EXHIBIT 10.5

 

THE ALLSTATE CORPORATION

 

EQUITY INCENTIVE PLAN FOR NON-EMPLOYEE DIRECTORS

 

As Amended and Restated effective as of September 15, 2008

 

I.                                       Purpose.

 

The purpose of The Allstate Corporation Equity Incentive Plan for Non-Employee
Directors (the “Plan”) is to promote the interests of The Allstate Corporation
(the “Company”) by providing an inducement to obtain and retain the services of
qualified persons as members of the Company’s Board of Directors (the “Board”)
and to align more closely the interests of such persons with the interests of
the Company’s stockholders by providing a significant portion of the
compensation provided to such persons in the form of equity securities of the
Company.

 

II.                                   Administration.

 

The Plan shall be administered by the Committee.  The Committee shall have full
power to construe and interpret the Plan and Shares, RSUs and Options granted
hereunder, to establish and amend rules for its administration and to correct
any defect or omission and to reconcile any inconsistency in the Plan or in any
Share, RSU or Option granted hereunder to the extent the Committee deems
desirable to carry the Plan or any Share, RSU or Option granted hereunder into
effect.  Any decisions of the Committee in the administration of the Plan shall
be final and conclusive.  The Committee may authorize any one or more of its
members, the secretary of the Committee or any officer of the Company to execute
and deliver documents on behalf of the Committee.  Each member of the Committee,
and, to the extent provided by the Committee, any other person to whom duties or
powers shall be delegated in connection with the Plan, shall incur no liability
with respect to any action taken or omitted to be taken in connection with the
Plan and shall be fully protected in relying in good faith upon the advice of
counsel, to the fullest extent permitted under applicable law.

 

III.                              Eligibility.

 

Each Non-Employee Director shall be eligible to participate in the Plan.

 

IV.                               Limitation on Aggregate Shares.

 

A.                                   Maximum Number of Shares.  The aggregate
maximum number of Shares that may be granted pursuant to the Plan or delivered
upon settlement of RSUs or upon exercise of Options granted pursuant to the Plan
shall be 580,000 Shares.  Such maximum number of Shares is subject to adjustment
under the provisions of Section IV.B.  The Shares to be granted pursuant to the
Plan or delivered upon settlement of RSUs or upon exercise of Options may be
either (i) authorized but unissued Shares or (ii) Shares previously issued which
have been reacquired by

 

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the Company (“Treasury Shares”); provided, however, that on or after June 1,
2001, only Treasury Shares shall be granted pursuant to the Plan or delivered
upon settlement of RSUs or exercise of Options (other than upon exercise of
Options granted prior to such date).  In the event any RSU, Option or Reload
Option shall, for any reason, terminate or expire or be surrendered without
having been exercised in full or without all Shares subject thereto having been
delivered, the Shares subject to such RSU, Option or Reload Option but not
delivered or purchased thereunder shall be available for future RSUs, Options or
Reload Options to be granted under the Plan.

 

B.                                     Adjustment.  The maximum number of Shares
referred to in Section IV.A of the Plan, the number of RSUs granted pursuant to
Section VI of the Plan, the number of Shares subject to outstanding RSUs granted
under Section VI of the Plan, the number of Options granted pursuant to
Section VII of the Plan, and the option price and the number of Shares which may
be purchased under any outstanding Option granted under Section VII of the Plan
shall be proportionately adjusted for (i) any increase or decrease in the number
of issued and outstanding Shares as the result of (a) the declaration and
payment of a dividend payable in Common Stock, or the division of the Common
Stock outstanding at the date hereof (or the date of the grant of any such
outstanding Option or RSU, as applicable) into a greater number of Shares
without the receipt of consideration therefore by the Company, or any other
increase in the number of such Shares of the Company outstanding at the date
hereof (or the date of the grant of any such outstanding Option or RSU, as
applicable) which is effective without the receipt of consideration therefore by
the Company (exclusive of any Shares granted by the Company to employees of the
Company or any of its Subsidiaries without receipt of separate consideration by
the Company), or (b) the consolidation of the Shares outstanding at the date
hereof (or the date of the grant of any such outstanding Option or RSU, as
applicable) into a smaller number of Shares without the payment of consideration
thereof by the Company, or any other decrease in the number of such Shares
outstanding at the date hereof (or the date of the grant of any such outstanding
Option or RSU, as applicable) effected without the payment of consideration by
the Company or (ii) to the extent not addressed in (i), any equity restructuring
(within the meaning of Financial Accounting Standards No. 123 (revised 2004))
that causes the per share value of the Common Stock to change; provided,
however, that the total option price for all Shares which may be purchased upon
the exercise of any Option granted pursuant to the Plan (computed by multiplying
the number of Shares originally purchasable thereunder, reduced by the number of
such Shares which have theretofore been purchased thereunder, by the original
option price per share before any of the adjustments herein provided for) shall
not be changed.

 

In the event of a change in the Common Stock as presently constituted which is
limited to a change of the Company’s authorized shares with a par value into the
same number of shares with a different par value or without par value, the
shares resulting from any such change will be deemed to be the Common Stock
within the meaning of this Plan and no adjustment will be required pursuant to
this Section IV.B.

 

The foregoing adjustments shall be made by the Committee, whose determination in
that respect shall be final, binding and conclusive.  Except as expressly
provided in this Section IV.B,

 

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a Non-Employee Director shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock of
any class.

 

V.                                  Definitions.

 

The following terms shall have the meanings set forth below when used herein:

 

“CHANGE OF CONTROL” MEANS, EXCEPT AS OTHERWISE PROVIDED AT THE END OF THIS
SECTION, THE OCCURRENCE OF ANY ONE OR MORE OF THE FOLLOWING:

 

(a)                                  (Voting Power)  any Person or group (as
such term is defined in Treasury Regulation Section 1.409A-3(i)(5)(v)(B)), other
than a Subsidiary or any employee benefit plan (or any related trust) of the
Company or any of its Subsidiaries, acquires or has acquired during the 12-month
period ending on the date of the most recent acquisition by such Person or
Persons, ownership of stock of the Company possessing 30% or more of the
combined voting power of all Voting Securities of the Company (such a Person or
group that is not a Similarly Owned Company (as defined below), a “More than 30%
Owner”), except that no Change of Control shall be deemed to have occurred
solely by reason of such ownership by a corporation with respect to which both
more than 70% of the common stock of such corporation and Voting Securities
representing more than 70% of the combined voting power of the Voting Securities
of such corporation are then owned, directly or indirectly, by the Persons who
were the direct or indirect owners of the common stock and Voting Securities of
the Company immediately before such acquisition in substantially the same
proportions as their ownership, immediately before such acquisition, of the
common stock and Voting Securities of the Company, as the case may be (a
“Similarly Owned Company”); or

 

(b) (Majority Ownership) any Person or group (as such term is defined in
Treasury Regulation Section 1.409A-3(i)(5)(v)(B)), other than a Subsidiary or
any employee benefit plan (or any related trust) of the Company or any of its
Subsidiaries, acquires ownership of more than 50% of the voting power of all
Voting Securities of the Company or of the total fair market value of the stock
of the Company (such a Person or group that is not a Similarly Owned Company, a
“Majority Owner”), except that no Change of Control shall be deemed to have
occurred solely by reason of such ownership by a Similarly Owned Company; or

 

(c)  (Board Composition) a majority of the members of the Board is replaced
during any 12-month period by directors whose appointment or election is not
endorsed by a majority of the members of the Board before the date of the
appointment or election (“Board Turnover”); or

 

(d)  (Reorganization) the consummation of a merger, reorganization,
consolidation, or similar transaction, or of a plan or agreement for the sale or
other disposition of all or substantially all of the consolidated assets of the
Company, or a plan of liquidation of the Company (any of the foregoing, a
“Reorganization Transaction”) that, does not qualify as an Exempt Reorganization
Transaction.

 

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Notwithstanding anything contained herein to the contrary:  (i)  no transaction
or event shall constitute a Change of Control for purposes of this Plan unless
the transaction or event constituting the Change of Control also constitutes a
change in the ownership of a corporation (as defined in Treasury Regulation
Section 1.409A-3(i)(5)(v)), a change in effective control of a corporation (as
defined in Treasury Regulation Section 1.409A-3(i)(5)(vi)) or a change in the
ownership of a substantial portion of the assets of a corporation (as defined in
Treasury Regulation Section 1.409A-3(i)(5)(vii)); and (ii) no sale or
disposition of one or more Subsidiaries (“Sale Subsidiary”) or the assets
thereof shall constitute a Change of Control for purposes of this Plan if the
investments in and advances by the Company and its Subsidiaries (other than the
Sale Subsidiaries) to such Sale Subsidiary as of immediately prior to the sale
or disposition determined in accordance with Generally Accepted Accounting
Principles (“GAAP”) (but after intercompany eliminations and net of the effect
of intercompany reinsurance) are less than 51% of the Consolidated Total
Shareholders’ Equity of the Company as of immediately prior to the sale or
disposition.  Consolidated Total Shareholders’ Equity means, at any date, the
total shareholders’ equity of the Company and its Subsidiaries at such date, as
reported in the consolidated financial statements prepared in accordance with
GAAP.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Committee” means the Nominating and Governance Committee of the Board, any
successor committee of the Board performing similar functions or, in the absence
of such a committee, the Board.

 

“Common Stock” means the Common Stock, par value $.01 per share, of the Company.

 

“Disability” means a condition which renders a Non-Employee Director disabled
within the meaning of Code Section 409A(a)(2)(C).

 

“Dividend Equivalent Right” means an unfunded and unsecured promise to pay a
cash amount equal to the regular cash dividends that would be paid on a Share of
Common Stock underlying a Restricted Stock Unit if such Share had been delivered
pursuant to the Restricted Stock Unit award.

 

“Election Shares” means any Shares issued to a Non-Employee Director pursuant to
the election of such person to receive such Shares in lieu of cash compensation
made in accordance with Section VIII.B.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

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

 

“Exempt Reorganization Transaction” means a Reorganization Transaction (as that
term is defined in subpart (d) of the definition of Change of Control) that
fails to result in (a) any Person or group (as such term is defined in Treasury
Regulation Section 1.409A-3(i)(5)(v)(B))

 

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becoming a More than 30% Owner (as that term is defined in subpart (a) of the
definition of Change of Control) or a Majority Owner (as that term is defined in
subpart (b) of the definition of Change of Control), (b) Board Turnover (as that
term is defined in subpart (c) of the definition of Change of Control), or (c) a
sale or disposition to any Person or group (as such term is defined in Treasury
Regulation Section 1.409A-3(i)(5)(v)(B)) of the assets of the Company that have
a total Gross Fair Market Value equal to at least forty percent (40%) of the
total Gross Fair Market Value of all of the assets of the Company immediately
before such transaction.

 

“Fair Market Value” means the price at which a share of the Stock was last sold
in the principal United States market for the Stock as of the date for which
fair market value is being determined.

 

“Gross Fair Market Value” means the value of the assets of the Company, or the
value of the assets being disposed of, determined without regard to any
liabilities associated with such assets.

 

“Initial Election Date” means, for each Non-Employee Director, the later to
occur of (i) the date the Plan is approved and adopted by the Company’s
stockholders pursuant to Section XIII of the Plan, and (ii) the date of such
member’s initial election or appointment to the Board.

 

“Non-Employee Director” means each member of the Board who is not an officer or
employee of the Company or any of its Subsidiaries.

 

“Option” means an option to purchase shares of Common Stock.

 

“Person” means any individual, sole proprietorship, partnership, joint venture,
limited liability company, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, entity or government
instrumentality, division, agency, body or department.

 

“Restricted Stock Unit” or “RSU” means a restricted stock unit award, which
represents an unfunded and unsecured promise to deliver a Share of Common Stock
in accordance with Article VI.

 

“Shares” means shares of Common Stock.

 

“Subsidiary” means any partnership, corporation, association, limited liability
company, joint stock company, trust, joint venture, unincorporated organization
or other business entity of which (i) if a corporation, a majority of the total
voting power of shares of stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by the
Company or one or more of the other Subsidiaries of the Company or a combination
thereof, or (ii) if a partnership, association, limited liability company, joint
stock company, trust, joint venture, unincorporated organization or other
business entity, a majority of the partnership or other similar equity ownership
interest thereof is at the time owned or controlled, directly or indirectly,

 

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by the Company or one or more Subsidiaries of the Company or a combination
thereof.  For purposes hereof, the Company or a Subsidiary shall be deemed to
have a majority ownership interest in a partnership, association, limited
liability company, joint stock company, trust, joint venture, unincorporated
organization or other business entity if the Company or such Subsidiary shall be
allocated a majority of partnership, association, limited liability company,
joint stock company, trust, joint venture, unincorporated organization or other
business entity gains or losses or shall be or control the managing director,
the trustee, the manager or the general partner of such partnership,
association, limited liability company, joint stock company, trust, joint
venture, unincorporated organization or other business entity.

 

“Voting Securities” means securities of a corporation that are entitled to vote
generally in the election of directors of such corporation.

 

VI.                                Formula Restricted Stock Unit Grants for
Non-Employee Directors.

 

A.                                 Annual Grant of Restricted Stock Units. 
Beginning December 1, 2004, on December 1 of each year 2,000 RSUs shall
automatically be granted to each Non-Employee Director serving on the Board on
such date who has served in such capacity since June 1 of such year.  If any
person serving as a Non-Employee Director on June 1 of 2004 or any subsequent
year ceases to serve as a director of the Company prior to December 1 of such
year, such director shall be automatically granted on his or her last day of
service a number of RSUs equal to (i) 2,000 multiplied by (ii) a fraction, the
numerator of which is the number of full calendar months such Non-Employee
Director has served on the Board during the period beginning on such June 1 and
ending on such director’s last date of service and the denominator of which is
6.

 

B.                                   Grant for Newly Appointed Directors.  If
after June 1, 2004 a Non-Employee Director is initially elected or appointed to
the Board effective on any date other than June 1, such Non-Employee Director
shall automatically be granted, on the June 1 following the date he or she joins
the Board (or such earlier date as he or she ceases to serve as a director), a
number of RSUs equal to (i) 2,000 multiplied by (ii) a fraction, the numerator
of which is the number of full calendar months such Non-Employee Director has
served on the Board during the period beginning on the date such director joined
the Board and ending on the following May 31 (or such earlier date as he or she
ceases to serve as a director) and the denominator of which is 6; provided that
such fraction shall in no event be greater than one.

 

C.                                   Delivery of Shares.  Unless otherwise
determined by the Board, the Non-Employee Director shall be entitled to delivery
of Shares that underlie the RSUs then outstanding (which amount shall be rounded
to the nearest whole number to avoid delivery of fractional Shares) upon the
earlier of (i) the date of the Non-Employee Director’s death or Disability, and
(ii) one year after the date on which the Non-Employee Director is no longer
serving as a director of the Company.  Delivery of Shares shall be effected by
book entry credit to the Non-Employee Director’s account with the Company’s
transfer agent.

 

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D.                                  Restrictions.  A Non-Employee Director shall
have only the rights of a general unsecured creditor of the Company and shall
have no rights as a shareholder of the Company with respect to the RSUs.  Upon
delivery of Shares pursuant to Section VI.C the Non-Employee Director will
obtain full voting and other rights as a shareholder of the Company.  The RSUs
granted pursuant to this Section VI shall be fully vested but may not be sold,
transferred, pledged, assigned, or otherwise alienated at any time.

 

E.                                    Dividend Equivalent Rights.  Each RSU
shall include a Dividend Equivalent Right that shall entitle the Non-Employee
Director to receive a cash amount equal to the regular dividend payment as would
have been made in respect of each share of Stock underlying such RSU in
accordance with the following schedule:

 

Regular Dividend Payment (“RDP”), if any

 

Dividend Equivalent Payment Date

 

 

 

1st Quarter

 

January 1 through March 31 of the year RDP paid

2nd Quarter

 

April 1 through June 30 of the year RDP paid

3rd Quarter

 

July 1 through September 30 of the year RDP paid

4th Quarter

 

October 1 through December 31 of the year RDP paid

 

Cash payment with respect to a Dividend Equivalent Right shall be made only with
respect to such RSUs that are outstanding on the dividend record date.

 

F.  Change of Control.  In the event of a Change of Control, all outstanding
RSUs shall immediately be payable in Shares upon consummation of the Change of
Control.

 

VII.                          Formula Stock Option Grants for Non-Employee
Directors.

 

A.                                   Annual Grant of Options.  On June 1 of each
year, beginning June 1, 2001, Options to purchase 4,000 Shares shall
automatically be granted to each Non-Employee Director serving on the Board on
such date.  If any such Non-Employee Director will be required to retire
(pursuant to the policies of the Board) during the 12 month period beginning on
the date of any grant (or if any such Non-Employee Director has notified the
Board that he or she intends to resign from the Board for any reason during the
12 month period beginning on the date of any grant), such director shall instead
be granted on June 1 of the relevant year Options to purchase a number of Shares
equal to (i) 4,000, multiplied by (ii) a fraction, the numerator of which is the
number of full calendar months such Non-Employee Director will serve on the
Board during the period beginning on such June 1 and ending on such director’s
last date of service and the denominator of which is 12.

 

B.                                     Grant for Newly Appointed Directors.  If
after June 1, 2001 a Non-Employee Director is initially elected or appointed to
the Board effective on any date other than June 1, such Non-Employee Director
shall automatically be granted, on the date he or she joins the Board, Options
to purchase a number of Shares equal to (i) 4,000, multiplied by (ii) a
fraction, the numerator of which is the number of full calendar months such
Non-Employee Director will serve on the Board during the period beginning on the
date such director joins the Board and

 

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ending on the following May 31 and the denominator of which is 12.

 

C.                                     Option Exercise Price.  The exercise
price per Share for each Option shall be 100% of the Fair Market Value of a
Share on the date of grant, subject to Section IV.B.

 

D.                                    Term of Options.  Each Option shall be
exercisable for ten years after the date of grant, subject to Section VII.F.

 

E.                                      Conditions and Limitations on Exercise.

 

(i)                           Vesting.  Each Option shall vest in three
installments as follows:  (i) on each of the first and second anniversaries of
the date of grant, as to one-third of the Shares subject to such Option (with
any resulting fractional Share rounded to the nearest whole Share) and (ii) on
the third anniversary of the date of grant, as to the remaining unvested portion
of such Option.  Upon a Non-Employee Director’s mandatory retirement pursuant to
the policies of the Board, the unvested portions of any outstanding Options held
by such Non-Employee Director shall fully vest.  Upon the termination of a
Non-Employee Director’s tenure for any other reason, the unvested portions of
any outstanding Options shall expire and no Options granted to such Non-Employee
Director shall vest after the termination of such director’s tenure on the
Board.

 

(ii)                        Exercise.  Each Option shall be exercisable in one
or more installments and shall not be exercisable for less than 100 Shares,
unless the exercise represents the entire remaining exercisable balance of a
grant or grants.  Each Option shall be exercised by delivery to the Company of
written notice of intent to purchase a specific number of Shares subject to the
Option.  The option price of any Shares as to which an Option shall be exercised
shall be paid in full at the time of the exercise.  Payment may, at the election
of the Non-Employee Director, be made in any one or any combination of the
following forms:

 

(a)                                  check or wire transfer of funds in such
form as may be satisfactory to the Committee;

 

(b)                                 delivery of Shares valued at their Fair
Market Value on the date of exercise or, if the date of exercise is not a
business day, the next preceding business day;

 

(c)                                  through simultaneous sale through a broker
of unrestricted Shares acquired on exercise, as permitted under Regulation T of
the Federal Reserve Board; or

 

(d)                                 by authorizing the Company in his or her
written notice of exercise to withhold from issuance a number of Shares issuable
upon exercise of such Option which, when multiplied by the Fair Market Value of
Common Stock on

 

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the date of exercise (or, if the date of exercise is not a business day, the
next preceding business day), is equal to the aggregate exercise price payable
with respect to the Option so exercised.

 

In the event a Non-Employee Director elects to pay the exercise price payable
with respect to an Option pursuant to clause (b) above, (i) only a whole number
of Share(s) (and not fractional Shares) may be tendered in payment, (ii) such
Non-Employee Director must present evidence acceptable to the Company that he or
she has owned any such Shares tendered in payment of the exercise price (and
that such Shares tendered have not been subject to any substantial risk of
forfeiture) for at least six months prior to the date of exercise, and (iii) the
certificate(s) for all such Shares tendered in payment of the exercise price
must be accompanied by duly executed instruments of transfer in a form
acceptable to the Company.  When payment of the Option exercise price is made by
the tender of Shares, the difference, if any, between the aggregate exercise
price payable with respect to the Option being exercised and the Fair Market
Value of the Share(s) tendered in payment (plus any applicable taxes) shall be
paid by check or wire transfer of funds.  No Non-Employee Director may tender
Shares having a Fair Market Value exceeding the aggregate exercise price payable
with respect to the Option being exercised.

 

In the event a Non-Employee Director elects to pay the exercise price payable
with respect to an Option pursuant to clause (d) above, (i) only a whole number
of Share(s) (and not fractional Shares) may be withheld in payment and (ii) such
Non-Employee Director must present evidence acceptable to the Company that he or
she has owned a number of Shares at least equal to the number of Shares to be
withheld in payment of the exercise price (and that such owned Shares have not
been subject to any substantial risk of forfeiture) for at least six months
prior to the date of exercise.  When payment of the Option exercise price is
made by the withholding of Shares, the difference, if any, between the aggregate
exercise price payable with respect to the Option being exercised and the Fair
Market Value of the Share(s) withheld in payment (plus any applicable taxes)
shall be paid by check or wire transfer of funds.  No Non-Employee Director may
authorize the withholding of Shares having a Fair Market Value exceeding the
aggregate exercise price payable with respect to the Option being exercised. 
Any withheld Shares shall no longer be issuable under such Option.

 

F.                                      Additional Provisions.

 

                                                                 
(i)                   Accelerated Expiration of Options Upon Termination of
Directorship.  Upon the termination of a Non-Employee Director’s tenure for any
reason, each outstanding vested and previously unexercised Option shall expire
three months after the date of such termination; provided that (a) upon the
termination of a Non-Employee Director’s tenure as a result of death or
Disability, each outstanding vested and previously unexercised Option shall
expire two years after the date of his or her termination as a director, and
(b) upon the mandatory retirement of a Non-Employee Director pursuant to the
policies of the Board, each outstanding vested and previously unexercised Option
shall expire five years after the date of his or her termination as a director. 
In no event shall the provisions of this Section VII.F operate to extend the
original expiration date of

 

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any Option.

 

(ii)                        Change of Control.  In the event of a Change of
Control, the Options may be assumed by the successor corporation or a parent of
such successor corporation or substantially equivalent options may be
substituted by the successor corporation or a parent of such successor
corporation, and if the successor corporation does not assume the Options or
substitute options, then all outstanding and unvested Options shall become
immediately exercisable and all outstanding Options shall terminate if not
exercised as of the date of the Change of Control.  The Company shall provide at
least 30 days prior written notice of the Change of Control to the holders of
all outstanding Options, which notice shall state whether (a) the Options will
be assumed by the successor corporation or substantially equivalent options will
be substituted by the successor corporation, or (b) the Options are thereafter
vested and exercisable and will terminate if not exercised as of the date of the
Change of Control.

 

  (iii)                   Liquidation or Dissolution.  In the event of the
liquidation or dissolution of the Company, Options shall terminate immediately
prior to the liquidation or dissolution.

 

G.                                     Grant of Reload Options.  A Non-Employee
Director who exercises all or any portion of an Option granted under the Plan
before June 1, 2004 by the tender or withholding of Shares which have a Fair
Market Value equal to not less than 100% of the exercise price for such Options
(the “Exercised Options”) shall be granted, subject to Section IV, an additional
option (a “Reload Option”) for a number of Shares equal to the sum of the number
of Shares tendered or withheld in payment of the exercise price for the
Exercised Options.  Options granted on and after June 1, 2004 shall not provide
for the grant of a Reload Option upon exercise.

 

Reload Options shall be subject to the following terms and conditions:

 

  (i)                     the grant date for each Reload Option shall be the
date of exercise of the Exercised Option to which it relates;

 

 (ii)                     subject to clause (iii) below, the Reload Option may
be exercised at any time during the unexpired term of the Exercised Option
(subject to earlier termination thereof as provided in the Plan); and

 

(iii)                     the other terms of the Reload Option shall be the same
as the terms of the Exercised Option to which it relates and shall be subject to
the provisions of the Plan, except that (a) the option price shall be the Fair
Market Value of the Shares on the grant date of the Reload Option, (b) no Reload
Option may be exercised within six months from the grant date thereof, and
(c) no other Reload Option shall be granted upon exercise of such Reload Option.

 

H.                                    Non-Qualified Stock Options.  All Options
granted under the Plan shall be non-qualified options not entitled to special
tax treatment under Code Section 422, as may be

 

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amended from time to time.

 

VIII.                    Election to Receive Stock in Lieu of Cash Compensation

 

A.                                   General.  A Non-Employee Director may elect
to reduce the cash compensation otherwise payable for services to be rendered by
him or her as a director for any period beginning on June 1 and continuing to
the following May 31 (or such other period for which cash compensation is
payable to Non-Employee Directors pursuant to the policies of the Board),
beginning June 1, 1996 and to receive in lieu thereof Election Shares as
provided in this Section VIII.

 

B.                                     Election.  By the later of (i) the date
of the Company’s annual meeting of stockholders next preceding the June 1 to
which such election relates (but in no event less than five business days prior
to such June 1) and (ii) such Non-Employee Director’s Initial Election Date,
each Non-Employee Director may make an irrevocable election to receive, in lieu
of all or a specified percentage (which percentage shall be in 10% increments)
of the cash compensation to which such director would otherwise be entitled as a
member of the Board and any committee thereof (including the annual retainer fee
and any meeting or other fees payable for services on the Board or any committee
thereof, but excluding any reimbursement for out-of-pocket expenses) for the
year beginning the following June 1 (or such other period for which cash
compensation is payable to such Non-Employee Director pursuant to the policies
of the Board), an equivalent value in Election Shares granted in accordance with
this Section VIII.  An election shall be effective (i) if made in accordance
with clause (i) of the preceding sentence, beginning on the June 1 following
such election; and (ii) if made on such Non-Employee Director’s Initial Election
Date, immediately.

 

Each such election shall (i) be in writing in a form prescribed by the Company,
(ii) specify the amount of cash compensation to be received in the form of
Election Shares (expressed as a percentage of the compensation otherwise payable
in cash), and (iii) be delivered to the Secretary of the Company.  Such election
may not be revoked or changed thereafter except as to compensation for services
to be rendered in any 12 month period beginning on any June 1 at least six
months following such revocation or new election.

 

C.                                     Issuance of Common Stock.  If a
Non-Employee Director elects pursuant to Section VIII.B above to receive
Election Shares, there shall be issued to such director promptly following each
subsequent June 1 for which such election is effective (or promptly following
the first day of such other period for which such election is effective) a
number of Election Shares equal to the amount of compensation otherwise payable
for the 12 month period beginning on such June 1 (or the other period for which
such election is effective) divided by the Fair Market Value of the Election
Shares on such June 1 (or on the first day of such other period).  To the extent
that the application of the foregoing formula would result in fractional shares
of Common Stock being issuable, cash will be paid to the Non-Employee Director
in lieu of such fractional Election Shares based upon the Fair Market Value of
such fractional Election Share.

 

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D.                                    Compliance with Exchange Act.  The
election to receive Election Shares is intended to comply in all respects with
Rule 16b-3(d)(1) promulgated under Section 16(b) of the Exchange Act such that
the issuance of Election Shares under the Plan on a grant date occurring at
least six months after the election shall be exempt from Section 16(b) of the
Exchange Act.

 

E.                                      Grant Date.  The grant date for each
Election Share for the Non-Employee Director electing such option shall be the
first day of the period to which such election relates and is effective.

 

IX.                              Miscellaneous Provisions.

 

A.                                   Rights of Non-Employee Directors.  No
Non-Employee Director shall be entitled under the Plan to voting rights,
dividends or other rights of a stockholder prior to the issuance of Common
Stock.  Neither the Plan nor any action taken hereunder shall be construed as
giving any Non-Employee Director any right to be retained in the service of the
Company.

 

B.                                     Limitations on Transfer and Exercise. All
Options granted under the Plan shall not be transferable by the Non-Employee
Director, other than by will or the laws of descent and distribution or pursuant
to a qualified domestic relations order, as defined by Section 1 et seq, of the
Code, Title I of ERISA or the rules and regulations thereunder, and shall be
exercisable during the Non-Employee Director’s lifetime only by such
Non-Employee Director or by such Non-Employee Director’s guardian or other legal
representative; provided, however, that the vested portions of Options may be
transferred by the Non-Employee Director during his lifetime to (a) any member
of his immediate family, (b) to a trust established for the exclusive benefit of
himself or one or more members of his immediate family, or (c) to a partnership,
the partners of which are limited to the Non-Employee Director and members of
his immediate family.  A transfer of an Option pursuant to this paragraph may
only be effected by the Company at the written request of a Non-Employee
Director and shall become effective only when recorded in the Company’s record
of outstanding Options.  In the event an Option is transferred as contemplated
in this paragraph, any Reload Options associated with such transferred Option
shall terminate, and such transferred Option may not be subsequently transferred
by the transferee except by will or the laws of descent and distribution. 
Otherwise, a transferred Option shall continue to be governed by and subject to
the terms and limitations of the Plan and the relevant grant, and the transferee
shall be entitled to the same rights as the Non-Employee Director, as if no
transfer had taken place.  As used in this paragraph, “immediate family” shall
mean, with respect to any person, his/her spouse, any child, stepchild or
grandchild, and shall include relationships arising from legal adoption.

 

C.                                     Compliance with Laws.  No shares of
Common Stock shall be issued hereunder unless counsel for the Company shall be
satisfied that such issuance will be in compliance with applicable federal,
state, local and foreign securities, securities exchange and other applicable
laws and requirements.  Each Share delivered pursuant to Section VI or granted
pursuant to

 

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Section VIII and each Option granted pursuant to Section VII shall be subject to
the requirement that if at any time the Committee shall determine, in its
discretion, that the listing, registration or qualification of the Shares
delivered, granted or subject to the Option upon any securities exchange or
under any state or federal securities or other law or regulation, or the consent
or approval of any governmental regulatory body, is necessary or desirable as a
condition to or in connection with the granting or delivery of such Share, such
Option or the issuance or purchase of Shares thereunder, no such Share may be
issued or delivered and no Option may be exercised or paid in Common Stock, in
whole or in part, unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.  The holder of an RSU, Share or Option will supply
the Company with such certificates, representations and information as the
Company shall request and shall otherwise cooperate with the Company in
obtaining such listing, registration, qualification, consent or approval.  The
Committee may at any time impose any limitations upon the delivery of a Share
pursuant to an RSU, the sale of a Share or the exercise of an Option or the sale
of the Shares delivered pursuant to an RSU or issued upon exercise of an Option
that, in the Committee’s discretion, are necessary or desirable in order to
comply with Section 16(b) of the Exchange Act and the rules and regulations
thereunder.  The Committee may at any time impose additional limitations, or may
amend or delete the existing limitations, upon the exercise of Options by the
tender or withholding of Shares in accordance with Section VII.E (including an
amendment or deletion of the related ownership period for Shares specified in
such Section), if such additional, amended or deleted limitations are necessary,
desirable or no longer required (as the case may be) to remain in compliance
with applicable accounting pronouncements relating to the treatment of the plan
as a fixed plan for accounting purposes.

 

D.                                    Payment of Withholding Tax.  Whenever
Shares are to be delivered pursuant to Section VI or issued pursuant to
Section VIII of the Plan or upon exercise of Options issued pursuant to
Section VII of the Plan, the Company shall be entitled to require as a condition
of delivery (i) that the participant remit an amount sufficient to satisfy all
federal, state and local withholding tax requirements related thereto, (ii) the
withholding of Shares due to the participant under the Plan with a Fair Market
Value equal to such amount, or (iii) any combination of the foregoing.

 

E.                                      Expenses.  The expenses of the Plan
shall be borne by the Company and its Subsidiaries.

 

F.                                      Deemed Acceptance, Ratification and
Consent.  By accepting any Common Stock hereunder or other benefit under the
Plan, each Non-Employee Director and each person claiming under or through him
or her shall be conclusively deemed to have indicated his or her acceptance and
ratification of, and consent to, any action taken under the Plan by the Company,
the Board or the Committee.

 

G.                                     Securities Act Registration.  The Company
shall use its best efforts to cause to be filed under the Securities Act of
1933, as amended, a registration statement covering the Shares issued, and
issuable upon delivery of Shares pursuant to RSUs and exercise of Options
granted,

 

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under the Plan.

 

H.                                    Governing Law.  The provisions of the Plan
shall be governed by and construed in accordance with the laws of the State of
Delaware.

 

I.                                         Election Shares.  Pending the grant
of Election Shares hereunder, all compensation earned by a Non-Employee Director
with respect to which an election to receive the grant of Election Shares
pursuant to Section VIII.B has been made shall be the property of such director
and shall be paid to him or her in cash in the event that Election Shares are
not granted by the Company hereunder.

 

J.                                        Headings; Construction.  Headings are
given to the sections of the Plan solely as a convenience to facilitate
reference.  Such headings, numbering and paragraphing shall not in any case be
deemed in any way material or relevant to the construction of the Plan or any
provisions hereof.  The use of the singular shall also include within its
meaning the plural, where appropriate, and vice versa.

 

K.                                    Code Section 409A Compliance.  To the
extent applicable, it is intended that this Plan and any awards granted
hereunder comply with the requirements of Section 409A of the Code and any
related regulations or other guidance promulgated with respect to such
Section by the U.S. Department of the Treasury or the Internal Revenue Service
and the Plan and any Awards granted hereunder shall be interpreted and construed
in a manner consistent with such intent.

 

X.                                  This section intentionally left blank.

 

XI.                              Amendment.

 

The Plan may be amended at any time and from time to time by resolution of the
Board as the Board shall deem advisable; provided, however, that no amendment
shall become effective without stockholder approval if such stockholder approval
is required by law, rule or regulation.  No amendment of the Plan shall
materially and adversely affect any right of any participant with respect to any
Options, Shares or RSUs theretofore granted under the Plan without such
participant’s written consent, except for any modifications required to maintain
compliance with any federal or state statute or regulation.

 

XII.                        Termination.

 

The Plan shall terminate upon the earlier of the following dates or events to
occur:

 

(i)                       upon the adoption of a resolution of the Board
terminating the Plan; and

 

(ii)                    ten years from the date the Plan is initially approved
and adopted by the

 

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stockholders of the Company in accordance with Article XIII.

 

Except as specifically provided herein, no termination of the Plan shall
materially and adversely affect any of the rights or obligations of any person
without his or her consent with respect to any Options, Shares or RSUs
theretofore granted under the Plan.

 

XIII.                    Stockholder Approval and Adoption.

 

The Plan was originally adopted by the Board on March 12, 1996 and was approved
and adopted at a meeting of the stockholders of the Company held on May 21,
1996.  The Plan was amended and restated by the Board at meetings held on
November 12, 1996, August 14, 1997 and, in connection with a 2-for-1 stock split
in the form of a dividend, effective as of July 2, 1998.  The Plan was further
amended and restated by the Board at meetings held on November 10, 1998, on
September 18, 2000, effective as of June 1, 2001 and on September 8, 2003
effective as of June 1, 2004.  Until June 1, 2004, the Plan as amended and
restated on September 18, 2000, effective as of June 1, 2001 remained in
effect.  The Plan was further amended and restated by the Board at meetings held
on November 9, 2004, September 10, 2006, February 20, 2007, and September 15,
2008.

 

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