exv10w3



 





Exhibit
10.3



CARDTRONICS, INC.




2007 STOCK INCENTIVE PLAN




I. PURPOSE OF THE PLAN




     The purpose of the CARDTRONICS, INC. 2007 STOCK INCENTIVE PLAN (the “Plan”) is to provide a
means through which CARDTRONICS, INC., a Delaware corporation (the “Company”), and its Affiliates
may attract able persons to serve as Directors or Consultants or to enter the employ of the Company
and its Affiliates and to provide a means whereby those individuals upon whom the responsibilities
of the successful administration and management of the Company and its Affiliates rest, and whose
present and potential contributions to the Company and its Affiliates are of importance, can
acquire and maintain stock ownership, thereby strengthening their concern for the welfare of the
Company and its Affiliates. A further purpose of the Plan is to provide such individuals with
additional incentive and reward opportunities designed to enhance the profitable growth of the
Company and its Affiliates. Accordingly, the Plan provides for granting Incentive Stock Options,
options that do not constitute Incentive Stock Options, Restricted Stock Awards, Performance
Awards, Phantom Stock Awards, Bonus Stock Awards, or any combination of the foregoing, as is best
suited to the circumstances of the particular employee, Consultant, or Director as provided herein.



II. DEFINITIONS




     The following definitions shall be applicable throughout the Plan unless specifically modified
by any paragraph:



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



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



     (c) “Board” means the Board of Directors of the Company.



     (d) “Bonus Stock Award” means an Award granted under Paragraph XI of the Plan.



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



 









 





     (f) “Committee” means a committee of the Board that is selected by the Board as provided in
Paragraph IV(a).



     (g) “Common Stock” means the common stock, par value $0.0001 per share, of the Company, or any
security into which such common stock may be changed by reason of any transaction or event of the
type described in Paragraph XII.



     (h) “Company” means Cardtronics, Inc., a Delaware corporation.



     (i) “Consultant” means any person who is not an employee or a Director and who is providing
advisory or consulting services to the Company or any Affiliate.



     (j) “Corporate Change” shall have the meaning assigned to such term in Paragraph XII(c) of the
Plan.



     (k) “Director” means an individual who is a member of the Board.



     (l) An “employee” means any person (including a Director) in an employment relationship with
the Company or any Affiliate.



     (m) “Exchange Act” means the Securities Exchange Act of 1934, as amended.



     (n) “Fair Market Value” means, as of any specified date, the mean of the high and low sales
prices of the Common Stock (i) reported by the National Market System of NASDAQ on that date or
(ii) if the Common Stock is listed on a national stock exchange, reported on the stock exchange
composite tape on that date (or such other reporting service approved by the Committee); or, in
either case, if no prices are reported on that date, on the last preceding date on which such
prices of the Common Stock are so reported. If the Common Stock is traded over the counter at the
time a determination of its fair market value is required to be made hereunder, its fair market
value shall be deemed to be equal to the average between the reported high and low or closing bid
and asked prices of Common Stock on the most recent date on which Common Stock was publicly traded.
In the event Common Stock is not publicly traded at the time a determination of its value is
required to be made hereunder, the determination of its fair market value shall be made by the
Committee in such manner as it deems appropriate and as is consistent with the requirements of
section 409A of the Code.



     (o) “Incentive Stock Option” means an incentive stock option within the meaning of section 422
of the Code



     (p) “Option” means an Award granted under Paragraph VII of the Plan and includes both
Incentive Stock Options to purchase Common Stock and Options that do not constitute Incentive Stock
Options to purchase Common Stock.



     (q) “Option Agreement” means a written agreement between the Company and a Participant with
respect to an Option.



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     (r) “Participant” means an employee, Consultant, or Director who has been granted an Award.



     (s) “Performance Award” means an Award granted under Paragraph IX of the Plan.



     (t) “Performance Award Agreement” means a written agreement between the Company and a
Participant with respect to a Performance Award.



     (u) “Phantom Stock Award” means an Award granted under Paragraph X of the Plan.



     (v) “Phantom Stock Award Agreement” means a written agreement between the Company and a
Participant with respect to a Phantom Stock Award.



     (w) “Plan” means the Cardtronics, Inc. 2007 Stock Incentive Plan, as amended from time to
time.



     (x) “Restricted Stock Agreement” means a written agreement between the Company and a
Participant with respect to a Restricted Stock Award.



     (y) “Restricted Stock Award” means an Award granted under Paragraph VIII of the Plan.



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



     (aa) “Stock Appreciation Right” means a right to acquire, upon exercise of the right, Common
Stock and/or, in the sole discretion of the Committee, cash having an aggregate value equal to the
then excess of the Fair Market Value of the shares with respect to which the right is exercised
over the exercise price therefor.



III. EFFECTIVE DATE AND DURATION OF THE PLAN




     The Plan shall become effective upon the date of its adoption by the Board, provided the Plan
is approved by the stockholders of the Company within 12 months thereafter. Notwithstanding any
provision in the Plan, no Option shall be exercisable, no Restricted Stock Award or Bonus Stock
Award shall be granted, and no Performance Award or Phantom Stock Award shall vest or become
satisfiable prior to such stockholder approval. No further Awards may be granted under the Plan
after 10 years from the date the Plan is adopted by the Board. The Plan shall remain in effect
until all Options granted under the Plan have been exercised or expired, all Restricted Stock
Awards granted under the Plan have vested or been forfeited, and all Performance Awards, Phantom
Stock Awards, and Bonus Stock Awards have been satisfied or expired.



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IV. ADMINISTRATION




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



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



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



     (d) Delegation of Authority by the Committee. Notwithstanding the preceding
provisions of this Paragraph IV or any other provision of the Plan to the contrary, the Committee
may from time to time, in its sole discretion, delegate to the Chief Executive Officer of the
Company the administration (or interpretation of any provision) of the Plan, and the right to grant
Awards under the Plan, insofar as such administration (and interpretation) and power to grant
Awards relates to any person who is not subject to section 16 of the Exchange Act (including any
successor section to the same or similar effect). Any such delegation may be effective only so
long as the Chief Executive Officer of the Company is a Director, and the Committee may revoke such
delegation at any time. The Committee may put any conditions and restrictions on the powers that
may be exercised by the Chief Executive Officer of the Company upon such delegation as the
Committee determines in its sole discretion. In the event of any



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conflict in a determination or interpretation under the Plan as between the Committee and the
Chief Executive Officer of the Company, the determination or interpretation, as applicable, of the
Committee shall be conclusive.




V. SHARES SUBJECT TO THE PLAN; AWARD LIMITS;

GRANT OF AWARDS




     (a) Shares Subject to the Plan and Award Limits. Subject to adjustment in the same
manner as provided in Paragraph XII with respect to shares of Common Stock subject to Options then
outstanding, the aggregate maximum number of shares of Common Stock that may be issued under the
Plan, and the aggregate maximum number of shares of Common Stock that may be issued under the Plan
through Incentive Stock Options, shall not exceed 400,000 shares. Shares shall be deemed to have
been issued under the Plan only to the extent actually issued and delivered pursuant to an Award.
To the extent that an Award lapses or the rights of its holder terminate, any shares of Common
Stock subject to such Award shall again be available for the grant of an Award under the Plan. In
addition, shares issued under the Plan and forfeited back to the Plan, shares surrendered in
payment of the exercise price or purchase price of an Award, and shares withheld for payment of
applicable employment taxes and/or withholding obligations associated with an Award shall again be
available for the grant of an Award under the Plan. Notwithstanding any provision in the Plan to
the contrary, (i) the maximum number of shares of Common Stock that may be subject to Awards
denominated in shares of Common Stock granted to any one individual during the term of the Plan may
not exceed 50% of the aggregate maximum number of shares of Common Stock that may be issued under
the Plan (as adjusted from time to time in accordance with the provisions of the Plan), and (ii)
the maximum amount of compensation that may be paid under all Performance Awards denominated in
cash (including the Fair Market Value of any shares of Common Stock paid in satisfaction of such
Performance Awards) granted to any one individual during any calendar year may not exceed
$1,000,000, and any payment due with respect to a Performance Award shall be paid no later than 10
years after the date of grant of such Performance Award. From and after the date upon which the
Company becomes a “publicly held corporation” (as defined in section 162(m) of the Code and
applicable interpretative authority thereunder), the limitations set forth in the preceding
sentence shall be applied in a manner that will permit Awards that are intended to provide
“performance-based” compensation for purposes of section 162(m) of the Code to satisfy the
requirements of such section, including, without limitation, counting against such maximum number
of shares, to the extent required under section 162(m) of the Code and applicable interpretive
authority thereunder, any shares subject to Options or Stock Appreciation Rights that are canceled
or repriced.



     (b) Grant of Awards. The Committee may from time to time grant Awards to one or more
employees, Consultants, or Directors determined by it to be eligible for participation in the Plan
in accordance with the terms of the Plan.



     (c) Stock Offered. Subject to the limitations set forth in Paragraph V(a), the stock
to be offered pursuant to the grant of an Award may be authorized but unissued Common Stock or
Common Stock previously issued and outstanding and reacquired by the Company. Any of such shares
which remain unissued and which are not subject to outstanding Awards at the



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termination of the Plan shall cease to be subject to the Plan but, until termination of the
Plan, the Company shall at all times make available a sufficient number of shares to meet the
requirements of the Plan.




VI. ELIGIBILITY




     Awards may be granted only to persons who, at the time of grant, are employees, Consultants,
or Directors. An Award may be granted on more than one occasion to the same person, and, subject
to the limitations set forth in the Plan, such Award may include an Incentive Stock Option, an
Option that is not an Incentive Stock Option, a Restricted Stock Award, a Performance Award, a
Phantom Stock Award, a Bonus Stock Award, or any combination thereof.



VII. STOCK OPTIONS




     (a) Option Period. The term of each Option shall be as specified by the Committee at
the date of grant, but in no event shall an Option be exercisable after the expiration of 10 years
from the date of grant.



     (b) Limitations on Exercise of Option. An Option shall be exercisable in whole or in
such installments and at such times as determined by the Committee.



     (c) Special Limitations on Incentive Stock Options. An Incentive Stock Option may be
granted only to an individual who is employed by the Company or any parent or subsidiary
corporation (as defined in section 424 of the Code) at the time the Option is granted. To the
extent that the aggregate fair market value (determined at the time the respective Incentive Stock
Option is granted) of stock with respect to which Incentive Stock Options are exercisable for the
first time by an individual during any calendar year under all incentive stock option plans of the
Company and its parent and subsidiary corporations exceeds $100,000, such Incentive Stock Options
shall be treated as Options which do not constitute Incentive Stock Options. The Committee shall
determine, in accordance with applicable provisions of the Code, Treasury Regulations, and other
administrative pronouncements, which of a Participant’s Incentive Stock Options will not constitute
Incentive Stock Options because of such limitation and shall notify the Participant of such
determination as soon as practicable after such determination. No Incentive Stock Option shall be
granted to an individual if, at the time the Option is granted, such individual owns stock
possessing more than 10% of the total combined voting power of all classes of stock of the Company
or of its parent or subsidiary corporation, within the meaning of section 422(b)(6) of the Code,
unless (i) at the time such Option is granted, the option price is at least 110% of the Fair Market
Value of the Common Stock subject to the Option and (ii) such Option by its terms is not
exercisable after the expiration of five years from the date of grant. Except as otherwise
provided in sections 421 or 422 of the Code, an Incentive Stock Option shall not be transferable
otherwise than by will or the laws of descent and distribution and shall be exercisable during the
Participant’s lifetime only by such Participant or the Participant’s guardian or legal
representative.



     (d) Option Agreement. Each Option shall be evidenced by an Option Agreement in such
form and containing such provisions not inconsistent with the provisions of the Plan as the



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Committee from time to time shall approve, including, without limitation, provisions to
qualify an Option as an Incentive Stock Option under section 422 of the Code. Each Option
Agreement shall specify the effect of termination of (i) employment, (ii) the consulting or
advisory relationship, or (iii) membership on the Board, as applicable, on the exercisability of
the Option. An Option Agreement may provide for the payment of the option price, in whole or in
part, by the delivery of a number of shares of Common Stock (plus cash if necessary) having a Fair
Market Value equal to such option price. Moreover, an Option Agreement may provide for a “cashless
exercise” of the Option by establishing procedures satisfactory to the Committee with respect
thereto. Further, an Option Agreement may provide, on such terms and conditions as the Committee
in its sole discretion may prescribe, for the grant of a Stock Appreciation Right in connection
with the grant of an Option and, in such case, the exercise of the Stock Appreciation Right shall
result in the surrender of the right to purchase a number of shares under the Option equal to the
number of shares with respect to which the Stock Appreciation Right is exercised (and vice versa).
In the case of any Stock Appreciation Right that is granted in connection with an Incentive Stock
Option, such right shall be exercisable only when the Fair Market Value of the Common Stock exceeds
the price specified therefor in the Option or the portion thereof to be surrendered. The terms and
conditions of the respective Option Agreements need not be identical. Subject to the consent of
the Participant, the Committee may, in its sole discretion, amend an outstanding Option Agreement
from time to time in any manner that is not inconsistent with the provisions of the Plan
(including, without limitation, an amendment that accelerates the time at which the Option, or a
portion thereof, may be exercisable).




     (e) Option Price and Payment. The price at which a share of Common Stock may be
purchased upon exercise of an Option shall be determined by the Committee but, subject to
adjustment as provided in Paragraph XII, such purchase price shall not be less than the Fair Market
Value of a share of Common Stock on the date such Option is granted. The Option or portion thereof
may be exercised by delivery of an irrevocable notice of exercise to the Company, as specified by
the Committee. The purchase price of the Option or portion thereof shall be paid in full in the
manner prescribed by the Committee. Separate stock certificates shall be issued by the Company for
those shares acquired pursuant to the exercise of an Incentive Stock Option and for those shares
acquired pursuant to the exercise of any Option that does not constitute an Incentive Stock Option.



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



     (g) Options and Rights in Substitution for Options Granted by Other Employers.
Options and Stock Appreciation Rights may be granted under the Plan from time to time in
substitution for options and such rights held by individuals providing services to corporations or
other entities who become employees, Consultants, or Directors as a result of a merger or
consolidation or other business transaction with the Company or any Affiliate.



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VIII. RESTRICTED STOCK AWARDS




     (a) Forfeiture Restrictions To Be Established by the Committee. Shares of Common
Stock that are the subject of a Restricted Stock Award shall be subject to restrictions on
disposition by the Participant and an obligation of the Participant to forfeit and surrender the
shares to the Company under certain circumstances (the “Forfeiture Restrictions”). The Forfeiture
Restrictions shall be determined by the Committee in its sole discretion, and the Committee may
provide that the Forfeiture Restrictions shall lapse upon (i) the attainment of one or more
performance measures established by the Committee that are based on (1) the price of a share of
Common Stock, (2) the Company’s earnings per share, (3) the Company’s market share, (4) the market
share of a business unit of the Company designated by the Committee, (5) the Company’s sales, (6)
the sales of a business unit of the Company designated by the Committee, (7) the net income (before
or after taxes) of the Company or any business unit of the Company designated by the Committee, (8)
the cash flow or return on investment of the Company or any business unit of the Company designated
by the Committee, (9) the earnings before or after interest, taxes, depreciation, and/or
amortization of the Company or any business unit of the Company designated by the Committee, (10)
the economic value added, (11) the return on capital, assets, or stockholders’ equity achieved by
the Company, or (12) the total stockholders’ return achieved by the Company, (ii) the Participant’s
continued employment with the Company or continued service as a Consultant or Director for a
specified period of time, (iii) the occurrence of any event or the satisfaction of any other
condition specified by the Committee in its sole discretion, or (iv) a combination of any of the
foregoing. The performance measures described in clause (i) of the preceding sentence may be
subject to adjustment for specified significant extraordinary items or events, may be absolute,
relative to one or more other companies, or relative to one or more indexes, and may be contingent
upon future performance of the Company or any Affiliate, division, or department thereof. Each
Restricted Stock Award may have different Forfeiture Restrictions, in the discretion of the
Committee.



     (b) Other Terms and Conditions. Common Stock awarded pursuant to a Restricted Stock
Award shall be represented by a stock certificate registered in the name of the Participant.
Unless provided otherwise in a Restricted Stock Agreement, the Participant shall have the right to
receive dividends with respect to Common Stock subject to a Restricted Stock Award, to vote Common
Stock subject thereto, and to enjoy all other stockholder rights, except that (i) the Participant
shall not be entitled to delivery of the stock certificate until the Forfeiture Restrictions have
expired, (ii) the Company shall retain custody of the stock until the Forfeiture Restrictions have
expired, (iii) the Participant may not sell, transfer, pledge, exchange, hypothecate, or otherwise
dispose of the stock until the Forfeiture Restrictions have expired, (iv) a breach of the terms and
conditions established by the Committee pursuant to the Restricted Stock Agreement shall cause a
forfeiture of the Restricted Stock Award, and (v) with respect to the payment of any dividend with
respect to shares of Common Stock subject to a Restricted Stock Award directly to the Participant,
each such dividend shall be paid no later than the end of the calendar year in which the dividends
are paid to stockholders of such class of shares or, if later, the fifteenth day of the third month
following the date the dividends are paid to stockholders of such class of shares. At the time of
such Award, the Committee may, in its sole discretion, prescribe additional terms, conditions, or
restrictions relating to Restricted Stock Awards, including, but not limited to, rules pertaining
to the termination of employment or service as a Consultant or



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Director (by retirement, disability, death, or otherwise) of a Participant prior to expiration
of the Forfeitures Restrictions. Such additional terms, conditions, or restrictions shall be set
forth in a Restricted Stock Agreement made in conjunction with the Award.




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



     (d) Committee’s Discretion to Accelerate Vesting of Restricted Stock Awards. The
Committee may, in its discretion and as of a date determined by the Committee, fully vest any or
all Common Stock awarded to a Participant pursuant to a Restricted Stock Award and, upon such
vesting, all restrictions applicable to such Restricted Stock Award shall terminate as of such
date. Any action by the Committee pursuant to this Subparagraph may vary among individual
Participants and may vary among the Restricted Stock Awards held by any individual Participant.
Notwithstanding the preceding provisions of this Subparagraph, the Committee may not take any
action described in this Subparagraph with respect to a Restricted Stock Award that has been
granted to a “covered employee” (within the meaning of Treasury Regulation section 1.162-27(c)(2))
if such Award has been designed to meet the exception for performance-based compensation under
section 162(m) of the Code.



     (e) Restricted Stock Agreements. At the time any Award is made under this Paragraph
VIII, the Company and the Participant shall enter into a Restricted Stock Agreement setting forth
each of the matters contemplated hereby and such other matters as the Committee may determine to be
appropriate. The terms and provisions of the respective Restricted Stock Agreements need not be
identical. Subject to the consent of the Participant and the restriction set forth in the last
sentence of Subparagraph (d) above, the Committee may, in its sole discretion, amend an outstanding
Restricted Stock Agreement from time to time in any manner that is not inconsistent with the
provisions of the Plan.



IX. PERFORMANCE AWARDS




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



     (b) Performance Measures. A Performance Award shall be awarded to a Participant
contingent upon future performance of the Company or any Affiliate, division, or department thereof
during the performance period. The Committee shall establish the performance measures applicable
to such performance either (i) prior to the beginning of the performance period or (ii) within 90
days after the beginning of the performance period if the outcome of the performance targets is
substantially uncertain at the time such targets are established, but not later than the date that
25% of the performance period has elapsed; provided such measures may be made subject to adjustment
for specified significant extraordinary items or events. The



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performance measures may be absolute, relative to one or more other companies, or relative to one or more
indexes. The performance measures established by the Committee may be based upon (1) the price of
a share of Common Stock, (2) the Company’s earnings per share, (3) the Company’s market share, (4)
the market share of a business unit of the Company designated by the Committee, (5) the Company’s
sales, (6) the sales of a business unit of the Company designated by the Committee, (7) the net
income (before or after taxes) of the Company or any business unit of the Company designated by the
Committee, (8) the cash flow or return on investment of the Company or any business unit of the
Company designated by the Committee, (9) the earnings before or after interest, taxes,
depreciation, and/or amortization of the Company or any business unit of the Company designated by
the Committee, (10) the economic value added, (11) the return on capital, assets, or stockholders’
equity achieved by the Company, (12) the total stockholders’ return achieved by the Company, or
(13) a combination of any of the foregoing. The Committee, in its sole discretion, may provide for
an adjustable Performance Award value based upon the level of achievement of performance measures
and/or provide for a reduction in the value of a Performance Award during the performance period.




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



     (d) Payment. Following the end of the performance period, the holder of a Performance
Award shall be entitled to receive payment of an amount not exceeding the number of shares of
Common Stock subject to, or the maximum value of, the Performance Award, based on the achievement
of the performance measures for such performance period, as determined and certified in writing by
the Committee. Payment of a Performance Award may be made in cash, Common Stock, or a combination
thereof, as determined by the Committee. Payment shall be made in a lump sum or in installments as
prescribed by the Committee. If a Performance Award covering shares of Common Stock is to be paid
in cash, such payment shall be based on the Fair Market Value of the Common Stock on the payment
date or such other date as may be specified by the Committee in the Performance Award Agreement.



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



     (f) Performance Award Agreements. At the time any Award is made under this Paragraph
IX, the Company and the Participant shall enter into a Performance Award Agreement setting forth
each of the matters contemplated hereby and such additional matters as the Committee may determine
to be appropriate. The terms and provisions of the respective Performance Award Agreements need
not be identical.



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X. PHANTOM STOCK AWARDS




     (a) Phantom Stock Awards. Phantom Stock Awards are rights to receive shares of Common
Stock (or the Fair Market Value thereof), or rights to receive an amount equal to any appreciation
or increase in the Fair Market Value of Common Stock over a specified period of time, which vest
over a period of time as established by the Committee, without satisfaction of any performance
criteria or objectives. The Committee may, in its discretion, require payment or other conditions
of the Participant respecting any Phantom Stock Award. A Phantom Stock Award may include, without
limitation, a Stock Appreciation Right that is granted independently of an Option; provided,
however, that the exercise price per share of Common Stock subject to the Stock Appreciation Right
shall be determined by the Committee but, subject to adjustment as provided in Paragraph XII, such
exercise price shall not be less than the Fair Market Value of a share of Common Stock on the date
such Stock Appreciation Right is granted.



     (b) Award Period. The Committee shall establish, with respect to and at the time of
each Phantom Stock Award, a period over which the Award shall vest with respect to the Participant.



     (c) Awards Criteria. In determining the value of Phantom Stock Awards, the Committee
shall take into account a Participant’s responsibility level, performance, potential, other Awards,
and such other considerations as it deems appropriate.



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



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



     (f) Phantom Stock Award Agreements. At the time any Award is made under this
Paragraph X, the Company and the Participant shall enter into a Phantom Stock Award Agreement
setting forth each of the matters contemplated hereby and such additional matters as the Committee
may determine to be appropriate. The terms and provisions of the respective Phantom Stock Award
Agreements need not be identical.



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XI. BONUS STOCK AWARDS




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



XII. RECAPITALIZATION OR REORGANIZATION




     (a) No Effect on Right or Power. The existence of the Plan and the Awards granted
hereunder shall not affect in any way the right or power of the Board or the stockholders of the
Company to make or authorize any adjustment, recapitalization, reorganization, or other change in
the Company’s or any Affiliate’s capital structure or its business, any merger or consolidation of
the Company or any Affiliate, any issue of debt or equity securities ahead of or affecting Common
Stock or the rights thereof, the dissolution or liquidation of the Company or any Affiliate, any
sale, lease, exchange, or other disposition of all or any part of its assets or business, or any
other corporate act or proceeding.



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



     (c) Recapitalizations and Corporate Changes. If the Company recapitalizes,
reclassifies its capital stock, or otherwise changes its capital structure (a “recapitalization”),
the number and class of shares of Common Stock covered by an Award theretofore granted shall be
adjusted so that such Award shall thereafter cover the number and class of shares of stock and
securities to which the Participant would have been entitled pursuant to the terms of the
recapitalization if, immediately prior to the recapitalization, the Participant had been the holder
of record of the number of shares of Common Stock then covered by such Award. If (i) the Company
shall not be the surviving entity in any merger or consolidation (or survives only as a subsidiary
of an entity), (ii) the Company sells, leases, or exchanges or agrees to sell, lease, or exchange
all or substantially all of its assets to any other person or entity, (iii) the Company is to be
dissolved and liquidated, (iv) any person or entity, including a “group” as contemplated by section
13(d)(3) of the Exchange Act, acquires or gains ownership or control (including, without
limitation, power to vote) of more than 50% of the outstanding shares of the Company’s voting stock
(based upon voting power), or (v) as a result of or in connection with a contested election



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of Directors, the persons who were Directors of the Company before such election shall cease
to constitute a majority of the Board (each such event is referred to herein as a “Corporate
Change”), no later than (x) 10 days after the approval by the stockholders of the Company of such
merger, consolidation, reorganization, sale, lease, or exchange of assets or dissolution or such
election of Directors or (y) 30 days after a Corporate Change of the type described in clause (iv),
the Committee, acting in its sole discretion without the consent or approval of any Participant,
shall effect one or more of the following alternatives, which alternatives may vary among
individual Participants and which may vary among Options or Stock Appreciation Rights held by any
individual Participant: (1) accelerate the time at which Options or Stock Appreciation Rights then
outstanding may be exercised so that such Awards may be exercised in full for a limited period of
time on or before a specified date (before or after such Corporate Change) fixed by the Committee,
after which specified date all such unexercised Awards and all rights of Participants thereunder
shall terminate, (2) require the mandatory surrender to the Company by all or selected Participants
of some or all of the outstanding Options or Stock Appreciation Rights held by such Participants
(irrespective of whether such Awards are then exercisable under the provisions of the Plan) as of a
date, before or after such Corporate Change, specified by the Committee, in which event the
Committee shall thereupon cancel such Awards and the Company shall pay (or cause to be paid) to
each Participant an amount of cash per share equal to the excess, if any, of the amount calculated
in Subparagraph (d) below (the “Change of Control Value”) of the shares subject to such Awards over
the exercise price(s) under such Awards for such shares, or (3) make such adjustments to Options or
Stock Appreciation Rights then outstanding as the Committee deems appropriate to reflect such
Corporate Change and to prevent the dilution or enlargement of rights (provided, however, that the
Committee may determine in its sole discretion that no adjustment is necessary to such Awards then
outstanding), including, without limitation, adjusting such an Award to provide that the number and
class of shares of Common Stock covered by such Award shall be adjusted so that such Award shall
thereafter cover securities of the surviving or acquiring corporation or other property (including,
without limitation, cash) as determined by the Committee in its sole discretion.




     (d) Change of Control Value. For the purposes of clause (2) in Subparagraph (c)
above, the “Change of Control Value” shall equal the amount determined in clause (i), (ii) or
(iii), whichever is applicable, as follows: (i) the per share price offered to stockholders of the
Company in any such merger, consolidation, sale of assets or dissolution transaction, (ii) the
price per share offered to stockholders of the Company in any tender offer or exchange offer
whereby a Corporate Change takes place, or (iii) if such Corporate Change occurs other than
pursuant to a tender or exchange offer, the fair market value per share of the shares into which
such Options or Stock Appreciation Rights being surrendered are exercisable, as determined by the
Committee as of the date determined by the Committee to be the date of cancellation and surrender
of such Awards. In the event that the consideration offered to stockholders of the Company in any
transaction described in this Subparagraph (d) or Subparagraph (c) above consists of anything other
than cash, the Committee shall determine the fair cash equivalent of the portion of the
consideration offered which is other than cash.



     (e) Other Changes in the Common Stock. In the event of changes in the outstanding
Common Stock by reason of recapitalizations, reorganizations, mergers, consolidations,
combinations, split-ups, split-offs, spin-offs, exchanges, or other relevant



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changes in capitalization or distributions to the holders of Common Stock occurring after the
date of the grant of any Award and not otherwise provided for by this Paragraph XII, such Award and
any agreement evidencing such Award shall be subject to adjustment by the Committee at its sole
discretion as to the number and price of shares of Common Stock or other consideration subject to
such Award so as to prevent the dilution or enlargement of rights. In the event of any such change
in the outstanding Common Stock or distribution to the holders of Common Stock, or upon the
occurrence of any other event described in this Paragraph XII, the aggregate maximum number of
shares available under the Plan, the aggregate maximum number of shares that may be issued under
the Plan through Incentive Stock Options, and the maximum number of shares that may be subject to
Awards granted to any one individual shall be appropriately adjusted to the extent, if any,
determined by the Committee, whose determination shall be conclusive.




     (f) Stockholder Action. Any adjustment provided for in the above Subparagraphs shall
be subject to any required stockholder action.



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



XIII. AMENDMENT AND TERMINATION OF THE PLAN




     The Board in its discretion may terminate the Plan at any time with respect to any shares of
Common Stock for which Awards have not theretofore been granted. The Board shall have the right to
alter or amend the Plan or any part thereof from time to time; provided that no change in the Plan
may be made that would impair the rights of a Participant with respect to an Award theretofore
granted without the consent of the Participant, and provided, further, that the Board may not,
without approval of the stockholders of the Company, amend the Plan to increase the maximum
aggregate number of shares that may be issued under the Plan, increase the maximum number of shares
that may be issued under the Plan through Incentive Stock Options, or change the class of
individuals eligible to receive Awards under the Plan.



XIV. MISCELLANEOUS




     (a) No Right To An Award. Neither the adoption of the Plan nor any action of the
Board or of the Committee shall be deemed to give any individual any right to be granted an Option,
a right to a Restricted Stock Award, a right to a Performance Award, a right to a Phantom Stock
Award, a right to a Bonus Stock Award, or any other rights hereunder except as may be evidenced by
an Award agreement duly executed on behalf of the Company, and then only to the extent and on the
terms and conditions expressly set forth therein. The Plan shall be unfunded. The Company shall
not be required to establish any special or separate fund or to
make any other segregation of funds or assets to assure the performance of its obligations
under any Award.



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     (b) No Employment/Membership Rights Conferred. Nothing contained in the Plan shall
(i) confer upon any employee or Consultant any right with respect to continuation of employment or
of a consulting or advisory relationship with the Company or any Affiliate or (ii) interfere in any
way with the right of the Company or any Affiliate to terminate his or her employment or consulting
or advisory relationship at any time. Nothing contained in the Plan shall confer upon any Director
any right with respect to continuation of membership on the Board.



     (c) Other Laws; Withholding. The Company shall not be obligated to issue any Common
Stock pursuant to any Award granted under the Plan at any time when the shares covered by such
Award have not been registered under the Securities Act of 1933, as amended, and such other state
and federal laws, rules, and regulations as the Company or the Committee deems applicable and, in
the opinion of legal counsel for the Company, there is no exemption from the registration
requirements of such laws, rules, and regulations available for the issuance and sale of such
shares. No fractional shares of Common Stock shall be delivered, nor shall any cash in lieu of
fractional shares be paid. The Company shall have the right to deduct in connection with all
Awards any taxes required by law to be withheld and to require any payments required to enable it
to satisfy its withholding obligations.



     (d) No Restriction on Corporate Action. Nothing contained in the Plan shall be
construed to prevent the Company or any Affiliate from taking any action which is deemed by the
Company or such Affiliate to be appropriate or in its best interest, whether or not such action
would have an adverse effect on the Plan or any Award made under the Plan. No Participant,
beneficiary or other person shall have any claim against the Company or any Affiliate as a result
of any such action.



     (e) Restrictions on Transfer. An Award (other than an Incentive Stock Option, which
shall be subject to the transfer restrictions set forth in Paragraph VII(c)) shall not be
transferable otherwise than (i) by will or the laws of descent and distribution, (ii) pursuant to a
qualified domestic relations order as defined by the Code or Title I of the Employee Retirement
Income Security Act of 1974, as amended, or the rules thereunder, or (iii) with the consent of the
Committee.



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




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