EXHIBIT 10.31


 


AFTERMARKET TECHNOLOGY CORP.

2002 STOCK INCENTIVE PLAN


 


SECTION 1.                            PURPOSE
OF PLAN


 


The purpose of this 2002 Stock Incentive Plan (this
“Plan”) of Aftermarket Technology Corp., a Delaware corporation (the
“Company”), is to enable the Company to attract, retain and motivate its
employees, non-employee directors and independent contractors, and to further
align the interests of such employees, non-employee directors and independent
contractors with those of the stockholders of the Company by providing for or
increasing the proprietary interest of such employees, non-employee directors
and independent contractors in the Company.


 


SECTION
2.                            ADMINISTRATION
OF PLAN


 


2.1                               Composition
of Committee.  Subject to
Section 2.04, this Plan shall be administered by the Compensation and
Human Resources Committee of the Board of Directors (the “Committee”), as appointed from time to time by the Board of
Directors, provided, however, that with respect to any
Award  (as defined in Section 5.1)
intended to qualify as “performance-based compensation” within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”),
the term “Committee” shall refer to a committee of two or more “outside
directors” as determined for purposes of applying Code Section 162(m).  The
Board of Directors shall fill vacancies on, and from time to time may remove or
add members to, the Committee. The Committee shall act pursuant to a majority
vote or unanimous written consent.  The
Committee may designate the Secretary of the Company or other Company employees
to assist the Committee in the administration of this Plan and may grant
authority to such persons to execute agreements or other documents evidencing
Awards made under this Plan or other documents entered into under this Plan on
behalf of the Committee or the Company.


 


2.2                               Powers
of the Committee.  Subject to
the express provisions of this Plan, the Committee shall be authorized and
empowered to do all things necessary or desirable, in its sole discretion, in
connection with the administration of this Plan, including, without limitation,
the following:


 


(a)                                  to
prescribe, amend and rescind rules and regulations relating to this Plan and to
define terms not otherwise defined herein; provided that, unless the Committee shall
specify otherwise, for purposes of this Plan (i) the term “fair market value”
shall mean, as of any date, the closing price for a Share (as defined in
Section 3.1) reported for that date by the Nasdaq National Market System (or
such other stock exchange or quotation system on which Shares are then listed
or quoted) or, if no Shares are traded on the Nasdaq National Market System (or
such other stock exchange or quotation system) on the date in question, then
for the next preceding date for which Shares are traded on the Nasdaq National
Market System (or such other stock exchange or quotation system); and (ii) the
term “Company” shall mean the Company and its subsidiaries and affiliates
unless the context otherwise requires;


 


(b)                                 to
determine which persons are Eligible Persons (as defined in Section 4), to
which of Eligible Persons, if any, Awards shall be granted hereunder and the
timing of any such Awards;


 


(c)                                  to
determine the number of Shares subject to Awards and the exercise or purchase price
of such Shares;


 

















 


(d)                                 to
establish and verify the extent of satisfaction of any performance goals
applicable to Awards;


 


(e)                                  to
prescribe and amend the terms of the agreements or other documents evidencing
Awards made under this Plan (which need not be identical);


 


(f)                                    to
determine whether, and the extent to which, adjustments are required pursuant
to Section 10;


 


(g)                                 to
interpret and construe this Plan, any rules and regulations under this Plan and
the terms and conditions of any Award granted hereunder and to make exceptions
to any such provisions in good faith and for the benefit of the Company;  and


 


(h)                                 to
make all other determinations deemed necessary or advisable for the
administration of this Plan.


 


2.3                               Determinations
of the Committee.  All decisions,
determinations and interpretations by the Committee regarding this Plan shall
be final and binding on all Eligible Persons and Participants (as defined in
Section 4).  The Committee shall
consider such factors as it deems relevant to making such decisions,
determinations and interpretations including, without limitation, the
recommendations or advice of any director, officer or employee of the Company
and such attorneys, consultants and accountants as it may select.


 


2.4.                            Authority
of the Board of Directors.  The
Board of Directors, in its sole discretion, may exercise any authority of the
Committee under this Plan in lieu of the Committee’s exercise thereof.


 


SECTION 3.                            STOCK
SUBJECT TO PLAN


 


3.1                               Aggregate
Limits.  At any time, the
aggregate number of shares of the Company’s Common Stock, $.01 par value
(“Shares”), issued and issuable pursuant to all Awards (including all ISOs (as
defined in Section 5.1)) granted under this Plan shall not exceed 1,000,000; provided
that, notwithstanding Section 3.3, the aggregate number of Shares that may
be issued pursuant to the exercise of ISOs (as defined in Section 5.1(a))
granted under this Plan shall not exceed 1,000,000.  The Shares subject to this Plan may be either Shares reacquired
by the Company, including Shares purchased in the open market, or authorized
but unissued Shares.  Such limits shall
be subject to adjustment as provided in Section 10.


 


3.2                               Code
Section 162(m) Limits.  The
aggregate number of Shares subject to Options (as defined in Section 5.1(a))
granted under this Plan during any calendar year to any one employee of the
Company (an “Employee)” shall not exceed 400,000.  The aggregate number of Shares issued or issuable under all
Awards granted under this Plan, other than Options, during any calendar year to
any one Employee shall not exceed 400,000. 
Notwithstanding anything to the contrary in this Plan, the foregoing
limitations shall be subject to adjustment under Section 10 only to the
extent that such adjustment will not affect the status of any Award intended to
qualify as “performance-based compensation” under Code Section 162(m).


 


3.3                               Issuance
of Shares.  For purposes of
Section 3.1, the aggregate number of Shares issued under this Plan at any time
shall equal only the number of Shares actually issued upon exercise or
settlement of an Award and not returned to the Company upon cancellation,
expiration or forfeiture of an Award or in payment or satisfaction of the
purchase price, exercise price or tax withholding obligation of an Award.


 


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SECTION 4.                            PERSONS
ELIGIBLE UNDER PLAN


 


Any person who is an employee, prospective employee,
consultant, director or advisor of the Company (an “Eligible Person”) shall be
eligible to be considered for the grant of Awards hereunder.  A “Participant” is any current or former
Eligible Person to whom an Award has been made and any person (including any
estate) to whom an Award has been assigned or transferred pursuant to
Section 9.1.


 


SECTION 5.                            PLAN
AWARDS


 


5.1                               Award
Types.  The Committee, on behalf
of the Company, is authorized under this Plan to grant certain types of
arrangements to Eligible Persons and to confer certain benefits on them.  The following arrangements or benefits are
authorized under this Plan if their terms and conditions are not inconsistent
with the provisions of this Plan: 
Options, Incentive Bonuses and Incentive Stock.  Such arrangements and benefits are sometimes
referred to herein as “Awards.”  The
authorized types of arrangements and benefits for which Awards may be granted
are defined as follows:


 


(a)                                  Options:  An Option is a right granted under
Section 6 to purchase a number of Shares at such exercise price, at such
times and on such other terms and conditions as are specified in the agreement
or other document evidencing the Award (the “Option Document “).  Options intended to qualify as Incentive
Stock Options (“ISOs”) pursuant to Code Section 422 and Options not
intended to qualify as ISOs (“Nonqualified Options”) may be granted under
Section 6.


 


(b)                                 Incentive
Bonus:  An Incentive Bonus is
a bonus opportunity awarded under Section 7 pursuant to which a
Participant may become entitled to receive an amount based on satisfaction of
such performance criteria as are specified in the agreement or other document
evidencing the Award (the “Incentive Bonus Document”).


 


(c)                                  Incentive
Stock:  Incentive Stock is an
award or issuance of Shares made under Section 8, the grant, issuance,
retention, vesting and/or transferability of which is subject during specified
periods of time to such conditions (including performance conditions) and terms
as are expressed in the agreement or other document evidencing the Award (the
“Incentive Stock Document”).


 


5.2                               Grants
of Awards.  An Award may consist
of one such arrangement or benefit or two or more of them in tandem or in the
alternative.


 


SECTION 6.                            OPTIONS


 


The Committee may grant an Option or provide for the
grant of an Option, either from time to time in the discretion of the Committee
or automatically upon the occurrence of specified events, including, without
limitation, the achievement of performance goals, the satisfaction of an event
or condition within the control of the recipient of the Award or within the
control of others.


 


6.1                               Option
Document.  Each Option
Document shall contain provisions regarding (a) the number of Shares that
may be issued upon exercise of the Option, (b) the purchase price of the
Shares and the means of payment for the Shares, (c) the term of the
Option, (d) such terms and conditions of exercisability as may be
determined from time to time by the Committee, (e) restrictions on the
transfer of the Option and forfeiture provisions, and (f) such further
terms and conditions, in each case not inconsistent with this Plan, as may be
determined from time to time by the Committee. 
Option Documents evidencing ISOs shall contain such terms and conditions
as may be necessary to comply with the applicable provisions of Section 422 of
the Code.


 


6.2                               Option
Price.  The purchase price per
share of the Shares subject to each Option granted under this Plan shall equal
or exceed 100% of the fair market value of such Shares on the date the Option
is granted except that (i) the exercise price of an Option may be higher
or lower in the case of Options granted 


 


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to
employees of a company acquired by the Company in assumption and substitution
of options held by such employees at the time such company is acquired, (ii) in
the event an Employee is required to pay or forego the receipt of any cash
amount in consideration of receipt of an Option, the exercise price plus such
cash amount shall equal or exceed 100% of the fair market value of such Stock
on the date the Option is granted, and (iii) the exercise price of an
Option granted to a director who is not an Employee may be lower.


 


6.3                               Option
Term.   The “Term” of each
Option granted under this Plan, including any ISOs, shall be ten (10) years
from the date of its grant unless the Committee shall provide otherwise.


 


6.4                               Option
Vesting.  Options granted under
this Plan shall be exercisable at such time and in such installments during the
period prior to the expiration of the Option’s Term as determined by the
Committee.  The Committee shall have the
right to make the timing of the ability to exercise any Option granted under
this Plan subject to such performance requirements as deemed appropriate by the
Committee.  At any time after the grant
of an Option the Committee may reduce or eliminate any restrictions surrounding
any Participant’s right to exercise all or part of the Option.


 


6.5                               Termination
of Employment.  Subject
to Section 11, upon a termination of employment by a Participant prior to
the full exercise of an Option, the unexercised portion of the Option shall be
subject to such procedures as the Committee may establish except, in the case
of an ISO, if and to the extent that other procedures are necessary to comply
with the provisions of Section 421, 422 or 424 of the Code.


 


6.6                               Payment
of Exercise Price.  The exercise
price of an Option shall be paid in the form of one of more of the following,
as the Committee shall specify, either through the terms of the Option Document
or at the time of exercise of an Option: 
(a) cash or certified or cashiers’ check, (b) shares of capital
stock of the Company that have been held by the Participant for such period of
time as the Committee may specify, (c) other property deemed acceptable by
the Committee, (d) a reduction in the number of Shares or other property
otherwise issuable pursuant to such Option, (e) a promissory note of or
other commitment to pay by the Participant or of a third party, the terms and
conditions of which shall be determined by the Committee, or (f) any
combination of (a) through (e).


 


SECTION
7.                            INCENTIVE
BONUSES


 


Each Incentive Bonus
Award will confer upon the Employee the opportunity to earn a future payment
tied to the level of achievement with respect to one or more performance
criteria established for a performance period.


 


7.1                               Incentive
Bonus Document.  Each Incentive Bonus Document shall
contain provisions regarding (a) the target and maximum amount payable to the
Participant as an Incentive Bonus, (b) the performance criteria and level of
achievement versus these criteria that shall determine the amount of such
payment, (c) the term of the performance period as to which performance shall
be measured for determining the amount of any payment, (d) the timing of any
payment earned by virtue of performance, (e) restrictions on the alienation or
transfer of the Incentive Bonus prior to actual payment, (f) forfeiture
provisions, and (g) such further terms and conditions, in each case not
inconsistent with this Plan as may be determined from time to time by the
Committee.  The maximum amount payable
as an Incentive Bonus may be a multiple of the target amount payable, but the
maximum amount payable pursuant to that portion of an Incentive Bonus Award
granted under this Plan for any fiscal year to any Participant that is intended
to satisfy the requirements for “performance-based compensation” under Code
Section 162(m) shall not exceed $3,000,000 in the case of any Award
payable in cash.


 


7.2                               Performance
Criteria.  The Committee shall
establish the performance criteria and level of achievement versus these
criteria that shall determine the target and maximum amount payable under an
Incentive Bonus Award, which criteria may be based on financial performance
and/or personal performance evaluations. 
The Committee may specify the percentage of the target Incentive Bonus
that is intended to satisfy the requirements for “performance-based
compensation” under Code Section 162(m).


 


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Notwithstanding
anything to the contrary herein, the performance criteria for any portion of an
Incentive Bonus that is intended by the Committee to satisfy the requirements
for “performance-based compensation” under Code Section 162(m) shall be a
measure based on one or more Qualifying Performance Criteria (as defined in Section 9.2)
selected by the Committee and specified within the time period required under
Code Section 162(m).  The Committee
shall certify the extent to which any Qualifying Performance Criteria has been
satisfied and the amount payable as a result thereof prior to payment of any
Incentive Bonus that is intended to satisfy the requirements for
“performance-based compensation” under Code Section 162(m).


 


7.3                               Timing
and Form of Payment.  The Committee shall determine the timing
of payment of any Incentive Bonus.  The
Committee may provide for or, subject to such terms and conditions as the
Committee may specify, may permit a Participant to elect the payment of any
Incentive Bonus to be deferred to a specified date or event.


 


7.4                               Discretionary
Adjustments.  Notwithstanding
satisfaction of any performance goals, the amount paid under an Incentive Bonus
Award on account of either financial performance or personal performance
evaluations may be reduced by the Committee on the basis of such further
considerations as the Committee shall determine.


 


SECTION
8.                            INCENTIVE
STOCK


 


Incentive Stock is an
award or issuance of Shares the grant, issuance, retention, vesting and/or
transferability of which is subject during specified periods of time to such
conditions (including performance conditions) and terms as the Committee deems
appropriate.


 


8.1                               Incentive
Stock Document.  Each
Incentive Stock Document shall contain provisions regarding (a) the number of
Shares subject to such Award or a formula for determining such, (b) the
performance criteria, if any, and level of achievement versus these criteria
that shall determine the number of Shares granted, issued, retainable and/or
vested, (c) the period, if any, as to which performance shall be measured
for determining achievement of performance, (d) forfeiture,
(e) transferability and (f) such further terms and conditions, not
inconsistent with this Plan as may be determined from time to time by the
Committee.


 


8.2                               Sale
Price.  Subject to the
requirements of applicable law, the Committee shall determine the price, if
any, at which Shares of Incentive Stock shall be sold or awarded to an Eligible
Person, which may vary from time to time and among Eligible Persons and which
may be below the fair market value of such Shares at the date of grant or
issuance.


 


8.3                               Performance
Criteria.  The grant, issuance,
retention and/or vesting of Incentive Stock may but need not be subject to such
performance criteria and level of achievement versus these criteria as the
Committee shall determine, which criteria may be based on financial performance
and/or personal performance evaluations. 
Notwithstanding anything to the contrary herein, the performance
criteria for any Incentive Stock that is intended to satisfy the requirements
for “performance-based compensation” under Code Section 162(m) shall be a
measure based on one or more Qualifying Performance Criteria selected by the
Committee and specified within the time period required under Code
Section 162(m).


 


8.4                               Discretionary
Adjustments.  Notwithstanding
satisfaction of any performance goals, the number of Shares granted, issued,
retainable and/or vested under an Incentive Stock Award on account of either
financial performance or personal performance evaluations may be reduced by the
Committee on the basis of such further considerations as the Committee shall
determine.


 


8.5                               Termination
of Employment.   Subject
to Section 11,  upon a termination of employment by a
Participant prior to the vesting of or the lapsing of restrictions on Incentive
Stock, the Incentive Stock Awards granted to such Participant shall be subject
to such procedures as determined by the Committee.


 


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SECTION
9.                            OTHER
PROVISIONS APPLICABLE TO AWARDS


 


9.1                               Transferability.  Unless the agreement or other document
evidencing an Award (or an amendment thereto authorized by the Committee)
expressly states that the Award is transferable as provided hereunder, no Award
granted under this Plan (nor any interest in such Award) may be sold, assigned,
conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner
prior to the vesting or lapse of any and all restrictions applicable thereto,
other than by will or the laws of descent and distribution.  The Committee may grant an Award or amend an
outstanding Award to provide that the Award is transferable or assignable to a
member or members of the Participant’s “immediate family,” as such term is
defined in Rule 16a-1(e) under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), or to a trust for the benefit solely of a member or
members of the Participant’s immediate family or to a partnership or other
entity whose only owners are members of the Participant’s immediate family, provided
that (i) no consideration is given in connection with the transfer of such
Award, and (ii) following any such transfer or assignment the Award will remain
subject to substantially the same terms applicable to the Award while held by
the Participant, as modified as the Committee shall deem appropriate, and the
transferee shall execute an agreement agreeing to be bound by such terms.


 


9.2                               Qualifying
Performance Criteria.  For
purposes of this Plan, the term “Qualifying Performance Criteria” shall mean
any one or more of the following performance criteria, either individually,
alternatively or in any combination, applied to either the Company as a whole
or to a business unit or subsidiary, either individually, alternatively or in
any combination, and measured either annually or cumulatively over a period of
years, on an absolute basis or relative to a pre-established target, previous
years’ results or a designated comparison group, in each case as specified by
the Committee in the Award:  (a) cash
flow, (b) earnings per share, (c) earnings before interest, taxes,
depreciation and amortization, (d) earnings before interest, taxes and
amortization, (e) earnings before interest and taxes, (f) return on
equity, (g) total stockholder return, (h) return on capital, (i) return
on assets or net assets, (j) revenue, (k) income or net income,
(l) operating income or net operating income, (m) operating profit or
net operating profit, (n) operating margin, (o) return on operating
revenue, (p) market share, and (q) overhead or other expense
reduction.  The Committee shall
appropriately adjust any evaluation of performance under a Qualifying
Performance Criteria to exclude any of the following events that occurs during
a performance period:  (i) asset
write-downs, (ii) litigation or claim judgments or settlements,
(iii) the effect of changes in tax law, accounting principles or other
such laws or provisions affecting reported results, (iv) accruals for
reorganization and restructuring programs, (v) divestitures, and
(vi) any extraordinary non-recurring items as described in Accounting
Principles Board Opinion No. 30 and/or in management’s discussion and analysis
of financial condition and results of operations appearing in the Company’s
annual report to stockholders for the applicable year.


 


9.3                               Dividends.  Unless otherwise provided by the Committee,
no adjustment shall be made in Shares issuable under Awards on account of cash
dividends that may be paid or other rights that may be issued to the holders of
Shares prior to their issuance under any Award.  The Committee shall specify whether dividends or dividend
equivalent amounts shall be paid to any Participant with respect to the Shares
subject to any Award that have not vested or been issued or that are subject to
any restrictions or conditions on the record date for dividends.


 


9.4                               Documents
Evidencing Awards.  The
Committee shall, subject to applicable law, determine the date an Award is
deemed to be granted, which, for purposes of this Plan, shall not be affected
by the fact that an Award is contingent on subsequent stockholder approval of
this Plan.  The Committee or, except to
the extent prohibited under applicable law, its delegate(s) may establish the
terms of agreements or other documents evidencing Awards under this Plan and
may, but need not, require as a condition to any such agreement’s or document’s
effectiveness that such agreement or document be executed by the Participant
and that such Participant agree to such further terms and conditions as
specified in such agreement or document. 
The grant of an Award under this Plan shall not confer any rights upon
the Participant holding such Award other than such terms, and subject to such
conditions, as are specified in this Plan as being applicable to such type of
Award (or to all Awards) or as are expressly set forth in the agreement or
other document evidencing such Award.


 


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9.5                               Tandem
Stock or Cash Rights.  Either at
the time an Award is granted or by subsequent action, the Committee may, but
need not, provide that an Award shall contain as a term thereof, a right,
either in tandem with the other rights under the Award or as an alternative
thereto, of the Participant to receive, without payment to the Company, a
number of Shares, cash or a combination thereof, the amount of which is
determined by reference to the value of the Award.


 


9.6                               Financing.  The Committee may provide financing to a
Participant in a principal amount sufficient to pay the purchase price of any
Award and/or to pay the amount of taxes required by law to be withheld with
respect to any Award.  Any such loan
shall be subject to all applicable legal requirements and restrictions
pertinent thereto, including Regulation U promulgated by the Federal
Reserve Board.  The grant of an Award shall
in no way obligate the Company or the Committee to provide any financing
whatsoever in connection therewith.


 


SECTION
10.                     CHANGES
IN CAPITAL STRUCTURE


 


If the outstanding securities of the class then
subject to this Plan are increased, decreased or exchanged for or converted
into cash, property or a different number or kind of shares or securities, or
if cash, property or shares or securities are distributed in respect of such
outstanding securities, in either case as a result of a reorganization, merger,
consolidation, recapitalization, restructuring, reclassification, dividend
(other than a regular, quarterly cash dividend) or other distribution, stock
split, reverse stock split, spin-off or the like, or if substantially all of
the property and assets of the Company are sold, then, unless the terms of such
transaction shall provide otherwise, the Committee shall make appropriate and
proportionate adjustments in (i) the number and type of shares or other
securities or cash or other property that may be acquired pursuant to Awards
theretofore granted under this Plan and the exercise or settlement price of
such Awards, provided, however, that such adjustment shall be made in
such a manner that will not affect the status of any Award intended to qualify
as an ISO under Code Section 422 or as “performance-based compensation”
under Code Section 162(m), and (ii) the maximum number and type of
shares or other securities that may be issued pursuant to such Awards
thereafter granted under this Plan.


 


SECTION
11.                     CHANGE
OF CONTROL


 


11.1                        Effect
of Change of Control.  The
Committee may, through the terms of the Award or otherwise, provide that any or
all of the following shall occur in connection with a Change of Control or a
Change of Control Transaction (as those terms are defined in Section 11.2)
or upon termination of the Participant’s employment following a Change of
Control or a Change of Control Transaction: 
(a) in the case of an Option, the acceleration of the Participant’s
ability to exercise any portion of the Option not previously exercisable,
(b) in the case of an Incentive Bonus, the acceleration of the
Participant’s right to receive a payment equal to the target amount payable or,
if greater, a payment based on performance through a date determined by the Committee
prior to the Change of Control, and (c) in the case of Shares issued in
payment of any Incentive Bonus and/or in the case of Incentive Stock, the lapse
and expiration of any conditions to the grant, issuance, retention, vesting or
transferability of, or any other restrictions applicable to, such Award.  The Committee also may, through the terms of
the Award or otherwise, provide for an absolute or conditional exercise,
payment or lapse of conditions or restrictions on an Award that shall only be effective
if, upon the announcement of a Change of Control Transaction, no provision is
made in such Change of Control Transaction for the exercise, payment or lapse
of conditions or restrictions on the Award or other procedure whereby the
Participant may realize the full benefit of the Award.


 


11.2                        Definitions.  Unless the Committee shall provide
otherwise,


 


“Change of Control” shall mean an occurrence of any of
the following events:


 


(a)                                  an
acquisition (other than directly from the Company) of any voting securities of
the Company (the “Voting Securities”) by any “person or group” (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) immediately after
which such person or group has “Beneficial Ownership” (within the meaning of
Rule 13d-3 under the Exchange Act) of more than 50% of the combined voting
power of the Company’s then outstanding Voting Securities, except 


 


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in the case of an acquisition by any person or group
that immediately prior to such acquisition already had Beneficial Ownership of
more than 50% of the combined voting power of the Company’s then outstanding
Voting Securities;


 


(b)                                 consummation
of (i) a merger, consolidation or reorganization involving the Company
unless the company resulting from such merger, consolidation or reorganization
(the “Surviving Corporation”) shall adopt or assume this Plan and all
Participants’ Awards under this Plan and either (A) the stockholders of
the Company immediately before such merger, consolidation or reorganization
own, directly or indirectly immediately following such merger, consolidation or
reorganization, more than 50% of the combined voting power of the Surviving
Corporation in substantially the same proportion as their ownership immediately
before such merger, consolidation or reorganization, or (B) at least a
majority of the members of the Board of Directors of the Surviving Corporation
were directors of the Company immediately prior to the execution of the
agreement providing for such merger, consolidation or reorganization, or (ii) a
complete liquidation or dissolution of the Company; or


 


(c)                                  such
other events as the Committee from time to time may specify.


 


“Change of Control Transaction” shall mean any tender
offer, offer, exchange offer, solicitation, merger, consolidation,
reorganization or other transaction that is intended to or reasonably expected
to result in a Change of Control.


 


SECTION
12.                     TAXES


 


12.1                        Withholding
Requirements.  The Committee may
make such provisions or impose such conditions as it may deem appropriate for
the withholding or payment by a Participant of any taxes that the Committee
determines are required in connection with any Award granted under this Plan,
and a Participant’s rights in any Award are subject to satisfaction of such
conditions.


 


12.2                        Payment
of Withholding Taxes. 
Notwithstanding the terms of Section 12.1, the Committee may provide in
the agreement or other document evidencing an Award or otherwise that all or
any portion of the taxes required to be withheld by the Company or, if
permitted by the Committee, desired to be paid by the Participant, in
connection with the exercise of a Nonqualified Option or the exercise, vesting,
settlement or transfer of any other Award shall be paid or, at the election of
the Participant, may be paid by the Company by withholding shares of the
Company’s capital stock otherwise issuable or subject to such Award or by the
Participant delivering previously owned shares of the Company’s capital stock,
in each case having a fair market value equal to the amount required or elected
to be withheld or paid.  Any such
election is subject to such conditions or procedures as may be established by
the Committee and may be subject to disapproval by the Committee.


 


SECTION
13.                     AMENDMENTS
OR TERMINATION


 


The Board may amend,
alter or discontinue this Plan or any agreement or other document evidencing an
Award made under this Plan, but no such amendment shall be made which (i) would
materially impair the rights of any Award holder, without such holder’s
consent, under any Award theretofore granted, provided that no such consent
shall be required if the Committee determines in its sole discretion and prior
to the date of any Change of Control that such amendment or alteration is not
reasonably likely to significantly diminish the benefits provided under such
Award, or that any such diminution has been adequately compensated, or (ii)
would have any of the following effects, unless approved by the stockholders of
the Company:


 


(a)                                  materially
increase the maximum number of Shares for which Awards may be granted under
this Plan;


 


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(b)                                 reduce
the price at which Options may be granted below the price provided for in
Section 6.2;


 


(c)                                  reduce
the exercise price of outstanding Options;


 


(d)                                 extend
the term of this Plan; or


 


(e)                                  change
the class of persons eligible to be Participants.


 


SECTION
14.                     COMPLIANCE
WITH OTHER LAWS AND REGULATIONS.


 


This Plan, the grant and exercise of Awards thereunder,
and the obligation of the Company to sell, issue or deliver Shares under such
Awards, shall be subject to all applicable federal, state and foreign laws,
rules and regulations and to such approvals by any governmental or regulatory
agency as may be required.  The Company
shall not be required to register in a Participant’s name or deliver any Shares
prior to the completion of any registration or qualification of such Shares
under any federal, state or foreign law or any ruling or regulation of any
government body which the Committee shall determine to be necessary or
advisable.  This Plan is intended to
constitute an unfunded arrangement for a select group of management or other
key employees, directors and consultants.


 


No Option shall be exercisable unless a registration
statement with respect to the Option is effective or the Company has determined
that such registration is unnecessary. 
Unless the Awards and Shares covered by this Plan have been registered
under the Securities Act of 1933, as amended, or the Company has determined
that such registration is unnecessary, each person receiving an Award and/or
Shares pursuant to any Award may be required by the Company to give a
representation in writing that such person is acquiring such Shares for his or her
own account for investment and not with a view to, or for sale in connection
with, the distribution of any part thereof.


 


SECTION
15.                     OPTION
GRANTS BY SUBSIDIARIES


 


In
the case of a grant of an option to any Eligible Person employed by a
subsidiary of the Company, such grant may, if the Committee so directs, be
implemented by the Company issuing any subject shares to the subsidiary for
such lawful consideration as the Committee may determine, upon the condition or
understanding that the subsidiary will transfer the shares to the optionholder
in accordance with the terms of the option specified by the Committee pursuant
to the provisions of this Plan. 
Notwithstanding any other provision hereof, such option may be issued by
and in the name of the subsidiary and shall be deemed granted on such date as
the Committee shall determine.


 


SECTION
16.                     NO
RIGHT TO COMPANY EMPLOYMENT


 


Nothing in this Plan or as a result of any Award
granted pursuant to this Plan shall confer on any individual any right to
continue in the employ of the Company or interfere in any way with the right of
the Company to terminate an individual’s employment at any time.  The agreements or other documents evidencing
Awards may contain such provisions as the Committee may approve with reference
to the effect of approved leaves of absence.


 


SECTION
17.                     EFFECTIVENESS
AND EXPIRATION OF PLAN


 


This Plan shall be effective on the date the Board
adopts this Plan.  All Awards granted
under this Plan are subject to, and may not be exercised before, the approval
of this Plan by the stockholders prior to the first anniversary date of the
effective date of this Plan, by the affirmative vote of the holders of a
majority of the outstanding shares of the Company present, or represented by
proxy, and entitled to vote at a meeting of the Company’s stockholders or by
written consent in accordance with the laws of the State of Delaware; provided
that if such approval by the stockholders of the Company is not forthcoming,
all 


 


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Awards
previously granted under this Plan shall be void.  No Awards shall be granted pursuant to this Plan more than ten
(10) years after the effective date of this Plan.


 


SECTION
18.                     NON-EXCLUSIVITY
OF PLAN


 


Neither the adoption of this Plan by the Board nor the
submission of this Plan to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board or the
Committee to adopt such other incentive arrangements as either may deem desirable,
including without limitation, the granting of restricted stock or stock options
otherwise than under this Plan, and such arrangements may be either generally
applicable or applicable only in specific cases.


 


SECTION
19.                     GOVERNING
LAW


 


This Plan and any agreements
or other documents hereunder shall be interpreted and construed in accordance
with the laws of the State of Delaware and applicable federal law.  The Committee may provide that any dispute
as to any Award shall be presented and determined in such forum as the
Committee may specify, including through binding arbitration.  Any reference in this Plan or in the
agreement or other document evidencing any Award to a provision of law or to a
rule or regulation shall be deemed to include any successor law, rule or
regulation of similar effect or applicability.


 


SECTION
20.                     SUCCESSORS


 


Upon
a reorganization, merger or consolidation of the Company as a result of which
the outstanding securities of the class then subject to Awards hereunder are
changed into or exchanged for securities issued by an entity (a “Surviving
Corporation”) other than the Company or as a result of which the Company
becomes a direct or indirect subsidiary of another entity whose equity
securities are publicly traded (similarly, a “Surviving Corporation”) and the
class of securities subject to Awards under this Plan cease to be publicly
traded, then unless the Company specifies otherwise in the agreement providing
for such transaction, either (a) this Plan and the Awards then outstanding
under this Plan shall be assumed by the Surviving Corporation and the equity
securities of the Surviving Corporation substituted for Shares issuable under
this Plan and such Awards, provided that the number of shares subject to the
Plan and such Awards and the terms of such Awards shall be adjusted in
accordance with Section 10 hereof, or (b) the Surviving Corporation shall
substitute equivalent awards for the Awards then outstanding under this
Plan, provided that the number
of shares subject to and the terms of such Awards shall be adjusted in
accordance with Section 10 hereof, or shall provide substantially
similar consideration to Participants for their Awards as was provided to
stockholders of the Company (after taking into account the existing provisions
of the Awards).


 


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