**EXHIBIT10.6**

 

 

**APEXMORTGAGE CAPITAL, INC.**

** **

**AMENDED AND RESTATED1997 STOCK OPTION PLAN**

 

(As Amended on December16, 1998 and December 13, 2001)

 

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**TABLE OF CONTENTS**

 
| 1.     | The Plan |
|--------|----------|
|   |     |
|   | 1.1      | Purpose |
|   |     |   |
|   | 1.2      | Administration  and Authorization; Power and Procedure |
|   |     |   |
|   |     | 1.2.1 | Committee |
|   |     |   |   |
|   |     | 1.2.2 | Plan  Awards; Interpretation; Powers of Committee |
|   |     |   |   |
|   |     | 1.2.3 | Binding  Determinations |
|   |     |   |   |
|   |     | 1.2.4 | Reliance  on Experts |
|   |     |   |   |
|   |     | 1.2.5 | Delegation |
|   |     |   |   |
|   | 1.3      | Participation |
|   |     |   |
|   | 1.4      | Shares  Available for Awards; Share Limits |
|   |     |   |
|   |     | 1.4.1 | Shares Available |
|   |     |   |   |
|   |     | 1.4.2 | Share Limits |
|   |     |   |   |
|   |     | 1.4.3 | Limitation  on Ownership |
|   |     |   |   |
|   |     | 1.4.4 | Share  Reservation; Replenishment and Reissue of Unvested Awards |
|   |     |   |   |
|   | 1.5      | Grant of Awards |
|   |     |   |
|   | 1.6      | Award Period |
|   |     |   |
|   | 1.7      | Limitations  on Exercise and Vesting of Awards |
|   |     |   |
|   |     | 1.7.1 | Provisions  for Exercise |
|   |     |   |   |
|   |     | 1.7.2 | Procedure |
|   |     |   |   |
|   |     | 1.7.3 | Fractional  Shares/Minimum Issue |
|   |     |   |   |
|   | 1.8      | Acceptance of  Notes to Finance Exercise |
|   |     |   |
|   |     | 1.8.1 | Principal |
|   |     |   |   |
|   |     | 1.8.2 | Term |
|   |     |   |   |
|   |     | 1.8.3 | Recourse; Security;  Compliance |
|   |     |   |   |
|   |     | 1.8.4 | Termination of Employment |
|   |     |   |   |
|   | 1.9      | No  Transferability; Limited Exception to Transfer Restrictions |
|   |     |   |
|   |     | 1.9.1 | Limit On Exercise and  Transfer |
|   |     |   |   |
|   |     | 1.9.2 | Exceptions |
|   |     |   |   |
|   |     | 1.9.3 | Further  Exceptions to Limits On Transfer |
|        |          |  |  |  |

 

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| 2.     | Options                                                                         |
|--------|---------------------------------------------------------------------------------|
|   |                                                                            |
|   | 2.1                                                                             | Grants |
|   |                                                                            |   |
|   | 2.2                                                                             | Option Price |
|   |                                                                            |   |
|   |                                                                            | 2.2.1 | Pricing Limits |
|   |                                                                            |   |   |
|   |                                                                            | 2.2.2 | Payment  Provisions |
|   |                                                                            |   |   |
|   | 2.3                                                                             | Limitations  on Grant and Terms of Incentive Stock Options |
|   |                                                                            |   |
|   |                                                                            | 2.3.1 | $100,000 Limit |
|   |                                                                            |   |   |
|   |                                                                            | 2.3.2 | Option Period |
|   |                                                                            |   |   |
|   |                                                                            | 2.3.3 | Other Code Limits |
|   |                                                                            |   |   |
|   | 2.4                                                                             | Limits  on 10% Holders |
|   |                                                                            |   |
|   | 2.5                                                                             | Option  Repricing/Cancellation and Regrant/Waiver of Restrictions |
|   |                                                                            |   |
|   | 2.6                                                                             | Effects  of Termination of Employment; Termination of Subsidiary Status; Discretionary  Provisions |
|   |                                                                            |   |
|   |                                                                            | 2.6.1 | Options -  Resignation or Dismissal |
|   |                                                                            |   |   |
|   |                                                                            | 2.6.2 | Options - Death or  Disability |
|   |                                                                            |   |   |
|   |                                                                            | 2.6.3 | Options  - Retirement |
|   |                                                                            |   |   |
|   |                                                                            | 2.6.4 | Certain SARs |
|   |                                                                            |   |   |
|   |                                                                            | 2.6.5 | Other Awards |
|   |                                                                            |   |   |
|   |                                                                            | 2.6.6 | Committee  Discretion |
|   |                                                                            |   |   |
|   | 2.7                                                                             | Options  and Rights in Substitution for Stock Options Granted by Other Corporations |
|   |                                                                            |   |
| 3.     | Stock  Appreciation Rights  (Including  Limited Stock Appreciation Rights) |
|   |                                                                            |
|   | 3.1                                                                             | Grants |
|   |                                                                            |   |
|   | 3.2                                                                             | Exercise of  Stock Appreciation Rights |
|   |                                                                            |   |
|   |                                                                            | 3.2.1 | Exercisability |
|   |                                                                            |   |   |
|   |                                                                            | 3.2.2 | Effect on Available Shares |
|   |                                                                            |   |   |
|   |                                                                            | 3.2.3 | Stand-Alone SARs |
|   |                                                                            |   |   |
|   |                                                                            | 3.2.4 | Proportionate  Reduction |
|   |                                                                            |   |   |
|   | 3.3                                                                             | Payment |
|   |                                                                            |   |
|   |                                                                            | 3.3.1 | Amount |
|        |                                                                                 |  |  |  |

 

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|   |                                                  | 3.3.2                                                       | Form of Payment                   |
|--------|-------------------------------------------------------|-------------------------------------------------------------|-----------------------------------|
|   |                                                  |                                                        |                              |
|   | 3.4                                                   | Limited Stock  Appreciation Rights                          |
|   |                                                  |                                                        |
| 4.     | Restricted  Stock Awards                              |
|   |                                                  |
|   | 4.1                                                   | Grants                                                      |
|   |                                                  |                                                        |
|   | 4.2                                                   | Restrictions                                                |
|   |                                                  |                                                        |
|   |                                                  | 4.2.1                                                       | Pre-Vesting  Restraints           |
|   |                                                  |                                                        |                              |
|   |                                                  | 4.2.2                                                       | Dividend and Voting Rights        |
|   |                                                  |                                                        |                              |
|   |                                                  | 4.2.3                                                       | Cash Payments                     |
|   |                                                  |                                                        |                              |
|   | 4.3                                                   | Return to the Corporation                                   |
|   |                                                  |                                                        |
| 5.     | Performance  Share Awards; Stock Units; Stock Bonuses |
|   |                                                  |
|   | 5.1                                                   | Grants of  Performance Share Awards                         |
|   |                                                  |                                                        |
|   | 5.2                                                   | Special  Performance-Based Share Awards                     |
|   |                                                  |                                                        |
|   |                                                  | 5.2.1                                                       | Eligible Class                    |
|   |                                                  |                                                        |                              |
|   |                                                  | 5.2.2                                                       | Maximum Award                     |
|   |                                                  |                                                        |                              |
|   |                                                  | 5.2.3                                                       | Committee Certification           |
|   |                                                  |                                                        |                              |
|   |                                                  | 5.2.4                                                       | Terms and Conditions of  Awards   |
|   |                                                  |                                                        |                              |
|   |                                                  | 5.2.5                                                       | Stock  Payout Features            |
|   |                                                  |                                                        |                              |
|   |                                                  | 5.2.6                                                       | Adjustments for  Material Changes |
|   |                                                  |                                                        |                              |
|   | 5.3                                                   | Grants  of Stock Bonuses                                    |
|   |                                                  |                                                        |
|   | 5.4                                                   | Deferred Payments; Stock  Units                             |
|   |                                                  |                                                        |
|   | 5.5                                                   | Cash Bonus Awards                                           |
|   |                                                  |                                                        |
|   |                                                  | 5.5.1                                                       | Performance  Goals                |
|   |                                                  |                                                        |                              |
|   | 5.6                                                   | Alternative  Payments                                       |
|   |                                                  |                                                        |
| 6.     | Other Provisions                                      |
|   |                                                  |
|   | 6.1                                                   | Rights of Eligible  Persons, Participants and Beneficiaries |
|   |                                                  |                                                        |
|   |                                                  | 6.1.1                                                       | Employment  Status                |
|   |                                                  |                                                        |                              |
|   |                                                  | 6.1.2                                                       | No  Employment Contract           |
|   |                                                  |                                                        |                              |
|   |                                                  | 6.1.3                                                       | Plan Not Funded                   |
|   |                                                  |                                                        |                              |
|   | 6.2                                                   | Adjustments; Acceleration                                   |
|   |                                                  |                                                        |
|   |                                                  | 6.2.1                                                       | Adjustments                       |
|        |                                                       |                                                             |                                   |  |  |  |  |  |  |

 

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|   |                           | 6.2.2                                       | Acceleration  of Awards Upon Change in Control    |
|--------|--------------------------------|---------------------------------------------|---------------------------------------------------|
|   |                           |                                        |                                              |
|   |                           | 6.2.3                                       | Possible  Early Termination of Accelerated Awards |
|   |                           |                                        |                                              |
|   |                           | 6.2.4                                       | Golden Parachute  Limitations                     |
|   |                           |                                        |                                              |
|   | 6.3                            | Effect of  Termination of Employment        |
|   |                           |                                        |
|   | 6.4                            | Compliance  with Laws                       |
|   |                           |                                        |
|   |                           | 6.4.1                                       | General                                           |
|   |                           |                                        |                                              |
|   |                           | 6.4.2                                       | Restrictions  on Transfer                         |
|   |                           |                                        |                                              |
|   | 6.5                            | Tax Withholding                             |
|   |                           |                                        |
|   |                           | 6.5.1                                       | Provision for Tax  Withholding Offset             |
|   |                           |                                        |                                              |
|   |                           | 6.5.2                                       | Tax Loans                                         |
|   |                           |                                        |                                              |
|   | 6.6                            | Plan Amendment, Termination  and Suspension |
|   |                           |                                        |
|   |                           | 6.6.1                                       | Board  Authorization                              |
|   |                           |                                        |                                              |
|   |                           | 6.6.2                                       | Stockholder  Approval                             |
|   |                           |                                        |                                              |
|   |                           | 6.6.3                                       | Amendments  to Awards                             |
|   |                           |                                        |                                              |
|   |                           | 6.6.4                                       | Limitations  on Amendments to Plan and Awards     |
|   |                           |                                        |                                              |
|   | 6.7                            | Privileges of Stock  Ownership              |
|   |                           |                                        |
|   | 6.8                            | Effective Date of the Plan                  |
|   |                           |                                        |
|   | 6.9                            | Term of the Plan                            |
|   |                           |                                        |
|   | 6.10                           | Governing  Law/Construction/Severability    |
|   |                           |                                        |
|   |                           | 6.10.1                                      | Choice of Law                                     |
|   |                           |                                        |                                              |
|   |                           | 6.10.2                                      | Severability                                      |
|   |                           |                                        |                                              |
|   |                           | 6.10.3                                      | Plan Construction                                 |
|   |                           |                                        |                                              |
|   | 6.11                           | Captions                                    |
|   |                           |                                        |
|   | 6.12                           | Effect of Change  of Subsidiary Status      |
|   |                           |                                        |
|   | 6.13                           | Non-Exclusivity  of Plan                    |
|   |                           |                                        |
| 7.     | Definitions                    |
|   |                           |
| 8.     | Non Employee Director  Options |
|   |                           |
|   | 8.1                            | Participation                               |
|   |                           |                                        |
|   | 8.2                            | Option Grants                               |
|   |                           |                                        |
|   |                           | 8.2.1                                       | Time  of Initial Award                            |
|        |                                |                                             |                                                   |  |  |  |  |

 

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|   |   | 8.2.2                                        | Subsequent Automatic  Awards     |
|--------|--------|----------------------------------------------|----------------------------------|
|   |   |                                         |                             |
|   |   | 8.2.3                                        | Subsequent  Discretionary Awards |
|   |   |                                         |                             |
|   | 8.3    | Option Price                                 |
|   |   |                                         |
|   | 8.4    | Option Period and  Exercisability            |
|   |   |                                         |
|   | 8.5    | Termination of Directorship                  |
|   |   |                                         |
|   | 8.6    | Adjustments;  Accelerations; Terminations    |
|   |   |                                         |
|   | 8.7    | Acceleration  Upon a Change in Control Event |

 

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**APEX MORTGAGE CAPITAL, INC.**

**AMENDED AND RESTATED 1997 STOCK OPTION PLAN**

 

**1. The Plan**

** **

**1.1****                               Purpose**. The purpose of this Plan is to promote the success of the Company andthe interests of its stockholders by attracting, motivating, retaining andrewarding directors, officers and employees and other Eligible Persons associatedwith the management of the Company with awards and incentives for high levelsof performance and improving the financial performance of the Company, byaligning the interests of the those persons and the Company’s stockholders, andby attracting, motivating and retaining experienced and knowledgeableindependent directors through the benefits provided under Section 8.  “Corporation” means Apex Mortgage Capital,Inc. and “Company” means the Corporation and its Subsidiaries,collectively.  These terms and othercapitalized terms are defined in Section 7.

** **

**1.2****                               Administration and Authorization;Power and Procedure**

** **

**1.2.1****                     Committee**.  This Plan will be administered by and allAwards to Eligible Persons will be authorized by the Committee, other than theInitial Awards which have been authorized by the Corporation’s stockholder(s)in connection with approving this Plan. Action of the Committee with respect to the administration of this Planwill be taken pursuant to a majority vote or by written consent of its members.

 

**1.2.2****                     Plan Awards; Interpretation; Powersof Committee**.  Subject to the express provisions of thisPlan, the Committee will have the authority to:

 

(a)                                  determinethe particular Eligible Persons who will receive Awards;

 

(b)                                 grantAwards to Eligible Persons, determine the price at which securities will beoffered or awarded and the amount of securities to be offered or awarded to anyof such Eligible Persons, and determine the other specific terms and conditionsof such Awards consistent with the express limits of this Plan, and establishthe installments (if any) in which such Awards will become exercisable or willvest, or determine that no delayed exercisability or vesting is required, andestablish the events of termination or reversion of such Awards;

 

(c)                                  approvethe forms of Award Agreements (which need not be identical either as to type ofAward or among Participants);

 

(d)                                 construeand interpret this Plan and any agreements defining the rights and obligationsof the Company and Eligible Persons under this Plan, further define the termsused in this Plan, and prescribe, amend and rescind rules and regulationsrelating to the administration of this Plan;

 

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(e)                                  cancel,modify, or waive the Corporation’s rights with respect to, or modify,discontinue, suspend, or terminate any or all outstanding Awards held byEligible Persons, subject to any required consent under Section 6.6;

 

(f)                                    accelerateor extend the exercisability or extend the term of any or all such outstandingAwards within the maximum 10 year term of Awards under Section 1.6; and

 

(g)                                 makeall other determinations and take such other action as contemplated by thisPlan or as may be necessary or advisable for the administration of this Planand the effectuation of its purposes.

 

Notwithstanding the foregoing, the provisions ofSections 8.2.1 and 8.2.2 relating to Non-Employee Director Awards will beautomatic and, to the maximum extent possible, self-effectuating.

 

**1.2.3****                     Binding Determinations**.  Any action taken by, or inaction of, the Corporation, anySubsidiary, the Board or the Committee relating or pursuant to this Plan willbe within the absolute discretion of that entity or body and will be conclusiveand binding upon all persons.  No memberof the Board or Committee, or officer of the Corporation or any Subsidiary,will be liable for any such action or inaction of the entity or body, ofanother person or, except in circumstances involving bad faith, of himself orherself.  Subject only to compliancewith the express provisions hereof, the Board and Committee may act in theirabsolute discretion in matters within their authority related to this Plan.

** **

**1.2.4****                     Reliance on Experts**.  In making anydetermination or in taking or not taking any action under this Plan, theCommittee or the Board, as the case may be, may obtain and may rely upon theadvice of experts, including professional advisors to the Corporation.  No director, officer or agent of the Companywill be liable for any such action or determination taken or made or omitted ingood faith.

** **

**1.2.5****                     Delegation**.  The Committee may delegate ministerial, non-discretionary functions to individualswho are officers or employees of the Company.

** **

**1.3****                               Participation**.  Awards may be granted by the Committee onlyto those persons that the Committee determines to be Eligible Persons.  An Eligible Person who has been granted anAward may, if otherwise eligible, be granted additional Awards if the Committeeso determines.

** **

**1.4****                               Shares Available for Awards; ShareLimits**.

 

**1.4.1****                     Shares Available**.  Subject tothe provisions of Section 6.2, the capital stock that may be deliveredunder this Plan will be shares of the Corporation’s authorized but unissuedCommon Stock and any shares of its Common Stock held as treasury shares (the“Shares”).  The Shares may be deliveredfor any lawful consideration.

 

2

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**1.4.2****                     Share Limits**.  The maximum number of Shares that may bedelivered pursuant to Awards granted to Eligible Persons under this Plan willnot exceed 1,000,000 Shares (the “Share Limit”).  The number of Shares subject to Awards outstanding at any timewill not exceed the number of Shares remaining available for issuance under thePlan.  The maximum number of Sharessubject to those Options and Stock Appreciation Rights that are granted duringany calendar year to any one individual, subject to Section 1.4.3, will belimited to 200,000 Shares.  Each of theforegoing numerical limits is subject to adjustment as contemplated by thisSection 1.4 and Section 6.2.

** **

**1.4.3****                     Limitation on Ownership**.

 

(a)                                  NoAwards will be granted under the Plan to any person who, after the grant ofsuch Award, would be deemed to beneficially own more than 9.8% (in value or innumber of Shares, whichever is more restrictive) of the outstanding Shares ofCommon Stock of the Corporation.  Forpurposes of this Section 1.4.3, “ownership” is determined in accordancewith the Real Estate Investment Trust provisions of the Code, the constructiveownership provisions of Section 544 of the Code (as modified bySection 856(1)(b) of the Code), and Rule 13d-3 promulgated under theExchange Act.

 

(b)                                 If,after an Award is granted, circumstances of ownership (or the Corporation’sknowledge thereof) change so that the exercise of such Award would cause theParticipant to beneficially own more Shares than are permitted pursuant toparagraph (a) above, then upon any exercise of such Award that causes suchresult, the Corporation shall have the right to deliver to the Participant, inlieu of Shares, a check or cash in the amount equal to the Fair Market Value ofthe Shares otherwise deliverable on the date of exercise (minus any amountswithheld pursuant to Section 6.5).

** **

**1.4.4****                     Share Reservation; Replenishmentand Reissue of Unvested Awards**.  No Award may be granted under this Planunless, on the date of grant, the sum of (a) the maximum number of Sharesissuable at any time pursuant to such Award, plus (b) the number of Sharesthat have previously been issued pursuant to Awards granted under this Plan,other than reacquired Shares available for reissue consistent with anyapplicable legal limitations, plus (c) the maximum number of Shares thatmay be issued at any time after such date of grant pursuant to Awards that areoutstanding on such date, does not exceed the Share Limit.  Shares that are subject to or underlieAwards that expire or for any reason are canceled or terminated, are forfeited,fail to vest, or for any other reason are not paid or delivered under thisPlan, as well as reacquired Shares, will again, except to the extent prohibitedby law, be available for subsequent Awards under the Plan.  Except as limited by law, if an Award is ormay be settled only in cash, such Award need not be counted against any of thelimits under this Section 1.4.

 

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**1.5****                               Grant of Awards**.  Subject to theexpress provisions of this Plan, the Committee will determine the number ofShares subject to each Award, the price (if any) to be paid for the Shares orthe Award and, in the case of performance share awards, in addition to mattersaddressed in Section 1.2.2, the specific objectives, goals and performancecriteria (such as an increase in sales, market value, earnings or book valueover a base period, the years of service before vesting, the relevant jobclassification or level of responsibility or other factors) that further definethe terms of the performance share award. Each Award will be evidenced by an Award Agreement signed by theCorporation and, if required by the Committee, by the Participant.

** **

**1.6****                               Award Period**.  The Award Period of any Option, SAR, warrantor similar right shall expire and any other Award shall either vest or beforfeited not more than 10 years after the date of grant; provided, however,that any payment of cash or delivery of Shares pursuant to an Award may bedelayed until a future date if specifically authorized by the Committee inwriting.

** **

**1.7****                               Limitations on Exercise and Vestingof Awards**.

** **

**1.7.1****                     Provisions for Exercise**.  Unless the Committee otherwise expressly provides, no Award willbe exercisable or will vest until at least six months after the initial AwardDate, and once exercisable an Award will remain exercisable until the expirationor earlier termination of the Award.

** **

**1.7.2****                     Procedure**.  Any exercisable Award will be deemed to beexercised when the Corporation receives written notice of such exercise fromthe Participant, together with any required payment made in accordance with Section 2.2.2or 8.4, as the case may be, and any other requirements of exercise,including any document required by Section 6.4, are satisfied.

** **

**1.7.3****                     Fractional Shares/Minimum Issue**.  Fractional share interests will bedisregarded, but may be accumulated. The Committee, however, may determine inthe case of Eligible Persons that cash, other securities, or other propertywill be paid or transferred in lieu of any fractional share interests.  No fewer than 100 Shares may bepurchased on exercise of any Award at one time unless the number purchased isthe total number at the time available for purchase under the Award.

** **

**1.8****                               Acceptance of Notes to FinanceExercise**.  The Corporation, in its sole discretion, mayaccept one or more notes from any Eligible Person in connection with theexercise or receipt of any outstanding Award; but any such note will be subjectto the following terms and conditions:

** **

**1.8.1****                     Principal**.  The principal of the note will not exceedthe amount required to be paid to the Corporation upon the exercise or receiptof one or more Awards under the Plan and the note will be delivered directly tothe Corporation in consideration of such exercise or receipt.

 

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**1.8.2****                     Term**.  The initial term of the note will bedetermined by the Committee; but the term of the note, including extensions,will not exceed a period of five years.

** **

**1.8.3****                     Recourse; Security; Compliance**.  The note will provide for full recourse tothe Participant and will bear interest at a rate determined by the Committeebut not less than the interest rate necessary to avoid the imputation ofinterest under the Code.  If required bythe Committee or by applicable law, the note will be secured by a pledge of anyShares or rights financed thereby in compliance with applicable law.  The terms, repayment provisions, andcollateral release provisions of the note and the pledge securing the note willconform with applicable rules and regulations of the Federal Reserve Board asthen in effect.

** **

**1.8.4****                     Termination of Employment**.  If the employment of the Participantterminates, the unpaid principal balance of the note will become due andpayable on the 10th business day after the Severance Date; but if a sale ofsuch Shares would cause the Participant to incur liability underSection 16(b) of the Exchange Act, the unpaid balance will become due andpayable on the 10th business day after the first day on which a sale of suchShares could have been made without incurring such liability assuming for thesepurposes that there are no other transactions (or deemed transactions) insecurities of this Corporation by the Participant after such termination.

** **

**1.9****                               No Transferability; LimitedException to Transfer Restrictions**.

** **

**1.9.1****                     Limit On Exercise and Transfer**.  Unless otherwise expressly provided in (orpursuant to) this Section 1.9, by applicable law and by the AwardAgreement, as the same may be amended, (a) all Awards are non-transferableand will not be subject in any manner to sale, transfer, anticipation,alienation, assignment, pledge, encumbrance or charge, (b) Awards may beexercised only by the Participant, and (c) amounts payable or Sharesissuable pursuant to an Award will be delivered only to (or for the account of)the Participant.

** **

**1.9.2****                     Exceptions**.  The Committee may permit Awards to beexercised by and paid only to certain persons or entities related to theParticipant pursuant to such conditions and procedures as the Committee mayestablish.  Any permitted transfer willbe subject to the condition that the Committee receive evidence satisfactory toit that the transfer is being made to related persons for estate and/or taxplanning purposes and without consideration (other than nominalconsideration).  Incentive Stock Optionsand Restricted Stock Awards, however, will be subject to any and all additionaltransfer restrictions under the Code.

** **

**1.9.3****                     Further Exceptions to Limits OnTransfer**.  The exercise and transfer restrictions inSection 1.9.1 will not apply to:

 

(a)                                  transfersto the Corporation,

 

(b)                                 thedesignation of a beneficiary to receive benefits if the Participant dies or, ifthe Participant has died, transfers to or exercise by the Participant’s 

 

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beneficiary, or, in the absence of a validlydesignated beneficiary, transfers by will or the laws of descent anddistribution,

 

(c)                                  transferspursuant to a QDRO if approved or ratified by the Committee,

 

(d)                                 ifthe Participant has suffered a disability, permitted transfers or exercises onbehalf of the Participant by the Participant’s legal representative, or

 

(e)                                  theauthorization by the Committee of “cashless exercise” procedures with thirdparties who provide financing for the purpose of (or who otherwise facilitate)the exercise of Awards consistent with applicable laws and the expressauthorization of the Committee.

** **

**2.  Options**

 

**2.1****                               Grants**.  One or more Options may be granted underthis Section to any Eligible Person. Each Option granted will be designated by the Committee in the applicableAward Agreement as either an Incentive Stock Option, subject toSection 2.3, or a Non-Qualified Stock Option.

** **

**2.2****                               Option Price**.

** **

**2.2.1****                     Pricing Limits**.  The purchaseprice per Share of the Shares covered by each Option will be not be less than100% (110% in the case of a Participant described in Section 2.4) of theFair Market Value of the Common Stock on the date of grant.

** **

**2.2.2****                     Payment Provisions**.  Thepurchase price of any Shares purchased on exercise of an Option granted underthis Section will be paid in full at the time of each purchase in one or acombination of the following methods: (a) in cash or by electronic funds transfer; (b) by certifiedor cashier’s check payable to the order of the Corporation; (c) ifpermitted by the Committee, by a promissory note of the Participant consistentwith the requirements of Sections 1.8 and 6.4; (d) by notice andthird party payment in such manner as may be authorized by the Committee; or(e) by the delivery of shares of Common Stock of the Corporation alreadyowned by the Participant, but the Committee may in its absolute discretionlimit the Participant’s ability to exercise an Award by delivering such shares,and any shares delivered that were initially acquired upon exercise of a stockoption must have been owned by the Participant at least six months as of thedate of delivery.  Shares of CommonStock used to satisfy the exercise price of an Option will be valued at theirFair Market Value on the date of exercise. Without limiting the generality of the foregoing, the Committee mayprovide that the Option can be exercised and payment made by delivering aproperly executed exercise notice together with irrevocable instructions to abroker to promptly deliver to the Corporation the amount of sale proceeds necessaryto pay the exercise price and, unless otherwise prohibited by the Committee orapplicable law, any applicable tax withholding under Section 6.5.  The Corporation will not be obligated todeliver certificates for the shares unless and until it receives full paymentof the 

 

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exercise price therefor and any related withholdingobligations have been satisfied.

** **

**2.3****                               Limitations on Grant and Terms ofIncentive Stock Options**.

** **

**2.3.1****                     $100,000Limit**.  To the extent that the aggregate “FairMarket Value” of Shares with respect to which incentive stock options firstbecome exercisable by a Participant in any calendar year exceeds $100,000,taking into account both Shares subject to Incentive Stock Options under thisPlan and stock subject to incentive stock options under all other plans of theCompany or any parent corporation, such options will be treated as NonqualifiedStock Options.  For this purpose, the“Fair Market Value” of the stock subject to options will be determined as ofthe date the options were awarded.  Inreducing the number of options treated as incentive stock options to meet the$100,000 limit, the most recently granted options will be reduced first.  To the extent a reduction of simultaneouslygranted options is necessary to meet the $100,000 limit, the Committee may, inthe manner and to the extent permitted by law, designate which Shares are to betreated as Shares acquired pursuant to the exercise of an Incentive StockOption.

** **

**2.3.2****                     Option Period**.  Except as provided in Section 1.6, eachOption and all rights thereunder will expire no later than 10 years afterthe Award Date.

** **

**2.3.3****                     Other Code Limits**.  IncentiveStock Options may only be granted to Eligible Employees of the Corporation or aSubsidiary who satisfy the eligibility requirements of the Code.  There will be imposed in any Award Agreementrelating to Incentive Stock Options such other terms and conditions as fromtime to time are required in order that the Option be an “incentive stockoption” as that term is defined in Section 422 of the Code.

** **

**2.4****                               Limits on 10% Holders**.  No Incentive Stock Option may be granted to any person who, atthe time the Option is granted, owns (or is deemed to own underSection 424(d) of the Code) shares of outstanding Common Stock possessingmore than 10% of the total combined voting power of all classes of stock of theCorporation, unless the exercise price of such Option is at least 110% of theFair Market Value of the stock subject to the Option and such Option by itsterms is not exercisable after the expiration of five years from the date suchOption is granted.

** **

**2.5****                               Option Repricing/Cancellation andRegrant/Waiver of Restrictions**. Subject to Section 1.4 andSection 6.6 and the specific limitations on Awards contained in this Plan,the Committee from time to time may authorize, generally or in specific casesonly, for the benefit of any Eligible Person any adjustment in the exercise orpurchase price, the vesting schedule, the number of Shares subject to, therestrictions upon or the term of, an Award granted under this Section bycancellation of an outstanding Award and a subsequent regranting of an Award,by amendment, by substitution of an outstanding Award, by waiver or by otherlegally valid means.  Such amendment orother action may result among other changes in an exercise or purchase pricethat is higher or lower than 

 

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the exercise or purchase price of the original orprior Award, provide for a greater or lesser number of Shares subject to theAward, or provide for a longer or shorter vesting or exercise period.

** **

**2.6****                               Effects of Termination ofEmployment; Termination of Subsidiary Status; Discretionary Provisions**.

** **

**2.6.1****                     Options - Resignation or Dismissal**.  If the Participant’s employment by (or otherservice specified in the Award Agreement to) the Company or the Manager, as thecase may be, terminates for any reason (the date of such termination beingreferred to as the “Severance Date”) other than Retirement, Total Disability ordeath, or “for Cause” (as determined in the discretion of the Committee), theParticipant will have, unless otherwise provided in the Award Agreement andsubject to earlier termination pursuant to or as contemplated bySection 1.6 or 6.2, 90 days after the Severance Date to exerciseany Option to the extent exercisable on the Severance Date.  In the case of a termination “for Cause”,the Option will terminate on the Severance Date.  The Option, to the extent not exercisable on the Severance Date,will terminate in all cases, unless the Award Agreement or the Committeeotherwise provides.

** **

**2.6.2****                     Options - Death or Disability**.  If the Participant’s employment by (orspecified service to) the Company or the Manager, as the case may be,terminates as a result of Total Disability or death, the Participant,Participant’s Personal Representative or the Participant’s Beneficiary, as thecase may be, will have, unless otherwise provided in the Award Agreement andsubject to earlier termination pursuant to or as contemplated bySection 1.6 or 6.2, until 12 months after the Severance Date toexercise any Option to the extent exercisable on the Severance Date.  Any Option to the extent not exercisable onthe Severance Date will terminate.

** **

**2.6.3****                     Options - Retirement**.  If the Participant’s employment by (or specified service to) theCompany or the Manager, as the case may be, terminates as a result ofRetirement, the Participant, Participant’s Personal Representative or the Participant’sBeneficiary, as the case may be, will have, unless otherwise provided in theAward Agreement and subject to earlier termination pursuant to or ascontemplated by Section 1.6 or 6.2, until 12 months after theSeverance Date to exercise any Nonqualified Stock Option (three months afterthe Severance Date if an Incentive Stock Option states it is it be retained) tothe extent exercisable on the Severance Date. The Option, to the extent not exercisable on the Severance Date, willterminate.

** **

**2.6.4****                     Certain SARs**.  Any SAR granted concurrently or in tandemwith an Option will have the same post-Severance Date provisions andexercisability periods as the Option to which it relates, unless the Committeeotherwise provides.

** **

**2.6.5****                     Other Awards**.  The Committee will establish in respect ofeach other Award granted hereunder the Participant’s rights and benefits (ifany) if the Participant’s 

 

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employment is terminated and in so doing may makedistinctions based upon the cause of termination and the nature of the Award.

** **

**2.6.6****                     Committee Discretion**.  Notwithstanding the foregoing provisions of thisSection 2.6, in the event of, or in anticipation of, a termination ofemployment with the Company or the Manager, as the case may be, for any reason,other than a discharge for Cause, the Committee, by express provisions in or byamendment to the Award Agreement, may increase the portion of the Participant’sAward available to the Participant, or Participant’s Beneficiary or PersonalRepresentative, as the case may be, and/or, subject to the provisions ofSection 1.6, extend the exercisability period, upon such terms as theCommittee deems appropriate.

** **

**2.7****                               Options and Rights in Substitutionfor Stock Options Granted by Other Corporations**.  Options and Stock Appreciation Rights may begranted to Eligible Persons under this Plan in substitution for employee stockoptions granted by other entities to persons who are or who will becomeEligible Persons in respect of the Company, in connection with a distribution,merger or reorganization by or with the granting entity or an affiliatedentity, or the acquisition by the Company, directly or indirectly, of all or asubstantial part of the stock or assets of the employing entity.

** **

**3. Stock Appreciation Rights (Including Limited Stock Appreciation Rights)**

** **

**3.1****                               Grants**.  The Committee may grant to any EligiblePerson Stock Appreciation Rights either concurrently with the grant of anotherAward or in respect of an outstanding Award, in whole or in part, orindependently of any other Award.  AnyStock Appreciation Right granted in connection with an Incentive Stock Optionwill contain such terms as may be required to comply with the provisions of Section 422of the Code and the regulations promulgated thereunder, unless the holderotherwise agrees.

** **

**3.2****                               Exercise of Stock AppreciationRights**.

** **

**3.2.1****                     Exercisability**.  Unless theAward Agreement or the Committee otherwise provides, a Stock Appreciation Rightrelated to another Award will be exercisable at such time or times, and to theextent, that the related Award will be exercisable.

** **

**3.2.2****                     Effect on Available Shares**.  To the extent that a Stock Appreciation Right is exercised, onlythe actual number of delivered Shares will be charged against the maximumamount of Common Stock that may be delivered pursuant to Awards under thisPlan.  The number of shares subject tothe Stock Appreciation Right and the related Option of the Participant will,however, be reduced by the number of underlying shares as to which the exerciserelated, unless the Award Agreement otherwise expressly provides.

** **

**3.2.3****                     Stand-Alone SARs**.  A StockAppreciation Right granted independently of any other Award will be exercisablepursuant to the terms of the Award Agreement 

 

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but in no event earlier than six months after theAward Date, except in the case of death or Total Disability.

** **

**3.2.4****                     Proportionate Reduction**.  If an SAR extends to less than all the Shares covered by the relatedAward and if a portion of the related Award is thereafter exercised, the numberof Shares subject to the unexercised SAR shall be reduced only if and to theextent that the remaining number of Shares covered by the related Award is lessthan the remaining number of Shares subject to such SAR.

**3.3****                               Payment**.

** **

**3.3.1****                     Amount**.  Unless the Committee otherwise provides,upon exercise of a Stock Appreciation Right and the attendant surrender of anexercisable portion of any related Award, the Participant will be entitled toreceive subject to Section 6.5 payment of an amount determined bymultiplying

 

(a)                                  thedifference obtained by subtracting the exercise price per Share under therelated Award (if applicable) or the initial share value specified in the Awardfrom the Fair Market Value of a share of Common Stock on the date of exerciseof the Stock Appreciation Right, by

 

(b)                                 thenumber of Shares with respect to which the Stock Appreciation Right has beenexercised.

 

**3.3.2****                     Form of Payment**.  The Committee,in its sole discretion, will determine the form in which payment will be madeof the amount determined under Section 3.3.1 above, either solely in cash,solely in Shares (valued at Fair Market Value on the date of exercise of theStock Appreciation Right), or partly in Shares and partly in cash, providedthat the Committee has determined that such exercise and payment are consistentwith applicable law.  If the Committeepermits the Participant to elect to receive cash or Shares (or a combinationthereof) upon exercise, the election will be subject to such conditions as theCommittee may impose.

** **

**3.4****                               Limited Stock Appreciation Rights**.  The Committee may grant to any EligiblePerson Stock Appreciation Rights exercisable only upon or in respect of achange in control or any other specified event (“Limited SARs”) and suchLimited SARs may relate to or operate in tandem or combination with orsubstitution for Options, other SARs or other Awards (or any combinationthereof), and may be payable in cash or Shares based on the spread between thebase price of the SAR and a price based upon or equal to the Fair Market Valueof the Shares during a specified period or at a specified time before, after orincluding the date of such event.

** **

**4. Restricted Stock Awards**

** **

**4.1****                               Grants**.  The Committee may grant one or moreRestricted Stock Awards to any Eligible Person.  Each Restricted Stock Award Agreement will specify the number ofShares to be issued to the Participant, the date of such issuance, the considerationfor such Shares (but not less than the minimum lawful consideration underapplicable state law) payable by 

 

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the Participant, the extent (if any) to which and thetime (if ever) at which the Participant will be entitled to dividends, votingand other rights in respect of the Shares prior to vesting, and therestrictions (which may be based on performance criteria, passage of time orother factors or any combination thereof) imposed on such Shares and theconditions of release or lapse of such restrictions.  Such restrictions will not lapse earlier than six months afterthe Award Date, except to the extent the Committee may otherwise expresslyprovide.  Stock certificates evidencingshares of Restricted Stock pending the lapse of the restrictions (“RestrictedShares”) will bear a legend making appropriate reference to the restrictionshereunder and will be held by the Corporation or by a third party designated bythe Committee until the restrictions on such Restricted Shares have lapsed andthe Restricted Shares have vested in accordance with the provisions of theAward and Section 1.7.  Uponissuance of the Restricted Stock Award, the Participant may be required toprovide such further assurance and documents as the Committee may require toenforce the restrictions.

** **

**4.2****                               Restrictions**.

** **

**4.2.1****                     Pre-Vesting Restraints**. Except as provided in Sections 4.1 and 1.9, RestrictedShares comprising any Restricted Stock Award may not be sold, assigned,transferred, pledged or otherwise disposed of or encumbered, either voluntarilyor involuntarily, until the restrictions on such Restricted Shares have lapsedand the Shares have become vested.

** **

**4.2.2****                     Dividend and Voting Rights**.  Unless otherwise provided in the applicableAward Agreement, a Participant receiving a Restricted Stock Award will beentitled to cash dividend and voting rights for all Shares issued even thoughthey are not vested, but such rights will terminate immediately as to anyRestricted Shares which cease to be eligible for vesting.

** **

**4.2.3****                     Cash Payments**.  If the Participant has been paid or receivedcash (including any dividends) in connection with the Restricted Stock Award,the Award Agreement will specify the extent (if any) to which the cash must bereturned (with or without an earnings factor) as to any Restricted Shares thatcease to be eligible for vesting.

** **

**4.3****                               Return to the Corporation**. Unless the Committee otherwise expressly provides, RestrictedShares that remain subject to restrictions as of a Severance Date with respectto the Participant or are subject to other conditions to vesting that have notbeen satisfied by the time specified in the applicable Award Agreement will notvest and will be returned to the Corporation in such manner and on such termsas set forth in the Award Agreement or as the Committee otherwise expresslyprovides.

** **

**5. Performance Share Awards;Stock Units; Stock Bonuses**

** **

**5.1****                               Grants of Performance Share Awards**.  The Committee may grant Performance ShareAwards to Eligible Employees based upon such factors as the Committee deemsrelevant in light of the specific type and terms of the award.  An Award Agreement will specify 

 

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the maximum number of Shares (if any) subject to thePerformance Share Award, the consideration (but not less than the minimumlawful consideration) to be paid for any such Shares as may be issuable to theParticipant, the duration of the Award and the conditions upon which deliveryof any Shares or cash to the Participant will be based.  The amount of cash or Shares or otherproperty that may be deliverable pursuant to such Award will be based upon thedegree of attainment over a specified period of not more than 10 years (a“performance cycle”) as may be established by the Committee of such measure(s)of the performance of the Company (or any part thereof) or the Participant asmay be established by the Committee. The Committee may provide for full or partial credit, prior to completionof such performance cycle or the attainment of the performance achievementspecified in the Award, in the event of the Participant’s death, Retirement, orTotal Disability, a Change in Control Event or in such other circumstances asthe Committee (consistent with Section 6.10.3(b), if applicable) maydetermine.

** **

**5.2****                               Special Performance-Based ShareAwards**. Options or SARs granted with anexercise price not less than Fair Market Value at the applicable date of grantfor Section 162(m) purposes to Eligible Employees which otherwise satisfythe conditions to deductibility under Section 162(m) of the Code aredeemed “Qualifying Awards”.  Withoutlimiting the generality of the foregoing, and in addition to Qualifying Awardsgranted under other provisions of this Plan, other performance-based awardswithin the meaning of Section 162(m) of the Code (“Performance-BasedAwards”), whether in the form of restricted stock, performance stock, phantomstock or other rights, the vesting of which depends on the performance of theCompany on a consolidated, segment, subsidiary, or division basis, withreference to revenue growth, net earnings (before or after taxes or before orafter taxes, interest, depreciation, and/or amortization), cash flow, return onequity, return on assets or return on net investment, or cost containment orreduction, or any combination thereof (the “business criteria”) relative topreestablished performance goals, may be granted under this Plan.  To the extent so applicable, these terms areused as applied under generally accepted accounting principles and in theCompany’s financial reporting.  Theapplicable business criterion or criteria and the specific performance goalsmust be approved by the Committee in advance of any applicable deadlines underthe Code and while the performance relating to such goals remains substantiallyuncertain.  The applicable performancemeasurement period may be not less than one (except as provided inSection 1.6) nor more than 10 years.  Other types of performance and non-performance awards may also begranted under the other provisions of this Plan.  The following provisions relate to all Performance-Based Awards(other than Qualifying Awards) granted under this Plan:

** **

**5.2.1****                     Eligible Class**.  The eligible class of persons for Awardsunder this Section is executive officers of the Corporation.

** **

**5.2.2****                     Maximum Award**.  Subject to Section 1.4.2, in no eventwill grants in any calendar year to any one individual under thisSection 5.2 relate to more than 250,000 shares or, (if payable solely incash) a cash amount of more than $1,000,000.

 

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**5.2.3****                     Committee Certification**.  To the extent required bySection 162(m), before any Performance-Based Award under thisSection 5.2 is paid, the Committee must certify that the material terms ofthe Performance-Based Award were satisfied.

** **

**5.2.4****                     Terms and Conditions of Awards**.  The Committee will have discretion todetermine the restrictions or other limitations of the individual Awards underthis Section 5.2 (including the authority to reduce Awards, payouts orvesting or to pay no Awards, in its sole discretion, if the Committee preservessuch authority at the time of grant by language to this effect in itsauthorizing resolutions or otherwise).

** **

**5.2.5****                     Stock Payout Features**.  In lieu of cash payment of an Award, the Committee may require orallow all or a portion of the Award to be paid in the form of Shares,Restricted Shares, an Option, or another Award.

** **

**5.2.6****                     Adjustments for Material Changes**.  Performance goals or other features of anAward under this Section 5.2 may provide that they (a) shall beadjusted to reflect a change in corporate capitalization, a corporatetransaction (such as a reorganization, combination, separation, or merger) or acomplete or partial corporate liquidation, or (b) shall be calculatedeither without regard for or to reflect any change in accounting policies orpractices affecting the Company and/or the business criteria or performancegoals or targets, or (c) shall be adjusted for any other circumstance orevent, or (d) any combination of (a) through (c), but only to theextent in each case that such adjustment or determination in respect ofPerformance-Based Awards would be consistent with the requirements ofSection 162(m) to qualify as performance-based compensation.

** **

**5.3****                               Grants of Stock Bonuses**.  The Committee may grant a Stock Bonus to any Eligible Person toreward exceptional or special services, contributions or achievements in themanner and on such terms and conditions (including any restrictions on suchShares) as determined from time to time by the Committee.  The number of Shares so awarded will bedetermined by the Committee.  The Awardmay be granted independently or in lieu of a cash bonus.

** **

**5.4****                               Deferred Payments; Stock Units**.  The Committee may authorize for the benefitof any Eligible Person the deferral of any payment of cash or Shares that mayotherwise become due or of cash otherwise payable under this Plan or otherwise,in the form of stock units payable in cash or Shares or by other means, and mayprovide for accretion thereof based upon such deferment, at the election or atthe request of the Participant, subject to any other applicable terms of thisPlan.  Such deferral will be subject tosuch further conditions, restrictions or requirements as the Committee mayimpose, subject to any then vested rights of Participants.

 

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**5.5****                               Cash Bonus Awards**.

** **

**5.5.1****                     Performance Goals**.  The Committee may establish a program of annual incentive awardsthat are payable in cash to Eligible Persons based upon the extent to whichperformance goals are met during the performance period.  The performance goals may depend upon theperformance of the Company on a consolidated, subsidiary division basis withreference to revenues, net earnings (before or after interest, taxes,depreciation, or amortization), cash flow, return on equity or on assets or netinvestment, cost containment or reduction, or achievement of strategic goals(or any combination of such factors). In addition, the award may depend upon the Eligible Employee’sindividual performance.

** **

**5.6****                               Alternative Payments**.  In lieu of cash payment of an Award, the Committee may require orallow all or a portion of the Award to be paid or credited in the form ofShares, Restricted Shares, an Option or other Award.

** **

**6.  Other Provisions**

** **

**6.1****                               Rightsof Eligible Persons, Participants andBeneficiaries**.

** **

**6.1.1****                     Employment Status**. Status as an Eligible Person will not be construed as acommitment that any Award will be made under this Plan to an Eligible Person orto Eligible Persons generally.

** **

**6.1.2****                     No Employment Contract**.  Nothing contained in this Plan (or in any other documents relatedto this Plan or to any Award) will confer upon any Eligible Person or otherParticipant any right to continue in the employ or other service of the Companyor the Manager, as the case may be, or constitute any management or othercontract or agreement of employment or other service, nor will interfere in anyway with the right of the Company or the Manager, as the case may be, tootherwise change a person’s compensation or other benefits or to terminate theemployment or service of such person, with or without cause.  This Plan or any related document will not,however, adversely affect any independent contractual right of such personwithout the Participant’s consent.

** **

**6.1.3****                     Plan Not Funded**.  Awards payableunder this Plan will be payable in Shares or from the general assets of theCorporation, and (except as provided in Section 1.4.3) no special orseparate reserve, fund or deposit will be made to assure payment of suchAwards.  No Participant, Beneficiary orother person will have any right, title or interest in any fund or in anyspecific asset (including Shares) of the Company by reason of any Awardhereunder.  Neither the provisions ofthis Plan (or of any related documents), nor the creation or adoption of thisPlan, nor any action taken pursuant to the provisions of this Plan will create,or be construed to create, a trust of any kind or a fiduciary relationshipbetween the Company and any Participant, Beneficiary or other person.  To the extent that a Participant,Beneficiary or other person acquires a right to receive 

 

 

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payment pursuant to any Award hereunder, such rightwill be no greater than the right of any unsecured general creditor of theCompany.

** **

**6.2****                               Adjustments; Acceleration**.

** **

**6.2.1****                     Adjustments**.  The following provisions will apply in thecase of (i) any extraordinary dividend or other extraordinary distributionoccurs in respect of the Common Stock (whether in the form of cash, CommonStock, other securities, or other property), (ii) any reclassification,recapitalization, stock split (including a stock split in the form of a stockdividend), or reverse stock split, (iii) any reorganization, merger,combination, consolidation, split-up, spin-off, combination, materialrepurchase or exchange of Common Stock or other securities of the Corporation,(iv) any similar, unusual or extraordinary corporate transaction (or eventin respect of the Common Stock) or (v) a sale of substantially all theassets of the Corporation as an entirety. In such event, the Committee will, in such manner and to such extent (ifany) as it deems appropriate and equitable:

 

(a)                                  (i)                                     proportionatelyadjust any or all of (1) the number and type of Shares (or othersecurities) that thereafter may be made the subject of Awards (including thespecific maximum and numbers of shares set forth elsewhere in this Plan),(2) the number, amount and type of Shares (or other securities orproperty) subject to any or all outstanding Awards, (3) the grant,purchase, or exercise price of any or all outstanding Awards, (4) thesecurities, cash or other property deliverable upon exercise of any outstandingAwards, or (5) the performance standards appropriate to any outstandingAwards, or

 

(ii)                                  inthe case of an extraordinary dividend or other distribution, recapitalization,reclassification, merger, reorganization, consolidation, combination, sale ofassets, split up, exchange, or spin off, make provision for a cash payment orfor the substitution or exchange of any or all outstanding Awards or the cash,securities or property deliverable to the holder of any or all outstandingAwards based upon the distribution or consideration payable to holders of theCommon Stock of the Corporation upon or in respect of such event.

 

(b)                                 Ineach case, with respect to Awards of Incentive Stock Options, no such adjustmentwill be made that would cause the Plan to violate Section 424(a) of theCode or any successor provisions without the written consent of holdersmaterially adversely affected thereby.

 

(c)                                  Inany of such events, the Committee may take such action sufficiently prior tosuch event if necessary to permit the Participant to realize the 

 

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benefits intended to be conveyed with respect to theunderlying shares in the same manner as is available to stockholders generally.

** **

**6.2.2****                     Acceleration of Awards Upon Changein Control**.  Unless prior to a Change in Control Eventthe Committee determines that, upon its occurrence, benefits under any or allAwards will not accelerate or determines that only certain or limited benefitsunder any or all Awards will be accelerated and the extent to which they willbe accelerated, and/or establishes a different time in respect of such Eventfor such acceleration, then upon the occurrence of a Change in Control Event

 

(a)                                  eachOption and Stock Appreciation Right will become immediately exercisable,

 

(b)                                 RestrictedStock will immediately vest free of restrictions, and

 

(c)                                  eachPerformance Share Award will become payable to the Participant.

 

However, in the case of a transaction intended to beaccounted for as a pooling of interests transaction, the Committee shall haveno discretion with respect to the foregoing acceleration of Awards.  The Committee may override the limitationson acceleration in this Section 6.2.2 by express provision in the AwardAgreement and may accord any Eligible Person a right to refuse anyacceleration, whether pursuant to the Award Agreement or otherwise, in suchcircumstances as the Committee may approve.

 

Any acceleration of Awards will comply with applicablelegal requirements and, if the circumstances require, may be deemed by theCommittee to occur an instant before the event.

** **

**6.2.3****                     Possible Early Termination ofAccelerated Awards**.  If any Option or other right to acquireShares under this Plan (other than under Section 8) has been fullyaccelerated as required or permitted by Section 6.2.2 but is not exercisedat or prior to (a) a dissolution of the Corporation, or (b) an eventdescribed in Section 6.2.1 that the Corporation does not survive, or(c) the consummation of an event described in Section 6.1 involving aChange of Control approved by the Board, the Option or right will terminate,subject to any provision that has been expressly made by the Committee througha plan of reorganization approved by the Board or otherwise for the survival,substitution, assumption, exchange or other settlement of the Option or right.

** **

**6.2.4****                     Golden Parachute Limitations**.  Unless otherwise specified in an AwardAgreement or expressly approved by the Committee, no Award will be acceleratedunder this Plan to an extent or in a manner that would not be fully deductibleby the Company for federal income tax purposes because of Section 280G ofthe Code, nor will any payment hereunder be accelerated if any portion of suchaccelerated payment would not be deductible by the Company because ofSection 280G of the Code.  If aholder would be entitled to benefits or payments hereunder and under any otherplan or program that would constitute 

 

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“parachute payments” as defined in Section 280Gof the Code, then the holder may by written notice to the Company designate theorder in which such parachute payments will be reduced or modified so that theCompany is not denied federal income tax deductions for any “parachutepayments” because of Section 280G of the Code.

** **

**6.3****                               Effect of Termination of Employment**.  The Committee will establish in respect ofeach Award granted to an Eligible Person the effect of a termination ofemployment or service on the rights and benefits thereunder and in so doing maymake distinctions based upon the cause of termination.

** **

**6.4****                               Compliance with Laws**.

** **

**6.4.1****                     General**.  This Plan, the granting, vesting and exerciseof Awards under this Plan and the offer, issuance and delivery of Shares and/orthe payment of money under this Plan or under Awards granted hereunder aresubject to compliance with all applicable federal and state laws, rules andregulations (including but not limited to state and federal securities law,federal margin requirements) and to such approvals by any listing, regulatoryor governmental authority as may, in the opinion of counsel for theCorporation, be necessary or advisable in connection therewith.  Any securities delivered under this Planwill be subject to such restrictions, and to any restrictions the Committee mayrequire to preserve a pooling of interests under generally accepted accountingprinciples, and the person acquiring such securities will, if requested by theCorporation, provide such assurances and representations to the Corporation asthe Corporation may deem necessary or desirable, to assure compliance with allapplicable legal requirements.

** **

**6.4.2****                     Restrictions on Transfer**.  If the offer or sale of any Shares under the Plan is notregistered under the Securities Act, but an exemption is available whichrequires an investment representation or other representation, each Participantwill be required to represent that the Shares are being acquired forinvestment, and not with a view to the sale or distribution thereof, and tomake such other representations as are deemed necessary or appropriate in theopinion of the Committee and the Corporation’s counsel.  Any determination by the Corporation and itscounsel in connection with any other the matters set forth in thisSection 6.4 will be conclusive and binding on all persons.  Stock certificates evidencing Sharesacquired under the Plan pursuant to an unregistered transaction will bear thefollowing restrictive legend and such other restrictive legends as are requiredor deemed advisable under the provisions of any applicable law:

 

“THE SALE OF THE SECURITIES REPRESENTED HEREBY HAVENOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE“ACT”).  ANY TRANSFER OF SUCH SECURITIESWILL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT ASTO SUCH TRANSFER OR IN THE OPINION OF COUNSEL FOR THE ISSUER 

 

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SUCH REGISTRATION IS UNNECESSARY IN ORDER FOR SUCH TRANSFERTO COMPLY WITH THE ACT.”

 

If, in the opinion of the Corporation and its counsel,any legend placed on a stock certificate representing Shares sold under thePlan is no longer required, the holder of such certificate may exchange suchcertificate for a certificate representing the same number of Shares withoutsuch legend.

** **

**6.5****                               Tax Withholding**.

** **

**6.5.1****                     Provision for Tax Withholding Offset**.  Upon any exercise, vesting, or payment ofany Award or upon the disposition of Shares acquired pursuant to the exerciseof an Incentive Stock Option prior to satisfaction of the holding periodrequirements of Section 422 of the Code, the Company shall have the rightat its option to (a) require the Participant (or Personal Representativeor Beneficiary, as the case may be) to pay or provide for payment of the amountof any taxes which the Company may be required to withhold with respect to suchAward event or payment or (b) deduct from any amount payable in cash theamount of any taxes which the Company may be required to withhold with respectto such cash payment.  In any case wherea tax is required to be withheld in connection with the delivery of Sharesunder this Plan, the Committee may in its sole discretion (subject to Section 6.4)grant (either at the time of the Award or thereafter) to the Participant theright to elect, pursuant to such rules and subject to such conditions as theCommittee may establish, to have the Corporation reduce the number of Shares tobe delivered by (or otherwise reacquire) the appropriate number of Sharesvalued at their then Fair Market Value, to satisfy such withholding obligation.

** **

**6.5.2****                     Tax Loans**.  If so provided in the Award Agreement, theCompany may, to the extent permitted by law, authorize a loan to an EligiblePerson in the amount of any taxes that the Company may be required to withholdwith respect to Shares received (or disposed of, as the case may be) pursuantto a transaction described in Section 6.5.1.  Such a loan will be for a term, at a rate of interest andpursuant to such other terms and conditions as the Company, under applicablelaw may establish and such loan need not comply with the provisions ofSection 1.8.

** **

**6.6****                               PlanAmendment, Termination and Suspension**.

** **

**6.6.1****                     Board Authorization**.  The Board may, at any time, terminate or, from time to time,amend, modify or suspend this Plan, in whole or in part.  No Awards may be granted during anysuspension of this Plan or after termination of this Plan, but the Committeewill retain jurisdiction as to Awards then outstanding in accordance with theterms of this Plan.

** **

**6.6.2****                     Stockholder Approval**.  To the extent then required under Sections 422 and 424of the Code or any other applicable law, or deemed necessary or advisable bythe Board, any amendment to this Plan shall be subject to stockholder approval.

 

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**6.6.3****                     Amendments to Awards**.  Without limiting any other express authority of the Committeeunder but subject to the express limits of this Plan, the Committee by agreementor resolution may waive conditions of or limitations on Awards to Participantsthat the Committee in the prior exercise of its discretion has imposed, withoutthe consent of a Participant, and may make other changes to the terms andconditions of Awards that do not affect in any manner materially adverse to theParticipant, the Participant’s rights and benefits under an Award.

** **

**6.6.4****                     Limitations on Amendments to Planand Awards**.  No amendment, suspension or termination ofthis Plan or change of or affecting any outstanding Award will, without writtenconsent of the Participant, affect in any manner materially adverse to theParticipant any rights or benefits of the Participant or obligations of theCorporation under any Award granted under this Plan prior to the effective dateof such change.  Changes contemplated bySection 6.2 will not be deemed to constitute changes or amendments forpurposes of this Section 6.6.

** **

**6.7****                               Privileges of Stock Ownership**.  Except as otherwise expressly authorized bythe Committee or this Plan, a Participant will not be entitled to any privilegeof stock ownership as to any Shares not actually delivered to and held ofrecord by the Participant.  Noadjustment will be made for dividends or other rights as a stockholder for whicha record date is prior to such date of delivery.

** **

**6.8****                               Effective Date of the Plan**.  This Plan is effective as of December 3, 1997 (the“Effective Date”).  The Plan wasapproved by the Corporation’s stockholder(s) on October 17, 1997.

** **

**6.9****                               Term of the Plan**.  No Award may begranted under this Plan more than ten years after the Effective Date (the“termination date”).  Unless otherwiseexpressly provided in this Plan or in an applicable Award Agreement, any Awardgranted prior to the termination date may extend beyond such date, and allauthority of the Committee with respect to Awards hereunder, including theauthority to amend an Award, will continue during any suspension of this Planand in respect of Awards outstanding on the termination date.

** **

**6.10****                        GoverningLaw/Construction/Severability**.

** **

**6.10.1****              Choice of Law**.  This Plan, the Awards, all documentsevidencing Awards and all other related documents will be governed by, andconstrued in accordance with the laws of the State of California.

** **

**6.10.2****              Severability**.  If a court of competent jurisdiction holdsany provision invalid and unenforceable, the remaining provisions of this Planwill continue in effect.

** **

**6.10.3****              Plan Construction**.

 

(a)                                  **Rule 16b-3**.  It is the intent of the Corporation that theAwards hereunder satisfy and be interpreted in a manner that, in the case ofParticipants who are or may be subject to Section 16 of the Exchange Act,satisfies the applicable requirements of Rule 16b–3 so that suchpersons (unless they 

 

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otherwise agree) will be entitled to the benefits ofRule 16b–3 or other exemptive rules under Section 16 of theExchange Act in respect of those transactions and will not be subjected toavoidable liability thereunder.  If anyprovision of this Plan or of any Award would otherwise frustrate or conflictwith the intent expressed above, that provision to the extent reasonable willbe interpreted as to avoid such conflict. If the conflict remains irreconcilable, the Committee may disregard theprovision if it concludes that to do so furthers the interest of theCorporation, is fair to the affected Participant and is consistent with thepurposes of this Plan as to such persons in the circumstances.

 

(b)                                 **Section 162(m)**.  It is the further intent of the Companythat, to the extent the Corporation or Awards under this Plan may be or becomesubject to Section 162(m), Options or SARs with an exercise or base pricenot less than Fair Market Value on the date of grant and performance awardsunder Section 5.2 of this Plan that are granted to or held by a personsubject to Section 162(m) of the Code will qualify as performance-basedcompensation under Section 162(m) of the Code, and this Plan will beinterpreted consistent with such intent.

** **

**6.11****                        Captions**.  Captions and headings are given to thesections and subsections of this Plan solely as a convenience to facilitatereference.  Such headings will not bedeemed in any way material or relevant to the construction or interpretation ofthis Plan or any provision thereof.

** **

**6.12****                        Effect of Change of SubsidiaryStatus**.  For purposes of this Plan and any Awardhereunder, if an entity ceases to be a Subsidiary a termination of employmentand service will be deemed to have occurred with respect to each EligiblePerson in respect of such Subsidiary who does not continue as an EligiblePerson in respect of another entity within the Company.

** **

**6.13****                        Non-Exclusivity of Plan**.  Nothing in this Plan will limit or be deemed to limit theauthority of the Board or the Committee to grant awards or authorize any othercompensation, with or without reference to the Common Stock, under any otherplan or authority.

** **

**7. Definitions**

** **

**“Award”**means an award of any Option, Stock Appreciation Right, Restricted Stock,Stock Bonus, performance share award, stock unit, dividend equivalent ordeferred payment right or other right or security that would constitute a“derivative security” under Rule 16a–1(c) of the Exchange Act, orany combination thereof, whether alternative or cumulative, authorized by andgranted under this Plan.

** **

**“AwardAgreement”** means any writing setting forth the terms of anAward that has been authorized by the Committee.

 

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**“AwardDate”** means the date upon which the Committee took the actiongranting an Award or such later date as the Committee designates as the AwardDate at the time of the Award or, in the case of Awards under Section 8,the applicable dates set forth therein.

** **

**“AwardPeriod”** means the period beginning on an Award Date andending on the expiration date of such Award.

** **

**“Beneficiary”**means the person, persons, trust or trusts designated by a Participant or, inthe absence of a designation, entitled by will or the laws of descent anddistribution, to receive the benefits specified in the Award Agreement andunder this Plan if the Participant dies, and means the Participant’s executoror administrator if no other Beneficiary is designated and able to act underthe circumstances.

** **

**“Board”**means the Board of Directors of the Corporation.

** **

**“Changein Control Event”** means any of the following:

 

(a)                                  Approvalby the stockholders of the Corporation of the dissolution or liquidation of theCorporation;

 

(b)                                 Approvalby the stockholders of the Corporation of an agreement to merge or consolidate,or otherwise reorganize, with or into one or more entities that are notSubsidiaries or other affiliates, as a result of which less than 50% of theoutstanding voting securities of the surviving or resulting entity immediatelyafter the reorganization are, or will be, owned, directly or indirectly, bystockholders of the Corporation immediately before such reorganization(assuming for purposes of such determination that there is no change in therecord ownership of the Corporation’s securities from the record date for suchapproval until such reorganization and that such record owners hold nosecurities of the other parties to such reorganization), but including in suchdetermination any securities of the other parties to such reorganization heldby affiliates of the Corporation);

 

(c)                                  Approvalby the stockholders of the Corporation of the sale of substantially all of theCorporation’s business and/or assets as an entity to a person or entity that isnot a Subsidiary or other affiliate; or

 

(d)                                 Any**“person”**(as such term is used in Sections 13(d) and 14(d) of the Exchange Actbut excluding any person described in and satisfying the conditions ofRule 13d–1(b)(1) thereunder) becomes the beneficial owner (asdefined in Rule 13d–3 under the Exchange Act), directly orindirectly, of securities of the Corporation representing more than 50% of thecombined voting power of the Corporation’s then outstanding securities entitledto then vote generally in the election of directors of the Corporation; or

 

(e)                                  Duringany period not longer than two consecutive years, individuals who at thebeginning of such period constituted the Board cease to constitute at least amajority thereof, unless the election, or the nomination for election by theCorporation’s stockholders, of each new Board member was approved by a vote 

 

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of at least three-fourths of the Board members thenstill in office who were Board members at the beginning of such period(including for these purposes, new members whose election or nomination was soapproved).

** **

**“Code”**means the Internal Revenue Code of 1986, as amended from time to time.

** **

**“Commission”**means the Securities and Exchange Commission.

** **

**“Committee”**means one or more committees appointed by the Board to administer this Plan,each of which will be comprised of two or more directors meeting such criteriaas the Board may establish from time to time in order to satisfy any applicablelegal or regulatory requirements.

** **

**“CommonStock”** means the Common Stock of the Corporation and suchother securities or property as may become the subject of Awards, or becomesubject to Awards, pursuant to an adjustment made under Section 6.2 ofthis Plan.

** **

**“Company”**means, collectively, the Corporation and its Subsidiaries.

** **

**“Corporation”**means Apex Mortgage Capital, Inc., a Maryland corporation, and its successors.

** **

**“EligibleEmployee”** means an officer (whether or not a director) oremployee of the Company.

** **

**“EligiblePerson”** means an Eligible Employee, or any Other EligiblePerson, as determined by the Committee.

** **

**“ExchangeAct”** means the Securities Exchange Act of 1934, as amendedfrom time to time.

** **

**“FairMarket Value”** on any date means (a) if the stock islisted or admitted to trade on a national securities exchange, the closingprice of the stock on the Composite Tape, as published in the Western Editionof The Wall Street Journal, of the principal national securities exchange onwhich the stock is so listed or admitted to trade, on such date, or, if thereis no trading of the stock on such date, then the closing price of the stock asquoted on such Composite Tape on the next preceding date on which there wastrading in such shares; (b) if the stock is not listed or admitted totrade on a national securities exchange, the last price for the stock on suchdate, as furnished by the National Association of Securities Dealers, Inc. (**“NASD”**)through the NASDAQ National Market Reporting System or a similar organizationif the NASD is no longer reporting such information; (c) if the stock isnot listed or admitted to trade on a national securities exchange and is notreported on the National Market Reporting System, the mean between the bid andasked price for the stock on such date, as furnished by the NASD or a similarorganization; or (d) if the stock is not listed or admitted to trade on anational securities exchange, is not reported on the National Market ReportingSystem and if bid and asked prices for the stock are not furnished by the NASDor a similar organization, the value as established by the Committee at suchtime for purposes of this Plan.

** **

**“IncentiveStock Option”** means an Option that is designated and intendedas an incentive stock option within the meaning of Section 422 of theCode, the award of that contains such provisions (including but not limited tothe receipt of stockholder approval of this Plan, if the award is made 

 

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prior to such approval) and is made under such circumstances and tosuch persons as may be necessary to comply with that section.

** **

**“InitialAwards”** means the Options granted immediately prior to theeffectiveness of the registration statement relating to the Corporation’sinitial public offering, which Options are granted to officers and employees ofthe Corporation and the Manager and which are exercisable for an aggregate of300,000 shares of Common Stock.

** **

**“Manager”**means TCW Investment Management Company.

** **

**“NonqualifiedStock Option”** means an Option that is designated as aNonqualified Stock Option and will include any Option intended as an IncentiveStock Option that fails to meet the applicable legal requirements thereof.  Any Option granted hereunder that is notdesignated as an incentive stock option will be deemed to be designated anonqualified stock option under this Plan and not an incentive stock optionunder the Code.

** **

**“Non-EmployeeDirector”** means a member of the Board of Directors of theCorporation who is not an officer or employee of the Company.  For purposes of this Plan, the Chairman ofthe Board will be deemed an officer of the Company.

** **

**“Option”**means an option to purchase Common Stock granted under thisPlan.  The Committee will designate anyOption granted to an Eligible Person as a Nonqualified Stock Option or anIncentive Stock Option.

** **

**“OtherEligible Person”** means any Non-Employee Director, anydirector, officer or employee of the Manager, or any other natural personconsultant or advisor to the Company (or any natural person employee of anyconsultant or advisor to the Company), in each case, who renders or hasrendered bonafide services to the Company (other than servicesin connection with the offering or sale of securities of the Company in acapital raising transaction or services that directly or indirectly promote ormaintain a market for the Company’s securities).

** **

**“Participant”**means an Eligible Person who has been granted an Award under this Plan and aNon-Employee Director who has been received an Award under Section  8 ofthis Plan.

** **

**“PerformanceShare Award”** means an Award of a right to receive Sharesunder Section 5.1, or to receive Shares or other compensation (includingcash) under Section 5.2, the issuance or payment of that is contingentupon, among other conditions, the attainment of performance objectivesspecified by the Committee.

** **

**“PersonalRepresentative”** means the person or persons who, upon thedisability or incompetence of a Participant, has acquired on behalf of theParticipant, by legal proceeding or otherwise, the power to exercise the rightsor receive benefits under this Plan by virtue of having become the legalrepresentative of the Participant.

** **

**“Plan”**means this Apex Mortgage Capital, Inc. 1997 Stock Option Plan, as amended fromtime to time.

** **

**“QDRO”**means a qualified domestic relations order.

 

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**“RestrictedShares”** or **“Restricted Stock”** means Shares awarded toa Participant under this Plan, subject to payment of such consideration, ifany, and such conditions on vesting (which may include, among others, thepassage of time, specified performance objectives or other factors) and suchtransfer and other restrictions as are established in or pursuant to this Planand the related Award Agreement, for so long as such Shares remain unvestedunder the terms of the applicable Award Agreement.

** **

**“Retirement”**means retirement with the consent of the Company or the Manager, as the casemay be, or, from active service as an employee or officer of the Company or theManager, as the case may be, on or after attaining age 55 with ten or moreyears of service or age 65, or, in the case of a Non-Employee Director,retirement or failure to stand for reelection, with the consent of the Board ofDirectors, on or after age 55 with ten or more years of service, or in any caseafter age 65.

** **

**“Rule16b-3”** means Rule 16b–3 as promulgated by theCommission pursuant to the Exchange Act, as amended from time to time.

** **

**“SecuritiesAct”** means the Securities Act of 1933, as amended from timeto time.

** **

**“StockAppreciation Right”** or **“SAR”** means a right authorized under thisPlan to receive a number of Shares or an amount of cash, or a combination ofShares and cash, the aggregate amount or value of which is determined byreference to a change in the Fair Market Value of the Common Stock.

** **

**“StockBonus”** means an Award of Shares granted under this Plan forno consideration other than past services and without restriction other thansuch transfer or other restrictions as the Committee may deem advisable toassure compliance with law.

** **

**“StockUnit”** means a bookkeeping entry which serves a unit ofmeasurement relative to a Share for purposes of determining the payment of adeferred benefit or right under the Plan.

** **

**“Subsidiary”**means any corporation or other entity a majority of whose outstanding votingstock or voting power is beneficially owned directly or indirectly by theCorporation.

** **

**“TotalDisability”** means a disability where Participant is unable toeffectively engage in the material activities required for Participant’sposition with the Company or the Manager, as the case may be, by reason of anymedically determinable physical or mental impairment that can be expected toresult in death or that has lasted or can be expected to last for a period of90 consecutive days or for shorter periods aggregating 180 days in anyconsecutive 12–month period.

** **

**8.  NonEmployee Director Options**

** **

**8.1****                               Participation**.  Awards under this Section 8 will be made only toNon-Employee Directors and will be evidenced by Award Agreements in the formadopted by the Committee.

 

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**8.2****                               Option Grants**.

** **

**8.2.1****                     Time of Initial Award**.  After approval of this Plan by the stockholder(s) of theCorporation, and upon the closing of the Corporation’s initial public offering,each person who is then a Non-Employee Director will automatically be granted(without any action by the Board or Committee) a Non-qualified Stock Option(the Award Date of which will be the date of the closing of such initial publicoffering) to purchase 25,000 shares of Common Stock at the price that theCorporations Common Stock is offered in such initial public offering.

** **

**8.2.2****                     Subsequent Automatic Awards**.  If any person who is not then an officer oremployee of the Company becomes a director of the Corporation, such person willautomatically be granted (without any action by the Board or Committee) aNon-qualified Stock Option (the Award Date of which will be the date suchperson takes office) to purchase 25,000 Shares.

** **

**8.2.3****                     Subsequent Discretionary Awards**. The Committeeshall have the authority to grant additional Options to Non-Employee Directorsfrom time to time; provided, however that no more than 50,000 shares, subjectto adjustment as contemplated by Section 6.2, in the aggregate, shall besubject to Options made to any one Non-Employee Director under this Section 8.2and provided further that any such discretionary Option shall be subject tocontemporaneous approval or ratification by a majority of the members of theBoard of Directors and a majority of the Directors who are not recipients ofsuch grants.

** **

**8.3****                               Option Price**. The purchase price per share of the Common Stock covered by eachOption granted pursuant to Section 8.2.2 or Section 8.2.3 will be 100% of theFair Market Value of the Common Stock on the Award Date.  The exercise price of any Option grantedunder this Section will be paid in full at the time of each purchase in cash orby check or in Shares valued at the Fair Market Value on the date of exerciseof the Option, or partly in such shares and partly in cash, but any such sharesused in payment must be owned by the Participant at least six months prior tothe date of exercise.  Any notice andthird party cashless exercise payment procedures authorized by the Committeewith respect to Options under Section 2 may be utilized with respect to Optionsgranted under Section 8.2 unless the Committee or applicable law otherwiseprovide.

** **

**8.4****                               Option Period and Exercisability**.  Each Option granted under this Section 8 andall rights or obligations thereunder will expire on the day before the 10thanniversary of the Award Date and will be subject to earlier termination asprovided below. Each Option granted under Section 8.2 shall become exercisableno earlier than six months after the Award Date.  Unless the Board or Committee otherwise provides in theapplicable Award Agreement, an Option will vest as follows:  one-third on each of the first, second andthird anniversaries of the date of grant.

** **

**8.5****                               Termination of Directorship**.  If a Non-Employee Director’s services as amember of the Board of Directors terminate by reason of death, Total Disabilityor Retirement, an Option granted pursuant to this Section 8 held by suchParticipant will immediately 

 

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become and will remain exercisable for nine monthsafter the date of such termination or until the expiration of the stated termof such Option, whichever first occurs. If a Non-Employee Director’s services as a member of the Board ofDirectors terminate for any other reason, any portion of an Option grantedpursuant to this Section that is not then exercisable will terminate and anyportion of such Option that is then exercisable may be exercised for six monthsafter the date of such termination or until the expiration of the stated termwhichever first occurs.

** **

**8.6****                               Adjustments; Accelerations;Terminations**. Options granted under thisSection 8 will be subject to adjustments, accelerations and terminationsas provided in Section 6.2, but only to the extent that in the case of aChange in Control Event such effect and any Board or Committee action inrespect thereof is effected pursuant to the terms of a reorganization agreementapproved by stockholders of the Corporation or is otherwise consistent with theeffect on Options held by persons other than executive officers or directors ofthe Corporation (or, if there are none, consistent in respect of the underlyingshares with the effect on stockholders generally).

** **

**8.7****                               Acceleration Upon a Change inControl Event**.  Upon the occurrence of a Change in ControlEvent and acceleration under Section 6.2.2, each Option granted underSection 8.2 hereof will become immediately exercisable in full.  To the extent that any Option granted underthis Section 8 is not exercised prior to (a) a dissolution of theCorporation or (b) a merger or other corporate event that the Corporationdoes not survive, and no provision is (or consistent with the provisions ofthis Plan can be) made for the assumption, conversion, substitution or exchangeof the Option, the Option will terminate upon the occurrence of such event.

 

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