**Exhibit 10.12**       **CAPITALSOURCE INC.****THIRD AMENDED AND RESTATED EQUITY INCENTIVE PLAN**  

 
**TABLE OF CONTENTS**        **Page**        1. PURPOSE  1      2. DEFINITIONS  1      3. ADMINISTRATION OF THE PLAN  4        3.1. Board  4        3.2. Committee  4        3.3. Terms of Awards  4        3.4. Deferral Arrangement  5        3.5. No Liability  5      4. STOCK SUBJECT TO THE PLAN  5      5. EFFECTIVE DATE, DURATION AND AMENDMENTS  6        5.1. Effective Date  6        5.2. Term  6        5.3. Amendment and Termination of the Plan  6      6. AWARD ELIGIBILITY AND LIMITATIONS  6        6.1. Service Providers; Outside Directors;    Other Persons  6        6.2. Successive Awards  6        6.3. Limitation on Shares of Stock Subject to    Awards and Cash Awards  6        6.4. Limitations on Incentive Stock Options  6        6.5. Stand-Alone, Additional, Tandem, and    Substitute Awards  7      7. AWARD AGREEMENT  7      8. TERMS AND CONDITIONS OF OPTIONS  7        8.1. Option Price  7        8.2. Vesting  7        8.3. Term  7        8.4. Termination of Service  8        8.5. Limitations on Exercise of Option  8        8.6. Method of Exercise  8        8.7. Rights of Holders of Options  8        8.8. Delivery of Stock Certificates  8        8.9. No Option Repricing  8      9. TRANSFERABILITY OF OPTIONS  8        9.1. Transferability of Options  8        9.2. Family Transfers  8     10. STOCK APPRECIATION RIGHTS  9       10.1. Right to Payment  9       10.2. Other Terms  9     11. RESTRICTED STOCK AND STOCK UNITS  9       11.1. Grant of Restricted Stock or Stock Units  9       11.2. Restrictions  9       11.3. Restricted Stock Certificates  10       11.4. Rights of Holders of Restricted Stock  10 
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         **Page**         11.5. Rights of Holders of Stock Units  10        11.5.1. No Voting and Dividend Rights  10        11.5.2. Creditor’s Rights  10       11.6. Termination of Service  10       11.7. Purchase of Restricted Stock  11       11.8. Delivery of Stock  11     12. UNRESTRICTED STOCK AWARDS  11     13. FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK  11       13.1. General Rule.  11       13.2. Surrender of Stock.  11       13.3. Cashless Exercise.  11       13.4. Other Forms of Payment  11     14. DIVIDEND EQUIVALENT RIGHTS  12       14.1. Dividend Equivalent Rights  12       14.2. Termination of Service  12     15. PERFORMANCE AND ANNUAL INCENTIVE AWARDS  12       15.1. Performance Conditions  12       15.2. Performance or Annual Incentive Awards Granted    to Designated Covered Employees  12        15.2.1. Performance Goals Generally  12        15.2.2. Business Criteria  13        15.2.3. Timing For Establishing Performance Goals  13        15.2.4. Performance or Annual Incentive Award Pool  13        15.2.5. Settlement of Performance or Annual Incentive    Awards; Other Terms  13       15.3. Written Determinations  13       15.4. Status of Section 15.2 Awards Under Code    Section 162(m)  13     16. PARACHUTE LIMITATIONS  14     17. REQUIREMENTS OF LAW  14       17.1. General  14       17.2. Rule 16b-3  15     18. EFFECT OF CHANGES IN CAPITALIZATION  15       18.1. Changes in Stock  15       18.2. Changes in Capitalization; Merger; Liquidation  15       18.3. Adjustments  16       18.4. No Limitations on Company  16     19. GENERAL PROVISIONS  16       19.1. Disclaimer of Rights  16       19.2. Nonexclusivity of the Plan  16       19.3. Withholding Taxes  17       19.4. Captions  17       19.5. Other Provisions  17       19.6. Number And Gender  17       19.7. Severability  17       19.8. Governing Law  17       19.9. Code Section 409A  17 
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**CAPITALSOURCE INC.****THIRD AMENDED AND RESTATED EQUITY INCENTIVE PLAN**     CapitalSource Inc., a Delaware corporation (the“Company”), sets forth herein the terms of its ThirdAmended and Restated Equity Incentive Plan (the“Plan”) asof January 25, 2006, as follows:**1.****PURPOSE**     This Plan is intended to (a) provide incentive to eligiblepersons to stimulate their efforts toward the continued successof the Company and to operate and manage their businesses in amanner that will provide for the long-term growth andprofitability of the Company; and (b) provide a means ofobtaining, rewarding and retaining key personnel. To this end,the Plan provides for the grant of stock options, stockappreciation rights, restricted stock, stock units, unrestrictedstock, dividend equivalent rights and cash awards. Any of theseawards may, but need not, be made as performance incentives toreward attainment of annual or long-term performance goals inaccordance with the terms hereof. Stock options granted underthe Plan may be non-qualified stock options or incentive stockoptions, as provided herein.**2.****DEFINITIONS**     For purposes of interpreting the Plan and related documents(including Award Agreements), the following definitions shallapply:     2.1     **“Affiliate”**means, with respect to the Company, any company or othertrade or business that controls, is controlled by or is undercommon control with the Company within the meaning ofRule 405 of Regulation C under the Securities Act,including, without limitation, any Subsidiary.     2.2     **“Annual IncentiveAward”**means an Award made subject to attainment ofperformance goals (as described in **Section 15**) overa performance period of up to and including one year (the fiscalyear, unless otherwise specified by the Committee).     2.3     **“Award”**meansa grant of an Option, Stock Appreciation Right, RestrictedStock, Unrestricted Stock, Stock Unit, Dividend EquivalentRights, or cash award under the Plan.     2.4     **“Award Agreement”**means the written agreement between the Company and aGrantee that evidences and sets out the terms and conditions ofan Award.     2.5     **“BenefitArrangement”**shall have the meaning set forth in**Section 16** hereof.     2.6     **“Board”**meansthe Board of Directors of the Company.     2.7     **“Cause,”**unless otherwise provided by the Board or the Committee inthe Award Agreement, has the same meaning as provided in theemployment agreement between the Service Provider and theCompany or any Affiliate of the Company, on the date ofTermination of Employment, or if no such definition oremployment agreement exists, “Cause” means conductamounting to (i) fraud or dishonesty against the Company orany Affiliate of the Company, (ii) Service Provider’swillful misconduct, repeated refusal to follow the reasonabledirections of a member of the Board or knowing violation of lawin the course of performance of the duties of ServiceProvider’s employment with the Company any Affiliate of theCompany, (iii) repeated absences from work without areasonable excuse, (iv) intoxication with alcohol or drugswhile on the Company’s or any Affiliate of theCompany’s premises, (v) a conviction or plea of guiltyor nolo contendere to a felony or a crime involving dishonesty,or (vi) a material breach or violation of the terms of anyemployment or other agreement to which Service Provider and theCompany, or, if applicable, any Affiliate of the Company areparties.     2.8     **“Code”**meansthe Internal Revenue Code of 1986, as now in effect or ashereafter amended.     2.9     **“Committee”**means the Compensation Committee of the Board.     2.10     **“Company”**means CapitalSource Inc.
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     2.11     **“CorporateTransaction”**means (i) the dissolution orliquidation of the Company or a merger, consolidation, orreorganization of the Company with one or more other entities inwhich the Company is not the surviving entity, (ii) a saleof substantially all of the assets of the Company to anotherperson or entity, or (iii) any transaction (includingwithout limitation a merger or reorganization in which theCompany is the surviving entity) which results in any person orentity (other than persons who are shareholders or Affiliatesimmediately prior to the transaction) owning 50% or more of thecombined voting power of all classes of stock of the Company.     2.12     **“CoveredEmployee”**means a Grantee who is a Covered Employeewithin the meaning of Section 162(m)(3) of the Code.     2.13     **“Disability”**has the same meaning as provided in the long-term disabilityplan or policy maintained or, if applicable, most recentlymaintained, by the Company or, if applicable, any Affiliate ofthe Company for the Service Provider. If no long-term disabilityplan or policy was ever maintained on behalf of the ServiceProvider, Disability shall mean that condition described in CodeSection 22(e)(3), as amended from time to time. In theevent of a dispute, the determination of Disability shall bemade by the Board and shall be supported by advice of aphysician competent in the area to which such Disability relates.     2.14     **“DividendEquivalent”**means a right granted to a Grantee under**Section 14** hereof, to receive cash,Stock, other Awards or other property equal in value to dividends paid with respect to a specified number of shares of Stock, or other periodic payments.     2.15     **“Effective Date”**means January 25, 2006.     2.16     **“Exchange Act”**means the Securities Exchange Act of 1934, as now in effector as hereafter amended.     2.17     **“Fair MarketValue”**means the value of a share of Stock, determinedas follows: if on the Grant Date or other determination date theStock is listed on an established national or regional stockexchange, is admitted to quotation on The Nasdaq Stock Market,Inc. or is publicly traded on an established securities market,the Fair Market Value of a share of Stock shall be the closingprice of the Stock on such exchange or in such market (if thereis more than one such exchange or market the Board shalldetermine the appropriate exchange or market) on the Grant Dateor such other determination date (or if there is no suchreported closing price, the Fair Market Value shall be the meanbetween the highest bid and lowest asked prices or between thehigh and low sale prices on such trading day) or, if no sale ofStock is reported for such trading day, on the next precedingday on which any sale shall have been reported. If the Stock isnot listed on such an exchange, quoted on such system or tradedon such a market, Fair Market Value shall be the value of theStock as determined by the Board in good faith. Notwithstandingthe foregoing, for Options with a Grant Date of the date of theassumption of the Plan by the Company from CapitalSourceHoldings LLC, Fair Market Value on such Grant Date shall be theprice per share at which the Company agrees to sell Stock in theCompany’s initial public offering as set forth in theunderwriting agreement among the Company, the sellingstockholders named therein and the representatives of theseveral underwriters named in a schedule thereto.     2.18     **“Family Member”**means a person who is a spouse, former spouse, child,stepchild, grandchild, parent, stepparent, grandparent, niece,nephew, mother-in-law,father-in-law,son-in-law,daughter-in-law,brother, sister,brother-in-law, orsister-in-law,including adoptive relationships, of the Grantee, any personsharing the Grantee’s household (other than a tenant oremployee), a trust in which any one or more of these personshave more than fifty percent of the beneficial interest, afoundation in which any one or more of these persons (or theGrantee) control the management of assets, and any other entityin which one or more of these persons (or the Grantee) own morethan fifty percent of the voting interests.     2.19     **“Grant Date”**means, as determined by the Board or the Committee, thelatest to occur of (i) the date as of which the Board orsuch Committee approves an Award, (ii) the date on whichthe recipient of an
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Award first becomes eligible to receive an Award under**Section 6**hereof, or (iii) such other date asmay be specified by the Board or such Committee.     2.20     **“Grantee”**means a person who receives or holds an Award under the Plan.     2.21     **“Incentive StockOption”**means an “incentive stock option”within the meaning of Section 422 of the Code, or thecorresponding provision of any subsequently enacted tax statute,as amended from time to time.     2.22     **“Non-qualified StockOption”**means an Option that is not an Incentive StockOption.     2.23     **“Option”**means an option to purchase one or more shares of Stockpursuant to the Plan.     2.24     **“Option Price”**means the purchase price for each share of Stock subject toan Option.     2.25     **“Other Agreement”**shall have the meaning set forth in **Section 16**hereof.     2.26     **“OutsideDirector”**means a member of the Board who is not anofficer or employee of the Company.     2.27     **“PerformanceAward”**means an Award made subject to the attainment ofperformance goals (as described in **Section 15**) overa performance period of more than one year.     2.28     **“Plan”**meansthis CapitalSource Inc. Third Amended and Restated EquityIncentive Plan.     2.29     **“Purchase Price”**means the purchase price for each share of Stock pursuant toa grant of Restricted Stock.     2.30     **“ReportingPerson”**means a person who is required to file reportsunder Section 16(a) of the Exchange Act.     2.31     **“RestrictedStock”**means shares of Stock, awarded to a Granteepursuant to **Section 11**hereof.     2.32     **“SAR ExercisePrice”**means the per share exercise price of an SARgranted to a Grantee under **Section 10**hereof.     2.33     **“Securities Act”**means the Securities Act of 1933, as now in effect or ashereafter amended.     2.34     **“Service”**means service as an employee, officer, Outside Director orother Service Provider of the Company or an Affiliate. Unlessotherwise stated in the applicable Award Agreement, aGrantee’s change in position or duties shall not result ininterrupted or terminated Service, so long as such Granteecontinues to be an employee, officer, Outside Director or otherService Provider of the Company or an Affiliate. Subject to thepreceding sentence, whether a termination of Service shall haveoccurred for purposes of the Plan shall be determined by theBoard, which determination shall be final, binding andconclusive.     2.35     **“ServiceProvider”**means an employee, officer or OutsideDirector of the Company or an Affiliate, or a consultant oradviser currently providing services to the Company or anAffiliate.     2.36     **“Stock”**meansthe common stock, par value $.01 per share, of the Company.     2.37     **“Stock AppreciationRight”**or **“SAR”**means a right grantedto a Grantee under **Section 10**hereof.     2.38     **“Stock Unit”**means a bookkeeping entry representing the equivalent of ashare of Stock, awarded to a Grantee pursuant to**Section 11**hereof.     2.39     **“Subsidiary”**means any “subsidiary corporation” of the Companywithin the meaning of Section 424(f) of the Code.     2.40     **“TerminationDate”**means the date upon which an Option shallterminate or expire, as set forth in **Section 8.3**hereof.     2.41     **“Ten PercentStockholder”**means an employee who owns more than tenpercent (10%) of the total combined voting power of all classesof outstanding stock of the Company, its parent or any of its
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Subsidiaries. In determining stock ownership, the attributionrules of Section 424(d) of the Code shall be applied.     2.42     **“UnrestrictedStock”**means an Award pursuant to **Section 12**hereof.**3.****ADMINISTRATION OF THE PLAN**     3.1.     *Board*     The Board shall have such powers and authorities related to theadministration of the Plan as are consistent with theCompany’s amended and restated certificate of incorporationand amended and restated by-laws and applicable law. The Boardshall have full power and authority to take all actions and tomake all determinations required or provided for under the Plan,any Award or any Award Agreement, and shall have full power andauthority to take all such other actions and make all such otherdeterminations not inconsistent with the specific terms andprovisions of the Plan that the Board deems to be necessary orappropriate to the administration of the Plan, any Award or anyAward Agreement. All such actions and determinations shall be bythe affirmative vote of a majority of the members of the Boardpresent at a meeting or by unanimous consent of the Boardexecuted in writing in accordance with the Company’samended and restated certificate of incorporation and amendedand restated by-laws and applicable law. The interpretation andconstruction by the Board of any provision of the Plan, anyAward or any Award Agreement shall be final and conclusive.     3.2.     *Committee.*     The Board from time to time may delegate to the Committee suchpowers and authorities related to the administration andimplementation of the Plan, as set forth in **Section 3.1**above and other applicable provisions, as the Board shalldetermine, consistent with the amended and restated certificateof incorporation and amended and restated by-laws of the Companyand applicable law. The Board may also appoint one or moreseparate committees of the Board, each composed of one or moredirectors of the Company who need not be Outside Directors, whomay administer the Plan with respect to employees or otherService Providers who are not officers or directors of theCompany, may grant Awards under the Plan to such employees orother Service Providers, and may determine all terms of suchAwards. In addition, the Committee may delegate to one or moreexecutive officers of the Company the authority to grant Awardsto employees or other Service Providers who are not officers ordirectors of the Company. Such delegation shall specify themaximum number of shares of Stock that may be granted by suchofficer(s), as well as the time period during which thedelegation shall remain in effect. In the event that the Plan,any Award or any Award Agreement entered into hereunder providesfor any action to be taken by or determination to be made by theBoard, such action may be taken or such determination may bemade by the Committee if the power and authority to do so hasbeen delegated to the Committee by the Board as provided for inthis Section. Unless otherwise expressly determined by theBoard, any such action or determination by the Committee shallbe final, binding and conclusive. To the extent permitted bylaw, the Committee may delegate its authority under the Plan toa member of the Board.     3.3.     *Terms of Awards.*     Subject to the other terms and conditions of the Plan, the Boardshall have full and final authority to:          (i) designate Grantees,           (ii) determine the type or types of Awards to be made to a    Grantee,           (iii) determine the number of shares of Stock to be subject    to an Award,           (iv) establish the terms and conditions of each Award    (including, but not limited to, the exercise price of any    Option, the nature and duration of any restriction or condition    (or provision for lapse thereof) relating to the vesting,    exercise, transfer, or forfeiture of an Award or the shares of    Stock subject thereto, and any terms or conditions that may be    necessary to qualify Options as Incentive Stock Options),           (v) prescribe the form of each Award Agreement evidencing    an Award, and
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          (vi) amend, modify, or supplement the terms of any    outstanding Award, subject to Section **8.9.** Such    authority specifically includes the authority, in order to    effectuate the purposes of the Plan but without amending the    Plan, to modify Awards to eligible individuals who are foreign    nationals or are individuals who are employed outside the United    States to recognize differences in local law, tax policy, or    custom.     The Board shall have the right, in its discretion, to makeAwards in substitution or exchange for any other award underanother plan of the Company, any Affiliate, or any businessentity to be acquired by the Company or an Affiliate. TheCommittee may retain the right in an Award Agreement to cause aforfeiture of the gain realized by a Grantee on account ofactions taken by the Grantee in violation or breach of or inconflict with any non-competition agreement, any agreementprohibiting solicitation of employees or clients of the Companyor any Affiliate thereof or any confidentiality obligation withrespect to the Company or any Affiliate thereof or otherwise incompetition with the Company or any Affiliate thereof, to theextent specified in such Award Agreement applicable to theGrantee. Furthermore, the Company may annul an Award if theGrantee is an employee of the Company or an Affiliate thereofand is terminated for Cause as defined in the applicable AwardAgreement or the Plan, as applicable. The grant of any Awardshall be contingent upon the Grantee executing the appropriateAward Agreement.     3.4.     *Deferral Arrangement.*     The Board may permit or require the deferral of any awardpayment into a deferred compensation arrangement, subject tosuch rules and procedures as it may establish, which may includeprovisions for the payment or crediting of interest or dividendequivalents, including converting such credits into deferredStock equivalents and restricting deferrals to comply withhardship distribution rules affecting 401(k) plans. Any suchdeferrals shall be made in a manner that complies with CodeSection 409A.     3.5.     *No Liability.*     No member of the Board or of the Committee shall be liable forany action or determination made in good faith with respect tothe Plan or any Award or Award Agreement.**4.****STOCK SUBJECT TO THE PLAN**     Subject to adjustment as provided in **Section 18**hereof, the number of shares of Stock available for issuanceunder the Plan shall be thirty three million (33,000,000).Any shares of Stock that are subject to Awards of Options shallbe counted against this limit as one (1) share for everyone (1) share issued. With respect to Stock AppreciationRights, when a stock-settled Stock Appreciation Right grant isexercised, the shares subject to such award will be countedagainst the maximum share limitations as one (1) share forevery share subject thereto, regardless of the number of sharesactually issued to settle the Stock Appreciation Right uponexercise. Any shares that are subject to Awards other thanOptions or Stock Appreciation Rights shall be counted againstthis limit as one and one-half(11/2)shares for every one (1) share granted. Stock issued or tobe issued under the Plan shall be authorized but unissued sharesor treasury shares. If any shares covered by an Award are notpurchased or are forfeited, if an Award is settled in cash or ifan Award otherwise terminates without delivery of any Stocksubject thereto, then the number of shares of Stock countedagainst the aggregate number of shares available under the Planwith respect to such Award shall, to the extent of any suchforfeiture, cash payment or termination, again be available formaking Awards under the Plan. Any shares of Stock that againbecome available for grant pursuant to this Article 4 shallbe added back as one (1) share if such shares were subjectto Options or Stock Appreciation Rights granted under the Plan,and as one and one-half(11/2) shares if such shares were subject to Awards other thanOptions or Stock Appreciation Rights granted under the Plan.Shares issued pursuant to Awards granted in substitution forawards held by employees of a business entity acquired by theCompany or an Affiliate shall not count against the sharesavailable for issuance under the Plan.
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**5.****EFFECTIVE DATE, DURATION AND AMENDMENTS**     5.1.     *Effective Date.*     The amendment and restatement of the Plan shall be effective asof the Effective Date, subject to approval of the Plan by theCompany’s stockholders within one year of the EffectiveDate. Upon approval of the Plan by the stockholders of theCompany as set forth above, all Awards made under the Plan on orafter the Effective Date shall be fully effective as if thestockholders of the Company had approved the Plan on theEffective Date. If the stockholders fail to approve theamendment and restatement of the Plan within one year after theEffective Date, any Awards made hereunder after the EffectiveDate shall be null and void and of no effect.     5.2.     *Term.*     The Plan shall terminate automatically on August 6, 2016 and may be terminated on any earlier date asprovided in **Section 5.3.**     5.3.     *Amendment and Terminationof the Plan*     The Board may, at any time and from time to time, amend,suspend, or terminate the Plan as to any shares of Stock as towhich Awards have not been made. An amendment shall becontingent on approval of the Company’s stockholders to theextent stated by the Board or required by applicable law. Inaddition, an amendment will be contingent on approval of theCompany’s stockholders if the amendment would(i) materially increase the benefits accruing toparticipants under the Plan, (ii) materially increase theaggregate number of shares of Stock that may be issued under thePlan, or (iii) materially modify the requirements as toeligibility for participation in the Plan. No Awards shall bemade after termination of the Plan. No amendment, suspension, ortermination of the Plan shall, without the consent of theGrantee, impair rights or obligations under any Awardtheretofore awarded under the Plan.**6.****AWARD ELIGIBILITY AND LIMITATIONS**     6.1.     *Service Providers; OutsideDirectors; Other Persons*     Subject to this **Section 6**, Awards may be made underthe Plan to: (i) any Service Provider to the Company or ofany Affiliate, including any such Service Provider who is anofficer or director of the Company, or of any Affiliate, as theBoard shall determine and designate from time to time and(ii) any other individual whose participation in the Planis determined to be in the best interests of the Company by theBoard.     6.2.     *Successive Awards.*     An eligible person may receive more than one Award, subject tosuch restrictions as are provided herein.     6.3.     *Limitation on Shares ofStock Subject to Awards and Cash Awards.*     (i) the maximum number of shares of Stock subject toOptions or SARs that can be issued under the Plan to any personeligible for an Award under **Section 6**hereof is tenmillion (10,000,000) in any three consecutive calendaryears;     (ii) the maximum number of shares that can be issued underthe Plan, other than pursuant to an Option, SAR or time-vestedRestricted Stock grant, to any person eligible for an Awardunder **Section 6**hereof is one million (1,000,000) inany three consecutive calendar years; and     (iii) the maximum amount that may be earned as an AnnualIncentive Award or other cash Award in any fiscal year by anyone Grantee shall be $5,000,000 and the maximum amount that maybe earned as a Performance Award or other cash Award in respectof a performance period by any one Grantee shall be $5,000,000.     The preceding limitations in this **Section 6.3**aresubject to adjustment as provided in **Section 18**hereof.     6.4.     *Limitations on IncentiveStock Options.*
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     An Option shall constitute an Incentive Stock Option only(i) if the Grantee of such Option is an employee of theCompany or any Subsidiary of the Company; (ii) to theextent specifically provided in the related Award Agreement; and(iii) to the extent that the aggregate Fair Market Value(determined at the time the Option is granted) of the shares ofStock with respect to which all Incentive Stock Options held bysuch Grantee become exercisable for the first time during anycalendar year (under the Plan and all other plans of theGrantee’s employer and its Affiliates) does not exceed$100,000. This limitation shall be applied by taking Optionsinto account in the order in which they were granted.     6.5.     *Stand-Alone, Additional,Tandem, and Substitute Awards*     Awards granted under the Plan may, in the discretion of theBoard, be granted either alone or in addition to, in tandemwith, or in substitution or exchange for, any other Award or anyaward granted under another plan of the Company, any Affiliate,or any business entity to be acquired by the Company or anAffiliate, or any other right of a Grantee to receive paymentfrom the Company or any Affiliate. Such additional, tandem, andsubstitute or exchange Awards may be granted at any time. If anAward is granted in substitution or exchange for another Award,the Board shall require the surrender of such other Award inconsideration for the grant of the new Award. In addition,Awards may be granted in lieu of cash compensation, including inlieu of cash amounts payable under other plans of the Company orany Affiliate. Notwithstanding Sections 8.1 and 10.1, theOption Price of an Option or the grant price of an SAR that is aSubstitute Award may be less than 100% of the Fair Market Valueof a share of Common Stock on the original date of grant;provided, that, the Option Price or grant price is determined inaccordance with the principles of Code Section 424 and theregulations thereunder.**7.****AWARD AGREEMENT**     Each Award granted pursuant to the Plan shall be evidenced by anAward Agreement, in such form or forms as the Board shall fromtime to time determine. Award Agreements granted from time totime or at the same time need not contain similar provisions butshall be consistent with the terms of the Plan. Each AwardAgreement evidencing an Award of Options shall specify whethersuch Options are intended to be Non-qualified Stock Options orIncentive Stock Options, and in the absence of suchspecification such options shall be deemed Non-qualified StockOptions.**8.****TERMS AND CONDITIONS OF OPTIONS**     8.1.     *Option Price*     The Option Price of each Option shall be fixed by the Board andstated in the Award Agreement evidencing such Option. The OptionPrice of each Option shall be at least the Fair Market Value onthe Grant Date of a share of Stock; provided,however, that in the event that a Grantee is a TenPercent Stockholder, the Option Price of an Option granted tosuch Grantee that is intended to be an Incentive Stock Optionshall be not less than 110 percent of the Fair Market Valueof a share of Stock on the Grant Date. In no case shall theOption Price of any Option be less than the par value of a shareof Stock.     8.2.     *Vesting.*     Subject to **Sections 8.3 and 18**hereof, each Optiongranted under the Plan shall become exercisable at such timesand under such conditions as shall be determined by the Boardand stated in the Award Agreement. For purposes of this**Section 8.2**, fractional numbers of shares of Stocksubject to an Option shall be rounded down to the next nearestwhole number.     8.3.     *Term.*     Each Option granted under the Plan shall terminate, and allrights to purchase shares of Stock thereunder shall cease, uponthe expiration of ten years from the date such Option isgranted, or under such circumstances and on such date priorthereto as is set forth in the Plan or as may be fixed by theBoard and stated in the Award Agreement relating to such Option(the “Termination Date”); provided, however, that inthe event that the Grantee is a Ten Percent Stockholder, anOption granted to such Grantee that is intended to be anIncentive Stock Option shall not be exercisable after theexpiration of five years from its Grant Date.
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     8.4.     *Termination of Service.*     Each Award Agreement shall set forth the extent to which theGrantee shall have the right to exercise the Option followingtermination of the Grantee’s Service. Such provisions shallbe determined in the sole discretion of the Board, need not beuniform among all Options issued pursuant to the Plan, and mayreflect distinctions based on the reasons for termination ofService. An Option that is intended to be an Incentive StockOption shall no longer be exercisable as an Incentive StockOption ninety (90) days after the termination of theGrantee’s Service.     8.5.     *Limitations on Exercise ofOption.*     Notwithstanding any other provision of the Plan, in no event mayany Option be exercised, in whole or in part, ten yearsfollowing the Grant Date, or after the occurrence of an eventreferred to in **Section 18**hereof which results intermination of the Option.     8.6.     *Method of Exercise.*     An Option that is exercisable may be exercised by theGrantee’s delivery to the Company of written notice ofexercise on any business day, at the Company’s principaloffice, on the form specified by the Company. Such notice shallspecify the number of shares of Stock with respect to which theOption is being exercised and shall be accompanied by payment infull of the Option Price of the shares for which the Option isbeing exercised.     8.7.*     Rights of Holders ofOptions*     Unless otherwise stated in the applicable Award Agreement, anindividual holding or exercising an Option shall have none ofthe rights of a stockholder (for example, the right to receivecash or dividend payments or distributions attributable to thesubject shares of Stock or to direct the voting of the subjectshares of Stock ) until the shares of Stock covered thereby arefully paid and issued to him. Except as provided in**Section 18**hereof, no adjustment shall be made fordividends, distributions or other rights for which the recorddate is prior to the date of such issuance.     8.8.*     Delivery of StockCertificates.*     Promptly after the exercise of an Option by a Grantee and thepayment in full of the Option Price, such Grantee shall beentitled to the issuance of a stock certificate or certificatesevidencing his or her ownership of the shares of Stock subjectto the Option. Notwithstanding any other provision of this Planto the contrary, the Company may elect to satisfy anyrequirement under this Plan for the delivery of stockcertificates through the use of book-entry.     8.9.*     No Option Repricing.*     Notwithstanding any other provision in the Plan to the contrary,the Option Price of an Option may not be amended or modifiedafter the Grant Date, and an Option may not be surrendered inconsideration of or exchanged for cash, other Awards or a newoption having an Option Price below that of the Option which wassurrendered or exchanged without approval of the Company’sstockholders.**9.****TRANSFERABILITY OF OPTIONS**     9.1.*     Transferability ofOptions*     Except as provided in **Section 9.2**, during thelifetime of a Grantee, only the Grantee (or, in the event oflegal incapacity or incompetency, the Grantee’s guardian orlegal representative) may exercise an Option. Except as providedin **Section 9.2**, no Option shall be assignable ortransferable by the Grantee to whom it is granted, other than bywill or the laws of descent and distribution.     9.2.*     Family Transfers.*     If authorized in the applicable Award Agreement, a Grantee maytransfer, not for value, all or part of an Option which is notan Incentive Stock Option to any Family Member. For the purposeof this **Section 9.2**, a
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“not for value” transfer is a transfer which is(i) a gift, (ii) a transfer under a domestic relationsorder in settlement of marital property rights; or (iii) atransfer to an entity in which more than fifty percent of thevoting interests are owned by Family Members (or the Grantee) inexchange for an interest in that entity. Following a transferunder this **Section 9.2**, any such Option shallcontinue to be subject to the same terms and conditions as wereapplicable immediately prior to transfer. Subsequent transfersof transferred Options are prohibited except to Family Membersof the original Grantee in accordance with this**Section 9.2**or by will or the laws of descent anddistribution. The events of termination of Service of**Section 8.4**hereof shall continue to be applied withrespect to the original Grantee, following which the Optionshall be exercisable by the transferee only to the extent, andfor the periods specified, in **Section 8.4.****10.****STOCK APPRECIATION RIGHTS**     The Board is authorized to grant Stock Appreciation Rights(“SARs”) to Grantees on the following terms andconditions:     10.1.     *Right to Payment.*     A SAR shall confer on the Grantee to whom it is granted a rightto receive, upon exercise thereof, the excess of (A) theFair Market Value of one share of Stock on the date of exerciseover (B) the grant price of the SAR, as determined by theBoard. The Award Agreement for an SAR shall specify the grantprice of the SAR, which shall be at least the Fair Market Valueof a share of Stock on the Grant Date.     10.2.     *Other Terms.*     The Board shall determine at the date of grant or thereafter,the time or times at which and the circumstances under which aSAR may be exercised in whole or in part (including based onachievement of performance goals and/or future servicerequirements), the time or times at which SARs shall cease to beor become exercisable following termination of Service or uponother conditions, the method of exercise, method of settlement,form of consideration payable in settlement which may be cash orStock, method by or forms in which Stock will be delivered ordeemed to be delivered to Grantees, whether or not a SAR shallbe in tandem or in combination with any other Award, and anyother terms and conditions of any SAR, provided, however, thateach SAR granted under the Plan shall terminate, and all rightsto acquire shares of Stock thereunder shall cease, upon theexpiration of ten years from the date such SAR is granted.     10.3.     *No SAR Repricing.*     Notwithstanding any other provision in the Plan to the contrary,the grant price of an SAR may not be amended or modified afterthe Grant Date, and an SAR may not be surrendered inconsideration of or exchanged for cash, other Awards or a newSAR having an grant price below that of the SAR which wassurrendered or exchanged without approval of the Company’sstockholders.**11.****RESTRICTED STOCK AND STOCK UNITS**     11.1.     *Grant of Restricted Stockor Stock Units.*     The Board may from time to time grant Restricted Stock or StockUnits to persons eligible to receive Awards under**Section 6**hereof, subject to such restrictions,conditions and other terms, if any, as the Board may determine.     11.2.     *Restrictions.*     At the time a grant of Restricted Stock or Stock Units is made,the Board may, in its sole discretion, establish a period oftime (a “restricted period”) applicable to suchRestricted Stock or Stock Units. Each Award of Restricted Stockor Stock Units may be subject to a different restricted period.The Board may, in its sole discretion, at the time a grant ofRestricted Stock or Stock Units is made, prescribe restrictionsin addition to or other than the expiration of the restrictedperiod, including the satisfaction of corporate or individualperformance objectives, which may be applicable to all or anyportion of the Restricted Stock or Stock Units in accordancewith **Section 15.1** and **15.2.** Notwithstandingthe foregoing and other than in the
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case of employees newly-hired by the Company, Restricted Stockthat vests solely by the passage of time shall not vest in fullin less than three (3) years from the Grant Date.Restricted Stock for which vesting may be accelerated may beaccelerated by achieving performance targets shall not vest infull in less than one (1) year from the Grant Date. NeitherRestricted Stock nor Stock Units may be sold, transferred,assigned, pledged or otherwise encumbered or disposed of duringthe restricted period or prior to the satisfaction of any otherrestrictions prescribed by the Board with respect to suchRestricted Stock or Stock Units.     11.3.     *Restricted StockCertificates.*     The Company shall issue, in the name of each Grantee to whomRestricted Stock has been granted, stock certificatesrepresenting the total number of shares of Restricted Stockgranted to the Grantee, as soon as reasonably practicable afterthe Grant Date. The Board may provide in an Award Agreement thateither (i) the Secretary of the Company, or his delegate,shall hold such certificates for the Grantee’s benefituntil such time as the Restricted Stock is forfeited to theCompany or the restrictions lapse, or (ii) suchcertificates shall be delivered to the Grantee, provided,however, that all such certificates, regardless of whether heldby the Secretary, his delegate or delivered to the Grantee,shall bear a legend or legends that comply with the applicablesecurities laws and regulations and makes appropriate referenceto the restrictions imposed under the Plan and the AwardAgreement.     11.4.     *Rights of Holders ofRestricted Stock.*     Unless the Board otherwise provides in an Award Agreement,holders of Restricted Stock shall have the right to vote suchStock and the right to receive any dividends declared or paidwith respect to such Stock. The Board may provide that anydividends paid on Restricted Stock must be reinvested in sharesof Stock, which may or may not be subject to the same vestingconditions and restrictions applicable to such Restricted Stock.All distributions, if any, received by a Grantee with respect toRestricted Stock as a result of any stock split, stock dividend,combination of shares, or other similar transaction shall besubject to the restrictions applicable to the original Grant.Holders of Restricted Stock may not make an election under CodeSection 83(b) with regard to the grant of Restricted Stock,and any holder who attempts to make such an election shallforfeit the Restricted Stock.     11.5.     *Rights of Holders of StockUnits.*          11.5.1.     *No Voting and DividendRights.*          Unless the Board otherwise provides in an Award Agreement,    holders of Stock Units shall have no rights as stockholders of    the Company. The Board may provide in an Award Agreement    evidencing a grant of Stock Units that the holder of such Stock    Units shall be entitled to receive, upon the Company’s    payment of a cash dividend on its outstanding Stock, a cash    payment for each Stock Unit held equal to the per-share dividend    paid on the Stock. Such Award Agreement may also provide that    such cash payment will be deemed reinvested in additional Stock    Units at a price per unit equal to the Fair Market Value of a    share of Stock on the date that such dividend is paid.          11.5.2.     *Creditor’sRights.*          A holder of Stock Units shall have no rights other than those of    a general creditor of the Company. Stock Units represent an    unfunded and unsecured obligation of the Company, subject to the    terms and conditions of the applicable Award Agreement.     11.6.     *Termination of Service.*     Unless the Board otherwise provides in an Award Agreement or inwriting after the Award Agreement is issued, upon thetermination of a Grantee’s Service, any Restricted Stock orStock Units held by such Grantee that have not vested, or withrespect to which all applicable restrictions and conditions havenot lapsed, shall immediately be deemed forfeited. Uponforfeiture of Restricted Stock or Stock Units, the Grantee shallhave no further rights with respect to such Award, including butnot limited to any right to vote Restricted Stock or any rightto receive dividends with respect to shares of Restricted Stockor Stock Units.
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     11.7.     *Purchase of RestrictedStock.*     The Grantee shall be required, to the extent required byapplicable law, to purchase the Restricted Stock from theCompany at a Purchase Price equal to the greater of (i) theaggregate par value of the shares of Stock represented by suchRestricted Stock or (ii) the Purchase Price, if any,specified in the Award Agreement relating to such RestrictedStock. The Purchase Price shall be payable in a form describedin **Section 13**or, in the discretion of the Board, inconsideration for past Services rendered to the Company or anAffiliate.     11.8.     *Delivery of Stock.*     Upon the expiration or termination of any restricted period andthe satisfaction of any other conditions prescribed by theBoard, the restrictions applicable to shares of Restricted Stockor Stock Units settled in Stock shall lapse, and, unlessotherwise provided in the Award Agreement, a stock certificatefor such shares shall be delivered, free of all suchrestrictions, to the Grantee or the Grantee’s beneficiaryor estate, as the case may be. Stock Units may also be settledin cash upon the determination of the Board or as specified inthe applicable Award Agreement.**12.****UNRESTRICTED STOCK AWARDS**     The Board may, in its sole discretion, grant (or sell at parvalue or such other higher purchase price determined by theBoard) an Unrestricted Stock Award to any Grantee pursuant towhich such Grantee may receive shares of Stock free of anyrestrictions (“Unrestricted Stock”) under the Plan.Unrestricted Stock Awards may be granted or sold as described inthe preceding sentence in respect of past services and othervalid consideration, or in lieu of, or in addition to, any cashcompensation due to such Grantee.**13.****FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK**     13.1.     *General Rule.*     Payment of the Option Price for the shares purchased pursuant tothe exercise of an Option or the Purchase Price for RestrictedStock shall be made in cash or in cash equivalents acceptable tothe Company.     13.2.     *Surrender of Stock.*     To the extent the Award Agreement so provides, payment of theOption Price for shares purchased pursuant to the exercise of anOption or the Purchase Price for Restricted Stock may be madeall or in part through the tender to the Company of shares ofStock, which shall be valued, for purposes of determining theextent to which the Option Price or Purchase Price has been paidthereby, at their Fair Market Value on the date of exercise. Inaddition, and also only to the extent the Award Agreement soprovides, payment of the Option Price may be made by requestingthat the Company withhold shares of Stock that would otherwisebe deliverable pursuant to the exercise of the Option, whichshares shall be valued at their Fair Market Value on the date ofexercise.     13.3.     *Cashless Exercise.*     With respect to an Option only (and not with respect toRestricted Stock), to the extent the Award Agreement so providesand subject to compliance with applicable law, payment of theOption Price for shares purchased pursuant to the exercise of anOption may be made all or in part by delivery (on a formacceptable to the Board) of an irrevocable direction to alicensed securities broker acceptable to the Company to sellshares of Stock and to deliver all or part of the sales proceedsto the Company in payment of the Option Price and anywithholding taxes described in **Section 19.3.**     13.4.     *Other Forms of Payment.*     To the extent the Award Agreement so provides, payment of theOption Price for shares purchased pursuant to exercise of anOption or the Purchase Price for Restricted Stock may be made inany other form that is consistent with applicable laws,regulations and rules.
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**14.****DIVIDEND EQUIVALENT RIGHTS**     14.1.     *Dividend EquivalentRights.*     A Dividend Equivalent Right is an Award entitling the recipientto receive credits based on cash distributions that would havebeen paid on the shares of Stock specified in the DividendEquivalent Right (or other award to which it relates) if suchshares had been issued to and held by the recipient. A DividendEquivalent Right may be granted hereunder to any Grantee as acomponent of another Award or as a freestanding award. The termsand conditions of Dividend Equivalent Rights shall be specifiedin the grant. Dividend Equivalents credited to the holder of aDividend Equivalent Right may be paid currently or may be deemedto be reinvested in additional shares of Stock, which maythereafter accrue additional equivalents. Any such reinvestmentshall be at Fair Market Value on the date of reinvestment.Dividend Equivalent Rights may be settled in cash or Stock or acombination thereof, in a single installment or installments,all determined in the sole discretion of the Board. Subject toCode Section 409A, a Dividend Equivalent Right granted as acomponent of another Award may provide that such DividendEquivalent Right shall be settled upon exercise, settlement, orpayment of, or lapse of restrictions on, such other award, andthat such Dividend Equivalent Right shall expire or be forfeitedor annulled under the same conditions as such other award. ADividend Equivalent Right granted as a component of anotherAward may also contain terms and conditions different from suchother award.     14.2.     *Termination of Service.*     Except as may otherwise be provided by the Board either in theAward Agreement or in writing after the Award Agreement isissued, a Grantee’s rights in all Dividend EquivalentRights or interest equivalents shall automatically terminateupon the Grantee’s termination of Service for any reason.**15.****PERFORMANCE AND ANNUAL INCENTIVE AWARDS**     15.1.     *Performance Conditions*     The right of a Grantee to exercise or receive a grant orsettlement of any Award, and the timing thereof, may be subjectto such performance conditions as may be specified by the Board.The Board may use such business criteria and other measures ofperformance as it may deem appropriate in establishing anyperformance conditions, and may exercise its discretion toreduce the amounts payable under any Award subject toperformance conditions, except as limited under**Sections 15.2**hereof in the case of a PerformanceAward or Annual Incentive Award intended to qualify under CodeSection 162(m). If and to the extent required under CodeSection 162(m), any power or authority relating to aPerformance Award or Annual Incentive Award intended to qualifyunder Code Section 162(m), shall be exercised by theCommittee and not the Board.     15.2.     *Performance or AnnualIncentive Awards Granted to Designated Covered Employees*     If and to the extent that the Committee determines that aPerformance or Annual Incentive Award to be granted to a Granteewho is designated by the Committee as likely to be a CoveredEmployee should qualify as “performance-basedcompensation” for purposes of Code Section 162(m), thegrant, exercise and/or settlement of such Performance or AnnualIncentive Award shall be contingent upon achievement ofpre-established performance goals and other terms set forth inthis **Section 15.2.**          15.2.1.     *Performance GoalsGenerally.*          The performance goals for such Performance or Annual Incentive    Awards shall consist of one or more business criteria and a    targeted level or levels of performance with respect to each of    such criteria, as specified by the Committee consistent with    this **Section 15.2.** Performance goals shall be    objective and shall otherwise meet the requirements of Code    Section 162(m) and regulations thereunder including the    requirement that the level or levels of performance targeted by    the Committee result in the achievement of performance goals    being “substantially uncertain.” The Committee may    determine that such Performance or Annual Incentive Awards shall    be granted, exercised and/or settled upon achievement of any one    performance goal or that two or more of the performance goals    must be
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     achieved as a condition to grant, exercise and/or settlement of    such Performance or Annual Incentive Awards. Performance goals    may differ for Performance or Annual Incentive Awards granted to    any one Grantee or to different Grantees.          15.2.2.     *Business Criteria.*          One or more of the following business criteria for the Company,    on a consolidated basis, and/or specified subsidiaries or    business units of the Company (except with respect to the total    stockholder return and earnings per share criteria), shall be    used exclusively by the Committee in establishing performance    goals for such Performance or Annual Incentive Awards:    (1) total stockholder return; (2) such total    stockholder return as compared to total return (on a comparable    basis) of a publicly available index such as, but not limited    to, the Standard & Poor’s 500 Stock Index;    (3) net income; (4) pretax earnings; (5) earnings    before interest expense and taxes (EBIT), (6) earnings    before interest expense, taxes, depreciation and amortization    (EBITDA); (7) pretax operating earnings after interest    expense and before bonuses, service fees, and extraordinary or    special items; (8) operating margin; (9) earnings per    share; (10) return on equity; (11) return on assets,    (12) return on capital; (13) return on investment;    (14) operating earnings; (15) working capital;    (16) ratio of debt to stockholders’ equity,    (17) revenue; (18) book value and (19) funds from    operations (FFO).           15.2.3.     *Timing For Establishing    Performance Goals.*           Performance goals shall be established not later than    90 days after the beginning of any performance period    applicable to such Performance or Annual Incentive Awards, or at    such other date as may be required or permitted for    “performance-based compensation” under Code    Section 162(m).           15.2.4.     *Performance or Annual    Incentive Award Pool.*           The Committee may establish a Performance or Annual Incentive    Award pool, which shall be an unfunded pool, for purposes of    measuring Company performance in connection with Performance or    Annual Incentive Awards.           15.2.5.     *Settlement of    Performance or Annual Incentive Awards; Other Terms.*           Settlement of such Performance or Annual Incentive Awards shall    be in cash, Stock, other Awards or other property, in the    discretion of the Committee. The Committee may, in its    discretion, reduce the amount of a settlement otherwise to be    made in connection with such Performance or Annual Incentive    Awards. The Committee shall specify the circumstances in which    such Performance or Annual Incentive Awards shall be paid or    forfeited in the event of termination of Service by the Grantee    prior to the end of a performance period or settlement of    Performance Awards.     15.3.     *Written Determinations.*     All determinations by the Committee as to the establishment ofperformance goals, the amount of any Performance Award pool orpotential individual Performance Awards and as to theachievement of performance goals relating to Performance Awards,and the amount of any Annual Incentive Award pool or potentialindividual Annual Incentive Awards and the amount of finalAnnual Incentive Awards, shall be made in writing in the case ofany Award intended to qualify under Code Section 162(m). Tothe extent required to comply with Code Section 162(m), theCommittee may delegate any responsibility relating to suchPerformance Awards or Annual Incentive Awards.     15.4.     *Status ofSection 15.2 Awards Under Code Section 162(m)*     It is the intent of the Company that Performance Awards andAnnual Incentive Awards under **Section 15.2**hereofgranted to persons who are designated by the Committee as likelyto be Covered Employees within the meaning of CodeSection 162(m) and regulations thereunder shall, if sodesignated by the Committee, constitute “qualifiedperformance-based compensation” within the meaning of CodeSection 162(m) and regulations thereunder. Accordingly, theterms of **Section 15.2**, including the definitions ofCovered Employee and other terms used therein, shall beinterpreted in a manner consistent with Code Section 162(m)and regulations thereunder. The foregoing notwithstanding,because the Committee cannot
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determine with certainty whether a given Grantee will be aCovered Employee with respect to a fiscal year that has not yetbeen completed, the term Covered Employee as used herein shallmean only a person designated by the Committee, at the time ofgrant of Performance Awards or an Annual Incentive Award, aslikely to be a Covered Employee with respect to that fiscalyear. If any provision of the Plan or any agreement relating tosuch Performance Awards or Annual Incentive Awards does notcomply or is inconsistent with the requirements of CodeSection 162(m) or regulations thereunder, such provisionshall be construed or deemed amended to the extent necessary toconform to such requirements.**16.****PARACHUTE LIMITATIONS**     Notwithstanding any other provision of this Plan or of any otheragreement, contract, or understanding heretofore or hereafterentered into by a Grantee with the Company or any Affiliate,except an agreement, contract, or understanding between theGrantee and the Company or any Affiliate that modifies orexcludes application of this paragraph (an “OtherAgreement”), and notwithstanding any formal or informalplan or other arrangement for the direct or indirect provisionof compensation to the Grantee (including groups or classes ofGrantees or beneficiaries of which the Grantee is a member),whether or not such compensation is deferred, is in cash, or isin the form of a benefit to or for the Grantee (a “BenefitArrangement”), if the Grantee is a “disqualifiedindividual,” as defined in Section 280G(c) of theCode, any Option, Restricted Stock or Stock Unit held by thatGrantee and any right to receive any payment or other benefitunder this Plan shall not become exercisable or vested(i) to the extent that such right to exercise, vesting,payment, or benefit, taking into account all other rights,payments, or benefits to or for the Grantee under this Plan, allOther Agreements, and all Benefit Arrangements, would cause anypayment or benefit to the Grantee under this Plan to beconsidered a “parachute payment” within the meaning ofSection 280G(b)(2) of the Code as then in effect (a“Parachute Payment”) and (ii) if, as a result ofreceiving a Parachute Payment, the aggregate after-tax amountsreceived by the Grantee from the Company under this Plan, allOther Agreements, and all Benefit Arrangements would be lessthan the maximum after-tax amount that could be received by theGrantee without causing any such payment or benefit to beconsidered a Parachute Payment. In the event that the receipt ofany such right to exercise, vesting, payment, or benefit underthis Plan, in conjunction with all other rights, payments, orbenefits to or for the Grantee under any Other Agreement or anyBenefit Arrangement would cause the Grantee to be considered tohave received a Parachute Payment under this Plan that wouldhave the effect of decreasing the after-tax amount received bythe Grantee as described in clause (ii) of the precedingsentence, then the Grantee shall have the right, in theGrantee’s sole discretion, to designate those rights,payments, or benefits under this Plan, any Other Agreements, andany Benefit Arrangements that should be reduced or eliminated soas to avoid having the payment or benefit to the Grantee underthis Plan be deemed to be a Parachute Payment.**17.****REQUIREMENTS OF LAW**     17.1.     *General.*     The Company shall not be required to sell or issue any shares ofStock under any Award if the sale or issuance of such shareswould constitute a violation by the Grantee, any otherindividual exercising an Option, or the Company of any provisionof any law or regulation of any governmental authority,including without limitation any federal or state securitieslaws or regulations. If at any time the Company shall determine,in its discretion, that the listing, registration orqualification of any shares subject to an Award upon anysecurities exchange or under any governmental regulatory body isnecessary or desirable as a condition of, or in connection with,the issuance or purchase of shares hereunder, no shares of Stockmay be issued or sold to the Grantee or any other individualexercising an Option pursuant to such Award unless such listing,registration, qualification, consent or approval shall have beeneffected or obtained free of any conditions not acceptable tothe Company, and any delay caused thereby shall in no way affectthe date of termination of the Award. Specifically, inconnection with the Securities Act, upon the exercise of anyOption or the delivery of any shares of Stock underlying anAward, unless a registration statement under such Act is ineffect with respect to the shares of Stock covered by suchAward, the Company shall not be required to sell or issue suchshares unless the Board has received evidence satisfactory to itthat the Grantee or any
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other individual exercising an Option may acquire such sharespursuant to an exemption from registration under the SecuritiesAct. Any determination in this connection by the Board shall befinal, binding, and conclusive. The Company may, but shall in noevent be obligated to, register any securities covered herebypursuant to the Securities Act. The Company shall not beobligated to take any affirmative action in order to cause theexercise of an Option or the issuance of shares of Stockpursuant to the Plan to comply with any law or regulation of anygovernmental authority. As to any jurisdiction that expresslyimposes the requirement that an Option shall not be exercisableuntil the shares of Stock covered by such Option are registeredor are exempt from registration, the exercise of such Option(under circumstances in which the laws of such jurisdictionapply) shall be deemed conditioned upon the effectiveness ofsuch registration or the availability of such an exemption.     17.2.     *Rule 16b-3.*     During any time when the Company has a class of equity securityregistered under Section 12 of the Exchange Act, it is theintent of the Company that Awards pursuant to the Plan and theexercise of Options granted hereunder will qualify for theexemption provided byRule 16b-3 underthe Exchange Act. To the extent that any provision of the Planor action by the Board does not comply with the requirements ofRule 16b-3, itshall be deemed inoperative to the extent permitted by law anddeemed advisable by the Board, and shall not affect the validityof the Plan. In the event thatRule 16b-3 isrevised or replaced, the Board may exercise its discretion tomodify this Plan in any respect necessary to satisfy therequirements of, or to take advantage of any features of, therevised exemption or its replacement.**18.****EFFECT OF CHANGES IN CAPITALIZATION**     18.1.     *Changes in Stock.*     If the number of outstanding shares of Stock is increased ordecreased or the shares of Stock are changed into or exchangedfor a different number or kind of shares or other securities ofthe Company on account of any recapitalization,reclassification, stock split, reverse split, combination ofshares, exchange of shares, stock dividend or other distributionpayable in capital stock, or other increase or decrease in suchshares effected without receipt of consideration by the Companyoccurring after the Effective Date, the number and kinds ofshares for which grants of Awards may be made under the Planshall be adjusted proportionately and accordingly by theCompany. In addition, the number and kind of shares for whichAwards are outstanding shall be adjusted proportionately andaccordingly so that the proportionate interest of the Granteeimmediately following such event shall, to the extentpracticable, be the same as immediately before such event. Anysuch adjustment in outstanding Options or SARs shall not changethe aggregate Option Price or SAR Exercise Price payable withrespect to shares that are subject to the unexercised portion ofan outstanding Option or SAR, as applicable, but shall include acorresponding proportionate adjustment in the Option Price orSAR Exercise Price per share. The conversion of any convertiblesecurities of the Company shall not be treated as an increase inshares effected without receipt of consideration.Notwithstanding the foregoing, in the event of any distributionto the Company’s stockholders of securities of any otherentity or other assets (other than dividends payable in cash orstock of the Company) without receipt of consideration by theCompany, the Company may, in such manner as the Company deemsappropriate, adjust (i) the number and kind of sharessubject to outstanding Awards and/or (ii) the exerciseprice of outstanding Options and SARs to reflect suchdistribution.     18.2.     *Changes in Capitalization;Merger; Liquidation.*     (a) In the event of a merger, consolidation, reorganizationor other Corporate Transaction of the Company, the Board maymake such adjustments with respect to Awards and take such otheraction as it deems necessary or appropriate to reflect suchmerger, consolidation, reorganization or other CorporateTransaction, including, without limitation, the substitution ofnew awards, the termination or the adjustment of outstandingawards, the acceleration of Awards or the removal ofrestrictions on outstanding Awards, all as may be provided inthe applicable Award Agreement or, if not expressly addressedtherein, as the Board subsequently may determine in the event ofany such transaction.
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     (b) In addition to or instead of any adjustments authorizedin Section **18.1**(a) above, in the event of amerger, consolidation, reorganization or other CorporateTransaction of the Company, the Board may elect, in its solediscretion, to cancel or repurchase any outstanding Awardsissued under the Plan and pay or deliver, or cause to be paid ordelivered, to the holder thereof an amount in cash or securitieshaving a value (as determined by the Board acting in goodfaith), in the case of an Award consisting of Restricted Stockor Stock Units, equal to the formula or fixed price per sharepaid to holders of the Stock in connection with such transactionand, in the case of Options, equal to the product of the numberof shares of Stock subject to the Option (the “OptionStock”) multiplied by the amount, if any, by which(I) the formula or fixed price per share of Stock paid toholders of Stock pursuant to such transaction exceeds(II) the Option Price applicable to such Option.Notwithstanding the foregoing, Stock Units shall be cancelled ona Corporate Transaction only to the extent such CorporateTransaction constitutes a “change in control event”within the meaning of Code Section 409A.     18.3.     *Adjustments.*     Adjustments under this **Section 18**related to sharesof Stock or securities of the Company shall be made by theBoard, whose determination in that respect shall be final,binding and conclusive. No fractional shares or other securitiesshall be issued pursuant to any such adjustment, and anyfractions resulting from any such adjustment shall be eliminatedin each case by rounding downward to the nearest whole share.The Board may provide in the Award Agreements at the time ofgrant, or any time thereafter with the consent of the Grantee,for different provisions to apply to an Award in place of thosedescribed in **Section 18.**     18.4.     *No Limitations onCompany.*     The existence of this Plan and the Awards granted pursuant tothis Plan shall not affect in any way the right or power of theCompany to make or authorize any adjustment, reclassification,reorganization or other change in its capital or businessstructure, any merger or consolidation of the Company, any issueof debt or equity securities having preferences or priorities asto the Stock or the rights thereof, the dissolution orliquidation of the Company, any sale or transfer of all or anypart of its business or assets, or any other act or proceeding.**19.****GENERAL PROVISIONS**     19.1.     *Disclaimer of Rights*     No provision in the Plan or in any Award or Award Agreementshall be construed to confer upon any individual the right toremain in the employ or service of the Company or any Affiliate,or to interfere in any way with any contractual or other rightor authority of the Company either to increase or decrease thecompensation or other payments to any individual at any time, orto terminate any employment or other relationship between anyindividual and the Company. In addition, notwithstandinganything contained in the Plan to the contrary, unless otherwisestated in the applicable Award Agreement, no Award granted underthe Plan shall be affected by any change of duties or positionof the Grantee, so long as such Grantee continues to be adirector, officer, consultant or employee of the Company or anAffiliate. The obligation of the Company to pay any benefitspursuant to this Plan shall be interpreted as a contractualobligation to pay only those amounts described herein, in themanner and under the conditions prescribed herein. The Planshall in no way be interpreted to require the Company totransfer any amounts to a third party trustee or otherwise holdany amounts in trust or escrow for payment to any Grantee orbeneficiary under the terms of the Plan.     19.2.     *Nonexclusivity of thePlan*     Neither the adoption of the Plan nor the submission of the Planto the stockholders of the Company for approval shall beconstrued as creating any limitations upon the right andauthority of the Board to adopt such other incentivecompensation arrangements (which arrangements may be applicableeither generally to a class or classes of individuals orspecifically to a particular individual or particularindividuals) as the Board in its discretion determinesdesirable, including, without limitation, the granting of stockoptions otherwise than under the Plan.
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     19.3.     *Withholding Taxes*     The Company or an Affiliate, as the case may be, shall have theright to deduct or withhold from payments of any kind otherwisedue to a Grantee (including by withholding shares of Stockotherwise deliverable under an Award) any Federal, state, orlocal taxes of any kind required by law to be withheld withrespect to the vesting of or other lapse of restrictionsapplicable to an Award or upon the issuance of any shares ofStock upon the exercise of an Option or pursuant to an Award. Atthe time of such vesting, lapse, or exercise, the Grantee shallpay to the Company or the Affiliate, as the case may be, anyamount that the Company or the Affiliate may reasonablydetermine to be necessary to satisfy such withholdingobligation. Subject to the prior approval of the Company or theAffiliate, which may be withheld by the Company or theAffiliate, as the case may be, in its sole discretion, theGrantee may elect to satisfy such obligations, in whole or inpart, (i) by causing the Company or the Affiliate towithhold shares of Stock otherwise issuable to the Grantee or(ii) by delivering to the Company or the Affiliate sharesof Stock already owned by the Grantee. The shares of Stock sodelivered or withheld shall have an aggregate Fair Market Valueequal to such withholding obligations. The Fair Market Value ofthe shares of Stock used to satisfy such withholding obligationshall be determined by the Company or the Affiliate as of thedate that the amount of tax to be withheld is to be determined.A Grantee who has made an election pursuant to this**Section 19.3**may satisfy his or her withholdingobligation only with shares of Stock that are not subject to anyrepurchase, forfeiture, unfulfilled vesting, or other similarrequirements.     19.4.     *Captions*     The use of captions in this Plan or any Award Agreement is forthe convenience of reference only and shall not affect themeaning of any provision of the Plan or such Award Agreement.     19.5.     *Other Provisions*     Each Award granted under the Plan may contain such other termsand conditions not inconsistent with the Plan as may bedetermined by the Board, in its sole discretion.     19.6.     *Number And Gender*     With respect to words used in this Plan, the singular form shallinclude the plural form, the masculine gender shall include thefeminine gender, etc., as the context requires.     19.7.      Severability     If any provision of the Plan or any Award Agreement shall bedetermined to be illegal or unenforceable by any court of law inany jurisdiction, the remaining provisions hereof and thereofshall be severable and enforceable in accordance with theirterms, and all provisions shall remain enforceable in any otherjurisdiction.     19.8.     *Governing Law*     The validity and construction of this Plan and the instrumentsevidencing the Award hereunder shall be governed by the laws ofthe State of Delaware, other than any conflicts or choice of lawrule or principle that might otherwise refer construction orinterpretation of this Plan and the instruments evidencing theAwards granted hereunder to the substantive laws of any otherjurisdiction.     19.9.     *Code Section 409A*     The Board or the Committee, as applicable, intends to complywith Section 409A of the Code, or an exemption toSection 409A, with regard to Awards hereunder thatconstitute nonqualified deferred compensation within the meaningof Section 409A. To the extent that the Board or theCommittee, as applicable, determines that a Grantee wouldotherwise be subject to the additional 20% tax imposed oncertain nonqualified deferred compensation plans pursuant toSection 409A as a result of any provision of any Awardgranted under this Plan, such provision shall be deemed amendedto the minimum extent necessary to avoid application of suchadditional tax. The nature of any such amendment shall bedetermined by the Board or the Committee, as applicable.
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