Exhibit 10.1


MARVELL TECHNOLOGY GROUP,
LTD.


2007
DIRECTOR STOCK INCENTIVE PLAN


AS
AMENDED AND RESTATED OCTOBER 19, 2007


1.             Purposes of the Plan.  The purposes
of this 2007 Director Stock Incentive Plan are to attract and retain the best
available personnel for service as Outside Directors (as defined herein) of the
Company, to provide additional incentive to the Outside Directors of the
Company to serve as Directors, and to encourage their continued service on the
Board.


2.             Definitions.  As used
herein, the following definitions will apply:


(a)           “Administrator”
means the Board or any of its Committees as will administer the Plan in
accordance with Section 4 hereof.


(b)           “Annual
General Meeting” means the Company’s annual meeting of shareholders.


(c)           “Applicable
Laws” means the requirements relating to the administration of equity-based
awards under U.S. state corporate laws, U.S. federal and state securities laws,
the Code, any stock exchange or quotation system on which the Common Stock is
listed or quoted and the applicable laws of any foreign country or jurisdiction
where Awards are, or will be, granted under the Plan.


(d)           “Award”
individually or collectively, a grant under the Plan of Options, Performance
Shares, Performance Units, Stock Appreciation Rights, Restricted Stock, or
Restricted Stock Units.


(e)           “Award
Agreement” means the written or electronic agreement setting forth the
terms and provisions applicable to each Award granted under the Plan.  The Award Agreement is subject to the terms
and conditions of the Plan.


(f)            “Board”
means the Board of Directors of the Company.


(g)           “Change
in Control” means the occurrence of any of the following events:


(i)    Any “person”
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes
the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly
or indirectly, of securities of the Company representing fifty percent (50%) or
more of the total voting power represented by the Company’s then outstanding
voting securities; or


(ii)   The
consummation of the sale or disposition by the Company of all or substantially
all of the Company’s assets; or


(iii)  The
consummation of a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting


 

















securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities
of the surviving entity or its parent) at least fifty percent (50%) of the
total voting power represented by the voting securities of the Company or such
surviving entity or its parent outstanding immediately after such merger or
consolidation.


(iv)  A change in the composition of the Board
occurring within a two (2) year period, as a result of which less than a
majority of the Directors are Incumbent Directors.


(h)           “Code”
means the Internal Revenue Code of 1986, as amended.  Any reference to a section of the Code herein
will be a reference to any successor or amended section of the Code.


(i)            “Committee”
means a committee of Directors or of other individuals satisfying Applicable
Laws appointed by the Board in accordance with Section 4 hereof.


(j)            “Common
Stock” means the common stock of the Company.


(k)           “Company”
means Marvell Technology Group Ltd., a Bermuda corporation.


(l)            “Consultant”
means any natural person, including an advisor, engaged by the Company or a
Parent or Subsidiary of the Company to render services to such entity.


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


(n)           “Disability”
means total and permanent disability as defined in Section 22(e)(3) of the
Code.


(o)           “Employee”
means any person, including Officers and Directors, employed by the Company or
any Parent or Subsidiary of the Company. 
Neither service as a Director nor the payment of a Director’s fee by the
Company will not be sufficient in and of itself to constitute “employment” by
the Company.


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


(q)           “Exchange
Program” means a program under which (i) outstanding Awards are surrendered
or cancelled in exchange for Awards of the same type (which may have lower
exercise prices and different terms), Awards of a different type, and/or cash,
(ii) Participants would have the opportunity to transfer any outstanding
Awards to a financial institution or other person or entity selected by the
Administrator, and/or (iii) the exercise price of an outstanding Award is
reduced.  The Administrator will
determine the terms and conditions of any Exchange Program in its sole
discretion, however if an Award is exchanged for an Award with a lower exercise
price or the exercise price of an outstanding Award is reduced, shareholder
approval must be obtained in advance.


 


2

















 


(r)            “Fair
Market Value” means, as of any date, the value of a share of Common Stock
determined as follows:


(i)            If
the Common Stock is listed on any established stock exchange or a national
market system, including without limitation the Nasdaq Global Market, the
Nasdaq Global Select Market or the Nasdaq Capital Market, its Fair Market Value
shall be the closing sales price for such stock (or, if no closing sales price
was reported on that date, as applicable, on the last trading date such closing
sales price was reported) as quoted on such exchange or system on the day of
determination, as reported in The Wall Street Journal
or such other source as the Administrator deems reliable;


(ii)           If
the Common Stock is regularly quoted by a recognized securities dealer but
selling prices are not reported, its Fair Market Value shall be the mean
between the high bid and low asked prices for the Common Stock on the day of
determination (or, if no bids and asks were reported on that date, as
applicable, on the last trading date such bids and asks were reported); or


(iii)          In
the absence of an established market for the Common Stock, the Fair Market
Value thereof shall be determined in good faith by the Administrator.


(s)           “Incumbent
Director” means a Director who either (A) is a Director as of the
effective date of the Plan, or (B) is elected, or nominated for election,
to the Board with the affirmative votes of at least a majority of the Directors
at the time of such election or nomination (but will not include an individual
whose election or nomination is in connection with an actual or threatened
proxy contest relating to the election of Directors to the Company).


(t)            “Inside
Director” means a Director who is an Employee.


(u)           “Nonstatutory
Stock Option” means an Option that by its terms does not qualify or is not
intended to qualify as an Incentive Stock Option.


(v)           “Officer”
means a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.


(w)          “Option”
means a stock option granted pursuant to the Plan.  All
Options granted under the Plan will be Nonstatutory Stock Options.


(x)            “Outside
Director” means a Director who has not been an Employee.


(y)           “Parent”
means a “parent corporation,” whether now or hereafter existing, as defined in
Section 424(e) of the Code.


(z)            “Participant”
means the holder of an outstanding Award.


 


3

















 


(aa)         “Performance
Share” means an Award denominated in Shares which may be earned in whole or in
part upon attainment of performance goals or other vesting criteria as the
Administrator may determine pursuant to Section 13.


(bb)         “Performance
Unit” means an Award which may be earned in whole or in part upon attainment
of performance goals or other vesting criteria as the Administrator may
determine and which may be settled for cash, Shares or other securities or a
combination of the foregoing pursuant to Section 13.


(cc)         “Plan”
means this 2007 Director Stock Incentive Plan.


(dd)         “Restricted
Stock” means Shares issued pursuant to a Restricted Stock Award under the
Plan.


(ee)         “Restricted
Stock Unit” or “RSU” means a bookkeeping entry representing an
amount equal to the Fair Market Value of one Share, granted pursuant to the
Plan.  Each Restricted Stock Unit
represents an unfunded and unsecured obligation of the Company.


(ff)           “Service
Provider” means an Employee, Director or Consultant.


(gg)         “Share”
means a share of the Common Stock, as adjusted in accordance with Section 18
hereof.


(hh)         “Stock
Appreciation Right” means an Award granted under the Plan, granted alone or
in connection with an Option, that is designated as a Stock Appreciation Right.


(ii)           “Subsidiary”
means a “subsidiary corporation,” whether now or hereafter existing, as defined
in Section 424(f) of the Code.


3.             Stock Subject to the Plan.


(a)           Plan
Pool.  The maximum aggregate number
of Shares which may be granted pursuant to Awards under the Plan is seven
hundred-fifty thousand (750,000) Shares.  The Shares may be authorized, but unissued,
or reacquired Common Stock.


(b)           Lapsed Awards. 
If an Award expires or becomes unexercisable without having been
exercised in full, is surrendered pursuant to an Exchange Program, or, with
respect to Performance Shares, Performance Units, Restricted Stock or
Restricted Stock Units, is forfeited to or repurchased by the Company due to
failure to vest, the unpurchased Shares (or for Awards other than Options or
Stock Appreciation Rights the forfeited or repurchased Shares) which were
subject thereto will become available for future grant or sale under the Plan
(unless the Plan has terminated).  Shares
that have actually been issued under the Plan under any Award will not be
returned to the Plan and will not become available for future distribution
under the Plan; provided, however, that if Shares issued pursuant to Awards are
repurchased by the Company or are forfeited to the Company due to their failure
to vest, such Shares will become available for future grant under the Plan.  Shares used to pay the exercise price of an
Award or to satisfy the minimum statutory withholding obligations related to an
Award will not become


 


4

















 


available for future grant or sale under the
Plan.  To the extent an Award under the
Plan is paid out in cash rather than Shares, such cash payment will not result
in reducing the number of Shares available for issuance under the Plan.


4.     Administration.  The Plan will be administered by (A) the Board or
(B) a Committee, which will be constituted to satisfy Applicable
Laws.  Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator will have the authority, in
its discretion: (i) to determine the Fair Market Value; (ii) to
construe and interpret the terms of the Plan and Awards granted pursuant to the
Plan; (iii) to prescribe, amend and rescind rules and regulations relating
to the Plan, including the ability to accelerate the vesting of awards granted
to Outside Directors who will not stand for reelection; (iv) to make such other
determinations and take such other actions as permitted under the Plan; (v) to determine
the terms and conditions of any, and, with the approval of the shareholders if
necessary, to institute any Exchange Program and (vi) to make all other determinations deemed
necessary or advisable for administering the Plan.  The Administrator’s decisions, determinations
and interpretations will be final and binding on all Participants and any other
holders of Awards.


5.     Grants of
Awards under the Plan.


(a)           Procedure for Grants.  All
grants of Awards to Outside Directors under this Plan shall be made strictly in
accordance with the following provisions:


(b)           Type of Option.  If Options are granted pursuant to the Plan
they will be Nonstatutory Stock Options and, except as otherwise provided
herein, will be subject to the other terms and conditions of the Plan.


(c)           Eligibility
for Awards.  An Outside Director is
eligible for Awards under the Plan (is an “Eligible Outside Director”) if such
person:


(i)    is first elected as an Outside Director on
or following the date this Plan is adopted by the Board; or


(ii)   is designated by the Board of Directors as an
Eligible Outsider Director.


(d)           Initial Option Award.  Each person who first becomes an Outside
Director on or following the date this Plan is adopted by the Board will
automatically be granted an Option to purchase fifty thousand (50,000) Shares
(the “Initial Option  Award”) upon
the later of (x) the date such person first becomes an Outside Director,
whether through election by the shareholders of the Company or appointment by
the Board to fill a vacancy and (y) the date that the Plan is approved by the shareholders
of the Company; provided, however, that an Inside Director who ceases to be an
Inside Director, but who remains a Director, will not receive an Initial Option  Award.


(e)           Annual Option  Award.  Each Eligible Outside Director will be
automatically granted an Option to purchase twelve thousand (12,000) Shares (an
“Annual 


 


5

















 


Option Award”) on the date of each Annual General
Meeting of the Company beginning in 2007, if as of such date, such Eligible Outside
Director has served on the Board for at least the preceding six (6) months.


(f)            Terms.  The terms of each Award granted pursuant to
the Plan will be as follows:


(i)    If the
Award is an Option, the term of the Award will be ten (10) years; provided, however,
that the Option may expire earlier pursuant to Section 8 hereof.


(ii)   To the
extent not in conflict with the terms of this Section, the other terms and
conditions of the Plan will apply to Awards granted pursuant to this Section.


(g)           Acceleration
of Awards.  If
a Participant’s status as a Service Provider terminates as result of the
Participant’s death or Disability, each outstanding Award granted to the
Participant under the Plan shall be immediately vested in full as of the date
of such termination.


(h)           Form and Timing
of Payment.  Payment of
earned Performance Units or Restricted Stock Units granted under the Plan will
be made as soon as practicable after the applicable vesting date.  On the date set forth in the Award Agreement,
all unvested Performance Units or Restricted Stock Units will be forfeited to
the Company.


(i)            Amendment.  The Administrator in its discretion may
change and otherwise revise the terms of Awards granted under this Plan for
Awards granted on or after the date the Administrator determines to make any
such change or revision, including, without limitation, the allocation between
types of equity Awards, the number of Shares subject to such Awards, the
vesting schedule and the exercise or purchase price thereof.  The Administrator will determine from time to
time whether other service by Directors on committees of the Board not covered
by the Plan warrants grants of Awards for such service, and will have the power
and authority to modify the Plan from time to time to establish non-discretionary,
automatic award grants to be made to such committee members on such terms and
at such times as the Administrator will determine.


6.             Consideration.  The consideration to be paid for the Shares to be
issued upon exercise of an Award or the purchase of Shares thereunder shall
consist entirely of: (i) cash; (ii) check; (iii) other Shares, provided that
such Shares have a Fair Market Value on the date of surrender
equal to the aggregate exercise or purchase price of the Shares as to which
such Awards shall be exercised and provided that accepting such Shares, in the
sole discretion of the Administrator, shall not result in any adverse
accounting consequences to the Company; (iv) consideration received by the Company under a
broker-assisted (or other) cashless exercise program implemented by the Company
in connection with the Plan; (v) such other consideration and method of payment
for the issuance of Shares to the extent permitted by Applicable Laws; or (vi)
any combination of the foregoing methods of payment.


 


6

















 


7.             Exercise of Options or Stock
Appreciation Rights.  Any Option or Stock Appreciation Right
granted hereunder will be exercisable as set forth in Section 5 hereof;
provided, however, that no Option or Stock Appreciation Right shall be
exercisable until shareholder approval of the Plan in accordance with Section
25 hereof has been obtained.  An Option
or Stock Appreciation Right may not be exercised for a fraction of a Share.


An Option or Stock Appreciation Right will be deemed
exercised when the Company receives: (i) notice of exercise (in such form
as the Administrator specify from time to time) from the person entitled to
exercise the Option, and (ii) full payment for the Shares with respect to
which the Option or Stock Appreciation Right is exercised (together with
applicable tax withholdings).  Full
payment may consist of any consideration and method of payment authorized under
the Plan and Applicable Law.  Shares
issued upon exercise of an Option or Stock Appreciation Right will be issued in
the name of the Participant or, if requested by the Participant, in the name of
the Participant and his or her spouse. 
Until the Shares are issued (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
shareholder will exist with respect to the Shares subject to an Option or Stock
Appreciation Right, notwithstanding the exercise of the Option or Stock
Appreciation Right, as applicable.  The
Company will issue (or cause to be issued) such Shares promptly after the
Option or Stock Appreciation Right, as applicable is exercised.  No adjustment will be made for a dividend or
other right for which the record date is prior to the date the Shares are
issued.


Exercising an Option or Stock
Appreciation Right in any manner will decrease the number of Shares thereafter
available, both for purposes of the Plan and for sale under the Option or Stock Appreciation Right, as
applicable, by the number of Shares as to
which the Option or Stock Appreciation Right is exercised.


8.             Termination of Status as a Service
Provider.


(a)           Termination of Relationship as a
Service Provider.  If a Participant ceases
to be a Service Provider, other
than termination as a result of the Participant’s death or Disability, the Participant may exercise his or
her Option or Stock Appreciation Right, as applicable, within ninety (90) days
following such termination to the extent that the Option or Stock Appreciation
Right, as applicable, is vested on the date of termination (but in no event
later than the expirationof the term of such Award, as set forth in the Award
Agreement).  If on the date of
termination the Participant is not vested as to his or her entire Option or
Stock Appreciation Right, as applicable, the Shares covered by the unvested
portion of the Award will revert to the Plan. 
If after termination the Participant does not exercise his or her Option
or Stock Appreciation Right, as applicable, within the above-specified time
period, the Award will terminate, and the Shares covered by such Award will
revert to the Plan.


(b)           Death or Disability of Participant.  If a Participant ceases to be a Service Provider as a result of the
Participant’s death or Disability, the Option or Stock Appreciation Right, as
applicable, may be exercised following the Participant’s termination within six
(6) months  following the date of such termination
to the extent that the Option or Stock Appreciation Right, as applicable, is
vested on the date of termination (but in no event later than the expiration


7

















 


of the term of such Award as set forth in the Award
Agreement), by the Participant or, in the case of the Participant’s death, the
Participant’s designated beneficiary, provided such beneficiary has been
designated prior to Participant’s death in a form acceptable to the
Administrator.  If no such beneficiary
has been designated by the Participant, then such Award may be exercised by the
personal representative of the Participant’s estate or by the person(s) to whom
the Award is transferred pursuant to the Participant’s will or in accordance
with the laws of descent and distribution. 
If the Option or Stock Appreciation Right, as applicable, is not so
exercised within the above-specified time period, the Option will terminate,
and the Shares covered by such Award will revert to the Plan.


9.             Options.


(a)           Grant of Options.  Subject to the terms and provisions of the
Plan and pursuant to Section 5(i), the Administrator, may change or add
automatic Awards granted pursuant to Section 5 to include different or
additional Awards of Options in such amounts as the Administrator, in its sole
discretion, will determine.


(b)           Terms.  The terms of each Option granted pursuant to
the Plan will be as follows:


(i)    The term
of an Option will be ten (10) years; provided, however, that the Option may
expire earlier pursuant to Section 8 hereof.


(ii)   The per share
exercise price for Shares subject to Options will be one hundred percent (100%)
of the Fair Market Value on the grant date.


(iii)  Subject to
Section 5(g) and Section 18, each Initial Option  Award
will vest and become exercisable as to one-third (1/3rd) of the Shares subject
to the Option on the the one-year anniversary of the date of grant (or on the
last day of the month, if there is no corresponding date); as to an additional
one-third (1/3rd) of the Shares subject to the Option on the second annual anniversary
of the date of grant thereafter (or on the last day of the month, if there is
no corresponding date); and as to an final one-third (1/3rd) of the Shares
subject to the Option on the third annual anniversary of the date of grant
thereafter (or on the last day of the month, if there is no corresponding
date); provided that the Outside Director continues to serve as a Service
Provider through each applicable vesting date.


(iv)  Subject to
Section 5(g) and Section 18, each Annual Option  Award
will vest and become exercisable as to one hundred percent (100%) of the Shares
subject to the Option on the earlier of the next Annual General Meeting or the
one year anniversary of the Option grant date (or on the last day of the month,
if there is no corresponding date),
provided that the Outside Director continues to serve as a Service Provider
through such date.


(c)           Option
Agreement.  Each Option will be evidenced by an Award Agreement
that will specify the vesting criteria, the number of Shares covered by the
Award, the applicable vesting schedule, and such other terms and conditions as
the Administrator, in its sole discretion, will determine.


8

















 


(d)           Expiration of Options.  An Option granted under the Plan will expire
upon the date determined by the Administrator, in its sole discretion, and set
forth in the Award Agreement. 
Notwithstanding the foregoing, the rules of Section 8 also will
apply to Options.


10.          Restricted Stock.


(a)           Grant
of Restricted Stock.  Subject to the
terms and provisions of the Plan and pursuant to Section 5(i), the
Administrator, may change or add automatic Awards granted pursuant to Section 5
to include Awards of Restricted Stock in such amounts as the Administrator, in
its sole discretion, will determine.


(b)           Restricted
Stock Agreement.  Each Award of
Restricted Stock will be evidenced by an Award Agreement that will specify the
vesting criteria, number of Shares granted, and such other terms and conditions
as the Administrator, in its sole discretion, will determine; provided,
however, that an Award of Restricted Stock shall not be fully vested before a
period of restriction (“Period of Restriction”) of a minimum of three (3)
years.  Vesting shall be no more
favorable than pro rata and occur as to no more than 1/3rd of the number of the
Shares on each one-year anniversary of the grant date.  Unless the Administrator determines
otherwise, the Company as escrow agent will hold Shares of Restricted Stock
until the restrictions on such Shares have lapsed.


(c)           Other
Restrictions.  The Administrator, in
its sole discretion, may impose such other restrictions on Shares of Restricted
Stock as it may deem advisable or appropriate.


(d)           Removal
of Restrictions.  Except as otherwise
provided in this Section 8, Shares of Restricted Stock covered by each
Restricted Stock grant made under the Plan will be released from escrow as soon
as practicable after the last day of the Period of Restriction or at such other
time as the Administrator may determine.


(e)           Voting
Rights.  During the Period of
Restriction, Participants holding Shares of Restricted Stock granted hereunder
may exercise full voting rights with respect to those Shares, unless the
Administrator determines otherwise.


(f)            Dividends
and Other Distributions.  During the
Period of Restriction, Participants holding Shares of Restricted Stock will be
entitled to receive all dividends and other distributions paid with respect to
such Shares, unless the Administrator provides otherwise.  If any such dividends or distributions are
paid in Shares, the Shares will be subject to the same restrictions on
transferability and forfeitability as the Shares of Restricted Stock with
respect to which they were paid.


(g)           Return
of Restricted Stock to Company.  On
the date set forth in the Award Agreement, the Restricted Stock for which
restrictions have not lapsed will revert to the Company and again will become
available for grant under the Plan.


 


9

















 


11.          Restricted Stock Units.


(a)           Grant.  Subject to the terms and provisions of
the Plan and pursuant to Section 5(i), the Administrator, may change or add
automatic Awards granted pursuant to Section 5 to include different or
additional Awards of Restricted Stock Units in such amounts as the
Administrator, in its sole discretion, will determine.


(b)           Restricted
Stock Unit Agreement.  Each Award of Restricted Stock Units will be
evidenced by an Award Agreement that will specify the vesting criteria, the
number of Shares granted, and such other terms and conditions as the
Administrator, in its sole discretion, will determine.


(c)           Vesting
Criteria and Other Terms.  The Administrator will set
vesting criteria in its discretion, which, depending on the extent to which the
criteria are met, will determine the number of Restricted Stock Units that will
be paid out to the Participant.  The
Administrator may set vesting criteria based upon the achievement of
Company-wide, business unit, or individual goals (including, but not limited
to, continued employment or status as a
Service Provider), or any other basis determined by the Administrator in
its discretion.  An Award of Restricted
Stock Units shall not be fully vested until a minimum period of three (3) years
from the date of grant.  Vesting shall be
no more favorable than pro rata and occur as to no more than 1/3rd of the
number of the Shares on each one-year anniversary of the grant date.


(d)           Form and Timing of Payment.  Upon meeting the applicable vesting criteria,
the Participant will be entitled to receive a payout as determined by the
Administrator.  Payment of earned
Restricted Stock Units will be made as soon as practicable after the date(s)
determined by the Administrator and set forth in the Award Agreement.  The Administrator, in its sole discretion,
may only settle earned Restricted Stock Units in cash, Shares, or a combination
of both.


(e)           Cancellation.  On the date set forth in the Award Agreement,
all unearned Restricted Stock Units will be forfeited to the Company.


12.          Stock
Appreciation Rights.


(a)           Grant
of Stock Appreciation Rights. 
Subject to the terms and provisions of the Plan and pursuant to Section
5(i), the Administrator, may change or add automatic Awards granted pursuant to
Section 5 to include Awards of Stock Appreciation Rights.


(b)           Stock
Appreciation Right Agreement.  Each
Stock Appreciation Right grant will be evidenced by an Award Agreement that
will specify the exercise price, the term of the Stock Appreciation Right, the
conditions of exercise, and such other terms and conditions as the
Administrator, in its sole discretion, will determine.


(c)           Exercise
Price.  The per share exercise price
for the Shares to be issued pursuant to exercise of a Stock Appreciation Right
will be one hundred percent (100%) of the Fair Market Value on the date of
grant.


(d)           Expiration
of Stock Appreciation Rights.  A
Stock Appreciation Right granted under the Plan will expire upon the date
determined by the Administrator, in its sole


10

















 


discretion,
and set forth in the Award Agreement. 
Notwithstanding the foregoing, the rules of Section 8 also will
apply to Stock Appreciation Rights.


(e)           Payment
of Stock Appreciation Right Amount. 
Upon exercise of a Stock Appreciation Right, a Participant will be
entitled to receive payment from the Company in an amount determined by
multiplying:


(i)    The
difference between the Fair Market Value of a Share on the date of exercise
over the exercise price; times


(ii)   The number
of Shares with respect to which the Stock Appreciation Right is exercised.


At the discretion of the Administrator, the payment upon Stock
Appreciation Right exercise may be in cash, in Shares of equivalent value, or
in some combination thereof.


13.          Performance Units and Performance
Shares.


(a)           Grant of Performance Units/Shares. 
Performance Units and Performance Shares may be granted to Service
Providers at any time and from time to time, as will be determined by the
Administrator, in its sole discretion. 
The Administrator will have complete discretion in determining the
number of Performance Units and Performance Shares granted to each Participant.


(b)           Value of Performance Units/Shares. 
Each Performance Unit will have an initial value that is established by
the Administrator on or before the date of grant.  Each Performance Share will have an initial
value equal to the Fair Market Value of a Share on the date of grant.


(c)           Performance Objectives and Other Terms. 
The Administrator will set performance objectives or other vesting provisions
(including, without limitation, continued status as a Service Provider) in its
discretion which, depending on the extent to which they are met, will determine
the number or value of Performance Units/Shares that will be paid out to the
Service Providers.  The time period
during which the performance objectives or other vesting provisions must be met
will be called the “Performance Period.” 
The duration of a Performance Period shall be no less than three (3)
years.  Vesting shall be no more favorable
than pro rata and occur as to no more than 1/3rd of the number of the Shares on
each one-year anniversary of the grant date. 
Each Award of Performance Units/Shares will be evidenced by an Award
Agreement that will specify the Performance Period, and such other terms and
conditions as the Administrator, in its sole discretion, will determine.  The Administrator may set performance
objectives based upon the achievement of Company-wide, divisional, or
individual goals, applicable federal or state securities laws, or any other
basis determined by the Administrator in its discretion.


(d)           Earning of Performance
Units/Shares.  After the applicable
Performance Period has ended, the holder of Performance Units/Shares will be
entitled to receive a payout of the number of Performance Units/Shares earned
by the Participant over the Performance Period,


11

















 


to be determined as a function of the extent to which
the corresponding performance objectives or other vesting provisions have been
achieved.  After the grant of a
Performance Unit/Share, the Administrator, in its sole discretion, may reduce
or waive any performance objectives or other vesting provisions for such
Performance Unit/Share.


(e)           Form and Timing of Payment of
Performance Units/Shares.  Payment of
earned Performance Units/Shares will be made as soon as practicable after the
expiration of the applicable Performance Period.  The Administrator, in its sole discretion,
may pay earned Performance Units/Shares in the form of cash, in Shares (which
have an aggregate Fair Market Value equal to the value of the earned
Performance Units/Shares at the close of the applicable Performance Period) or
in a combination thereof.


(f)            Cancellation of Performance
Units/Shares.  On the date set forth
in the Award Agreement, all unearned or unvested Performance Units/Shares will
be forfeited to the Company, and again will be available for grant under the
Plan.


14.          Nontransferability
of Awards.  An Award may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or
by the laws of descent or distribution and may be exercised, during the
lifetime of the Participant, only by the Participant.


15.          Awards Generally.


(a)           Limitations.  Awards may be granted only to Outside
Directors.


(b)           Shares.  In the event that any Award granted under the
Plan would cause the number of Shares subject to outstanding Awards plus the
number of Shares previously issued pursuant to an Award to exceed the number of
shares available for issuance under the Plan pursuant to Section 3, then the
remaining Shares available for award grant will be allocated on a pro rata
basis.  No further grants will be made
until such time, if any, as additional Shares become available for grant under
the Plan through action of the Board or the shareholders to increase the number
of Shares which may be issued under the Plan or through the forfeiture of
Shares issued pursuant to Awards previously granted hereunder as provided in
Section 3 hereof.


16.          No Guarantee of
Continued Service.  The Plan shall not confer upon any
Participant any rights with respect to continuation of service as a Director or
other Service Provider or nomination to serve as a Director, nor shall it
interfere in any way with any rights which the Director or the Company may have
to terminate the Director’s relationship with the Company at any time.


17.          Term of Plan.  The Plan will become effective upon the earlier to
occur of its adoption by the Board or its approval by the shareholders of the
Company as described in Section 25 of the Plan.  It will continue in effect for a term of ten
(10) years unless sooner terminated under Section 20 hereof.


12

















 


18.          Dissolution, Merger or Asset Sale.


(a)           Dissolution
or Liquidation.  In the event of the proposed dissolution or
liquidation of the Company, the Administrator will notify each Participant as
soon as practicable prior to the effective date of such proposed
transaction.  The Administrator may
determine that each outstanding Option shall be exercisable as to all or any
part of the Option, including Shares as to which the Option would not otherwise
be exercisable, for such period as determined by the Administrator and ending
immediately prior to the consummation of such proposed action.  To the extent it has not been previously
exercised, an Award will terminate immediately prior to the consummation of
such proposed action.


(b)           Change
in Control.  In the event of
a merger or Change in Control, each outstanding Award will be treated as the
Administrator determines, including, without limitation, that each Award be
assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation; provided,
however, that in all cases, upon a Change in Control the Participant will fully
vest in and have the right to exercise all of his or her outstanding Options
and Stock Appreciation Rights, including Shares as to which such Awards would
not otherwise be vested or exercisable, all restrictions on Restricted Stock
and Restricted Stock Units will lapse (so as to become one hundred percent
(100%) vested), and, with respect to Awards with performance-based vesting, all
performance goals or other vesting criteria will be deemed achieved at one
hundred percent (100%) of target levels and all other terms and conditions
met.  The Administrator will not be
required to treat all Awards similarly in the transaction.


For the purposes of this subsection (c), an Award will
be considered assumed if, following the Change in Control, the Award confers
the right to purchase or receive, for each Share subject to the Award
immediately prior to the Change in Control, the consideration (whether stock,
cash, or other securities or property) received in the Change in Control by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the Change in Control
is not solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of an Option or Stock
Appreciation Right or upon the payout of a Performance Share, Performance Unit,
or Restricted Stock Unit, for each Share subject to such Award (or in the case of
an Award settled in cash, the number of implied shares determined by dividing
the value of the Award by the per share consideration received by holders of
Common Stock in the Change in Control), to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the Change in Control.


With respect to Awards that
are assumed or substituted for, if on the date of or following such assumption
or substitution the Participant’s status as a Director or a director of the
successor corporation, as applicable, is terminated other than upon a voluntary
resignation by the Participant (unless such resignation is at the request of
the acquirer), then the Participant will fully vest in and have the right to
exercise Options as to all of the Shares underlying such Award, including those
Shares which would not otherwise be vested or exercisable.


 


13

















 


19.          Time of Granting Awards.  The date of grant of an Award will, for all purposes,
be the date determined in accordance with Sections 5 hereof.  Notice of the determination shall be given to
each Participant to whom an Award is so granted within a reasonable time after
the date of such grant.


20.          Amendment and Termination of the Plan.


(a)           Amendment and Termination.  The Administrator may at any time amend,
alter, suspend or terminate the Plan.


(b)           Shareholder Approval.  The Company will obtain shareholder approval
of any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.


(c)           Effect of Amendment or Termination.  No amendment, alteration, suspension or
termination of the Plan will impair the rights of any Participant, unless
mutually agreed otherwise between the Participant and the Administrator, which
agreement must be in writing and signed by the Participant and the
Company.  Termination of the Plan will
not affect the Administrator’s ability to exercise the powers granted to it
hereunder with respect to Awards granted under the Plan prior to the date of
such termination.


21.          Conditions on Issuance of Shares.


(a)           Legal Compliance.  Shares will not be issued pursuant to the
exercise of an Award unless the exercise of such Award and the issuance and
delivery of such Shares will comply with Applicable Laws and will be further
subject to the approval of counsel for the Company with respect to such
compliance.


(b)           Investment Representations.  As a condition to the exercise of an Award,
the Company may require the person exercising such Award to represent and
warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute
such Shares if, in the opinion of counsel for the Company, such a
representation is required.


22.          Inability to Obtain Authority.  The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company’s counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, will relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite
authority will not have been obtained. 
The Company has no obligation to register any Shares issued pursuant to
this Plan under the securities laws of any jurisdiction.


23.          Reservation of Shares.  The Company, during the term of this Plan, will at all
times reserve and keep available such number of Shares as will be sufficient to
satisfy the requirements of the Plan.


24.          Award
Agreement.  Awards will be evidenced by written
agreements in such form as the Administrator will approve.


14

















 


25.          Shareholder
Approval.  The Plan will be subject to approval by
the shareholders of the Company within twelve (12) months after the date the
Plan is adopted by the Board.  Such
shareholder approval will be obtained in the manner and to the degree required
under Applicable Laws.


15