Exhibit 10.2

            

            

            


            
            QUALITY SYSTEMS, INC.


            
            AMENDED AND RESTATED


             


            
            2005 STOCK OPTION


            
            AND


            
            INCENTIVE PLAN


             


            
            ARTICLE I


            
            GENERAL


            
            1.1   
            Purpose. The purpose of the Quality
            Systems, Inc. Amended and Restated 2005 Stock Option and Incentive Plan (the
            “Plan”) is to promote
            the future success of Quality Systems, Inc. (the
            “Company”) by providing
            an incentive for officers, employees and directors of, and consultants and advisors to,
            the Company and its Related Entities to acquire a proprietary interest in the success
            of the Company, to remain in the service of the Company and/or Related Entities, and to
            render superior performance during such service.


            
                	
                             

                        	
                            
                            1.2

                        	
                            
                            Definitions of Certain
                            Terms.

                        


            


            
            (a)          
            “Award”
            means an award under the Plan as described in
            Section 1.5 and
            Article II.


            
            (b)          
            “Award
            Agreement” means a written agreement entered into
            between the Company and a Grantee in connection with an Award.


            
                	
                             

                        	
                            
                            (c)

                        	
                            
                            “Board
                            ” means the Board of Directors of the
                            Company.

                        


            


            
            (d)          
            “Cause.”
            Termination of Employment by the Company for
            “Cause” means, with
            respect to a Grantee and an Award, (i) except as provided otherwise in the applicable
            Award Agreement or as provided in clause (ii) below, Termination of Employment of the
            Grantee by the Company (A) upon Grantee’s failure to substantially perform
            Grantee’s duties with the Company or a Related Entity (other than any such
            failure resulting from death or Disability), (B) upon Grantee’s failure to
            substantially follow and comply with the specific and lawful directives of the Board or
            any officer of the Company or a Related Entity to whom Grantee directly or indirectly
            reports, (C) upon the Board’s determination of Grantee’s commission of an
            act of fraud or dishonesty resulting in actual economic, financial or reputational
            injury to the Company or a Related Entity, (D) upon the Board’s determination of
            Grantee’s engagement in illegal conduct, gross misconduct or an act of moral
            turpitude, involving economic, financial or reputational injury to the Company or a
            Related Entity, or (E) upon Grantee’s material violation of any material written
            policy, guideline, code, handbook or similar document governing the conduct of
            directors, officers or employees of the Company or its Related Entities resulting in
            actual economic, financial or reputational injury to the Company or


             


            
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            Related Entity; or (ii) in the case of directors, officers or employees
            who at the time of the Termination of Employment (A) are entitled to the benefits of a
            change in control, employment or similar agreement entered into by the Company or a
            Related Entity or (B) are subject to an existing Company policy or agreement, that
            defines or addresses termination for cause, termination for cause as defined and/or
            determined pursuant to such agreement.


            
                	
                             

                        	
                            
                            (e)

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

                        


            


            
            (f)           
            “Committee”
            means a compensation committee appointed by the Board in accordance with
            Section 1.3(a) of the Plan.
             


            
                	
                             

                        	
                            
                            (g)

                        	
                            
                            “Common
                            Stock” means the common stock of the
                            Company.

                        


            


            
            (h)          
            “Disability”
            means, with respect to a Grantee and an Award, (i) except as provided in the applicable
            Award Agreement or as provided in clause (ii) below, “disability” as
            defined in (i) the long-term disability plan in which Grantee is participating; or (ii)
            in the case of directors, officers or employees who at the time of the Termination of
            Employment are entitled to the benefits of a change in control, employment or similar
            agreement entered into by the Company or a Related Entity that defines or addresses
            termination because of disability, “disability” as defined in such
            agreement; or (iii) if neither (i) nor (ii) apply, then such a plan in which any of the
            officers of the Company may be participating; or (iv) if (i), (ii) and (iii) do not
            apply, then as defined in Section 22(e)(3) of the Code. Notwithstanding the foregoing,
            (A) in the case of an Incentive Stock Option, the term
            “Disability” for
            purposes of the preceding sentence shall have the meaning given to it by
            Section 422 (c)(6) of the Code and (B) to the extent an Award is subject to the
            provisions of Section 409A of the Code and if in order for compensation provided
            under any Award to avoid the imposition of taxes under Section 409A of the Code, a
            different definition of “disabled” is required by Section 409A, the term
            “Disability” or
            “Disabled” for purposes
            of the preceding sentence shall have the meaning given to it by Section 409A
            (a)(2)(C) of the Code and the Regulations promulgated thereunder.


            
                	
                             

                        	
                            
                            (i)

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

                        


            


            
            (j)           
            “Fair Market
            Value” of a share of Common Stock on any date shall be
            (i) the closing sale price per share of Common Stock during normal trading hours
            on the national securities exchange, association or other market on which the Common
            Stock is principally traded for such date or the last preceding date on which there was
            a sale of such Common Stock on such exchange, association or market, or (ii) if
            the shares of Common Stock are then traded in an over-the-counter market or other
            market or association but the sale price for the Common Stock is not reported, the
            average of the closing bid and asked prices for the shares of Common Stock during
            normal trading hours in such over-the-counter market for such date or the last
            preceding date on which both the closing bid price and asked price are reported for the
            Common Stock, or (iii) if the shares of Common Stock are not then listed on a
            national securities exchange, association or other market or traded in an
            over-the-counter market, such value as the Board on advice


             


            
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            of the Committee and in the Board’s discretion shall determine,
            provided that such valuation shall take into account all available information material
            to the value of the company, including but not limited to the value of the tangible and
            intangible assets of the company, the present value of its anticipated future cash
            flows, the market value of the stock or equity interests in other entities engaged in
            substantially the same business, recent arm’s length transactions involving the
            sale of such stock, and other relevant factors.


            
                	
                             

                        	
                            
                            (k)

                        	
                            
                            “Grantee
                            ” means a person who receives an Award.

                        


            


            
            (l)           
            “Incentive Stock
            Option” means, subject to
            Section 2.3(f), a stock option that is
            intended to qualify for special federal income tax treatment pursuant to Sections 421
            and 422 of the Code (or a successor provision thereof) and which is so designated in
            the applicable Award Agreement. Under no circumstances shall any stock option that is
            not specifically designated as an Incentive Stock Option be considered an Incentive
            Stock Option.


            
            (m)         
            “Key
            Executive” means a Key Person who, on the last day of
            the Company’s taxable year, is either (i) the chief executive officer of the
            Company or acting in such capacity, or (ii) among the four highest compensated officers
            (other than the chief executive officer).


            
            (n)          
            “Key
            Persons” means then acting or prospective directors,
            officers and employees of the Company or of a Related Entity, and then acting or
            prospective consultants and advisors to the Company or a Related Entity.


            
                	
                             

                        	
                            
                            (o)

                        	
                            
                            “Non-Employee
                            Director” has the meaning given to it
                            in
                            Section 2.12(a).

                        


            


            
            (p)          
            “Performance
            Goals” means the objective goal(s) (or combined
            goal(s)) adopted by the Committee in its discretion to be applicable to a Key Executive
            with respect to an Award; such Performance Goals applicable to an Award may provide for
            a targeted or measured level or levels of achievement or change using any objective
            performance standard, including, but not limited to (and by way of example only): (i)
            revenue, (ii) earnings per share, (iii) net income, (iv) return on assets, (v) return
            on equity, (vi) stock price, (vii) economic profit or shareholder value added, (viii)
            total shareholder return, (ix) EBIT, and (x) EBITDA. Such measures may be defined and
            calculated in such objective manner and detail as the Committee in its discretion may
            determine, including whether such measures shall be calculated before or after income
            taxes or other items, the degree or manner in which various items shall be included or
            excluded from such measures, whether total assets or certain categories of assets shall
            be used, whether such measures shall be applied to the Company on a consolidated basis
            or to certain Related Entities of the Company or to certain divisions, operating units
            or business lines of the Company or a Related Entity, the weighting that shall be given
            to various measures if combined goals are used, and the periods and dates during or on
            which such measures shall be calculated. The Performance Goals may differ from Key
            Executive to Key Executive and from Award to Award. A Performance Goal is
            objective


             


            
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            if a third party having knowledge of the relevant facts could determine
            whether the Performance Goal is met.


            
            (q)          
            “Person,”
            whether or not capitalized, means any natural person, any corporation, partnership,
            limited liability company, trust or legal or contractual entity or joint undertaking
            and any governmental authority.


            
            (r)           
            “Related
            Entity” means any corporation, partnership, limited
            liability company or other entity that is an “affiliate” of the Company
            within the meaning of Rule 12b-2 under the Exchange Act.


            
            (s)          
            “Retirement”
            means, with respect to a Grantee and an Award, except as otherwise provided in the
            applicable Award Agreement, the Grantee’s Termination of Employment with the
            Company or a Related Entity for a reason other than for Cause and that at the time of
            the Termination of Employment the Grantee has satisfied the criteria for retirement in
            accordance with the Company’s employment policies if and when adopted by the
            Company.


            
                	
                            
                             

                        	
                            
                            (t)

                        	
                            
                            “Rule
                            16b-3” means Rule 16b-3 under the
                            Exchange Act.

                        


            


            
            (u)          
            A Grantee shall be deemed to have a
            “Termination of
            Employment” upon ceasing employment with the Company or
            any Related Entity (or, in the case of a Grantee who is not an employee, upon ceasing
            association with the Company or any Related Entity as a director, consultant, advisor
            or otherwise), provided, however, it
            shall not be considered a Termination of Employment of a Grantee if the Grantee ceases
            employment or association with the Company or a Related Entity but continues or
            immediately commences employment or association with a majority-owned Related Entity or
            the Company.


            
                	
                             

                        	
                            
                            1.3

                        	
                            
                            Administration.

                        


            


            
            (a)          
            The Committee. If such is required to
            assure compliance under Section 162(m), different Committees with respect to different
            groups of Key Persons may administer the Plan in accordance with this
            Section 1.3(a).


            
            (i)           
            Section 162(m). To the extent the Award is
            intended to qualify as “performance-based compensation” within the meaning
            of Section 162(m) of the Code, the Plan shall be administered by a Committee of two or
            more “outside directors” within the meaning of Section 162(m) of the
            Code.


            
            (ii)          
            Other Administration. Other than as
            provided above, the Plan shall be administered by (A) the Board through recommendations
            of the Compensation Committee as set forth herein, or (B) upon election and delegation
            by the Board, a Compensation Committee (including any successor thereto) of the Board
            which it may elect to act upon in its sole and absolute discretion, provided such
            Compensation Committee shall consist of not less than two independent
            directors.


             


            
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            (b)          
            Authority. The Committee shall advise the
            Board concerning the administration of the Plan and the Board’s actions which may
            be taken pursuant to the Plan. The Committee shall have the authority to recommend to
            the Board for Board approval: (i) the manner in which the Plan and any Award Agreement
            is construed, interpreted and implemented, (iii) amendments and rescission of
            rules and regulations relating to the Plan, including rules governing its own
            operations, (iv) determinations deemed necessary or advisable in administering the Plan
            (including defining and calculating Performance Goals and certifying that such
            Performance Goals have been met), (v) the correction of any defect, supplying any
            omission and reconciling any inconsistency in the Plan, (vi) amending the Plan to
            reflect changes in applicable law or regulations, (vii) whether, to what extent and
            under what circumstances Awards may be settled or exercised in cash, shares of Common
            Stock, other securities, other Awards or other property, or canceled, forfeited or
            suspended and the method or methods by which Awards may be settled, canceled, forfeited
            or suspended (including, but not limited to, canceling an Award in exchange for a cash
            payment (or securities with an equivalent value) equal to the difference between the
            Fair Market Value of a share of Common Stock on the date of grant and the Fair Market
            Value of a share of Common Stock on the date of cancellation, and, if no such
            difference exists, canceling an Award without a payment in cash or securities), and
            (viii) whether, and to what extent and under what circumstances cash, shares of Common
            Stock, other securities, other Awards or other property and other amounts payable with
            respect to an Award shall be deferred either automatically or at the election of the
            holder thereof or of the Board.


            
            (c)          
            Voting. Actions of the Committee shall be
            taken by the vote of a majority of its members. Any action may be taken by a written
            instrument signed by all of the Committee members, and action so taken shall be fully
            as effective as if it had been taken by a vote at a meeting.


            
            (d)          
            Binding Determinations. The determination
            of the Board on all matters relating to the Plan or any Award Agreement shall be final,
            binding and conclusive.


            
            (e)          
            Exculpation. No member of the Board or the
            Committee or any officer, employee or agent of the Company or any of its Related
            Entities (each such person a “Covered
            Person”) shall have any liability to any person
            (including, without limitation, any Grantee) for any action taken or omitted to be
            taken or any determination made in good faith with respect to the Plan or any Award.
            Each Covered Person shall be indemnified and held harmless by the Company against and
            from any loss, cost, liability or expense (including attorneys’ fees) that may be
            imposed upon or incurred by such Covered Person in connection with or resulting from
            any action, suit or proceeding to which such Covered Person may be a party or in which
            such Covered Person may be involved by reason of any action taken or omitted to be
            taken under the Plan and against and from any and all amounts paid by such Covered
            Person, with the Company’s approval, in settlement thereof, or paid by such
            Covered Person in satisfaction of any judgment in any such action, suit or proceeding
            against such Covered Person; provided
            that the Company shall have the right, at its own expense, to assume and
            defend any such action, suit or proceeding and, once the Company gives notice of its
            intent to assume the defense, the Company shall have sole control over such defense
            with counsel of the


             


            
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            Company’s choice subject to approval of the Covered Person (not to
            be unreasonably withheld). The foregoing right of indemnification shall not be
            available to a Covered Person to the extent that a court of competent jurisdiction in a
            final judgment or other final adjudication, in either case, not subject to further
            appeal, determines that the acts or omissions of such Covered Person giving rise to the
            indemnification claim resulted from such Covered Person’s bad faith, fraud or
            willful criminal act or omission. The foregoing right of indemnification shall not be
            exclusive of any other rights of indemnification to which Covered Persons may be
            entitled under the Company’s Articles of Incorporation or Bylaws, in each case as
            amended from time to time, as a matter of law, or otherwise, or any other power that
            the Company may have to indemnify such persons or hold them harmless pursuant to an
            indemnification agreement or otherwise (in which case, any conflict between the
            indemnification agreement or such other Board approved agreement shall be resolved in
            favor of the indemnification agreement or such other agreement).


            
            (f)           
            Experts. In making any determination or in
            taking or not taking any action under this Plan, the Committee or the Board, as the
            case may be, may obtain and rely upon the advice of experts, including professional and
            financial advisors and consultants to the Committee or the Company. No director,
            officer, employee or agent of the Company shall be liable for any such action or
            determination taken or made or omitted in good faith reliance on such
            advice.


            
            (g)          
            Board. Subject to the provisions of
            Sections 1.3(a)(i) and 1.7(b), but
            notwithstanding any other provision herein to the contrary (i) until the Board
            shall appoint the members of the Committee, the Plan shall be administered by the
            Board, and (ii) the Board may, in its sole discretion, at any time and from time
            to time, (A) grant Awards, (B) require that the Committee’s authority shall be
            limited to making recommendations to the Board concerning the granting and
            administration of the Plan and Awards hereunder, or (C) resolve to administer the Plan
            directly. In any of the foregoing events, the Board shall have all of the authority and
            responsibility granted to the Committee herein.
            Notwithstanding the foregoing, at any time during which the Board
            shall administer the granting of Awards, any Awards to the Chief Executive Officer and
            other executive officers of the Company shall be made by the Board meeting in executive
            session consisting entirely of independent directors (as defined in Rule 4350 of the
            Nasdaq Marketplace Rules).


            
            1.4          
            Persons Eligible for Awards. Awards under
            the Plan may be made to such Key Persons as the Committee shall select and recommended
            to the Board, provided that, to the extent an Award is subject to the provisions of
            Section 409A of the Code, such Key Person shall not be eligible to receive an
            Award of a stock right of a Related Person who is not either the entity to which the
            Key Person is providing direct services, or any corporation in a chain of a controlled
            group of corporations, beginning with the parent of the entity to which the Key Person
            is providing direct services and ending with the corporation that is receiving the
            services.


            
            1.5          
            Types of Awards Under the Plan. Awards may
            be made under the Plan including: (i) stock options, including Incentive Stock
            Options and non-qualified stock options, (ii) stock appreciation rights,
            (iii) restricted stock, (iv) unrestricted stock, (v) restricted stock
            units,


            
             


            
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           (vi) performance shares, (vii) performance units (including
            performance options), and other stock-based Awards, as set forth in
            Article II.


            
                	
                             

                        	
                            
                            1.6

                        	
                            
                            Shares Available for or Subject to
                            Awards.

                        


            


            
            (a)          
            Total Shares Available. The total number of
            shares of Common Stock that may be transferred pursuant to Awards granted under the
            Plan shall not exceed 1,200,000 shares. All of such shares shall be authorized for
            issuance pursuant to incentive stock options under
            Section 2.3 or for other Awards
            under Article II. Such shares
            may be authorized but unissued Common Stock. Any stock certificate evidencing shares
            issued pursuant to the Plan shall bear a legend setting forth such restrictions on
            transferability as may apply to such shares pursuant to the Plan. Such legend shall be
            caused to be removed by the Company’s Chief Financial Officer and Chief Executive
            Officer upon their joint written determination that the conditions warranting the
            inclusion of such legend are no longer applicable. If any Award is forfeited or
            otherwise terminates or is canceled without the delivery of shares of Common Stock,
            then the shares covered by such forfeited, terminated or canceled Award shall again
            become available for transfer pursuant to Awards granted or to be granted under this
            Plan. However, if any Award or shares of Common Stock issued or issuable under Awards
            are tendered or withheld as payment for the exercise price of an Award, the shares of
            Common Stock may not be reused or reissued or otherwise be treated as being available
            for Awards or issuance pursuant to the Plan. With respect to a stock appreciation
            right, both shares of Common Stock issued pursuant to the Award and shares of Common
            Stock representing the exercise price of the Award shall be treated as being
            unavailable for other Awards or other issuances pursuant to the Plan unless the stock
            appreciation right is forfeited, terminated or cancelled without the delivery of shares
            of Common Stock. Any shares of Common Stock delivered by the Company, any shares of
            Common Stock with respect to which Awards are made by the Company and any shares of
            Common Stock with respect to which the Company becomes obligated to make Awards,
            through the assumption of, or in substitution for, outstanding awards previously
            granted by an acquired entity, shall not be counted against the shares available for
            Awards under this Plan.


            
            (b)          
            Treatment of Certain Awards. Any shares of
            Common Stock subject to Awards shall be counted against the numerical limits of
            this Section 1.6 as two shares
            for every share subject thereto. For example, if an Award of restricted shares or
            performance shares (or any Award involving the receipt of actual “hard”
            shares of the Company) is made in the amount of 10,000 shares, then 20,000 shares shall
            be deducted from the then existing balance of authorized and unissued shares
            (originally set at 1,200,000 in Section 1.6(a), above) available for future issuances
            under the Plan.


            
            (c)          
            Adjustments. The number of shares of Common
            Stock covered by each outstanding Award, the number or amount of shares or units
            available for Awards under Section 1.6(a) or otherwise, the
            number or amount of shares or units that may be subject to Awards to any one Grantee
            under Section 1.7(b) or
            otherwise, the price per share of Common Stock or units covered by each such
            outstanding Award and any other calculation relating to shares of Common Stock
            available for Awards or under outstanding Awards (including Awards under
            Section 2.13) shall be
            proportionately 


             


            
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            adjusted, in order to prevent dilution or enlargement of the benefits or
            potential benefits intended to be made available under the Plan, for any increase or
            decrease in the number of issued shares of Common Stock resulting from a stock split,
            reverse stock split, stock dividend, recapitalization, combination or reclassification
            of the Common Stock or similar transaction, or any other increase or decrease in the
            number of issued shares of Common Stock effected without receipt of consideration by
            the Company or to reflect any distributions to holders of Common Stock (including
            rights offerings) other than regular cash dividends; provided, however, that conversion
            of any convertible securities of the Company shall not be deemed to have been
            “effected without receipt of consideration.” Except as expressly provided
            herein, no issuance by the Company of shares of stock of any class, or securities
            convertible into shares of stock of any class, shall affect, and no adjustment by
            reason thereof shall be made with respect to, the number or price of shares of Common
            Stock subject to an Award. After any adjustment made pursuant to this paragraph, the
            number of shares subject to each outstanding Award shall be rounded to the nearest
            whole number.


            
            (d)          
            Grants Exceeding Allotted Shares. If the
            shares of Common Stock covered by an Award exceeds, as of the date of grant, the number
            of shares of Common Stock which may be issued under the Plan without additional
            shareholder approval, such Award shall be void.


            
                	
                             

                        	
                            
                            1.7

                        	
                            
                            Regulatory
                            Considerations.

                        


            


            
            (a)          
            General. To the extent that the Board
            determines it desirable for any Award to be given any particular tax, accounting, legal
            or regulatory treatment, the Award may be made by the Board, subject to any necessary
            restrictions, conditions or other terms or otherwise in such manner as is necessary to
            obtain the desired treatment.


            
            (b)          
            Code Section 162(m) Provisions. For
            purposes of qualifying any compensation attributable to a grant of an Award to a Key
            Executive as “performance-based compensation” within the meaning of
            Section 162(m) of the Code:


            
                	
                             

                        	
                            
                            (i)

                        	
                            
                            The compensation shall either:

                        


            


            
            (A)     
            Be attributable solely to (I) Incentive Stock Options, (II) nonqualified
            stock options with a per share exercise price equal to at least 100% of the Fair Market
            Value of a share of Common Stock on the date the option is granted, and/or (III) stock
            appreciation rights for which the amount of compensation is based solely on an increase
            in the value of the shares of Common Stock of the Company after the date of grant of
            the Award; or


            
            (B)     To the extent subsection (A) above is not applicable, be based upon the
            achievement of Performance Goals established by the Committee in writing not later than
            90 days after the commencement of the period of service to which the Performance Goal
            relates, provided that the outcome is substantially uncertain at the time the Committee
            actually


             


            
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            establishes the Performance Goal and less than 25% of the period of
            service to which the Performance Goal relates has elapsed at such time;


            
            (ii)          
            The Committee described in Section
            1.3(a)(i) of this Plan shall grant the Award and establish
            any applicable Performance Goals;


            
            (iii)         
            With respect to any Award of stock options and/or stock appreciation
            rights described in Section 1.7(b)(i)(A)
            above (subject to Section
            1.6(b)), no Key Executive shall be granted, in any fiscal
            year, stock options, or stock appreciation rights to purchase (or obtain the benefits
            of the equivalent of) more than 200,000 shares of Common Stock (the
            “Annual Share
            Limit”);
            provided,
            however, that in connection with his or her
            initial service, the Key Executive may be granted stock options, or stock appreciation
            rights to purchase up to an additional 300,000 (the
            “Initial Service Limit”)
            shares of Common Stock of the Company which do not count against the Annual Share
            Limit; and provided,
            further, that if a stock option, or stock
            appreciation right is cancelled in the same fiscal year of the Company in which it was
            granted (other than in connection with a transaction described in
            Section 1.6(c)), the cancelled stock
            option, or stock appreciation right will be counted against the Annual Share Limit for
            such fiscal year (for this purpose, if the exercise price of a stock option is reduced,
            the transaction will be treated as a cancellation of the stock option and grant of a
            new stock option). The foregoing Annual Share Limit and Initial Service Limit shall be
            adjusted proportionately in connection with any change in the Company’s
            capitalization as described in Section
            1.6(c). All provisions of this
            Section 1.7(b)(iii) will also apply to
            grants of full value shares, including restricted stock, restricted units and
            performance shares, except that the maximum grants will be fifty percent (50%) of the
            maximums shown above applicable to stock options and stock appreciation rights. Nothing
            in this Section 1.7(b)(iii) or elsewhere in this Plan shall be construed so as to
            permit, without prior stockholder approval, the administrator of the Plan to reprice
            stock options, stock appreciation or purchase rights, outstanding under the Plan by
            modifying or amending such options or rights or canceling such options or rights and
            replacing them with new options or rights having a lower exercise price.


            
            (iv)          
            No Key Executive shall be paid, in any fiscal year, more than $2,000,000
            in cash performance units (which are a separate vehicle from performance shares);
            and


            
            (v)          
            Prior to payment of the compensation, the Committee described in
            Section 1.3(a)(i) certifies that any
            applicable Performance Goals and any other material terms of the Award were in fact
            satisfied.


             


            
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            ARTICLE II

            AWARDS UNDER THE PLAN


            
            2.1          
            Awards and Award Agreements. Each Award
            granted under the Plan shall be evidenced by an Award Agreement which shall contain
            such provisions as the Board in its discretion deems necessary or desirable. For any
            awards of stock rights that would be subject to the provisions of section 409A of the
            Code, each such Award shall include a provision fixing the number of shares covered by
            the Award. Such provisions may further include (but are not limited to) restrictions on
            the Grantee’s right to transfer the shares of Common Stock issuable pursuant to
            the Award, a requirement that the Grantee become a party to an agreement restricting
            transfer or allowing repurchase of any shares of Common Stock acquired pursuant to the
            Award, a requirement that the Grantee acknowledge that such shares are acquired for
            investment purposes only, and a right of first refusal exercisable by the Company in
            the event that the Grantee wishes to transfer any such shares. The Board may grant
            Awards in tandem or in connection with or independently of or in substitution for any
            other Award or Awards granted under this Plan or any award granted under any other plan
            of the Company. Payments or transfers to be made by the Company upon the grant,
            exercise or payment of an Award may be made in such form as the Board shall determine,
            including cash, shares of Common Stock or other securities (or proceeds from the sale
            thereof), other Awards (by surrender or cancellation thereof or otherwise) or other
            property and may be made in a single payment or transfer, in installments or on a
            deferred basis. The Board may determine that a Grantee shall have no rights with
            respect to an Award unless such Grantee accepts the Award within such period as the
            Board shall specify by executing an Award Agreement in such form as the Board shall
            determine and, if the Board shall so require, makes payment to the Company in such
            amount as the Board may determine. Loans to executive officers of the Company may not
            be extended, guaranteed or arranged by the Company in violation of Section 402 of
            the Sarbanes-Oxley Act of 2002, Regulation O of the Board of Governors of the Federal
            Reserve System or any other applicable law or regulation.


            
            2.2          
            No Rights as a Shareholder. No Grantee of
            an Award (or other person having rights pursuant to such Award) shall have any of the
            rights of a shareholder of the Company with respect to shares subject to such Award
            until the transfer of such shares to such person. Except as otherwise provided
            in Section 1.6(c), no
            adjustment shall be made for dividends, distributions or other rights (whether ordinary
            or extraordinary, and whether in cash, securities or other property) for which the
            record date is prior to the date such shares are issued.


            
                	
                             

                        	
                            
                            2.3

                        	
                            
                            Grant of Stock Options, Stock Appreciation Rights and
                            Additional Options.

                        


            


            
            (a)          
            Grant of Stock Options. The Board may grant
            stock options, including Incentive Stock Options and nonqualified stock options, to
            purchase shares of Common Stock from the Company, to such Key Persons, in such amounts
            and subject to such terms and conditions (including the attainment of Performance
            Goals), as the Board shall determine in its discretion, subject to the provisions of
            the Plan.


            
            (b)          
            Grant of Stock Appreciation Rights. The
            Board may grant stock appreciation rights to such Key Persons, in such amounts and
            subject to such terms and conditions (including the attainment of Performance Goals),
            as the Board shall determine in its discretion, subject to the provisions of the Plan.
            Stock appreciation rights may be granted in connection with all or any part of, or
            independently of, any stock option granted under the Plan. A stock appreciation right
            may be granted at or after the time of grant of such option.


            
             


            
            10


             

            
            


            

            

            
            


            
             


            
            (c)          
            Stock Appreciation Rights. The Grantee of a
            stock appreciation right shall have the right, subject to the terms of the Plan and the
            applicable Award Agreement, to receive from the Company an amount equal to (i) the
            excess of the Fair Market Value of a share of Common Stock on the date of exercise of
            the stock appreciation right over (ii) the exercise price of such right as set
            forth in the Award Agreement (if the stock appreciation right is granted in connection
            with a stock option, then the exercise price of the option), multiplied by (iii) the
            number of shares with respect to which the stock appreciation right is exercised.
            Payment to the Grantee upon exercise of a stock appreciation right shall be made in
            cash or in shares of Common Stock (valued at their Fair Market Value on the date of
            exercise of the stock appreciation right) or both, as the Board shall determine in its
            discretion. Upon the exercise of a stock appreciation right granted in connection with
            a stock option, the number of shares subject to the option shall be correspondingly
            reduced by the number of shares with respect to which the stock appreciation right is
            exercised. Upon the exercise of a stock option in connection with which a stock
            appreciation right has been granted, the number of shares subject to the stock
            appreciation right shall be reduced correspondingly by the number of shares with
            respect to which the option is exercised.


            
            (d)          
            Exercise Price. Each Award Agreement with
            respect to a stock option or stock appreciation right shall set forth the exercise
            price, which shall be determined by the Committee in its discretion, except that no
            stock option or stock appreciation right may be granted with an exercise price below
            the fair market value of the Company’s common stock on the date of
            grant.


            
            (e)          
            Exercise Periods. Each Award Agreement with
            respect to a stock option or stock appreciation right shall set forth the periods
            during which the Award evidenced thereby shall be exercisable, and, if applicable, the
            conditions which must be satisfied (including the attainment of Performance Goals) in
            order for the Award evidenced thereby to be exercisable, whether in whole or in part.
            Such periods and conditions shall be determined by the Board in its discretion;
            provided,
            however, that no stock option or stock
            appreciation right shall be exercisable more than ten (10) years after the date the
            Award is issued.


            
            (f)           
            Incentive Stock Options.
            Notwithstanding Section 2.3(d) and
            (e), with respect to any Incentive Stock Option or stock
            appreciation right granted in connection with an Incentive Stock Option (i) the
            exercise price shall be at least 100% of the Fair Market Value of a share of Common
            Stock on the date the option is granted (except as permitted in connection with the
            assumption or issuance of options in a transaction to which Section 424(a) of the
            Code applies) and (ii) the exercise period shall not be for longer than ten (10) years
            after the date of the grant. To the extent that the aggregate Fair Market Value
            (determined as of the time the option is granted) of the shares of Common Stock with
            respect to which Incentive Stock Options and stock appreciation rights granted in
            connection with Incentive Stock Options granted under this Plan and all other plans of
            the Company are first exercisable by any Grantee during any calendar year shall exceed
            the maximum limit (currently, $100,000), if any, imposed from time to time under
            Section 422 of the Code, such options and rightsshall be treated as nonqualified
            stock


            
             


            
            11


             

            
            


            

            

            


            
            options. For purposes of this
            Section 2.3(f), Incentive Stock
            Options shall be taken into account in the order in which they were granted.


            
            (g)          
            Ten Percent Owners. Notwithstanding the
            provisions of Sections 2.3(d), (e)
            and (f), to the extent required under Section 422 of the Code, an Incentive Stock
            Option may not be granted under the Plan to an individual who, at the time the option
            is granted, owns stock possessing more than 10% of the total combined voting power of
            all classes of stock of his or her employer corporation or of its parent or subsidiary
            corporations (as such ownership may be determined for purposes of
            Section 422(b)(6) of the Code) unless (i) at the time such Incentive Stock Option
            is granted the exercise price is at least 110% of the Fair Market Value of the shares
            subject thereto, and (ii) the Incentive Stock Option by its terms is not exercisable
            after the expiration of five (5) years from the date granted.


            
            (h)          
            Repricing Requires Shareholder Approval.
            Except as allowed by Section 3.1(e) of this Plan (with regard to modifications in order
            to avoid tax treatment under section 409A of the Code), no Award granted hereunder
            shall have its exercise price modified or “repriced” without first
            obtaining shareholder approval.


            
            2.4          
            Exercise of Stock Options and Stock Appreciation
            Rights. Each stock option or stock appreciation right granted
            under the Plan shall be exercisable as follows:


            
            (a)          
            Exercise Period. A stock option or stock
            appreciation right shall become and cease to be exercisable at such time or times as
            determined by the Board and set forth in the Award Agreement, except that in no event
            shall a stock option or stock appreciation right be extended beyond the initial option
            term at a time when the fair market value of the stock underlying the option is greater
            than the Exercise Price unless such extension remains within ten (10) years from the
            initial date of grant.


            
            (b)          
            Manner of Exercise. Unless the applicable
            Award Agreement otherwise provides, a stock option or stock appreciation right may be
            exercised from time to time as to all or part of the shares as to which such Award is
            then exercisable (but, in any event, only for whole shares). A stock appreciation right
            granted in connection with an option may be exercised at any time when, and to the same
            extent that, the related option may be exercised. A stock option or stock appreciation
            right shall be exercised by written notice to the Company, on such form and in such
            manner as the Board shall prescribe.


            
            (c)          
            Payment of Exercise Price. Any written
            notice of exercise of a stock option shall be accompanied by payment of the exercise
            price for the shares being purchased. Such payment shall be made (i) in cash (by
            certified check or as otherwise permitted by the Board), or (ii) (A) by
            delivery of shares of Common Stock (which, if acquired pursuant to the exercise of a
            stock option or under an Award made under this Plan or any other compensatory plan of
            the Company, were acquired at least six (6) months prior to the option exercise date)
            having a Fair Market Value (determined as of the exercise date) equal to all or part of
            the exercise price and cash for any remaining portion of the exercise price, (B) by
            cashless exercise procedure through a broker-dealer,


            
             


            
            12


             

            
            


            

            

            
            and (C) to the extent permitted by law, by such other method not
            otherwise prohibited by the Board including, without limitation, a “net
            exercise.”


            
            (d)          
            Delivery of Shares. Promptly after
            receiving payment of the full exercise price, or after receiving notice of the exercise
            of a stock appreciation right for which payment by the Company will be made partly or
            entirely in shares of Common Stock, the Company shall, subject to the provisions
            of Section 3.3 (relating to
            certain restrictions), transfer to the Grantee or to such other person as may then have
            the right to exercise the Award, the shares of Common Stock for which the Award has
            been exercised and to which the Grantee is entitled. If the method of payment employed
            upon option exercise so requires, and if applicable law permits, a Grantee may direct
            the Company to deliver the shares to the Grantee’s broker-dealer.


            
                	
                             

                        	
                            
                            2.5

                        	
                            
                            Termination of
                            Employment.

                        


            


            
            (a)          
            Termination of Employment by Grantee for any Reason or By the Company
            for Cause. Except to the extent otherwise provided in
            paragraphs (b), (c), (d) and (e) below or in the applicable Award Agreement, all
            unvested stock options and stock appreciation rights to the extent not theretofore
            exercised shall terminate immediately upon (i) the Grantee’s Termination of
            Employment at Grantee’s election for any reason or (ii) Grantee’s
            Termination of Employment by the Company for Cause.


            
            (b)          
            At Election of Company or a Related Entity.
            Except to the extent otherwise provided in the applicable Award Agreement, upon the
            Termination of Employment of a Grantee at the election of the Company or a Related
            Entity (other than in circumstances governed by paragraph (a) above or paragraphs (c),
            (d) or (e) below) the Grantee may exercise any outstanding stock option or stock
            appreciation right on the following terms and conditions: (i) exercise may be made only
            to the extent that the Grantee was entitled to exercise the Award on the date of the
            Termination of Employment; and (ii) exercise must occur within three (3) months
            after the Termination of Employment but in no event after the expiration date of the
            Award as set forth in the Award Agreement.


            
             (c)               
            Retirement.  At such time as the Company adopts a policy of retirement and
            during the continued effectiveness of such policy, except to the extent otherwise
            provided in the applicable Award Agreement, upon the Termination of Employment of a
            Grantee by reason of the Grantee’s Retirement, the Grantee may exercise any
            outstanding stock option or stock appreciation right on the following terms and
            conditions: (i) exercise may be made only to the extent that the Grantee was entitled
            to exercise the Award on the date of Retirement; and (ii) exercise must occur within
            three (3) years after Retirement but in no event after the expiration date of the Award
            as set forth in the Award Agreement.


            
            (d)          
            Disability. Except to
            the extent otherwise provided in the applicable Award Agreement, upon the termination
            of Employment of a Grantee by reason of Disability the Grantee may exercise any
            outstanding stock option or stock appreciation right on the following terms and
            conditions: (i) exercise may be made only to the extent


            
             


            
            13


             

            
            


            

            

            
                that the Grantee was entitled to exercise the
                Award on the date of Termination of Employment; and (ii) exercise must occur no
                later than six (6) months after the Termination of Employment but in no event after
                the expiration date of the Award as set forth in the Award Agreement.

            


            
            (e)          
            Death. Except to the extent otherwise
            provided in the applicable Award Agreement, if a Grantee dies during the period in
            which the Grantee’s stock options or stock appreciation rights are exercisable,
            whether pursuant to their terms or pursuant to paragraph (b), (c) or (d) above, any
            outstanding stock option or stock appreciation right shall be exercisable on the
            following terms and conditions: (i) exercise may be made only to the extent that
            the Grantee was entitled to exercise the Award on the date of death; and
            (ii) exercise must occur no later than six (6) months after the date of the
            Grantee’s death. Any such exercise of an Award following a Grantee’s death
            shall be made only by the Grantee’s executor or administrator, unless the
            Grantee’s will specifically disposes of such Award, in which case such exercise
            shall be made only by the recipient of such specific disposition. If a Grantee’s
            executor (or administrator) or the recipient of a specific disposition under the
            Grantee’s will shall be entitled to exercise any Award pursuant to the preceding
            sentence, such executor (or administrator) or recipient shall be bound by all the terms
            and conditions of the Plan and the applicable Award Agreement which would have applied
            to the Grantee.


            
                	
                             

                        	
                            
                            2.6

                        	
                            
                            Grant of Restricted Stock and Unrestricted
                            Stock.

                        


            


            
            (a)          
            Grant of Restricted Stock. The Board may
            grant restricted shares of Common Stock to such Key Persons, in such amounts and
            subject to such terms and conditions (including the attainment of Performance Goals),
            as the Board shall determine in its discretion, subject to the provisions of the
            Plan.


            
            (b)          
            Grant of Unrestricted Stock. The Board may
            grant unrestricted shares of Common Stock to such Key Persons, in such amounts and
            subject to such terms and conditions as the Board shall determine in its discretion,
            subject to the provisions of the Plan.


            
                (c)            
            Rights as Shareholder. The Company may issue in the Grantee’s name shares
            of Common Stock covered by an Award of restricted stock or unrestricted stock. Upon the
            issuance of such shares, the Grantee shall have the rights of a shareholder with
            respect to the restricted stock or unrestricted stock, subject to the transfer
            restrictions and the Company’s repurchase rights described in paragraphs (d)
            and (e) below and to such other restrictions and conditions as the Board in its
            discretion may include in the applicable Award Agreement.


            
            (d)          
            Company to Hold Certificates. Unless the
            Board shall otherwise determine, any certificate issued evidencing shares of restricted
            stock shall remain in the possession of the Company until such shares are free of any
            restrictions specified in the Plan or the applicable Award Agreement.


            
             


            


            
            14


             

            
            


            

            

            
                       
            (e)          
            Nontransferable. Shares of restricted stock
            may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of
            except as specifically provided in this Plan or the applicable Award Agreement. The
            Board at the time of grant shall specify the date or dates (which may depend upon or be
            related to the attainment of Performance Goals) and other conditions on which the
            non-transferability of the restricted stock shall lapse. Unless the applicable Award
            Agreement provides otherwise, additional shares of Common Stock or other property
            distributed to the Grantee in respect of shares of restricted stock, as dividends or
            otherwise, shall be subject to the same restrictions applicable to such restricted
            stock. The Board at any time may waive or amend the transfer restrictions or other
            condition of an Award of restricted stock.


            
            (f)           
            Termination of Employment. Except to the
            extent otherwise provided in the applicable Award Agreement or unless otherwise
            determined by the Board, in the event of the Grantee’s Termination of Employment
            for any reason, shares of restricted stock that remain subject to transfer restrictions
            as of the date of such termination (and therefore are unvested) shall be forfeited and
            canceled.


            
                	
                             

                        	
                            
                            2.7

                        	
                            
                            Grant of Restricted Stock
                            Units.

                        


            


            
            (a)          
            Grant of Restricted Stock Units. The Board
            may grant Awards of restricted stock units to such Key Persons, in such amounts and
            subject to such terms and conditions (including the attainment of Performance Goals),
            as the Board shall determine in its discretion, subject to the provisions of the
            Plan.


            
            (b)          
            Vesting. The Board, at the time of grant,
            shall specify the date or dates on which the restricted stock units shall become vested
            and other conditions to vesting (including the attainment of Performance
            Goals).


            
            (c)          
            Termination of Employment. Except to the
            extent otherwise provided in the applicable Award Agreement or unless otherwise
            determined by the Board, in the event of the Grantee’s Termination of Employment
            for any reason, restricted stock units that have not vested shall be forfeited and
            canceled.


            
            


            	
                        2.8

                    	
                        
                        Grant of Performance Shares, Performance Options and
                        Performance Share Units.

                    


            

            



            
            (a)          
            Grant of Performance Shares, Options Share
            Units and Cash Performance Units. The Board may grant
            performance shares in the form of actual shares of Common Stock, performance options or
            share units over an identical number of shares of Common Stock, to such Key Persons, in
            such amounts (which may depend on the extent to which Performance Goals are attained),
            subject to the attainment of such Performance Goals and satisfaction of such other
            terms and conditions (which may include the occurrence of specified dates), as the
            Board shall determine in its discretion, subject to the provisions of the Plan. The
            Board may also grant cash performance units, which are cash awards subject to
            performance goal attainment, but which are denominated only in cash, not in stock. The
            Performance Goals and the length of the performance period applicable to any Award of
            performance shares, performance options, share units or performance units shall be
            determined by the Board. The Board shall determine in its discretion
            whether


            
            15


             

            
            


            

            

            


            
                
                     performance shares granted in the form of share units
                    shall be paid in cash, Common Stock, or a  combination of cash and Common
                    Stock.
                

            


            
            (b)          
            Company to Hold Certificates. Unless the
            Board shall otherwise determine, any certificate issued evidencing performance shares
            shall remain in the possession of the Company until such performance shares are earned
            and are free of any restrictions specified in the Plan or the applicable Award
            Agreement.


            
            (c)          
            Nontransferable. Performance shares may not
            be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except
            as specifically provided in this Plan or the applicable Award Agreement. The Board at
            the time of grant shall specify the date or dates (which may depend upon or be related
            to the attainment of Performance Goals) and other conditions on which the
            non-transferability of the performance shares shall lapse. Unless the applicable Award
            Agreement provides otherwise, additional shares of Common Stock or other property
            distributed to the Grantee in respect of performance shares, as dividends or otherwise,
            shall be subject to the same restrictions applicable to such performance shares. The
            Board at any time may waive or amend the transfer restrictions or other condition of an
            Award of performance shares.


            
            (d)          
            Termination of Employment. Except to the
            extent otherwise provided in the applicable Award Agreement or unless otherwise
            determined by the Board, in the event of the Grantee’s Termination of Employment
            for any reason, performance shares and performance share units or cash performance
            units that remain subject to transfer restrictions as of the date of such termination
            (and therefore shall not have vested) shall be forfeited and canceled.


            
            2.9          
            Grant of Dividend Equivalent Rights. The
            Board may in its discretion include in the Award Agreement with respect to any share
            denominated Award a dividend equivalent right entitling the Grantee to receive amounts
            equal to the ordinary dividends that would be paid, during the time such Award is
            outstanding and unexercised, on the shares of Common Stock covered by such Award if
            such shares were then outstanding. In the event such a provision is included in an
            Award Agreement, the Board shall determine whether such payments shall be made in cash,
            in shares of Common Stock or in another form, whether they shall be conditioned upon
            the exercise or vesting of, or the attainment or satisfaction of terms and conditions
            applicable to, the Award to which they relate, the time or times at which they shall be
            made, and such other terms and conditions as the Board shall deem
            appropriate.


            
            


            	
                         

                    	
                        
                        2.10

                    	
                        
                        Deferred Stock
                        Units.

                    


            
            (a)          
            Description. Deferred
            stock units shall consist of a restricted stock, restricted stock unit, performance
            share or share unit Award that the Board in its discretion permits to be paid out in
            installments or on a deferred basis, in accordance with rules and procedures
            established by the Board. Deferred stock units shall remain subject to the claims of
            the Company’s general creditors until distributed to the Grantee. Cash
            Performance Units may be deferred, but shall remain subject to the claims of the
            Company’s general creditors until distributed to the Grantee.


            
             


            
            16


             

            
            


            

            
           
                 
            

            
            (b)          
            162(m) Limits. Deferred stock units and
            deferred cash performance units shall be subject to the annual Section 162(m)\
            limits applicable to the underlying restricted stock, restricted stock unit,
            performance share or share unit or cash performance unit Award as forth in
            Section 1.7(b).


            
            2.11       
            Other Stock-Based Awards. The Board may
            grant other types of stock-based Awards to such Key Persons, in such amounts and
            subject to such terms and conditions, as the Board shall in its discretion determine,
            subject to the provisions of the Plan. Such Awards may entail the transfer of actual
            shares of Common Stock, or payment in cash or otherwise of amounts based on the value
            of shares of Common Stock.


            
                	
                             

                        	
                            
                            2.12

                        	
                            
                            Director Stock
                            Options.

                        


            


            
            (a)          
            Eligibility. Subject to the specific
            requirements, terms and conditions as adopted from time to time by the Board in its
            discretion (i) all voting directors of the Company who are not employees of the Company
            (“Non-Employee
            Directors”) shall receive stock options pursuant to the
            conditions of this
            Section 2.12.


            
            (b)          
            Grant of Director Stock Options. Each
            Non-Employee Director may be granted stock options to purchase shares of Common Stock
            of the Company.


            
            (c)          
            Exercise Price. Notwithstanding
            Section 2.3(d), until and unless the
            Board in its discretion determines otherwise, the per share exercise price for each
            stock option granted under this Section 2.13
            shall be 100% of the Fair Market Value of a share of Common Stock on the
            date the stock option is granted, provided that in no event shall the per share
            exercise price be less than 100% of the Fair Market Value of a share of Common Stock on
            the date the stock option is granted.


            
            (d)          
            Exercise Period. Each stock option granted
            under this Section 2.13 shall
            vest, become exercisable and possess a term in accordance with the policy then in place
            and as adopted by the Board, provided, however, that (i) if the Non-Employee
            Director’s


             


            
            17


             

            
            


            

            

            
            service on the Board is terminated as a result of not being renominated
            or reelected to the Board, then such stock option shall continue to exercisable until
            the earlier to occur of (A) the expiration of the remaining term of the option or (B)
            three (3) years from the date Board service terminated, and (ii) no stock option may
            have a term in excess of ten (10) years.


            
            (e)          
            Non-statutory Options. Stock options
            granted under this Section 2.12
            will constitute nonqualified stock options.


            
            (f)           
            Other Stock Option Terms Applicable. Except
            as set forth in this
            Section 2.12, all stock options
            granted under this Section 2.12
            will be subject to and benefited by the terms and conditions
            (including Section 3.7) of the
            Plan applicable to other stock options granted under the Plan.


            
            2.13       
            Section 409A Compliance. Nothwithstanding
            any provisions to the contrary, Awards made under this Article II that provide for the
            nonqualified deferral of compensation (including any amendments to such Awards) will
            comply with all provisions of Section 409A of the Code and the Regulations promulgated
            thereunder. No award providing for the deferral of compensation shall permit the
            acceleration of the time or schedule of any payment, except as provided in Section
            409A. Compensation deferred pursuant to such an Award with comply with all distribution
            rules of Section 409A, and shall not be distributed earlier than—


             


            
            (i) separation from service as determined by the Secretary (except as
            provided in Section 409A(B)(i), relating to deferred compensation payable to key
            employees after the termination of service),


            
             


            
            (ii) the date the participant becomes disabled (within the meaning of
            subparagraph (C) of Section 409A),


            
             


            
            (iii) death,


            
             


            
            (iv) a specified time (or pursuant to a fixed schedule) specified under
            the plan at the date of the deferral of such compensation,


            
             


            
            (v) to the extent provided by the Secretary, a change in the ownership
            or effective control of the corporation, or in the ownership of a substantial portion
            of the assets of the corporation, or


            
             


            
            (vi) the occurrence of an unforeseeable emergency (as that term is
            defined by Section 409A(a)(2)(B)(i).


            
             


            
            2.14       
            Deferral Election. To the extent to which
            any participant in this Plan is allowed to elect to defer compensation for services
            performed during a taxable year, such election shall be made not later than the close
            of the preceding taxable year, or such early deadline as proscribed in Section
            409A(a)(4) of the Code.


             


            
            18


             

            
            


            

            

            


            
            ARTICLE III


            
            MISCELLANEOUS


            
                	
                             

                        	
                            
                            3.1

                        	
                            
                            Amendment of the Plan; Modification of
                            Awards.

                        


            


            
            (a)          
            Board Authority to Amend Plan. The Board in
            its discretion may at any time suspend, discontinue, revise or amend the Plan in any
            respect whatsoever, except that any such amendment (other than an amendment pursuant to
            paragraphs (d), (e) or (f) of this Section 3.1
            or an amendment to effect an assumption or other action consistent
            with Section 3.7) that
            materially impairs the rights or materially increases the obligations of a Grantee
            under an outstanding Award shall be effective with respect to such Grantee and Award
            only with the consent of the Grantee (or, upon the Grantee’s death, the
            Grantee’s executor (or administrator) or the recipient of a specific disposition
            under the Grantee’s will).


            
            (b)          
            Shareholder Approval. Shareholder approval
            of any amendment shall be obtained to the extent necessary to comply with
            Section 422 of the Code (relating to Incentive Stock Options) or any other
            applicable law, regulation or rule (including the rules of self-regulatory
            organizations). As set forth in Section
            2.3(h), shareholder approval shall be required for any
            “repricing” of a previously granted Award hereunder.


            
            (c)          
            Board Authority to Amend Awards. Subject
            to Section 2.3(h) which requires
            shareholder approval for any “repricing” of an Award granted hereunder, the
            Board in its discretion may at any time, whether before or after the grant, expiration,
            exercise, vesting or maturity of or lapse of restriction on an Award or the Termination
            of Employment of a Grantee, amend any outstanding Award or Award Agreement, including
            an amendment which would accelerate the time or times at which the Award becomes
            unrestricted or may be exercised, or waive or amend any goals, restrictions or
            conditions set forth in the Award Agreement, provided that no Award of a stock option
            or stock appreciation right shall be amended in such a way as might, under the Section
            409A Regulations, provide for the additional deferral of compensation or an effective
            decrease in the exercise price of the Award to a price below what was the Fair Market
            Value of the Common Stock on the date of grant. Further, any such amendment (other than
            an amendment pursuant to paragraphs (d), (e) or (f) of this
            Section 3.1 or an amendment to effect
            an action consistent with
            Section 3.7) that materially impairs
            the rights or materially increases the obligations of a Grantee under an outstanding
            Award shall be made only with the consent of the Grantee (or, upon the Grantee’s
            death, the Grantee’s executor (or administrator) or the recipient of a specific
            disposition under the Grantee’s will). For purposes of the Plan, any action of
            the Board that alters or affects the tax treatment of any Award shall not be considered
            to materially impair any rights of any Grantee.


            
            (d)          
            Regulatory Changes Generally.
            Notwithstanding anything to the contrary in this Plan, the Board shall have full
            discretion to amend the Plan or an outstanding Award or Award Agreement to the extent
            necessary to preserve any tax, accounting, legal


             


            
            19


             

            
            


            

            

            
            


            
            or regulatory treatment with respect to any Award and any outstanding
            Award Agreement shall be deemed to be so amended to the same extent, without obtaining
            the consent of any Grantee (or, after the Grantee’s death, the Grantee’s
            executor (or administrator) or the recipient of a specific disposition under the
            Grantee’s will) provided that such amendment does not adversely affect a
            Grantee’s rights under the Plan or such Award and Award Agreement.


            
            (e)          
            Section 409A Changes. Notwithstanding
            anything to the contrary in this Plan, the Board shall have full discretion to amend
            the Plan or any outstanding Award or Award Agreement to the extent necessary to avoid
            the imposition of any tax under Section 409A of the Code. Any such amendments to
            the Plan, an Award or an Award Agreement may be adopted without obtaining the consent
            of any Grantee (or, after the Grantee’s death, the Grantee’s executor (or
            administrator) or the recipient of a specific disposition under the Grantee’s
            will), regardless of whether such amendment adversely affects a Grantee’s rights
            under the Plan or such Award or Award Agreement.


            
            (f)           
            Other Tax Changes. In the event that
            changes are made to Section 83(b), 162(m), 422, 409A or other applicable provision
            of the Code or the Treasury Regulations, the Board may, subject to
            Sections 3.1(a), (b) and (c), make any
            adjustments it determines in its discretion to be appropriate with respect to the Plan
            or any Award or Award Agreement.


            
                	
                             

                        	
                            
                            3.2

                        	
                            
                            Tax Withholding.

                        


            


            
            (a)          
            Tax Withholdings. As a condition to the
            receipt of any shares of Common Stock pursuant to any Award or the lifting of
            restrictions on any Award, or in connection with any other event that gives rise to a
            federal or other governmental tax withholding obligation on the part of the Company
            relating to an Award (including, without limitation, FICA tax), the Company shall be
            entitled to require that the Grantee remit to the Company an amount sufficient in the
            opinion of the Company to satisfy such withholding obligation.


            
            (b)          
            Withholding Shares. If the event giving
            rise to the withholding obligation is a transfer of shares of Common Stock, then,
            unless otherwise provided in the applicable Award Agreement,the Grantee may satisfy
            only the minimum statutory withholding obligation imposed under paragraph (a) by
            electing to have the Company withhold shares of Common Stock having a Fair Market Value
            equal to the amount of tax to be withheld. For this purpose, Fair Market Value shall be
            determined as of the date on which the amount of tax to be withheld is determined (and
            any fractional share amount shall be settled in cash).


            
                	
                             

                        	
                            
                            3.3

                        	
                            
                            Restrictions.

                        


            


            
            (a)          
            Required Consents. If the Board shall at
            any time determine that any consent (as hereinafter defined) is necessary or desirable
            as a condition of, or in connection with, the granting of any Award, the issuance or
            purchase of shares of


             


            
            20


             

            
            


            

            

            
            Common Stock or other rights thereunder, or the taking of any other
            action thereunder (a “Plan
            Action”), then no such Plan Action shall be taken, in
            whole or in part, unless and until such consent shall have been effected or obtained to
            the full satisfaction of the Board.


            
            (b)          
            Definition. The term
            “consent” as used herein
            with respect to any action referred to in paragraph (a) means (i) any and all
            listings, registrations or qualifications in respect thereof upon any securities
            exchange or under any federal, state or local law, rule or regulation, (ii) any
            and all written agreements and representations by the Grantee with respect to the
            disposition of shares, or with respect to any other matter, which the Board shall deem
            necessary or desirable to comply with the terms of any such listing, registration or
            qualification or to obtain an exemption from the requirement that any such listing,
            qualification or registration be made, (iii) any and all consents, clearances and
            approvals in respect of a Plan Action by any governmental or other regulatory bodies,
            and (iv) any and all consents or authorizations required to comply with, or required to
            be obtained under, applicable local law or otherwise required by the Board. Nothing
            herein shall require the Company to list, register or qualify the shares of Common
            Stock on any securities exchange.


            
                	
                             

                        	
                            
                            3.4

                        	
                            
                            Nonassignability.

                        


            


            
            (a)          
            Nonassignability. No Award or right granted
            to any person under the Plan shall be assignable or transferable other than by will or
            by the laws of descent and distribution, and all such Awards and rights shall be
            exercisable during the life of the Grantee only by the Grantee or the Grantee’s
            legal representative and any such attempted assignment, transfer or exercise in
            contravention of this Section 3.4
            shall be void. Notwithstanding the foregoing, the Board may in its
            discretion permit the donative transfer of any Award under the Plan (other than an
            Incentive Stock Option) by the Grantee (including to a trust or similar instrument),
            subject to such terms and conditions as may be established by the Board.


            
            (b)          
            Cashless Exercises Permitted. The
            restrictions on exercise and transfer in paragraph (a) above shall not be deemed to
            prohibit “cashless exercise” procedures with parties who provide financing
            for the purpose of (or who otherwise facilitate) the exercise of Awards consistent with
            applicable legal restrictions and Rule 16b-3 and as otherwise permitted by
            Section 2.4(c).


            
            3.5          
            Requirement of Notification of Election Under Section 83(b) of
            the Code. If a Grantee, in connection with the acquisition of
            shares of Common Stock under the Plan, is permitted under the terms of the Award
            Agreement to make the election permitted under Section 83(b) of the Code (i.e., an
            election to include in gross income in the year of transfer the amounts specified in
            Section 83(b) of the Code notwithstanding the continuing transfer restrictions)
            and the Grantee makes such an election, the Grantee shall notify the Company of such
            election within ten (10) days of filing notice of the election with the Internal
            Revenue Service, in addition to any filing and notification required pursuant to
            regulations issued under Section 83(b) of the Code.


             


            
            21


             

            
            


            

            

            


            
            3.6          
            Requirement of Notification Upon Disqualifying Disposition Under
            Section 421(b) of the Code. If any Grantee shall make
            any disposition of shares of Common Stock issued pursuant to the exercise of an
            Incentive Stock Option under the circumstances described in Section 421(b) of the
            Code (relating to certain disqualifying dispositions), such Grantee shall notify the
            Company of such disposition within ten (10) days thereof.


            
                	
                             

                        	
                            
                            3.7

                        	
                            
                            Change in
                            Control.

                        


            


            
            (a)          
            Definition. A
            “Change in Control”
            means the occurrence of any one of the following events:


            
            (i)           
            any Person (as defined in Sections 13(d) and 14(d) of the Exchange Act)
            is or becomes the Beneficial Owner (as defined in Rule 13d-3 under the Exchange Act),
            directly or indirectly, of securities of the Company representing in excess of fifty
            percent (50%) or more of the combined voting power of the Company’s then
            outstanding securities (“Company Voting
            Securities”);
            provided,
            however, that the event described in this
            clause (i) shall not be deemed a Change in Control by virtue of any of the following
            acquisitions: (A) by the Company or any corporation controlled by the Company, (B) by
            any employee benefit plan (or related trust) sponsored or maintained by the Company or
            any corporation controlled by the Company, (C) by any underwriter temporarily holding
            securities pursuant to an offering of such securities, (D) pursuant to a Non-Qualifying
            Transaction (as defined in clause (iii) below), (E) pursuant to any acquisition by
            Grantee or any group of persons including Grantee (or any entity controlled by Grantee
            or any group of persons including Grantee), (F) a transaction (other than one described
            in clause (iii) below) in which outstanding Company Voting Securities are acquired from
            the Company, if a majority of the Continuing Directors (as defined in clause (ii)
            below) approve a resolution providing expressly that the acquisition pursuant to this
            subclause (F) does not constitute a Change in Control under this clause (F), or (G) any
            increase in the ownership position of a person of the outstanding Company Voting
            Securities as a result of an acquisition of common stock of the Company by the Company
            which, by reducing the number of shares of common stock of the Company outstanding,
            increases the proportionate number of shares beneficially owned by such person to in
            excess of fifty percent (50%)or more of the outstanding Company Voting
            Securities, provided,
            however, that if a person shall become the
            beneficial owner of in excess of fifty percent (50%) or more of the outstanding Company
            Voting Securities by reason of a share acquisition by the Company as described above
            and shall, after such share acquisition by the Company, become the beneficial owner of
            any additional shares of common stock of the Company, then such acquisition shall
            constitute a Change in Control;


            
            (ii)          
            the consummation of a merger, consolidation, statutory share exchange or
            similar form of corporate transaction involving the Company or any of its subsidiaries
            that requires the approval of the Company’s shareholders,


             


            
            22


             

            
            


            

            

            


            
            whether for such transaction or the issuance of securities in the
            transaction (a “Business
            Combination”), unless immediately following such
            Business Combination: (A) more than 50% of the total voting power of (x) the
            corporation resulting from such Business Combination (the
            “Surviving
            Corporation”), or (y) if applicable, the ultimate
            parent corporation that directly or indirectly has beneficial ownership of at least 95%
            of the voting securities eligible to elect directors of the Surviving Corporation (the
            “Parent Corporation”),
            is represented by Company Voting Securities that were outstanding immediately prior to
            such Business Combination (or, if applicable, is represented by shares into which such
            Company Voting Securities were converted pursuant to such Business Combination), and
            such voting power among the holders thereof is in substantially the same proportion as
            the voting power of such Company Voting Securities among the holders thereof
            immediately prior to the Business Combination, (B) no person (other than any
            employee benefit plan (or related trust) sponsored or maintained by the Surviving
            Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or
            indirectly, of in excess of fifty percent (50%) or more of the total voting power of
            the outstanding voting securities eligible to elect directors of the Parent Corporation
            (or, if there is no Parent Corporation, the Surviving Corporation) and (C) at
            least a majority of the members of the board of directors of the Parent Corporation
            (or, if there is no Parent Corporation, the Surviving Corporation) following the
            consummation of the Business Combination are Continuing Directors (any Business
            Combination which satisfies all of the criteria specified in subclauses (A), (B) and
            (C) above shall be deemed to be a “Non-Qualifying
            Transaction”); provided,
            however, that if Continuing Directors constitute a majority
            of the Board immediately following the occurrence of a Business Combination, then a
            majority of Continuing Directors in office prior to the Consummation of the Business
            Combination may approve a resolution providing expressly that such Business Combination
            does not constitute a Change in Control under this clause (ii) for any and all purposes
            of the Plan.


            
            (iii)        
            the shareholders of the Company approve a plan of complete liquidation
            or dissolution of the Company;


            
            (iv)         
            the consummation of an agreement (or agreements) providing for the sale
            or disposition by the Company of all or substantially all of the Company’s assets
            other than a sale or disposition which would result in the voting securities of the
            Company outstanding immediately prior thereto continuing to represent 50% or more of
            the combined voting power of the Company or such surviving entity outstanding
            immediately after such sale or disposition; or


            
            (v)           
            in the case of directors, officers or employees who are entitled to the
            benefits of a change in control agreement or similar provisions within an agreement
            entered into by the Company or a Related Entity that defines or addresses change of
            control, “change of control” as defined in such agreement


             


            
            23


             

            
            


            

            

            


            
            (b)          
            Effect of Change in Control. Upon the
            occurrence of a Change in Control specified in paragraph (a)(i) above and immediately
            prior to the occurrence of a Change in Control specified in paragraph (a)(ii), (a)(iii)
            or (a)(iv) above, Awards shall Fully Vest (as defined in paragraph (c) below). If,
            within two (2) years after the occurrence of a Change in Control a Termination of
            Employment occurs with respect to any Grantee for any reason other than Cause,
            Disability, death or Retirement, Grantee shall be entitled to exercise Awards at any
            time thereafter until the earlier of (i) the date twelve (12) months after the date of
            Termination of Employment and (ii) the expiration date in the applicable Award
            Agreement.


            
            (c)          
            Fully Vest. The following shall occur if
            Awards “Fully Vest”: (i) any stock options and stock appreciation
            rights granted under the Plan shall become fully vested and immediately exercisable,
            (ii) any restricted stock, restricted stock units, performance shares, performance
            units and other stock-based Awards granted under the Plan will become fully vested and
            matured, any restrictions applicable to such Awards shall lapse and such Awards
            denominated in stock will be immediately paid out, and (iii) any Performance Goals
            applicable to Awards will be deemed to be fully satisfied;
            provided that (A) any Performance Goals
            whose performance period has not yet lapsed shall be calculated based on the higher of
            (x) the target value of the Awards as established by the Board and (y) the value of the
            Awards calculated under the terms of the Awards based on the average performance
            through the end of the fiscal quarter immediately prior to the effective date of the
            Change of Control (continued pro forma through the end of the performance period if
            necessary for purposes of determining whether the Performance Goal would have been
            met), and (B) if the Award has a performance period greater than one (1) year, the
            amount of the Award payable to the Grantee will be pro rated, based on a fraction, the
            numerator of which is the number of fiscal quarters completed from the beginning of the
            performance period until the effective date of the Change of Control and the
            denominator is the total number of fiscal quarters in the performance
            period.


            
            (d)          
            Section 409A. To the extent it is
            necessary for the term “change of control” to be defined in order for
            compensation provided under any Award to avoid the imposition of taxes under
            Section 409A of the Code, then the term “change in control,” only
            insofar as it applies to any such Award and its treatment under Section 409A, shall be
            defined as that term is defined by Section 409A-3 of the Treasury Regulations
            promulgated under Section 409A (26 CFR § 409A-3), rather than as provided
            in Section 3.7(a), and the
            terms of Sections 3.7(b) through (c)
            shall be applied and interpreted with respect to such Section 409A
            mandated definition in such manner as the Board in its discretion determines to be
            equitable and reflect the intention of Sections 3.7(a) through
            (c).


            
            (e)          
            No Conflict with Other Agreements. The
            foregoing definition of “change of control” is applicable only to the
            matters contemplated by and set forth in this Plan and any Award agreement pursuant to
            this Plan, and shall not be controlling with respect to any other agreement between the
            Company and any third party.


             


            
            24


             

            
            


            

            

            


            
            3.8          
            No Right to Employment. Nothing in the Plan
            or in any Award Agreement shall confer upon any Grantee the right to continue in the
            employ of or association with the Company or any Related Entity or affect any right
            which the Company or Related Entity may have to terminate such employment or
            association at any time (with or without cause).


            
            3.9          
            Nature of Payments. Unless the Board
            determines at any time in its discretion, any and all grants of Awards and issuances of
            shares of Common Stock under the Plan shall constitute a special incentive payment to
            the Grantee and shall not be taken into account in computing the amount of salary or
            compensation of the Grantee for the purpose of determining any benefits under any
            pension, retirement, profit-sharing, bonus, life insurance or other benefit plan of the
            Company or under any agreement with the Grantee, unless such plan or agreement
            specifically provides otherwise.


            
            3.10       
            Non-Uniform Determinations. The
            Board’s determinations under the Plan need not be uniform and may be made by it
            selectively among persons who receive, or are eligible to receive, Awards (whether or
            not such persons are similarly situated). Without limiting the generality of the
            foregoing, the Board shall be entitled, among other things, to make non-uniform and
            selective determinations, and to enter into non-uniform and selective Award Agreements,
            as to the persons to receive Awards under the Plan, and the terms and provisions of
            Awards under the Plan.


            
            3.11       
            Other Payments or Awards. Nothing contained
            in the Plan shall be deemed in any way to limit or restrict the Company from making any
            award or payment to any person under any other plan, arrangement or understanding,
            whether now existing or hereafter in effect.


            
            3.12       
            Interpretation. The section headings
            contained herein are for the purpose of convenience only and are not intended to define
            or limit the contents of the sections. As used in the Plan, “include,”
            “includes,” and “including” are deemed to be followed by
            “without limitation” whether or not they are followed by such words or
            words of like import; except as the context requires, the singular includes the plural
            and visa versa; and references to any agreement or other document are references to
            such agreement or document as amended or supplemented from time to time. Any
            determination, interpretation or similar act to be made by the Board shall be made in
            the discretion of the Board, whether or not the applicable provisions of the Plan
            specifically refer to the Board’s discretion.


            
            3.13       
            Effective Date and Term of Plan. Unless
            sooner terminated by the Board, the Plan, including the provisions respecting the grant
            of Incentive Stock Options, shall terminate on the tenth anniversary of the adoption of
            the Plan by the Board; provided that the Plan shall continue to govern outstanding
            Awards until such Awards have been satisfied or terminated. All Awards made under the
            Plan prior to its termination shall remain in effect until such Awards have been
            satisfied or terminated in accordance with the terms and provisions of the Plan and the
            applicable Award Agreements.


             


            
            25


             

            
            


            

            

            


            
            3.14       
            Governing Law. All rights and obligations
            under the Plan shall be construed and interpreted in accordance with the laws of the
            State of California, without giving effect to principles of conflict of
            laws.


            
            3.15       
            Severability; Entire Agreement. If any of
            the provisions of this Plan or any Award Agreement is finally held to be invalid,
            illegal or unenforceable (whether in whole or in part), such provision shall be deemed
            modified to the extent, but only to the extent, of such invalidity, illegality or
            unenforceability and the remaining provisions shall not be affected thereby;
            provided,
            that if any of such provisions is finally
            held to be invalid, illegal, or unenforceable because it exceeds the maximum scope
            determined to be acceptable to permit such provision to be enforceable, such provision
            shall be deemed to be modified to the minimum extent necessary to modify such scope in
            order to make such provision enforceable hereunder. The Plan and any Award Agreements
            contain the entire agreement of the parties with respect to the subject matter thereof
            and supersede all prior agreements, promises, covenants, arrangements, communications,
            representations and warranties between them, whether written or oral, with respect to
            the subject matter thereof.


            
            3.16       
            No Third Party Beneficiaries. Except as
            expressly provided therein, neither the Plan nor any Award Agreement shall confer on
            any person other than the Company and the grantee of any Award any rights or remedies
            thereunder.


            
            3.17       
            Successors and Assigns. The terms of this
            Plan shall be binding upon and inure to the benefit of the Company and its successors
            and assigns.


            
            3.18       
            Waiver of Claims. Each Grantee of an Award
            recognizes and agrees that prior to being recommended by the Committee to the Board to
            receive an Award he or she has no right to any benefits hereunder. Accordingly, in
            consideration of the Grantee’s receipt of any Award hereunder, he or she
            expressly waives any right to contest the amount of any Award, the terms of any Award
            Agreement, any determination, action or omission hereunder or under any Award Agreement
            by the Committee, the Company or the Board, or any amendment to the Plan or any Award
            Agreement (other than an amendment to this Plan or an Award Agreement to which his or
            her consent is expressly required by the express terms of the Plan or an Award
            Agreement).


             


            
            26