLY GRANTED OPTION FOR
SHARES OF COMMON STOCK, WHEREUPON THE NUMBER OF SHARES OF COMMON STOCK SUBJECT
TO THE STAPLED SARS SHALL BE REDUCED BY AN EQUIVALENT NUMBER, (II) THE
REDEMPTION OF SUCH STAPLED SARS IN EXCHANGE FOR A DISTRIBUTION FROM THE COMPANY
IN AN AMOUNT EQUAL TO THE EXCESS OF THE FAIR MARKET VALUE (ON THE REDEMPTION
DATE) OF THE NUMBER OF VESTED SHARES WHICH THE HOLDER REDEEMS OVER THE AGGREGATE
BASE PRICE FOR SUCH VESTED SHARES, WHEREUPON THE NUMBER OF SHARES OF COMMON
STOCK SUBJECT TO THE CONCURRENTLY GRANTED OPTION SHALL BE REDUCED BY ANY
EQUIVALENT NUMBER, OR (III) A COMBINATION OF (I) AND (II).

 

(C)                                THE DISTRIBUTION TO WHICH THE HOLDER OF
STAPLED SARS SHALL BECOME ENTITLED UPON THE REDEMPTION OF STAPLED SARS MAY BE
MADE IN SHARES OF COMMON STOCK VALUED AT FAIR MARKET VALUE ON THE REDEMPTION
DATE, IN CASH, OR PARTLY IN SHARES AND PARTLY IN CASH, AS THE COMMITTEE SHALL IN
ITS SOLE DISCRETION DEEM APPROPRIATE.

 

(iii)                               Limitations. The total number of shares of
Common Stock subject to a SAR may, but need not, vest in period installments
that may, but need not, be equal. The Committee shall determine the criteria
under which shares of Common Stock under the SAR may vest. If the Stock Award
Agreement does not provide for transferability, then the shares subject to the
SAR shall not be transferable except by will or by the laws of descent and
distribution.

 

8.2.                                                 OTHER STOCK-BASED AWARDS.
THE COMMITTEE, IN ITS SOLE DISCRETION, MAY GRANT OR SELL AN AWARD OF A
RESTRICTED STOCK BONUS, RESTRICTED STOCK PURCHASE RIGHT, PHANTOM STOCK UNIT,
RESTRICTED STOCK UNIT, PERFORMANCE SHARE BONUS, PERFORMANCE SHARE UNIT, OR OTHER
STOCK-BASED AWARD THAT IS VALUED IN WHOLE OR IN PART BY REFERENCE TO, OR IS
OTHERWISE BASED ON, THE FAIR MARKET VALUE OF THE COMPANY’S COMMON STOCK (EACH,
AN “OTHER STOCK-BASED AWARD”). EACH OTHER STOCK-BASED AWARD SHALL BE SUBJECT TO
A STOCK AWARD AGREEMENT WHICH SHALL CONTAIN SUCH TERMS AND CONDITIONS AS THE
COMMITTEE SHALL DEEM APPROPRIATE, INCLUDING ANY PROVISIONS FOR THE DEFERRAL OF
THE RECEIPT OF ANY SHARES OF COMMON STOCK, CASH OR PROPERTY OTHERWISE
DISTRIBUTABLE TO THE PARTICIPANT IN RESPECT OF THE STOCK AWARD. THE TERMS AND
CONDITIONS OF OTHER STOCK-BASED AWARDS MAY CHANGE FROM TIME TO TIME, AND THE
TERMS AND CONDITIONS OF SEPARATE OTHER STOCK-BASED AWARDS NEED NOT BE IDENTICAL,
BUT EACH OTHER STOCK-BASED AWARD SHALL BE SUBJECT TO THE FOLLOWING PROVISIONS
(EITHER THROUGH INCORPORATION OF PROVISIONS HEREOF BY REFERENCE IN THE
APPLICABLE STOCK AWARD AGREEMENT OR OTHERWISE):

 

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(I)                                     PURCHASE PRICE. OTHER STOCK-BASED AWARDS
MAY BE GRANTED IN CONSIDERATION FOR PAST SERVICES ACTUALLY RENDERED TO THE
COMPANY OR AN AFFILIATE. THE PURCHASE PRICE (IF ANY) UNDER EACH OTHER
STOCK-BASED AWARD SHALL BE SUCH AMOUNT AS THE COMMITTEE SHALL DETERMINE AND
DESIGNATE IN THE APPLICABLE STOCK AWARD AGREEMENT. TO THE EXTENT REQUIRED BY
APPLICABLE LAW, THE PURCHASE PRICE SHALL NOT BE LESS THAN ONE HUNDRED PERCENT
(100%) OF THE FAIR MARKET VALUE OF THE COMMON STOCK SUBJECT TO THE OTHER
STOCK-BASED AWARD ON THE DATE SUCH AWARD IS MADE OR AT THE TIME THE PURCHASE IS
CONSUMMATED, AS APPLICABLE.

 

(II)                                  CONSIDERATION.

 

(A)                              THE PURCHASE PRICE (IF ANY) OF COMMON STOCK
ACQUIRED PURSUANT TO OTHER STOCK-BASED AWARDS SHALL BE PAID EITHER: (1) IN CASH
OR BY CHECK, OR (2) AS DETERMINED BY THE COMMITTEE (AND TO THE EXTENT REQUIRED
BY APPLICABLE LAW, AT THE TIME OF THE GRANT): (V) BY DELIVERY TO THE COMPANY OF
OTHER SHARES OF COMMON STOCK (SUBJECT TO SUCH REQUIREMENTS AS MAY BE IMPOSED BY
THE COMMITTEE), (W) IF THERE IS A PUBLIC MARKET FOR THE COMMON STOCK AT SUCH
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, PURSUANT TO A “SAME DAY
SALE” PROGRAM THAT RESULTS IN EITHER THE RECEIPT OF CASH (OR CHECK) BY THE
COMPANY OR THE RECEIPT OF IRREVOCABLE INSTRUCTIONS TO PAY THE AGGREGATE EXERCISE
PRICE TO THE COMPANY FROM THE SALES PROCEEDS, (X) REDUCTION OF THE COMPANY’S
LIABILITY TO THE PARTICIPANT, (Y) BY ANY OTHER FORM OF CONSIDERATION PERMITTED
BY LAW, BUT IN NO EVENT SHALL A PROMISSORY NOTE OR OTHER FORM OF DEFERRED
PAYMENT CONSTITUTE A PERMISSIBLE FORM OF CONSIDERATION, OR (Z) BY SOME
COMBINATION OF THE FOREGOING.

 

(B)                                Unless otherwise specifically provided in the
Stock Award Agreement, the purchase price of Common Stock acquired pursuant to
any Other Stock-Based Award that is paid by delivery to the Company of other
Common Stock, which Common Stock was acquired, directly or indirectly from the
Company, shall be paid only by shares of the Common Stock that have been held
for more than six (6) months (or such longer or shorter period of time required
to avoid a supplemental charge to earnings for financial accounting purposes).
To the extent required by Applicable Law, the Participant shall pay the Common
Stock’s “par value” solely in cash or by check.

 

(C)                                Whenever a Participant is permitted to pay
the exercise price of any Other Stock-Based Award and/or taxes relating to the
exercise thereof by delivering Common Stock, the Participant may, subject to
procedures satisfactory to the Committee, satisfy such delivery requirements by
presenting proof of beneficial ownership of such Common Stock, in which case the
Company shall treat the Other Stock-Based Award as exercised or redeemed without
further payment and shall withhold such number of shares of Common Stock from
the Common Stock acquired under the Other Stock-Based Award. When necessary to
avoid a supplemental charge to earnings for financial accounting purposes, any
such withholding for tax purposes shall be made at the statutory minimum rate of
withholding.

 

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(III)                               VESTING. THE TOTAL NUMBER OF SHARES OF
COMMON STOCK SUBJECT TO EACH OTHER STOCK-BASED AWARD MAY, BUT NEED NOT, VEST
AND/OR BECOME REDEEMABLE IN PERIODIC INSTALLMENTS THAT MAY, BUT NEED NOT, BE
EQUAL. THE COMMITTEE SHALL DETERMINE THE CRITERIA UNDER WHICH SHARES OF COMMON
STOCK UNDER THE EACH OTHER STOCK-BASED AWARD MAY VEST. THE CRITERIA MAY OR
MAY NOT INCLUDE PERFORMANCE CRITERIA OR CONTINUOUS SERVICE. SHARES OF COMMON
STOCK ACQUIRED UNDER EACH OTHER STOCK-BASED AWARD MAY, BUT NEED NOT, BE SUBJECT
TO A SHARE REPURCHASE RIGHT OR SIMILAR FORFEITURE FEATURE IN FAVOR OF THE
COMPANY IN ACCORDANCE WITH A VESTING SCHEDULE TO BE DETERMINED BY THE COMMITTEE.

 

(IV)                              DISTRIBUTIONS. THE DISTRIBUTION WITH RESPECT
TO ANY OTHER STOCK-BASED AWARD MAY BE MADE IN SHARES OF COMMON STOCK VALUED AT
FAIR MARKET VALUE ON THE REDEMPTION OR EXERCISE DATE, IN CASH, OR PARTLY IN
SHARES AND PARTLY IN CASH, AS THE COMMITTEE SHALL IN ITS SOLE DISCRETION DEEM
APPROPRIATE.

 

(V)                                 TERMINATION OF PARTICIPANT’S CONTINUOUS
SERVICE. IN THE EVENT A PARTICIPANT’S CONTINUOUS SERVICE TERMINATES, THE COMPANY
MAY REPURCHASE OR REACQUIRE, AND/OR THE PARTICIPANT SHALL FORFEIT (AS
APPLICABLE), ANY OR ALL OF THE SHARES OF COMMON STOCK HELD BY THE PARTICIPANT
THAT HAVE NOT VESTED AS OF THE DATE OF TERMINATION ON SUCH TERMS AND CONDITIONS
AS SET FORTH IN THE STOCK AWARD AGREEMENT.

 

(VI)                              TRANSFERABILITY. RIGHTS TO ACQUIRE SHARES OF
COMMON STOCK UNDER OTHER STOCK-BASED AWARD SHALL BE TRANSFERABLE BY THE
PARTICIPANT ONLY UPON SUCH TERMS AND CONDITIONS AS ARE SET FORTH IN THE
APPLICABLE STOCK AWARD AGREEMENT, AS THE COMMITTEE SHALL DETERMINE IN ITS
DISCRETION. IF THE STOCK AWARD AGREEMENT DOES NOT PROVIDE FOR TRANSFERABILITY,
THEN THE SHARES SUBJECT TO OTHER STOCK-BASED AWARD SHALL NOT BE TRANSFERABLE
EXCEPT BY WILL OR BY THE LAWS OF DESCENT AND DISTRIBUTION.

 

IX. ISSUANCE OF SHARES.

 

9.1.                                                 AVAILABILITY OF SHARES.
DURING THE TERMS OF THE OUTSTANDING STOCK AWARDS, THE COMPANY SHALL KEEP
AVAILABLE AT ALL TIMES THE NUMBER OF SHARES OF COMMON STOCK REQUIRED TO SATISFY
SUCH STOCK AWARDS.

 

9.2.                                                 SECURITIES LAW COMPLIANCE.
THE GRANT OF STOCK AWARDS AND THE ISSUANCE OF COMMON STOCK PURSUANT TO STOCK
AWARDS SHALL BE SUBJECT TO COMPLIANCE WITH ALL APPLICABLE REQUIREMENTS OF
FEDERAL, STATE AND FOREIGN LAW WITH RESPECT TO SECURITIES. THE COMPANY SHALL USE
COMMERCIALLY REASONABLE EFFORTS TO OBTAIN FROM EACH REGULATORY COMMISSION OR
AGENCY HAVING JURISDICTION OVER THE PLAN SUCH AUTHORITY AS MAY BE REQUIRED TO
GRANT STOCK AWARDS AND TO ISSUE AND SELL SHARES OF COMMON STOCK UPON EXERCISE,
REDEMPTION OR SATISFACTION OF THE STOCK AWARDS; PROVIDED, HOWEVER, THAT THIS
UNDERTAKING SHALL NOT REQUIRE THE COMPANY TO REGISTER UNDER THE SECURITIES ACT
OR UNDER ANY FOREIGN LAW OF SIMILAR EFFECT THE PLAN, ANY STOCK AWARD OR ANY
COMMON STOCK ISSUED OR ISSUABLE PURSUANT TO ANY SUCH STOCK AWARD. IF, AFTER
COMMERCIALLY REASONABLE EFFORTS, THE COMPANY IS UNABLE TO OBTAIN FROM ANY SUCH
REGULATORY COMMISSION OR AGENCY THE AUTHORITY WHICH COUNSEL FOR THE COMPANY
DEEMS NECESSARY FOR THE LAWFUL ISSUANCE AND SALE OF COMMON STOCK UNDER THE PLAN,
THE COMPANY SHALL BE RELIEVED FROM ANY LIABILITY FOR FAILURE TO ISSUE AND SELL
COMMON STOCK RELATED TO SUCH STOCK AWARDS UNLESS AND UNTIL SUCH AUTHORITY IS
OBTAINED.

 

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9.3.                                                 PROCEEDS. PROCEEDS FROM THE
SALE OF COMMON STOCK PURSUANT TO STOCK AWARDS SHALL CONSTITUTE GENERAL FUNDS OF
THE COMPANY.

 

X. MISCELLANEOUS.

 

10.1.                                           VESTING GENERALLY. UNLESS
OTHERWISE PROVIDED IN THE STOCK AWARD AGREEMENT OR THE TERMS OF THE PLAN, IF THE
VESTING OF A STOCK AWARD IS BASED SOLELY ON THE PARTICIPANT’S CONTINUOUS
SERVICE, THE STOCK AWARD WILL NOT FULLY VEST IN LESS THAN THREE (3) YEARS AND IF
THE VESTING OF A STOCK AWARD IS BASED ON THE PARTICIPANT’S ACHIEVEMENT OF
PERFORMANCE CRITERIA, THE STOCK AWARD WILL NOT FULLY VEST IN LESS THAN ONE
(1) YEAR.

 

10.2.                                           ACCELERATION OF EXERCISABILITY
AND VESTING. THE COMMITTEE SHALL HAVE THE POWER TO ACCELERATE EXERCISABILITY
AND/OR VESTING WHEN IT DEEMS FIT, SUCH AS UPON A CHANGE OF CONTROL. THE
COMMITTEE SHALL HAVE THE POWER TO ACCELERATE THE TIME AT WHICH A STOCK AWARD
MAY FIRST BE EXERCISED OR THE TIME DURING WHICH A STOCK AWARD OR ANY
PART THEREOF WILL VEST IN ACCORDANCE WITH THE PLAN, NOTWITHSTANDING THE
PROVISIONS IN THE STOCK AWARD STATING THE TIME AT WHICH IT MAY FIRST BE
EXERCISED OR THE TIME DURING WHICH IT WILL VEST.

 

10.3.                                           CLAWBACK. THE COMPANY
MAY PROVIDE IN ANY STOCK AWARD AGREEMENT THAT, UPON THE COMMITTEE’S DISCOVERY OF
FACTS THAT WOULD BE GROUNDS FOR A TERMINATION FOR CAUSE OF A PARTICIPANT’S
CONTINUOUS SERVICE, AND REGARDLESS OF WHETHER SUCH DISCOVERY IS MADE PRIOR TO OR
FOLLOWING A TERMINATION OF CONTINUOUS SERVICE FOR ANY REASON, THE COMMITTEE
MAY (IN ITS SOLE DISCRETION, BUT ACTING IN GOOD FAITH) DIRECT THAT THE COMPANY
RECOVER ALL OR A PORTION OF THE STOCK AWARD, INCLUDING ANY SHARES OF COMMON
STOCK THEN HELD BY THE PARTICIPANT AS WELL AS ANY GAIN RECOGNIZED BY THE
PARTICIPANT UPON ANY SALE OF THE SHARES OF COMMON STOCK ISSUED PURSUANT TO THE
STOCK AWARD. IN NO EVENT SHALL THE AMOUNT TO BE RECOVERED BY THE COMPANY BE LESS
THAN ANY AMOUNT REQUIRED TO BE REPAID OR RECOVERED AS A MATTER OF LAW. THE
COMMITTEE SHALL DETERMINE WHETHER THE COMPANY SHALL EFFECT ANY SUCH RECOVERY OR
REPAYMENT (I) BY SEEKING RECOVERY OR REPAYMENT FROM THE PARTICIPANT, (II) BY
REDUCING (SUBJECT TO APPLICABLE LAW AND THE TERMS AND CONDITIONS OF THE
APPLICABLE PLAN, PROGRAM OR ARRANGEMENT) THE AMOUNT THAT WOULD OTHERWISE BE
PAYABLE TO THE PARTICIPANT UNDER ANY COMPENSATORY PLAN, PROGRAM, AGREEMENT OR
ARRANGEMENT MAINTAINED BY THE COMPANY OR ANY OF ITS AFFILIATES, (III) BY
WITHHOLDING PAYMENT OF FUTURE COMPENSATION (INCLUDING THE PAYMENT OF ANY
DISCRETIONARY BONUS AMOUNT) OR GRANTS OF COMPENSATORY AWARDS THAT WOULD
OTHERWISE HAVE BEEN MADE IN ACCORDANCE WITH THE OTHERWISE APPLICABLE
COMPENSATION PRACTICES OF THE COMPANY OR ANY AFFILIATE, OR (IV) BY ANY
COMBINATION OF THE FOREGOING.

 

10.4.                                           COMPLIANCE OF PERFORMANCE
AWARDS. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, ANY STOCK AWARD GRANTED
UNDER THIS PLAN MAY, BUT NEED NOT, BE GRANTED IN A MANNER WHICH MAY BE
DEDUCTIBLE BY THE COMPANY UNDER SECTION 162(M) OF THE CODE AND, AS APPLICABLE,
COMPLIANT WITH THE REQUIREMENTS OF SECTION 409A OF THE CODE (SUCH AWARDS,
“PERFORMANCE-BASED AWARDS”). A PARTICIPANT’S PERFORMANCE-BASED AWARD SHALL BE
DETERMINED BASED ON THE ATTAINMENT OF WRITTEN PERFORMANCE GOALS APPROVED BY THE
COMMITTEE FOR A PERFORMANCE PERIOD ESTABLISHED BY THE COMMITTEE, WHICH GOALS ARE
APPROVED (I) WHILE THE OUTCOME FOR THAT PERFORMANCE PERIOD IS SUBSTANTIALLY
UNCERTAIN AND (II) DURING SUCH PERIOD OF TIME AS PERMITTED BY APPLICABLE LAW.
THE PERFORMANCE GOALS, WHICH MUST BE OBJECTIVE,

 

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SHALL BE BASED UPON ONE OR MORE OF THE FOLLOWING CRITERIA: (I) CONSOLIDATED
EARNINGS BEFORE OR AFTER TAXES (INCLUDING EARNINGS BEFORE ONE OR MORE OF THE
FOLLOWING: INTEREST, TAXES, DEPRECIATION AND AMORTIZATION); (II) NET INCOME;
(III) OPERATING INCOME; (IV) EARNINGS PER SHARE; (V) BOOK VALUE PER SHARE;
(VI) RETURN ON STOCKHOLDERS’ EQUITY; (VII) EXPENSE MANAGEMENT; (VIII) RETURN ON
INVESTMENT; (IX) IMPROVEMENTS IN CAPITAL STRUCTURE; (X) PROFITABILITY OF AN
IDENTIFIABLE BUSINESS UNIT OR PRODUCT; (XI) MAINTENANCE OR IMPROVEMENT OF PROFIT
MARGINS; (XII) STOCK PRICE; (XIII) MARKET SHARE; (XIV) REVENUES OR SALES; (XV)
COSTS AND/OR COST REDUCTIONS OR SAVINGS; (XVI) CASH FLOW; (XVII) WORKING
CAPITAL; (XVIII) RETURN ON INVESTED CAPITAL OR ASSETS; (XIX) CONSUMMATIONS OF
ACQUISITIONS OR SALES OF CERTAIN COMPANY ASSETS, SUBSIDIARIES OR OTHER
BUSINESSES; (XX) FUNDS FROM OPERATIONS AND (XXI) PRE-TAX INCOME. THE FOREGOING
CRITERIA MAY RELATE TO THE COMPANY, ONE OR MORE OF ITS AFFILIATES OR ONE OR MORE
OF ITS DIVISIONS OR UNITS, OR ANY COMBINATION OF THE FOREGOING, AND MAY BE
APPLIED ON AN ABSOLUTE BASIS AND/OR BE RELATIVE TO ONE OR MORE PEER GROUP
COMPANIES OR INDICES, OR ANY COMBINATION THEREOF, ALL AS THE COMMITTEE SHALL
DETERMINE. IN ADDITION, TO THE DEGREE CONSISTENT WITH SECTION 162(M) OF THE CODE
(OR ANY SUCCESSOR SECTION THERETO) AND/OR SECTION 409A OF THE CODE, THE
PERFORMANCE GOALS MAY BE CALCULATED WITHOUT REGARD TO EXTRAORDINARY ITEMS. THE
COMMITTEE SHALL DETERMINE WHETHER, WITH RESPECT TO A PERFORMANCE PERIOD, THE
APPLICABLE PERFORMANCE GOALS HAVE BEEN MET WITH RESPECT TO A GIVEN PARTICIPANT
AND, IF THEY HAVE, TO SO CERTIFY AND ASCERTAIN THE AMOUNT OF THE APPLICABLE
PERFORMANCE-BASED AWARD. NO PERFORMANCE-BASED AWARDS WILL BE PAID FOR SUCH
PERFORMANCE PERIOD UNTIL SUCH CERTIFICATION IS MADE BY THE COMMITTEE. THE AMOUNT
OF THE PERFORMANCE-BASED AWARD ACTUALLY PAID TO A GIVEN PARTICIPANT MAY BE LESS
THAN THE AMOUNT DETERMINED BY THE APPLICABLE PERFORMANCE GOAL FORMULA, AT THE
DISCRETION OF THE COMMITTEE. THE AMOUNT OF THE PERFORMANCE-BASED AWARD
DETERMINED BY THE COMMITTEE FOR A PERFORMANCE PERIOD SHALL BE PAID TO THE
PARTICIPANT AT SUCH TIME AS DETERMINED BY THE COMMITTEE IN ITS SOLE DISCRETION
AFTER THE END OF SUCH PERFORMANCE PERIOD; PROVIDED, HOWEVER, THAT A PARTICIPANT
MAY, IF AND TO THE EXTENT PERMITTED BY THE COMMITTEE AND CONSISTENT WITH THE
PROVISIONS OF SECTION 162(M) AND/OR SECTION 409A OF THE CODE, ELECT TO DEFER
PAYMENT OF A PERFORMANCE-BASED AWARD.

 

10.5.                                           STOCKHOLDER RIGHTS. NO
PARTICIPANT SHALL BE DEEMED TO BE THE HOLDER OF, OR TO HAVE ANY OF THE RIGHTS OF
A HOLDER WITH RESPECT TO, ANY SHARES OF COMMON STOCK SUBJECT TO A STOCK AWARD
EXCEPT TO THE EXTENT THAT THE COMPANY HAS ISSUED THE SHARES OF COMMON STOCK
RELATING TO SUCH STOCK AWARD OR EXCEPT AS EXPRESSLY PROVIDED IN A STOCK AWARD
AGREEMENT.

 

10.6.                                           NO EMPLOYMENT OR OTHER SERVICE
RIGHTS. NOTHING IN THE PLAN OR ANY INSTRUMENT EXECUTED OR STOCK AWARD GRANTED
PURSUANT THERETO SHALL CONFER UPON ANY PARTICIPANT ANY RIGHT TO CONTINUE TO
SERVE THE COMPANY OR AN AFFILIATE IN THE CAPACITY IN EFFECT AT THE TIME THE
STOCK AWARD WAS GRANTED OR SHALL AFFECT THE RIGHT OF THE COMPANY OR AN AFFILIATE
TO TERMINATE (I) THE EMPLOYMENT OF AN EMPLOYEE WITH OR WITHOUT NOTICE AND WITH
OR WITHOUT CAUSE, (II) THE SERVICE OF A CONSULTANT PURSUANT TO THE TERMS OF SUCH
CONSULTANT’S AGREEMENT WITH THE COMPANY OR AN AFFILIATE OR (III) THE SERVICE OF
A DIRECTOR PURSUANT TO THE BYLAWS OF THE COMPANY, AND ANY APPLICABLE PROVISIONS
OF THE CORPORATE LAW OF THE STATE OR OTHER JURISDICTION IN WHICH THE COMPANY IS
DOMICILED, AS THE CASE MAY BE.

 

10.7.                                           INVESTMENT ASSURANCES. THE
COMPANY MAY REQUIRE A PARTICIPANT, AS A CONDITION OF EXERCISING OR REDEEMING A
STOCK AWARD OR ACQUIRING COMMON STOCK UNDER ANY STOCK AWARD, (I) TO GIVE WRITTEN
ASSURANCES SATISFACTORY TO THE COMPANY AS TO THE

 

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PARTICIPANT’S KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS AND/OR
TO EMPLOY A PURCHASER REPRESENTATIVE REASONABLY SATISFACTORY TO THE COMPANY WHO
IS KNOWLEDGEABLE AND EXPERIENCED IN FINANCIAL AND BUSINESS MATTERS AND THAT HE
OR SHE IS CAPABLE OF EVALUATING, ALONE OR TOGETHER WITH THE PURCHASER
REPRESENTATIVE, THE MERITS AND RISKS OF ACQUIRING THE COMMON STOCK; (II) TO GIVE
WRITTEN ASSURANCES SATISFACTORY TO THE COMPANY STATING THAT THE PARTICIPANT IS
ACQUIRING COMMON STOCK SUBJECT TO THE STOCK AWARD FOR THE PARTICIPANT’S OWN
ACCOUNT AND NOT WITH ANY PRESENT INTENTION OF SELLING OR OTHERWISE DISTRIBUTING
THE COMMON STOCK; AND (III) TO GIVE SUCH OTHER WRITTEN ASSURANCES AS THE COMPANY
MAY DETERMINE ARE REASONABLE IN ORDER TO COMPLY WITH APPLICABLE LAW. THE
FOREGOING REQUIREMENTS, AND ANY ASSURANCES GIVEN PURSUANT TO SUCH REQUIREMENTS,
SHALL BE INOPERATIVE IF (1) THE ISSUANCE OF THE SHARES OF COMMON STOCK UNDER THE
STOCK AWARD HAS BEEN REGISTERED UNDER A THEN CURRENTLY EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR (2) AS TO ANY PARTICULAR REQUIREMENT, A
DETERMINATION IS MADE BY COUNSEL FOR THE COMPANY THAT SUCH REQUIREMENT NEED NOT
BE MET IN THE CIRCUMSTANCES UNDER THE THEN APPLICABLE SECURITIES LAWS, AND IN
EITHER CASE OTHERWISE COMPLIES WITH APPLICABLE LAW. THE COMPANY MAY, UPON ADVICE
OF COUNSEL TO THE COMPANY, PLACE LEGENDS ON STOCK CERTIFICATES ISSUED UNDER THE
PLAN AS SUCH COUNSEL DEEMS NECESSARY OR APPROPRIATE IN ORDER TO COMPLY WITH
APPLICABLE LAWS, INCLUDING, BUT NOT LIMITED TO, LEGENDS RESTRICTING THE TRANSFER
OF THE COMMON STOCK.

 

10.8.                                           DESIGNATION OF A BENEFICIARY.
THE COMMITTEE MAY ESTABLISH RULES PERTAINING TO THE DESIGNATION BY THE
PARTICIPANT OF A BENEFICIARY WHO IS TO RECEIVE ANY SHARES OF COMMON STOCK AND/OR
ANY CASH, OR HAVE THE RIGHT TO EXERCISE OR REDEEM THAT PARTICIPANT’S STOCK
AWARD, IN THE EVENT OF SUCH PARTICIPANT’S DEATH.

 

10.9.                                           WITHHOLDING OBLIGATIONS. TO THE
EXTENT PROVIDED BY THE TERMS OF A STOCK AWARD AGREEMENT, THE PARTICIPANT
MAY SATISFY ANY FEDERAL, STATE, LOCAL, OR FOREIGN TAX WITHHOLDING OBLIGATION
RELATING TO THE GRANT, EXERCISE, ACQUISITION OR REDEMPTION OF A STOCK AWARD OR
THE ACQUISITION, VESTING, DISTRIBUTION OR TRANSFER OF COMMON STOCK UNDER A STOCK
AWARD BY ANY OF THE FOLLOWING MEANS (IN ADDITION TO THE COMPANY’S RIGHT TO
WITHHOLD FROM ANY COMPENSATION PAID TO THE PARTICIPANT BY THE COMPANY) OR BY A
COMBINATION OF SUCH MEANS: (I) TENDERING A CASH PAYMENT; (II) AUTHORIZING THE
COMPANY TO WITHHOLD SHARES OF COMMON STOCK FROM THE SHARES OF COMMON STOCK
OTHERWISE ISSUABLE TO THE PARTICIPANT, PROVIDED, HOWEVER, THAT NO SHARES OF
COMMON STOCK ARE WITHHELD WITH A VALUE EXCEEDING THE MINIMUM AMOUNT OF TAX
REQUIRED TO BE WITHHELD BY LAW (WHERE WITHHOLDING IN EXCESS OF THE MINIMUM
AMOUNT WILL RESULT IN A SUPPLEMENTAL CHARGE TO EARNINGS FOR FINANCIAL ACCOUNTING
PURPOSES); OR (III) DELIVERING TO THE COMPANY OWNED AND UNENCUMBERED SHARES OF
COMMON STOCK; PROVIDED, HOWEVER, THAT IN THE CASE OF THE TENDER OF SHARES, THAT
ANY SUCH SHARES HAVE BEEN HELD BY THE PARTICIPANT FOR NOT LESS THAN SIX
(6) MONTHS (OR SUCH OTHER PERIOD AS ESTABLISHED FROM TIME TO TIME BY THE
COMMITTEE IN ORDER TO AVOID A SUPPLEMENTAL CHARGE TO EARNINGS FOR FINANCIAL
ACCOUNTING PURPOSES).

 

10.10.                                     SECTION 409A. NOTWITHSTANDING
ANYTHING IN THE PLAN TO THE CONTRARY, IT IS THE INTENT OF THE COMPANY THAT THE
ADMINISTRATION OF THE PLAN, AND THE GRANTING OF ALL STOCK AWARDS UNDER THIS
PLAN, SHALL BE DONE IN ACCORDANCE WITH SECTION 409A OF THE CODE AND THE
DEPARTMENT OF TREASURY REGULATIONS AND OTHER INTERPRETIVE GUIDANCE ISSUED
THEREUNDER, INCLUDING ANY GUIDANCE OR REGULATIONS THAT MAY BE ISSUED AFTER THE
EFFECTIVE DATE OF THIS PLAN, AND SHALL NOT CAUSE THE ACCELERATION OF, OR THE
IMPOSITION OF THE ADDITIONAL, TAXES PROVIDED FOR

 

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IN SECTION 409A OF THE CODE. ANY STOCK AWARD SHALL BE GRANTED, DEFERRED, PAID
OUT OR MODIFIED UNDER THIS PLAN IN A MANNER THAT SHALL BE INTENDED TO AVOID
RESULTING IN THE ACCELERATION OF TAXATION, OR THE IMPOSITION OF PENALTY
TAXATION, UNDER SECTION 409A UPON A PARTICIPANT. IN THE EVENT THAT IT IS
REASONABLY DETERMINED BY THE COMMITTEE THAT ANY AMOUNTS PAYABLE IN RESPECT OF
ANY STOCK AWARD UNDER THE PLAN WILL BE TAXABLE TO A PARTICIPANT UNDER
SECTION 409A OF THE CODE PRIOR TO THE PAYMENT AND/OR DELIVERY TO SUCH
PARTICIPANT OF SUCH AMOUNTS OR WILL BE SUBJECT TO THE ACCELERATION OF TAXATION
OR THE IMPOSITION OF PENALTY TAXATION UNDER SECTION 409A OF THE CODE, THE
COMPANY MAY EITHER (I) ADOPT SUCH AMENDMENTS TO THE PLAN AND RELATED STOCK
AWARD, AND APPROPRIATE POLICIES AND PROCEDURES, INCLUDING AMENDMENTS AND
POLICIES WITH RETROACTIVE EFFECT, THAT THE COMMITTEE DETERMINES NECESSARY OR
APPROPRIATE TO PRESERVE THE INTENDED TAX TREATMENT OF THE BENEFITS PROVIDED BY
THE PLAN AND STOCK AWARDS HEREUNDER, AND/OR (II) TAKE SUCH OTHER ACTIONS AS THE
COMMITTEE DETERMINES NECESSARY OR APPROPRIATE TO COMPLY WITH THE REQUIREMENTS OF
SECTION 409A OF THE CODE.

 

10.11.                                     MARKET STANDOFF PROVISION. IF
REQUIRED BY THE COMPANY (OR A REPRESENTATIVE OF THE UNDERWRITER(S)) IN
CONNECTION WITH THE FIRST UNDERWRITTEN REGISTRATION OF THE OFFERING OF ANY
EQUITY SECURITIES OF THE COMPANY UNDER THE SECURITIES ACT, FOR A SPECIFIED
PERIOD OF TIME, THE PARTICIPANT SHALL NOT SELL, DISPOSE OF, TRANSFER, MAKE ANY
SHORT SALE OF, GRANT ANY OPTION FOR THE PURCHASE OF, OR ENTER INTO ANY HEDGING
OR SIMILAR TRANSACTION WITH THE SAME ECONOMIC EFFECT AS A SALE, ANY SHARES OF
THE COMMON STOCK ACQUIRED BY THE PARTICIPANT PURSUANT TO A STOCK AWARD, AND
SHALL EXECUTE AND DELIVER SUCH OTHER AGREEMENTS AS MAY BE REASONABLY REQUESTED
BY THE COMPANY AND/OR THE UNDERWRITER(S) THAT ARE CONSISTENT WITH THE FOREGOING
OR THAT ARE NECESSARY TO GIVE FURTHER EFFECT THERETO. IN ORDER TO ENFORCE THE
FOREGOING COVENANT, THE COMPANY MAY IMPOSE STOP TRANSFER INSTRUCTIONS WITH
RESPECT TO SUCH SHARES UNTIL THE END OF SUCH PERIOD.

 

XI. ADJUSTMENTS UPON CHANGES IN STOCK.

 

11.1.                                           CAPITALIZATION ADJUSTMENTS. IN
THE EVENT OF ANY CHANGE IN THE COMMON STOCK SUBJECT TO THE PLAN OR SUBJECT TO OR
UNDERLYING ANY STOCK AWARD, BY REASON OF ANY STOCK DIVIDEND, STOCK SPLIT,
REVERSE STOCK SPLIT, REORGANIZATION, RECAPITALIZATION, MERGER, CONSOLIDATION,
SPIN-OFF, COMBINATION, EXCHANGE OF SHARES OF COMMON STOCK OR OTHER CORPORATE
EXCHANGE, OR ANY DISTRIBUTION OR DIVIDEND TO STOCKHOLDERS OF COMMON STOCK
(WHETHER PAID IN CASH OR OTHERWISE) OR ANY TRANSACTION SIMILAR TO THE FOREGOING,
THE COMMITTEE IN ITS SOLE DISCRETION AND WITHOUT LIABILITY TO ANY PERSON
MAY MAKE SUCH SUBSTITUTION OR ADJUSTMENT, IF ANY, AS IT DEEMS TO BE EQUITABLE TO
(I) THE TYPE, CLASS(ES) AND MAXIMUM NUMBER OF SECURITIES OR OTHER PROPERTY
SUBJECT TO THE PLAN PURSUANT TO THE SHARE RESERVE, THE ISO LIMIT, AND
SECTION 5.3, (II) THE TYPE, CLASS(ES) AND NUMBER OF SECURITIES SUBJECT TO OPTION
GRANTS TO ELIGIBLE DIRECTORS UNDER SECTION 7 OF THE PLAN, (III) THE TYPE,
CLASS(ES) AND NUMBER OF SECURITIES OR OTHER PROPERTY SUBJECT TO, AS WELL AS THE
EXERCISE PRICE, BASE PRICE, REDEMPTION PRICE OR PURCHASE PRICE APPLICABLE TO,
OUTSTANDING STOCK AWARDS OR (IV) ANY OTHER AFFECTED TERMS OF ANY OUTSTANDING
STOCK AWARDS. ANY DETERMINATION, SUBSTITUTION OR ADJUSTMENT MADE BY THE
COMMITTEE UNDER THIS SECTION 11.1, SHALL BE FINAL, BINDING AND CONCLUSIVE ON ALL
PERSONS. THE CONVERSION OF ANY CONVERTIBLE SECURITIES OF THE COMPANY SHALL NOT
BE TREATED AS A TRANSACTION THAT SHALL CAUSE THE COMMITTEE TO MAKE ANY
DETERMINATION, SUBSTITUTION OR ADJUSTMENT UNDER THIS SECTION 11.1.

 

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11.2.                                           ADJUSTMENTS UPON A CHANGE OF
CONTROL. IN THE EVENT OF A CHANGE OF CONTROL, THEN THE COMMITTEE OR THE BOARD OF
DIRECTORS OF ANY SURVIVING ENTITY OR ACQUIRING ENTITY MAY PROVIDE OR REQUIRE
THAT THE SURVIVING OR ACQUIRING ENTITY SHALL: (1) ASSUME OR CONTINUE ALL OR ANY
PART OF THE STOCK AWARDS OUTSTANDING UNDER THE PLAN OR (2) SUBSTITUTE
SUBSTANTIALLY EQUIVALENT STOCK AWARDS (INCLUDING AN AWARD TO ACQUIRE
SUBSTANTIALLY THE SAME CONSIDERATION PAID TO THE STOCKHOLDERS IN THE TRANSACTION
BY WHICH THE CHANGE OF CONTROL OCCURS) FOR THOSE STOCK AWARDS OUTSTANDING UNDER
THE PLAN. IN THE EVENT ANY SURVIVING ENTITY OR ACQUIRING ENTITY REFUSES TO
ASSUME OR CONTINUE OUTSTANDING STOCK AWARDS OR TO SUBSTITUTE SIMILAR STOCK
AWARDS FOR THOSE OUTSTANDING UNDER THE PLAN, THEN WITH RESPECT TO STOCK AWARDS
HELD BY PARTICIPANTS WHOSE CONTINUOUS SERVICE HAS NOT TERMINATED, THE COMMITTEE
IN ITS SOLE DISCRETION AND WITHOUT LIABILITY TO ANY PERSON MAY: (1) PROVIDE FOR
THE PAYMENT OF A CASH AMOUNT IN EXCHANGE FOR THE CANCELLATION OF A STOCK AWARD
EQUAL TO THE PRODUCT OF (X) THE EXCESS, IF ANY, OF THE FAIR MARKET VALUE PER
SHARE OF COMMON STOCK AT SUCH TIME OVER THE EXERCISE OR REDEMPTION PRICE, IF
ANY, AND (Y) THE TOTAL NUMBER OF SHARES THEN SUBJECT TO SUCH STOCK AWARD;
(2) CONTINUE THE STOCK AWARDS UPON SUCH TERMS AS THE COMMITTEE DETERMINES IN ITS
SOLE DISCRETION; (3) PROVIDE FOR THE ISSUANCE OF SUBSTITUTE AWARDS THAT WILL
SUBSTANTIALLY PRESERVE THE OTHERWISE APPLICABLE TERMS OF ANY AFFECTED STOCK
AWARDS (INCLUDING ANY UNREALIZED VALUE IMMEDIATELY PRIOR TO THE CHANGE OF
CONTROL) PREVIOUSLY GRANTED HEREUNDER, AS DETERMINED BY THE COMMITTEE IN ITS
SOLE DISCRETION; OR (4) NOTIFY PARTICIPANTS HOLDING STOCK AWARDS THAT THEY MUST
EXERCISE OR REDEEM ANY PORTION OF SUCH STOCK AWARD (INCLUDING, AT THE DISCRETION
OF THE COMMITTEE, ANY UNVESTED PORTION OF SUCH STOCK AWARD) AT OR PRIOR TO THE
CLOSING OF THE TRANSACTION BY WHICH THE CHANGE OF CONTROL OCCURS AND THAT THE
STOCK AWARDS SHALL TERMINATE IF NOT SO EXERCISED OR REDEEMED AT OR PRIOR TO THE
CLOSING OF THE TRANSACTION BY WHICH THE CHANGE OF CONTROL OCCURS. WITH RESPECT
TO ANY OTHER STOCK AWARDS OUTSTANDING UNDER THE PLAN, SUCH STOCK AWARDS SHALL
TERMINATE IF NOT EXERCISED OR REDEEMED WITH RESPECT TO THE VESTED PORTION OF THE
STOCK AWARD (AND, AT THE DISCRETION OF THE COMMITTEE, ANY UNVESTED PORTION OF
SUCH STOCK AWARD) AT OR PRIOR TO THE CLOSING OF THE TRANSACTION BY WHICH THE
CHANGE OF CONTROL OCCURS. IN THE EVENT OF THE DISSOLUTION OR LIQUIDATION OF THE
COMPANY, UNLESS THE BOARD DETERMINED OTHERWISE, ALL OUTSTANDING STOCK AWARDS
WILL TERMINATE IMMEDIATELY PRIOR TO THE DISSOLUTION OR LIQUIDATION OF THE
COMPANY. IN ALL CASES, THE COMMITTEE SHALL NOT BE OBLIGATED TO TREAT ALL STOCK
AWARDS, EVEN THOSE THAT ARE OF THE SAME TYPE, IN THE SAME MANNER.

 

XII. AMENDMENT OR TERMINATION OF THE PLAN OR STOCK AWARDS.

 

12.1.                                           TERM AND TERMINATION OF THE
PLAN. THE COMMITTEE MAY SUSPEND OR TERMINATE THE PLAN AT ANY TIME. UNLESS SOONER
TERMINATED, THE PLAN SHALL TERMINATE ON THE DAY BEFORE THE TENTH (10TH)
ANNIVERSARY OF THE EARLIER OF THE DATE THAT THE PLAN IS APPROVED BY THE
STOCKHOLDERS OF THE COMPANY OR THE DATE THE PLAN IS ADOPTED BY THE BOARD. NO
STOCK AWARDS MAY BE GRANTED UNDER THE PLAN WHILE THE PLAN IS SUSPENDED OR AFTER
IT IS TERMINATED.

 

12.2.                                           AMENDMENT OF THE PLAN AND STOCK
AWARDS. THE COMMITTEE AT ANY TIME, AND FROM TIME TO TIME, MAY AMEND THE PLAN,
SUBJECT TO THE APPROVAL OF THE COMPANY’S STOCKHOLDERS TO THE EXTENT SUCH
APPROVAL IS NECESSARY UNDER APPLICABLE LAW. THE COMMITTEE AT ANY TIME, AND FROM
TIME TO TIME, MAY AMEND THE TERMS OF ONE OR MORE STOCK AWARDS. IT IS EXPRESSLY
CONTEMPLATED THAT THE COMMITTEE MAY AMEND THE PLAN AND STOCK AWARDS IN ANY
RESPECT THE COMMITTEE DEEMS NECESSARY OR ADVISABLE (I) TO PROVIDE ELIGIBLE
PARTICIPANTS WITH

 

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THE MAXIMUM BENEFITS PROVIDED OR TO BE PROVIDED UNDER THE PROVISIONS OF THE CODE
AND THE REGULATIONS PROMULGATED THEREUNDER RELATING TO INCENTIVE STOCK OPTIONS
AND DEFERRED COMPENSATION AND/OR (II) TO BRING THE PLAN AND/OR STOCK AWARDS
GRANTED UNDER THE PLAN INTO COMPLIANCE WITH APPLICABLE LAW.

 

12.3.                                           NO MATERIAL IMPAIRMENT OF
RIGHTS. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE PLAN, THE AMENDMENT,
SUSPENSION OR TERMINATION OF THE PLAN AND THE AMENDMENT OF OUTSTANDING STOCK
AWARDS, SHALL NOT MATERIALLY IMPAIR RIGHTS AND OBLIGATIONS UNDER ANY STOCK AWARD
GRANTED WHILE THE PLAN IS IN EFFECT EXCEPT WITH THE WRITTEN CONSENT OF THE
PARTICIPANT UNLESS SUCH AMENDMENT IS NECESSARY PURSUANT TO SECTION 10.10 HEREOF,
IN WHICH CASE THE PARTICIPANT WILL BE DEEMED TO HAVE CONSENTED TO THE AMENDMENT
BY VIRTUE OF ACCEPTING THE GRANT OF THE STOCK AWARD.

 

XIII. EFFECTIVE DATE OF PLAN.

 

13.1                                              EFFECTIVE DATE. THE PLAN SHALL
BECOME EFFECTIVE AS OF THE DATE THE BOARD APPROVES THE PLAN, OR SUCH LATER DATE
AS IS DESIGNATED BY THE BOARD (SUCH DATE, AS SET FORTH ON THE FIRST PAGE OF THIS
PLAN, THE “EFFECTIVE DATE”), SUBJECT TO THE APPROVAL OF THE PLAN BY THE
STOCKHOLDERS OF THE COMPANY WITHIN TWELVE (12) MONTHS BEFORE OR AFTER THE DATE
THE PLAN IS ADOPTED BY THE BOARD.

 

XIV. CHOICE OF LAW.

 

14.1                                              CHOICE OF LAW. THE LAW OF THE
STATE OF DELAWARE SHALL GOVERN ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS PLAN, WITHOUT REGARD TO SUCH STATE’S
CONFLICT OF LAWS RULES.

 

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