Exhibit 10.4


 


EZENIA! INC.


 


2004 EQUITY INCENTIVE PLAN


 





















 


TABLE OF CONTENTS


 


	
  1.

  	
  Purpose

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Term of the Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Stock Subject to the Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Administration

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Authorization of Grants

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Specific Terms of Awards

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Adjustment Provisions

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Settlement of Awards

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Reservation of Stock

  	
   

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Limitation of Rights in Stock; No Special
  Service Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  12.

  	
  Unfunded Status of Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  Nonexclusivity of the Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  Termination and Amendment of the Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  Notices and Other Communications

  	
   

  
	
   

  	
   

  	
   

  
	
  16.

  	
  Governing
  Law

  	
   

  



 





















 


EZENIA!
INC.


 


2004
EQUITY INCENTIVE PLAN


 


1.                                      Purpose


 


This
Plan is intended to encourage ownership of Stock by employees, consultants,
advisors and directors of the Company and its Affiliates and to provide
additional incentive for them to promote the success of the Company’s business
through the grant of Awards of or pertaining to shares of the Company’s
Stock.  The Plan is intended to be an
incentive stock option plan within the meaning of Section 422 of the Code,
but not all Awards are required to be Incentive Options.


 


2.                                      Definitions


 


As
used in this Plan, the following terms shall have the following meanings:


 


2.1.                              Accelerate, Accelerated, and Acceleration,
means: (a) when used with respect to an Option, that as of the time of
reference the Option will become exercisable with respect to some or all of the
shares of Stock for which it was not then otherwise exercisable by its terms;
and (b) when used with respect to Restricted Stock, that the Risk of
Forfeiture otherwise applicable to the Stock shall expire with respect to some
or all of the shares of Restricted Stock then still otherwise subject to the
Risk of Forfeiture.


 


2.2.                              Acquisition means a merger or consolidation of
the Company into another person (i.e., in which merger or consolidation the
Company does not survive) or the sale, transfer, or other disposition of all or
substantially all of the Company’s assets to one or more other persons in a
single transaction or series of related transactions, unless securities
possessing more than 50% of the total combined voting power of the survivor’s
or acquiror’s outstanding securities (or the securities of any parent thereof)
are held by a person or persons who held securities possessing more than 50% of
the total combined voting power of the Company immediately prior to that
transaction.


 


2.3.                              Affiliate means any corporation, partnership,
limited liability company, business trust, or other entity controlling,
controlled by or under common control with the Company.


 


2.4.                              Award means any grant or sale pursuant to
the Plan of Options, Restricted Stock, or Stock Grants.


 


2.5.                              Award Agreement means an agreement
between the Company and the recipient of an Award, setting forth the terms and
conditions of the Award.


 


2.6.                              Board means the Company’s Board of
Directors.


 





















 


2.7.                              Change of  Control means any
of the following transactions:


 


(a)                                  any Acquisition, or


 


(b)                                 any person or group of persons
(within the meaning of Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended and in effect from time to time), other than the
Company or an Affiliate, directly or indirectly acquires, including but not limited
to by means of merger or consolidation, beneficial ownership (determined
pursuant to Securities and Exchange Commission Rule 13d-3
promulgated under the said Exchange Act) of securities possessing more than 50%
of the total combined voting power of the Company’s outstanding securities
pursuant to a tender or exchange offer made directly to the Company’s
stockholders that the Board does not recommend such stockholders to accept,
other than a person or group of persons who fall into the following categories (i) the
Company or an Affiliate, (ii) an employee benefit plan of the Company or
any of its Affiliates, (iii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
Affiliates, or (iv) an underwriter temporarily holding securities pursuant
to an offering of such securities, or


 


(c)                                  over a period of 36 consecutive
months or less, there is a change in the composition of the Board such that a
majority of the Board members (rounded up to the next whole number, if a
fraction) ceases, by reason of one or more proxy contests for the election of
Board members, to be composed of individuals who either (A) have been
Board members continuously since the beginning of that period, or (B) have
been elected or nominated for election as Board members during such period by
at least a majority of the Board members described in the preceding clause (A) who
were still in office at the time that election or nomination was approved by
the Board, or


 


(d)                                 a majority of the Board votes in
favor of a decision that a Change in Control has occurred.


 


2.8.                              Code means the Internal Revenue Code of
1986, as amended from time to time, or any successor statute thereto, and any
regulations issued from time to time thereunder.


 


2.9.                              Committee means any committee of the Board
delegated the responsibility for the administration of the Plan, as provided in
Section 5 of the Plan.  For any
period during which no such committee is in existence “Committee” shall mean
the Board and all authority and responsibility assigned to the Committee under
the Plan shall be exercised, if at all, by the Board.


 


2.10.                        Company means Ezenia! Inc., a corporation organized under the laws of the State of
Delaware.


 


2.11.                        Grant Date means the date as of
which an Option is granted, as determined under Section 7.1(a).


 


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2.12.                        Incentive Option means an Option which
by its terms is to be treated as an “incentive stock option” within the meaning
of Section 422 of the Code.


 


2.13.                        Market Value means the value of a
share of Stock on a particular date determined by such methods or procedures as
may be established by the Committee. 
Unless otherwise determined by the Committee, the Market Value of Stock
as of any date is the closing price for the Stock as reported on the OTC
Bulletin Board (or on any national securities exchange or quotation system on
which the Stock is then listed) for that date or, if no closing price is
reported for that date, the closing price on the next preceding date for which
a closing price was reported.


 


2.14.                        Nonstatutory Option means any Option that
is not an Incentive Option.


 


2.15.                        Option means an option to purchase shares
of Stock.


 


2.16.                        Optionee means a Participant to whom an
Option shall have been granted under the Plan.


 


2.17.                        Participant means any holder of an outstanding
Award under the Plan.


 


2.18.                        Plan means this 2004 Equity Incentive Plan of the Company, as amended from time to
time, and including any attachments or addenda hereto.


 


2.19.                        Restricted Stock means a grant or sale
of shares of Stock to a Participant subject to a Risk of Forfeiture.


 


2.20.                        Restriction Period means the period of time, established by the Committee in
connection with an Award of Restricted Stock, during which the shares of
Restricted Stock are subject to a Risk of Forfeiture described in the
applicable Award Agreement.


 


2.21.                        Risk of  Forfeiture means a
limitation on the right of the Participant to retain Restricted Stock,
including a right in the Company to reacquire shares of Restricted Stock at
less than their then Market Value, arising because of the occurrence or
non-occurrence of specified events or conditions.


 


2.22.                        Stock means common stock, par value $.01 per share, of the Company.


 


2.23.                        Stock Grant means the grant of
shares of Stock not subject to restrictions or other forfeiture conditions.


 


2.24.                        Stockholders’ Agreement means any
agreement by and among the holders of at least a majority of the outstanding
voting securities of the Company and setting forth, among other provisions,
restrictions upon the transfer of shares of Stock or on the exercise of rights
appurtenant thereto (including but not limited to voting rights).


 


2.25.                        Ten Percent  Owner means a
person who owns, or is deemed within the meaning of Section 422(b)(6) of
the Code to own, stock possessing more than 10% of the


 


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total combined voting power of all classes of stock of the
Company (or any parent or subsidiary corporations of the Company, as defined in
Sections 424(e) and (f), respectively, of the Code).  Whether a person is a Ten Percent Owner shall
be determined with respect to an Option based on the facts existing immediately
prior to the Grant Date of the Option.


 


3.                                      Term of the Plan


 


Unless
the Plan shall have been earlier terminated by the Board, Awards may be granted
under this Plan at any time in the period commencing on the date of approval of
the Plan by the Board and ending immediately prior to the tenth anniversary of
the adoption of the Plan by the Board. 
Awards granted pursuant to the Plan within that period shall not expire
solely by reason of the termination of the Plan.  Awards of Incentive Options granted prior to
stockholder approval of the Plan are expressly conditioned upon such approval,
but in the event of the failure of the stockholders to approve the Plan shall
thereafter and for all purposes be deemed to constitute Nonstatutory Options.


 


4.                                      Stock
Subject to the Plan


 


At
no time shall the number of shares of Stock issued pursuant to or subject to
outstanding Awards granted under the Plan (including pursuant to Incentive
Options), nor the number of shares of Stock issued pursuant to Incentive
Options, exceed 7,500,000 shares
of Stock; subject, however, to the provisions of Section 8
of the Plan.  For purposes of applying
the foregoing limitation, (a) if any Option expires, terminates, or is
cancelled for any reason without having been exercised in full, or if any Award
of Restricted Stock is forfeited by the recipient, the shares not purchased by
the Optionee or which are forfeited by the recipient shall again be available
for Awards to be granted under the Plan and (b) if any Option is exercised
by delivering previously owned shares in payment of the exercise price therefor,
only the net number of shares, that is, the number of shares issued minus the
number received by the Company in payment of the exercise price, shall be
considered to have been issued pursuant to an Award granted under the Plan.  In addition, settlement of any Award shall
not count against the foregoing limitations except to the extent settled in the
form of Stock.  Shares of Stock issued
pursuant to the Plan may be either authorized but unissued shares or shares held
by the Company in its treasury.


 


5.                                      Administration


 


The
Plan shall be administered by the Committee; provided,
however, that at any time and on any one or more occasions the Board
may itself exercise any of the powers and responsibilities assigned the
Committee under the Plan and when so acting shall have the benefit of all of
the provisions of the Plan pertaining to the Committee’s exercise of its
authorities hereunder; and provided further, however,
that the Committee may delegate to an executive officer or officers the
authority to grant Awards hereunder to employees who are not officers, and to
consultants, in accordance with such guidelines as


 


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the Committee shall set forth at any time or from time to
time.  Subject to the provisions of the
Plan, the Committee shall have complete authority, in its discretion, to make
or to select the manner of making all determinations with respect to each Award
to be granted by the Company under the Plan including the employee, consultant
or director to receive the Award and the form of Award.  In making such determinations, the Committee
may take into account the nature of the services rendered by the respective
employees, consultants, and directors, their present and potential
contributions to the success of the Company and its Affiliates, and such other
factors as the Committee in its discretion shall deem relevant.  Subject to the provisions of the Plan, the
Committee shall also have complete authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine
the terms and provisions of the respective Award Agreements (which need not be
identical), and to make all other determinations necessary or advisable for the
administration of the Plan.  The
Committee’s determinations made in good faith on matters referred to in the
Plan shall be final, binding and conclusive on all persons having or claiming
any interest under the Plan or an Award made pursuant hereto.


 


6.                                      Authorization
of Grants


 


6.1.                              Eligibility. 
The Committee may grant from time to time and at any time prior to the
termination of the Plan one or more Awards, either alone or in combination with
any other Awards, to any employee of or consultant or advisor to one or more of
the Company and its Affiliates or to any non-employee member of the Board or of
any board of directors (or similar governing authority) of any Affiliate.
However, only employees of the Company, and of any parent or subsidiary
corporations of the Company, as defined in Sections 424(e) and (f),
respectively, of the Code, shall be eligible for the grant of an Incentive
Option.  Further, in no event shall the
number of shares of Stock covered by Options or other Awards granted to any one
person in any one calendar year exceed 25% of the aggregate number of shares of
Stock subject to the Plan.


 


6.2.                              General Terms  of  Awards.  Each grant of an Award shall be subject to
all applicable terms and conditions of the Plan (including but not limited to
any specific terms and conditions applicable to that type of Award set out in
the following Section), and such other terms and conditions, not inconsistent
with the terms of the Plan, as the Committee may prescribe.  No prospective Participant shall have any rights
with respect to an Award, unless and until such Participant has executed an
agreement evidencing the Award, delivered a fully executed copy thereof to the
Company, and otherwise complied with the applicable terms and conditions of
such Award.


 


6.3.                              Effect of  Termination  of
Employment,  Etc. Unless the Committee shall provide otherwise
with respect to any Award, if the Participant’s employment or other association
with the Company and its Affiliates ends for any reason, including because of
the Participant’s employer ceasing to be an Affiliate, (a) any outstanding
Option of the Participant shall cease to be exercisable in any respect not
later than 90 days following that event and, for the period it remains
exercisable following that event, shall be exercisable only to the extent
exercisable at the date of that event, and (b) any other


 


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outstanding Award of the Participant shall be forfeited or
otherwise subject to return to or repurchase by the Company on the terms
specified in the applicable Award Agreement. 
Military or sick leave or other bona fide leave shall not be deemed a
termination of employment or other association, provided
that it does not exceed the longer of ninety (90) days or the period during
which the absent Participant’s reemployment rights, if any, are guaranteed by
statute or by contract.


 


6.4.                              Non-Transferability of  Awards.  Except as otherwise provided in this Section 6.4,
Awards shall not be transferable, and no Award or interest therein may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution.  All of a Participant’s rights in any Award
may be exercised during the life of the Participant only by the Participant or
the Participant’s legal representative. 
However, the Committee may, at or after the grant of an Award of a
Nonstatutory Option, or shares of Restricted Stock, provide that such Award may
be transferred by the recipient to a family member; provided,
however, that any such transfer is without payment of any
consideration whatsoever and that no transfer shall be valid unless first
approved by the Committee, acting in its sole discretion.  For this purpose, “family member” means any
child, stepchild, grandchild, parent, stepparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, any person sharing the employee’s household (other than a tenant
or employee), a trust in which the foregoing persons have more than fifty (50)
percent of the beneficial interests, a foundation in which the foregoing
persons (or the Participant) control the management of assets, and any other
entity in which these persons (or the Participant) own more than fifty (50)
percent of the voting interests.


 


7.                                      Specific
Terms of Awards


 


7.1.                              Options.


 


(a)                                  Date of  Grant.  The granting of an Option shall take place at
the time specified in the Award Agreement. 
Only if expressly so provided in the applicable Award Agreement shall
the Grant Date be the date on which the Award Agreement shall have been duly
executed and delivered by the Company and the Optionee.


 


(b)                                 Exercise Price.  The price at which shares of Stock may be
acquired under each Incentive Option shall be not less than 100% of the Market
Value of Stock on the Grant Date, or not less than 110% of the Market Value of
Stock on the Grant Date if the Optionee is a Ten Percent Owner.  The price at which shares may be acquired
under each Nonstatutory Option shall not be so limited solely by reason of this
Section.


 


(c)                                  Option Period.  No Incentive Option may be exercised on or
after the tenth anniversary of the Grant Date, or on or after the fifth
anniversary of the Grant Date if the Optionee is a Ten Percent Owner.  The Option period under each Nonstatutory
Option shall not be so limited solely by reason of this Section.


 


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(d)                                 Exercisability. 
An Option may be immediately exercisable or become exercisable in such
installments, cumulative or non-cumulative, as the Committee may
determine.  In the case of an Option not
otherwise immediately exercisable in full, the Committee may Accelerate such
Option in whole or in part at any time; provided, however,
that in the case of an Incentive Option, any such Acceleration of the Option
would not cause the Option to fail to comply with the provisions of Section 422
of the Code or the Optionee consents to the Acceleration.


 


(e)                                  Method of  Exercise.  An Option may be exercised by the Optionee
giving written notice, in the manner provided in Section 16, specifying
the number of shares with respect to which the Option is then being
exercised.  The notice shall be
accompanied by payment in the form of cash or check payable to the order of the
Company in an amount equal to the exercise price of the shares to be purchased
or, unless prohibited by applicable law, the Optionee’s executed full recourse
promissory note at a market rate of interest in the principal amount equal to
the exercise price of the shares to be purchased and otherwise in such form as
the Committee shall have approved.


 


Receipt by the Company of such notice and payment in any
authorized or combination of authorized means shall constitute the exercise of
the Option.  Within thirty (30) days
thereafter but subject to the remaining provisions of the Plan, the Company
shall deliver or cause to be delivered to the Optionee or his agent a
certificate or certificates for the number of shares then being purchased.  Such shares shall be fully paid and
nonassessable.


 


(f)            Limit on  Incentive  Option  Characterization.  An Incentive Option shall be considered to be
an Incentive Option only to the extent that the number of shares of Stock for
which the Option first becomes exercisable in a calendar year do not have an
aggregate Market Value (as of the date of the grant of the Option) in excess of
the “current limit”.  The current limit
for any Optionee for any calendar year shall be $100,000 minus
the aggregate Market Value at the date of grant of the number of shares of
Stock available for purchase for the first time in the same year under each
other Incentive Option previously granted to the Optionee under the Plan, and
under each other incentive stock option previously granted to the Optionee
under any other incentive stock option plan of the Company and its Affiliates,
after December 31, 1986.  Any shares
of Stock which would cause the foregoing limit to be violated shall be deemed
to have been granted under a separate Nonstatutory Option, otherwise identical
in its terms to those of the Incentive Option.


 


(g)                                 Notification of  Disposition.  Each person exercising any Incentive Option
granted under the Plan shall be deemed to have covenanted with the Company to
report to the Company any disposition of such shares prior to the expiration of
the holding periods specified by Section 422(a)(1) of the Code and,
if and to the extent that the realization of income in such a disposition
imposes upon the Company federal, state, local or other withholding tax
requirements, or any such withholding is required to secure 


 


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for the Company an otherwise available tax deduction, to
remit to the Company an amount in cash sufficient to satisfy those
requirements.


 


7.2.                              Restricted Stock.


 


(a)                                  Purchase Price.  Shares of Restricted Stock shall be issued
under the Plan for such consideration, in cash, other property or services, or
any combination thereof, as is determined by the Committee.


 


(b)                                 Issuance of  Certificates.  Each Participant receiving a Restricted Stock
Award, subject to subsection (c) below, shall be issued a stock
certificate in respect of such shares of Restricted Stock.  Such certificate shall be registered in the
name of such Participant, and, if applicable, shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such Award
substantially in the following form:


 


The
transferability of this certificate and the shares represented by this
certificate are subject to the terms and conditions of Ezenia! Inc. 2004 Equity Incentive Plan and an Award
Agreement entered into by the registered owner and Ezenia! Inc.  Copies of such Plan and Agreement are on file
in the offices of the Company.


 


(c)                                  Escrow of  Shares.  The Committee may require that the stock
certificates evidencing shares of Restricted Stock be held in custody by a
designated escrow agent (which may but need not be the Company) until the
restrictions thereon shall have lapsed, and that the Participant deliver a
stock power, endorsed in blank, relating to the Stock covered by such Award.


 


(d)                                 Restrictions and  Restriction  Period.  During the Restriction Period applicable to
shares of Restricted Stock, such shares shall be subject to limitations on
transferability and a Risk of Forfeiture arising on the basis of such
conditions related to the performance of services, Company or Affiliate
performance or otherwise as the Committee may determine and provide for in the
applicable Award Agreement.  Any such
Risk of Forfeiture may be waived or terminated, or the Restriction Period
shortened, at any time by the Committee on such basis as it deems appropriate.


 


(e)                                  Rights Pending  Lapse  of
Risk  of  Forfeiture  or  Forfeiture  of  Award.  Except as otherwise provided in the Plan or
the applicable Award Agreement, at all times prior to lapse of any Risk of
Forfeiture applicable to, or forfeiture of, an Award of Restricted Stock, the
Participant shall have all of the rights of a stockholder of the Company,
including the right to vote, and the right to receive any dividends with
respect to, the shares of Restricted Stock. 
The Committee, as determined at the time of Award, may permit or require
the payment of cash dividends to be deferred and, if the Committee so
determines, reinvested in additional Restricted Stock to the extent shares are
available under Section 4.


 


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(f)                                    Lapse of  Restrictions.  If and when the Restriction Period expires
without a prior forfeiture of the Restricted Stock, the certificates for such
shares shall be delivered to the Participant promptly if not theretofore so
delivered.


 


7.3.                              Stock Grants. Stock Grants shall
be awarded solely in recognition of significant contributions to the success of
the Company or its Affiliates, in lieu of compensation otherwise already due
and in such other limited circumstances as the Committee deems
appropriate.  Stock Grants shall be made
without forfeiture conditions of any kind.


 


7.4.                              Awards to  Participants  Outside
the  United  States. 
The Committee may modify the terms of any Award under the Plan granted
to a Participant who is, at the time of grant or during the term of the Award,
resident or primarily employed outside of the United States in any manner
deemed by the Committee to be necessary or appropriate in order that the Award
shall conform to laws, regulations, and customs of the country in which the
Participant is then resident or primarily employed, or so that the value and
other benefits of the Award to the Participant, as affected by foreign tax laws
and other restrictions applicable as a result of the Participant’s residence or
employment abroad, shall be comparable to the value of such an Award to a
Participant who is resident or primarily employed in the United States.  An Award may be modified under this Section 7.4
in a manner that is inconsistent with the express terms of the Plan, so long as
such modifications will not contravene any applicable law or regulation.  The Committee may establish supplements to,
or amendments, restatements, or alternative versions of the Plan for the
purpose of granting and administrating any such modified Award.  No such modification, supplement, amendment,
restatement or alternative version may increase the share limit of Section 4.


 


8.                                      Adjustment Provisions


 


8.1.                              Adjustment for  Corporate  Actions.
All of the share numbers set forth in the Plan reflect the capital structure of
the Company as of December 31, 2004.  Subject
to Section 8.2, if subsequent to that date the outstanding shares of Stock
(or any other securities covered by the Plan by reason of the prior application
of this Section) are increased, decreased, or exchanged for a different number
or kind of shares or other securities, or if additional shares or new or
different shares or other securities are distributed with respect to shares of
Stock, through merger, consolidation, sale of all or substantially all the
property of the Company, reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split, or other similar distribution
with respect to such shares of Stock, an appropriate and proportionate
adjustment will be made in (i) the maximum numbers and kinds of shares
provided in Section 4, (ii) the numbers and kinds of shares or other
securities subject to the then outstanding Awards, (iii) the exercise
price for each share or other unit of any other securities subject to then
outstanding Options (without change in the aggregate purchase price as to which
such Options remain exercisable), and (iv) the repurchase price of each
share of Restricted Stock then subject to a Risk of Forfeiture in the form of a
Company repurchase right.


 


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8.2.                              Change in  Control. Subject
to any provisions of then outstanding Awards granting greater rights to the
holders thereof, in the event of a Change in Control (including a Change of
Control which is an Acquisition), (a) any then outstanding Options shall
Accelerate in full, whether or not assumed by the acquiring entity or replaced
by comparable options to purchase shares of the capital stock of the successor
or acquiring entity or parent thereof, and to the extent not assumed or
replaced on the Acquisition shall then (or after a reasonable period following
the Acquisition, as determined by the Committee) terminate to the extent not
exercised and (b) any then Restricted Stock shall Accelerate in full,
whether or not the Company’s rights to reacquire such shares of Restricted
Stock on occurrence of the applicable Risk of Forfeiture with respect to those
shares are assigned to the acquiring entity. 
Each outstanding Option that is assumed in connection with an
Acquisition, or is otherwise to continue in effect subsequent to the
Acquisition, will be appropriately adjusted, immediately after the Acquisition,
as to the number and class of securities and the price at which it may be
exercised in accordance with Section 8.1.


 


8.3.                              Dissolution or  Liquidation.  Upon dissolution or liquidation of the Company,
other than as part of an Acquisition or similar transaction, each outstanding
Option shall terminate, but the Optionee shall have the right, immediately
prior to the dissolution or liquidation, to exercise the Option to the extent
exercisable on the date of dissolution or liquidation.


 


8.4.                              Adjustment of  Awards  Upon
the  Occurrence  of  Certain  Unusual  or  Nonrecurring
Events. In the event of any corporate action not specifically covered by
the preceding Sections, including but not limited to an extraordinary cash
distribution on Stock, a corporate separation or other reorganization or
liquidation, the Committee may make such adjustment of outstanding Awards and
their terms, if any, as it, in its sole discretion, may deem equitable and
appropriate in the circumstances.  The
Committee may make adjustments in the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or nonrecurring events
(including, without limitation, the events described in this Section) affecting
the Company or the financial statements of the Company or of changes in
applicable laws, regulations, or accounting principles, whenever the Committee
determines that such adjustments are appropriate in order to prevent dilution
or enlargement of the benefits or potential benefits intended to be made
available under the Plan.


 


8.5.                              Related Matters.  Any adjustment in Awards made pursuant to
this Section 8 shall be determined and made, if at all, by the Committee
and shall include any correlative modification of terms, including of Option
exercise prices, rates of vesting or exercisability, Risks of Forfeiture and
applicable repurchase prices for Restricted Stock, which the Committee may deem
necessary or appropriate so as to ensure the rights of the Participants in
their respective Awards are not substantially diminished nor enlarged as a
result of the adjustment and corporate action other than as expressly
contemplated in this Section 8.  No
fraction of a share shall be purchasable or deliverable upon exercise, but in
the event any adjustment hereunder of the number of shares covered by an Award
shall cause such number to include a fraction of a share, such number of shares
shall be


 


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adjusted to the nearest smaller whole number of shares.  No adjustment of an Option exercise price per
share pursuant to this Section 8 shall result in an exercise price which
is less than the par value of the Stock.


 


9.                                      Settlement of Awards


 


9.1.                              Violation of  Law.  Notwithstanding any other provision of the
Plan or the relevant Award Agreement, if, at any time, in the reasonable
opinion of the Company, the issuance of shares of Stock covered by an Award may
constitute a violation of law, then the Company may delay such issuance and the
delivery of a certificate for such shares until (i) approval shall have
been obtained from such governmental agencies, other than the Securities and
Exchange Commission, as may be required under any applicable law, rule, or
regulation and (ii) in the case where such issuance would constitute a
violation of a law administered by or a regulation of the Securities and
Exchange Commission, one of the following conditions shall have been satisfied:


 


(a)                                  the shares are at the time of the
issue of such shares effectively registered under the Securities Act of 1933;
or


 


(b)                                 the Company shall have determined,
on such basis as it deems appropriate (including an opinion of counsel in form
and substance satisfactory to the Company) that the sale, transfer, assignment,
pledge, encumbrance or other disposition of such shares or such beneficial
interest, as the case may be, does not require registration under the
Securities Act of 1933, as amended or any applicable state securities laws.


 


The
Company shall make all reasonable efforts to bring about the occurrence of said
events.


 


9.2.                              Corporate Restrictions  on  Rights
in  Stock. Any Stock to be issued pursuant to Awards granted under
the Plan shall be subject to all restrictions upon the transfer thereof which
may be now or hereafter imposed by the charter, certificate or articles, and
by-laws, of the Company.  Whenever Stock
is to be issued pursuant to an Award, if the Committee so directs at or after
grant, the Company shall be under no obligation to issue such shares until such
time, if ever, as the recipient of the Award (and any person who exercises any
Option, in whole or in part), shall have become a party to and bound by the
Stockholders’ Agreement, if any.  In the
event of any conflict between the provisions of this Plan and the provisions of
the Stockholders’ Agreement, the provisions of the Stockholders’ Agreement
shall control except as required to fulfill the intention that this Plan
constitute an incentive stock option plan within the meaning of Section 422
of the Code, but insofar as possible the provisions of the Plan and such
Agreement shall be construed so as to give full force and effect to all such
provisions.


 


9.3.                              Investment Representations.  The Company shall be under no obligation to
issue any shares covered by any Award unless the shares to be issued pursuant
to Awards granted under the Plan have been effectively registered under the
Securities Act of 1933, as amended, or the Participant shall have made such
written representations to the Company (upon which the Company believes it may
reasonably rely) as the Company


 


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may deem necessary or appropriate for purposes of confirming
that the issuance of such shares will be exempt from the registration
requirements of that Act and any applicable state securities laws and otherwise
in compliance with all applicable laws, rules and regulations, including
but not limited to that the Participant is acquiring the shares for his or her
own account for the purpose of investment and not with a view to, or for sale
in connection with, the distribution of any such shares.


 


9.4.                              Registration. 
If the Company shall deem it necessary or desirable to register under
the Securities Act of 1933, as amended or other applicable statutes any shares
of Stock issued or to be issued pursuant to Awards granted under the Plan, or
to qualify any such shares of Stock for exemption from the Securities Act of
1933, as amended or other applicable statutes, then the Company shall take such
action at its own expense.  The Company
may require from each recipient of an Award, or each holder of shares of Stock
acquired pursuant to the Plan, such information in writing for use in any
registration statement, prospectus, preliminary prospectus or offering circular
as is reasonably necessary for that purpose and may require reasonable
indemnity to the Company and its officers and directors from that holder
against all losses, claims, damage and liabilities arising from use of the
information so furnished and caused by any untrue statement of any material
fact therein or caused by the omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made.  In addition, the Company may require of any
such person that he or she agree that, without the prior written consent of the
Company or the managing underwriter in any public offering of shares of Stock,
he or she will not sell, make any short sale of, loan, grant any option for the
purchase of, pledge or otherwise encumber, or otherwise dispose of, any shares
of Stock during the 180 day period commencing on the effective date of the
registration statement relating to the underwritten public offering of
securities. Without limiting the generality of the foregoing provisions of this
Section 9.4, if in connection with any underwritten public offering of
securities of the Company the managing underwriter of such offering requires
that the Company’s directors and officers enter into a lock-up agreement
containing provisions that are more restrictive than the provisions set forth
in the preceding sentence, then (a) each holder of shares of Stock
acquired pursuant to the Plan (regardless of whether such person has complied
or complies with the provisions of clause (b) below) shall be bound by,
and shall be deemed to have agreed to, the same lock-up terms as those to which
the Company’s directors and officers are required to adhere; and (b) at
the request of the Company or such managing underwriter, each such person shall
execute and deliver a lock-up agreement in form and substance equivalent to
that which is required to be executed by the Company’s directors and officers.


 


9.5.                              Placement of  Legends;  Stop
Orders;  etc.  Each share of
Stock to be issued pursuant to Awards granted under the Plan may bear a
reference to the investment representation made in accordance with Section 9.3
in addition to any other applicable restriction under the Plan, the terms of the
Award and if applicable under the Stockholders’ Agreement and to the fact that
no registration statement has been filed with the Securities and Exchange
Commission in respect to such shares of Stock. 
All certificates for shares of Stock or other securities delivered under
the Plan shall be subject


 


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to such stock transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and other
requirements of any stock exchange upon which the Stock is then listed, and any
applicable federal or state securities law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.


 


9.6.                              Tax Withholding. Whenever shares
of Stock are issued or to be issued pursuant to Awards granted under the Plan,
the Company shall have the right to require the recipient to remit to the
Company an amount sufficient to satisfy federal, state, local or other
withholding tax requirements if, when, and to the extent required by law
(whether so required to secure for the Company an otherwise available tax
deduction or otherwise) prior to the delivery of any certificate or
certificates for such shares.  The
obligations of the Company under the Plan shall be conditional on satisfaction
of all such withholding obligations and the Company shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the recipient of an Award.  However, in such cases Participants may
elect, subject to the approval of the Committee, acting in its sole discretion,
to satisfy an applicable withholding requirement, in whole or in part, by
having the Company withhold shares to satisfy their tax obligations.  Participants may only elect to have Shares
withheld having a Market Value on the date the tax is to be determined equal to
the minimum statutory total tax which could be imposed on the transaction.  All elections shall be irrevocable, made in writing,
signed by the Participant, and shall be subject to any restrictions or
limitations that the Committee deems appropriate.


 


10.                               Reservation of Stock


 


The
Company shall at all times during the term of the Plan and any outstanding
Awards granted hereunder reserve or otherwise keep available such number of
shares of Stock as will be sufficient to satisfy the requirements of the Plan
(if then in effect) and the Awards and shall pay all fees and expenses
necessarily incurred by the Company in connection therewith.


 


11.                               Limitation
of Rights in Stock; No Special Service Rights


 


A
Participant shall not be deemed for any purpose to be a stockholder of the
Company with respect to any of the shares of Stock subject to an Award, unless
and until a certificate shall have been issued therefor and delivered to the
Participant or his agent.  Any Stock to
be issued pursuant to Awards granted under the Plan shall be subject to all
restrictions upon the transfer thereof which may be now or hereafter imposed by
the Certificate of Incorporation and the By-laws of the Company.  Nothing contained in the Plan or in any Award
Agreement shall confer upon any recipient of an Award any right with respect to
the continuation of his or her employment or other association with the Company
(or any Affiliate), or interfere in any way with the right of the Company (or
any Affiliate), subject to the terms of any separate employment or consulting
agreement or provision of law or corporate articles or by-laws to the contrary,
at any time to terminate such employment or consulting agreement or to increase
or decrease, or


 


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otherwise adjust, the other terms and conditions of the
recipient’s employment or other association with the Company and its
Affiliates.


 


12.                               Unfunded
Status of Plan


 


The
Plan is intended to constitute an “unfunded” plan for incentive compensation,
and the Plan is not intended to constitute a plan subject to the provisions of
the Employee Retirement Income Security Act of 1974, as amended.  With respect to any payments not yet made to
a Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.  In its sole discretion, the Committee
may authorize the creation of trusts or other arrangements to meet the
obligations created under the Plan to deliver Stock or payments with respect to
Options hereunder, provided, however,
that the existence of such trusts or other arrangements is consistent with the
unfunded status of the Plan.


 


13.                               Nonexclusivity
of the Plan


 


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


 


14.                               Termination
and Amendment of the Plan


 


The
Board may at any time terminate the Plan or make such modifications of the Plan
as it shall deem advisable.  Unless the
Board otherwise expressly provides, no amendment of the Plan shall affect the
terms of any Award outstanding on the date of such amendment.  In any case, no termination or amendment of
the Plan may, without the consent of any recipient of an Award granted
hereunder, adversely affect the rights of the recipient under such Award.


 


The
Committee may amend the terms of any Award theretofore granted, prospectively
or retroactively, provided that the Award as amended is consistent with the
terms of the Plan, but no such amendment shall impair the rights of the
recipient of such Award without his or her consent.


 


15.                               Notices and
Other Communications


 


Any
notice, demand, request or other communication hereunder to any party shall be
deemed to be sufficient if contained in a written instrument delivered in
person or duly sent by first class registered, certified or overnight mail,
postage prepaid, or telecopied with a confirmation copy by regular, certified
or overnight mail, addressed or telecopied, as the case may be, (i) if to
the recipient of an Award, at his or her residence address last filed with the
Company and (ii) if to the Company, at its principal place of business,
addressed to the attention of its Treasurer, or to such other address or
telecopier number,


 


14





















 


as the case may be, as the addressee may have designated by
notice to the addressor.  All such
notices, requests, demands and other communications shall be deemed to have
been received: (i) in the case of personal delivery, on the date of such
delivery; (ii) in the case of mailing, when received by the addressee; and
(iii) in the case of facsimile transmission, when confirmed by facsimile
machine report.


 


16.                               Governing Law


 


The
Plan and all Award Agreements and actions taken thereunder shall be governed,
interpreted and enforced in accordance with the laws of the State of Delaware, without regard to the
conflict of laws principles thereof.


 


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