01222001 S8 Plan





EXHIBIT 4.1

AMERICAN CHAMPION ENTERTAINMENT,
INC.

2000 STOCK INCENTIVE PLAN

 

ARTICLE 1.

PURPOSE AND ADOPTION OF THE PLAN

1.1. Purpose. The purpose of the American
Champion Entertainment, Inc. 2000 Stock Incentive Plan (hereinafter referred to
as the "Plan") is to assist in attracting and retaining highly competent key
employees, non-employee directors and consultants and to act as an incentive in
motivating key employees, non-employee directors, legal counsel and consultants
of American Champion Entertainment, Inc. and its Subsidiaries (as defined below)
to achieve long-term corporate objectives. 

1.2. Adoption and Term. The Plan has been
approved by the Board of Directors (hereinafter referred to as the "Board") of
American Champion Entertainment, Inc. (hereinafter referred to as the
"Company"), to be effective as of January 10, 2000 (the "Effective Date"). The
Plan is intended to be a broad based plan which all employees of the Company are
eligible for, and grants to be made to management personnel and members of the
board of directors shall not exceed 50% of the total number of shares issuable
under the Plan. Therefore the Plan does not require shareholder approval
pursuant to applicable rules and regulations of the Nasdaq Stock Market. The
Plan shall remain in effect until terminated by action of the Board.

 

ARTICLE II.

DEFINITIONS

For the purposes of this Plan, capitalized terms
shall have the following meanings: 

2. 1. Award means any grant to a
Participant of one or more of a combination of Restricted Shares described in
Article VII and Performance Awards described in Article VIII. 

2.2. Award Agreement means a written
agreement between the Company and a Participant or a written notice from the
Company to a Participant specifically setting forth the terms and conditions of
an Award granted under the Plan. 

2.3. Award Period means, with respect to an
Award, the period of time set forth in the Award Agreement during which
specified target performance goals must be achieved or other conditions set
forth in the Award Agreement must be satisfied. 

2.4. Beneficiary means an individual, trust
or estate who or which, by a written designation of the Participant filed with
the Company or by operation of law, succeeds to the rights and obligations of
the Participant under the Plan and an Award Agreement upon the Participant's
death. 

2.5. Board means the Board of Directors of
the Company. 

2.6. Change in Control means, and shall be
deemed to have occurred upon the occurrence of, any one of the following events:


(a) The acquisition in one or more transactions by
any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) (a "Person") of beneficial ownership (within the
meaning of Rule l3d-3 promulgated under the Exchange Act) of shares or other
securities (as defined in Section 3(a)(10) of the Exchange Act) representing 30%
or more of either (i) the Outstanding Common Stock or (ii) the Company Voting
Securities; provided, however, that a Change in Control as defined in this
clause (a) shall not be deemed to occur in connection with any acquisition by
the Company, an employee benefit plan of the Company or any Person who
immediately prior to the Effective Date is a holder of Outstanding Common Stock
or Company Voting Securities (a "Current Stockholder") so long as such
acquisition does not result in any Person other than the Company, such employee
benefit plan or such Current Stockholder beneficially owning shares or
securities representing 30% or more of either the Outstanding Common Stock or
Company Voting Securities; or 

(b) Any election has occurred of persons as directors
of the Company that causes two-thirds or more of the Board to consist of persons
other than (i) persons who, were members of the Board on the Effective Date and
(ii) persons who were nominated by the Board for election as members of the
Board at a time when at least two-thirds of the Board consisted of persons who
were members of the Board on the Effective Date; provided, however, that any
person nominated for election by the Board when at least two-thirds of the
members of the Board are persons described in subclause (i) or (ii) and persons
who were themselves previously nominated in accordance with this clause (b)
shall, for this purpose, be deemed to have been nominated by a Board composed of
persons described in subclause (ii); or 

(c) Approval by the stockholders of the Company of a
reorganization, merger, consolidation or similar transaction (a "Reorganization
Transaction"), in each case, unless, immediately following such Reorganization
Transaction, more than 50% of, respectively, the outstanding shares of common
stock (or similar equity security) of the corporation or other entity resulting
from or surviving such Reorganization Transaction and the combined voting power
of the securities of such corporation or other entity entitled to vote generally
in the election of directors, is then beneficially owned, directly or
indirectly, by the individuals and entities who were the respective beneficial
owners of the Outstanding Common Stock and the Company Voting Securities
immediately prior to such Reorganization Transaction in substantially the same
proportions as their ownership of the Outstanding Common Stock and Company
Voting Securities immediately prior to such Reorganization Transaction; or 

(d) Approval by the stockholders of the Company of
(i) a complete liquidation or dissolution of the Company or (ii) the sale or
other disposition of all or substantially all of the assets of the Company to a
corporation or other entity, unless, with respect to such corporation or other
entity, immediately following such sale or other disposition more than 50% of,
respectively, the outstanding shares of common stock (or similar equity
security) of such corporation or other entity and the combined voting power of
the securities of such corporation or other entity entitled to vote generally in
the election of directors, is then beneficially owned, directly or indirectly,
by the individuals and entities who were the respective beneficial owners of the
Outstanding Common Stock and the Company Voting Securities immediately prior to
such sale or disposition in substantially the same proportions as their
ownership of the Outstanding Common Stock and Company Voting Securities
immediately prior to such sale or disposition. 

2.7 Code means the Internal Revenue Code of
1986, as amended. References to a section of the Code include that section and
any comparable section or sections of any future legislation that amends,
supplements or supersedes said section. 

2.8 Committee means the committee
established in accordance with Section 3.1. 

2. 9. Company means American Champion
Entertainment, Inc., a Delaware corporation, and its successors. 

2.10 Common Stock means Common Stock of the
Company, par value $0.0001 per share. 

2.11. Company Voting Securities means the
combined voting power of all outstanding securities of the Company entitled to
vote generally in the election of directors of the Company. 

2.12. Date of Grant means the date
designated by the Committee as the date as of which it grants an Award, which
shall not be earlier than the date on which the Committee approves the granting
of such Award. 

2.13. Effective Date shall have the meaning
given to such term in Section 1.2.

2.14. Exchange Act means the Securities
Exchange Act of 1934, as amended. 

2.15. Merger means any merger,
reorganization, consolidation, share exchange, transfer of assets or other
transaction having similar effect involving the Company. 

2.16. Non-Employee Director means a member
of the Board who (i) is not currently an officer or otherwise employed by the
Company or a parent or a subsidiary of the Company, (ii) does not receive
compensation directly or indirectly from the Company or a parent or a subsidiary
of the Company for services rendered as a consultant or in any capacity other
than as a director, except for an amount for which disclosure would not be
required pursuant to Item 404(a) of Regulation S-K, (iii) does not possess an
interest in any other transaction for which disclosure would be required
pursuant to Item 404(a) of Regulation S-K, and (iv) is not engaged in a business
relationship for which disclosure would be required pursuant to Item 404(b) of
Regulation S-K. 

2.17. Outstanding Common Stock means, at
any time, the issued and outstanding shares of Common Stock. 

2.18. Participant means a person designated
to receive an Award under the Plan in accordance with Section 5. 1. 

2.19. Performance Awards means Awards
granted in accordance with Article VIII. 

2.20. Plan means the American Champion
Entertainment, Inc. 2000, Stock Incentive Plan as described herein, as the same
may be amended from time to time. 

2.21 Restricted Shares means Common Stock
subject to restrictions imposed in connection with Awards granted under Article
VII. 

2.22. Retirement means early or normal
retirement under a pension plan or arrangement of the Company or one of its
Subsidiaries in which the Participant participates. 

2.23. Subsidiary means a subsidiary of the
Company within the meaning of Section 424(f) of the Code. 

2.24. Termination of Employment means the
voluntary or involuntary termination of a Participant's employment with the
Company or a Subsidiary for any reason, including death, disability, retirement
or as the result of the divestiture of the Participant's employer or any similar
transaction in which the Participant's employer ceases to be the Company or one
of its Subsidiaries. Whether entering military or other government service shall
constitute Termination of Employment, or whether a Termination of Employment
shall occur as a result of disability, shall be determined in each case by the
Committee in its sole discretion. In the case of a consultant who is not an
employee of the Company or a Subsidiary, Termination of Employment shall mean
voluntary or involuntary termination of the consulting relationship for any
reason. In the case of a Non-Employee Director, Termination of Employment shall
mean voluntary or involuntary termination, non-election, removal or other act
which results in such Non-Employee Director no longer serving in such capacity.


 

ARTICLE III.

ADMINISTRATION



3.1. Committee. The Plan shall be
administered by a committee of the Board (the "Committee") comprised of at least
one person. The Committee shall have exclusive and final authority in each
determination, interpretation or other action affecting the Plan and its
Participants. The Committee shall have the sole discretionary authority to
interpret the Plan, to establish and modify administrative rules for the Plan,
to impose such conditions and restrictions on Awards as it determines
appropriate, and to take such steps in connection with the Plan and Awards
granted hereunder as it may deem necessary or advisable. The Committee may,
subject to compliance with applicable legal requirements, with respect to
Participants who are not subject to Section 16(b) of the Exchange Act, delegate
such of its powers and authority under the Plan as it deems appropriate to
designated officers or employees of the Company. In addition, the Board may
exercise any of the authority conferred upon the Committee hereunder. In the
event of any such delegation of authority or exercise of authority by the Board,
references in the Plan to the Committee shall be deemed to refer to the delegate
of the Committee or the Board, as the case may be. 

 

ARTICLE IV.

SHARES

4.1. Number of Shares Issuable. The total
number of shares initially authorized to be issued under the Plan shall be
1,500,000 shares of Common Stock. The number of shares available for issuance
under the Plan shall be subject to adjustment in accordance with Section 9.7.
The shares to be offered under the Plan shall be authorized and unissued shares
of Common Stock, or issued shares of Common Stock which will have been
reacquired by the Company. 

 

4.2. Increase in the Number of Shares
Issuable. The total number of shares has been increased by approval of
the Board of Directors on December 27, 2000 to 4,000,000 shares.

 

 

ARTICLE V.

PARTICIPATION

5.1. Eligible Participants. Participants in
the Plan shall be such key employees, consultants, legal counsel and non-
employee directors of the Company and its Subsidiaries, whether or not members
of the Board, as the Committee, in its sole discretion, may designate from time
to time. The Committee's designation of a Participant in any year shall not
require the Committee to designate such person to receive Awards in any other
year. The designation of a Participant to receive an Award under one portion of
the Plan does not require the Committee to include such Participant under other
portions of the Plan. The Committee shall consider such factors as it deems
pertinent in selecting Participants and in determining the types and amounts of
their respective Awards. Subject to adjustment in accordance with Section 9.7,
during any fiscal year no Participant shall be granted Awards in respect of more
than 500,000 shares of Common Stock.

 

ARTICLE VI.

INTENTIONALLY LEFT BLANK

 

 

ARTICLE VII.

RESTRICTED SHARES

7.1. Restricted Share Awards. The Committee
may grant to any Participant an Award of such number of shares of Common Stock
on such terms, conditions and restrictions, whether based on performance
standards, periods of service, retention by the Participant of ownership of
purchased or designated shares of Common Stock or other criteria, as the
Committee shall establish. It is not a criteria of the Plan that the Restricted
Shares be issued pursuant to any specific criteria. With respect to performance-
based Awards of Restricted Shares intended to qualify for deductibility under
Section 162(m) of the Code, performance targets will include specified levels of
one or more of operating income, return or investment, return on stockholders'
equity, earnings before interest, taxes, depreciation and amortization and/or
earnings per share. The terms of any Restricted Share Award granted under this
Plan shall be set forth in an Award Agreement which shall contain provisions
determined by the Committee and not inconsistent with this Plan. 

(a) Issuance of Restricted Shares. As soon
as practicable after the Date of Grant of a Restricted Share Award by the
Committee, the Company shall cause to be transferred on the books of the Company
or its agent, shares of Common Stock, registered on behalf of the Participant,
evidencing the Restricted Shares covered by the Award, subject to forfeiture to
the Company as of the Date of Grant if an Award Agreement with respect to the
Restricted Shares covered by the Award is not duly executed by the Participant
and timely returned to the Company. All shares of Common Stock covered by Awards
under this Article VII shall be subject to the restrictions, terms and
conditions contained in the Plan and the applicable Award Agreements entered
into by the appropriate Participants. Until the lapse or release of all
restrictions applicable to an Award of Restricted Shares the share certificates
representing such Restricted Shares may be held in custody by the Company, its
designee, or, if the certificates bear a restrictive legend, by the Participant.
Upon the lapse or release of all restrictions with respect to an Award as
described in Section 7.1 (d), one or more share certificates, registered in the
name of the Participant, for an appropriate number of shares as provided in
Section 7.1 (d), free of any restrictions set forth in the Plan and the related
Award Agreement (however subject to any restrictions that may be imposed by law)
shall be delivered to the Participant. 

(b) Stockholder Rights. Beginning on
the Date of Grant of a Restricted Share Award and subject to execution of the
related Award Agreement as provided in Section 7.1 (a), and except as otherwise
provided in such Award Agreement, the Participant shall become a stockholder of
the Company with respect to all shares subject to the Award Agreement and shall
have all of the rights of a stockholder, including, but not limited to, the
right to vote such shares and the right to receive dividends; provided, however,
that any shares of Common Stock distributed as a dividend or otherwise with
respect to any Restricted Shares as to which the restrictions have not yet
lapsed, shall be subject to the same restrictions as such Restricted Shares and
held or restricted as provided in Section 7.1 (a). 

(c) Registration of Shares. None of the
Restricted Shares may be sold, assigned, pledged, hypothecated or transferred
without Registration under the Securities Act of 1933 as amended or exemption
there from. It is anticipated that at the time of issuance the Company will have
in effect a Registration Statement on Form S-8 or such other comparable form
such that the Restricted Shares will be registered for resale upon issuance.


(d) Delivery of Shares Upon Vesting.
Upon expiration or earlier termination of the forfeiture period without a
forfeiture and the satisfaction of or release from any other conditions
prescribed by the Committee, or at such earlier time as provided under the
provisions of Section 7.3, the restrictions applicable to the Restricted Shares
shall lapse. As promptly as administratively feasible thereafter, subject to the
requirements of Section 9.5, the Company shall deliver to the Participant or, in
case of the Participant's death, to the Participant's Beneficiary, one or more
share certificates for the appropriate number of shares of Common Stock, free of
all such restrictions, except for any restrictions that may be imposed by law.


7.2. Terms of Restricted Shares. 

(a) Forfeiture of Restricted Shares.
Subject to Sections 7.2(b) and 7.3, Restricted Shares shall be forfeited and
returned to the Company and all rights of the Participant with respect to such
Restricted Shares shall terminate unless the Participant continues in the
service of the Company or a Subsidiary as an employee until the expiration of
the forfeiture period for such Restricted Shares and satisfies any and all other
conditions set forth in the Award Agreement. The Committee shall determine the
forfeiture period (which may, but need not, lapse in installments) and any other
terms and conditions applicable with respect to any Restricted Share Award. 

(b) Waiver of Forfeiture Period.
Notwithstanding anything contained in this Article VII to the contrary, the
Committee may, in its sole discretion, waive the forfeiture period and any other
conditions set forth in any Award Agreement under appropriate circumstances
(including the death, disability or Retirement of the Participant or a material
change in circumstances arising after the date of an Award) and subject to such
terms and conditions (including forfeiture of a proportionate number of the
Restricted Shares) as the Committee shall deem appropriate. 

7.3. Change in Control. Unless otherwise
provided by the Committee in the applicable Award Agreement, in the event of a
Change in Control, all restrictions applicable to the Restricted Share Award
shall terminate fully and the Participant shall immediately have the right to
the delivery of share certificates for such shares in accordance with Section
7.1 (d). 

 

ARTICLE VIII.

PERFORMANCE AWARDS

8.1. Performance Awards. 

(a) Award Periods and Calculations of Potential
Incentive Amounts. The Committee may grant Performance Awards to
Participants. A Performance Award shall consist of the right to receive a
payment (measured by the Fair Market Value of a specified number of shares of
Common Stock, increases in such Fair Market Value during the Award Period and/or
a fixed cash amount) contingent upon the extent to which certain predetermined
performance targets have been met during an Award Period. Performance Awards may
be made in conjunction with, or in addition to, Restricted Share Awards made
under Article VII. The Award Period shall be two or more fiscal or calendar
years as determined by the Committee. The Committee, in its discretion and under
such terms as it deems appropriate, may permit newly eligible employees, such as
those who are promoted or newly hired, to receive Performance Awards after an
Award Period has commenced. 

(b) Performance Targets. The
performance targets may include such goals related to the performance of the
Company and/or the performance of a Participant as may be established by the
Committee in its discretion. In the case of Performance Awards intended to
qualify for deductibility under Section 162(m) of the Code, the targets will
include specified levels of one or more of operating income, return on
investment, return on stockholders' equity, earnings before interest, taxes,
depreciation and amortization and/or earnings per share. The performance targets
established by the Committee may vary for different Award Periods and need not
be the same for each Participant receiving a Performance Award in an Award
Period. Except to the extent inconsistent with the performance-based
compensation exception under Section 162(m) of the Code, in the case of
Performance Awards granted to employees to whom such section is applicable, the
Committee, in its discretion, but only under extraordinary circumstances as
determined by the Committee, may change any prior determination of performance
targets for any Award Period at any time prior to the final determination of the
value of a related Performance Award when events or transactions occur to cause
such performance targets to be an inappropriate measure of achievement. 

(c) Earning Performance Awards. The
Committee, on or as soon as practicable after the Date of Grant, shall prescribe
a formula to determine the percentage of the applicable Performance Award to be
earned based upon the degree of attainment of performance targets. 

(d) Payment of Earned Performance
Awards. Payments of earned Performance Awards shall be made in cash or
shares of Common Stock or a combination of cash and shares of Common Stock, in
the discretion of the Committee. The Committee, in its sole discretion, may
provide such terms and conditions with respect to the payment of earned
Performance Awards as it may deem desirable. 

8.2. Terms of Performance Awards. 

(a) Termination of Employment. Unless
otherwise provided below or in Section 8.3, in the case of a Participant's
Termination of Employment prior to the end of an Award Period, the Participant
will not have earned any Performance Awards for that Award Period. 

(b) Retirement. If a Participant's
Termination of Employment is because of Retirement prior to the end of an Award
Period, the Participant will not be paid any Performance Award, unless the
Committee, in its sole and exclusive discretion, determines that an Award should
be paid. In such a case, the Participant shall be entitled to receive a pro-rata
portion of his or her Award as determined under subsection (d) of this Section
8.2. 

(c) Death or Disability. If a
Participant's Termination of Employment is due to death or to disability (as
determined in the sole and exclusive discretion of the Committee) prior to the
end of an Award Period, the Participant or the Participant's personal
representative shall be entitled to receive a pro-rata share of his or her Award
as determined under subsection (d) of this Section 8.2. 

(d) Pro-Rata Payment. The amount of any
payment to be made to a participant whose employment is terminated by
Retirement, death or disability (under the circumstances described in
subsections (b) and (c)) will be the amount determined by multiplying (i) the
amount of the Performance Award that would have been earned through the end of
the Award Period had such employment not been terminated by (ii) a fraction, the
numerator of which is the number of whole months such Participant was employed
during the Award Period, and the denominator of which is the total number of
months of the Award Period. Any such payment made to a Participant whose
employment is terminated prior to the end of an Award Period shall be made at
the end of such Award Period, unless otherwise determined by the Committee in
its sole discretion. Any partial payment previously made or credited to a
deferred account for the benefit of a Participant in accordance with Section 8.
1 (d) of the Plan shall be subtracted from the amount otherwise determined as
payable as provided in this Section 8.2(d). 

(e) Other Events. Notwithstanding
anything to the contrary in this Article VIII, the Committee may, in its sole
and exclusive discretion, determine to pay all or any portion of a Performance
Award to a Participant who has terminated employment prior to the end of an
Award Period under certain circumstances (including the death, disability or
Retirement of the Participant or a material change in circumstances arising
after the Date of Grant), subject to such terms and conditions as the Committee
shall deem appropriate. 

8.3. Change in Control. Unless otherwise
provided by the Committee in the applicable Award Agreement, in the event of a
Change in Control, all Performance Awards for all Award Periods shall
immediately become fully payable to all Participants and shall be paid to
Participants within thirty (30) days after such Change in Control. 

 

ARTICLE IX.

TERMS APPLICABLE TO ALL AWARDS GRANTED UNDER THE PLAN

9.1. Plan Provisions Control Award Terms. The
terms of the Plan shall govern all Awards granted under the Plan, and in no
event shall the Committee have the power to grant any Award under the Plan the
terms of which are contrary to any of the provisions of the Plan. In the event
any provision of any Award granted under the Plan shall conflict with any term
in the Plan as constituted on the Date of Grant of such Award, the term in the
Plan as constituted on the Date of Grant of such Award shall control. Except as
provided in Section 9.3 and Section 9.7, the terms of any Award granted under
the Plan may not be changed after the Date of Grant of such Award so as to
materially decrease the value of the Award without the express written approval
of the holder. 

9.2. Award Agreement. No person shall have
any rights under any Award granted under the Plan unless and until the Company
and the Participant to whom such Award shall have been granted shall have
executed and delivered an Award Agreement or the Participant shall have received
and acknowledged notice of the Award authorized by the Committee expressly
granting the Award to such person and containing provisions setting forth the
terms of the Award. 

9.3. Modification of Award After Grant. No
Award granted under the Plan to a Participant may be modified (unless such
modification does not materially decrease the value of that Award) after its
Date of Grant except by express written agreement between the Company and such
Participant, provided that any such change (a) may not be inconsistent with the
terms of the Plan, and (b) shall be approved by the Committee. 

9. 4. Limitation on Transfer. Except as
provided in Section 7.1(c) in the case of Restricted Shares, a Participant's
rights and interest under the Plan may not be assigned or transferred other than
by will or the laws of descent and distribution and, during the lifetime of a
Participant, only the Participant personally (or the Participant's personal
representative) may exercise rights under the Plan. The Participant's
Beneficiary may exercise the Participant's rights to the extent they are
exercisable under the Plan following the death of the Participant. 

9. 5. Taxes. The Company shall be entitled,
if the Committee deems it necessary or desirable, to withhold (or secure payment
from the Participant in lieu of withholding) the amount of any withholding or
other tax required by law to be withheld or paid by the Company with respect to
any amount payable and/or shares issuable under such Participant's Award and the
Company may defer payment of cash or issuance of shares upon exercise or vesting
of an Award unless indemnified to its satisfaction against any liability for any
such tax. The amount of such withholding or tax payment shall be determined by
the Committee and shall be payable by the Participant at such time as the
Committee determines in accordance with the following rules: 

(a) The Participant shall have the right to elect to
meet his or her withholding requirement (i) by having withheld from such Award
at the appropriate time that number of shares of Common Stock, rounded up to the
next whole share, the Fair Market Value of which is equal to the amount of
withholding taxes due, (ii) by direct payment to the Company in cash of the
amount of any taxes required to be withheld with respect to such Award or (iii)
by a combination of withholding such shares and paying cash. 

(b) The Committee shall have the discretion as to any
Award to cause the Company to pay to tax authorities for the benefit of the
applicable Participant, or to reimburse such Participant for, the individual
taxes which are due on the grant, exercise or vesting of any Award or the lapse
of any restriction on any Award (whether by reason of such Participant's filing
of an election under Section 83(b) of the Code or otherwise), including, but not
limited to, Federal income tax, state income tax, local income tax and excise
tax under Section 4999 of the Code, as well as for any such taxes as may be
imposed upon such tax payment or reimbursement. 

(c) In the case of Participants who are subject to
Section 16 of the Exchange Act, the Committee may impose such limitations and
restrictions as it deems necessary or appropriate with respect to the delivery
or withholding of shares of Common Stock to meet tax withholding obligations.


9. 6. Surrender of Awards. Any Award
granted under the Plan may be surrendered to the Company for cancellation on
such terms as the Committee and the Participant approve. 

9. 7 Adjustments to Reflect Capital
Changes. 

(a) Recapitalization. The number and kind of
shares subject to outstanding Awards, the Purchase Price or Exercise Price for
such shares, the number and kind of shares available for Awards subsequently
granted under the Plan and the maximum number of shares in respect of which
Awards can be made to any Participant in any calendar year shall be
appropriately adjusted to reflect any stock dividend, stock split, combination
or exchange of shares, merger, consolidation or other change in capitalization
with a similar substantive effect upon the Plan or the Awards granted under the
Plan. The Committee shall have the power and sole discretion to determine the
amount of the adjustment to be made in each case. 

(b) Merger. After any Merger in which the
Company is the surviving corporation, each Participant shall, at no additional
cost, be entitled upon any exercise of an Option or receipt of any other Award
to receive (subject to any required action by stockholders), in lieu of the
number of shares of Common Stock receivable or exercisable pursuant to such
Award prior to such Merger, the number and class of shares or other securities
to which such Participant would have been entitled pursuant to the terms of the
Merger if, at the time of the Merger, such Participant had been the holder of
record of a number of shares of Common Stock equal to the number of shares of
Common Stock receivable or exercisable pursuant to such Award. Comparable rights
shall accrue to each Participant in the event of successive Mergers of the
character described above. In the event of a Merger in which the Company is not
the surviving corporation, the surviving, continuing, successor or purchasing
corporation, as the case may be (the "Acquiring Corporation), will either assume
the Company's rights and obligations under outstanding Award Agreements or
substitute awards in respect of the Acquiring Corporation's stock for
outstanding Awards, provided, however, that if the Acquiring Corporation does
not assume or substitute for such outstanding Awards, the Board shall provide
prior to the Merger that any unexercisable and/or unvested portion of the
outstanding Awards shall be immediately exercisable and vested as of a date
prior to such merger or consolidation, as the Board so determines. The exercise
and/or vesting of any Award that was permissible solely by reason of this
Section 9.7(b) shall be conditioned upon the consummation of the Merger. Any
Options which are neither assumed by the Acquiring Corporation not exercised as
of the date of the Merger shall terminate effective as of the effective date of
the Merger. 

(c) Options to Purchase Shares or Stock of
Acquired Companies. After any merger in which the Company or a Subsidiary
shall be a surviving corporation, the Committee may grant substituted options
under the provisions of the Plan, pursuant to Section 424 of the Code, replacing
old options granted under a plan of another party to the merger whose shares of
stock subject to the old options may no longer be issued following the merger.
The manner of application of the foregoing provisions to such options and any
appropriate adjustments shall be determined by the Committee in its sole
discretion. Any such adjustments may provide for the elimination of any
fractional shares which might otherwise become subject to any Options. 

9.8 No Right to Employment. No employee or
other person shall have any claim of right to be granted an Award under the
Plan. Neither the Plan nor any action taken hereunder shall be construed as
giving any employee any right to be retained in the employ of the Company or any
of its Subsidiaries. 

9.9. Awards Not Includable for Benefit
Purposes. Payments received by a Participant pursuant to the provisions
of the Plan shall not be included in the determination of benefits under any
pension, group insurance or other benefit plan applicable to the Participant
which is maintained by the Company or any of its Subsidiaries, except as may be
provided under the terms of such plans or determined by the Board. 

9.10. Governing Law. All determinations
made and actions taken pursuant to the Plan shall be governed by the laws of the
State of Delaware and construed in accordance therewith. 

9.11. No Strict Construction. No rule of
strict construction shall be implied against the Company, the Committee or any
other person in the interpretation of any of the terms of the Plan, any Award
granted under the Plan or any rule or procedure established by the
Committee.

9.12. Captions. The captions (i.e., all
Section headings) used in the Plan are for convenience only, do not constitute a
part of the Plan, and shall not be deemed to limit, characterize or affect in
any way any provisions of the Plan, and all provisions of the Plan shall be
construed as if no captions had been used in the Plan. 

9.13. Severability. Whenever possible, each
provision in the Plan and every Award at any time granted under the Plan shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of the Plan or any Award at any time granted under the Plan
shall be held to be prohibited by or invalid under applicable law, then (a) such
provision shall be deemed amended to accomplish the objectives of the provision
as originally written to the fullest extent permitted by law and (b) all other
provisions of the Plan, such Award and every other Award at any time granted
under the Plan shall remain in full force and effect. 

9.14. Amendment and Termination. 

(a) Amendment. The Board shall have
complete power and authority to amend the Plan at any time without the
authorization or approval of the Company's stockholders, unless the amendment
(i) materially increases the benefits accruing to Participants under the Plan,
(ii) materially increases the aggregate number of securities that may be issued
under the Plan or (iii) materially modifies the requirements as to eligibility
for participation in the Plan, but in each case only to the extent then required
by the Code or applicable law, or deemed necessary or advisable by the Board. No
termination or amendment of the Plan may, without the consent of the Participant
to whom any Award shall theretofore have been granted under the Plan, materially
adversely affect the right of such individual under such Award. 

(b) Termination. The Board shall have
the right and the power to terminate the Plan at any time. No Award shall be
granted under the Plan after the termination of the Plan, but the termination of
the Plan shall not have any other effect and any Award outstanding at the time
of the termination of the Plan may be exercised after termination of the Plan at
any time prior to the expiration date of such Award to the same extent such
Award would have been exercisable had the Plan not been terminated.