exv10w34xay



 




Exhibit 10.34(a)








GameTech International, Inc.




 






1997 Incentive Stock Plan




Amended and Restated as of




January 6, 2006





 









 








GameTech International, Inc.




1997 Incentive Stock Plan




     1. Purpose. The purpose of this 1997 Incentive Stock Plan (the “Plan”) is to
assist GameTech International, Inc., a Delaware corporation (the “Company”) and its Related
Entities (as hereinafter defined) in attracting, motivating, retaining and rewarding high-quality
executives and other employees, officers, directors, consultants and other persons who provide
services to the Company or its Related Entities by enabling such persons to acquire or increase a
proprietary interest in the Company in order to strengthen the mutuality of interests between such
persons and the Company’s shareholders, and providing such persons with annual and long-term
performance incentives to expend their maximum efforts in the creation of shareholder value. The
Plan is intended to qualify certain compensation awarded under the Plan for tax deductibility under
Section 162(m) of the Code (as hereafter defined) to the extent deemed appropriate by the Plan
Administrator (as hereafter defined).



     2. Definitions. For purposes of the Plan, the following terms shall be defined as set
forth below, in addition to such terms defined in the Plan.



          (a) “2001 Plan” means the Company’s 2001 Restricted Stock Plan.




          (b) “Applicable Laws” means the requirements relating to the administration of equity
compensation plans under U.S. state corporate laws, U.S. federal and state securities laws, the
Code, the rules and regulations of any stock exchange upon which the Common Stock is listed and the
applicable laws of any foreign country or jurisdiction where Awards are granted under the Plan.




          (c) “Award” means any award granted pursuant to the terms of this Plan including, an
Option, Stock Appreciation Right, Restricted Stock, Stock Unit, Stock granted as a bonus or in lieu
of another award, Dividend Equivalent, Other Stock-Based Award or Performance Award, together with
any other right or interest, granted to a Participant under the Plan.




          (d) “Award Agreement” means the written agreement evidencing an Award granted under
the Plan.




          (e) “Beneficiary” means the person, persons, trust or trusts which have been
designated by a Participant in his or her most recent written beneficiary designation filed with
the Plan Administrator to receive the benefits specified under the Plan upon such Participant’s
death or to which Awards or other rights are transferred if and to the extent permitted under
Section 10(b) hereof. If, upon a Participant’s death, there is no designated Beneficiary or
surviving designated Beneficiary, then the term Beneficiary means the person, persons, trust or
trusts entitled by will or the laws of descent and distribution to receive such benefits.




          (f) “Beneficial Owner”, “Beneficially Owning” and “Beneficial
Ownership” shall have the meanings ascribed to such terms in Rule 13d-3 under the Exchange Act
and any successor to such Rule.




          (g) “Board” means the Company’s Board of Directors.




          (h) “Cause” shall, with respect to any Participant, have the meaning specified in the
Award Agreement. In the absence of any definition in the Award Agreement, “Cause” shall have the
equivalent meaning or the same meaning as “cause” or “for cause” set forth in any employment,
consulting, or other agreement for the performance of services between the Participant and the
Company or a Related Entity or, in the absence of any such definition in such agreement, such term
shall mean (i) the failure by the Participant to perform his or her duties as assigned by the
Company (or a Related Entity) in a reasonable manner, (ii) any material violation or material
breach by the Participant of his or her employment, consulting or other similar agreement with the
Company (or a Related Entity), if any, (iii) any violation or breach by the Participant of any
confidential information and invention assignment, non-competition, non-solicitation,
non-disclosure and/or other similar agreement with the Company or a Related Entity, if any, (iv)
any act by the Participant of dishonesty or bad faith with respect to the Company (or






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a Related
Entity), (v) any material violation or breach by the Participant of the Company’s or a Related
Entity’s policy for employee conduct, if any, (vi) use of alcohol, drugs or other similar
substances in a manner that adversely affects the Participant’s work performance, or (vii) the
commission by the Participant of any act, misdemeanor, or crime reflecting unfavorably upon the
Participant or the Company or any Related Entity. The good faith determination of the Plan
Administrator of whether the Participant’s Continuous Service has been terminated for “Cause” shall
be final and binding on all parties and for all purposes hereunder.




          (i) “Change in Control” means and shall be deemed to have occurred on the earliest of
the following dates:




               (i) the date on which any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) obtains “beneficial ownership” (as defined in Rule 13d-3 of the Exchange Act) or a
pecuniary interest in fifty percent (50%) or more of the combined voting power of the Company’s
then outstanding securities (“Voting Stock”);



               (ii) the consummation of a merger, consolidation, reorganization or similar transaction other
than a transaction: (1) (a) in which substantially all of the holders of Company’s Voting Stock
hold or receive directly or indirectly fifty percent (50%) or more of the voting stock of the
resulting entity or a parent company thereof, in substantially the same proportions as their
ownership of the Company immediately prior to the transaction; or (2) in which the holders of
Company’s capital stock immediately before such transaction will, immediately after such
transaction, hold as a group on a fully diluted basis the ability to elect at least a majority of
the directors of the surviving corporation (or a parent company);



               (iii) there is consummated a sale, lease, exclusive license or other disposition of all or
substantially all of the consolidated assets of the Company and its Subsidiaries, other than a
sale, lease, license or other disposition of all or substantially all of the consolidated assets of
the Company and its Subsidiaries to an entity, fifty percent (50%) or more of the combined voting
power of the voting securities of which are owned by shareholders of the Company in substantially
the same proportions as their ownership of the Company immediately prior to such sale, lease,
license or other disposition; or



               (iv) individuals who, on the date this Plan is adopted by the Board, are Directors (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the Directors;
provided, however, that if the appointment or election (or nomination for election) of any new
Director was approved or recommended by a majority vote of the members of the Incumbent Board then
still in office, such new member shall, for purposes of this Plan, be considered as a member of the
Incumbent Board.



     For purposes of determining whether a Change in Control has occurred, a transaction includes
all transactions in a series of related transactions, and terms used in this definition but not
defined are used as defined in the Plan. The term Change in Control shall not include a sale of
assets, merger or other transaction effected exclusively for the purpose of changing the domicile
of the Company.



     Notwithstanding the foregoing or any other provision of this Plan, the definition of Change in
Control (or any analogous term) in an individual written agreement between the Company and the
Participant shall supersede the foregoing definition with respect to Awards subject to such
agreement (it being understood, however, that if no definition of Change in Control or any
analogous term is set forth in such an individual written agreement, the foregoing definition shall
apply).



          (j) “Code” means the Internal Revenue Code of 1986, as amended from time to time,
including regulations thereunder and successor provisions and regulations thereto.




          (k) “Committee” means a committee designated by the Board to administer the Plan with
respect to at least a group of Employees, Directors or Consultants.





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          (l) “Consultant” means any person (other than an Employee or a Director, solely with
respect to rendering services in such person’s capacity as a director) who is engaged by the
Company or any Related Entity to render consulting or advisory services to the Company or such
Related Entity.




          (m) “Continuous Service” means uninterrupted provision of services to the Company or
any Related Entity in the capacity as either an officer, Employee, Director, Consultant or other
service provider. Continuous Service shall not be considered to be interrupted in the case of (i)
any approved leave of absence, (ii) transfers among the Company, any Related Entities, or any
successor entities, in the capacity as either an officer, Employee, Director, Consultant or other
service provider or (iii) any change in status as long as the individual remains in the service of
the Company or a Related Entity in the capacity as either an officer, Employee, Director,
Consultant or other service provider (except as otherwise provided in the Award Agreement). An
approved leave of absence shall include sick leave, military leave, or any other authorized
personal leave.




          (n) “Corporate Transaction” means the occurrence, in a single transaction or in a
series of related transactions, of any one or more of the following events:




               (i) a sale, lease, exclusive license or other disposition of a significant portion of the
consolidated assets of the Company and its Subsidiaries, as determined by the Board in its
discretion;



               (ii) a sale or other disposition of more than twenty percent (20%) of the outstanding
securities of the Company; or



               (iii) a merger, consolidation, reorganization or similar transaction, whether or not the
Company is the surviving corporation.



          (o) “Covered Employee” means an Eligible Person who is a Covered Employee as specified
in Section 7(d) of the Plan.




          (p) “Director” means a member of the Board or the board of directors of any Related
Entity.




          (q) “Disability” means a permanent and total disability (within the meaning of Section
22(e) of the Code), as determined by a medical doctor satisfactory to the Plan Administrator.




          (r) “Dividend Equivalent” means a right, granted to a Participant under Section 6(g)
hereof, to receive cash, Stock, other Awards or other property equal in value to dividends paid
with respect to a specified number of Shares, or other periodic payments.




          (s) “Effective Date” means the effective date of this Plan, which shall be the date
this Plan is adopted by the Board, subject to the approval of the shareholders of the Company.




          (t) “Eligible Person” means each officer, Director, Employee or Consultant who
provides services to the Company or any Related Entity. The foregoing notwithstanding, only common
law employees of the Company, the Parent, or any Subsidiary shall be Eligible Persons for purposes
of receiving any Incentive Stock Options. An Employee on leave of absence may be considered as
still in the employ of the Company or a Related Entity for purposes of eligibility for
participation in the Plan.




          (u) “Employee” means any person, including an officer or Director, who is an employee
of the Company or any Related Entity. The payment of a director’s fee by the Company or a Related
Entity shall not be sufficient to constitute “employment” by the Company.




          (v) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time, including rules thereunder and successor provisions and rules thereto.




          (w) “Fair Market Value” means the fair market value of Shares, Awards or other
property as determined by the Plan Administrator, or under procedures established by the Plan
Administrator. Unless otherwise




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determined by the Plan Administrator, the Fair Market Value of a
Share as of any given date, after which the Stock is publicly traded on a stock exchange or market,
shall be the closing sale price per share reported on a consolidated basis for stock listed on the
principal stock exchange or market on which the Stock is traded on the date as of which such value
is being determined or, if there is no sale on that date, then on the last previous day on which a
sale was reported.




          (x) “Good Reason” shall, with respect to any Participant, have the meaning specified
in the Award Agreement. In the absence of any definition in the Award Agreement, “Good Reason”
shall have the equivalent meaning (or the same meaning as “good reason” or “for good reason”) set
forth in any employment, consulting or other agreement for the performance of services between the
Participant and the Company or a Related Entity or, in the absence of any such definition in such
agreement, such term shall mean (i) the assignment to the Participant of any duties inconsistent in
any material respect with the Participant’s position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as assigned by the Company or a
Related Entity, or any other action by the Company (or a Related Entity) which results in a
material diminution in such duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company
(or a Related Entity) promptly after receipt of notice thereof given by the Participant; (ii) any
material failure by the Company (or a Related Entity) to comply with its material obligations to
the Participant as agreed upon, other than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by the Company (or a Related Entity) promptly after
receipt of notice thereof given by the Participant; (iii) the Company’s (or Related Entity’s)
requiring the Participant to be based at any office or location more than fifty (50) miles from the
location of employment immediately prior to such relocation, except for travel reasonably required
in the performance of the Participant’s responsibilities; (iv) any purported termination by the
Company (or a Related Entity) of the Participant’s Continuous Service otherwise than for Cause (as
defined in Section 2(h)), death, or by reason of the Participant’s Disability (as defined in
Section 2(q)); or (v) any reduction in the Participant’s base salary.




          (y) “Incentive Stock Option” means any Option intended to be designated as an
incentive stock option within the meaning of Section 422 of the Code or any successor provision
thereto.




          (z) “Option” means a right granted to a Participant under Section 6(b) hereof, to
purchase Stock or other Awards at a specified price during specified time periods.




          (aa) “Option Expiration Date” means the date of expiration of the Option’s maximum
term as set forth in the Award Agreement evidencing such Option.




          (bb) “Other Stock-Based Awards” means Awards granted to a Participant pursuant to
Section 6(i) hereof.




          (cc) “Parent” means any corporation (other than the Company), whether now or hereafter
existing, in an unbroken chain of corporations ending with the Company, if each of the corporations
in the chain (other than the Company) owns stock possessing fifty percent (50%) or more of the
combined voting power of all classes of stock in one of the other corporations in the chain.




          (dd) “Participant” means a person who has been granted an Award under the Plan which
remains outstanding, including a person who is no longer an Eligible Person.




          (ee) “Performance Award” means a right, granted to an Eligible Person under Sections
6(h) and 7 hereof, to receive Awards based upon performance criteria specified by the Plan
Administrator.




          (ff) “Performance Period” means that period established by the Plan Administrator at
the time any Performance Award is granted or at any time thereafter during which any performance
goals specified by the Plan Administrator with respect to such Award are to be measured.




          (gg) “Person” has the meaning ascribed to such term in Section 3(a)(9) of the Exchange
Act and used in Sections 13(d) and 14(d) thereof, and shall include a “group” as defined in Section
12(d) thereof.





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          (hh) “Plan Administrator” means the Board or any Committee delegated by the Board to
administer the Plan. There may be different Plan Administrators with respect to different groups
of Eligible Persons.




          (ii) “Related Entity” means any Subsidiary and any business, corporation, partnership,
limited liability company or other entity designated by the Plan Administrator in which the
Company, a Parent or a Subsidiary, directly or indirectly, holds a substantial ownership interest.




          (jj) “Restricted Stock” means Stock granted to a Participant under Section 6(d)
hereof, that is subject to certain restrictions, including a risk of forfeiture.




          (kk) “Rule 16b-3” and “Rule 16a-1(c)(3)” means Rule 16b-3 and Rule
16a-1(c)(3), as from time to time in effect and applicable to the Plan and Participants,
promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act.




          (ll) “Share” means a share of the Company’s Common Stock, and the share of such other
securities as may be substituted (or resubstituted) for Stock pursuant to Section 10(c) hereof.




          (mm) “Stock” means the Company’s Common Stock, and such other securities as may be
substituted (or resubstituted) for the Company’s Common Stock pursuant to Section 10(c) hereof.




          (nn) “Stock Appreciation Right” means a right granted to a Participant pursuant to
Section 6(c) hereof.




          (oo) “Stock Unit” means a right, granted to a Participant pursuant to Section 6(e)
hereof, to receive Shares, cash or a combination thereof at the end of a specified period of time.




          (pp) “Subsidiary” means any corporation (other than the Company), whether now or
hereafter existing, in an unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.




     3. Administration.



          (a) Administration by Board. The Board shall administer the Plan unless and until the
Board delegates administration to a Committee, as provided in Section 3(b).




          (b) Delegation to Committee.




               (i) General. The Board may delegate administration of the Plan to a Committee or
Committees, and the term “Committee” shall apply to any person or persons to whom such authority
has been delegated. If administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed by the Board,
including the power to delegate to a subcommittee any of the administrative powers the Committee is
authorized to exercise (and references in this Plan to the Board shall thereafter be to the
Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish
the Committee at any time and revest in the Board the administration of the Plan.



               (ii) Section 162(m) and Rule 16b-3 Compliance. In the discretion of the Board, the
Committee may consist solely of two or more “Outside Directors”, in accordance with Section 162(m)
of the Code,
and/or solely of two or more “Non-Employee Directors”, in accordance with Rule 16b-3. In
addition, the Board or the Committee may delegate to a committee the authority to grant Awards to
eligible persons who are either (a) not then Covered Employees and are not expected to be Covered
Employees at the time of recognition of income resulting from such Award, (b) not persons with
respect to whom the Company wishes to comply with Section 162(m) of the Code, or (c) not then
subject to Section 16 of the Exchange Act.



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          (c) Powers of the Plan Administrator. The Plan Administrator shall have the power,
subject to, and within the limitations of, the express provisions of the Plan:




               (i) To determine from time to time which of the persons eligible under the Plan shall be
granted Awards; when and how each Award shall be granted; what type or combination of types of
Award shall be granted; the provisions of each Award granted (which need not be identical),
including the time or times when a person shall be permitted to receive Shares or cash pursuant to
an Award; and the number of Shares or amount of cash with respect to which an Award shall be
granted to each such person.



               (ii) To construe and interpret the Plan and Awards granted under it, and to establish, amend
and revoke rules and regulations for its administration. The Plan Administrator, in the exercise
of this power, may correct any defect, omission or inconsistency in the Plan or in any Award
Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.



               (iii) To amend the Plan or an Award as provided in Section 10(e).



               (iv) To terminate or suspend the Plan as provided in Section 10(e).



               (v) To adopt such modifications, procedures, and subplans as may be necessary or desirable to
comply with provisions of the laws of foreign countries in which the Company or Related Entities
may operate to assure the viability of the benefits from Awards granted to Participants performing
services in such countries and to meet the objectives of the Plan.



               (vi) To make all determinations required under the Plan or any Award Agreements thereunder,
including, but not limited to, the determination if there has been a Change in Control, a Corporate
Transaction, whether a termination of Continuous Service was for Cause or for Good Reason and
whether a Participant was prevented from selling his or her Shares due to federal or state
securities laws or by agreement.



               (vii) Generally, to exercise such powers and to perform such acts as the Plan Administrator
deems necessary or appropriate to promote the best interests of the Company and that are not in
conflict with the provisions of the Plan.



          (d) Effect of Plan Administrator’s Decision. All determinations, interpretations and
constructions made by the Plan Administrator in good faith shall not be subject to review by any
person and shall be final, binding and conclusive on all persons.




          (e) Arbitration. Any dispute or claim concerning any Award granted (or not granted)
pursuant to the Plan or any disputes or claims relating to or arising out of the Plan shall be
fully, finally and exclusively resolved by binding and confidential arbitration conducted pursuant
to the rules of Judicial Arbitration and Mediation Services, Inc. (“JAMS”) in the nearest city in
which JAMS conducts business to the city in which the Participant is employed by the Company. The
Company shall pay all arbitration fees. In addition to any other relief, the arbitrator may award
to the prevailing party recovery of its attorneys’ fees and costs. By accepting an Award, the
Participant and the Company waive their respective rights to have any such disputes or claims tried
by a judge or jury.




          (f) Limitation of Liability. The Plan Administrator, and each member thereof, shall
be entitled to, in good faith, rely or act upon any report or other information furnished to him or
her by any officer or Employee, the Company’s independent auditors, Consultants or any other agents
assisting in the administration of the Plan. Members of the Plan Administrator, and any officer or
Employee acting at the direction or on behalf of the Plan Administrator, shall not be personally
liable for any action or determination taken or made in good faith with respect to the Plan, and
shall, to the extent permitted by law, be fully indemnified and protected by the Company with
respect to any such action or determination.




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     4. Shares Issuable Under the Plan.



          (a) Limitation on Overall Number of Shares Available for Issuance Under the Plan.
Subject to adjustment as provided in Section 10(c) hereof, the total number of Shares that may be
issued in connection with Awards under the Plan shall not exceed in the aggregate 4,000,000 plus
any Shares available for issuance under the 2001 Plan as of the date of the 2006 annual
shareholders meeting. Any Shares delivered under the Plan may consist, in whole or in part, of
authorized and unissued Shares or treasury shares.




          (b) Availability of Shares Not Issued Pursuant to Awards.




               (i) If any Shares subject to an Award or subject to an award granted under the 2001 Plan are
forfeited, expire or otherwise terminate without issuance of such Shares, or any Award or any award
granted under the 2001 Plan is settled for cash or otherwise does not result in the issuance of all
or a portion of the Shares subject to such Award, the Shares shall, to the extent of such
forfeiture, expiration, termination, cash settlement or non-issuance, be available for Awards under
the Plan, subject to Section 4(b)(iv) below.



               (ii) If any Shares issued pursuant to an Award or an award granted under the 2001 Plan are
forfeited back to or repurchased by the Company, including, but not limited to, any repurchase or
forfeiture caused by the failure to meet a contingency or condition required for the vesting of
such shares, then such forfeited or repurchased Shares shall revert to and become available for
issuance under the Plan, subject to Section 4(b)(iv) below.



               (iii) In the event that any Option or other Award is exercised by the withholding of Shares
from the Award by the Company, or withholding tax liabilities arising from such Option or other
Award are satisfied by the withholding of Shares from the Award by the Company, then only the net
number of Shares actually issued to the Participant, excluding the Shares withheld, shall be
counted as issued for purposes of determining the maximum number of Shares available for grant
under the Plan, subject to Section 4(b)(iv) below.



               (iv) Notwithstanding anything in this Section 4(b) to the contrary and solely for purposes of
determining whether Shares are available for the grant of Incentive Stock Options, the maximum
aggregate number of shares that may be granted under this Plan shall be determined without regard
to any Shares restored pursuant to this Section 4(b) that, if taken into account, would cause the
Plan to fail the requirement under Code Section 422 that the Plan designate a maximum aggregate
number of shares that may be issued.



          (c) Application of Limitations. The limitation contained in this Section 4 shall
apply not only to Awards that are settled by the delivery of Shares but also to Awards relating to
Shares but settled only in cash (such as cash-only Stock Appreciation Rights). The Plan
Administrator may adopt reasonable counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute awards) and may make adjustments if
the number of Shares actually delivered differs from the number of shares previously counted in
connection with an Award.




     5. Eligibility; Per-Person Award Limitations. Awards may be granted under the Plan only to Eligible Persons. Subject to adjustment as
provided in Section 10(c), for each fiscal year in which awards granted under the Plan are subject
to the requirements of Section 162(m) of the Code, an Eligible Person may not be granted (i)
Options or Stock Appreciation Rights with respect to more than the total number of Shares reserved
under the Plan or (ii) Awards, other than Options or Stock Appreciation Rights, with respect to
more than the total number of Shares reserved under the Plan. In addition, the maximum dollar
value payable in any fiscal year to any one Participant with respect to Awards granted under the
Plan is $5,000,000.



     6. Terms of Awards.



          (a) General. Awards may be granted on the terms and conditions set forth in this
Section 6. In addition, the Plan Administrator may impose on any Award or the exercise thereof, at
the date of grant or thereafter (subject to Section 10(e)), such additional terms and conditions,
not inconsistent with the provisions of the Plan, as the Plan Administrator shall determine,
including terms requiring forfeiture of Awards in the event of





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termination of the Participant’s
Continuous Service and terms permitting a Participant to make elections relating to his or her
Award. The Plan Administrator shall retain full power and discretion to accelerate, waive or
modify, at any time, any term or condition of an Award that is not mandatory under the Plan.




          (b) Options. The Plan Administrator is authorized to grant Options to any Eligible
Person on the following terms and conditions:




               (i) Stock Option Agreement. Each grant of an Option shall be evidenced by an Award
Agreement. Such Award Agreement shall be subject to all applicable terms and conditions of the
Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan
and which the Plan Administrator deems appropriate for inclusion in the Award Agreement. The
provisions of the various Award Agreements entered into under the Plan need not be identical.
Notwithstanding any other provision of the Plan, any Non-Qualified Stock Option shall be structured
to comply with or be exempt from Section 409A of the Code, unless otherwise specifically determined
by the Plan Administrator.



               (ii) Number of Shares. Each Award Agreement shall specify the number of Shares that
are subject to the Option and shall provide for the adjustment of such number in accordance with
Section 10(c) hereof. The Award Agreement shall also specify whether the Stock Option is an
Incentive Stock Option or a Non-Qualified Stock Option.



               (iii) Exercise Price.



                    (A) In General. Each Award Agreement shall state the price at which Shares subject to
the Option may be purchased (the “Exercise Price”), which shall be, with respect to Incentive Stock
Options, not less than one hundred percent (100%) of the Fair Market Value of the Stock on the date
of grant. In the case of Non-Qualified Stock Options, the Exercise Price shall be determined in
the sole discretion of the Plan Administrator; provided, however, that if the Exercise Price is
less than one hundred percent (100%) of the Fair Market Value of the Stock on the date of grant,
the Non-Qualified Stock Option shall be structured to comply with or be exempt from Section 409A of
the Code.



                    (B) Ten Percent Shareholder. If a Participant owns or is deemed to own (by reason of
the attribution rules applicable under Section 424(d) of the Code) more than 10% of the combined
voting power of all classes of stock of
the Company or any Parent or Subsidiary, any Incentive Stock Option granted to such Employee
must have an exercise price per Share of at least 110% of the Fair Market Value of a Share on the
date of grant.



               (iv) Time and Method of Exercise. The Plan Administrator shall determine the time or
times at which or the circumstances under which an Option may be exercised in whole or in part
(including based on achievement of performance goals and/or future service requirements), the time
or times at which Options shall cease to be or become exercisable following termination of
Continuous Service or upon other conditions, the methods by which the exercise price may be paid or
deemed to be paid (including, in the discretion of the Plan Administrator, a cashless exercise
procedure), the form of such payment, including, without limitation, cash, Stock, Shares subject to
the Option (a “net” exercise), other Awards or awards granted under other plans of the Company or a
Related Entity, other property (including notes or other contractual obligations of Participants to
make payment on a deferred basis) or any other form of consideration legally permissible, and the
methods by or forms in which Stock will be delivered or deemed to be delivered to Participants.



               (v) Termination of Service. Subject to earlier termination of the Option as otherwise
provided in the Plan and unless otherwise specifically provided by the Plan Administrator with
respect to an Option and set forth in the Award Agreement, an Option shall remain exercisable, to
the extent vested, after a Participant’s termination of Continuous Service only during the
applicable time period determined in accordance with this Section and thereafter shall terminate
and no longer be exercisable:



                    (A) Death or Disability. If the Participant’s Continuous Service terminates because
of the death or Disability of the Participant, the Option, to the extent unexercised and vested and
exercisable



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on the date on which the Participant’s Continuous Service terminated, may be exercised
by the Participant (or the Participant’s legal representative or estate) at any time prior to the
expiration of twelve (12) months (or such other period of time as determined by the Plan
Administrator, in its discretion) after the date on which the Participant’s Continuous Service
terminated, but in any event only with respect to the vested portion of the Option and no later
than the Option Expiration Date.




                    (B) Termination for Cause. Notwithstanding any other provision of the Plan to the
contrary, if the Participant’s Continuous Service is terminated for Cause, the Option shall
terminate and cease to be exercisable immediately upon such termination of Continuous Service.



                    (C) Other Termination of Service. If the Participant’s Continuous Service terminates
for any reason, except Disability, death or Cause, the Option, to the extent unexercised, vested
and exercisable by the Participant on the date on which the Participant’s Continuous Service
terminated, may be exercised by the Participant at any time prior to the expiration of thirty (30)
days (or such longer period of time as determined by the Plan Administrator, in its discretion)
after the date on which the Participant’s Continuous Service terminated, but in any event only with
respect to the vested portion of the Option and no later than the Option Expiration Date.



                    (D) Extension for Securities Law Violations. Notwithstanding the other provisions of
this Section 6(b)(v) and contingent upon this provision not adversely affecting the exemption of
the Option from the provisions of Section 409A of the Code, if the Participant’s Continuous Service
terminates for any reason, except Cause, and the Participant is precluded by federal or state
securities laws from selling the Shares, so that the Participant has less than a thirty (30) day
period from the termination of Participant’s Continuous Service to the expiration date of the
Option in which the Participant would be permitted by federal or state securities laws to sell the
Shares, then the period for exercising the Option following the termination of Participant’s
Continuous Service shall automatically be extended by an additional period of up to thirty (30)
days measured from the date the Participant is first free to sell Shares; provided, however, that
in no event shall the Option be exercisable after the specified Option Expiration Date and the
maximum date permitted for exemption of the Option under Section 409A of the Code. The
determination of whether the Participant is precluded from selling the Shares subject to the Option
by federal or state securities laws shall be made by the Plan Administrator and such determination
shall be final, binding and conclusive.



               (vi) Incentive Stock Options. The terms of any Incentive Stock Option granted under
the Plan shall comply in all respects with the provisions of Section 422 of the Code. If and to
the extent
required to comply with Section 422 of the Code, Options granted as Incentive Stock Options
shall be subject to the following special terms and conditions:



                    (1) The Option shall not be exercisable more than ten years after the date such
Incentive Stock Option is granted; provided, however, that if a Participant owns or is deemed to
own (by reason of the attribution rules of Section 424(d) of the Code) more than 10% of the
combined voting power of all classes of stock of the Company or any Parent or Subsidiary and the
Incentive Stock Option is granted to such Participant, the Incentive Stock Option shall not be
exercisable (to the extent required by the Code at the time of the grant) for no more than five
years from the date of grant; and



                    (2) If the aggregate Fair Market Value (determined as of the date the Incentive
Stock Option is granted) of the Shares with respect to which Incentive Stock Options granted under
the Plan and all other option plans of the Company, its Parent or any Subsidiary are exercisable
for the first time by a Participant during any calendar year in excess of $100,000, then such
Participant’s Incentive Stock Option(s) or portions thereof that exceed such $100,000 limit shall
be treated as Non-Qualified Stock Options (in the reverse order in which they were granted, so that
the last Incentive Stock Option will be the first treated as a Non-Qualified Stock Option). This
paragraph shall only apply to the extent such limitation is applicable under the Code at the time
of the grant.



          (c) Stock Appreciation Rights. The Plan Administrator is authorized to grant Stock
Appreciation Rights to Participants on the following terms and conditions:





9









 








               (i) Agreement. Each grant of a Stock Appreciation Right shall be evidenced by an
Award Agreement. Such Award Agreement shall be subject to all applicable terms and conditions of
the Plan and may be subject to any other terms and conditions which are not inconsistent with the
Plan and which the Plan Administrator deems appropriate for inclusion in the Award Agreement. The
provisions of the various Award Agreements entered into under the Plan need not be identical.



               (ii) Right to Payment. A Stock Appreciation Right shall confer on the Participant to
whom it is granted a right to receive, upon exercise thereof, the excess of (A) the Fair Market
Value of one share of stock on the date of exercise over (B) the grant price of the Stock
Appreciation Right as determined by the Plan Administrator.



               (iii) Other Terms. The Plan Administrator shall determine at the date of grant or
thereafter, the time or times at which and the circumstances under which a Stock Appreciation Right
may be exercised in whole or in part (including based on achievement of performance goals and/or
future service requirements), the time or times at which Stock Appreciation Rights shall cease to
be or become exercisable following termination of Continuous Service or upon other conditions, the
form of payment upon exercise of Shares, cash or other property, the method of exercise, method of
settlement, form of consideration payable in settlement (either cash, Shares or other property),
method by or forms in which Stock will be delivered or deemed to be delivered to Participants,
whether or not a Stock Appreciation Right shall be in tandem or in combination with any other
Award, and any other terms and conditions of any Stock Appreciation Right. Stock Appreciation
Rights may be either freestanding or in tandem with other Awards. Notwithstanding any other
provision of the Plan, unless otherwise specifically determined by the Plan Administrator, each
Stock Appreciation Right shall be structured to either comply with or be exempt from Section 409A
of the Code.



          (d) Restricted Stock. The Plan Administrator is authorized to grant Restricted Stock
to any Eligible Person on the following terms and conditions:




               (i) Grant and Restrictions. Restricted Stock shall be subject to such restrictions on
transferability, risk of forfeiture and other restrictions, if any, as the Plan Administrator may
impose, or as otherwise
provided in this Plan. The terms of any Restricted Stock granted under the Plan shall be set
forth in a written Award Agreement which shall contain provisions determined by the Plan
Administrator and not inconsistent with the Plan. The restrictions may lapse separately or in
combination at such times, under such circumstances (including based on achievement of performance
goals and/or future service requirements), in such installments or otherwise, as the Plan
Administrator may determine at the date of grant or thereafter. Except to the extent restricted
under the terms of the Plan and any Award Agreement relating to the Restricted Stock, a Participant
granted Restricted Stock shall have all of the rights of a shareholder, including the right to vote
the Restricted Stock and the right to receive dividends thereon (subject to any mandatory
reinvestment or other requirement imposed by the Plan Administrator). During the restricted period
applicable to the Restricted Stock, subject to Section 10(b) below, the Restricted Stock may not
be sold, transferred, pledged, hypothecated, margined or otherwise encumbered by the Participant.



               (ii) Forfeiture. Except as otherwise determined by the Plan Administrator, upon
termination of a Participant’s Continuous Service during the applicable restriction period, the
Participant’s Restricted Stock that is at that time subject to a risk of forfeiture that has not
lapsed or otherwise been satisfied shall be forfeited to or reacquired by the Company; provided
that the Plan Administrator may provide, by rule or regulation or in any Award Agreement, or may
determine in any individual case, that restrictions or forfeiture conditions relating to Restricted
Stock shall be waived in whole or in part in the event of terminations resulting from specified
causes, and the Plan Administrator may in other cases waive in whole or in part the forfeiture of
Restricted Stock, as the Plan Administrator determines, in its discretion.



               (iii) Certificates for Shares. Restricted Stock granted under the Plan may be
evidenced in such manner as the Plan Administrator shall determine. If certificates representing
Restricted Stock are registered in the name of the Participant, the Plan Administrator may require
that such certificates bear an appropriate legend referring to the terms, conditions and
restrictions applicable to such Restricted Stock, that the Company retain physical possession of
the certificates, that the certificates be kept with an escrow agent and that the Participant
deliver a stock power to the Company, endorsed in blank, relating to the Restricted Stock.



10









 





               (iv) Dividends and Splits. As a condition to the grant of an Award of Restricted
Stock, the Plan Administrator may require or permit a Participant to elect that any cash dividends
paid on a Share of Restricted Stock be automatically reinvested in additional Shares of Restricted
Stock or applied to the purchase of additional Awards under the Plan. Unless otherwise determined
by the Plan Administrator, Shares distributed in connection with a stock split or stock dividend,
and other property distributed as a dividend, shall be subject to restrictions and a risk of
forfeiture to the same extent as the Restricted Stock with respect to which such Shares or other
property have been distributed.



          (e) Stock Units. The Plan Administrator is authorized to grant Stock Units to
Participants, which are rights to receive Shares, cash or other property, or a combination thereof
at the end of a specified time period, subject to the following terms and conditions:




               (i) Award and Restrictions. Satisfaction of an Award of Stock Units shall occur upon
expiration of the time period specified for such Stock Units by the Plan Administrator (or, if
permitted by the Plan Administrator, as elected by the Participant). In addition, Stock Units
shall be subject to such restrictions (which may include a risk of forfeiture) as the Plan
Administrator may impose, if any, which restrictions may lapse at the expiration of the time period
or at earlier specified times (including based on achievement of performance goals and/or future
service requirements), separately or in combination, in installments or otherwise, as the Plan
Administrator may determine. The terms of an Award of Stock Units shall be set forth in a written
Award Agreement which shall contain provisions determined by the Plan Administrator and not
inconsistent with the Plan. Stock Units may be satisfied by delivery of Stock, cash equal to the
Fair Market Value of the specified number of Shares covered by the Stock Units, or a combination
thereof, as determined by the Plan Administrator at the date of grant or thereafter. Prior to
satisfaction of an Award of Stock Units, an Award of Stock Units carries no voting or dividend or
other rights associated with share ownership. Notwithstanding any other provision of the Plan,
unless specifically determined by the Plan Administrator, each Stock Unit shall be structured to
either comply with or be exempt from Section 409A of the Code.



               (ii) Forfeiture. Except as otherwise determined by the Plan Administrator, upon
termination of a Participant’s Continuous Service during the applicable time period or portion
thereof to which forfeiture conditions apply (as provided in the Award Agreement evidencing the
Stock Units), the Participant’s Stock Units (other than those vested Stock Units subject to
deferral at the election of the Participant) shall be forfeited; provided that the Plan
Administrator may provide, by rule or regulation or in any Award Agreement, or may determine in any
individual case, that restrictions or forfeiture conditions relating to Stock Units shall be waived
in whole or in part in the event of terminations resulting from specified causes, and the Plan
Administrator may in other cases waive in whole or in part the forfeiture of Stock Units at its
discretion.



               (iii) Dividend Equivalents. Unless otherwise determined by the Plan Administrator at
date of grant, any Dividend Equivalents that are granted with respect to any Award of Stock Units
shall be either (A) paid with respect to such Stock Units at the dividend payment date in cash or
in Shares of unrestricted Stock having a Fair Market Value equal to the amount of such dividends,
or (B) deferred with respect to such Stock Units and the amount or value thereof automatically
deemed reinvested in additional Stock Units, other Awards or other investment vehicles, as the Plan
Administrator shall determine or permit the Participant to elect.



          (f) Bonus Stock and Awards in Lieu of Obligations. The Plan Administrator is
authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu of Company
obligations to pay cash or deliver other property under the Plan or under other plans or
compensatory arrangements, provided that, in the case of Participants subject to Section 16 of the
Exchange Act, the amount of such grants remains within the discretion of the Plan Administrator to
the extent necessary to ensure that acquisitions of Stock or other Awards are exempt from liability
under Section 16(b) of the Exchange Act. Stock or Awards granted hereunder shall be subject to
such other terms as shall be determined by the Plan Administrator.




          (g) Dividend Equivalents. The Plan Administrator is authorized to grant Dividend
Equivalents to any Eligible Person entitling the Eligible Person to receive cash, Shares, other
Awards, or other property equal in value to dividends paid with respect to a specified number of
Shares, or other periodic payments. Dividend Equivalents may be awarded on a free-standing basis
or in connection with another Award. The terms of an Award of Dividend Equivalents shall be set
forth in a written Award Agreement which shall contain provisions




11









 







determined by the Plan
Administrator and not inconsistent with the Plan. The Plan Administrator may provide that Dividend
Equivalents shall be paid or distributed when accrued or shall be deemed to have been reinvested in
additional Stock, Awards, or other investment vehicles, and subject to such restrictions on
transferability and risks of forfeiture, as the Plan Administrator may specify. Notwithstanding
any other provision of the Plan, unless specifically determined by the Plan Administrator, each
Dividend Equivalent shall be structured to either comply with or be exempt from Section 409A of the
Code.




          (h) Performance Awards. The Plan Administrator is authorized to grant Performance
Awards to any Eligible Person payable in cash, Shares, other property, or other Awards, on terms
and conditions established by the Plan Administrator, subject to the provisions of Section 7 if and
to the extent that the Plan Administrator shall, in its sole discretion, determine that an Award
shall be subject to those provisions. The performance criteria to be achieved during any
Performance Period and the length of the Performance Period shall be determined by the Plan
Administrator upon the grant of each Performance Award. Except as provided in this Plan or as may
be provided in an Award Agreement, Performance Awards will be distributed only after the end of the
relevant Performance Period. The performance goals to be achieved for each Performance Period
shall be conclusively determined by the Plan Administrator and may be based upon the criteria set
forth in Section 7(b), or in the case of an Award that the Plan Administrator determines shall not
be subject to Section 7 hereof, any other criteria that the Plan Administrator, in its sole
discretion, shall determine should be used for that purpose. The amount of the Award to be
distributed shall be conclusively determined by the Plan Administrator. Performance Awards may be
paid in a lump sum or in installments following the close of the Performance Period or, in
accordance with procedures established by the Plan Administrator, on a deferred basis.




          (i) Other Stock-Based Awards. The Plan Administrator is authorized, subject to
limitations under applicable law, to grant to any Eligible Person such other Awards that may be
denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or
related to, Shares, as deemed by the Plan Administrator to be consistent with the purposes of the
Plan, including, without limitation, convertible or exchangeable debt securities, other rights
convertible or exchangeable into Stock, purchase rights for Stock, Awards with value and payment
contingent upon performance of the Company or any other factors designated by the Plan
Administrator, and Awards valued by reference to the book value of Stock or the value of securities
of or the performance of specified Related Entities or business units. These Awards may be granted
alone or in connection with other awards (whether or not such other awards are granted under the
Plan). The Plan Administrator shall determine the terms and conditions of such Awards. The terms
of any Award pursuant to this Section shall be set forth in a written Award Agreement which shall
contain provisions determined by the Plan Administrator and not inconsistent with the Plan. Stock
delivered pursuant to an Award in the nature of a purchase right granted under this Section 6(h)
shall be purchased for such consideration (including without limitation loans from the Company or a
Related Entity), paid for at such times, by such methods, and in such forms, including, without
limitation, cash, Stock, other Awards or other property, as the Plan Administrator shall determine.
Cash awards, as an element of or supplement to any other Award under the Plan, may also be
granted pursuant to this Section 6(i). Notwithstanding any other provision of the Plan, unless
specifically determined by the Plan Administrator, each Award shall be structured to either be
exempt or comply with Section 409A of the Code.




     7. Tax Qualified Performance Awards.



          (a) Covered Employees. A Committee, composed in compliance with the requirements of
Section 162(m) of the Code, in its discretion, may determine at the time an Award is granted to an
Eligible Person who is, or is likely to be, as of the end of the tax year in which the Company
would claim a tax deduction in connection with such Award, a Covered Employee, that the provisions
of this Section 7 shall be applicable to such Award.




          (b) Performance Criteria. If an Award is subject to this Section 7, then the lapsing of
restrictions thereon and the distribution of cash, Shares or other property pursuant thereto, as
applicable, shall be contingent upon achievement of one or more objective performance goals.
Performance goals shall be objective and shall otherwise meet the requirements of Section 162(m) of
the Code and regulations thereunder including the requirement that the level or levels of
performance targeted by the Committee result in the achievement of performance goals being
“substantially uncertain.” One or more of the following business criteria for the Company, on a
consolidated basis, and/or for Related Entities, or for business or geographical units of the
Company and/or
a




12









 







Related Entity (except with respect to the total stockholder return and earnings
per share criteria), shall be used by the Committee in establishing performance goals for such
Awards: (1) earnings per share; (2) revenues or margins; (3) cash flow; (4) operating margin; (5)
return on net assets, investment, capital, or equity; (6) economic value added; (7) direct
contribution; (8) net income; pretax earnings; earnings before interest and taxes; earnings before
interest, taxes, depreciation and amortization; earnings after interest expense and before
extraordinary or special items; operating income; income before interest income or expense, unusual
items and income taxes, local, state or federal and excluding budgeted and actual bonuses which
might be paid under any ongoing bonus plans of the Company; (9) working capital; (10) management of
fixed costs or variable costs; (11) identification or consummation of investment opportunities or
completion of specified projects in accordance with corporate business plans, including strategic
mergers, acquisitions or divestitures; (12) total stockholder return; and (13) debt reduction. Any
of the above goals may be determined on an absolute or relative basis or as compared to the
performance of a published or special index deemed applicable by the Committee including, but not
limited to, the Standard & Poor’s 500 Stock Index or a group of companies that are comparable to
the Company. The Committee shall exclude the impact of an event or occurrence which the Committee
determines should appropriately be excluded, including without limitation (i) restructurings,
discontinued operations, extraordinary items, and other unusual or non-recurring charges, (ii) an
event either not directly related to the operations of the Company or not within the reasonable
control of the Company’s management, or (iii) a change in accounting standards required by
generally accepted accounting principles.




          (c) Performance Period; Timing For Establishing Performance Goals. Achievement of
performance goals in respect of such Performance Awards shall be measured over a Performance
Period, as specified by the Committee. Performance goals shall be established not later than
ninety (90) days after the beginning of any Performance Period applicable to such Performance
Awards, or at such other date as may be required or permitted for “performance-based compensation”
under Section 162(m) of the Code.




          (d) Adjustments. The Committee may, in its discretion, reduce the amount of a settlement
otherwise to be made in connection with Awards subject to this Section 7, but may not exercise
discretion to increase any such amount payable to a Covered Employee in respect of an Award subject
to this Section 7. The Committee shall specify the circumstances in which such Awards shall be
paid or forfeited in the event of termination of Continuous Service by the Participant prior to the
end of a Performance Period or settlement of Awards.




          (e) Committee Certification. No Participant shall receive any payment under the Plan
unless the Committee has certified, by resolution or other appropriate action in writing, that the
performance criteria and any other material terms previously established by the Committee or set
forth in the Plan, have been satisfied to the extent necessary to qualify as “performance based
compensation” under Section 162(m) of the Code.




     8. Certain Provisions Applicable to Awards or Sales.



          (a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted under the
Plan may, in the discretion of the Plan Administrator, be granted either alone or in addition to,
in tandem with, or in substitution or exchange for, any other Award or any award granted under
another plan of the Company, any Related Entity, or any business entity to be acquired by the
Company or a Related Entity, or any other right of a Participant to receive payment from the
Company or any Related Entity. Such additional, tandem, and substitute or exchange Awards may be
granted at any time. If an Award is granted in substitution or exchange for another Award or
award, the Plan Administrator shall require the surrender of such other Award or award in
consideration for the grant of the new Award. In addition, Awards may be granted in lieu of cash
compensation, including in lieu of cash amounts payable under other plans of the Company or any
Related Entity.




          (b) Form and Timing of Payment Under Awards; Deferrals. Subject to the terms of the
Plan and any applicable Award Agreement, payments to be made by the Company or a Related Entity
upon the exercise of an Option or other Award or settlement of an Award may be made in such forms
as the Plan Administrator shall determine, including, without limitation, cash, other Awards or
other property, and may be made in a single payment or transfer, in installments, or on a deferred
basis. The settlement of any Award may be accelerated, and cash paid in lieu of Stock in
connection with such settlement, in the discretion of the Plan Administrator or upon occurrence of
one or more specified events (in addition to a Change in Control). Installment or deferred
payments may be





13









 







required by the Plan Administrator (subject to Section 10(g) of the Plan) or
permitted at the election of the Participant on terms and conditions established by the Plan
Administrator. Payments may include, without limitation, provisions for the payment or crediting
of a reasonable interest rate on installment or deferred payments or the grant or crediting of
Dividend Equivalents or other amounts in respect of installment or deferred payments denominated in
Stock.




          (c) Exemptions from Section 16(b) Liability. It is the intent of the Company that
this Plan comply in all respects with applicable provisions of Rule 16b-3 or Rule 16a-1(c)(3) to
the extent necessary to ensure that neither the grant of any Awards to nor other transaction by a
Participant who is subject to Section 16 of the Exchange Act is subject to liability under
Section 16(b) thereof (except for transactions acknowledged in writing to be non-exempt by
such Participant). Accordingly, if any provision of this Plan or any Award Agreement does not
comply with the requirements of Rule 16b-3 or Rule 16a-1(c)(3) as then applicable to any such
transaction, such provision will be construed or deemed amended to the extent necessary to conform
to the applicable requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such Participant shall
avoid liability under Section 16(b).




          (d) Code Section 409A. If and to the extent that the Plan Administrator believes that
any Awards may constitute a “nonqualified deferred compensation plan” under Section 409A of the
Code, the terms and conditions set forth in the Award Agreement for that Award shall be drafted in
a manner that is intended to comply with, and shall be interpreted in a manner consistent with, the
applicable requirements of Section 409A of the Code, unless otherwise agreed to in writing by the
Participant and the Company.




     9. Change in Control; Corporate Transaction.



          (a) Change in Control.




               (i) The Plan Administrator may, in its discretion, accelerate the vesting, exercisability,
lapsing of restrictions, or expiration of deferral of any Award, including upon the occurrence of a
Change in Control. In addition, the Plan Administrator may provide in an Award Agreement that the
performance goals relating to any Award will be deemed to have been met upon the occurrence of any
Change in Control.



               (ii) In addition to the terms of Sections 9(a)(i) above, the effect of a “change in control,”
may be provided (1) in an employment, compensation, or severance agreement, if any, between the
Company or any Related Entity and the Participant, relating to the Participant’s employment,
compensation, or severance with or from the Company or such Related Entity, or (2) in the Award
Agreement.



          (b) Corporate Transactions. In the event of a Corporate Transaction, any surviving
entity or acquiring entity or its parent (together, the “Surviving Entity”) may either (i)
assume any or all Awards outstanding under the Plan; (ii) continue any or all Awards outstanding
under the Plan; or (iii) substitute similar stock awards for outstanding Awards (it being
understood that similar awards include, but are not limited to, awards to acquire the same
consideration paid to the shareholders or the Company, as the case may be, pursuant to the
Corporate Transaction). In the event that any Surviving Entity does not assume or continue any or
all such outstanding Awards or substitute similar stock awards for such outstanding Awards, then
with respect to Awards that have been not assumed, continued or substituted, then such Awards shall
terminate if not exercised (if applicable) at or prior to such effective time (contingent upon the
effectiveness of the Corporate Transaction); provided that the Plan Administrator provides the
Participants reasonable notice of the termination of their Awards and a period of at least three
(3) business days to exercise the Awards (to the extent the Awards are exercisable).




          The Plan Administrator, in its discretion and without the consent of any Participant, may (but
is not obligated to) either (i) accelerate the vesting of any Awards (and, if applicable, the time
at which such Awards may be exercised) in full or as to some percentage of the Award to a date
prior to the effective time of such Corporate Transaction as the Plan Administrator shall determine
(contingent upon the effectiveness of each Corporate Transaction) or (ii) provide for a cash
payment in exchange for the termination of an Award or any portion thereof where such cash payment
is equal to the Fair Market Value of the Shares that the Participant would receive if the Award
were fully vested and exercised (if applicable) as of such date (less any applicable exercise
price). In the event that the Plan Administrator accelerates the vesting of any Award, the Plan
Administrator shall





14









 







provide the Participant whose Award has been accelerated notice of the vesting acceleration
and a period of fifteen (15) days from the date of the notice in which to exercise the Award.




          (c) Notwithstanding the foregoing, with respect to Restricted Stock and any other Award
granted under the Plan where the Company has any forfeiture, reacquisition or repurchase rights,
the forfeiture, reacquisition or repurchase rights for such Awards may be assigned by the Company
to the Successor Entity in connection with such Corporate Transaction. In the event any such
rights are not continued or assigned to the Successor Entity, then such rights shall lapse and the
Award shall be fully vested as of the effective time of the Corporate Transaction. In addition,
the Plan Administrator, in its discretion, may (but is not obligated to) provide that any
forfeiture, reacquisition or repurchase rights held by the Company with respect to any such Awards
shall lapse in whole or in part (contingent upon the effectiveness of the Corporate Transaction).




          (d) Dissolution or Liquidation. In the event of a dissolution or liquidation of the
Company, then all outstanding Awards shall terminate immediately prior to the completion of such
dissolution or liquidation, and Shares subject to the Company’s repurchase option may be
repurchased by the Company notwithstanding the fact that the holder of such stock is still in
Continuous Service.




     10. General Provisions.



          (a) Compliance With Legal and Other Requirements. The Company may, to the extent
deemed necessary or advisable by the Plan Administrator, postpone the issuance or delivery of Stock
or payment of other benefits under any Award until completion of such registration or qualification
of such Stock or other required action under any federal or state law, rule or regulation, listing
or other required action with respect to any stock exchange or automated quotation system upon
which the Stock or other Company securities are listed or quoted, or compliance with any other
obligation of the Company, as the Plan Administrator, may consider appropriate, and may require any
Participant to make such representations, furnish such information and comply with or be subject to
such other conditions as it may consider appropriate in connection with the issuance or delivery of
Stock or payment of other benefits in compliance with applicable laws, rules, and regulations,
listing requirements, or other obligations. The foregoing notwithstanding, in connection with a
Change in Control, the Company shall take or cause to be taken no action, and shall undertake or
permit to arise no legal or contractual obligation, that results or would result in any
postponement of the issuance or delivery of Stock or payment of benefits under any Award or the
imposition of any other conditions on such issuance, delivery or payment, to the extent that such
postponement or other condition would represent a greater burden on a Participant than existed on
the ninetieth (90th) day preceding the Change in Control.




          (b) Limits on Transferability; Beneficiaries. Except as determine by the Plan
Administrator, a Participant may not assign, sell, transfer, or otherwise encumber or subject to
any lien any Award or other right or interest granted under this Plan, in whole or in part, other
than by will or by operation of the laws of descent and distribution, and such Awards or rights
that may be exercisable shall be exercised during the lifetime of the Participant only by the
Participant or his or her guardian or legal representative.




          (c) Adjustments.




               (i) Adjustments to Awards. In the event that any extraordinary dividend or other
distribution (whether in the form of cash, Stock, or other property), recapitalization, forward or
reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, share
exchange, liquidation, dissolution or other similar corporate transaction or event affects the
Stock and/or such other securities of the Company or any other issuer such that a substitution,
exchange, or adjustment is determined by the Plan Administrator to be appropriate, then the Plan
Administrator shall, in such manner as the Plan Administrator may deem equitable, substitute,
exchange, or adjust any or all of (A) the number and kind of Shares which reserved for issuance in
connection with Awards granted thereafter, (B) the number and kind of Shares by which annual
per-person Award limitations are measured under Section 5 hereof, (C) the number and kind of Shares
subject to or deliverable in
respect of outstanding Awards, (D) the exercise price, grant price or purchase price relating
to any Award and/or make provision for payment of cash or other property in respect of any
outstanding Award, and (E) any other aspect of any Award that the Plan Administrator determines to
be appropriate.



15









 





               (ii) Other Adjustments. The Plan Administrator (which shall be a Committee to the
extent such authority is required to be exercised by a Committee to comply with Code Section
162(m)) is authorized to make adjustments in the terms and conditions of, and the criteria included
in, Awards (including Awards subject to performance goals) in recognition of unusual or
nonrecurring events (including, without limitation, acquisitions and dispositions of businesses and
assets) affecting the Company, any Related Entity or any business unit, or the financial statements
of the Company or any Related Entity, or in response to changes in applicable laws, regulations,
accounting principles, tax rates and regulations or business conditions or in view of the Plan
Administrator’s assessment of the business strategy of the Company, any Related Entity or business
unit thereof, performance of comparable organizations, economic and business conditions, personal
performance of a Participant, and any other circumstances deemed relevant; provided that no such
adjustment shall be authorized or made if and to the extent that such authority or the making of
such adjustment would cause Options, Stock Appreciation Rights or Performance Awards granted to
Participants designated by the Plan Administrator as Covered Employees and intended to qualify as
“performance-based compensation” under Code Section 162(m) and the regulations thereunder to
otherwise fail to qualify as “performance-based compensation” under Code Section 162(m) and
regulations thereunder.



          (d) Taxes. The Company and any Related Entity are authorized to withhold from any
Award granted, any payment relating to an Award under the Plan, including from a distribution of
Stock, or any payroll or other payment to a Participant, amounts of withholding and other taxes due
or potentially payable in connection with any transaction involving an Award, and to take such
other action as the Plan Administrator may deem advisable to enable the Company, any Related Entity
and the Participants to satisfy obligations for the payment of withholding taxes and other tax
obligations relating to any Award. This authority shall include authority to withhold or receive
Stock or other property and to make cash payments in respect thereof in satisfaction of a
Participant’s tax obligations, either on a mandatory or elective basis in the discretion of the
Plan Administrator.




          (e) Changes to the Plan and Awards. The Board may amend, alter, suspend, discontinue
or terminate the Plan, or any Committee’s authority to grant Awards under the Plan, without the
consent of shareholders or Participants. Any amendment or alteration to the Plan shall be subject
to the approval of the Company’s shareholders if such shareholder approval is deemed necessary and
advisable by the Board. However, without the consent of an affected Participant, no such amendment,
alteration, suspension, discontinuance or termination of the Plan may materially and adversely
affect the rights of such Participant under any previously granted and outstanding Award. The Plan
Administrator may waive any conditions or rights under, or amend, alter, suspend, discontinue or
terminate any Award theretofore granted and any Award Agreement relating thereto, except as
otherwise provided in the Plan; provided that, without the consent of an affected Participant, no
such action may materially and adversely affect the rights of such Participant under such Award.




          (f) Limitation on Rights Conferred Under Plan. Neither the Plan nor any action taken
hereunder shall be construed as (i) giving any Eligible Person or Participant the right to continue
as an Eligible Person or Participant or in the employ of the Company or a Related Entity; (ii)
interfering in any way with the right of the Company or a Related Entity to terminate any Eligible
Person’s or Participant’s Continuous Service at any time, (iii) giving an Eligible Person or
Participant any claim to be granted any Award under the Plan or to be treated uniformly with other
Participants and Employees, or (iv) conferring on a Participant any of the rights of a shareholder
of the Company unless and until the Participant is duly issued or transferred Shares in accordance
with the terms of an Award.




          (g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended to constitute an “unfunded” plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant or obligations to deliver
Stock pursuant to an Award, nothing contained in the Plan or any Award shall give any such
Participant any rights that are greater than those of a general creditor of the Company; provided
that the Plan Administrator may authorize the creation of trusts and deposit therein cash, Stock,
other Awards or other property, or make other arrangements to meet the Company’s obligations under
the Plan. Such trusts or other arrangements shall be consistent with the “unfunded” status of the
Plan unless the Plan Administrator otherwise determines with the consent of each affected
Participant. The trustee of such trusts may be authorized to dispose of trust assets and reinvest
the proceeds in alternative investments, subject to such terms and conditions as the Plan
Administrator may specify and in accordance with applicable law.





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          (h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor its
submission to the shareholders of the Company for approval shall be construed as creating any
limitations on the power of the Board or the Committee thereof to adopt such other incentive
arrangements as it may deem desirable including incentive arrangements and awards which do not
qualify under Code Section 162(m).




          (i) Fractional Shares. No fractional Shares shall be issued or delivered pursuant to
the Plan or any Award. The Plan Administrator shall determine whether cash, other Awards or other
property shall be issued or paid in lieu of such fractional shares or whether such fractional
shares or any rights thereto shall be forfeited or otherwise eliminated.




          (j) Governing Law. The validity, construction and effect of the Plan, any rules and
regulations under the Plan, and any Award Agreement shall be determined in accordance with the laws
of the State of Nevada without giving effect to principles of conflicts of laws, and applicable
federal law.




          (k) Plan Effective Date and Shareholder Approval; Termination of Plan. The Plan shall
become effective on the Effective Date, subject to subsequent approval within twelve (12) months of
its adoption by the Board by shareholders of the Company eligible to vote in the election of
directors, by a vote sufficient to meet the requirements of Applicable Laws. Awards may be granted
prior and subject to shareholder approval, but may not be exercised or otherwise settled in the
event shareholder approval is not obtained. The Plan shall terminate no later than ten (10) years
from the date of the later of (x) the Effective Date and (y) the date an increase in the number of
shares reserved for issuance under the Plan is approved by the Board (so long as such increase is
also approved by the shareholders).





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