Exhibit
10.41


 


TORNIER N.V.

2010 INCENTIVE PLAN


 


1.             BACKGROUND
AND PURPOSE


 


The
purpose of this Plan is to promote the interests of the Company and its
Affiliates by authorizing the Committee to grant Awards to Eligible Recipients
in order to (i) attract and retain such individuals, (ii) provide an
additional incentive to such individuals to work to increase the value of
Stock, and (iii) provide such individuals with a stake in the future of
the Company which corresponds to the stake of each of the Company’s
shareholders.  The Plan shall become
effective as of the Effective Date, provided, however,
that no grants of Awards shall be made under this Plan until the IPO Effective
Date.  As of the IPO Effective Date, no
further grants shall be made under the Prior Plan.


 


2.             DEFINITIONS


 


2.1.          Adverse Action.  Adverse Action means any action or conduct by
a Participant that the Committee, in its sole discretion, determines to be
injurious, detrimental, prejudicial, or adverse to the interests of the Company
or any Affiliate, including: (i) disclosing confidential information of
the Company or any Affiliate to any person not authorized by the Company or
Affiliate to receive it, (ii) engaging, directly or indirectly, in any
commercial activity that in the judgment of the Committee competes with the
business of the Company or any Affiliate, or (iii) interfering with the
relationships of the Company or any Affiliate and their respective employees,
independent contractors, customers, prospective customers, and vendors.


 


2.2.          Affiliate.  Affiliate means any other entity that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the Company and any other
entity determined by the Committee to be an “Affiliate” for purposes of this
Plan.


 


2.3.          Award.  Award means, individually or collectively, an
Option, Stock Appreciation Right, Stock Grant, Stock Unit Grant, Cash-Based
Award, or Other Stock-Based Award, in each case granted to an Eligible
Recipient pursuant to this Plan.


 


2.4.          Award Agreement.  Award Agreement means either: (i) a
written or electronic agreement entered into by the Company and a Participant
setting forth the terms and provisions applicable to an Award granted under
this Plan, including any amendment or modification thereof, or (ii) a
written or electronic certificate or statement issued by the Company to a
Participant describing the terms and provisions of such an Award, including any
amendment or modification thereof.  The
Committee may provide for the use of electronic, Internet, or other
non-paper Award Agreements, and the use of electronic, Internet, or other
non-paper means for the acceptance thereof and actions thereunder by a
Participant.


 


2.5.          Board.  Board means the Management Board of the
Company or any successor thereto, provided, that
if the Management Board does not exist, “Board” means the Board of Directors of
the Company.


 

















 


2.6.          Cash-Based Award.  Cash-Based Award means an Award, denominated
and paid in cash, not otherwise described by the terms of this Plan, granted
pursuant to Section 9.1 of this Plan.


 


2.7.          Cause.  Cause means with respect to any Participant: (i) the
Participant has engaged in conduct that in the judgment of the Committee
constitutes gross negligence, misconduct, or gross neglect in the performance
of the Participant’s duties and responsibilities, including any breach of the
policies of the Company, including but not limited to the Company’s Code of
Conduct on Insider Trading and Confidentiality and the Company’s Code of
Conduct on Interactions with Health Care Professionals, and conduct resulting
or intending to result directly or indirectly in gain or personal enrichment
for the Participant at the Company’s expense, (ii) the Participant has
been convicted of or has pled guilty to a felony for fraud, embezzlement, or
theft, (iii) the Participant has engaged in a breach of any policy of the
Company for which termination of employment or service is a permissible
consequence, or (iv) the Participant has engaged in any conduct that would
constitute “cause” under the terms of his or her employment or consulting
agreement, if any; provided, however, that if, subsequent to the
Participant’s voluntary termination for any reason or involuntary termination
by the Employer without Cause, it is discovered that the Participant’s
employment could have been terminated for Cause, such Participant’s employment
shall be deemed to have been terminated for Cause for all purposes under this
Plan.


 


2.8.          Change in Control.  Change in Control means (i) the
acquisition (other than from the Company) after the date hereof by any person,
entity, or “group” within the meaning of Section 13(d)(3) or 14(d)(2) of
the 1934 Act (excluding, for this purpose, the Company or its subsidiaries, any
employee benefit plan of the Company or its Affiliates) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifty
percent (50%) or more of either the then-outstanding ordinary shares or the
combined voting power of the Company’s then-outstanding capital stock entitled
to vote generally in the election of directors, (ii) individuals who, as
of the date hereof, constitute the Board (the “Incumbent Board”) ceasing
for any reason to constitute at least a majority of the Board, provided that
any person becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s shareholders was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board (other
than an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the directors of the Company) shall be, for purposes of this
Plan, considered as though such person were a member of the Incumbent Board, (iii) consummation
of a reorganization, merger, or consolidation, in each case, with respect to
which persons who were the shareholders of the Company immediately prior to
such reorganization, merger, or consolidation do not, immediately thereafter,
own more than fifty percent (50%) of the combined voting power entitled to vote
generally in the election of directors of the then-outstanding voting
securities of the reorganized, merged, consolidated, or other surviving
corporation (or its direct or indirect parent corporation), (iv) approval
by the shareholders of the Company of a liquidation or dissolution of the
Company, or (v) the consummation of the sale of all or substantially all
of the assets of the Company with respect to which persons who were the
shareholders of the Company immediately prior to such sale do not, immediately
thereafter, own more than fifty percent (50%) of the combined voting power
entitled to vote generally in the election of directors


 


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of
the then-outstanding voting securities of the acquiring corporation (or its
direct or indirect parent corporation).


 


2.9.          Code.  Code means the Internal Revenue Code of 1986,
as amended.  Any reference to a section
of the Code herein shall be deemed to include a reference to any applicable
regulations thereunder and any successor or amended section of the Code.


 


2.10.        Committee.  Committee means the Compensation Committee of
the Board or a subcommittee thereof, or any other committee comprised solely of
directors designated by the Board to administer this Plan who are (i) “non-employee
directors” within the meaning of Rule 16b-3 under the Exchange Act and (ii) “independent
directors” as defined in the Listing Rules of the Nasdaq Global Market (or
other applicable exchange or market on which the Stock may be traded or
quoted).  The members of the Committee
shall be appointed from time to time by and shall serve at the discretion of
the Board.  If the Committee does not
exist or cannot function for any reason, the Board may take any action under
this Plan that would otherwise be the responsibility of the Committee, except
as otherwise provided in the Plan.  Any
action duly taken by the Committee shall be valid and effective, whether or not
the members of the Committee at the time of such action are later determined
not to have satisfied the requirements of membership provided herein.


 


2.11.        Company.  Company means Tornier N.V., a public limited
liability company (naamloze vennootschap)
organized under the laws of The Netherlands or any successor thereto.


 


2.12.        Consultant.  Consultant means a person engaged to provide
consulting or advisory services (other than as an Employee or a Non-Employee
Director) to the Company or any Affiliate that: (i) are not in connection
with the offer and sale of the Company’s securities in a capital raising
transaction, and (ii) do not directly or indirectly promote or maintain a
market for the Company’s securities.


 


2.13.        Director.  Director means any member of the Board.


 


2.14.        Disability.  Disability means any medically determinable
physical or mental impairment which can be expected to result in death or can
be expected to last for a continuous period of not less than twelve (12) months
and which renders a Participant unable to engage in any substantial gainful
activity.  The Committee shall determine
whether a Participant has a Disability. 
If a Participant disputes such determination, the issue shall be
submitted to a competent licensed physician appointed by the Board, and the
physician’s determination as to whether a Participant has a Disability shall be
binding on the Company and the Participant.


 


2.15.        Disqualifying Disposition.  Disqualifying Disposition means any disposition
(including any sale) of Stock acquired upon the exercise of an ISO made within
the period that ends either (i) two (2) years after the date the
Participant was granted the ISO or (ii) one (1) year after the date
the Participant acquired Stock by exercising the ISO.


 


2.16.        Effective Date.  Effective Date means the date on which the
Plan is approved by a majority of the Company’s shareholders.


 


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2.17.        Eligible Recipients.  Eligible Recipients means all Employees, all
Non-Employee Directors, and all Consultants.


 


2.18.        Employee.  Employee means any individual performing
services for the Company or an Affiliate and designated as an employee of the
Company or an Affiliate on the payroll records thereof.  An Employee shall not include any individual
during any period he or she is classified or treated by the Company or an
Affiliate as an independent contractor, a consultant, or any employee of an
employment, consulting, or temporary agency or any other entity other than the
Company or an Affiliate, without regard to whether such individual is
subsequently determined to have been, or is subsequently retroactively
reclassified as a common-law employee of the Company or an Affiliate during
such period.  An individual shall not
cease to be an Employee in the case of: (i) any leave of absence approved
by the Company, or (ii) transfers between locations of the Company or
between the Company or any Affiliate. 
For purposes of ISOs, no such leave may exceed ninety (90) days, unless
reemployment upon expiration of such leave is guaranteed by statute or
contract.  If reemployment upon
expiration of a leave of absence approved by the Company or an Affiliate, as
applicable, is not so guaranteed, then three (3) months following the
ninety-first (91st) day of such leave, any ISO held by a Participant shall
cease to be treated as an ISO and shall be treated for tax purposes as a
Non-ISO.  Neither service as a
Non-Employee Director nor payment of a Non-Employee Director’s retainer or
other fee by the Company shall be sufficient to constitute “employment” by the
Company.


 


2.19.        Fair Market Value.  Fair Market Value means with respect to the
Stock, as of any date: (i) the closing sale price of the Stock as of such
date at the end of the regular trading session, as reported by the Nasdaq Stock
Market, the New York Stock Exchange, the American Stock Exchange, or any
national securities exchange on which the Stock is then listed (or, if no
shares were traded on such date, as of the next preceding date on which there
was such a trade), (ii) if the Stock is not so listed, admitted to
unlisted trading privileges, or reported on any national exchange, the closing
sale price as of such date at the end of the regular trading session, as reported
by the OTC Bulletin Board or the Pink Sheets LLC, or other comparable service
(or, if no shares were traded or quoted on such date, as of the next preceding
date on which there was such a trade or quote); or (iii) if the Stock is
not so listed or reported, such price as the Committee determines in good faith
in the exercise of its reasonable discretion, and consistent with the
definition of “fair market value” under Section 409A of the Code.  If determined by the Committee, such
determination shall be final, conclusive, and binding for all purposes and on
all persons, including the Company, the shareholders of the Company, the
Participants, and their respective successors-in-interest.  No member of the Committee shall be liable
for any determination regarding the Fair Market Value of the Stock that is made
in good faith.


 


2.20.        Full Value Award.  Full Value Award means an Award other than in
the form of an Option or Stock Appreciation Right, and which is settled by the
issuance of shares of Stock.


 


2.21.        Grant Date.  Grant Date means the date an Award is granted
to a Participant pursuant to this Plan.


 


2.22.        IPO.  IPO means an initial underwritten public
offering of the Company’s equity securities pursuant to an effective Form S-1
registration statement filed under the 1933 Act.


 


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2.23.        IPO Effective Date.  IPO Effective Date means the effective date
of an IPO.


 


2.24.        ISO.  ISO means an option granted under this Plan
to purchase Stock which is intended to satisfy the requirements of Section 422
of the Code.


 


2.25.        1933 Act.  1933 Act means the Securities Act of 1933, as
amended.  Any reference to a section of
the 1933 Act herein shall be deemed to include a reference to any applicable
regulations thereunder and any successor or amended section of the 1933 Act.


 


2.26.        1934 Act.  1934 Act means the Securities Exchange Act of
1934, as amended.  Any reference to a
section of the 1934 Act herein shall be deemed to include a reference to any
applicable regulations thereunder and any successor or amended section of the
1934 Act.


 


2.27.        Non-Employee Director.  Non-Employee Director means any Director who
is not an Employee of the Company or an Affiliate of the Company.


 


2.28.        Non-ISO.  Non-ISO means an option granted under this
Plan to purchase Stock which is not intended to satisfy the requirements of Section 422
of the Code.


 


2.29.        Option.  Option means an ISO or a Non-ISO.


 


2.30.        Other Stock-Based Award.  Other Stock-Based Award means an equity-based
or equity-related Award not otherwise described by the terms of this Plan,
granted pursuant to Section 9.2 of this Plan.


 


2.31.        Participant.  Participant means an Eligible Recipient who
receives one or more Awards under this Plan.


 


2.32.        Performance Goals.  Performance Goals mean with respect to any
applicable Award, one or more targets, goals, or levels of attainment required
to be achieved in terms of the specified performance measures (as determined by
the Committee in its sole discretion) during the specified Performance Period,
as set forth in the related Award Agreement.


 


2.33.        Performance Period.  Performance Period means the period of time,
as determined by the Committee, during which the Performance Goals must be met
in order to determine the degree of payout or vesting with respect to an Award.


 


2.34.        Plan.  Plan means this Tornier N.V. 2010 Incentive
Plan, as the same may be amended from time to time.


 


2.35.        Prior Plan.  Prior Plan means the Tornier B.V. Stock
Option Plan, which was adopted effective as of July 18, 2006, as amended.


 


2.36.        Retirement.  Retirement means, unless otherwise defined in
an Award Agreement or in a written employment, services, or other agreement
between the Participant and the Company or an Affiliate, “Retirement” as
defined from time to time for purposes of this Plan by the Committee or by the
Company’s chief human resources officer or other person performing that
function.


 


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2.37.        Rule 16b-3.  Rule 16b-3 means the exemption under Rule 16b-3
to Section 16(b) of the 1934 Act or any successor to such rule.


 


2.38.        Stock.  Stock means the ordinary shares of the
Company, with a par value per share as defined in the articles of association
of the Company, or the number and kind of shares or other securities into which
such Stock may be changed in accordance with Section 3.5 of this Plan.


 


2.39.        Stock Appreciation Right.  Stock Appreciation Right means a right which
is granted under Section 7 of this Plan to receive the appreciation in a
share of Stock.


 


2.40.        Stock-Based Award.  Stock-Based Award means any equity-based or
equity-related Award made pursuant to this Plan, including Options, Stock
Appreciation Rights, Stock Grants, Stock Unit Grants, and Other Stock-Based
Awards.


 


2.41.        Stock Grant.  Stock Grant means a grant under Section 8
of this Plan which is designed to result in the issuance of the number of
shares of Stock described in such grant rather than a payment in cash based on
the Fair Market Value of such shares of Stock.


 


2.42.        Stock Unit Grant.  Stock Unit Grant means a grant under Section 8
of this Plan which is designed to result in the payment of cash based on the
Fair Market Value of the number of shares of Stock described in such grant
rather than the issuance of the number of shares of Stock described in such
grant.


 


2.43.        Ten Percent Shareholder.  Ten Percent Shareholder means an individual
who owns (after taking into account the attribution rules of Section 424(d) of
the Code) more than ten percent (10%) of the total combined voting power of all
classes of shares of either the Company, an Affiliate or a “parent corporation”
(within the meaning of Section 424(e) of the Code).


 


3.             SHARES
AVAILABLE FOR ISSUANCE; GRANT LIMITS AND ADJUSTMENTS


 


3.1.          Stock Available for Issuance.  Subject to adjustment as provided in Section 3.5,
the maximum number of shares of Stock that shall be available for issuance
under this Plan shall be the sum of:


 


(a)           The number of shares of
Stock available for grant under the Prior Plan as of the IPO Effective Date
(not including any shares of Stock that are subject to outstanding “options”
(as defined in the Prior Plan) under the Prior Plan as of the IPO Effective
Date, or any shares of Stock that were issued pursuant to options granted under
the Prior Plan prior to the IPO Effective Date); and


 


(b)           The number of shares of
Stock underlying options which have been granted pursuant to the Prior Plan and
are outstanding as of the IPO Effective Date that remain undelivered following
any expiration, cancellation, forfeiture, cash settlement, or other termination
of such options following the IPO Effective Date; and


 


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(c)           The number of shares of
Stock issued or subject to Awards granted under the Plan in connection with the
settlement, assumption, or substitution of outstanding awards or obligations to
grant future awards as a condition of the Company and/or any Affiliate(s) acquiring,
merging, or consolidating with another entity; and


 


(d)           The number of shares that
are unallocated and available for grant under a stock plan assumed by the
Company or any Affiliate(s) in connection with the merger, consolidation,
or acquisition of another entity by the Company and/or any of its Affiliates,
based on the applicable exchange ratio and other transaction terms, but only to
the extent that such shares may be utilized by the Company or its Affiliates
following the transaction pursuant to the rules and regulations of the
Nasdaq Global Market (or other applicable market or exchange on which the
Company’s Stock may be quoted or traded);


 


provided, however, that no more than the maximum number of
shares of Stock authorized for issuance under this Plan may be issued pursuant
to Full Value Awards and no more than the maximum number of shares of Stock
authorized for issuance under this Plan may be issued in connection with the
exercise of ISOs.


 


3.2.          Source of Stock.  The shares of Stock described in Section 3.1
shall be reserved to the extent that the Company deems appropriate from authorized
but unissued shares of Stock and from shares of Stock which have been
reacquired by the Company.


 


3.3.          Accounting for Awards.  The Committee may adopt reasonable counting
procedures to ensure appropriate counting, avoid double counting (as, for example,
in the case of tandem or substitute awards) and make adjustments if the number
of shares of Stock actually delivered differs from the number of shares
previously counted in connection with an Award. 
If an Award expires or is canceled, forfeited, settled in cash, or
otherwise terminated without a delivery to the Participant of the full number
of shares to which the Award related, the shares subject to such Award shall,
to the extent of such expiration, cancellation, forfeiture, cash settlement or termination,
again be available for grant.  Shares
withheld in payment of the exercise price or taxes relating to an Award and
shares equal to the number surrendered in payment of any exercise price or
taxes relating to an Award shall be deemed to constitute shares not delivered
to the Participant and shall be deemed to again be available for Awards under
the Plan; provided, however, that such shares
shall not become available for issuance hereunder if either (i) the
applicable shares are withheld or surrendered following the termination of the
Plan, or (ii) at the time the applicable shares are withheld or
surrendered, it would constitute a material revision of the Plan subject to
shareholder approval under any then-applicable rules of the national
securities exchange on which the Stock is listed.


 


3.4.          Use of Proceeds.  The proceeds which the Company receives from
the sale of any shares of Stock under this Plan shall be used for general
corporate purposes and shall be added to the general funds of the Company.


 


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3.5.          Adjustments to Stock and Awards.


 


(a)           In the event of any
reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights
offering, divestiture or extraordinary dividend (including a spin off) or any
other similar change in the corporate structure or shares of the Company after
the date of grant of any Award, or in the event of any change in applicable
laws or circumstances that results in or could result in, in either case, the
substantial dilution or enlargement of the rights intended to be granted to, or
available for, Participants in the Plan, the Committee (or, if the Company is
not the surviving corporation in any such transaction, the board of directors
of the surviving corporation) shall make appropriate adjustment (which
determination shall be conclusive) as to: (i) the number and kind of
securities or other property (including cash) available for issuance or payment
under this Plan, including the sublimits set forth in Section 3.1, and (ii) in
order to prevent dilution or enlargement of the rights of Participants, the
number and kind of securities or other property (including cash) subject to
outstanding Awards and the exercise price of outstanding Awards.  The determination of the Committee as to the
foregoing adjustments, if any, shall be final, conclusive, and binding on
Participants under this Plan.


 


(b)           Notwithstanding anything
else herein to the contrary, without affecting the number of shares of Stock
reserved or available hereunder and the sublimits in Section 3.1, the
Committee may authorize the issuance or assumption of benefits under this Plan
in connection with any merger, consolidation, acquisition of property or stock,
or reorganization upon such terms and conditions as it may deem appropriate,
subject to compliance with the rules under Sections 409A, 422 and 424
of the Code, as and where applicable.


 


4.             COMMITTEE


 


4.1.          Plan Administration.  This Plan shall be administered by the
Committee; provided, however, that the Board may,
in its sole discretion, take any action delegated to the Committee under this
Plan as it may deem necessary. 
Notwithstanding anything in the Plan to the contrary, to the extent
required by the laws of The Netherlands, Awards granted pursuant to this Plan
(to the extent they constitute Options or other rights to acquire shares of
Stock or Stock Grants) shall be deemed to have been granted subject to the
approval of such Award (including its terms and conditions as established by
the Committee) by the Board (if and to the extent the Company’s general meeting
of shareholders has delegated such authority to the Board) or by the Company’s
general meeting of shareholders itself (if and to the extent the Company’s
general meeting of shareholders has not delegated such authority to the Board),
and no Awards shall be effective until such approval, as applicable, is
received.  The Committee acting in its
sole discretion shall exercise such powers and take such action as expressly
called for under this Plan and, further, the Committee shall have the power to
interpret this Plan and (subject to Section 12 and Section 17 herein
and Rule 16b-3) to take such other action in the administration and
operation of this Plan as the Committee deems equitable under the
circumstances, which action shall be binding on the Company, on each affected
Participant, and on each other person directly or indirectly affected by such
action.  The Committee shall not be
obligated to treat Participants or Eligible Recipients uniformly, and
determinations made under this Plan may be made by the 


 


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Committee
selectively among Participants or Eligible Recipients, whether or not such
Participants and Eligible Recipients are similarly situated.  Furthermore, the Committee as a condition to
making any grant under this Plan to any Eligible Recipient shall have the right
to require him or her to execute an agreement which makes the Eligible
Recipient subject to non-competition provisions and other restrictive covenants
which run in favor of the Company.


 


4.2.          Participants Based Outside of the United
States.  In addition
to the authority of the Committee under Section 4.1 and notwithstanding
any other provision of the Plan, the Committee may, in its sole discretion,
amend the terms of the Plan or Awards with respect to Participants resident
outside of the United States or employed by a non-U.S. Affiliate in order to
comply with local legal requirements, to otherwise protect the Company’s or
Affiliate’s interests, or to meet objectives of the Plan, and may, where
appropriate, establish one or more subplans (including the adoption of any
required rules and regulations) for the purposes of qualifying for
preferred tax treatment under foreign tax laws. 
The Committee shall have no authority, however, to take action pursuant
to this Section 4.2: (i) to reserve shares or grant Awards in excess
of the limitations provided in this Plan, (ii) to grant an Option or Stock
Appreciation Right having an exercise price less than one hundred percent
(100%) of the Fair Market Value of one share of Stock on the Grant Date in
violation of this Plan, or (iii) for which shareholder approval would then
be required pursuant to Section 17.2.


 


5.             ELIGIBILITY


 


Only
Employees shall be eligible for the grant of ISOs under this Plan.  All Eligible Recipients shall be eligible for
the grant of Non-ISOs, Stock Appreciation Rights, Cash-Based Awards, Other
Stock-Based Awards, and for Stock Grants and Stock Unit Grants under this Plan.


 


6.             OPTIONS


 


6.1.          Grant; Award Agreement.  The Committee acting in its sole discretion
shall have the right to grant Options to Eligible Recipients under this Plan to
purchase shares of Stock subject to such terms and conditions, consistent with
the other provisions of this Plan, as may be determined by the Committee in its
sole discretion.  Each grant of an Option
to an Eligible Recipient shall be evidenced by an Award Agreement, and each
Award Agreement shall set forth whether the Option is an ISO or a Non-ISO and
shall set forth such other terms and conditions of such grant as the Committee
acting in its sole discretion deems consistent with the terms of this Plan; provided, however, that if the Committee grants an ISO and
a Non-ISO to an Employee on the same date, the right of the Employee to
exercise the ISO shall not be conditioned on his or her failure to exercise the
Non-ISO.  To the extent that any ISO (or
portion thereof) granted under this Plan ceases for any reason to qualify as an
“incentive stock option” for purposes of Section 422 of the Code, such ISO
(or portion thereof) shall continue to be outstanding for purposes of this Plan
but shall thereafter be deemed to be a Non-ISO.


 


6.2.          $100,000 Limit.  To the extent the aggregate Fair Market Value
(determined as of the date of grant) of Stock for which ISOs are exercisable
for the first time by any Participant during any calendar year (under all plans
of the Company and its Affiliates) exceeds $100,000, such excess ISOs shall be
treated as Non-ISOs.


 


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6.3.          Exercise Price.  The per share price to be paid by a
Participant upon exercise of an Option granted pursuant to this Section 6
shall be determined by the Committee in its sole discretion at the time of
grant; provided, however, that other than with
respect to any substitute Award described in Section 3.1, such price shall
not be less than one hundred percent (100%) of the Fair Market Value of one
share of Stock on the Grant Date and; provided, further,
that if the Option is an ISO granted to an Employee who is a Ten Percent
Shareholder, the per share price for each share of Stock subject to such ISO
shall be no less than one hundred ten percent (110%) of the Fair Market Value
of a share of Stock on the date such ISO is granted.


 


6.4.          Payment.


 


(a)           The exercise price of an
Option shall be payable in full upon the exercise of such Option in cash
(including check, bank draft, or money order); provided,
however, that the Committee, in its sole discretion, may allow such
payments to be made, in whole or in part, by (i) by a “net exercise” of
the Option (as further described in paragraph (b), below), (ii) through
cashless exercise procedure which is effected by an unrelated broker through a
sale of Stock in the open market, (iii) by a combination of such methods;
or (iv) any other method approved or accepted by the Committee in its sole
discretion.


 


(b)           In the case of a “net
exercise” of an Option, a Participant shall receive the number of shares of
Stock underlying the Options so exercised reduced by the number of shares of
Stock equal to the aggregate exercise price of the Options divided by the Fair
Market Value on the date of exercise (the “Reduced Shares”).  In the event of a “net exercise” of an
Option, Options to purchase the Reduced Shares shall be cancelled in exchange
for the right to receive an amount (the “Redemption Amount”) equal to the Fair
Market Value of the Reduced Shares on the date of exercise.  The Redemption Amount shall automatically be
applied by the Company to satisfy the amount the Participant is required to pay
to exercise the Options.  Thereafter, the
Participant shall receive the number of shares of Stock remaining after such
Reduced Shares have been cancelled. 
Shares of Stock shall no longer be outstanding under an Option (and
shall therefore not thereafter be exercisable) following the exercise of such
Option to the extent of (i) shares cancelled to pay the exercise price of
an Option under the “net exercise,” (ii) shares actually delivered to the
Participant as a result of such exercise and (iii) any shares withheld for
purposes of tax withholding.


 


6.5.          Exercisability and Duration.  An Option shall become exercisable at such
times and in such installments and upon such terms and conditions as may be
determined by the Committee in its sole discretion at the time of grant and as
set forth in the related Award Agreement, including (i) the achievement of
one or more Performance Goals, or that (ii) the Participant remain in
continuous employment or service with the Company or an Affiliate for a certain
period; provided, however, that no Option shall
be exercisable after ten (10) years from the Grant Date (five (5) years
from the Grant Date in the case of an ISO that is granted to a Ten Percent
Shareholder on the date the Option is granted).


 


10

















 


6.6.          Manner of Exercise.  An Option may be exercised by a Participant
in whole or in part from time to time, subject to the conditions contained in
this Plan and in the Award Agreement evidencing such Option, by delivery in
person, by facsimile or electronic transmission, or through the mail of written
notice of exercise to the Company at its principal executive office (or to the
Company’s designee as may be established from time to time by the Company and
communicated to Participants) and by paying in full the total exercise price
for the shares of Stock to be purchased in accordance with Section 6.4 of
this Plan.


 


6.7.          Disqualifying Disposition.  Each Participant who receives an ISO shall
notify the Company in writing immediately after the Participant makes a
Disqualifying Disposition of any Stock acquired pursuant to the exercise of an
ISO.


 


7.             STOCK
APPRECIATION RIGHTS


 


7.1.          Grant; Award Agreement.  The Committee acting in its sole discretion
shall have the right to grant Stock Appreciation Rights to Eligible Recipients
under this Plan subject to such terms and conditions, consistent with the other
provisions of this Plan, as may be determined by the Committee in its sole
discretion.  Each Stock Appreciation
Right grant shall be evidenced by an Award Agreement or, if such Stock
Appreciation Right is granted as part of an Option, shall be evidenced by an
Award Agreement for the related Option.


 


7.2.          Exercise Price.  The exercise price of a Stock Appreciation
Right shall be determined by the Committee, in its sole discretion, at the time
of grant; provided, however, that other than with
respect to any substitute Award described in Section 3.1, such price shall
not be less than one hundred percent (100%) of the Fair Market Value of one
share of Stock on the Grant Date.


 


7.3.          Exercisability and Duration.  A Stock Appreciation Right shall become
exercisable at such times and in such installments as may be determined by the
Committee in its sole discretion at the time of grant and as set forth in the
related Award Agreement, including (i) the achievement of one or more
Performance Goals, or that (ii) the Participant remain in continuous
employment or service with the Company or an Affiliate for a certain period; provided, however, that no Stock Appreciation Right shall be
exercisable after ten (10) years from its Grant Date.


 


7.4.          Manner of Exercise.  A Stock Appreciation Right shall be exercised
by giving notice in the same manner as for Options, as set forth in Section 6.6,
subject to any other terms and conditions consistent with the other provisions
of this Plan as may be determined by the Committee in its sole discretion.


 


7.5.          Settlement.  Upon the exercise of a Stock Appreciation
Right, a Participant shall be entitled to receive payment from the Company in
an amount determined by multiplying:


 


(a)           The excess of the Fair
Market Value of a share of Stock on the date of exercise over the per share
exercise price; by


 


(b)           The number of shares of
Stock with respect to which the Stock Appreciation Right is exercised.


 


11

















 


7.6.          Form of Payment.  Payment, if any, with respect to a Stock
Appreciation Right settled in accordance with Section 7.5 shall be made in
accordance with the terms of the applicable Award Agreement, in cash, shares of
Stock, or a combination thereof, as the Committee determines in its sole
discretion.


 


8.             STOCK
GRANTS AND STOCK UNIT GRANTS


 


8.1.          Grant; Award Agreement.  The Committee acting in its sole discretion
shall have the right to make Stock Grants and Stock Unit Grants to Eligible
Recipients, subject to such terms and conditions, consistent with the other
provisions of this Plan, as may be determined by the Committee in its sole
discretion.  Each Stock Grant and each
Stock Unit Grant shall be evidenced by an Award Agreement, and each Award
Agreement shall set forth the conditions, if any, under which Stock shall be
issued under the Stock Grant or cash shall be paid under the Stock Unit Grant
and the conditions under which the Participant’s interest in any Stock which
has been issued shall become non-forfeitable.


 


8.2.          Conditions.


 


(a)           Conditions to Issuance of Stock.  The Committee acting in its sole discretion
may make the issuance of Stock under a Stock Grant subject to the satisfaction
of one or more conditions which the Committee deems appropriate under the
circumstances for Participants generally or for a Participant in particular,
and the related Award Agreement shall set forth each such condition and the
deadline for satisfying each such condition. 
Stock subject to a Stock Grant shall be issued in the name of a Participant
only after each such condition, if any, has been timely satisfied.  In addition to any restrictions set forth in
a Participant’s Award Agreement, until such time that the Stock underlying a
Stock Grant has vested pursuant to the terms of the Award Agreement, the
Participant shall not be permitted to sell, transfer, pledge, or otherwise
encumber such Stock.  The Committee shall
take into account compliance with local laws relating to payment for shares of
Stock in connection with any Stock Grant made under the Plan, to the extent
applicable.


 


(b)           Conditions on Forfeiture of Stock or Cash Payment.  The Committee acting in its sole discretion
may make any cash payment due under a Stock Unit Grant or Stock issued in the
name of a Participant under a Stock Grant non-forfeitable subject to the
satisfaction of one or more conditions, including the achievement of one or
more Performance Goals, that the Committee acting in its sole discretion deems
appropriate under the circumstances for Participants generally or for a
Participant in particular, and the related Award Agreement shall set forth each
such condition, if any, and the deadline, if any, for satisfying each such
condition.  A Participant’s
non-forfeitable interest in the shares of Stock underlying a Stock Grant or the
cash payable under a Stock Unit Grant shall depend on the extent to which he or
she timely satisfies each such condition.


 


8.3.          Satisfaction of Forfeiture Conditions.  A share of Stock shall cease to be subject to
a Stock Grant at such time as a Participant’s interest in such Stock becomes
non-forfeitable under this Plan, and the certificate or other evidence of
ownership representing such share shall be transferred to the Participant as
soon as practicable thereafter.


 


12














 


8.4.          Section 83(b) Election.  If a Participant makes an election pursuant
to Section 83(b) of the Code with respect to a Stock Grant, the
Participant must file, within thirty (30) days following the Grant Date of the
Stock Grant, a copy of such election with the Company and with the Internal
Revenue Service, in accordance with the regulations under Section 83 of
the Code.  The Committee may provide in
the Award Agreement that the Stock Grant is conditioned upon the Participant’s
making or refraining from making an election with respect to the Award under Section 83(b) of
the Code.


 


9.                                      CASH-BASED
AWARDS AND OTHER STOCK-BASED AWARDS


 


9.1.          Cash-Based Awards.  Subject to such terms and conditions,
consistent with the other provisions of this Plan, as may be determined by the
Committee in its sole discretion, the Committee, at any time and from time to
time, may grant Cash-Based Awards to Participants in such amounts and upon such
terms as the Committee shall determine, subject to limitations under applicable
law.  The terms and conditions applicable
to such Awards shall be determined by the Committee and evidenced by Award
Agreements.


 


9.2.          Other Stock-Based Awards.  Subject to such terms and conditions,
consistent with the other provisions of this Plan, as may be determined by the
Committee in its sole discretion, the Committee may grant Other Stock-Based
Awards not otherwise described by the terms of this Plan (including the grant
or offer for sale of unrestricted shares of Stock) in such amounts and subject
to such terms and conditions as the Committee shall determine, subject to
limitations under applicable law.  Such
Other Stock-Based Awards may involve the transfer of actual shares of Stock to
Participants or payment in cash or otherwise of amounts based on the value of
shares of Stock, and may include Stock-Based Awards designed to comply with or
take advantage of the applicable local laws of jurisdictions other than the
United States.


 


9.3.          Value of Cash-Based Awards and Other
Stock-Based Awards.  Each
Cash-Based Award shall specify a payment amount or payment range as determined
by the Committee in its sole discretion. 
Each Other Stock-Based Award shall be expressed in terms of shares of
Stock or units based on shares of Stock, as determined by the Committee in its
sole discretion.  The Committee may
establish Performance Goals in its sole discretion for any Cash-Based Award or
any Other Stock-Based Award.  If the
Committee exercises its discretion to establish Performance Goals for any such
Awards, the number or value of Cash-Based Awards or Other Stock-Based Awards
that shall be paid out to the Participant shall depend on the extent to which
the Performance Goals and any other non-performance terms have been met.


 


9.4.          Payment of Cash-Based Awards and Other
Stock-Based Awards. 
Payment, if any, with respect to an Cash-Based Award or an Other
Stock-Based Award shall be made in accordance with the terms of the Award, in
cash for any Cash-Based Award and in cash or shares of Stock for any Other
Stock-Based Award, as the Committee determines in its sole discretion, except
to the extent that a Participant has properly elected to defer payment that may
be attributable to an Cash-Based Award or Other Stock-Based Award under a
Company deferred compensation plan or arrangement.


 


13

















 


10.                               DIVIDEND
EQUIVALENTS


 


Any
Participant selected by the Committee may be granted dividend equivalents based
on the dividends declared on shares of Stock that are subject to any Award, to
be credited as of dividend payment dates, during the period between the date
the Award is granted and the date the Award is exercised, vests, or expires, as
determined by the Committee.  Such
dividend equivalents shall be converted to cash or additional shares of Stock
by such formula and at such time and subject to such limitations as may be
determined by the Committee. 
Notwithstanding the foregoing or any other provision of this Plan to the
contrary, the Committee shall not grant dividend equivalents based on the
dividends declared on shares of Stock that are subject to an Option or Stock
Appreciation Right.  Dividend equivalents
shall be accrued for the account of the Participant and shall be paid to the
Participant on the date on which the corresponding Awards are exercised,
settled, paid, or become free of restrictions, as applicable.  Dividend equivalents shall be subject to
forfeiture to the same extent that the corresponding Awards are subject to
forfeiture as provided in this Plan or any Award Agreement.


 


11.                               EFFECT
OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE


 


11.1.        Termination Due to Death or Disability.  Unless otherwise expressly provided by the
Committee in its sole discretion in an Award Agreement, and subject to Sections
11.3 and 11.5, in the event a Participant’s employment or other service with
the Company and all Affiliates is terminated by reason of death or Disability:


 


(a)           All outstanding Options and
Stock Appreciation Rights held by the Participant as of the effective date of
such termination shall, to the extent exercisable as of such termination,
remain exercisable for a period of one (1) year after such termination
(but in no event after the expiration date of any such Option or Stock
Appreciation Right) and Options and Stock Appreciation Rights not exercisable
as of such termination shall be terminated and forfeited;


 


(b)           All outstanding Stock Grants
and Stock Unit Grants held by the Participant as of the effective date of such
termination that have not vested as of the date of such termination, and all
outstanding but unpaid Cash-Based Awards and Other Stock-Based Awards held by
the Participant as of the effective date of such termination, shall be
terminated and forfeited; provided, however,
that with respect to any such Awards the vesting of which is based on the
achievement of Performance Goals, if a Participant’s employment or other
service with the Company or any Affiliate, as the case may be, is terminated by
reason of death or Disability prior to the end of the Performance Period of
such Award, but after the conclusion of a portion of the Performance Period
(but in no event less than one (1) year), the Committee may, in its sole
discretion, cause shares of Stock to be delivered or payment made with respect
to the Participant’s Award, but only if otherwise earned for the entire
Performance Period and only with respect to the portion of the applicable
Performance Period completed at the date of such event, with proration based on
full fiscal years only and no shares to be delivered for partial fiscal
years.  The Committee shall consider the
provisions of Section 11.5 and shall have the discretion to consider any
other fact or circumstance in making its decision as to whether to deliver such
shares of Stock or other payment, including whether the Participant again
becomes employed.  If the effective date 


 


14

















 


of such termination is on or after the end of the
Performance Period applicable to an Award which vests based on the achievement of
Performance Goals, then any such Award held by a Participant shall be paid to
the Participant in accordance with the payment terms of such Award.


 


11.2.        Termination for Reasons Other than Death,
Disability, or Actions Constituting Cause or Adverse Action.  Unless otherwise expressly provided by the
Committee in its sole discretion in an Award Agreement, and subject to Sections
11.3 and 11.5 of this Plan, in the event a Participant’s employment or other
service with the Company and all Affiliates is terminated for any reason other
than (i) death, (ii) Disability, or (iii) due to actions
constituting Cause or Adverse Action:


 


(a)           All outstanding Options and
Stock Appreciation Rights held by the Participant as of the effective date of
such termination shall, to the extent exercisable as of such termination,
remain exercisable for a period of three (3) months after such termination
(but in no event after the expiration date of any such Option or Stock
Appreciation Right) and Options and Stock Appreciation Rights not exercisable
as of such termination shall be terminated and forfeited.


 


(b)           All Stock Grants and Stock
Unit Grants held by the Participant as of the effective date of such
termination that have not vested as of such termination, and all outstanding unpaid
Cash-Based Awards and Other Stock-Based Awards held by the Participant as of
the effective date of such termination, shall be terminated and forfeited; provided, however, that with respect to any such Awards the
vesting of which is based on the achievement of Performance Goals, if the
effective date of such termination is on or after the end of the Performance
Period applicable to an Award which vests based on the achievement of
Performance Goals, then any such Award held by a Participant shall be paid to
the Participant in accordance with the payment terms of such Award.


 


11.3.        Modification of Rights upon Termination.  Notwithstanding the other provisions of this Section 11,
upon a Participant’s termination of employment or other service with the Company
or any Affiliate, as the case may be, the Committee may, in its sole discretion
(which may be exercised at any time on or after the Grant Date, including
following such termination) cause Options or Stock Appreciation Rights (or any
part thereof) held by such Participant as of the effective date of such
termination to terminate, become or continue to become exercisable or remain
exercisable following such termination of employment or service, and Stock
Grants, Stock Unit Grants, Cash-Based Awards, and Other Stock-Based Awards held
by such Participant as of the effective date of such termination to terminate,
vest, or become free of restrictions and conditions to payment, as the case may
be, following such termination of employment or service, in each case in the
manner determined by the Committee; provided, however,
that (i) no Option or Stock Appreciation Right may remain exercisable
beyond its expiration date, (ii) the Committee may not take any action not
permitted pursuant to Section 17.5 herein, and (iii) any such action
by the Committee adversely affecting any outstanding Award shall not be
effective without the consent of the affected Participant (subject to the right
of the Committee to take whatever action it deems appropriate under Section 3.5,
11.5, 12, or 17).


 


15

















 


11.4.        Determination of Termination of Employment or
Other Service.  Unless the
Committee otherwise determines in its sole discretion, a Participant’s
employment or other service shall, for purposes of this Plan, be deemed to have
terminated on the date recorded on the personnel or other records of the
Company or the Affiliate for which the Participant provides employment or other
service, as determined by the Committee in its sole discretion based upon such
records.  Notwithstanding the foregoing,
if payment of an Award that is subject to Section 409A of the Code is
triggered by a termination of a Participant’s employment or other service, such
termination shall also constitute a “separation from service” within the
meaning of Section 409A of the Code, and any change in employment status
that constitutes a “separation from service” under Section 409A of the
Code shall be treated as a termination of employment or service, as the case
may be.


 


11.5.        Additional Forfeiture Events.


 


(a)           Effect of Actions Constituting Cause or Adverse
Action.  Notwithstanding anything in
this Plan to the contrary and in addition to the other rights of the Committee
under this Section 11.5, if a Participant is determined by the Committee,
acting in its sole discretion, to have taken any action that would constitute
Cause or an Adverse Action during or within one (1) year after the
termination of employment or other service with the Company or an Affiliate,
irrespective of whether such action or the Committee’s determination occurs
before or after termination of such Participant’s employment or other service
with the Company or any Affiliate and irrespective of whether or not the
Participant was terminated as a result of such Cause or Adverse Action, (i) all
rights of the Participant under this Plan and any Award Agreements evidencing
an Award then held by the Participant shall terminate and be forfeited without
notice of any kind, and (ii) the Committee in its sole discretion shall
have the authority to rescind the exercise, vesting or issuance of, or payment
in respect of, any Awards of the Participant that were exercised, vested or
issued, or as to which such payment was made, during such period and to require
the Participant to pay to the Company, within ten (10) days of receipt
from the Company of notice of such rescission, any amount received or the
amount of any gain realized as a result of such rescinded exercise, vesting,
issuance or payment (including any dividend equivalents paid or other
distributions made with respect to any shares subject to any Award).  The Company shall be entitled to withhold and
deduct from future wages of the Participant (or from other amounts that may be
due and owing to the Participant from the Company or an Affiliate) or make
other arrangements for the collection of all amounts necessary to satisfy such
payment obligations.  Unless otherwise
provided by the Committee in an applicable Award Agreement, this Section 11.5(a) shall
not apply to any Participant following a Change in Control.


 


(b)           Forfeiture of Awards under Sarbanes-Oxley Act.  If the Company is required to prepare an
accounting restatement due to the material noncompliance of the Company, as a
result of misconduct, with any financial reporting requirement under the
securities laws, then any Participant who is one of the individuals subject to
automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002
shall reimburse the Company with respect to any Award received by such
individual under this Plan during the twelve (12) month period following the
first public issuance or filing with the Securities and Exchange Commission, as
the case may be, of the financial document embodying such financial reporting
requirement.


 


16

















 


12.                               CHANGE
IN CONTROL


 


12.1.        Acceleration of Vesting.  Without limiting the authority of the
Committee under Sections 3.5 and 4.1 of this Plan, if a Change in Control of
the Company occurs, then, unless otherwise provided by the Committee in its
sole discretion either in the Award Agreement evidencing an Award at the time
of grant or at any time after the grant of an Award, (i) all outstanding
Options and Stock Appreciation Rights shall become immediately exercisable in
full and shall remain exercisable for the remainder of their terms, regardless
of whether the Participant to whom such Options or Stock Appreciation Rights
have been granted remains in employment or service with the Company or any
Affiliate, (ii) all restrictions and vesting requirements applicable to
any Award based solely on the continued service of the Participant shall
terminate, and (iii) all Awards the vesting or payment of which are based
on Performance Goals shall vest as though such Performance Goals were fully
achieved at target and shall become immediately payable; provided,
however, that no Award that provides for a deferral of compensation
within the meaning of Section 409A of the Code shall be accelerated upon
the occurrence of a Change in Control unless the event or circumstances
constituting the Change in Control also constitute a “change in the ownership”
of the Company, a “change in the effective control” of the Company or a “change
in the ownership of a substantial portion of the assets” of the Company, in
each case as determined under Section 409A of the Code.  The treatment of any other Awards in the
event of a Change in Control shall be as determined by the Committee in
connection with the grant thereof, as reflected in the applicable Award
Agreement.


 


12.2.        Alternative Treatment of Stock-Based Awards.  In connection with a Change in Control, the
Committee in its sole discretion, either in an Award Agreement at the time of
grant of a Stock-Based Award or at any time after the grant of such an Award,
may determine that any or all outstanding Stock-Based Awards granted under this
Plan, whether or not exercisable or vested, as the case may be, shall be
canceled and terminated and that in connection with such cancellation and termination
the holder of such Stock-Based Award shall receive for each share of Stock
subject to such Award a cash payment (or the delivery of shares, other
securities or a combination of cash, shares and securities with a fair market
value (as determined by the Committee in good faith) equivalent to such cash
payment) equal to the difference, if any, between the consideration received by
shareholders of the Company in respect of a share of Stock in connection with
such Change in Control and the purchase price per share, if any, under the
Award, multiplied by the number of shares of Stock subject to such Award (or in
which such Award is denominated); provided, however,
that if such product is zero ($0) or less or to the extent that the Award is
not then exercisable, the Award may be canceled and terminated without payment
therefor.  If any portion of the
consideration pursuant to a Change in Control may be received by holders of
shares of Stock on a contingent or delayed basis, the Committee may, in its
sole discretion, determine the fair market value per share of such
consideration as of the time of the Change in Control on the basis of the
Committee’s good faith estimate of the present value of the probable future
payment of such consideration. 
Notwithstanding the foregoing, any shares of Stock issued pursuant to a
Stock-Based Award that immediately prior to the effectiveness of the Change in
Control are subject to no further restrictions pursuant to this Plan or an
Award Agreement (other than pursuant to the securities laws) shall be deemed to
be outstanding shares of Stock and receive the same consideration as other
outstanding shares of Stock in connection with the Change in Control.


 


12.3.        Limitation on Change in Control Payments.  Notwithstanding anything in Section 12.1
or 12.2 to the contrary, if, with respect to a Participant, the acceleration of
the 


 


17

















 


vesting
of an Award as provided in Section 12.1 or the payment of cash in exchange
for all or part of a Stock-Based Award as provided in Section 12.2 (which
acceleration or payment could be deemed a “payment” within the meaning of Section 280G(b)(2) of
the Code), together with any other “payments” that such Participant has the
right to receive from the Company or any corporation that is a member of an “affiliated
group” (as defined in Section 1504(a) of the Code without regard to Section 1504(b) of
the Code) of which the Company is a member, would constitute a “parachute
payment” (as defined in Section 280G(b)(2) of the Code), then the “payments”
to such Participant pursuant to Section 12.1 or 12.2 shall be reduced (or
acceleration of vesting eliminated) to the largest amount as shall result in no
portion of such “payments” being subject to the excise tax imposed by Section 4999
of the Code; provided, however, that such
reduction shall be made only if the aggregate amount of the payments after such
reduction exceeds the difference between (i) the amount of such payments
absent such reduction, minus (ii) the aggregate amount of the excise tax
imposed under Section 4999 of the Code attributable to any such excess
parachute payments, and provided further that such payments shall be reduced
(or acceleration of vesting eliminated) in the following order: (a) Options
with an exercise price above fair market value that have a positive value for
purposes of Section 280G of the Code, (b) pro rata among Awards that
constitute deferred compensation under Section 409A of the Code, and (c) finally,
among the Awards that are not subject to Section 409A of the Code.  Notwithstanding the foregoing sentence, if a
Participant is subject to a separate agreement with the Company or an Affiliate
that expressly addresses the potential application of Section 280G or 4999
of the Code, then this Section 12.3 shall not apply and any “payments” to
a Participant pursuant to Section 12.1 or 12.2 shall be treated as “payments”
arising under such separate agreement.


 


13.                               PAYMENT
OF WITHHOLDING TAXES


 


13.1.        General Rules.  The Company is entitled to (i) withhold
and deduct from future wages of the Participant (or from other amounts that may
be due and owing to the Participant from the Company or an Affiliate), or make
other arrangements for the collection of, all amounts the Company reasonably
determines are required to satisfy any and all federal, foreign, state, and
local withholding and employment related tax requirements attributable to an
Award, including the grant, exercise, vesting or settlement of, or payment of
dividend equivalents with respect to, an Award or a disqualifying disposition
of shares received upon exercise of an ISO, or (ii) require the
Participant promptly to remit the amount of such withholding to the Company
before taking any action, including issuing any shares of Stock, with respect
to an Award.  When withholding for taxes
is effected under this Plan, it shall be withheld only up to the minimum
required tax withholding rates or such other rate that will not trigger a
negative accounting impact on the Company.


 


13.2.        Special Rules.  The Committee may, in its sole discretion and
upon terms and conditions established by the Committee, permit or require a
Participant to satisfy, in whole or in part, any withholding or employment
related tax obligation described in Section 13.1 by withholding shares of
Stock underlying an Award, electing to tender, or by attestation as to
ownership of, other shares of Stock held by a Participant, by delivery of a
Broker Exercise Notice, or a combination of such methods.  For purposes of satisfying a Participant’s
withholding or employment-related tax obligation, shares of Stock withheld by
the Company or tendered or covered by an attestation shall be valued at their
Fair Market Value.


 


18

















 


14.                               NON-TRANSFERABILITY


 


14.1.        General Rule.  Except as provided in Section 14.2, no
Award shall be transferable by a Participant other than by will or by the laws
of descent and distribution, and any Option or Stock Appreciation Right shall
be exercisable during a Participant’s lifetime only by the Participant.  The person or persons to whom an Award is
transferred by will or by the laws of descent and distribution or pursuant to Section 14.2,
thereafter shall be treated as the Participant.


 


14.2.        Transfers to Family Members.  A Non-ISO may be transferred by a Participant
to a “family member” (as defined in Rule 701(c)(3) of the 1933 Act)
of such Participant or to a trust exclusively for the benefit of one or more of
such family members of such Participant; provided, however,
that such transfer is made as a gift without consideration, and such transfer
complies with applicable securities laws.


 


15.                               SECURITIES
REGISTRATION


 


As
a condition to the receipt of shares of Stock under this Plan, a Participant
shall, if so requested by the Company, agree to hold such shares of Stock for
investment and not with a view of resale or distribution to the public and, if
so requested by the Company, shall deliver to the Company a written statement
satisfactory to the Company to that effect. 
Furthermore, if so requested by the Company, a Participant shall make a
written representation to the Company that he or she shall not sell or offer
for sale any of such Stock unless a registration statement shall be in effect
with respect to such Stock under the 1933 Act and any applicable state
securities law or he or she shall have furnished to the Company an opinion in
form and substance satisfactory to the Company of legal counsel satisfactory to
the Company that such registration is not required.  Certificates or other evidence of ownership
representing the Stock transferred upon the exercise of an Option or Stock
Appreciation Right or upon the lapse of the forfeiture conditions, if any, on
any Stock Grant may at the discretion of the Company bear a legend to the
effect that such Stock has not been registered under the 1933 Act or any
applicable state securities law and that such Stock cannot be sold or offered
for sale in the absence of an effective registration statement as to such Stock
under the 1933 Act and any applicable state securities law or an opinion in
form and substance satisfactory to the Company of legal counsel satisfactory to
the Company that such registration is not required.


 


16.                               LIFE OF
PLAN


 


Subject
to earlier termination as provided in Section 17 below, this Plan shall
terminate at midnight on the tenth (10th) anniversary of the Effective Date.  No Award shall be granted after termination
of this Plan, but Awards outstanding upon termination of this Plan shall remain
outstanding in accordance with their applicable terms and conditions and the
terms and conditions of this Plan.


 


17.                               AMENDMENT,
MODIFICATION, OR TERMINATION


 


17.1.        Generally.  Subject to other subsections of this Section 17
and Section 17.3, the Board at any time may suspend or terminate this Plan
(or any portion thereof) or terminate any outstanding Award Agreement and the
Committee, at any time and from time to time, may amend this Plan or amend or
modify the terms of an outstanding Award. 
The Committee’s 


 


19

















 


power
and authority to amend or modify the terms of an outstanding Award includes the
authority to modify the number of shares of Stock or other terms and conditions
of an Award, extend the term of an Award, accelerate the exercisability or
vesting or otherwise terminate any restrictions relating to an Award, accept
the surrender of any outstanding Award or, to the extent not previously
exercised or vested, authorize the grant of new Awards in substitution for
surrendered Awards; provided, however,
that the amended or modified terms are permitted by this Plan as then in effect
and that any Participant adversely affected by such amended or modified terms
has consented to such amendment or modification.


 


17.2.        Shareholder Approval.  No amendments to this Plan shall be effective
in respect of any jurisdiction without approval of the Company’s shareholders
if shareholder approval of the amendment is then required pursuant to Section 422
of the Code, the rules of the primary stock exchange or stock market on
which the Stock is then traded, applicable United States state corporate laws
or regulations, applicable United States federal laws or regulations, or the
applicable laws of any foreign country or jurisdiction where Awards are, or
shall be, granted under this Plan.


 


17.3.        Awards Previously Granted.  Notwithstanding any other provision of this
Plan to the contrary, no termination, suspension, or amendment of this Plan may
adversely affect any outstanding Award without the consent of the affected
Participant; provided, however, that this
sentence shall not impair the right of the Committee to take whatever action it
deems appropriate under Sections 3.5, 11.5, 12 or 17.4 of this Plan.


 


17.4.        Amendments to Conform to Law.  Notwithstanding any other provision of this
Plan to the contrary, the Committee may amend this Plan or an Award Agreement,
to take effect retroactively or otherwise, as deemed necessary or advisable for
the purpose of conforming this Plan or an Award Agreement to any present or
future law relating to plans of this or similar nature, including Section 422
and 409A of the Code and Rule 16b-3 of the Exchange Act, and to the
administrative regulations and rulings promulgated thereunder.  By accepting an Award under this Plan, a
Participant agrees to any amendment made pursuant to this Section 17.4 to
any Award granted under this Plan without further consideration or action.


 


17.5.        Waiver, Lapse or Acceleration of
Exercisability or Vesting.  Notwithstanding any other provision of this
Plan, the Committee shall not have the authority to waive, lapse, or accelerate
the exercisability or vesting of any Award held by any Participant who is an
Employee, except (i) in connection with the death, Disability, or Retirement
of the Participant or a Change in Control or (ii) to the extent that the
number of shares of Stock covered by such waived, lapsed, or accelerated Award
(together with the number of shares of Stock covered by all other Awards, the
exercisability or vesting of which previously have been waived, lapsed, or
accelerated by the Committee under this Plan) do not exceed ten percent (10%)
of the total number of shares of Stock authorized for Awards under this Plan.


 


18.                               DEFERRED
COMPENSATION


 


It
is intended that all Awards issued under this Plan be in a form and
administered in a manner that shall comply with the requirements of Section 409A
of the Code, or the requirements of an exception to Section 409A of the
Code, and the Award Agreements and this 


 


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Plan
shall be construed and administered in a manner that is consistent with and
gives effect to such intent.  The
Committee is authorized to adopt rules or regulations deemed necessary or
appropriate to qualify for an exception from or to comply with the requirements
of Section 409A of the Code. 
Notwithstanding anything in this Section 18 to the contrary, with
respect to any Award subject to Section 409A of the Code, no amendment to
or payment under such Award shall be made except and only to the extent
permitted under Section 409A of the Code. 
Neither the Committee nor the Company shall be liable to anyone for any
federal, state, local, or foreign taxes, interest, or penalties incurred by
anyone in connection with the participation in or receipt of benefits under the
Plan, including, but not limited to, any taxes, interest, or penalties incurred
on account of the failure of the Plan or the operation of the Plan to comply
with, or be exempt from, Section 409A.


 


19.                               MISCELLANEOUS


 


19.1.        Shareholder Rights.  Except as otherwise specifically provided in
the Plan or in an Award Agreement, no person shall be entitled to the rights
and privileges of share ownership in respect of shares of Stock that are
subject to Awards hereunder until such shares have been issued to that
person.  Specifically, no Participant
shall have any rights as a shareholder of the Company as a result of the grant
of an Option or a Stock Appreciation Right pending the actual delivery of the
Stock subject to such Option or Stock Appreciation Right to such
Participant.  A Participant’s rights as a
shareholder in the shares of Stock that remain subject to forfeiture under Section 8.2(b) shall
be set forth in the related Award Agreement.


 


19.2.        No Contract of Employment.  No individual shall have any claim or right
to be granted an Award under the Plan or, having been selected for the grant of
an Award, to be selected for a grant of any other Award.  Neither the Plan nor any action taken
hereunder shall be construed as giving any individual any right to be retained
in the employ or service of the Company or an Affiliate of the Company.  The grant of an Award to a Participant under
this Plan shall not constitute a contract of employment or a right to continue
to serve on the Board and shall not confer on a Participant any rights upon his
or her termination of employment or service in addition to those rights, if
any, expressly set forth in this Plan or the related Award Agreement.


 


19.3.        Construction.  All references to Sections are to Sections of
this Plan unless otherwise indicated. 
Each term set forth in Section 2 shall, unless otherwise stated,
have the meaning set forth opposite such term for purposes of this Plan and,
for purposes of such definitions, the singular shall include the plural and the
plural shall include the singular.  In
this Plan, except where otherwise indicated by clear contrary intention, “including”
(and with correlative meaning “include”) means including without limiting the
generality of any description preceding such term, and “or” is used in the
inclusive sense of “and/or”.  Wherever
possible, each provision of this Plan and any Award Agreement shall be
interpreted so that it is valid under the applicable law.  If any provision of this Plan or any Award
Agreement is to any extent invalid under the applicable law that provision
shall still be effective to the extent it remains valid.  The remainder of this Plan and the Award
Agreement also shall continue to be valid, and the entire Plan and Award
Agreement shall continue to be valid in other jurisdictions.  If there is any conflict between the terms of
this Plan and the terms of any Award Agreement, the terms of this Plan shall
control.


 


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19.4.        Other Conditions.  Each Award Agreement may require that a
Participant (as a condition to the exercise of an Option or a Stock
Appreciation Right or the issuance of Stock or cash subject to any other Award)
enter into any agreement or make such representations prepared by the Company,
including any agreement which restricts the transfer of Stock acquired pursuant
to the exercise of an Option or a Stock Appreciation Right or a Stock Grant or
other Award or provides for the repurchase of such Stock by the Company.


 


19.5.        Rule 16b-3.  The Committee shall have the right to amend
any Award to withhold or otherwise restrict the transfer of any Stock or cash
under this Plan to a Participant as the Committee deems appropriate in order to
satisfy any condition or requirement under Rule 16b-3 to the extent Section 16
of the 1934 Act might be applicable to such grant or transfer.


 


19.6.        Coordination with Employment Agreements and
Other Agreements.  If the
Company enters into an employment agreement or other agreement with a
Participant which expressly provides for the acceleration in vesting of an
outstanding Award or for the extension of the deadline to exercise any rights
under an outstanding Award, any such acceleration or extension shall be deemed effected
pursuant to, and in accordance with, the terms of such outstanding Award and
this Plan even if such employment agreement or other agreement is first
effective after the date the outstanding Award was granted; provided, however, no extension of the deadline to exercise
any rights under an outstanding Option or Stock Appreciation Right shall be
permitted to the extent such extension would cause the Option or Stock
Appreciation Right to become subject to the requirements of Section 409A
of the Code.


 


19.7.        Fractional Shares.  No fractional shares of Stock shall be issued
or delivered under this Plan or any Award. 
The Committee shall determine whether cash, other Awards, or other
property shall be issued or paid in lieu of fractional shares of Stock or whether
such fractional shares of Stock or any rights thereto shall be forfeited or
otherwise eliminated by rounding up or down.


 


19.8.        Unfunded Plan.  Participants shall have no right, title, or
interest whatsoever in or to any investments that the Company or its Affiliates
may make to aid it in meeting its obligations under this Plan.  Nothing contained in this Plan, and no action
taken pursuant to its provisions, shall create or be construed to create a
trust of any kind, or a fiduciary relationship between the Company and any
Participant, beneficiary, legal representative, or any other individual.  To the extent that any individual acquires a
right to receive payments from the Company or any Affiliate under this Plan,
such right shall be no greater than the right of an unsecured general creditor
of the Company or the Affiliate, as the case may be.  All payments to be made hereunder shall be
paid from the general funds of the Company or the Affiliate, as the case may be,
and no special or separate fund shall be established and no segregation of
assets shall be made to assure payment of such amounts except as expressly set
forth in this Plan.


 


19.9.        Relationship to Other Benefits.  No payment under this Plan shall be taken
into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare, or benefit plan of the
Company or any Affiliate unless provided otherwise in such plan.


 


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19.10.      Governing Law.  Except to the extent expressly provided
herein or in connection with other matters of corporate governance and
authority (all of which shall be governed by the laws of the Company’s
jurisdiction of incorporation), the validity, construction, interpretation, administration
and effect of this Plan and any rules, regulations, and actions relating to
this Plan shall be governed by and construed exclusively in accordance with the
laws of the State of Delaware, notwithstanding the conflicts of laws principles
of any jurisdictions.  Unless otherwise
provided in an Award Agreement, recipients of an Award under this Plan are
deemed to submit to the exclusive jurisdiction and venue of the federal or
state courts of the State of Delaware to resolve any and all issues that may
arise out of or relate to this Plan or any related Award Agreement.


 


19.11.      Successors.  All obligations of the Company under this
Plan with respect to Awards granted hereunder shall be binding on any successor
to the Company, whether the existence of such successor is the result of a
direct or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business or assets of the Company.


 


19.12.      Delivery and Execution of Electronic
Documents.  To the
extent permitted by applicable law, the Company may: (i) deliver by email
or other electronic means (including posting on a Web site maintained by the
Company or by a third party under contract with the Company) all documents
relating to this Plan or any Award hereunder (including prospectuses required
by the Securities and Exchange Commission) and all other documents that the
Company is required to deliver to its security holders (including annual
reports and proxy statements), and (ii) permit Participants to use
electronic, internet, or other non-paper means to execute applicable Plan
documents (including Award Agreements) and take other actions under this Plan
in a manner prescribed by the Committee.


 


19.13.      No Liability of Committee Members.  No member of the Committee shall be
personally liable by reason of any contract or other instrument executed by
such member or on his behalf in his capacity as a member of the Committee or
for any mistake of judgment made in good faith, and the Company shall indemnify
and hold harmless each member of the Committee and each other employee,
officer, or director of the Company to whom any duty or power relating to the
administration or interpretation of the Plan may be allocated or delegated,
against all costs and expenses (including counsel fees) and liabilities
(including sums paid in settlement of a claim) arising out of any act or
omission to act in connection with the Plan unless arising out of such person’s
own fraud or willful misconduct; provided, however,
that approval of the Board shall be required for the payment of any amount in
settlement of a claim against any such person. 
The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Company’s certificate or articles of incorporation or by-laws, each as may be
amended from time to time, as a matter of law, or otherwise, or any power that
the Company may have to indemnify them or hold them harmless.


 


19.14.      Payments Following Accidents or Illness.  If the Committee shall find that any person
to whom any amount is payable under the Plan is unable to care for his affairs
because of illness or accident, or is a minor, or has died, then any payment
due to such person or his estate (unless a prior claim therefor has been made
by a duly appointed legal representative) may, if the Committee so directs the
Company, be paid to his spouse, child, relative, an institution 


 


23

















 


maintaining
or having custody of such person, or any other person deemed by the Committee
to be a proper recipient on behalf of such person otherwise entitled to
payment.  Any such payment shall be a
complete discharge of the liability of the Committee and the Company therefor.


 


19.15.      Reliance on Reports.  Each member of the Committee and each member
of the Board shall be fully justified in relying, acting or failing to act, and
shall not be liable for having so relied, acted, or failed to act in good
faith, upon any report made by the independent public accountant of the Company
and its Affiliates and upon any other information furnished in connection with
the Plan by any person or persons other than such member.


 


19.16.      Titles and Headings.  The titles and headings of the sections in
the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings, shall
control.


 


*        *        *


 


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