**Exhibit 10.27**

 

**AMNET MORTGAGE, INC.**

 

**2004 EQUITY INCENTIVE PLAN**

 

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**TABLE OF CONTENTS**

 

| 1.     | Establishment, Purpose and Term of Plan            |                                          |
|--------|----------------------------------------------------|-----------------------------------------------|
|   | 1.1                                                | Establishment                                 |   |
|   | 1.2                                                | Purpose                                       |   |
|   | 1.3                                                | Term  of Plan                                 |   |
|   |                                               |                                          |   |
| 2.     | Definitions and Construction                       |                                          |
|   | 2.1                                                | Definitions                                   |   |
|   | 2.2                                                | Construction                                  |   |
|   |                                               |                                          |   |
| 3.     | Administration                                     |                                          |
|   | 3.1                                                | Administration by the Committee               |   |
|   | 3.2                                                | Authority of Officers                         |   |
|   | 3.3                                                | Administration with Respect to Insiders       |   |
|   | 3.4                                                | Committee Complying with  Section 162(m) |   |
|   | 3.5                                                | Powers of the Committee                       |   |
|   | 3.6                                                | No  Repricing                                 |   |
|   | 3.7                                                | Indemnification                               |   |
|   |                                               |                                          |   |
| 4.     | Shares Subject to Plan                             |                                          |
|   | 4.1                                                | Maximum Number of Shares Issuable             |   |
|   | 4.2                                                | Adjustments for Changes in Capital  Structure |   |
|   |                                               |                                          |   |
| 5.     | Eligibility and Award Limitations                  |                                          |
|   | 5.1                                                | Persons Eligible for Awards                   |   |
|   | 5.2                                                | Participation                                 |   |
|   | 5.3                                                | Incentive Stock Option Limitations            |   |
|   | 5.4                                                | Award  Limits                                 |   |
|   |                                               |                                          |   |
| 6.     | Terms and Conditions of Options                    |                                          |
|   | 6.1                                                | Exercise  Price                               |   |
|   | 6.2                                                | Exercisability and Term of Options            |   |
|   | 6.3                                                | Payment of Exercise Price                     |   |
|   | 6.4                                                | Effect of Termination of Service              |   |
|   | 6.5                                                | Transferability of Options                    |   |
|   |                                               |                                          |   |
| 7.     | Terms and Conditions of Stock Appreciation  Rights |                                          |
|   | 7.1                                                | Types of SARs Authorized                      |   |
|   | 7.2                                                | Exercise  Price                               |   |
|   | 7.3                                                | Exercisability and Term of SARs               |   |
|   | 7.4                                                | Exercise  of SARs                             |   |
|   | 7.5                                                | Deemed Exercise of SARs                       |   |
|   | 7.6                                                | Effect of Termination of Service              |   |
|   | 7.7                                                | Nontransferability of SARs                    |   |
|   |                                               |                                          |   |
| 8.     | Terms and Conditions of Restricted Stock  Awards   |                                          |
|   | 8.1                                                | Types of Restricted Stock Awards Authorized   |   |
|   | 8.2                                                | Purchase  Price                               |   |
|   | 8.3                                                | Purchase  Period                              |   |
|   | 8.4                                                | Payment of Purchase Price                     |   |
|   | 8.5                                                | Vesting and Restrictions on Transfer          |   |
|   | 8.6                                                | Voting Rights; Dividends and Distributions    |   |

 

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|   | 8.7                                                   | Effect of Termination of Service                                                      |   |
|--------|-------------------------------------------------------|---------------------------------------------------------------------------------------|--------|
|   | 8.8                                                   | Nontransferability of Restricted Stock  Award Rights                                  |   |
|   |                                                  |                                                                                  |   |
| 9.     | Terms and Conditions of Performance Awards            |                                                                                  |
|   | 9.1                                                   | Types of Performance Awards Authorized                                                |   |
|   | 9.2                                                   | Initial Value of Performance Shares and  Performance Units                            |   |
|   | 9.3                                                   | Establishment of Performance Period,  Performance Goals and Performance Award Formula |   |
|   | 9.4                                                   | Measurement of Performance Goals                                                      |   |
|   | 9.5                                                   | Settlement of Performance Awards                                                      |   |
|   | 9.6                                                   | Voting Rights; Dividend Equivalent Rights  and Distributions                          |   |
|   | 9.7                                                   | Effect of Termination of Service                                                      |   |
|   | 9.8                                                   | Nontransferability of Performance Awards                                              |   |
|   |                                                  |                                                                                  |   |
| 10.    | Terms and Conditions of Restricted Stock  Unit Awards |                                                                                  |
|   | 10.1                                                  | Grant of Restricted Stock Unit Awards                                                 |   |
|   | 10.2                                                  | Purchase  Price                                                                       |   |
|   | 10.3                                                  | Vesting                                                                               |   |
|   | 10.4                                                  | Voting Rights, Dividend Equivalent Rights  and Distributions                          |   |
|   | 10.5                                                  | Effect of Termination of Service                                                      |   |
|   | 10.6                                                  | Settlement of Restricted Stock Unit Awards                                            |   |
|   | 10.7                                                  | Nontransferability of Restricted Stock Unit  Awards                                   |   |
|   |                                                  |                                                                                  |   |
| 11.    | Deferred Stock Units                                  |                                                                                  |
|   | 11.1                                                  | Establishment of Deferred Stock Unit  Program                                         |   |
|   | 11.2                                                  | Terms and Conditions of Deferred Stock  Units                                         |   |
|   |                                                  |                                                                                  |   |
| 12.    | Standard Forms of Award Agreement                     |                                                                                  |
|   | 12.1                                                  | Award  Agreements                                                                     |   |
|   | 12.2                                                  | Authority to Vary Terms                                                               |   |
|   |                                                  |                                                                                  |   |
| 13.    | Change in Control                                     |                                                                                  |
|   | 13.1                                                  | Definitions                                                                           |   |
|   | 13.2                                                  | Effect of Change in Control on Options and  SARs                                      |   |
|   | 13.3                                                  | Effect of Change in Control on Restricted  Stock Awards                               |   |
|   | 13.4                                                  | Effect of Change in Control on Performance  Awards                                    |   |
|   | 13.5                                                  | Effect of Change in Control on Restricted  Stock Unit Awards                          |   |
|   | 13.6                                                  | Effect of Change in Control on Deferred  Stock Units                                  |   |
|   |                                                  |                                                                                  |   |
| 14.    | Compliance with Securities Law                        |                                                                                  |
|   |                                                  |                                                                                  |
| 15.    | Tax Withholding                                       |                                                                                  |
|   | 15.1                                                  | Tax Withholding in General                                                            |   |
|   | 15.2                                                  | Withholding in Shares                                                                 |   |
|   |                                                  |                                                                                  |   |
| 16.    | Amendment or Termination of Plan                      |                                                                                  |
|   |                                                  |                                                                                  |
| 17.    | Miscellaneous Provisions                              |                                                                                  |
|   | 17.1                                                  | Repurchase  Rights                                                                    |   |
|   | 17.2                                                  | Provision of Information                                                              |   |
|   | 17.3                                                  | Rights as Employee, Consultant or Director                                            |   |
|   | 17.4                                                  | Rights as a Stockholder                                                               |   |
|   | 17.5                                                  | Fractional  Shares                                                                    |   |
|   | 17.6                                                  | Severability                                                                          |   |
|   | 17.7                                                  | Beneficiary Designation                                                               |   |
|   | 17.8                                                  | Unfunded Obligation                                                                   |   |

 

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**AMNET MORTGAGE, INC.**

**2004 EQUITY INCENTIVE PLAN**

 

**1.****                                      Establishment, Purpose and Term ofPlan.**

 

1.1**                                 Establishment*.*** The AmNet Mortgage, Inc. 2004 Equity Incentive Plan (the *“**Plan**”*)is hereby established effective asof                    ,2004, the date of its approval by the stockholders of the Company (the *“**Effective Date**”*).

 

1.2**                                 Purpose*.*** The purpose of the Plan is to advance the interests of the ParticipatingCompany Group and its stockholders by providing an incentive to attract, retainand reward persons performing services for the Participating Company Group andby motivating such persons to contribute to the growth and profitability of theParticipating Company Group. The Plan seeks to achieve this purpose byproviding for Awards in the form of Options, Indexed Options, StockAppreciation Rights, Restricted Stock Purchase Rights, Restricted StockBonuses, Performance Shares, Performance Units, Restricted Stock Units andDeferred Stock Units. After the Effective Date, the Company shall terminate,and no longer issue any awards from under, the Company’s 1997 Stock IncentivePlan, 1997 Stock Option Plan and 1997 Outside Director Stock Option Plan.

 

1.3**                                 Termof Plan.**  The Plan shall continue ineffect until the earlier of its termination by the Board or the date on whichall of the shares of Stock available for issuance under the Plan have beenissued and all restrictions on such shares under the terms of the Plan and theagreements evidencing Awards granted under the Plan have lapsed. However, allIncentive Stock Options shall be granted, if at all, within ten (10) yearsfrom the Effective Date.

 

**2.****                                      Definitions and Construction.**

 

2.1**                                 Definitions.**  Whenever used herein, the following termsshall have their respective meanings set forth below:

 

(a)*                                  “**Affiliate**”* means (i) an entity,other than a Parent Corporation, that directly, or indirectly through one ormore intermediary entities, controls the Company or (ii) an entity, otherthan a Subsidiary Corporation, that is controlled by the Company directly, orindirectly through one or more intermediary entities. For this purpose, theterm “control” (including the term “controlled by”) means the possession,direct or indirect, of the power to direct or cause the direction of themanagement and policies of the relevant entity, whether through the ownershipof voting securities, by contract or otherwise; or shall have such othermeaning assigned such term for the purposes of registration on Form S-8under the Securities Act.

 

(b)*                                 “**Award**”* means any Option, IndexedOption, SAR, Restricted Stock Purchase Right, Restricted Stock Bonus,Performance Share, Performance Unit, Restricted Stock Unit or Deferred StockUnit granted under the Plan.

 

(c)*                                  “**Award Agreement**”* means a writtenagreement between the Company and a Participant setting forth the terms,conditions and restrictions of the Award granted to the Participant. An AwardAgreement may be an “Option Agreement,” an “Indexed Option Agreement,” a “SARAgreement,” a “Restricted Stock Purchase Agreement,” a “Restricted Stock BonusAgreement,” a “Performance Share Agreement,” a “Performance Unit Agreement,” a“Restricted Stock Unit Agreement,” or a “Deferred Stock Unit Agreement.”

 

(d)*                                 “**Board**”* means the Board of Directors ofthe Company.

 

(e)*                                  “**Code**”* means the Internal Revenue Codeof 1986, as amended, and any applicable regulations promulgated thereunder.

 

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(f)*                                    “**Committee**”* means the CompensationCommittee or other committee of the Board duly appointed to administer the Planand having such powers as shall be specified by the Board. If no committee ofthe Board has been appointed to administer the Plan, the Board shall exerciseall of the powers of the Committee granted herein, and, in any event, the Boardmay in its discretion exercise any or all of such powers.

 

(g)*                                 “**Company**”* means AmNetMortgage, Inc., a Maryland corporation, or any successor corporationthereto.

 

(h)*                                 “**Consultant**”* means a person engaged toprovide consulting or advisory services (other than as an Employee or a memberof the Board) to a Participating Company, provided that the identity of suchperson, the nature of such services or the entity to which such services areprovided would not preclude the Company from offering or selling securities tosuch person pursuant to the Plan in reliance on a Form S-8 RegistrationStatement under the Securities Act.

 

(i)*                                     “**Deferred Stock Unit**”* means abookkeeping entry representing a right granted to a Participant pursuant toSection 11 of the Plan to receive a share of Stock on a date determined inaccordance with the provisions of Section 11 and the Participant’s AwardAgreement.

 

(j)*                                     “**Director**”* means a member of the Board.

 

(k)*                                  “**Disability**”* means the permanent andtotal disability of the Participant, within the meaning ofSection 22(e)(3) of the Code.

 

(l)*                                     “**Dividend Equivalent**”* means a credit,made at the discretion of the Committee or as otherwise provided by the Plan,to the account of a Participant in an amount equal to the cash dividends paidon one share of Stock for each share of Stock represented by an Award held bysuch Participant.

 

(m)*                               “**Employee**”* means any person treated asan employee (including an Officer or a Director who is also treated as anemployee) in the records of a Participating Company and, with respect to anyIncentive Stock Option granted to such person, who is an employee for purposesof Section 422 of the Code; provided, however, that neither service as aDirector nor payment of a Director’s fee shall be sufficient to constituteemployment for purposes of the Plan. The Company shall determine in good faithand in the exercise of its discretion whether an individual has become or hasceased to be an Employee and the effective date of such individual’s employmentor termination of employment, as the case may be. For purposes of anindividual’s rights, if any, under the Plan as of the time of the Company’sdetermination, all such determinations by the Company shall be final, bindingand conclusive, notwithstanding that the Company or any court of law orgovernmental agency subsequently makes a contrary determination.

 

(n)*                                 “**Exchange Act**”* means the SecuritiesExchange Act of 1934, as amended.

 

(o)*                                 “**Fair Market Value**”* means, as of anydate, the value of a share of Stock or other property as determined by theCommittee, in its discretion, or by the Company, in its discretion, if suchdetermination is expressly allocated to the Company herein, subject to thefollowing:

 

(i)                                     If, on such date,the Stock is listed on a national or regional securities exchange or marketsystem, the Fair Market Value of a share of Stock shall be the closing price ofa share of Stock (or the mean of the closing bid and asked prices of a share ofStock if the Stock is so quoted instead) as quoted on the Nasdaq NationalMarket, The Nasdaq SmallCap Market or such other national or regional securitiesexchange or market system constituting the primary market for the Stock, asreported in *The Wall Street Journal*or such other source as the Company deems reliable. If the relevant date doesnot fall on a day on which the Stock has traded on such securities exchange ormarket system, the date on which the Fair Market Value shall be establishedshall be the last day on which the Stock was so traded prior to the

 

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relevant date, or such other appropriate day as shall be determined bythe Committee, in its discretion.

 

(ii)                                  If, on such date, theStock is not listed on a national or regional securities exchange or marketsystem, the Fair Market Value of a share of Stock shall be as determined by theCommittee in good faith without regard to any restriction other than arestriction which, by its terms, will never lapse.

 

(p)*                                 “**Incentive Stock Option**”* means an Optionintended to be (as set forth in the Award Agreement) and which qualifies as anincentive stock option within the meaning of Section 422(b) of the Code.

 

(q)                                 “***Indexed Option***” means an Option with anexercise price which either increases by a fixed percentage over time orchanges by reference to a published index, as determined by the Committee and setforth in the Option Agreement.

 

(r)                                    “***Insider***” means anOfficer, a Director or any other person whose transactions in Stock are subjectto Section 16 of the Exchange Act.

 

(s)                                  “***Nonstatutory Stock Option***” means an Optionnot intended to be (as set forth in the Award Agreement) an incentive stockoption within the meaning of Section 422(b) of the Code.

 

(t)                                    “***Officer***” means anyperson designated by the Board as an officer of the Company.

 

(u)                                 “***Option***” means the right to purchase Stock ata stated price for a specified period of time granted to a Participant pursuantto Section 6 of the Plan. An Option may be either an Incentive StockOption, a Nonstatutory Stock Option or an Indexed Option.

 

(v)                                 “***Parent Corporation***” means any present orfuture “parent corporation” of the Company, as defined in Section 424(e)of the Code.

 

(w)                               “***Participant***” means any eligible person whohas been granted one or more Awards.

 

(x)                                   “***Participating Company***”means the Company or any Parent Corporation, Subsidiary Corporation or Affiliate.

 

(y)                                 “***Participating Company Group***” means, at anypoint in time, all entities collectively which are then ParticipatingCompanies.

 

(z)                                   “***Performance Award***”means an Award of Performance Shares or Performance Units.

 

(aa)                            “***Performance Award Formula***” means, for anyPerformance Award, a formula or table established by the Committee pursuant toSection 9.3 of the Plan which provides the basis for computing the valueof a Performance Award at one or more threshold levels of attainment of theapplicable Performance Goal(s) measured as of the end of the applicablePerformance Period.

 

(bb)                          “***Performance Goal***” means a performance goalestablished by the Committee pursuant to Section 9.3 of the Plan.

 

(cc)                            “***Performance Period***” means a periodestablished by the Committee pursuant to Section 9.3 of the Plan at theend of which one or more Performance Goals are to be measured.

 

(dd)                          “***Performance Share***” means a bookkeeping entryrepresenting a right granted to a Participant pursuant to Section 9 of thePlan to receive a payment equal to the value of a Performance Share, asdetermined by the Committee, based on performance.

 

(ee)                            “***Performance Unit***” means a bookkeeping entryrepresenting a right granted to a Participant pursuant to Section 9 of thePlan to receive a payment equal to the value of a Performance Unit, asdetermined by the Committee, based upon performance.

 

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(ff)                                “***Prior Plan Options***” means any option or otheraward granted by the Company which is subject to vesting or repurchase by theCompany, including specifically, all such options and awards granted pursuantto the Company’s 1997 Stock Incentive Plan, 1997 Stock Option Plan and 1997Outside Director Stock Option Plan which is outstanding on or after the EffectiveDate.

 

(gg)                          “***Restricted Stock Award***” means an Award of aRestricted Stock Bonus or a Restricted Stock Purchase Right.

 

(hh)                          “***Restricted Stock Bonus***” means Stock grantedto a Participant pursuant to Section 8 of the Plan.

 

(ii)*                                  “**Restricted Stock Purchase Right**”* meansa right to purchase Stock granted to a Participant pursuant to Section 8of the Plan.

 

(jj)                                  “***Restricted Stock Unit***” or “***Stock Unit***” means abookkeeping entry representing a right granted to a Participant pursuant toSection 10 of the Plan to receive a share of Stock on a date determined inaccordance with the provisions of Section 10 and the Participant’s AwardAgreement.

 

(kk)                            “***Restriction Period***” means the periodestablished in accordance with Section 8.5 of the Plan during which sharessubject to a Restricted Stock Award are subject to Vesting Conditions.

 

(ll)                                  “***Rule 16b-3***” means Rule 16b-3 underthe Exchange Act, as amended from time to time, or any successor rule orregulation.

 

(mm)                      “***SAR***” or “***Stock Appreciation Right***” means a bookkeeping entryrepresenting, for each share of Stock subject to such SAR, a right granted to aParticipant pursuant to Section 7 of the Plan to receive payment of anamount equal to the excess, if any, of the Fair Market Value of a share ofStock on the date of exercise of the SAR over the exercise price.

 

(nn)                          “***Section 162(m)***” meansSection 162(m) of the Code.

 

(oo)                          “***Securities Act***” means the Securities Act of1933, as amended.

 

(pp)                          “***Service***” means a Participant’s employment orservice with the Participating Company Group, whether in the capacity of anEmployee, a Director or a Consultant. A Participant’s Service shall not bedeemed to have terminated merely because of a change in the capacity in whichthe Participant renders such Service or a change in the Participating Companyfor which the Participant renders such Service, provided that there is nointerruption or termination of the Participant’s Service. Furthermore, aParticipant’s Service shall not be deemed to have terminated if the Participanttakes any military leave, sick leave, or other bona fide leave of absenceapproved by the Company. However, if any such leave taken by a Participantexceeds ninety (90) days, then on the one hundred eighty-first (181st) dayfollowing the commencement of such leave any Incentive Stock Option held by theParticipant shall cease to be treated as an Incentive Stock Option and insteadshall be treated thereafter as a Nonstatutory Stock Option, unless theParticipant’s right to return to Service with the Participating Company Groupis guaranteed by statute or contract. Notwithstanding the foregoing, unlessotherwise designated by the Company or required by law, a leave of absenceshall not be treated as Service for purposes of determining vesting under theParticipant’s Award Agreement. A Participant’s Service shall be deemed to haveterminated either upon an actual termination of Service or upon the entity forwhich the Participant performs Service ceasing to be a Participating Company.In addition, a Participant’s Service shall be deemed to have terminated if, inthe Committee’s sole discretion, the Participant’s employment relationship istransferred to an Affiliate or Subsidiary Corporation and the Participant isoffered a replacement equity award from the Affiliate or SubsidiaryCorporation. Subject to the foregoing, the Company, in its discretion, shalldetermine whether the Participant’s Service has terminated and the effectivedate of such termination.

 

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(qq)*                          “**Stock**”* means the common stock of theCompany, as adjusted from time to time in accordance with Section 4.2 ofthe Plan.

 

(rr)                                “***Subsidiary Corporation***” means any present orfuture “subsidiary corporation” of the Company, as defined inSection 424(f) of the Code.

 

(ss)                            “***Ten Percent Owner***” means a Participant who,at the time an Incentive Stock Option is granted to the Participant, owns stockpossessing more than ten percent (10%) of the total combined voting power ofall classes of stock of a Participating Company (other than an Affiliate)within the meaning of Section 422(b)(6) of the Code.

 

(tt)                                “***Vesting Conditions***” mean those conditionsestablished in accordance with Section 8.5 or Section 10.3 of thePlan prior to the satisfaction of which shares subject to a Restricted StockAward or Restricted Stock Unit Award, respectively, remain subject toforfeiture or a repurchase option in favor of the Company upon theParticipant’s termination of Service.

 

2.2**                                 Construction.**  Captions and titles contained herein are forconvenience only and shall not affect the meaning or interpretation of anyprovision of the Plan. Except when otherwise indicated by the context, thesingular shall include the plural and the plural shall include the singular.Use of the term “or” is not intended to be exclusive, unless the contextclearly requires otherwise.

 

**3.****                                      Administration.**

 

3.1**                                 Administrationby the Committee.**  The Plan shall beadministered by the Committee. All questions of interpretation of the Plan orof any Award shall be determined by the Committee, and such determinationsshall be final and binding upon all persons having an interest in the Plan orsuch Award.

 

3.2**                                 Authorityof Officers.**  Any Officer shall havethe authority to act on behalf of the Company with respect to any matter,right, obligation, determination or election which is the responsibility of orwhich is allocated to the Company herein, provided the Officer has apparentauthority with respect to such matter, right, obligation, determination orelection. The Board may, in its discretion, delegate to a committee comprisedof one or more Officers the authority to grant one or more Awards, withoutfurther approval of the Board or the Committee, to any Employee, other than aperson who, at the time of such grant, is an Insider; provided, however, that(a) such Awards shall not be granted for shares in excess of the maximumaggregate number of shares of Stock authorized for issuance pursuant toSection 4.1, (b) the exercise price per share of each Option shall benot less than the Fair Market Value per share of the Stock on the effectivedate of grant (or, if the Stock has not traded on such date, on the last daypreceding the effective date of grant on which the Stock was traded), and(iii) each such Award shall be subject to the terms and conditions of theappropriate standard form of Award Agreement approved by the Board or theCommittee and shall conform to the provisions of the Plan and such otherguidelines as shall be established from time to time by the Board or theCommittee.

 

3.3**                                 Administrationwith Respect to Insiders.**  Withrespect to participation by Insiders in the Plan, at any time that any class ofequity security of the Company is registered pursuant to Section 12 of theExchange Act, the Plan shall be administered in compliance with therequirements, if any, of Rule 16b-3.

 

3.4**                                 CommitteeComplying with Section 162(m).** If the Company is a “publicly held corporation” within the meaning ofSection 162(m), the Board may establish a Committee of “outside directors”within the meaning of Section 162(m) to approve the grant of any Awardwhich might reasonably be anticipated to result in the payment of employeeremuneration that would otherwise exceed the limit on employee remunerationdeductible for income tax purposes pursuant to Section 162(m).

 

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3.5**                                 Powersof the Committee*.***  In addition to any other powers set forth inthe Plan and subject to the provisions of the Plan, the Committee shall havethe full and final power and authority, in its discretion:

 

(a)                                  to determine thepersons to whom, and the time or times at which, Awards shall be granted andthe number of shares of Stock or units to be subject to each Award;

 

(b)                                 to determine the typeof Award granted and to designate Options as Incentive Stock Options,Nonstatutory Stock Options or Indexed Options;

 

(c)                                  to determine the FairMarket Value of shares of Stock or other property;

 

(d)                                 to determine theterms, conditions and restrictions applicable to each Award (which need not beidentical) and any shares acquired pursuant thereto, including, withoutlimitation, (i) the exercise or purchase price of shares purchasedpursuant to any Award, (ii) the method of payment for shares purchasedpursuant to any Award, (iii) the method for satisfaction of any taxwithholding obligation arising in connection with Award, including by thewithholding or delivery of shares of Stock, (iv) the timing, terms andconditions of the exercisability or vesting of any Award or any shares acquiredpursuant thereto, (v) the Performance Award Formula and Performance Goalsapplicable to any Award and the extent to which such Performance Goals havebeen attained, (vi) the time of the expiration of any Award,(vii) the effect of the Participant’s termination of Service on any of theforegoing, and (viii) all other terms, conditions and restrictionsapplicable to any Award or shares acquired pursuant thereto not inconsistentwith the terms of the Plan;

 

(e)                                  to determine whetheran Award of Restricted Stock Units, SARs, Performance Shares or PerformanceUnits will be settled in shares of Stock, cash, or in any combination thereof;

 

(f)                                    to approve one ormore forms of Award Agreement;

 

(g)                                 to amend, modify,extend, cancel or renew any Award or to waive any restrictions or conditionsapplicable to any Award or any shares acquired pursuant thereto;

 

(h)                                 to accelerate,continue, extend or defer the exercisability or vesting of any Award or anyshares acquired pursuant thereto, including with respect to the periodfollowing a Participant’s termination of Service;

 

(i)                                     to prescribe,amend or rescind rules, guidelines and policies relating to the Plan, or toadopt sub-plans or supplements to, or alternative versions of, the Plan,including, without limitation, as the Committee deems necessary or desirable tocomply with the laws or regulations of or to accommodate the tax policy,accounting principles or custom of, foreign jurisdictions whose citizens may begranted Awards;

 

(j)                                     to authorize, inconjunction with any applicable Company deferred compensation plan, that thereceipt of cash or Stock subject to any Award under this Plan, may be deferredunder the terms and conditions of such Company deferred compensation plan; and

 

(k)                                  to correct anydefect, supply any omission or reconcile any inconsistency in the Plan or anyAward Agreement and to make all other determinations and take such otheractions with respect to the Plan or any Award as the Committee may deemadvisable to the extent not inconsistent with the provisions of the Plan orapplicable law.

 

3.6**                                 NoRepricing.**  Without the affirmativevote of holders of a majority of the shares of Stock cast in person or by proxyat a meeting of the stockholders of the Company at which a quorum representinga majority of all outstanding shares of Stock is present or represented byproxy, the Board shall not approve a program providing for the amendment ofoutstanding Options and/or SARs to reduce the exercise price thereof. Thisparagraph shall not be construed to apply to “issuing or

 

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assuming a stock option in a transaction to which section 424(a)applies,” within the meaning of Section 424 of the Code.

 

3.7**                                 Indemnification.** In addition to such other rights of indemnification as they may have asmembers of the Board or the Committee or as officers or employees of theParticipating Company Group, members of the Board or the Committee and anyofficers or employees of the Participating Company Group to whom authority toact for the Board, the Committee or the Company is delegated shall beindemnified by the Company against all reasonable expenses, includingattorneys’ fees, actually and necessarily incurred in connection with thedefense of any action, suit or proceeding, or in connection with any appealtherein, to which they or any of them may be a party by reason of any actiontaken or failure to act under or in connection with the Plan, or any rightgranted hereunder, and against all amounts paid by them in settlement thereof(provided such settlement is approved by independent legal counsel selected bythe Company) or paid by them in satisfaction of a judgment in any such action,suit or proceeding, except in relation to matters as to which it shall be adjudgedin such action, suit or proceeding that such person is liable for grossnegligence, bad faith or intentional misconduct in duties; provided, however,that within sixty (60) days after the institution of such action, suit orproceeding, such person shall offer to the Company, in writing, the opportunityat its own expense to handle and defend the same.

 

**4.****                                      Shares Subject to Plan.**

 

4.1**                                 MaximumNumber of Shares Issuable.**  Subjectto adjustment as provided in Section 4.2, the maximum aggregate number ofshares of Stock that may be granted under the Plan shall be 2,441,867, reducedat any time by the number of shares subject to the Prior Plan Options (which asof the Effective Date equaled approximately 1,827,217). Such shares shallconsist of authorized but unissued or reacquired shares of Stock or anycombination thereof. If any outstanding Award, including any Prior PlanOptions, for any reason expires or is terminated or canceled without havingbeen exercised or settled in full, or if shares of Stock acquired pursuant toan Award subject to forfeiture or repurchase, including any Prior Plan Options,are forfeited or repurchased by the Company, the shares of Stock allocable tothe terminated portion of such Award, including any Prior Plan Options, or suchforfeited or repurchased shares of Stock shall again be available for grantunder the Plan. Shares of Stock shall not be deemed to have been grantedpursuant to the Plan (a) with respect to any portion of an Award that issettled in cash or (b) to the extent such shares are withheld insatisfaction of tax withholding obligations pursuant to Section 15.2. Uponpayment in shares of Stock pursuant to the exercise of a SAR, the number ofshares available for grant under the Plan shall be reduced only by the numberof shares actually issued in such payment. If the exercise price of an Optionis paid by tender to the Company, or attestation to the ownership, of shares ofStock owned by the Participant, the number of shares available for grant underthe Plan shall be reduced by the net number of shares for which the Option isexercised.

 

4.2**                                 Adjustmentsfor Changes in Capital Structure*.***  Subject to any required action by thestockholders of the Company, in the event of any change in the Stock effectedwithout receipt of consideration by the Company, whether through merger,consolidation, reorganization, reincorporation, recapitalization,reclassification, stock dividend, stock split, reverse stock split, split-up,split-off, spin-off, combination of shares, exchange of shares, or similarchange in the capital structure of the Company, or in the event of payment of adividend or distribution to the stockholders of the Company in a form otherthan Stock (excepting normal cash dividends) that has a material effect on the FairMarket Value of shares of Stock, appropriate adjustments shall be made in thenumber and class of shares subject to the Plan and to any outstanding Awards,and in the exercise or purchase price per share under any outstanding Award inorder to prevent dilution or enlargement of Participants’ rights under thePlan. For purposes of the foregoing, conversion of any convertible securitiesof the Company shall not be treated as “effected without receipt ofconsideration by the Company.” Any fractional share resulting from anadjustment pursuant to this Section 4.2 shall be rounded down to thenearest whole number, and in no event may the exercise or purchase price underany Award be decreased to an amount less than the par value, if any, of thestock subject to such Award. The adjustments determined by the Committeepursuant to this Section 4.2 shall be final, binding and conclusive.

 

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**5.****                                      Eligibility and Award Limitations.**

 

5.1**                                 PersonsEligible for Awards.**  Awards may begranted only to Employees, Consultants and Directors. For purposes of theforegoing sentence, “Employees,” “Consultants” and “Directors” shall includeprospective Employees, prospective Consultants and prospective Directors towhom Awards are granted in connection with written offers of an employment orother service relationship with the Participating Company Group; provided,however, that no Stock subject to any such Award shall vest, become exercisableor be issued prior to the date on which such person commences Service.

 

5.2**                                 Participation.**  Awards are granted solely at the discretionof the Committee. Eligible persons may be granted more than one (1) Award.However, eligibility in accordance with this Section shall not entitle anyperson to be granted an Award, or, having been granted an Award, to be grantedan additional Award.

 

5.3**                                 IncentiveStock Option Limitations.**

 

(a)***                                  PersonsEligible.***  An Incentive StockOption may be granted only to a person who, on the effective date of grant, isan Employee of the Company, a Parent Corporation or a Subsidiary Corporation(each being an *“**ISO-Qualifying Corporation**”*). Any person who is notan Employee of an ISO-Qualifying Corporation on the effective date of the grantof an Option to such person may be granted only a Nonstatutory Stock Option. AnIncentive Stock Option granted to a prospective Employee upon the conditionthat such person become an Employee of an ISO-Qualifying Corporation shall bedeemed granted effective on the date such person commences Service with anISO-Qualifying Corporation, with an exercise price determined as of such datein accordance with Section 6.1.

 

(b)***                                 FairMarket Value Limitation.***  To theextent that options designated as Incentive Stock Options (granted under allstock option plans of the Participating Company Group, including the Plan)become exercisable by a Participant for the first time during any calendar yearfor stock having a Fair Market Value greater than One Hundred Thousand dollars($100,000), the portion of such options which exceeds such amount shall betreated as Nonstatutory Stock Options. For purposes of this Section, optionsdesignated as Incentive Stock Options shall be taken into account in the orderin which they were granted, and the Fair Market Value of stock shall bedetermined as of the time the option with respect to such stock is granted. Ifthe Code is amended to provide for a different limitation from that set forthin this Section, such different limitation shall be deemed incorporated hereineffective as of the date and with respect to such Options as required orpermitted by such amendment to the Code. If an Option is treated as anIncentive Stock Option in part and as a Nonstatutory Stock Option in part byreason of the limitation set forth in this Section, the Participant maydesignate which portion of such Option the Participant is exercising. In theabsence of such designation, the Participant shall be deemed to have exercisedthe Incentive Stock Option portion of the Option first. Upon exercise, sharesissued pursuant to each such portion shall be separately identified.

 

5.4**                                 AwardLimits.**

 

(i)**                                     Optionsand SARs.**  Subject to adjustment asprovided in Section 4.2, no Employee shall be granted within any fiscalyear of the Company one or more Options or Freestanding SARs which in theaggregate are for more than Three Hundred Thousand (300,000) shares of Stock,provided, however, that the Company may make an additional one-time grant toany newly-hired Employee of an Option and/or SAR for the purchase of up to anadditional One Hundred and Fifty Thousand (150,000) shares of Stock. An Optionwhich is canceled (or a Freestanding SAR as to which the exercise price isreduced to reflect a reduction in the Fair Market Value of the Stock) in thesame fiscal year of the Company in which it was granted shall continue to becounted against such limit for such fiscal year.

 

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(ii)**                                  RestrictedStock Awards and Restricted Stock Units.** Subject to adjustment as provided in Section 4.2, no Employee shallbe granted within any fiscal year of the Company one or more Restricted StockAwards or Restricted Stock Units, subject to Vesting Conditions based on theattainment of Performance Goals, for more than One Hundred and Fifty Thousand(150,000) shares of Stock, provided, however, that the Company may make anadditional one-time grant to any newly-hired Employee of a Restricted StockAward or Restricted Stock Units of up to an additional Seventy-Five Thousand(75,000) shares of Stock.

 

(iii)**                               PerformanceAwards.**  Subject to adjustment asprovided in Section 4.2, no Employee shall be granted (A) PerformanceShares which could result in such Employee receiving more than One Hundred andFifty Thousand (150,000) shares of Stock for each full fiscal year of theCompany contained in the Performance Period for such Award, or(B) Performance Units which could result in such Employee receiving morethan Two Million Five Hundred Thousand ($2,500,000) for each full fiscal yearof the Company contained in the Performance Period for such Award. NoParticipant may be granted more than one Performance Award for the samePerformance Period.

 

**6.****                                      Terms and Conditions of Options.**

 

Options shall be evidenced by Award Agreements specifying the number ofshares of Stock covered thereby, in such form as the Committee shall from timeto time establish. No Option or purported Option shall be a valid and bindingobligation of the Company unless evidenced by a fully executed Award Agreement.Award Agreements evidencing Options may incorporate all or any of the terms ofthe Plan by reference and shall comply with and be subject to the followingterms and conditions:

 

6.1**                                 ExercisePrice.**  The exercise price for eachOption shall be established in the discretion of the Committee; provided,however, that (a) the exercise price per share shall be not less than theFair Market Value of a share of Stock on the effective date of grant of theOption, (b) no Incentive Stock Option granted to a Ten Percent Owner shallhave an exercise price per share less than one hundred ten percent (110%) ofthe Fair Market Value of a share of Stock on the effective date of grant of theOption, and (c) notwithstanding anything to the contrary in thisSection 6.1, in the case of an Indexed Option, the Committee shalldetermine the exercise price of such Indexed Option and the terms andconditions that affect, if any, any adjustments to the exercise price of suchIndexed Option. Notwithstanding the foregoing, an Option may be granted with anexercise price lower than the minimum exercise price set forth above if suchOption is granted pursuant to an assumption or substitution for another optionin a manner qualifying under the provisions of Section 424(a) of the Code.

 

6.2**                                 Exercisabilityand Term of Options*.***  Options shall be exercisable at such time ortimes, or upon such event or events, and subject to such terms, conditions,performance criteria and restrictions as shall be determined by the Committeeand set forth in the Award Agreement evidencing such Option; provided, however,that (a) no Option shall be exercisable after the expiration of ten(10) years after the effective date of grant of such Option, (b) noIncentive Stock Option granted to a Ten Percent Owner shall be exercisableafter the expiration of five (5) years after the effective date of grantof such Option, and (c) no Option granted to a prospective Employee,prospective Consultant or prospective Director may become exercisable prior tothe date on which such person commences Service. Subject to the foregoing,unless otherwise specified by the Committee in the grant of an Option, anyOption granted hereunder shall terminate ten (10) years after theeffective date of grant of the Option, unless earlier terminated in accordancewith its provisions.

 

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6.3**                                 Paymentof Exercise Price.**

 

(a)***                                  Formsof Consideration Authorized.*** Except as otherwise provided below, payment of the exercise price forthe number of shares of Stock being purchased pursuant to any Option shall bemade (i) in cash, by check or in cash equivalent, (ii) by tender tothe Company, or attestation to the ownership, of shares of Stock owned by theParticipant having a Fair Market Value not less than the exercise price,(iii) by delivery of a properly executed notice of exercise together withirrevocable instructions to a broker providing for the assignment to theCompany of the proceeds of a sale or loan with respect to some or all of theshares being acquired upon the exercise of the Option (including, withoutlimitation, through an exercise complying with the provisions ofRegulation T as promulgated from time to time by the Board of Governors ofthe Federal Reserve System) (a *“**Cashless Exercise**”*), (iv) bysuch other consideration as may be approved by the Committee from time to timeto the extent permitted by applicable law, or (v) by any combinationthereof. The Committee may at any time or from time to time grant Options whichdo not permit all of the foregoing forms of consideration to be used in paymentof the exercise price or which otherwise restrict one or more forms ofconsideration.

 

(b)***                                 Limitationson Forms of Consideration.***

 

(i)**                                     Tenderof Stock.**  Notwithstanding theforegoing, an Option may not be exercised by tender to the Company, orattestation to the ownership, of shares of Stock to the extent such tender orattestation would constitute a violation of the provisions of any law,regulation or agreement restricting the redemption of the Company’s stock.Unless otherwise provided by the Committee, an Option may not be exercised bytender to the Company, or attestation to the ownership, of shares of Stockunless such shares either have been owned by the Participant for more than six(6) months (and not used for another Option exercise by attestation duringsuch period) or were not acquired, directly or indirectly, from the Company.

 

(ii)**                                  CashlessExercise.**  The Company reserves, atany and all times, the right, in the Company’s sole and absolute discretion, toestablish, decline to approve or terminate any program or procedures for theexercise of Options by means of a Cashless Exercise, including with respect toone or more Participants specified by the Company notwithstanding that suchprogram or procedures may be available to other Participants.

 

6.4**                                 Effectof Termination of Service.**  AnOption shall be exercisable after a Participant’s termination of Service tosuch extent and during such period as determined by the Committee, in itsdiscretion, and set forth in the Award Agreement evidencing such Option.

 

6.5**                                 Transferabilityof Options.**  During the lifetime ofthe Participant, an Option shall be exercisable only by the Participant or theParticipant’s guardian or legal representative. Prior to the issuance of sharesof Stock upon the exercise of an Option, the Option shall not be subject in anymanner to anticipation, alienation, sale, exchange, transfer, assignment,pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’sbeneficiary, except transfer by will or by the laws of descent anddistribution. Notwithstanding the foregoing, to the extent permitted by theCommittee, in its discretion, and set forth in the Award Agreement evidencingsuch Option, a Nonstatutory Stock Option shall be assignable or transferablesubject to the applicable limitations, if any, described in the GeneralInstructions to Form S-8 Registration Statement under the Securities Act.Notwithstanding any of the foregoing, the Board may permit furthertransferability of any Option, on a general or specific basis, and may imposeconditions and limitations on any permitted transferability.

 

**7.****                                      Terms and Conditions of StockAppreciation Rights.**

 

Stock Appreciation Rights shall be evidenced by Award Agreementsspecifying the number of shares of Stock subject to the Award, in such form asthe Committee shall from time to time establish. No SAR or purported SAR shallbe a valid and binding obligation of the Company unless evidenced by

 

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a fully executed Award Agreement. Award Agreements evidencing SARs mayincorporate all or any of the terms of the Plan by reference and shall complywith and be subject to the following terms and conditions:

 

7.1**                                 Typesof SARs Authorized.**  SARs may begranted in tandem with all or any portion of a related Option (a *“**Tandem SAR**”*)or may be granted independently of any Option (a *“**Freestanding SAR**”*).A Tandem SAR may be granted either concurrently with the grant of the relatedOption or at any time thereafter prior to the complete exercise, termination,expiration or cancellation of such related Option.

 

7.2**                                 ExercisePrice.**  The exercise price for eachSAR shall be established in the discretion of the Committee; provided, however,that (a) the exercise price per share subject to a Tandem SAR shall be theexercise price per share under the related Option and (b) the exerciseprice per share subject to a Freestanding SAR shall be not less than the FairMarket Value of a share of Stock on the effective date of grant of the SAR.

 

7.3**                                 Exercisabilityand Term of SARs.**

 

(a)***                                  TandemSARs.***  Tandem SARs shall beexercisable only at the time and to the extent, and only to the extent, thatthe related Option is exercisable, subject to such provisions as the Committeemay specify where the Tandem SAR is granted with respect to less than the fullnumber of shares of Stock subject to the related Option. The Committee may, inits discretion, provide in any Award Agreement evidencing a Tandem SAR thatsuch SAR may not be exercised without the advance approval of the Company and,if such approval is not given, then the Option shall nevertheless remainexercisable in accordance with its terms. A Tandem SAR shall terminate andcease to be exercisable no later than the date on which the related Optionexpires or is terminated or canceled. Upon the exercise of a Tandem SAR withrespect to some or all of the shares subject to such SAR, the related Optionshall be canceled automatically as to the number of shares with respect towhich the Tandem SAR was exercised. Upon the exercise of an Option related to aTandem SAR as to some or all of the shares subject to such Option, the relatedTandem SAR shall be canceled automatically as to the number of shares withrespect to which the related Option was exercised.

 

(b)***                                 FreestandingSARs.***  Freestanding SARs shallbe exercisable at such time or times, or upon such event or events, and subjectto such terms, conditions, performance criteria and restrictions as shall bedetermined by the Committee and set forth in the Award Agreement evidencingsuch SAR; provided, however, that no Freestanding SAR shall be exercisableafter the expiration of ten (10) years after the effective date of grantof such SAR.

 

7.4**                                 Exerciseof SARs.**  Upon the exercise (ordeemed exercise pursuant to Section 7.5) of a SAR, the Participant (or theParticipant’s legal representative or other person who acquired the right toexercise the SAR by reason of the Participant’s death) shall be entitled toreceive payment of an amount for each share with respect to which the SAR isexercised equal to the excess, if any, of the Fair Market Value of a share ofStock on the date of exercise of the SAR over the exercise price. Payment ofsuch amount shall be made in cash, shares of Stock, or any combination thereofas determined by the Committee. Unless otherwise provided in the AwardAgreement evidencing such SAR, payment shall be made in a lump sum as soon aspracticable following the date of exercise of the SAR. The Award Agreementevidencing any SAR may provide for deferred payment in a lump sum or ininstallments. When payment is to be made in shares of Stock, the number ofshares to be issued shall be determined on the basis of the Fair Market Value ofa share of Stock on the date of exercise of the SAR. For purposes ofSection 7, a SAR shall be deemed exercised on the date on which theCompany receives notice of exercise from the Participant.

 

7.5**                                 DeemedExercise of SARs.**  If, on the dateon which a SAR would otherwise terminate or expire, the SAR by its termsremains exercisable immediately prior to such termination or expiration

 

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and, if so exercised, would result in a payment to the holder of suchSAR, then any portion of such SAR which has not previously been exercised shallautomatically be deemed to be exercised as of such date with respect to suchportion.

 

7.6**                                 Effectof Termination of Service.**  Subjectto earlier termination of the SAR as otherwise provided herein a SAR shall beexercisable after a Participant’s termination of Service to such extent andduring such period as determined by the Committee, in its discretion, and setforth in the Award Agreement evidencing such SAR and thereafter shallterminate.

 

7.7**                                 Nontransferabilityof SARs.**  During the lifetime of theParticipant, a SAR shall be exercisable only by the Participant or theParticipant’s guardian or legal representative. Prior to the exercise of a SAR,the SAR shall not be subject in any manner to anticipation, alienation, sale,exchange, transfer, assignment, pledge, encumbrance, or garnishment bycreditors of the Participant or the Participant’s beneficiary, except transferby will or by the laws of descent and distribution. Notwithstanding any of theforegoing, the Board may permit further transferability of any SAR, on ageneral or specific basis, and may impose conditions and limitations on anypermitted transferability.

 

**8.****                                      Terms and Conditions of RestrictedStock Awards.**

 

Restricted Stock Awards shall be evidenced by Award Agreementsspecifying whether the Award is a Restricted Stock Bonus or a Restricted StockPurchase Right and the number of shares of Stock subject to the Award, in suchform as the Committee shall from time to time establish. No Restricted StockAward or purported Restricted Stock Award shall be a valid and bindingobligation of the Company unless evidenced by a fully executed Award Agreement.Award Agreements evidencing Restricted Stock Awards may incorporate all or anyof the terms of the Plan by reference and shall comply with and be subject tothe following terms and conditions:

 

8.1**                                 Typesof Restricted Stock Awards Authorized.** Restricted Stock Awards may be in the form of either a Restricted StockBonus or a Restricted Stock Purchase Right. Restricted Stock Awards may begranted upon such conditions as the Committee shall determine, including,without limitation, upon the attainment of one or more Performance Goalsdescribed in Section 9.4. If either the grant of a Restricted Stock Awardor the lapsing of the Restriction Period is to be contingent upon theattainment of one or more Performance Goals, the Committee shall followprocedures substantially equivalent to those set forth in Sections 9.3 through9.5(a).

 

8.2**                                 PurchasePrice.**  The purchase price forshares of Stock issuable under each Restricted Stock Purchase Right shall beestablished by the Committee in its discretion. No monetary payment (other thanapplicable tax withholding) shall be required as a condition of receivingshares of Stock pursuant to a Restricted Stock Bonus, the consideration forwhich shall be services actually rendered to a Participating Company or for itsbenefit. Notwithstanding the foregoing, the Participant shall furnish considerationin the form of cash or past services rendered to a Participating Company or forits benefit having a value not less than the par value of the shares of Stocksubject to such Restricted Stock Award.

 

8.3**                                 PurchasePeriod.**  A Restricted Stock PurchaseRight shall be exercisable within a period established by the Committee, whichshall in no event exceed thirty (30) days from the effective date of thegrant of the Restricted Stock Purchase Right; provided, however, that noRestricted Stock Purchase Right granted to a prospective Employee, prospectiveConsultant or prospective Director may become exercisable prior to the date onwhich such person commences Service.

 

8.4**                                 Paymentof Purchase Price.**  Except asotherwise provided below, payment of the purchase price for the number ofshares of Stock being purchased pursuant to any Restricted Stock Purchase Rightshall be made (a) in cash, by check, or in cash equivalent, (b) bysuch other consideration as may be approved by the Committee from time to timeto the extent permitted by applicable law, or (iii) by

 

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any combination thereof. The Committee may at any time or from time totime grant Restricted Stock Purchase Rights which do not permit all of the foregoingforms of consideration to be used in payment of the purchase price or whichotherwise restrict one or more forms of consideration. Restricted Stock Bonusesshall be issued in consideration for past services actually rendered to aParticipating Company or for its benefit.

 

8.5**                                 Vestingand Restrictions on Transfer.** Shares issued pursuant to any Restricted Stock Award may or may not bemade subject to Vesting Conditions based upon the satisfaction of such Servicerequirements, conditions, restrictions or performance criteria, including,without limitation, Performance Goals as described in Section 9.4, asshall be established by the Committee and set forth in the Award Agreementevidencing such Award. During any Restriction Period in which shares acquiredpursuant to a Restricted Stock Award remain subject to Vesting Conditions, suchshares may not be sold, exchanged, transferred, pledged, assigned or otherwisedisposed of other than pursuant to an Ownership Change Event, as defined inSection 13.1, or as provided in Section 8.8. Upon request by theCompany, each Participant shall execute any agreement evidencing such transferrestrictions prior to the receipt of shares of Stock hereunder and shallpromptly present to the Company any and all certificates representing shares ofStock acquired hereunder for the placement on such certificates of appropriatelegends evidencing any such transfer restrictions.

 

8.6**                                 VotingRights; Dividends and Distributions.** Except as provided in this Section, Section 8.5 and any AwardAgreement, during the Restriction Period applicable to shares subject to aRestricted Stock Award, the Participant shall have all of the rights of astockholder of the Company holding shares of Stock, including the right to votesuch shares and to receive all dividends and other distributions paid withrespect to such shares. However, in the event of a dividend or distributionpaid in shares of Stock or any other adjustment made upon a change in thecapital structure of the Company as described in Section 4.2, then any andall new, substituted or additional securities or other property (other thannormal cash dividends) to which the Participant is entitled by reason of theParticipant’s Restricted Stock Award shall be immediately subject to the sameVesting Conditions as the shares subject to the Restricted Stock Award withrespect to which such dividends or distributions were paid or adjustments weremade.

 

8.7**                                 Effectof Termination of Service.**  Unlessotherwise provided by the Committee in the grant of a Restricted Stock Awardand set forth in the Award Agreement, if a Participant’s Service terminates forany reason, whether voluntary or involuntary (including the Participant’s deathor Disability), then (a) the Company shall have the option to repurchasefor the purchase price paid by the Participant any shares acquired by theParticipant pursuant to a Restricted Stock Purchase Right which remain subjectto Vesting Conditions as of the date of the Participant’s termination ofService and (b) the Participant shall forfeit to the Company any sharesacquired by the Participant pursuant to a Restricted Stock Bonus which remainsubject to Vesting Conditions as of the date of the Participant’s terminationof Service. The Company shall have the right to assign at any time anyrepurchase right it may have, whether or not such right is then exercisable, toone or more persons as may be selected by the Company.

 

8.8**                                 Nontransferability****of Restricted Stock Award Rights.**  Prior to the issuance of shares of Stockpursuant to a Restricted Stock Award, rights to acquire such shares shall notbe subject in any manner to anticipation, alienation, sale, exchange, transfer,assignment, pledge, encumbrance or garnishment by creditors of the Participantor the Participant’s beneficiary, except transfer by will or the laws ofdescent and distribution. All rights with respect to a Restricted Stock Awardgranted to a Participant hereunder shall be exercisable during his or herlifetime only by such Participant or the Participant’s guardian or legalrepresentative.

 

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**9.****                                      Terms and Conditions of PerformanceAwards.**

 

Performance Awards shall be evidenced by Award Agreements in such formas the Committee shall from time to time establish. No Performance Award orpurported Performance Award shall be a valid and binding obligation of theCompany unless evidenced by a fully executed Award Agreement. Award Agreementsevidencing Performance Awards may incorporate all or any of the terms of thePlan by reference and shall comply with and be subject to the following termsand conditions:

 

9.1**                                 Typesof Performance Awards Authorized.** Performance Awards may be in the form of either Performance Shares orPerformance Units. Each Award Agreement evidencing a Performance Award shallspecify the number of Performance Shares or Performance Units subject thereto,the Performance Award Formula, the Performance Goal(s) and Performance Periodapplicable to the Award, and the other terms, conditions and restrictions ofthe Award.

 

9.2**                                 InitialValue of Performance Shares and Performance Units.**  Unless otherwise provided by the Committeein granting a Performance Award, each Performance Share shall have an initialvalue equal to the Fair Market Value of one (1) share of Stock, subject toadjustment as provided in Section 4.2, on the effective date of grant ofthe Performance Share, and each Performance Unit shall have an initial value ofone hundred dollars ($100). The final value payable to the Participant insettlement of a Performance Award determined on the basis of the applicablePerformance Award Formula will depend on the extent to which Performance Goalsestablished by the Committee are attained within the applicable PerformancePeriod established by the Committee.

 

9.3**                                 Establishmentof Performance Period, Performance Goals and Performance Award Formula.**  In granting each Performance Award, theCommittee shall establish in writing the applicable Performance Period,Performance Award Formula and one or more Performance Goals which, whenmeasured at the end of the Performance Period, shall determine on the basis ofthe Performance Award Formula the final value of the Performance Award to bepaid to the Participant. Unless otherwise permitted in compliance with therequirements under Section 162(m) with respect to “performance-basedcompensation,” the Committee shall establish the Performance Goal(s) andPerformance Award Formula applicable to each Performance Award no later thanthe earlier of (a) the date ninety (90) days after the commencementof the applicable Performance Period or (b) the date on which 25% of thePerformance Period has elapsed, and, in any event, at a time when the outcomeof the Performance Goals remains substantially uncertain. Once established, thePerformance Goals and Performance Award Formula shall not be changed during thePerformance Period. The Company shall notify each Participant granted aPerformance Award of the terms of such Award, including the Performance Period,Performance Goal(s) and Performance Award Formula.

 

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9.4**                                 Measurementof Performance Goals.**  PerformanceGoals shall be established by the Committee on the basis of targets to beattained (*“**PerformanceTargets**”*) with respect to one or more measures ofbusiness or financial performance (each, a *“**Performance Measure**”*), subjectto the following:

 

(a)***                                  PerformanceMeasures.***  Performance Measuresshall have the same meanings as used in the Company’s financial statements, or,if such terms are not used in the Company’s financial statements, they shallhave the meaning applied pursuant to generally accepted accounting principles,or as used generally in the Company’s industry. Performance Measures shall becalculated with respect to the Company and each Subsidiary Corporationconsolidated therewith for financial reporting purposes or such division orother business unit as may be selected by the Committee. For purposes of thePlan, the Performance Measures applicable to a Performance Award shall becalculated in accordance with generally accepted accounting principles, butprior to the accrual or payment of any Performance Award for the samePerformance Period and excluding the effect (whether positive or negative) of anychange in accounting standards or any extraordinary, unusual or nonrecurringitem, as determined by the Committee, occurring after the establishment of thePerformance Goals applicable to the Performance Award. Performance Measures maybe one or more of the following, or a combination of the any of the following,as determined by the Committee:

 

(i)                                     revenue;

 

(ii)                                  grossmargin;

 

(iii)                               operatingmargin;

 

(iv)                              operatingincome;

 

(v)                                 pre-taxprofit;

 

(vi)                              earningsbefore interest, taxes and depreciation;

 

(vii)                           netincome;

 

(viii)                        cashflow;

 

(ix)                                expenses;

 

(x)                                   themarket price of the Stock;

 

(xi)                                earningsper share;

 

(xii)                             returnon stockholder equity;

 

(xiii)                          returnon capital;

 

(xiv)                         returnon net assets;

 

(xv)                            economicvalue added;

 

(xvi)                         numberof customers;

 

(xvii)                      marketshare;

 

(xviii)                   returnon investment

 

(xix)                           profitafter tax

 

(xx)                              productapproval

 

(xxi)                           volumeand/or origination;

 

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(xxii)                        strategicbenchmarks; and

 

(xxiii)                     customersatisfaction.

 

(b)***                                 PerformanceTargets.***  Performance Targetsmay include a minimum, maximum, target level and intermediate levels ofperformance, with the final value of a Performance Award determined under theapplicable Performance Award Formula by the level attained during theapplicable Performance Period. A Performance Target may be stated as anabsolute value or as a value determined relative to a standard selected by theCommittee.

 

9.5**                                 Settlementof Performance Awards.**

 

(a)***                                  Determinationof Final Value.***  As soon aspracticable following the completion of the Performance Period applicable to aPerformance Award, the Committee shall certify in writing the extent to whichthe applicable Performance Goals have been attained and the resulting finalvalue of the Award earned by the Participant and to be paid upon its settlementin accordance with the applicable Performance Award Formula.

 

(b)***                                 DiscretionaryAdjustment of Award Formula.***  Inits discretion, the Committee may, either at the time it grants a Performance Awardor at any time thereafter, provide for the positive or negative adjustment ofthe Performance Award Formula applicable to a Performance Award granted to anyParticipant who is not a “covered employee” within the meaning ofSection 162(m) (a *“**Covered Employee**”*) to reflectsuch Participant’s individual performance in his or her position with theCompany or such other factors as the Committee may determine. If permittedunder a Covered Employee’s Award Agreement, the Committee shall have thediscretion, on the basis of such criteria as may be established by theCommittee, to reduce some or all of the value of the Performance Award thatwould otherwise be paid to the Covered Employee upon its settlementnotwithstanding the attainment of any Performance Goal and the resulting valueof the Performance Award determined in accordance with the Performance AwardFormula. No such reduction may result in an increase in the amount payable uponsettlement of another Participant’s Performance Award.

 

(c)***                                  Effectof Leaves of Absence.***  Unlessotherwise required by law, payment of the final value, if any, of a PerformanceAward held by a Participant who has taken in excess of thirty (30) days inleaves of absence during a Performance Period shall be prorated on the basis ofthe number of days of the Participant’s Service during the Performance Periodduring which the Participant was not on a leave of absence.

 

(d)***                                 Noticeto Participants.***  As soon aspracticable following the Committee’s determination and certification in accordancewith Sections 9.5(a) and (b), the Company shall notify each Participant of thedetermination of the Committee.

 

(e)***                                  Paymentin Settlement of Performance Awards.*** As soon as practicable following the Committee’s determination andcertification in accordance with Sections 9.5(a) and (b), payment shall be madeto each eligible Participant (or such Participant’s legal representative orother person who acquired the right to receive such payment by reason of theParticipant’s death) of the final value of the Participant’s Performance Award.Payment of such amount shall be made in cash, shares of Stock, or a combinationthereof as determined by the Committee. Unless otherwise provided in the AwardAgreement evidencing a Performance Award, payment shall be made in a lump sum.An Award Agreement may provide for deferred payment in a lump sum or ininstallments. If any payment is to be made on a deferred basis, the Committeemay, but shall not be obligated to, provide for the payment during the deferralperiod of Dividend Equivalents or interest.

 

(f)***                                    ProvisionsApplicable to Payment in Shares.*** If payment is to be made in shares of Stock, the number of such sharesshall be determined by dividing the final value of the Performance

 

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Award by the value of a share of Stock determined by the methodspecified in the Award Agreement. Such methods may include, without limitation,the closing market price on a specified date (such as the settlement date) oran average of market prices over a series of trading days. Shares of Stockissued in payment of any Performance Award may be fully vested and freelytransferable shares or may be shares of Stock subject to Vesting Conditions asprovided in Section 8.5. Any shares subject to Vesting Conditions shall beevidenced by an appropriate Award Agreement and shall be subject to theprovisions of Sections 8.5 through 8.8 above.

 

9.6**                                 VotingRights; Dividend Equivalent Rights and Distributions.**  Participants shall have no voting rightswith respect to shares of Stock represented by Performance Share Awards untilthe date of the issuance of such shares, if any (as evidenced by theappropriate entry on the books of the Company or of a duly authorized transferagent of the Company). However, the Committee, in its discretion, may providein the Award Agreement evidencing any Performance Share Award that theParticipant shall be entitled to receive Dividend Equivalents with respect tothe payment of cash dividends on Stock having a record date prior to the dateon which the Performance Shares are settled or forfeited. Such DividendEquivalents, if any, shall be credited to the Participant in the form ofadditional whole Performance Shares as of the date of payment of such cash dividendson Stock. The number of additional Performance Shares (rounded to the nearestwhole number) to be so credited shall be determined by dividing (a) theamount of cash dividends paid on such date with respect to the number of sharesof Stock represented by the Performance Shares previously credited to theParticipant by (b) the Fair Market Value per share of Stock on such date.Dividend Equivalents may be paid currently or may be accumulated and paid tothe extent that Performance Shares become nonforfeitable, as determined by theCommittee. Settlement of Dividend Equivalents may be made in cash, shares ofStock, or a combination thereof as determined by the Committee, and may be paidon the same basis as settlement of the related Performance Share as provided inSection 9.5. Dividend Equivalents shall not be paid with respect toPerformance Units. In the event of a dividend or distribution paid in shares ofStock or any other adjustment made upon a change in the capital structure ofthe Company as described in Section 4.2, appropriate adjustments shall bemade in the Participant’s Performance Share Award so that it represents theright to receive upon settlement any and all new, substituted or additionalsecurities or other property (other than normal cash dividends) to which theParticipant would entitled by reason of the shares of Stock issuable uponsettlement of the Performance Share Award, and all such new, substituted oradditional securities or other property shall be immediately subject to thesame Performance Goals as are applicable to the Award.

 

9.7**                                 Effectof Termination of Service.**  Theeffect of a Participant’s termination of Service on the Performance Award shallbe determined by the Committee, in its discretion, and set forth in the AwardAgreement evidencing such Performance Award.

 

9.8**                                 Nontransferabilityof Performance Awards.**  Prior tosettlement in accordance with the provisions of the Plan, no Performance Awardshall be subject in any manner to anticipation, alienation, sale, exchange,transfer, assignment, pledge, encumbrance, or garnishment by creditors of theParticipant or the Participant’s beneficiary, except transfer by will or by thelaws of descent and distribution. All rights with respect to a PerformanceAward granted to a Participant hereunder shall be exercisable during his or herlifetime only by such Participant or the Participant’s guardian or legalrepresentative.

 

**10.****                               Terms and Conditions of RestrictedStock Unit Awards.**

 

Restricted Stock Unit Awards shall be evidenced by Award Agreementsspecifying the number of Restricted Stock Units subject to the Award, in suchform as the Committee shall from time to time establish. No Restricted StockUnit Award or purported Restricted Stock Unit Award shall be a valid andbinding obligation of the Company unless evidenced by a fully executed AwardAgreement. Award

 

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Agreements evidencing Restricted Stock Units may incorporate all or anyof the terms of the Plan by reference and shall comply with and be subject tothe following terms and conditions:

 

10.1                           **Grant of Restricted Stock Unit Awards.**  Restricted Stock Unit Awards may be grantedupon such conditions as the Committee shall determine, including, withoutlimitation, upon the attainment of one or more Performance Goals described inSection 9.4. If either the grant of a Restricted Stock Unit Award or theVesting Conditions with respect to such Award is to be contingent upon theattainment of one or more Performance Goals, the Committee shall followprocedures substantially equivalent to those set forth in Sections 9.3 through9.5(a).

 

10.2                           **Purchase Price.**  No monetary payment (other than applicable tax withholding, ifany) shall be required as a condition of receiving a Restricted Stock UnitAward, the consideration for which shall be services actually rendered to aParticipating Company or for its benefit.

 

10.3                           **Vesting.** Restricted Stock Units may or may not be made subject to VestingConditions based upon the satisfaction of such Service requirements,conditions, restrictions or performance criteria, including, withoutlimitation, Performance Goals as described in Section 9.4, as shall beestablished by the Committee and set forth in the Award Agreement evidencingsuch Award.

 

10.4                           **Voting Rights, Dividend Equivalent Rights andDistributions.**  Participantsshall have no voting rights with respect to shares of Stock represented byRestricted Stock Units until the date of the issuance of such shares (asevidenced by the appropriate entry on the books of the Company or of a dulyauthorized transfer agent of the Company). However, the Committee, in itsdiscretion, may provide in the Award Agreement evidencing any Restricted StockUnit Award that the Participant shall be entitled to receive DividendEquivalents with respect to the payment of cash dividends on Stock having arecord date prior to date on which Restricted Stock Units held by suchParticipant are settled. Such Dividend Equivalents, if any, shall be paid bycrediting the Participant with additional whole Restricted Stock Units as ofthe date of payment of such cash dividends on Stock. The number of additionalRestricted Stock Units (rounded to the nearest whole number) to be so creditedshall be determined by dividing (a) the amount of cash dividends paid onsuch date with respect to the number of shares of Stock represented by theRestricted Stock Units previously credited to the Participant by (b) theFair Market Value per share of Stock on such date. Such additional RestrictedStock Units shall be subject to the same terms and conditions and shall besettled in the same manner and at the same time (or as soon thereafter aspracticable) as the Restricted Stock Units originally subject to the RestrictedStock Unit Award. In the event of a dividend or distribution paid in shares ofStock or any other adjustment made upon a change in the capital structure ofthe Company as described in Section 4.2, appropriate adjustments shall bemade in the Participant’s Restricted Stock Unit Award so that it represents theright to receive upon settlement any and all new, substituted or additionalsecurities or other property (other than normal cash dividends) to which theParticipant would entitled by reason of the shares of Stock issuable upon settlementof the Award, and all such new, substituted or additional securities or otherproperty shall be immediately subject to the same Vesting Conditions as areapplicable to the Award.

 

10.5                           **Effect of Termination of Service.**  Unless otherwise provided by the Committeein the grant of a Restricted Stock Unit Award and set forth in the AwardAgreement, if a Participant’s Service terminates for any reason, whethervoluntary or involuntary (including the Participant’s death or Disability),then the Participant shall forfeit to the Company any Restricted Stock Unitspursuant to the Award which remain subject to Vesting Conditions as of the dateof the Participant’s termination of Service.

 

10.6                           **Settlement of Restricted Stock Unit Awards.**  The Company shall issue to a Participant onthe date on which Restricted Stock Units subject to the Participant’sRestricted Stock Unit Award vest or on such other date determined by theCommittee, in its discretion, and set forth in the Award Agreement one(1) share of Stock (and/or any other new, substituted or additionalsecurities or other

 

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property pursuant to an adjustment described in Section 10.4) foreach Restricted Stock Unit then becoming vested or otherwise to be settled onsuch date, subject to the withholding of applicable taxes. Notwithstanding theforegoing, if permitted by the Committee and set forth in the Award Agreement,the Participant may elect in accordance with terms specified in the AwardAgreement to defer receipt of all or any portion of the shares of Stock orother property otherwise issuable to the Participant pursuant to this Section.

 

10.7                           **Nontransferability of Restricted Stock Unit Awards.**  Prior to the issuance of shares of Stock insettlement of a Restricted Stock Unit Award, the Award shall not be subject inany manner to anticipation, alienation, sale, exchange, transfer, assignment,pledge, encumbrance, or garnishment by creditors of the Participant or theParticipant’s beneficiary, except transfer by will or by the laws of descentand distribution. All rights with respect to a Restricted Stock Unit Awardgranted to a Participant hereunder shall be exercisable during his or herlifetime only by such Participant or the Participant’s guardian or legalrepresentative.

 

**11.****                               Deferred Stock Units.**

 

11.1                           **Establishment of Deferred Stock Unit Program.**  The Committee, in its discretion and uponsuch terms and conditions as it may determine, may establish one or moreprograms pursuant to the Plan under which:

 

(a)                                  Participantsdesignated by the Committee who are Insiders or otherwise among a select groupof highly compensated Employees may irrevocably elect, prior to a datespecified by the Committee, to reduce such Participant’s compensation otherwisepayable in cash (subject to any minimum or maximum reductions imposed by theCommittee) and to be granted automatically at such time or times as specifiedby the Committee one or more Awards of Deferred Stock Units with respect tosuch numbers of shares of Stock as determined in accordance with the rules ofthe program established by the Committee and having such other terms andconditions as established by the Committee.

 

(b)                                 Participantsdesignated by the Committee who are Insiders or otherwise among a select groupof highly compensated Employees may irrevocably elect, prior to a datespecified by the Committee, to be granted automatically an Award of DeferredStock Units with respect to such number of shares of Stock and upon such otherterms and conditions as established by the Committee in lieu of:

 

(i)                                     shares of Stockotherwise issuable to such Participant upon the exercise of an Option;

 

(ii)                                  cash or shares ofStock otherwise issuable to such Participant upon the exercise of a SAR; or

 

(iii)                               cash or shares of Stockotherwise issuable to such Participant upon the settlement of a PerformanceAward.

 

11.2                           **Terms and Conditions of Deferred Stock Units.**  Deferred Stock Units granted pursuant tothis Section 11 shall be evidenced by Award Agreements in such form as theCommittee shall from time to time establish. No such Deferred Stock Unit orpurported Deferred Stock Unit shall be a valid and binding obligation of theCompany unless evidenced by a fully executed Award Agreement. Award Agreementsevidencing Deferred Stock Units may incorporate all or any of the terms of thePlan by reference and shall comply with and be subject to the following termsand conditions:

 

(a)***                                  VestingConditions.***  Deferred StockUnits shall not be subject to any vesting conditions.

 

(b)***                                 Termsand Conditions of Deferred Stock Units.***

 

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(i)**                                     VotingRights; Dividend Equivalent Rights and Distributions.**  Participants shall have no voting rightswith respect to shares of Stock represented by Deferred Stock Units until thedate of the issuance of such shares (as evidenced by the appropriate entry onthe books of the Company or of a duly authorized transfer agent of theCompany). However, a Participant shall be entitled to receive Dividend Equivalentswith respect to the payment of cash dividends on Stock having a record dateprior to date on which Deferred Stock Units held by such Participant aresettled. Such Dividend Equivalents shall be paid by crediting the Participantwith additional whole and/or fractional Deferred Stock Units as of the date ofpayment of such cash dividends on Stock. The method of determining the numberof additional Deferred Stock Units to be so credited shall be specified by theCommittee and set forth in the Award Agreement. Such additional Deferred StockUnits shall be subject to the same terms and conditions and shall be settled inthe same manner and at the same time (or as soon thereafter as practicable) asthe Deferred Stock Units originally subject to the Deferred Stock Unit Award.In the event of a dividend or distribution paid in shares of Stock or any otheradjustment made upon a change in the capital structure of the Company asdescribed in Section 4.2, appropriate adjustments shall be made in theParticipant’s Deferred Stock Unit Award so that it represent the right toreceive upon settlement any and all new, substituted or additional securitiesor other property (other than normal cash dividends) to which the Participantwould entitled by reason of the shares of Stock issuable upon settlement of theAward.

 

(ii)**                                  Settlementof Deferred Stock Unit Awards.**  AParticipant electing to receive an Award of Deferred Stock Units pursuant tothis Section 11, shall specify at the time of such election a settlementdate with respect to such Award. The Company shall issue to the Participant assoon as practicable following the earlier of the settlement date elected by theParticipant or the date of termination of the Participant’s Service, a numberof whole shares of Stock equal to the number of whole Deferred Stock Unitssubject to the Deferred Stock Unit Award. Such shares of Stock shall be fullyvested, and the Participant shall not be required to pay any additionalconsideration (other than applicable tax withholding) to acquire such shares.Any fractional Deferred Stock Unit subject to the Deferred Stock Unit Awardshall be settled by the Company by payment in cash of an amount equal to theFair Market Value as of the payment date of such fractional share.

 

(iii)**                               Nontransferabilityof Deferred Stock Unit Awards.** Prior to their settlement in accordance with the provision of the Plan,no Deferred Stock Unit Award shall be subject in any manner to anticipation,alienation, sale, exchange, transfer, assignment, pledge, encumbrance, orgarnishment by creditors of the Participant or the Participant’s beneficiary,except transfer by will or by the laws of descent and distribution. All rightswith respect to a Deferred Stock Unit Award granted to a Participant hereundershall be exercisable during his or her lifetime only by such Participant or theParticipant’s guardian or legal representative.

 

**12.****                               Standard Forms of Award Agreement.**

 

12.1                           **Award Agreements.**  Each Award shall comply with and be subject to the terms andconditions set forth in the appropriate form of Award Agreement approved by theCommittee and as amended from time to time. Any Award Agreement may consist ofan appropriate form of Notice of Grant and a form of Agreement incorporatedtherein by reference, or such other form or forms as the Committee may approvefrom time to time.

 

12.2                           **Authority to Vary Terms.**  The Committee shall have the authority fromtime to time to vary the terms of any standard form of Award Agreement eitherin connection with the grant or amendment of an individual Award or inconnection with the authorization of a new standard form or forms; provided,however, that the terms and conditions of any such new, revised or amendedstandard form or forms of Award Agreement are not inconsistent with the termsof the Plan.

 

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**13.****                               Change in Control.**

 

13.1                           **Definitions.**

 

(a)                                  An *“**Ownership ChangeEvent**”* shall be deemed to have occurred if any of thefollowing occurs with respect to the Company: (i) the direct or indirectsale or exchange in a single or series of related transactions by thestockholders of the Company of more than fifty percent (50%) of the votingstock of the Company; (ii) a merger or consolidation in which the Companyis a party; (iii) the sale, exchange, or transfer of all or substantiallyall of the assets of the Company (other than a sale, exchange or transfer toone or more subsidiaries of the Company); or (iv) a liquidation ordissolution of the Company.

 

(b)                                 A *“**Change in Control**”*shall mean an Ownership Change Event or series of related Ownership ChangeEvents (collectively, a *“**Transaction**”*) in which thestockholders of the Company immediately before the Transaction do not retainimmediately after the Transaction, in substantially the same proportions astheir ownership of shares of the Company’s voting stock immediately before theTransaction, direct or indirect beneficial ownership of more than fifty percent(50%) of the total combined voting power of the outstanding voting securities ofthe Company or, in the case of an Ownership Change Event described inSection 13.1(a)(iii), the entity to which the assets of the Company weretransferred (the *“**Transferee**”*), as the case may be. For purposes ofthe preceding sentence, indirect beneficial ownership shall include, withoutlimitation, an interest resulting from ownership of the voting securities ofone or more corporations or other business entities which own the Company orthe Transferee, as the case may be, either directly or through one or moresubsidiary corporations or other business entities. The Committee shall havethe right to determine whether multiple sales or exchanges of the votingsecurities of the Company or multiple Ownership Change Events are related, andits determination shall be final, binding and conclusive.

 

13.2                           **Effect of Change in Control on Options and SARs.**

 

(a)***                                  AcceleratedVesting.***  Notwithstanding anyother provision of the Plan to the contrary, the Committee, in its solediscretion, may provide in any Award Agreement or, in the event of a Change inControl, may take such actions as it deems appropriate to provide for theacceleration of the exercisability and vesting in connection with such Changein Control of any or all outstanding Options and SARs and shares acquired uponthe exercise of such Options and SARs upon such conditions and to such extentas the Committee shall determine.

 

(b)***                                ******Assumption or Substitution.***  In the event of a Change in Control, thesurviving, continuing, successor, or purchasing corporation or other businessentity or parent corporation thereof, as the case may be (the *“**AcquiringCorporation**”*), may, without the consent of theParticipant, either assume the Company’s rights and obligations underoutstanding Options and SARs or substitute for outstanding Options and SARssubstantially equivalent options and stock appreciation rights for theAcquiring Corporation’s stock. In the event that the Acquiring Corporationelects not to assume or substitute for outstanding Options and SARs in connectionwith a Change in Control, or if the Acquiring Corporation is not a “publiclyheld corporation” within the meaning of Section 162(m), the exercisabilityand vesting of each such outstanding Option, SAR and any shares acquired uponthe exercise thereof held by a Participant whose Service has not terminatedprior to such date shall be accelerated, effective as of the date ten(10) days prior to the date of the Change in Control. The exercise orvesting of any Option, SAR and any shares acquired upon the exercise thereofthat was permissible solely by reason of this Section 13.2 and theprovisions of such applicable Award Agreement shall be conditioned upon theconsummation of the Change in Control. Any Options and SARs which are neitherassumed or substituted for by the Acquiring Corporation in connection with theChange in Control nor exercised as of the date of the Change in Control shallterminate and cease to be outstanding

 

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effective as of the date of the Change in Control. Notwithstanding theforegoing, shares acquired upon exercise of an Option or SAR prior to theChange in Control and any consideration received pursuant to the Change inControl with respect to such shares shall continue to be subject to allapplicable provisions of the applicable Award Agreement evidencing such Optionor SAR except as otherwise provided in such applicable Award Agreement.Furthermore, notwithstanding the foregoing, if the corporation the stock ofwhich is subject to the outstanding Options and SARs immediately prior to anOwnership Change Event described in Section 13.1(a)(i) constituting aChange in Control is the surviving or continuing corporation and immediatelyafter such Ownership Change Event less than fifty percent (50%) of the totalcombined voting power of its voting stock is held by another corporation or byother corporations that are members of an affiliated group within the meaningof Section 1504(a) of the Code without regard to the provisions of Section 1504(b)of the Code, the outstanding Options and SARs shall not terminate unless theCommittee otherwise provides in its discretion.

 

(c)***                                  Cash-Out.***  The Committee may, in its sole discretionand without the consent of any Participant, determine that, upon the occurrenceof a Change in Control, each or any Option or SAR outstanding immediately priorto the Change in Control shall be canceled in exchange for a payment withrespect to each vested share of Stock subject to such canceled Option or SAR in(i) cash, (ii) stock of the Company or of a corporation or otherbusiness entity a party to the Change in Control, or (iii) other propertywhich, in any such case, shall be in an amount having a Fair Market Value equalto the excess of the Fair Market Value of the consideration to be paid pershare of Stock in the Change in Control over the exercise price per share undersuch Option or SAR (the *“**Spread**”*). In the event suchdetermination is made by the Committee, the Spread (reduced by applicablewithholding taxes, if any) shall be paid to Participants in respect of theircanceled Options and SARs as soon as practicable following the date of theChange in Control.

 

13.3                           **Effect of Change in Control on Restricted StockAwards.**  The Committee may,in its discretion, provide in any Award Agreement evidencing a Restricted StockAward that, in the event of a Change in Control, the lapsing of the RestrictionPeriod applicable to the shares subject to the Restricted Stock Award held by aParticipant whose Service has not terminated prior to the Change in Controlshall be accelerated effective immediately prior to the consummation of theChange in Control to such extent as specified in such Award Agreement. Anyacceleration of the lapsing of the Restriction Period that was permissiblesolely by reason of this Section 13.3 and the provisions of such AwardAgreement shall be conditioned upon the consummation of the Change in Control.

 

13.4                           **Effect of Change in Control on Performance Awards.**  The Committee may, in its discretion, providein any Award Agreement evidencing a Performance Award that, in the event of aChange in Control, the Performance Award held by a Participant whose Servicehas not terminated prior to the Change in Control shall become payableeffective as of the date of the Change in Control to such extent as specifiedin such Award Agreement.

 

13.5                           **Effect of Change in Control on Restricted Stock UnitAwards.**  The Committee may,in its discretion, provide in any Award Agreement evidencing a Restricted StockUnit Award that, in the event of a Change in Control, the Restricted Stock UnitAward held by a Participant whose Service has not terminated prior to such dateshall be settled effective as of the date of the Change in Control to suchextent as specified in such Award Agreement.

 

13.6                           **Effect of Change in Control on Deferred Stock Units.**  The Committee may, in its discretion,provide in any Award Agreement evidencing a Deferred Stock Unit Award that, inthe event of a Change in Control, the Deferred Stock Units pursuant to suchAward shall be settled effective as of the date of the Change in Control tosuch extent as specified in such Award Agreement.

 

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**14.****                               Compliance with Securities Law.**

 

The grant of Awards and the issuance of shares of Stock pursuant to anyAward shall be subject to compliance with all applicable requirements offederal, state and foreign law with respect to such securities and therequirements of any stock exchange or market system upon which the Stock maythen be listed. In addition, no Award may be exercised or shares issuedpursuant to an Award unless (a) a registration statement under theSecurities Act shall at the time of such exercise or issuance be in effect withrespect to the shares issuable pursuant to the Award or (b) in the opinionof legal counsel to the Company, the shares issuable pursuant to the Award maybe issued in accordance with the terms of an applicable exemption from theregistration requirements of the Securities Act. The inability of the Companyto obtain from any regulatory body having jurisdiction the authority, if any,deemed by the Company’s legal counsel to be necessary to the lawful issuanceand sale of any shares hereunder shall relieve the Company of any liability inrespect of the failure to issue or sell such shares as to which such requisiteauthority shall not have been obtained. As a condition to issuance of anyStock, the Company may require the Participant to satisfy any qualificationsthat may be necessary or appropriate, to evidence compliance with anyapplicable law or regulation and to make any representation or warranty withrespect thereto as may be requested by the Company.

 

**15.****                               Tax Withholding.**

 

15.1                           **Tax Withholding in General.**  The Company shall have the right to deductfrom any and all payments made under the Plan, or to require the Participant,through payroll withholding, cash payment or otherwise, including by means of aCashless Exercise of an Option, to make adequate provision for, the federal, state,local and foreign taxes, if any, required by law to be withheld by theParticipating Company Group with respect to an Award or the shares acquiredpursuant thereto. The Company shall have no obligation to deliver shares ofStock, to release shares of Stock from an escrow established pursuant to anAward Agreement, or to make any payment in cash under the Plan until theParticipating Company Group’s tax withholding obligations have been satisfiedby the Participant.

 

15.2                           **Withholding in Shares.**  The Company shall have the right, but notthe obligation, to deduct from the shares of Stock issuable to a Participantupon the exercise or settlement of an Award, or to accept from the Participantthe tender of, a number of whole shares of Stock having a Fair Market Value, asdetermined by the Company, equal to all or any part of the tax withholdingobligations of the Participating Company Group. The Fair Market Value of anyshares of Stock withheld or tendered to satisfy any such tax withholdingobligations shall not exceed the amount determined by the applicable minimumstatutory withholding rates.

 

**16.****                               Amendment or Termination of Plan.**

 

The Committee may amend, suspend or terminate the Plan at any time.However, without the approval of the Company’s stockholders, there shall be(a) no increase in the maximum aggregate number of shares of Stock thatmay be issued under the Plan (except by operation of the provisions ofSection 4.2), (b) no change in the class of persons eligible toreceive Incentive Stock Options, (c) no Option and/or SAR repricing asdescribed in Section 3.6, (d) no amendment to permit the granting ofOptions (other than Indexed Options) with exercise prices less than Fair MarketValue on the date of grant, and (e) no other amendment of the Plan thatwould require approval of the Company’s stockholders under any applicable law,regulation or rule. No amendment, suspension or termination of the Plan shallaffect any then outstanding Award unless expressly provided by the Committee.In any event, no amendment, suspension or termination of the Plan may adverselyaffect any then outstanding Award without the consent of the Participant unlessnecessary to comply with any applicable law, regulation or rule.

 

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**17.****                               Miscellaneous Provisions.**

 

17.1                           **Repurchase Rights.**  Shares issued under the Plan may be subjectto one or more repurchase options, or other conditions and restrictions asdetermined by the Committee in its discretion at the time the Award is granted.The Company shall have the right to assign at any time any repurchase right itmay have, whether or not such right is then exercisable, to one or more personsas may be selected by the Company. Upon request by the Company, eachParticipant shall execute any agreement evidencing such transfer restrictionsprior to the receipt of shares of Stock hereunder and shall promptly present tothe Company any and all certificates representing shares of Stock acquiredhereunder for the placement on such certificates of appropriate legendsevidencing any such transfer restrictions.

 

17.2                           **Provision of Information.**  Each Participant shall be given access toinformation concerning the Company equivalent to that information generallymade available to the Company’s common stockholders.

 

17.3                           **Rights as Employee, Consultant or Director.**  No person, even though eligible pursuant toSection 5, shall have a right to be selected as a Participant, or, havingbeen so selected, to be selected again as a Participant. Nothing in the Plan orany Award granted under the Plan shall confer on any Participant a right toremain an Employee, Consultant or Director or interfere with or limit in anyway any right of a Participating Company to terminate the Participant’s Serviceat any time. To the extent that an Employee of a Participating Company otherthan the Company receives an Award under the Plan, that Award shall in no eventbe understood or interpreted to mean that the Company is the Employee’semployer or that the Employee has an employment relationship with the Company.

 

17.4                           **Rights as a Stockholder.**  A Participant shall have no rights as astockholder with respect to any shares covered by an Award until the date ofthe issuance of such shares (as evidenced by the appropriate entry on the booksof the Company or of a duly authorized transfer agent of the Company). Noadjustment shall be made for dividends, distributions or other rights for whichthe record date is prior to the date such shares are issued, except as providedin Section 4.2 or another provision of the Plan.

 

17.5                           **Fractional Shares.**  The Company shall not be required to issuefractional shares upon the exercise or settlement of any Award.

 

17.6                           **Severability.**  If any one or more of the provisions (or any part thereof) ofthis Plan or of any Award Agreement issued hereunder, shall be held to beinvalid, illegal or unenforceable in any respect, such provision shall bemodified so as to make it valid, legal and enforceable, and the validity,legality and enforceability of the remaining provisions (or any part thereof)of the Plan or of any Award Agreement shall not in any way be affected orimpaired thereby. The Company may, without the consent of any Participant, andin a manner determined necessary solely in the discretion of the Company, amendthe Plan and any outstanding Award Agreement as the Company deems necessary toensure the Plan and all Awards remain valid, legal or enforceable in allrespects.

 

17.7                           **Beneficiary Designation.**  Subject to local laws and procedures, eachParticipant may file with the Company a written designation of a beneficiarywho is to receive any benefit under the Plan to which the Participant isentitled in the event of such Participant’s death before he or she receives anyor all of such benefit. Each designation will revoke all prior designations bythe same Participant, shall be in a form prescribed by the Company, and will beeffective only when filed by the Participant in writing with the Company duringthe Participant’s lifetime. If a married Participant designates a beneficiaryother than the Participant’s spouse, the effectiveness of such designation maybe subject to the consent of the Participant’s spouse. If a Participant dieswithout an effective designation of a beneficiary who is living at the time ofthe Participant’s death, the Company will pay any remaining unpaid benefits tothe Participant’s legal representative.

 

B-24

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17.8                           **Unfunded Obligation.**  Participants shall have the status ofgeneral unsecured creditors of the Company. Any amounts payable to Participantspursuant to the Plan shall be unfunded and unsecured obligations for allpurposes, including, without limitation, Title I of the Employee RetirementIncome Security Act of 1974. No Participating Company shall be required tosegregate any monies from its general funds, or to create any trusts, orestablish any special accounts with respect to such obligations. The Companyshall retain at all times beneficial ownership of any investments, includingtrust investments, which the Company may make to fulfill its paymentobligations hereunder. Any investments or the creation or maintenance of anytrust or any Participant account shall not create or constitute a trust orfiduciary relationship between the Committee or any Participating Company and aParticipant, or otherwise create any vested or beneficial interest in anyParticipant or the Participant’s creditors in any assets of any ParticipatingCompany. The Participants shall have no claim against any Participating Companyfor any changes in the value of any assets which may be invested or reinvestedby the Company with respect to the Plan.

 

B-25

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