exv4w3



 







Exhibit 4.3




CIRRUS LOGIC, INC.




2006 STOCK INCENTIVE PLAN




     1. PURPOSE



          1.1 Purpose. The purpose of the Cirrus Logic, Inc. 2006 Stock Incentive Plan (the
"Plan”) is to provide a means through which Cirrus Logic, Inc. (the “Company”) may attract able
persons to serve as employees, directors, or consultants of the Company or its Affiliates and to
provide a means whereby those individuals upon whom the responsibilities of the successful
administration and management of the Company rest, and whose present and potential contributions to
the welfare of the Company are of importance, may acquire and maintain stock ownership, thereby
strengthening their concern for the welfare of the Company. A further purpose of the Plan is to
provide such individuals with additional incentive and reward opportunities designed to enhance the
profitable growth of the Company. Accordingly, the Plan provides for granting Incentive Stock
Options, options that do not constitute Incentive Stock Options, Restricted Stock Awards,
Performance Awards, Phantom Stock Awards, and Bonus Stock Awards, or any combination of the
foregoing, as is best suited to the circumstances of the particular employee, consultant, or
director as provided in the Plan.




     2. DEFINITIONS



          2.1 Definitions. Whenever the following capitalized words or phrases are used, the
following definitions will be applicable throughout the Plan, unless specifically modified by any
Section:




     2.1.1 “Affiliate” means any corporation, partnership, limited liability company or
partnership, association, trust or other organization which, directly or indirectly, controls, is
controlled by, or is under common control with, the Company. For purposes of the preceding
sentence, “control” (including, with correlative meanings, the terms “controlled by” and “under
common control with”), as used with respect to any entity or organization, shall mean the
possession, directly or indirectly, of the power (i) to vote more than 50% of the securities having
ordinary voting power for the election of directors of the controlled entity or organization, or
(ii) to direct or cause the direction of the management and policies of the controlled entity or
organization, whether through the ownership of voting securities or by contract or otherwise.



     2.1.2 “Award” means, individually or collectively, any Option, Restricted Stock Award,
Performance Award, Phantom Stock Award, or Bonus Stock Award.



     2.1.3 “Board” means the board of directors of the Company.



     2.1.4
“Bonus Stock Award” means an Award granted under Section 11 of the Plan.



     2.1.5 “Change of Control Value” means the amount determined in accordance with Section
12.4.



 









 





     2.1.6 “Code” means the Internal Revenue Code of 1986, as amended. Reference in the Plan to
any section of the Code will be deemed to include any amendments or successor provisions to such
section and any regulations under such section.



     2.1.7 “Committee” means a committee of the Board that is selected by the Board as provided in
Section 4.1.



     2.1.8 “Common Stock” means the common stock, $0.001 par value, of the Company or any security
into which such common stock may be changed by reason of any transaction or event of the type
described in Section 12.



     2.1.9 “Company” means Cirrus Logic, Inc., a Delaware corporation.



     2.1.10 “Consultant” means any person who is not an Employee or Director and who is providing
services to the Company or any Affiliate as an advisor, consultant, or other non-common law
employee.



     2.1.11 “Corporate Change” means either (i) the Company will not be the surviving entity in any
merger, share exchange, or consolidation (or survives only as a subsidiary of an entity), (ii) the
Company sells, leases, or exchanges, or agrees to sell, lease, or exchange, all or substantially
all of its assets to any other person or entity, (iii) the Company is to be dissolved and
liquidated, (iv) any person or entity, including a “group” as contemplated by Section 13(d)(3) of
the 1934 Act, acquires or gains ownership or control (including, without limitation, power to vote)
of more than 50% of the outstanding shares of the Company’s voting stock (based upon voting power),
or (v) at such time as the Company becomes a reporting company under the 1934 Act, as a result of
or in connection with a contested election of Directors, the persons who were Directors of the
Company before such election will cease to constitute a majority of the Board; provided,
however, that a Corporate Change will not include (A) any reorganization, merger,
consolidation, sale, lease, exchange, or similar transaction, which involves solely the Company and
one or more entities wholly-owned, directly or indirectly, by the Company immediately prior to such
event or (B) the consummation of any transaction or series of integrated transactions immediately
following which the record holders of the voting stock of the Company immediately prior to such
transaction or series of transactions continue to hold 50% or more of the voting stock (based upon
voting power) of (1) any entity that owns, directly or indirectly, the stock of the Company, (2)
any entity with which the Company has merged, or (3) any entity that owns an entity with which the
Company has merged.



     2.1.12 “Director” means (i) an individual elected to the Board by the stockholders of the
Company or by the Board under applicable corporate law who either is serving on the Board on the
date the Plan is adopted by the Board or is elected to the Board after such date and (ii) for
purposes of and relating to eligibility for the grant of an Award, an individual elected to the
board of directors of any Affiliate.



     2.1.13 “Employee” means any person in an employment relationship with the Company or any
Affiliate. The payment of a Director’s fee by the Company shall not be sufficient in and of itself
to constitute employment by the Company.



     2.1.14 “Fair Market Value” means, as of any specified date, (i) the closing sales price of the
Common Stock either (A) if the Common Stock is traded on the National Market System of the NASDAQ,
as reported on the National Market System of NASDAQ on that date (or if no sales occur on that
date, on the last preceding date on which such sales of the Common Stock are



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so reported), or (B) if the Common Stock is listed on a national securities exchange, as
reported on the stock exchange composite tape on that date (or if no sales occur on that date, on
the last preceding date on which such sales of the Common Stock are so reported); (ii) if the
Common Stock is not traded on the National Market System of the NASDAQ or a national securities
exchange but is traded over the counter at the time a determination of its fair market value is
required to be made under the Plan, the closing sales price (or if selling prices are not reported,
the average between the closing bid and asked prices of Common Stock) on the most recent date on
which Common Stock was publicly traded; (iii) in the event Common Stock is not publicly traded at
the time a determination of its value is required to be made under the Plan, the amount determined
by the Committee in its discretion in such manner as it deems appropriate; or (iv) on the date of
an initial public offering of common stock, the offering price under such initial public offering.



     2.1.15 “Forfeiture Restrictions” will have the meaning assigned to such term in Section
8.2.



     2.1.16 “Full-Value Award” means an Award other than an Option, a Stock Appreciation Right, or
other Award whose intrinsic value is solely dependent on appreciation in the price of the Common
Stock after the date of grant.



     2.1.17 “Holder” means an Employee, Consultant, or Director who has been granted an Award.



     2.1.18 “Incentive Stock Option” means an incentive stock option within the meaning of section
422 of the Code.



     2.1.19 “1934 Act” means the Securities Exchange Act of 1934, as amended.



     2.1.20 “Nonstatutory Stock Option” means Options that do not constitute Incentive Stock
Options.



     2.1.21 “Option” means an Award granted under  7 and includes both Incentive Stock
Options and options that do not constitute Incentive Stock Options.



     2.1.22 “Option Agreement” means a written agreement between the Company and a Holder with
respect to an Option, including the accompanying “Notice of Grant of Stock Option.”



     2.1.23 “Performance Award” means an Award granted under Section 9 of the Plan.



     2.1.24 “Performance Award Agreement” means a written agreement between the Company and a
Holder with respect to a Performance Award.



     2.1.25 “Phantom Stock Award” means an Award granted under Section 10 of the Plan.



     2.1.26 “Phantom Stock Award Agreement” means a written agreement between the Company and a
Holder with respect to a Phantom Stock Award.



     2.1.27 “Plan” means the Cirrus Logic, Inc. 2006 Stock Incentive Plan, as amended from time to
time.



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     2.1.28 “Restricted Stock Agreement” means a written agreement between the Company and a Holder
with respect to a Restricted Stock Award.



     2.1.29 “Restricted Stock Award” means an Award granted under  8.



     2.1.30 “Rule 16b-3” means SEC Rule 16b-3 promulgated under the 1934 Act, as such may be
amended from time to time, and any successor rule, regulation, or statute fulfilling the same or a
similar function.



     2.1.31 “Stock Appreciation Right” will have the meaning assigned to such term in
Subsection 7.4.4.



          2.2 Number and Gender. Wherever appropriate in the Plan, words used in the singular
will be considered to include the plural, and words used in the plural will be considered to
include the singular. The masculine gender, where appearing in the Plan, will be deemed to include
the feminine gender.




          2.3 Headings. The headings of Sections and Subsections in the Plan are included
solely for convenience, and, if there is any conflict between such headings and the text of the
Plan, the text will control. All references to Sections and Subsections are to this document
unless otherwise indicated.




     3. EFFECTIVE DATE AND DURATION OF THE PLAN



          3.1 Effective Date. The Plan will become effective upon the date of its adoption by
the Board, provided that the Plan is approved by the stockholders of the Company within 12
months after such adoption. Notwithstanding any provision in the Plan or in any Option Agreement,
Restricted Stock Agreement, Performance Award Agreement, or Phantom Stock Award Agreement, no
Option will be exercisable, no Restricted Stock Award or Bonus Stock Award will be granted, and no
Performance Award or Phantom Stock Award will vest or become satisfiable prior to such stockholder
approval.




          3.2 Duration of Plan. No further Awards may be granted under the Plan after ten years
from the date the Plan is adopted by the Board. The Plan will remain in effect until all Options
granted under the Plan have been exercised, forfeited, assumed, substituted, satisfied or expired,
all Restricted Stock Awards granted under the Plan have vested or been forfeited, and all
Performance Awards, Phantom Stock Awards, and Bonus Stock Awards have been satisfied or expired.




     4. ADMINISTRATION



          4.1 Composition of Committee. The Plan will be administered by a committee of, and
appointed by, the Board. In the absence of the Board’s appointment of such Committee to administer
the Plan, the Board will serve as the Committee. Notwithstanding the foregoing, from and after the
date upon which the Company becomes a “publicly held corporation” (as defined in section 162(m) of
the Code and applicable interpretive authority under the Code), the Plan will be administered by a
committee of, and appointed by, the Board that will be comprised solely of two or more outside
Directors (within the meaning of the term “outside directors” as used in section 162(m) of the Code
and applicable interpretive authority under the Code and within the meaning of “Non-Employee
Director” as defined in Rule 16b-3).




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          4.2 Powers. Subject to the express provisions of the Plan, the Committee will have
authority, in its discretion, to determine which Employees, Consultants, or Directors will receive
an Award, the time or times when such Award will be made, whether an Incentive Stock Option or
Nonstatutory Stock Option will be granted, the number of shares to be subject to each Option or
Restricted Stock Award, the number of shares subject to or the value of each Performance Award or
Bonus Stock Award, and the value of each Phantom Stock Award. In making such determinations, the
Committee will take into account the nature of the services rendered by the respective Employees,
Consultants, or Directors, their present and potential contribution to the Company’s success, and
such other factors as the Committee in its discretion will deem relevant.




          4.3 Additional Powers. The Committee will have such additional powers as are
delegated to it by the other provisions of the Plan. Subject to the express provisions of the
Plan, this will include the power (1) to construe the Plan and the respective agreements executed
under the Plan, (2) to prescribe rules and regulations relating to the Plan, (3) to determine the
terms, restrictions, and provisions of the agreement relating to each Award, including such terms,
restrictions, and provisions as will be requisite in the judgment of the Committee to cause
designated Options to qualify as Incentive Stock Options, and (4) to make all other determinations
necessary or advisable for administering the Plan. The Committee may correct any defect, supply
any omission, or reconcile any inconsistency in the Plan or in any agreement relating to an Award
in the manner and to the extent it will deem expedient to carry it into effect. The determinations
of the Committee on the matters referred to in this Section will be conclusive and binding on all
persons.




     5. STOCK SUBJECT TO THE PLAN



          5.1 Stock Offered. Subject to the limitations set forth in Section 5.2, the
stock to be offered pursuant to the grant of an Award may be (1) authorized but unissued Common
Stock or (2) previously issued and outstanding Common Stock reacquired by the Company. Any of such
shares that remain unissued and are not subject to outstanding Awards at the termination of the
Plan will cease to be subject to the Plan, but until termination of the Plan, the Company will at
all times make available a sufficient number of shares to meet the requirements of the Plan.




          5.2 Plan and Individual Limitations on Shares.




     5.2.1 Subject to adjustment in the same manner as provided in Section 12 with respect
to shares of Common Stock subject to Options then outstanding, the aggregate maximum number of
shares of Common Stock that may be issued under the Plan, and the aggregate maximum number of
shares of Common Stock that may be issued under the Plan through Incentive Stock Options, will not
exceed 17,000,000 shares. To the extent that a share of Common Stock is subject to an outstanding
Full-Value Award, such share shall reduce the aggregate share limit set forth in this Subsection by
1.5 shares of Common Stock. To the extent that a share of Common Stock is subject to an
outstanding Award other than a Full-Value Award, such share shall reduce the aggregate share limit
set forth in this Subsection by one share of Common Stock. Stock Appreciation Rights to be settled
in shares of Common Stock pursuant to Section 7.4(d) or Section 10 shall be counted in full against
the number of shares available for award under the Plan, regardless of the number of shares issued
upon settlement of the Stock Appreciation Rights.



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     5.2.2 Notwithstanding any provision in the Plan to the contrary, the maximum number of shares
of Common Stock that may be subject to Options, Restricted Stock Awards, Phantom Stock Awards,
Bonus Stock Awards, and Performance Awards denominated in shares of Common Stock granted under the
Plan to any one individual during any calendar year may not exceed 400,000 shares (as adjusted from
time to time in accordance with the provisions of the Plan), and the maximum amount of compensation
that may be paid under all Performance Awards denominated in cash (including the Fair Market Value
of any shares of Common Stock paid in satisfaction of such Performance Awards) granted to any one
individual during any calendar year may not exceed $1,000,000.



     5.2.3 Shares will be deemed to have been issued under the Plan only (1) to the extent actually
issued and delivered pursuant to an Award or (2) to the extent an Award is settled in cash. To the
extent that an Award lapses or the rights of its Holder terminate, any shares of Common Stock
subject to such Award will again be available for the grant of an Award, and the aggregate share
limit set forth in Subsection 5.2(a) will be increased by the number of shares subtracted
from such limit with respect to the grant of such lapsed Award. From and after the date upon which
the Company becomes a “publicly held corporation” (as defined in section 162(m) of the Code and
applicable interpretive authority under the Code), the limitation set forth in the preceding
sentences will be applied in a manner that will permit compensation generated under the Plan to
constitute “performance-based” compensation for purposes of section 162(m) of the Code, including,
without limitation, counting against such maximum number of shares, to the extent required under
section 162(m) of the Code and applicable interpretative authority under the Code, any shares
subject to Options that are canceled or repriced.



     6. GRANT OF AWARDS



          6.1 Eligibility for Award. Awards may be granted only to persons who, at the time of
grant, are Employees, Consultants, or Directors.




          6.2 Grant of Awards. The Committee may from time to time in its discretion grant
Awards to one or more Employees, Consultants, or Directors determined by it to be eligible for
participation in the Plan in accordance with the provisions of Section 6.1. An Award may
be granted on more than one occasion to the same person, and, subject to the limitations set forth
in the Plan, such Award may include an Incentive Stock Option, a Nonstatutory Stock Option, a
Restricted Stock Award, a Performance Award, a Phantom Stock Award, a Bonus Stock Award, or any
combination thereof.




     7. STOCK OPTIONS



          7.1 Option Period. The term of each Option will be as specified by the Committee at
the date of grant, but in no event will an Option be exercisable after the expiration of ten years
from the date of grant.




          7.2 Limitations on Vesting and/or Exercise of Option. An Option will be vested and/or
exercisable in whole or in part and at such times as determined by the Committee and set forth in
the Notice of Grant and Option Agreement. The Committee in its discretion may provide that an
Option will be vested or exercisable upon (1) the attainment of one or more performance goals or
targets established by the Committee, which are based on (i) the price of a share of Common Stock,
(ii) the Company’s earnings per share, (iii) the Company’s market share, (iv) the market share of a
business unit of the Company designated by the Committee, (v) the Company’s sales, (vi) the sales
of a business unit of the Company designated by the Committee,




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(vii) the net income (before or after taxes) of the Company or a business unit of the Company
designated by the Committee, (viii) the cash flow return on investment of the Company or any
business unit of the Company designated by the Committee, (ix) the earnings before or after
interest, taxes, depreciation, and/or amortization of the Company or any business unit of the
Company designated by the Committee, (x) the economic value added, or (xi) the return on
stockholders’ equity achieved by the Company; (2) the Holder’s continued employment as an Employee
with the Company or continued service as a Consultant or Director for a specified period of time;
(3) the occurrence of any event or the satisfaction of any other condition specified by the
Committee in its sole discretion; or (4) a combination of any of the foregoing. Each Option may,
in the discretion of the Committee, have different provisions with respect to vesting and/or
exercise of the Option.




          7.3 Special Limitations on Incentive Stock Options.




     7.3.1 An Incentive Stock Option may be granted only to an individual who is employed by the
Company or any parent or subsidiary corporation (as defined in section 424 of the Code) at the time
the Option is granted.



     7.3.2 No Incentive Stock Option will be granted to an individual if, at the time the Option is
granted, such individual owns stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company or of its parent or subsidiary corporation, within the meaning
of section 422(b)(6) of the Code, unless (1) at the time such Option is granted the option price is
at least 110% of the Fair Market Value of the Common Stock subject to the Option and (2) such
Option by its terms is not exercisable after the expiration of five years from the date of grant.



     7.3.3 If an Option is designated as an Incentive Stock Option in the Notice of Grant of Stock
Option, to the extent that such Option (together with all Incentive Stock Options granted to the
Optionee under the Plan and all other stock option plans of the Company and its parent and
subsidiaries) becomes exercisable for the first time during any calendar year for shares having a
Fair Market Value greater than $100,000, the portion of each such Incentive Stock Option that
exceeds such amount will be treated as a Nonstatutory Stock Option. For purposes of this
Subsection, Options designated as Incentive Stock Options are taken into account in the order in
which they were granted, and the Fair Market Value of Common Stock is determined as of the time the
Option with respect to such Common Stock is granted. If the Code is amended to provide for a
different limitation from that set forth in this Subsection, such different limitation will be
deemed incorporated in the Plan effective as of the date required or permitted by such amendment to
the Code. If the Option is treated as an Incentive Stock Option in part and as a Nonstatutory
Stock Option in part by reason of the limitation set forth in this Subsection, the Optionee may
designate which portion of such Option the Optionee is exercising. In the absence of such
designation, the Optionee will be deemed to have exercised the Incentive Stock Option portion of
the Option first. Separate certificates representing each such portion will be issued upon the
exercise of the Option.



     7.3.4 An Incentive Stock Option (1) will not be transferable otherwise than by will or the
laws of descent and distribution and (2) will be exercisable during the Holder’s lifetime only by
such Holder or his guardian or legal representative.



     7.3.5 The price at which a share of Common Stock may be purchased upon exercise of an
Incentive Stock Option will not be less than 100% of the Fair Market Value of a share of Common
Stock on the date such Option is granted.



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          7.4 Option Agreement.




     7.4.1 Each Option will be evidenced by an Option Agreement in such form and containing such
provisions not inconsistent with the provisions of the Plan as the Committee from time to time will
approve, including, without limitation, provisions to qualify an Incentive Stock Option under
section 422 of the Code and provisions relating to vesting and exercisability. The terms and
conditions of the Options and respective Option Agreements need not be identical. Subject to the
consent of the Holder, the Committee may, in its sole discretion, amend an outstanding Option
Agreement from time to time in any manner that is not inconsistent with the provisions of the Plan
(including, without limitation, an amendment that accelerates the time at which the Option, or a
portion of the Option, may be exercisable).



     7.4.2 Each Option Agreement will specify the effect of termination of (1) employment, (2) the
consulting, advisory, or other non-common law employee relationship, or (3) membership on the
Board, as applicable, on the vesting and/or exercisability of the Option.



     7.4.3 An Option Agreement may provide for the payment of the option price, in whole or in
part, by the delivery of a number of shares of Common Stock (plus cash if necessary) having a Fair
Market Value equal to such option price. Moreover, an Option Agreement may provide for a “cashless
exercise” of the Option through procedures satisfactory to, and approved by and in the sole
discretion of, the Committee. Generally, and without limiting the Committee’s absolute discretion,
a “cashless exercise” will only be permitted at such times in which the shares underlying this
Option are publicly traded.



     7.4.4 An Option Agreement may provide for the surrender of the right to purchase shares under
the Option in return for a payment in cash or shares of Common Stock or a combination of cash and
shares of Common Stock equal in value to the excess of the Fair Market Value of the shares with
respect to which the right to purchase is surrendered over the option price for such shares (“Stock
Appreciation Right”), on such terms and conditions as the Committee in its sole discretion may
prescribe. In the case of any such Stock Appreciation Right that is granted in connection with an
Incentive Stock Option, such right will be exercisable only when the Fair Market Value of the
Common Stock exceeds the price specified for such Common Stock in the Option or the portion of the
Option to be surrendered.



          7.5 Option Price, Payment, and Exercise. Subject to Subsection 7.3.2 with
respect to Incentive Stock Options, the price at which a share of Common Stock may be purchased
upon exercise of an Option will be determined by the Committee, but such purchase price shall not
be less than the Fair Market Value of a share of Common Stock on the date such Option is granted.
The Option or portion of the Option may be exercised by delivery of an irrevocable notice of
exercise to the Secretary of the Company, except as may otherwise be provided in the Option
Agreement. The purchase price of the Option or portion of the Option will be paid in full in the
manner prescribed by the Committee. Separate stock certificates will be issued by the Company for
those shares acquired pursuant to the exercise of an Incentive Stock Option and for those shares
acquired pursuant to the exercise of a Nonstatutory Stock Option.




          7.6 Stockholder Rights and Privileges. The Holder will be entitled to all the
privileges and rights of a stockholder only with respect to such shares of Common Stock as have
been purchased under the Option and for which certificates of stock have been registered in the
Holder’s name.




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          7.7 Options and Rights in Substitution for Stock Options Granted by Other
Corporations. Options and Stock Appreciation Rights may be granted under the Plan from time to
time in substitution for stock options and such rights held by individuals employed by corporations
who become Employees, Consultants, or Directors as a result of a merger, consolidation, or other
business combination of the employing corporation with the Company or any Affiliate.




          7.8 Restrictions on Repricing of Options. Except as provided in Section 12,
the Committee may not, without approval of the stockholders of the Company, amend any outstanding
Option Agreement to lower the option price (or cancel and replace any outstanding Option Agreement
with Option Agreements having a lower option price).




     8. RESTRICTED STOCK AWARDS



          8.1 Restricted Stock Agreement. At the time any Award is made under this Section, the
Company and the Holder will enter into a Restricted Stock Agreement setting forth each of the
matters contemplated by the Plan and such other matters as the Committee may determine to be
appropriate. The terms and provisions of the respective Restricted Stock Agreements need not be
identical. Subject to the consent of the Holder and the restriction set forth in the last sentence
of Section 8.4 below, the Committee may, in its sole discretion, amend an outstanding
Restricted Stock Agreement from time to time in any manner that is not inconsistent with the
provisions of the Plan.




          8.2 Forfeiture Restrictions. Shares of Common Stock that are the subject of a
Restricted Stock Award will be subject to restrictions on disposition by the Holder and an
obligation of the Holder to forfeit and surrender the shares to the Company under certain
circumstances (the “Forfeiture Restrictions”). The Forfeiture Restrictions will be determined by
the Committee in its sole discretion, and the Committee may provide that the Forfeiture
Restrictions will lapse upon (1) the attainment of one or more performance goals or targets
established by the Committee, which are based on (i) the price of a share of Common Stock, (ii) the
Company’s earnings per share, (iii) the Company’s market share, (iv) the market share of a business
unit of the Company designated by the Committee, (v) the Company’s sales, (vi) the sales of a
business unit of the Company designated by the Committee, (vii) the net income (before or after
taxes) of the Company or a business unit of the Company designated by the Committee, (viii) the
cash flow return on investment of the Company or any business unit of the Company designated by the
Committee, (ix) the earnings before or after interest, taxes, depreciation, and/or amortization of
the Company or any business unit of the Company designated by the Committee, (x) the economic value
added, or (xi) the return on stockholders’ equity achieved by the Company; (2) the Holder’s
continued employment as an Employee with the Company or continued service as a Consultant or
Director for a specified period of time; (3) the occurrence of any event or the satisfaction of any
other condition specified by the Committee in its sole discretion; or (4) a combination of any of
the foregoing. The performance measures described in clause (1) of the preceding sentence may be
subject to adjustment for specified significant extraordinary items or events, and may be absolute,
relative to one or more other companies, or relative to one or more indexes, and may be contingent
upon future performance of the Company or any Affiliate, division, or department thereof. Each
Restricted Stock Award may, in the discretion of the Committee, have different Forfeiture
Restrictions.




          8.3 Other Terms and Conditions. Common Stock awarded pursuant to a Restricted Stock
Award will be represented by a stock certificate registered in the name of the Holder of such
Restricted Stock Award. Unless otherwise provided in the Restricted Stock

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Agreement, the Holder will have the right to receive dividends with respect to Common Stock
subject to a Restricted Stock Award, to vote Common Stock subject to such Restricted Stock
Agreement, and to enjoy all other stockholder rights, except that (1) the Holder will not be
entitled to delivery of the stock certificate until the Forfeiture Restrictions have lapsed, (2)
the Company will retain custody of the stock until the Forfeiture Restrictions have lapsed, (3) the
Holder may not sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of the stock
until the Forfeiture Restrictions have lapsed, and (4) a breach of the terms and conditions
established by the Committee pursuant to the Restricted Stock Agreement will cause a forfeiture of
the Restricted Stock Award. At the time of such Award, the Committee may, in its sole discretion,
prescribe additional terms, conditions, or restrictions relating to Restricted Stock Awards,
including, but not limited to, rules pertaining to the termination of employment or service as a
Consultant or Director (by retirement, disability, death, or otherwise) of a Holder prior to lapse
of the Forfeitures Restrictions. Such additional terms, conditions, or restrictions will be set
forth in the Restricted Stock Agreement made in conjunction with the Award.




          8.4 Committee’s Discretion to Accelerate Vesting of Restricted Stock Awards. The
Committee may, in its discretion and as of a date determined by the Committee, fully vest any or
all Common Stock awarded to a Holder pursuant to a Restricted Stock Award, and, upon such vesting,
all restrictions applicable to such Restricted Stock Award will lapse as of such date. Any action
by the Committee pursuant to this Section may vary among individual Holders and may vary among the
Restricted Stock Awards held by any individual Holder. Notwithstanding the preceding provisions of
this Section, from and after the date upon which the Company becomes a “publicly held corporation”
(as defined in section 162(m) of the Code and applicable interpretive authority under the Code),
the Committee may not take any action described in this Section with respect to a Restricted Stock
Award that has been granted after such date to a “covered employee” (within the meaning of Treasury
Regulation section 1.162-27(c)(2)) if such Award has been designed to meet the exception for
performance-based compensation under section 162(m) of the Code.




          8.5 Payment for Restricted Stock. The Committee will determine the amount and form of
any payment for Common Stock received pursuant to a Restricted Stock Award, provided that,
in the absence of such a determination, a Holder will not be required to make any payment for
Common Stock received pursuant to a Restricted Stock Award, except to the extent otherwise required
by law.




     9. PERFORMANCE AWARDS



          9.1 Performance Award Agreements. At the time any Award is made under this Section,
the Company and the Holder will enter into a Performance Award Agreement setting forth each of the
matters contemplated by the Plan and such additional matters as the Committee may determine to be
appropriate. The terms and provisions of the respective Performance Award Agreements need not be
identical.




          9.2 Performance Period. The Committee shall establish, with respect to and at the
time of each Performance Award, the number of shares of Common Stock subject to, or the maximum
value of, the Performance Award and the performance period over which the performance applicable to
the Performance Award will be measured.




          9.3 Performance Measures. A Performance Award shall be awarded to a Holder contingent
upon future performance of the Company or any Affiliate, division, or department thereof during the
performance period. The Committee shall establish the





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performance measures applicable to such performance either (i) prior to the beginning of the
performance period or (ii) within 90 days after the beginning of the performance period if the
outcome of the performance targets is substantially uncertain at the time such targets are
established, but not later than the date that 25% of the performance period has elapsed; provided
such measures may be made subject to adjustment for specified significant extraordinary items or
events. The performance measures may be absolute, relative to one or more other companies, or
relative to one or more indexes. The performance measures established by the Committee may be
based upon (1) the price of a share of Common Stock, (2) the Company’s earnings per share, (3) the
Company’s market share, (4) the market share of a business unit of the Company designated by the
Committee, (5) the Company’s sales, (6) the sales of a business unit of the Company designated by
the Committee, (7) the net income (before or after taxes) of the Company or any business unit of
the Company designated by the Committee, (8) the cash flow return on investment of the Company or
any business unit of the Company designated by the Committee, (9) the earnings before or after
interest, taxes, depreciation, and/or amortization of the Company or any business unit of the
Company designated by the Committee, (10) the economic value added, (11) the return on
stockholders’ equity achieved by the Company, (12) the total stockholders’ return achieved by the
Company, or (13) a combination of any of the foregoing. The Committee, in its sole discretion, may
provide for an adjustable Performance Award value based upon the level of achievement of
performance measures.




          9.4 Awards Criteria. In determining the value of Performance Awards, the Committee
will take into account a Holder’s responsibility level, performance, potential, other Awards, and
such other considerations as it deems appropriate. The Committee, in its sole discretion, may
provide for a reduction in the value of a Holder’s Performance Award during the performance period.




          9.5 Payment. Following the end of the performance period, the Holder of a Performance
Award will be entitled to receive payment of an amount not exceeding the number of shares of Common
Stock subject to, or the maximum value of, the Performance Award, based on the achievement of the
performance measures for such performance period, as determined and certified in writing by the
Committee. Notwithstanding any provision in this Section to the contrary, any payment due with
respect to a Performance Award shall be paid no later than ten years after the date of grant of
such Performance Award. Payment of a Performance Award may be made in cash, Common Stock, or a
combination thereof, as determined by the Committee. Payment shall be made in a lump sum or in
installments as prescribed by the Committee. If a Performance Award covering shares of Common
Stock is to be paid in cash, such payment shall be based on the Fair Market Value of the Common
Stock on the payment date or such other date as may be specified by the Committee in the
Performance Award Agreement.




          9.6 Termination of Award. A Performance Award shall terminate if the Holder does not
remain continuously in the employ of the Company and its Affiliates or does not continue to perform
services as a Consultant or a Director for the Company and its Affiliates at all times during the
applicable performance period, except as may be determined by the Committee.




     10. PHANTOM STOCK AWARDS



          10.1 Phantom Stock Award Agreements. At the time any Award is made under this
Section, the Company and the Holder will enter into a Phantom Stock Award Agreement setting forth
each of the matters contemplated by the Plan and such additional matters

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as the Committee may determine to be appropriate. The terms and provisions of the respective
Phantom Stock Award Agreements need not be identical.




          10.2 Phantom Stock Awards. Phantom Stock Awards are rights to receive shares of
Common Stock (or the Fair Market Value thereof), or rights to receive an amount equal to any
appreciation or increase in the Fair Market Value of Common Stock over a specified period of time,
which vest over a period of time as established by the Committee, without satisfaction of any
performance criteria or objectives. The Committee may, in its discretion, require payment or other
conditions of the Holder respecting any Phantom Stock Award. A Phantom Stock Award may include,
without limitation, a Stock Appreciation Right that is granted independently of an Option.




          10.3 Award Period. The Committee shall establish, with respect to and at the time of
each Phantom Stock Award, a period over which the Award will vest with respect to the Holder.




          10.4 Awards Criteria. In determining the value of Phantom Stock Awards, the Committee
will take into account a Holder’s responsibility level, performance, potential, other Awards, and
such other considerations as it deems appropriate.




          10.5 Payment. Following the end of the vesting period for a Phantom Stock Award (or
at such other time as the applicable Phantom Stock Award Agreement may provide), the Holder of a
Phantom Stock Award will be entitled to receive payment of an amount, not exceeding the maximum
value of the Phantom Stock Award, based on the then vested value of the Award. Payment of a
Phantom Stock Award may be made in cash, Common Stock, or a combination thereof as determined by
the Committee. Payment shall be made in a lump sum or in installments as prescribed by the
Committee. Any payment to be made in cash shall be based on the Fair Market Value of the Common
Stock on the payment date or such other date as may be specified by the Committee in the Phantom
Stock Award Agreement. Cash dividend equivalents may be paid during or after the vesting period
with respect to a Phantom Stock Award, as determined by the Committee.




          10.6 Termination of Award. A Phantom Stock Award shall terminate if the Holder does
not remain continuously in the employ of the Company and its Affiliates or does not continue to
perform services as a Consultant or a Director for the Company and its Affiliates at all times
during the applicable vesting period, except as may be otherwise determined by the Committee.




     11. BONUS STOCK AWARDS




          11.1 Bonus Stock Awards. Each Bonus Stock Award granted to a Holder will constitute a
transfer of unrestricted Common Stock on such terms and conditions as the Committee shall
determine. Bonus Stock Awards will be made in shares of Common Stock and need not be subject to
performance criteria or objectives or to forfeiture. The purchase price, if any, for Common Stock
issued in connection with a Bonus Stock Award will be determined by the Committee in its sole
discretion.



     12. RECAPITALIZATION OR REORGANIZATION



          12.1 No Effect on Board’s or Stockholders’ Power. The existence of the Plan and the
Awards granted under the Plan will not affect in any way the right or power of the

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Board or the stockholders of the Company to make or authorize (1) any adjustment,
recapitalization, reorganization, or other change in the Company’s or any Affiliate’s capital
structure or its business, (2) any merger, share exchange, or consolidation of the Company or any
Affiliate, (3) any issue of debt or equity securities ranking senior to or affecting Common Stock
or the rights of Common Stock, (4) the dissolution or liquidation of the Company or any Affiliate,
(5) any sale, lease, exchange, or other disposition of all or any part of the Company’s or any
Affiliate’s assets or business, or (6) any other corporate act or proceeding.




          12.2 Adjustment in the Event of Stock Subdivision, Consolidation, or Dividend. The
shares with respect to which Awards may be granted are shares of Common Stock as presently
constituted, but if, and whenever, prior to the expiration of an Award theretofore granted, the
Company will effect a subdivision or consolidation of shares of Common Stock or the payment of a
stock dividend on Common Stock without receipt of consideration by the Company, the number of
shares of Common Stock with respect to which such Award may thereafter be exercised (1) in the
event of an increase in the number of outstanding shares, will be proportionately increased, and
the purchase price per share will be proportionately reduced, and (2) in the event of a reduction
in the number of outstanding shares, will be proportionately reduced, and the purchase price per
share will be proportionately increased. Any fractional share resulting from such adjustment will
be rounded up to the next whole share.




          12.3 Adjustment in the Event of Recapitalization or Corporate Change.




     12.3.1 If the Company recapitalizes, reclassifies its capital stock, or otherwise changes its
capital structure (a “recapitalization”), the number and class of shares of Common Stock covered by
an Award theretofore granted will be adjusted so that such Award will thereafter cover the number
and class of shares of stock and securities to which the Holder would have been entitled pursuant
to the terms of the recapitalization if, immediately prior to the recapitalization, the Holder had
been the holder of record of the number of shares of Common Stock then covered by such Award.



     12.3.2 If a Corporate Change occurs, then no later than (1) 10 days after the approval by the
stockholders of the Company of a Corporate Change, other than a Corporate Change resulting from a
person or entity acquiring or gaining ownership or control of more than 50% of the outstanding
shares of the Company’s voting stock, or (2) 30 days after a Corporate Change resulting from a
person or entity acquiring or gaining ownership or control of more than 50% of the outstanding
shares of the Company’s voting stock, the Committee, acting in its sole discretion and without the
consent or approval of any Holder, will effect one or more of the following alternatives, which
alternatives may vary among individual Holders and which may vary among Options held by any
individual Holder:



               12.3.2.1 Accelerate the vesting of any Options (or any portion of any Option) then
outstanding;



               12.3.2.2 Accelerate the time at which some or all of the Options (or any portion of the
Options) then outstanding may be exercised so that such Options (or any portion of such Options)
may be exercised for a limited period of time on or before a specified date (before or after such
Corporate Change) fixed by the Committee, after which specified date all unexercised Options and
all rights of Holders under such Options will terminate;



               12.3.2.3 Require the mandatory surrender to the Company by selected Holders of some or all of
the outstanding Options (or any portion of such Options) held by such



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Holders (irrespective of whether such Options (or any portion of such Options) are then vested
or exercisable under the provisions of the Plan) as of a date, before or after such Corporate
Change, specified by the Committee, in which event the Committee will then cancel such Options (or
any portion of such Options) and cause the Company to pay each Holder an amount of cash per share
equal to the excess, if any, of the Change of Control Value of the shares subject to such Option
over the exercise price(s) under such Options for such shares;



               12.3.2.4 Make such adjustments to Options (or any portion of such Options) then outstanding as
the Committee deems appropriate to reflect such Corporate Change (provided,
however, that the Committee may determine in its sole discretion that no adjustment is
necessary to one or more Options (or any portion of such Options) then outstanding); or



               12.3.2.5 Provide that the number and class of shares of Common Stock covered by an Option (or
any portion of such Option) theretofore granted will be adjusted so that such Option will
thereafter cover the number and class of shares of stock or other securities or property
(including, without limitation, cash) to which the Holder would have been entitled pursuant to the
terms of the agreement of merger, consolidation, or sale of assets or dissolution if, immediately
prior to such merger, consolidation, or sale of assets or dissolution, the Holder had been the
holder of record of the number of shares of Common Stock then covered by such Option.



          12.4 Change of Control Value. For purposes of Subsection 12.3(b)(iii) above,
the “Change of Control Value” will equal the amount determined in one of the following clauses,
whichever is applicable:




     12.4.1 The per share price offered to stockholders of the Company in any such merger,
consolidation, sale of assets, or dissolution transaction;



     12.4.2 The price per share offered to stockholders of the Company in any tender offer or
exchange offer whereby a Corporate Change takes place; or



     12.4.3 If such Corporate Change occurs other than pursuant to a tender or exchange offer, the
fair market value per share of the shares into which such Options being surrendered are
exercisable, as determined by the Committee as of the date determined by the Committee to be the
date of cancellation and surrender of such Options.


In the event that the consideration offered to stockholders of the Company in any transaction
described in this Section or in Section 12.3 above consists of anything other than cash,
the Committee will determine in its discretion the fair cash equivalent of the portion of the
consideration offered that is other than cash.




          12.5 Other Adjustments. In the event of changes in the outstanding Common Stock by
reason of recapitalizations, mergers, consolidations, reorganizations, liquidations, combinations,
split-ups, split-offs, spin-offs, exchanges, issuances of rights or warrants, or other relevant
changes in capitalization or distributions to the holders of Common Stock occurring after the date
of grant of any Award and not otherwise provided for by this Section, (1) such Award and any
agreement evidencing such Award will be subject to adjustment by the Committee in its discretion as
to the number and price of shares of Common Stock or other consideration subject to such Award, and
(2) the aggregate number of shares available under the Plan, the aggregate number of shares that
may be issued under the Plan through Incentive Stock Options, and the maximum number of shares that
may be subject to Awards to any one individual

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may be appropriately adjusted by the Committee, whose determination will be conclusive and
binding on all parties. Notwithstanding the foregoing, except as otherwise provided by the
Committee, upon the occurrence of a Corporate Change, the Committee, acting in its sole discretion
without the consent or approval of any Holder, may require the mandatory surrender to the Company
by selected Holders of some or all of the outstanding Performance Awards and Phantom Stock Awards
as of a date, before or after such Corporate Change, specified by the Committee, in which event the
Committee shall thereupon cancel such Performance Awards and Phantom Stock Awards and the Company
shall pay (or cause to be paid) to each Holder an amount of cash equal to the maximum value (which
maximum value may be determined, if applicable and in the discretion of the Committee, based on the
then Fair Market Value of the Common Stock) of such Performance Award or Phantom Stock Award which,
in the event the applicable performance or vesting period set forth in such Performance Award or
Phantom Stock Award has not been completed, will be multiplied by a fraction, the numerator of
which is the number of days during the period beginning on the first day of the applicable
performance or vesting period and ending on the date of the surrender, and the denominator of which
is the aggregate number of days in the applicable performance or vesting period.




          12.6 Stockholder Action. If any event giving rise to an adjustment provided for in
this Section requires stockholder action, such adjustment will not be effective until such
stockholder action has been taken.




          12.7 No Adjustment Except as Provided in the Plan. Except as expressly provided in
the Plan, the issuance by the Company of shares of stock of any class or securities convertible
into shares of stock of any class for cash, property, labor, or services, upon direct sale, upon
the exercise of rights or warrants to subscribe for such shares or other securities, or upon
conversion of shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, will not affect, and no adjustment by
reason thereof will be made with respect to, the number of shares of Common Stock subject to Awards
theretofore granted or the purchase price per share, if applicable.




     13. AMENDMENT AND TERMINATION OF THE PLAN



          13.1 Termination of Plan. The Board in its discretion may terminate the Plan at any
time with respect to any shares of Common Stock for which Awards have not theretofore been granted.




          13.2 Amendment of Plan. The Board will have the right to alter or amend the Plan or
any part of the Plan from time to time; provided that no change in any Award theretofore
granted may be made that would impair the rights of the Holder without the consent of the Holder;
and provided, further, that the Board may not, without approval of the
stockholders, amend the Plan to (1) increase the maximum aggregate number of shares that may be
issued under the Plan, (2) increase the maximum number of shares that may be issued under the Plan
through Incentive Stock Options, (3) change the class of individuals eligible to receive Awards
under the Plan, or (4) amend or delete Section 7.8 of the Plan.




     14. MISCELLANEOUS



          14.1 No Right To An Award. Neither the adoption of the Plan nor any action of the
Board or of the Committee will be deemed to give any individual any right to be granted an Option,
a right to a Restricted Stock Award, a right to a Performance Award, a right to a Phantom Stock
Award, a right to a Bonus Stock Award, or any other rights under the Plan

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except as may be evidenced by an Award agreement duly executed on behalf of the Company, and
then only to the extent and on the terms and conditions expressly set forth in such Agreement.




          14.2 Unfunded Plan. The Plan will be unfunded. The Company will not be required to
establish any special or separate fund or to make any other segregation of funds or assets to
insure the payment of any Award.




          14.3 No Employment/Consulting/Membership Rights Conferred. Nothing contained in the
Plan will (1) confer upon any Employee or Consultant any right with respect to continuation of
employment or of a consulting, advisory, or other non-common law relationship with the Company or
any Affiliate or (2) interfere in any way with the right of the Company or any Affiliate to
terminate any Employee’s employment or any Consultant’s consulting, advisory, or other non-common
law relationship at any time. Nothing contained in the Plan will confer upon any Director any
right with respect to continuation of membership on the Board.




          14.4 Compliance with Other Laws. The Company will not be obligated to issue any
Common Stock pursuant to any Award granted under the Plan at any time when the shares covered by
such Award have not been registered under the Securities Act of 1933, as amended, and such other
state and federal laws, rules, or regulations as the Company or the Committee deems applicable and,
in the opinion of legal counsel to the Company, there is no exemption from the registration
requirements of such laws, rules, or regulations available for the issuance and sale of such
shares. No fractional shares of Common Stock will be delivered, nor will any cash in lieu of
fractional shares be paid.




          14.5 Withholding. The Company will have the right to deduct or cause to be deducted
in connection with all Awards any taxes required by law to be withheld and to require any payments
required to satisfy applicable withholding obligations.




          14.6 No Restriction on Corporate Action. Nothing contained in the Plan will be
construed to prevent the Company or any Affiliate from taking any corporate action that is deemed
by the Company or such Affiliate to be appropriate or in its best interest, whether or not such
action would have an adverse effect on the Plan or any Award made under the Plan. No Employee,
Consultant, Director, beneficiary, or other person will have any claim against the Company or any
Affiliate as a result of any such action.




          14.7 Restrictions on Transfer. Except as otherwise provided by the Committee as set
forth in this Section, an Award (other than an Incentive Stock Option, which will be subject to the
transfer restrictions set forth in Section 7.3) will not be transferable otherwise than by
will or the laws of descent and distribution or pursuant to a domestic relations order entered or
approved by a court of competent jurisdiction upon delivery to the Company of written notice of
such transfer and a certified copy of such order. The Committee shall have the discretion to
permit the transfer of an Award (other than an Incentive Stock Option); provided, however, that
such transfer shall be limited to members of a Holder’s immediate family (as defined in Rule
16(a)-1(e) of the 1934 Act), trusts, and partnerships established for the primary benefit of such
family members or to charitable organizations; and provided further, that such transfer is not made
for consideration to the Holder.




          14.8 Governing Law. The Plan shall be governed by, and construed in accordance with,
the laws of the state of Delaware, without regard to conflicts of laws principles thereof.





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