exh10-1_stockplan.htm


     

    
      

      

    

     

     

     

     

     

     

     

     

     

     

    EXHIBIT 10.1

     

    2008 STOCK INCENTIVE PLAN

     

     

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2008
Stock Incentive Plan

    


    1.           Establishment,
Purpose, and Types of Awards

     

    Energy Composites Corporation (the
“Company”) hereby establishes this equity-based incentive compensation plan to
be known as the “2008 Stock Incentive Plan” (hereinafter referred to as the
“Plan”), in order to provide incentives and awards to select employees,
directors, consultants, and advisors of the Company and its
Affiliates.

    


    The Plan permits the granting of the
following types of awards (“Awards”), according to the Sections of the Plan
listed here:

    
      	
              Section
      6

            	
              Options

            
	
              Section
      7

            	
              Share
      Appreciation Rights

            
	
              Section
      8

            	
              Restricted
      Shares, Restricted Share Units, and Unrestricted Shares

            
	
              Section
      9

            	
              Deferred
      Share Units

            
	
              Section
      10

            	
              Performance
      Awards

            


    

     

    The Plan is not intended to affect and
shall not affect any stock options, equity-based compensation, or other benefits
that the Company or its Affiliates may have provided, or may separately provide
in the future pursuant to any agreement, plan, or program, that is independent
of this Plan.

    


    2.           Defined
Terms

     

    Terms in the Plan that begin with an
initial capital letter have the defined meaning set forth herein unless defined
elsewhere in this Plan or the context of their use clearly indicates a different
meaning.

     

    “Affiliate”
means, with respect to any Person (as defined below), any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person.  For the purposes of this definition, “control,” when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person or the power to elect directors, whether through the ownership of
voting securities, by contract or otherwise; and the terms “affiliated,”
“controlling” and “controlled” have meanings correlative to the
foregoing.

     

    “Applicable
Law” means the legal requirements relating to the administration of
options and share-based plans under applicable U.S. federal and state laws, the
Code, any applicable stock exchange or automated quotation system rules or
regulations, and the applicable laws of any other country or jurisdiction where
Awards are granted, as such laws, rules, regulations and requirements shall be
in place from time to time.

     

    “Award”
means any award made pursuant to the Plan, including awards made in the form of
an Option, an SAR, a Restricted Share, a Restricted Share Unit, an Unrestricted
Share, a Deferred Share Unit, and a Performance Award, or any combination
thereof, whether alternative or cumulative, authorized by and granted under this
Plan.

    


    “Award
Agreement” means any written document setting forth the terms of an Award
that has been authorized by the Committee.  The Committee shall
determine the form or forms of documents to be used, and may change them from
time to time for any reason.

     

    “Board”
means the Board of Directors of the Company.

     

    “Cause”
for termination of a Participant’s Continuous Service will exist if the
Participant is terminated from employment or other service with the Company or
an Affiliate for any of the following reasons: (i) the Participant’s willful
failure to substantially perform his or her duties and responsibilities to the
Company or deliberate violation of a material Company policy; (ii) the
Participant’s commission of any material act or acts of fraud, embezzlement,
dishonesty, or other willful misconduct; (iii) the Participant’s material
unauthorized use or disclosure of any proprietary information or trade secrets
of the Company or any other party to whom the Participant owes an obligation of
nondisclosure as a result of his or her relationship with the Company; or (iv)
Participant’s


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


    willful
and material breach of any of his or her obligations under any written agreement
or covenant with the Company.

     

    The Committee shall in its discretion
determine whether or not a Participant is being terminated for
Cause.  The Committee’s determination shall, unless arbitrary and
capricious, be final and binding on the Participant, the Company, and all other
affected persons.  The foregoing definition does not in any way limit
the Company’s ability to terminate a Participant’s employment or consulting
relationship at any time, and the term “Company” will be interpreted herein to
include any Affiliate or successor thereto, if appropriate.

    


    “Change in
Control” means any of the following:

     

    (i)           Acquisition of Controlling
Interest.  Any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 50% or more of the combined
voting power of the Company’s then outstanding securities.  In
applying the preceding sentence, (i) securities acquired directly from the
Company or its Affiliates by or for the Person shall not be taken into account,
and (ii) an agreement to vote securities shall be disregarded unless its
ultimate purpose is to cause what would otherwise be a Change in Control, as
reasonably determined by the Board.

     

    (ii)           Change in Board
Control.  During a consecutive 2-year period commencing after
the date of adoption of this Plan, individuals who constituted the Board at the
beginning of the period (or their approved replacements, as defined in the next
sentence) cease for any reason to constitute a majority of the
Board.  A new Director shall be considered an “approved replacement”
Director if his or her election (or nomination for election) was approved by a
vote of at least a majority of the Directors then still in office who either
were Directors at the beginning of the period or were themselves approved
replacement Directors, but in either case excluding any Director whose initial
assumption of office occurred as a result of an actual or threatened
solicitation of proxies or consents by or on behalf of any Person other than the
Board.

     

    (iii)           Merger.  The
Company consummates a merger, or consolidation of the Company with any other
corporation unless: (a) the voting securities of the Company outstanding
immediately before the merger or consolidation would continue to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) at least 50% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; and (b) no Person
becomes the Beneficial Owner, directly or indirectly, of securities of the
Company representing 50% or more of the combined
voting power of the Company’s then outstanding securities.

     

    (iv)           Sale of
Assets.  The stockholders of the Company approve an agreement
for the sale or disposition by the Company of all, or substantially all, of the
Company’s assets.

     

    (v)           Liquidation or
Dissolution.  The stockholders of the Company approve a plan or
proposal for liquidation or dissolution of the Company.

     

    Notwithstanding the foregoing, a
“Change in Control” shall not be deemed to have occurred by virtue of the
consummation of any transaction or series of integrated transactions immediately
following which the record holders of the common stock of the Company
immediately prior to such transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity which owns all or
substantially all of the assets of the Company immediately following such
transaction or series of transactions.

     

    “Code”
means the U.S. Internal Revenue Code of 1986, as amended.

     

    “Committee”
means one or more committees or subcommittees of the Board appointed by the
Board to administer the Plan in accordance with Section 4 above.  With
respect to any decision involving an Award intended to satisfy the requirements
of Section 162(m) of the Code, the Committee shall consist of two or more
Directors of the Company who are “outside directors” within the meaning of
Section 162(m) of the Code.  With respect to any decision relating to
a Reporting Person, the Committee shall consist of two or more Directors who are
disinterested within the meaning of Rule 16b-3.

    



    
      
         


      

      
        2

        
          

        

      

      
         


      

    

    “Company”
means Energy Composites Corp., a Nevada corporation; provided, however, that in
the event the Company reincorporates to another jurisdiction, all references to
the term “Company” shall refer to the Company in such new
jurisdiction.

     

    “Consultant”
means any person, including an advisor, who is engaged by the Company or any
Affiliate to render services and is compensated for such services.

     

    “Continuous
Service” means the absence of any interruption or termination of service
as an Employee, Director, or Consultant.  Continuous Service shall not
be considered interrupted in the case of: (i) sick leave; (ii) military leave;
(iii) any other leave of absence approved by the Committee, provided that such
leave is for a period of not more than 90 days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to Company policy adopted from time to time; (iv)
changes in status from Director to advisory director or emeritus status; or (v)
in the case of transfers between locations of the Company or between the
Company, its Affiliates or their respective successors.  Changes in
status between service as an Employee, Director, and a Consultant will not
constitute an interruption of Continuous Service.

    


    “Deferred Share
Units” mean Awards pursuant to Section 9 of the Plan.

    


    “Director”
means a member of the Board, or a member of the board of directors of an
Affiliate.

    


    “Disabled”
means a condition under which a Participant is —

     

    (i)  unable to engage in any
substantial gainful activity by reason of 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 12 months, or

     

    (ii)  by reason of 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 12 months, received income replacement benefits for a period of not less
than 3 months under an accident or health plan covering employees of the
Company.

     

    “Eligible
Person” means any Consultant, Director or Employee and includes
non-Employees to whom an offer of employment has been extended.

     

    “Employee”
means any person whom the Company or any Affiliate classifies as an employee
(including an officer) for employment tax purposes, whether or not that
classification is correct.  The payment by the Company of a director’s
fee to a Director shall not be sufficient to constitute “employment” of such
Director by the Company.

     

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

     

    “Fair Market
Value” means, as of any date (the “Determination Date”) means: (i) the
closing price of a Share on the New York Stock Exchange or the American Stock
Exchange (collectively, the “Exchange”), on the Determination Date, or, if
shares were not traded on the Determination Date, then on the nearest preceding
trading day during which a sale occurred; or (ii) if such stock is not traded on
the Exchange but is quoted on NASDAQ or a successor quotation system, (A) the
last sales price (if the stock is then listed as a National Market Issue under
The Nasdaq National Market System) or (B) the mean between the closing
representative bid and asked prices (in all other cases) for the stock on the
Determination Date as reported by NASDAQ or such successor quotation system; or
(iii) if such stock is not traded on the Exchange or quoted on NASDAQ but is
otherwise traded in the over-the-counter, the mean between the representative
bid and asked prices on the Determination Date; or (iv) if subsections (i)-(iii)
do not apply, the fair market value established in good faith by the
Board.

     

    “Grant
Date” has the meaning set forth in Section 14 of the Plan.

     

    “Incentive Share
Option or ISO” hereinafter means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code, as
designated in the applicable Award Agreement.

    



    
      
         


      

      
        3

        
          

        

      

      
         


      

    


    “Involuntary
Termination” means termination of a Participant’s Continuous Service
under the following circumstances occurring on or after a Change in Control: (i)
termination without Cause by the Company or an Affiliate or successor thereto,
as appropriate; or (ii) voluntary termination by the Participant within 60 days
following (A) a material reduction in the Participant’s job responsibilities,
provided that neither a mere change in title alone nor reassignment to a
substantially similar position shall constitute a material reduction in job
responsibilities; (B) an involuntary relocation of the Participant’s work site
to a facility or location more than 50 miles from the Participant’s principal
work site at the time of the Change in Control; or (C) a material reduction in
Participant’s total compensation other than as part of an reduction by the same
percentage amount in the compensation of all other similarly-situated Employees,
Directors or Consultants.

     

    “Non-ISO”
means an Option not intended to qualify as an ISO, as designated in the
applicable Award Agreement.

     

    “Option”
means any stock option granted pursuant to Section 6 of the Plan.

     

    “Participant”
means any holder of one or more Awards, or the Shares issuable or issued upon
exercise of such Awards, under the Plan.

     

    “Performance
Awards” mean Performance Units and Performance Compensation Awards
granted pursuant to Section 10.

     

    “Performance
Compensation Awards” mean Awards granted pursuant to Section 10(b) of the
Plan.

     

    “Performance
Unit” means Awards granted pursuant to Section 10(a) of the Plan which
may be paid in cash, in Shares, or such combination of cash and Shares as the
Committee in its sole discretion shall determine.

     

    “Person”
means any natural person, association, trust, business trust, cooperative,
corporation, general partnership, joint venture, joint-stock company, limited
partnership, limited liability company, real estate investment trust, regulatory
body, governmental agency or instrumentality, unincorporated organization or
organizational entity.

     

    “Plan”
means this Energy Composites Corp. 2008 Stock Incentive Plan.

     

    “Reporting
Person” means an officer, Director, or greater than ten percent
shareholder of the Company within the meaning of Rule 16a-2 under the Exchange
Act, who is required to file reports pursuant to Rule 16a-3 under the Exchange
Act.

     

    “Restricted
Shares” mean Shares subject to restrictions imposed pursuant to Section 8
of the Plan.

     

    “Restricted Share
Units” mean Awards pursuant to Section 8 of the Plan.

     

    “Rule
16b-3” means Rule 16b-3 promulgated under the Exchange Act, as amended
from time to time, or any successor provision.

     

    “SAR” or “Share
Appreciation Right” means Awards granted pursuant to Section 7 of the
Plan.

     

    “Share”
means a share of common stock of the Company, par value $0.001, as adjusted in
accordance with Section 13 of the Plan.

     

    “Ten Percent
Holder” means a person who owns stock representing more than ten percent
(10%) of the combined voting power of all classes of stock of the Company or any
Affiliate.

     

    “Unrestricted
Shares” mean Shares awarded pursuant to Section 8 of the
Plan.

    



    
      
         


      

      
        4

        
          

        

      

      
         


      

    


    3.           Shares
Subject to the Plan

     

    Subject to the provisions of Section 13
of the Plan, the maximum number of Shares that the Company may issue for all
Awards is equal to 10% of the issued and outstanding common stock of the
Company, outstanding as of the end of the Company’s most recently completed
fiscal year.  For all Awards, the Shares issued pursuant to the Plan
may be authorized but unissued Shares, or Shares that the Company has reacquired
or otherwise holds in treasury.

     

    Shares that are subject to an Award
that for any reason expires, is forfeited, is cancelled, or becomes
unexercisable, and Shares that are for any other reason not paid or delivered
under the Plan shall again, except to the extent prohibited by Applicable Law,
be available for subsequent Awards under the Plan.  In addition, the
Committee may make future Awards with respect to Shares that the Company retains
from otherwise delivering pursuant to an Award either (i) as payment of the
exercise price of an Award, or (ii) in order to satisfy the withholding or
employment taxes due upon the grant, exercise, vesting or distribution of an
Award.  Notwithstanding the foregoing, but subject to adjustments
pursuant to Section 13 below, the number of Shares that are available for ISO
Awards shall be determined, to the extent required under applicable tax laws, by
reducing the number of Shares designated in the preceding paragraph by the
number of Shares granted pursuant to Awards (whether or not Shares are issued
pursuant to such Awards), provided that any Shares that are either issued or
purchased under the Plan and forfeited back to the Plan, or surrendered in
payment of the Exercise Price for an Award shall be available for issuance
pursuant to future ISO Awards.

    


    4.           Administration

     

    (a)           General.  The
Committee shall administer the Plan in accordance with its terms, provided that
the Board may act in lieu of the Committee on any matter.  The
Committee shall hold meetings at such times and places as it may determine and
shall make such rules and regulations for the conduct of its business as it
deems advisable.  In the absence of a duly appointed Committee or if
the Board otherwise chooses to act in lieu of the Committee, the Board shall
function as the Committee for all purposes of the Plan.

     

    (b)           Committee
Composition.  The Board shall appoint the members of the
Committee.  If and to the extent permitted by Applicable Law, the
Committee may authorize one or more Reporting Persons (or other officers) to
make Awards to Eligible Persons who are not Reporting Persons (or other officers
whom the Committee has specifically authorized to make Awards).  The
Board may at any time appoint additional members to the Committee, remove and
replace members of the Committee with or without Cause, and fill vacancies on
the Committee however caused.

     

    (c)           Powers of the
Committee.  Subject to the provisions of the Plan, the
Committee shall have the authority, in its sole discretion:

     

    (i)  to determine Eligible
Persons to whom Awards shall be granted from time to time and the number of
Shares, units, or SARs to be covered by each Award;

     

    (ii)  to determine, from time
to time, the Fair Market Value of Shares;

     

    (iii)  to determine, and to
set forth in Award Agreements, the terms and conditions of all Awards, including
any applicable exercise or purchase price, the installments and conditions under
which an Award shall become vested (which may be based on performance),
terminated, expired, cancelled, or replaced, and the circumstances for vesting
acceleration or waiver of forfeiture restrictions, and other restrictions and
limitations;

     

    (iv)  to approve the forms of
Award Agreements and all other documents, notices and certificates in connection
therewith which need not be identical either as to type of Award or among
Participants;

     

    (v)  to construe and
interpret the terms of the Plan and any Award Agreement, to determine the
meaning of their terms, and to prescribe, amend, and rescind rules and
procedures relating to the Plan and its administration;


    
      
         


      

      
        5

        
          

        

      

      
         


      

    


    (vi)  in order to fulfill the
purposes of the Plan and without amending the Plan, modify, cancel, or waive the
Company’s rights with respect to any Awards, to adjust or to modify Award
Agreements for changes in Applicable Law, and to recognize differences in
foreign law, tax policies, or customs; and

     

    (vii)  to make all other
interpretations and to take all other actions that the Committee may consider
necessary or advisable to administer the Plan or to effectuate its
purposes.

     

    Subject to Applicable Law and the
restrictions set forth in the Plan, the Committee may delegate administrative
functions to individuals who are Reporting Persons, officers, or Employees of
the Company or its Affiliates.

     

    (d)           Deference to Committee
Determinations.  The Committee shall have the discretion to
interpret or construe ambiguous, unclear, or implied (but omitted) terms in any
fashion it deems to be appropriate in its sole discretion, and to make any
findings of fact needed in the administration of the Plan or Award
Agreements.  The Committee’s prior exercise of its discretionary
authority shall not obligate it to exercise its authority in a like fashion
thereafter.  The Committee’s interpretation and construction of any
provision of the Plan, or of any Award or Award Agreement, shall be final,
binding, and conclusive.  The validity of any such interpretation,
construction, decision or finding of fact shall not be given de novo review if
challenged in court, by arbitration, or in any other forum, and shall be upheld
unless clearly made in bad faith or materially affected by fraud.

     

    (e)           No Liability;
Indemnification.  Neither the Board nor any Committee member,
nor any Person acting at the direction of the Board or the Committee, shall be
liable for any act, omission, interpretation, construction or determination made
in good faith with respect to the Plan, any Award or any Award
Agreement.  The Company and its Affiliates shall pay or reimburse any
member of the Committee, as well as any Director, Employee, or Consultant who
takes action in connection with the Plan, for all expenses incurred with respect
to the Plan, and to the full extent allowable under Applicable Law shall
indemnify each and every one of them for any claims, liabilities, and costs
(including reasonable attorney’s fees) arising out of their good faith
performance of duties under the Plan.  The Company and its Affiliates
may obtain liability insurance for this purpose.

    


    5.           Eligibility

     

    (a)           General Rule.  The
Committee may grant ISOs only to Employees (including officers who are
Employees) of the Company or an Affiliate that is a “parent corporation” or
“subsidiary corporation” within the meaning of Section 424 of the Code, and may
grant all other Awards to any Eligible Person.  A Participant who has
been granted an Award may be granted an additional Award or Awards if the
Committee shall so determine, if such person is otherwise an Eligible Person and
if otherwise in accordance with the terms of the Plan.

     

    (b)           Grant of
Awards.  Subject to the express provisions of the Plan, the
Committee shall determine from the class of Eligible Persons those individuals
to whom Awards under the Plan may be granted, the number of Shares subject to
each Award, the price (if any) to be paid for the Shares or the Award and, in
the case of Performance Awards, in addition to the matters addressed in Section
10 below, the specific objectives, goals and performance criteria that further
define the Performance Award.  Each Award shall be evidenced by an
Award Agreement signed by the Company and, if required by the Committee, by the
Participant.  The Award Agreement shall set forth the material terms
and conditions of the Award established by the Committee, and each Award shall
be subject to the terms and conditions set forth in Sections 23, 24, and 25
unless otherwise specifically provided in an Award Agreement.

     

    (c)           Limits on
Awards.  During any calendar year, no Participant may receive
Options and SARs that relate to more than 1,000,000 Shares.  The
Committee will adjust this limitation pursuant to Section 13 below.

     

    (d)           Replacement
Awards.  Subject to Applicable Laws (including any associated
Shareholder approval requirements), the Committee may, in its sole discretion
and upon such terms as it deems appropriate, require as a condition of the grant
of an Award to a Participant that the Participant surrender for cancellation
some or all of the Awards that have previously been granted to the Participant
under this Plan or otherwise.  An Award that is conditioned upon such
surrender may or may not be the same type of Award, may cover the same (or a
lesser or greater) number of Shares as such surrendered Award, may have other
terms that are determined without regard to


    
      
         


      

      
        6

        
          

        

      

      
         


      

    


    the terms
or conditions of such surrendered Award, and may contain any other terms that
the Committee deems appropriate.  In the case of Options, these other
terms may not involve an Exercise Price that is lower than the Exercise Price of
the surrendered Option unless the Company’s shareholders approve the grant
itself or the program under which the grant is made pursuant to the
Plan.

    


    6.           Option
Awards

    


    (a)           Types;
Documentation.  The Committee may in its discretion grant ISOs
to any Employee and Non-ISOs to any Eligible Person, and shall evidence any such
grants in an Award Agreement that is delivered to the
Participant.  Each Option shall be designated in the Award Agreement
as an ISO or a Non-ISO, and the same Award Agreement may grant both types of
Options.  At the sole discretion of the Committee, any Option may be
exercisable, in whole or in part, immediately upon the grant thereof, or only
after the occurrence of a specified event, or only in installments, which
installments may vary.  Options granted under the Plan may contain
such terms and provisions not inconsistent with the Plan that the Committee
shall deem advisable in its sole and absolute discretion.

    


    (b)           ISO $100,000
Limitation.  To the extent that the aggregate Fair Market Value
of Shares with respect to which Options designated as ISOs first become
exercisable by a Participant in any calendar year (under this Plan and any other
plan of the Company or any Affiliate) exceeds $100,000, such excess Options
shall be treated as Non-ISOs.  For purposes of determining whether the
$100,000 limit is exceeded, the Fair Market Value of the Shares subject to an
ISO shall be determined as of the Grant Date.  In reducing the number
of Options treated as ISOs to meet the $100,000 limit, the most recently granted
Options shall be reduced first.  In the event that Section 422 of the
Code is amended to alter the limitation set forth therein, the limitation of
this Section 6(b) shall be automatically adjusted accordingly.

     

    (c)           Term of
Options.  Each Award Agreement shall specify a term at the end
of which the Option automatically expires, subject to earlier termination
provisions contained in Section 6(h) hereof; provided, that, the term of any
Option may not exceed ten years from the Grant Date.  In the case of
an ISO granted to an Employee who is a Ten Percent Holder on the Grant Date, the
term of the ISO shall not exceed five years from the Grant Date.

     

    (d)           Exercise
Price.  The exercise price of an Option shall be determined by
the Committee in its sole discretion and shall be set forth in the Award
Agreement, provided that (i) if an ISO is granted to an Employee who on the
Grant Date is a Ten Percent Holder, the per Share exercise price shall not be
less than 110% of the Fair Market Value per Share on the Grant Date, and (ii)
for all other Options, such per Share exercise price shall not be less than 100%
of the Fair Market Value per Share on the Grant Date.  Neither the
Company nor the Committee shall, without shareholder approval, allow for a
repricing within the meaning of the federal securities laws applicable to proxy
statement disclosures.

     

    (e)           Exercise of
Option.  The times, circumstances and conditions under which an
Option shall be exercisable shall be determined by the Committee in its sole
discretion and set forth in the Award Agreement.  The Committee shall
have the discretion to determine whether and to what extent the vesting of
Options shall be tolled during any unpaid leave of absence; provided, however,
that in the absence of such determination, vesting of Options shall be tolled
during any such leave approved by the Company.

     

    (f)           Minimum Exercise
Requirements.  An Option may not be exercised for a fraction of
a Share.  The Committee may require in an Award Agreement that an
Option be exercised as to a minimum number of Shares, provided that such
requirement shall not prevent a Participant from purchasing the full number of
Shares as to which the Option is then exercisable.

     

    (g)           Methods of
Exercise.  Prior to its expiration pursuant to the terms of the
applicable Award Agreement, and subject to the times, circumstances and
conditions for exercise contained in the applicable Award Agreement, each Option
may be exercised, in whole or in part (provided that the Company shall not be
required to issue fractional shares), by delivery of written notice of exercise
to the secretary of the Company accompanied by the full exercise price of the
Shares being purchased.  In the case of an ISO, the Committee shall
determine the acceptable methods of payment on the Grant Date and it shall be
included in the applicable Award Agreement.  The


    
      
         


      

      
        7

        
          

        

      

      
         


      

    


    methods
of payment that the Committee may in its discretion accept or commit to accept
in an Award Agreement include:

    


    (i)  cash or check payable to
the Company (in U.S. dollars);

     

    (ii)  other Shares that (A)
are owned by the Participant who is purchasing Shares pursuant to an Option, (B)
have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which the Option is being exercised, (C) were
not acquired by such Participant pursuant to the exercise of an Option, unless
such Shares have been owned by such Participant for at least six months or such
other period as the Committee may determine, (D) are all, at the time of such
surrender, free and clear of any and all claims, pledges, liens and
encumbrances, or any restrictions which would in any manner restrict the
transfer of such shares to or by the Company (other than such restrictions as
may have existed prior to an issuance of such Shares by the Company to such
Participant), and (E) are duly endorsed for transfer to the
Company;

     

    (iii)  a cashless exercise
program that the Committee may approve, from time to time in its discretion,
pursuant to which a Participant may concurrently provide irrevocable
instructions (A) to such Participant’s broker or dealer to effect the immediate
sale of the purchased Shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the exercise price
of the Option plus all applicable taxes required to be withheld by the Company
by reason of such exercise, and (B) to the Company to deliver the certificates
for the purchased Shares directly to such broker or dealer in order to complete
the sale; or

    


    (iv)  any combination of the
foregoing methods of payment.

     

    The Company shall not be required to
deliver Shares pursuant to the exercise of an Option until payment of the full
exercise price therefore is received by the Company.

     

    (h)           Termination of Continuous
Service.  The Committee may establish and set forth in the
applicable Award Agreement the terms and conditions on which an Option shall
remain exercisable, if at all, following termination of a Participant’s
Continuous Service.  The Committee may waive or modify these
provisions at any time.  To the extent that a Participant is not
entitled to exercise an Option at the date of his or her termination of
Continuous Service, or if the Participant (or other person entitled to exercise
the Option) does not exercise the Option to the extent so entitled within the
time specified in the Award Agreement or below (as applicable), the Option shall
terminate and the Shares underlying the unexercised portion of the Option shall
revert to the Plan and become available for future Awards.  In no
event may any Option be exercised after the expiration of the Option term as set
forth in the Award Agreement.

     

    The following provisions shall apply to
the extent an Award Agreement does not specify the terms and conditions upon
which an Option shall terminate when there is a termination of a Participant’s
Continuous Service:

     

    (i)           Termination other than Upon
Disability or Death or for Cause.  In the event of termination
of a Participant’s Continuous Service (other than as a result of Participant’s
death, disability, retirement or termination for Cause), the Participant shall
have the right to exercise an Option at any time within 90 days following such
termination to the extent the Participant was entitled to exercise such Option
at the date of such termination.

     

    (ii)           Disability.  In the
event of termination of a Participant’s Continuous Service as a result of his or
her being Disabled, the Participant shall have the right to exercise an Option
at any time within one year following such termination to the extent the
Participant was entitled to exercise such Option at the date of such
termination.

     

    (iii)           Retirement.  In the
event of termination of a Participant’s Continuous Service as a result of
Participant’s retirement, the Participant shall have the right to exercise the
Option at any time within six months following such termination to the extent
the Participant was entitled to exercise such Option at the date of such
termination.


    
      
         


      

      
        8

        
          

        

      

      
         


      

    


    (iv)           Death.  In the
event of the death of a Participant during the period of Continuous Service
since the Grant Date of an Option, or within thirty days following termination
of the Participant’s Continuous Service, the Option may be exercised, at any
time within one year following the date of the Participant’s death, by the
Participant’s estate or by a person who acquired the right to exercise the
Option by bequest or inheritance, but only to the extent the right to exercise
the Option had vested at the date of death or, if earlier, the date the
Participant’s Continuous Service terminated.

     

    (v)           Cause.  If the
Committee determines that a Participant’s Continuous Service terminated due to
Cause, the Participant shall immediately forfeit the right to exercise any
Option, and it shall be considered immediately null and void.

     

    (i)           Reverse
Vesting.  The Committee in its sole discretion may allow a
Participant to exercise unvested Options, in which case the Shares then issued
shall be Restricted Shares having analogous vesting restrictions to the unvested
Options.

     

    (j)           Buyout
Provisions.  The Committee may at any time offer to buy out an
Option, in exchange for a payment in cash or Shares, based on such terms and
conditions as the Committee shall establish and communicate to the Participant
at the time that such offer is made.

    


    7.           Share
Appreciate Rights (SARs)

     

    (a)           Grants.  The
Committee may in its discretion grant Share Appreciation Rights to any Eligible
Person, in any of the following forms:

     

    (i)           SARs related to
Options.  The Committee may grant SARs either concurrently with
the grant of an Option or with respect to an outstanding Option, in which case
the SAR shall extend to all or a portion of the Shares covered by the related
Option.  An SAR shall entitle the Participant who holds the related
Option, upon exercise of the SAR and surrender of the related Option, or portion
thereof, to the extent the SAR and related Option each were previously
unexercised, to receive payment of an amount determined pursuant to Section 7(e)
below.  Any SAR granted in connection with an ISO will contain such
terms as may be required to comply with the provisions of Section 422 of the
Code and the regulations promulgated thereunder.

    


    (ii)           SARs Independent of
Options.  The Committee may grant SARs which are independent of
any Option subject to such conditions as the Committee may in its discretion
determine, which conditions will be set forth in the applicable Award
Agreement.

    


    (iii)           Limited SARs.  The
Committee may grant SARs exercisable only upon or in respect of a Change in
Control or any other specified event, and such limited SARs may relate to or
operate in tandem or combination with or substitution for Options or other SARs,
or on a stand-alone basis, and may be payable in cash or Shares based on the
spread between the exercise price of the SAR, and (A) a price based upon or
equal to the Fair Market Value of the Shares during a specified period, at a
specified time within a specified period before, after or including the date of
such event, or (B) a price related to consideration payable to Company’s
shareholders generally in connection with the event.

     

    (b)           Exercise
Price.  The per Share exercise price of an SAR shall be
determined in the sole discretion of the Committee, shall be set forth in the
applicable Award Agreement, and shall be no less than 100% of the Fair Market
Value of one Share.  The exercise price of an SAR related to an Option
shall be the same as the exercise price of the related
Option.  Neither the Company nor the Committee shall, without
shareholder approval, allow for a repricing within the meaning of federal
securities laws applicable to proxy statement disclosures.

     

    (c)           Exercise of
SARs.  Unless the Award Agreement otherwise provides, an SAR
related to an Option will be exercisable at such time or times, and to the
extent, that the related Option will be exercisable; provided that the Award
Agreement shall not, without the approval of the shareholders of the Company,
provide for a vesting period for the exercise of the SAR that is more favorable
to the Participant than the exercise period for the related
Option.  An SAR may not have a term exceeding ten years from its Grant
Date.  An SAR granted independently of


    
      
         


      

      
        9

        
          

        

      

      
         


      

    


    any other
Award will be exercisable pursuant to the terms of the Award Agreement, but
shall not, without the approval of the shareholders of the Company, provide for
a vesting period for the exercise of the SAR that is more favorable to the
Participant than the exercise period for the related Option.  Whether
an SAR is related to an Option or is granted independently, the SAR may only be
exercised when the Fair Market Value of the Shares underlying the SAR exceeds
the exercise price of the SAR.

     

    (d)           Effect on Available
Shares.  All SARs that may be settled in shares of the
Company’s stock shall be counted in full against the number of shares available
for award under the Plan, regardless of the number of shares actually issued
upon settlement of the SARs.

     

    (e)           Payment.  Upon
exercise of an SAR related to an Option and the attendant surrender of an
exercisable portion of any related Award, the Participant will be entitled to
receive payment of an amount determined by multiplying —

     

    (i)  the excess of the Fair
Market Value of a Share on the date of exercise of the SAR over the exercise
price per Share of the SAR, by

    


    (ii)  the number of Shares
with respect to which the SAR has been exercised.

     

    Notwithstanding the foregoing, an SAR
granted independently of an Option (i) may limit the amount payable to the
Participant to a percentage, specified in the Award Agreement but not exceeding
one-hundred percent (100%), of the amount determined pursuant to the preceding
sentence, and (ii) shall be subject to any payment or other restrictions that
the Committee may at any time impose in its discretion, including restrictions
intended to conform the SARs with Section 409A of the Code.

     

    (f)           Form and Terms of
Payment.  Subject to Applicable Law, the Committee may, in its
sole discretion, settle the amount determined under Section 7(e) above solely in
cash, solely in Shares (valued at their Fair Market Value on the date of
exercise of the SAR), or partly in cash and partly in Shares, with cash paid in
lieu of fractional shares.  Unless otherwise provided in an Award
Agreement, all SARs shall be settled in Shares as soon as practicable after
exercise.

     

    (g)           Termination of Employment or
Consulting Relationship.  The Committee shall establish and set
forth in the applicable Award Agreement the terms and conditions on which an SAR
shall remain exercisable, if at all, following termination of a Participant’s
Continuous Service.  The provisions of Section 6(h) above shall apply
to the extent an Award Agreement does not specify the terms and conditions upon
which an SAR shall terminate when there is a termination of a Participant’s
Continuous Service.

     

    (h)           Buy out.  The
Committee has the same discretion to buy out SARs as it has to take such actions
pursuant to Section 6(j) above with respect to Options.

    


    8.           Restricted
Shares, Restricted Share Units, and Unrestricted Shares

     

    (a)           Grants.  The
Committee may in its sole discretion grant restricted shares (“Restricted
Shares”) to any Eligible Person and shall evidence such grant in an Award
Agreement that is delivered to the Participant and that
sets forth the number of Restricted Shares, the purchase price for such
Restricted Shares (if any), and the terms upon which the Restricted Shares may
become vested.  In addition, the Company may in its discretion grant
the right to receive Shares after certain vesting requirements are met
(“Restricted Share Units”) to any Eligible Person and shall evidence such grant
in an Award Agreement that is delivered to the Participant which sets forth the
number of Shares (or formula, that may be based on future performance or
conditions, for determining the number of Shares) that the Participant shall be
entitled to receive upon vesting and the terms upon which the Shares subject to
a Restricted Share Unit may become vested.  The Committee may
condition any Award of Restricted Shares or Restricted Share Units to a
Participant on receiving from the Participant such further assurances and
documents as the Committee may require to enforce the
restrictions.  In addition, the Committee may grant Awards hereunder
in the form of unrestricted shares (“Unrestricted Shares”), which shall vest in
full upon the date of grant or such other date as the Committee may determine or
which the Committee may issue pursuant to any program under which
one


    
      
         


      

      
        10

        
          

        

      

      
         


      

    

    or more
Eligible Persons (selected by the Committee in its sole discretion) elect to
receive Unrestricted Shares in lieu of cash bonuses that would otherwise be
paid.

     

    (b)           Vesting and
Forfeiture.  The Committee shall set forth in an Award
Agreement granting Restricted Shares or Restricted Share Units, the terms and
conditions under which the Participant’s interest in the Restricted Shares or
the Shares subject to Restricted Share Units will become vested and
non-forfeitable.  Except as set forth in the applicable Award
Agreement or the Committee otherwise determines, upon termination of a
Participant’s Continuous Service for any other reason, the Participant shall
forfeit his or her Restricted Shares and Restricted Share Units; provided that
if a Participant purchases the Restricted Shares and forfeits them for any
reason, the Company shall return the purchase price to the Participant only if
and to the extent set forth in an Award Agreement.

     

    (c)           Issuance of Restricted Shares Prior
to Vesting.  The Company shall issue stock certificates that
evidence Restricted Shares pending the lapse of applicable restrictions, and
that bear a legend making appropriate reference to such
restrictions.  Except as set forth in the applicable Award Agreement
or the Committee otherwise determines, the Company or a third party that the
Company designates shall hold such Restricted Shares and any dividends that
accrue with respect to Restricted Shares pursuant to Section 8(e)
below.

     

    (d)           Issuance of Shares upon
Vesting.  As soon as practicable after vesting of a
Participant’s Restricted Shares (or Shares underlying Restricted Share Units)
and the Participant’s satisfaction of applicable tax withholding requirements,
the Company shall release to the Participant, free from the vesting
restrictions, one Share for each vested Restricted Share (or issue one Share
free of the vesting restriction for each vested Restricted Share Unit), unless
an Award Agreement provides otherwise.  No fractional shares shall be
distributed, and cash shall be paid in lieu thereof.

     

    (e)           Dividends Payable on
Vesting.  Whenever Shares are released to a Participant or
duly-authorized transferee pursuant to Section 8(d) above as a result of the
vesting of Restricted Shares or the Shares underlying Restricted Share Units are
issued to a Participant pursuant to Section 8(d) above, such Participant or
duly-authorized transferee shall also be entitled to receive (unless otherwise
provided in the Award Agreement), with respect to each Share released or issued,
an amount equal to any cash dividends (plus, in the sole discretion of the
Committee, simple interest at a rate as the Committee may determine) and a
number of Shares equal to any stock dividends, which were declared and paid to
the holders of Shares between the Grant Date and the date such Share is released
from the vesting restrictions in the case of Restricted Shares or issued in the
case of Restricted Share Units.

     

    (f)           Section 83(b)
Elections.  A Participant may make an election under Section
83(b) of the Code (the “Section 83(b) Election”) with respect to Restricted
Shares.  If a Participant who has received Restricted Share Units
provides the Committee with written notice of his or her intention to make a
Section 83(b) Election with respect to the Shares subject to such Restricted
Share Units, the Committee may in its discretion convert the Participant’s
Restricted Share Units into Restricted Shares, on a one-for-one basis, in full
satisfaction of the Participant’s Restricted Share Unit Award.  The
Participant may then make a Section 83(b) Election with respect to those
Restricted Shares.  Shares with respect to which a Participant makes a
Section 83(b) Election shall not be eligible for deferral pursuant to Section 9
below.

     

    (g)           Deferral
Elections.  At any time within the thirty-day period (or other
shorter or longer period that the Committee selects in its sole discretion) in
which a Participant who is a member of a select group of management or highly
compensated employees (within the meaning of the Code) receives an Award of
either Restricted Shares or Restricted Share Units, the Committee may permit the
Participant to irrevocably elect, on a form provided by and acceptable to the
Committee, to defer the receipt of all or a percentage of the Shares that would
otherwise be transferred to the Participant upon the vesting of such
Award.  If the Participant makes this election, the Shares subject to
the election, and any associated dividends and interest, shall be credited to an
account established pursuant to Section 9 hereof on the date such Shares would
otherwise have been released or issued to the Participant pursuant to Section
8(d) above.

    


    9.           Deferred
Share Units

     

    (a)           Elections to
Defer.  The Committee may permit any Eligible Person who is a
Director, Consultant or member of a select group of management or highly
compensated employees (within the meaning of the Code) to


    
      
         


      

      
        11

        
          

        

      

      
         


      

    


    irrevocably
elect, on a form provided by and acceptable to the Committee (the “Election
Form”), to forego the receipt of cash or other compensation (including the
Shares deliverable pursuant to any Award other than Restricted Shares for which
a Section 83(b) Election has been made), and in lieu thereof to have the Company
credit to an internal Plan account (the “Account”) a number of deferred share
units (“Deferred Share Units”) having a Fair Market Value equal to the Shares
and other compensation deferred.  These credits will be made at the
end of each calendar month during which compensation is
deferred.  Each Election Form shall take effect on the first day of
the next calendar year (or on the first day of the next calendar month in the
case of an initial election by a Participant who first becomes eligible to defer
hereunder) after its delivery to the Company, subject to Section 8(g) regarding
deferral of Restricted Shares and Restricted Share Units and to Section 10(e)
regarding deferral of Performance Awards, unless the Company sends the
Participant a written notice explaining why the Election Form is invalid within
five business days after the Company receives it.  Notwithstanding the
foregoing sentence: (i) Election Forms shall be ineffective with respect to any
compensation that a Participant earns before the date on which the Company
receives the Election Form, and (ii) the Committee may unilaterally make awards
in the form of Deferred Share Units, regardless of whether or not the
Participant foregoes other compensation.

     

    (b)           Vesting.  Unless an
Award Agreement expressly provides otherwise, each Participant shall be 100%
vested at all times in any Shares subject to Deferred Share Units.

     

    (c)           Issuances of
Shares.  The Company shall provide a Participant with one Share
for each Deferred Share Unit in five substantially equal annual installments
that are issued before the last day of each of the five calendar years that end
after the date on which the Participant’s Continuous Service terminates, unless
—

     

    (i)  the Participant has
properly elected a different form of distribution, on a form approved by the
Committee, that permits the Participant to select any combination of a lump sum
and annual installments that are completed within ten years following
termination of the Participant’s Continuous Service, and

     

    (ii)  the Company received
the Participant’s distribution election form at the time the Participant elects
to defer the receipt of cash or other compensation pursuant to Section 9(a),
provided that such election may be changed through any subsequent election that
(i) is delivered to the Company at least one year before the date on which
distributions are otherwise scheduled to commence pursuant to the Participant’s
election, and (ii) defers the commencement of distributions by at least five
years from the originally scheduled commencement date.

    


    Fractional
shares shall not be issued, and instead shall be paid out in cash.

     

    (d)           Crediting of
Dividends.  Whenever Shares are issued to a Participant
pursuant to Section 9(c) above, such Participant shall also be entitled to
receive, with respect to each Share issued, a cash amount equal to any cash
dividends (plus simple interest at a rate of five percent per annum, or such
other reasonable rate as the Committee may determine), and a number of Shares
equal to any stock dividends which were declared and paid to the holders of
Shares between the Grant Date and the date such Share is issued.

     

    (e)           Emergency
Withdrawals.  In the event a Participant suffers an
unforeseeable emergency within the contemplation of this Section and Section
409A of the Code, the Participant may apply to the Company for an immediate
distribution of all or a portion of the Participant’s Deferred Share
Units.  The unforeseeable emergency must result from a sudden and
unexpected illness or accident of the Participant, the Participant’s spouse, or
a dependent (within the meaning of Section 152(a) of the Code) of the
Participant, casualty loss of the Participant’s property, or other similar
extraordinary and unforeseeable conditions beyond the control of the
Participant.  Examples of purposes which are not considered
unforeseeable emergencies include post-secondary school expenses or the desire
to purchase a residence.  In no event will a distribution be made to
the extent the unforeseeable emergency could be relieved through reimbursement
or compensation by insurance or otherwise, or by liquidation of the
Participant’s nonessential assets to the extent such liquidation would not
itself cause a severe financial hardship.  The amount of any
distribution hereunder shall be limited to the amount necessary to relieve the
Participant’s unforeseeable emergency plus amounts necessary to pay taxes
reasonably anticipated as a result of the distribution.  The Committee
shall determine whether a Participant has a qualifying unforeseeable emergency
and the amount which qualifies for distribution, if any.  The
Committee may require evidence of the purpose and amount of the need, and may
establish such application or other procedures as it deems
appropriate.


    
      
         


      

      
        12

        
          

        

      

      
         


      

    


    (f)           Unsecured Rights to Deferred
Compensation.  A Participant’s right to Deferred Share Units
shall at all times constitute an unsecured promise of the Company to pay
benefits as they come due.  The right of the Participant or the
Participant’s duly-authorized transferee to receive benefits hereunder shall be
solely an unsecured claim against the general assets of the
Company.  Neither the Participant nor the Participant’s
duly-authorized transferee shall have any claim against or rights in any
specific assets, shares, or other funds of the Company.

    


    10.           Performance
Awards

     

    (a)           Performance
Units.  Subject to the limitations set forth in paragraph (c)
hereof, the Committee may in its discretion grant Performance Units to any
Eligible Person and shall evidence such grant in an Award Agreement that is
delivered to the Participant which sets forth the terms and conditions of the
Award.

     

    (b)           Performance Compensation
Awards.  Subject to the limitations set forth in paragraph (c)
hereof, the Committee may, at the time of grant of a Performance Unit, designate
such Award as a “Performance Compensation Award” (payable in cash or Shares) in
order that such Award constitutes “qualified performance-based compensation”
under Code Section 162(m), in which event the Committee shall have the power to
grant such Performance Compensation Award upon terms and conditions that qualify
it as “qualified performance-based compensation” within the meaning of Code
Section 162(m).  With respect to each such Performance Compensation
Award, the Committee shall establish, in writing within the time required under
Code Section 162(m), a “Performance Period,” “Performance Measure(s)”, and
“Performance Formula(e)” (each such term being hereinafter
defined).  Once established for a Performance Period, the Performance
Measure(s) and Performance Formula(e) shall not be amended or otherwise modified
to the extent such amendment or modification would cause the compensation
payable pursuant to the Award to fail to constitute qualified performance-based
compensation under Code Section 162(m).

     

    A Participant shall be eligible to
receive payment in respect of a Performance Compensation Award only to the
extent that the Performance Measure(s) for such Award is achieved and the
Performance Formula(e) as applied against such Performance Measure(s) determines
that all or some portion of such Participant’s Award has been earned for the
Performance Period.  As soon as practicable after the close of each
Performance Period, the Committee shall review and certify in writing whether,
and to what extent, the Performance Measure(s) for the Performance Period have
been achieved and, if so, determine and certify in writing the amount of the
Performance Compensation Award to be paid to the Participant and, in so doing,
may use negative discretion to decrease, but not increase, the amount of the
Award otherwise payable to the Participant based upon such
performance.

     

    (c)           Limitations on
Awards.  The maximum Performance Unit Award and the maximum
Performance Compensation Award that any one Participant may receive for any one
Performance Period shall not together exceed 1,000,000 Shares and $1,000,000 in
cash.  The Committee shall have the discretion to provide in any Award
Agreement that any amounts earned in excess of these limitations will either be
credited as Deferred Share Units, or as deferred cash compensation under a
separate plan of the Company (provided in the latter case that such deferred
compensation either bears a reasonable rate of interest or has a value based on
one or more predetermined actual investments).  Any amounts for which
payment to the Participant is deferred pursuant to the preceding sentence shall
be paid to the Participant in a future year or years not earlier than, and only
to the extent that, the Participant is either not receiving compensation in
excess of these limits for a Performance Period, or is not subject to the
restrictions set forth under Section 162(b) of the Code.

    


    (d)           Definitions.

     

    (i)  ”Performance Formula”
means, for a Performance Period, one or more objective formulas or standards
established by the Committee for purposes of determining whether or the extent
to which an Award has been earned based on the level of performance attained or
to be attained with respect to one or more Performance
Measure(s).  Performance Formulae may vary from Performance Period to
Performance Period and from Participant to Participant and may be established on
a stand-alone basis, in tandem or in the alternative.

     

    (ii)  ”Performance Measure”
means one or more of the following selected by the Committee to measure Company,
Affiliate, and/or business unit performance for a Performance Period, whether
in


    
      
         


      

      
        13

        
          

        

      

      
         


      

    


    absolute
or relative terms (including, without limitation, terms relative to a peer group
or index): basic, diluted, or adjusted earnings per share; sales or revenue;
earnings before interest, taxes, and other adjustments (in total or on a per
share basis); basic or adjusted net income; returns on equity, assets, capital,
revenue or similar measure; economic value added; working capital; total
shareholder return; and product development, product market share, research,
licensing, litigation, human resources, information services, mergers,
acquisitions, sales of assets of Affiliates or business units.  Each
such measure shall be, to the extent applicable, determined in accordance with
generally accepted accounting principles as consistently applied by the Company
(or such other standard applied by the Committee) and, if so determined by the
Committee, and in the case of a Performance Compensation Award, to the extent
permitted under Code Section 162(m), adjusted to omit the effects of
extraordinary items, gain or loss on the disposal of a business segment, unusual
or infrequently occurring events and transactions and cumulative effects of
changes in accounting principles.  Performance Measures may vary from
Performance Period to Performance Period and from Participant to Participant,
and may be established on a stand-alone basis, in tandem or in the
alternative.

    


    (iii)  “Performance Period”
means one or more periods of time (of not less than one fiscal year of the
Company), as the Committee may designate, over which the attainment of one or
more Performance Measure(s) will be measured for the purpose of determining a
Participant’s rights in respect of an Award.

     

    (e)           Deferral
Elections.  At any time prior to the date that is at least six
months before the close of a Performance Period (or shorter or longer period
that the Committee selects) with respect to an Award of either Performance Units
or Performance Compensation, the Committee may permit a Participant who is a
member of a select group of management or highly compensated employees (within
the meaning of the Code) to irrevocably elect, on a form provided by and
acceptable to the Committee, to defer the receipt of all or a percentage of the
cash or Shares that would otherwise be transferred to the Participant upon the
vesting of such Award.  If the Participant makes this election, the
cash or Shares subject to the election, and any associated interest and
dividends, shall be credited to an account established pursuant to Section 9
hereof on the date such cash or Shares would otherwise have been released or
issued to the Participant pursuant to Section 10(a) or Section 10(b)
above.

    


    11.           Taxes

     

    (a)           General.  As a
condition to the issuance or distribution of Shares pursuant to the Plan, the
Participant (or in the case of the Participant’s death, the person who succeeds
to the Participant’s rights) shall make such arrangements as the Company may
require for the satisfaction of any applicable federal, state, local or foreign
withholding tax obligations that may arise in connection with the Award and the
issuance of Shares.  The Company shall not be required to issue any
Shares until such obligations are satisfied.  If the Committee allows
the withholding or surrender of Shares to satisfy a Participant’s tax
withholding obligations, the Committee shall not allow Shares to be withheld in
an amount that exceeds the minimum statutory withholding rates for federal and
state tax purposes, including payroll taxes.

     

    (b)           Default Rule for
Employees.  In the absence of any other arrangement, an
Employee shall be deemed to have directed the Company to withhold or collect
from his or her cash compensation an amount sufficient to satisfy such tax
obligations from the next payroll payment otherwise payable after the date of
the exercise of an Award.

     

    (c)           Special Rules.  In
the case of a Participant other than an Employee (or in the case of an Employee
where the next payroll payment is not sufficient to satisfy such tax
obligations, with respect to any remaining tax obligations), in the absence of
any other arrangement and to the extent permitted under Applicable Law, the
Participant shall be deemed to have elected to have the Company withhold from
the Shares or cash to be issued pursuant to an Award that number of Shares
having a Fair Market Value determined as of the applicable Tax Date (as defined
below) or cash equal to the amount required to be withheld.  For
purposes of this Section 11, the Fair Market Value of the Shares to be withheld
shall be determined on the date that the amount of tax to be withheld is to be
determined under the Applicable Law (the “Tax Date”).

     

    (d)           Surrender of
Shares.  If permitted by the Committee, in its discretion, a
Participant may satisfy the minimum applicable tax withholding and employment
tax obligations associated with an Award by surrendering


    
      
         


      

      
        14

        
          

        

      

      
         


      

    


    Shares to
the Company (including Shares that would otherwise be issued pursuant to the
Award) that have a Fair Market Value determined as of the applicable Tax Date
equal to the amount required to be withheld.  In the case of Shares
previously acquired from the Company that are surrendered under this Section 11,
such Shares must have been owned by the Participant for more than six months on
the date of surrender (or such longer period of time the Company may in its
discretion require).

     

    (e)           Income Taxes and Deferred
Compensation.  Participants are solely responsible and liable
for the satisfaction of all taxes and penalties that may arise in connection
with Awards (including any taxes arising under Section 409A of the Code), and
the Company shall not have any obligation to indemnify or otherwise hold any
Participant harmless from any or all of such taxes.  The Committee
shall have the discretion to organize any deferral program, to require deferral
election forms, and to grant or to unilaterally modify any Award in a manner
that (i) conforms with the requirements of Section 409A of the Code with respect
to compensation that is deferred and that vests after December 31, 2004, (ii)
that voids any Participant election to the extent it would violate Section 409A
of the Code, and (iii) for any distribution election that would violate Section
409A of the Code, to make distributions pursuant to the Award at the earliest to
occur of a distribution event that is allowable under Section 409A of the Code
or any distribution event that is both allowable under Section 409A of the Code
and is elected by the Participant, subject to any valid second election to
defer, provided that the Committee permits second elections to defer in
accordance with Section 409A(a)(4)(C).  The Committee shall have the
sole discretion to interpret the requirements of the Code, including Section
409A, for purposes of the Plan and all Awards.

    


    12.           Non-Transferability
of Awards

     

    (a)           General.  Except as
set forth in this Section 12, or as otherwise approved by the Committee, Awards
may not be sold, pledged, assigned, hypothecated, transferred or disposed of in
any manner other than by will or by the laws of descent or
distribution.  The designation of a beneficiary by a Participant will
not constitute a transfer.  An Award may be exercised, during the
lifetime of the holder of an Award, only by such holder, the duly-authorized
legal representative of a Participant who is Disabled, or a transferee permitted
by this Section 12.

     

    (b)           Limited Transferability
Rights.  Notwithstanding anything else in this Section 12, the
Committee may in its discretion provide in an Award Agreement that an Award
other than an ISO may be transferred, on such terms and conditions as the
Committee deems appropriate, either (i) by instrument to the Participant’s
“Immediate Family” (as defined below), (ii) by instrument to an inter vivos or
testamentary trust (or other entity) in which the Award is to be passed to the
Participant’s designated beneficiaries, or (iii) by gift to charitable
institutions.  Any transferee of the Participant’s rights shall
succeed and be subject to all of the terms of the applicable Award Agreement and
the Plan.  “Immediate Family” means any child, stepchild, grandchild,
parent, stepparent, grandparent, 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, and shall include adoptive relationships.

    


    13.           Adjustments
Upon Changes in Capitalization, Merger or Certain Other
Transactions

     

    (a)           Changes in
Capitalization.  The Committee shall equitably adjust the
number of Shares covered by each outstanding Award, and the number of Shares
that have been authorized for issuance under the Plan but as to which no Awards
have yet been granted or that have been returned to the Plan upon cancellation,
forfeiture, or expiration of an Award, as well as the price per Share covered by
each such outstanding Award, to reflect any increase or decrease in the number
of issued Shares resulting from a stock-split, reverse stock-split, stock
dividend, combination, recapitalization or reclassification of the Shares, or
any other increase or decrease in the number of issued Shares effected without
receipt of consideration by the Company.  In the event of any such
transaction or event, the Committee may provide in substitution for any or all
outstanding Options under the Plan such alternative consideration (including
securities of any surviving entity) as it may in good faith determine to be
equitable under the circumstances and may require in connection therewith the
surrender of all Options so replaced.  In any case, such substitution
of securities shall not require the consent of any person who is granted Options
pursuant to the Plan.  Except as expressly provided herein, or in an
Award Agreement, if the Company issues for consideration shares of stock of any
class or securities convertible into shares of stock
of any class, the issuance shall not affect, and no adjustment by reason thereof
shall be required to be made with respect to the number or price of Shares
subject to any Award.

    



    
      
         


      

      
        15

        
          

        

      

      
         


      

    


    (b)           Dissolution or
Liquidation.  In the event of the dissolution or liquidation of
the Company other than as part of a Change of Control, each Award will terminate
immediately prior to the consummation of such action, subject to the ability of
the Committee to exercise any discretion authorized in the case of a Change in
Control.

     

    (c)           Change in
Control.  In the event of a Change in Control, the Committee
may in its sole and absolute discretion and authority, without obtaining the
approval or consent of the Company’s shareholders or any Participant with
respect to his or her outstanding Awards, take one or more of the following
actions:

     

    (i)  arrange for or otherwise
provide that each outstanding Award shall be assumed or a substantially similar
award shall be substituted by a successor corporation or a parent or subsidiary
of such successor corporation (the “Successor Corporation”);

     

    (ii)  accelerate the vesting
of Awards so that Awards shall vest (and, to the extent applicable, become
exercisable) as to the Shares that otherwise would have been unvested and
provide that repurchase rights of the Company with respect to Shares issued upon
exercise of an Award shall lapse as to the Shares subject to such repurchase
right;

     

    (iii)  arrange or otherwise
provide for the payment of cash or other consideration to Participants in
exchange for the satisfaction and cancellation of outstanding
Awards;

     

    (iv)  terminate upon the
consummation of the transaction, provided that the Committee may in its sole
discretion provide for vesting of all or some outstanding Awards in full as of a
date immediately prior to consummation of the Change of Control.  To
the extent that an Award is not exercised prior to consummation of a transaction
in which the Award is not being assumed or substituted, such Award shall
terminate upon such consummation; or

     

    (v)  make such other
modifications, adjustments or amendments to outstanding Awards or this Plan as
the Committee deems necessary or appropriate, subject however to the terms of
Section 15(a) below.

     

    Notwithstanding the above, in the event
a Participant holding an Award assumed or substituted by the Successor
Corporation in a Change in Control is Involuntarily Terminated by the Successor
Corporation in connection with, or within 12 months following consummation of,
the Change in Control, then any assumed or substituted Award held by the
terminated Participant at the time of termination shall accelerate and become
fully vested (and exercisable in full in the case of Options and SARs), and any
repurchase right applicable to any Shares shall lapse in full, unless an Award
Agreement provides for a more restrictive acceleration or vesting schedule or
more restrictive limitations on the lapse of repurchase rights or otherwise
places additional restrictions, limitations and conditions on an
Award.  The acceleration of vesting and lapse of repurchase rights
provided for in the previous sentence shall occur immediately prior to the
effective date of the Participant’s termination, unless an Award Agreement
provides otherwise.

     

    (d)           Certain
Distributions.  In the event of any distribution to the
Company’s shareholders of securities of any other entity or other assets (other
than dividends payable in cash or stock of the Company) without receipt of
consideration by the Company, the Committee may, in its discretion,
appropriately adjust the price per Share covered by each outstanding Award to
reflect the effect of such distribution.

    


    14.           Time
of Granting Awards

     

    The date of grant (“Grant Date”) of an
Award shall be the date on which the Committee makes the determination granting
such Award or such other date as is determined by the Committee, provided that
in the case of an ISO, the Grant Date shall be the later of the date on which
the Committee makes the determination granting such ISO or the date of
commencement of the Participant’s employment relationship with the
Company.

    



    
      
         


      

      
        16

        
          

        

      

      
         


      

    


    15.           Modification
of Awards and Substitution of Options

     

    (a)           Modification, Extension, and Renewal
of Awards.  Within the limitations of the Plan, the Committee
may modify an Award to accelerate the rate at which an Option or SAR may be
exercised (including without limitation permitting an Option or SAR to be
exercised in full without regard to the installment or vesting provisions of the
applicable Award Agreement or whether the Option or SAR is at the time
exercisable, to the extent it has not previously been exercised), to accelerate
the vesting of any Award, to extend or renew outstanding Awards or to accept the
cancellation of outstanding Awards to the extent not previously
exercised.  However, the Committee may not cancel an outstanding
option that is underwater for the purpose of reissuing the option to the
participant at a lower exercise price or granting a replacement award of a
different type.  Notwithstanding the foregoing provision, no
modification of an outstanding Award shall materially and adversely affect such
Participant’s rights thereunder, unless either the Participant provides written
consent or there is an express Plan provision permitting the Committee to act
unilaterally to make the modification.

     

    (b)           Substitution of
Options.  Notwithstanding any inconsistent provisions or limits
under the Plan, in the event the Company or an Affiliate acquires (whether by
purchase, merger or otherwise) all or substantially all of outstanding capital
stock or assets of another corporation or in the event of any reorganization or
other transaction qualifying under Section 424 of the Code, the Committee may,
in accordance with the provisions of that Section, substitute Options for
options under the plan of the acquired company provided (i) the excess of the
aggregate fair market value of the shares subject to an option immediately after
the substitution over the aggregate option price of such shares is not more than
the similar excess immediately before such substitution and (ii) the new option
does not give persons additional benefits, including any extension of the
exercise period.

    


    16.           Term
of Plan

     

    The Plan shall continue in effect for a
term of ten (10) years from its effective date as determined under Section 20
below, unless the Plan is sooner terminated under Section 17 below.

    


    17.           Amendment
and Termination of the Plan

     

    (a)           Authority to Amend or
Terminate.  Subject to Applicable Laws, the Board may from time
to time amend, alter, suspend, discontinue, or terminate the Plan.

     

    (b)           Effect of Amendment or
Termination.  No amendment, suspension, or termination of the
Plan shall materially and adversely affect Awards already granted unless either
it relates to an adjustment pursuant to Section 13 above, or it is otherwise
mutually agreed between the Participant and the Committee, which agreement must
be in writing and signed by the Participant and the
Company.  Notwithstanding the foregoing, the Committee may amend the
Plan to eliminate provisions which are no longer necessary as a result of
changes in tax or securities laws or regulations, or in the interpretation
thereof.

    


    18.           Conditions
Upon Issuance of Shares

     

    Notwithstanding any other provision of
the Plan or any agreement entered into by the Company pursuant to the Plan, the
Company shall not be obligated, and shall have no liability for failure, to
issue or deliver any Shares under the Plan unless such issuance or delivery
would comply with Applicable Law, with such compliance determined by the Company
in consultation with its legal counsel.

    


    19.           Reservation
of Shares

     

    The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.

    


    20.           Effective
Date

     

    This Plan shall become effective on the
date on which it has received approval by a vote of a majority of the votes cast
at a duly held meeting of the Company’s shareholders (or by such other
shareholder vote that the


    
      
         


      

      
        17

        
          

        

      

      
         


      

    


    Administrator
determines to be sufficient for the issuance of Shares or stock options
according to the Company’s governing documents and applicable state
law).

    


    21.           Controlling
Law

     

    All disputes relating to or arising
from the Plan shall be governed by the internal substantive laws (and not the
laws of conflicts of laws) of the State of Delaware, to the extent not preempted
by United States federal law.  If any provision of this Plan is held
by a court of competent jurisdiction to be invalid and unenforceable, the
remaining provisions shall continue to be fully effective.

    


    22.           Laws
And Regulations

     

    (a)           U.S. Securities
Laws.  This Plan, the grant of Awards, and the exercise of
Options and SARs under this Plan, and the obligation of the Company to sell or
deliver any of its securities (including, without limitation, Options,
Restricted Shares, Restricted Share Units, Deferred Share Units, and Shares)
under this Plan shall be subject to all Applicable Law.  In the event
that the Shares are not registered under the Securities Act of 1933, as amended
(the “Act”), or any applicable state securities laws prior to the delivery of
such Shares, the Company may require, as a condition to the issuance thereof,
that the persons to whom Shares are to be issued represent and warrant in
writing to the Company that such Shares are being acquired by him or her for
investment for his or her own account and not with a view to, for resale in
connection with, or with an intent of participating directly or indirectly in,
any distribution of such Shares within the meaning of the Act, and a legend to
that effect may be placed on the certificates representing the
Shares.

     

    (b)           Other
Jurisdictions.  To facilitate the making of any grant of an
Award under this Plan, the Committee may provide for such special terms for
Awards to Participants who are foreign nationals or who are employed by the
Company or any Affiliate outside of the United States of America as the
Committee may consider necessary or appropriate to accommodate differences in
local law, tax policy or custom.  The Company may adopt rules and
procedures relating to the operation and administration of this Plan to
accommodate the specific requirements of local laws and procedures of particular
countries.  Without limiting the foregoing, the Company is
specifically authorized to adopt rules and procedures regarding the conversion
of local currency, taxes, withholding procedures and handling of stock
certificates which vary with the customs and requirements of particular
countries.  The Company may adopt sub-plans and establish escrow
accounts and trusts as may be appropriate or applicable to particular locations
and countries.

    


    23.           No
Shareholder Rights

     

    Neither a Participant nor any
transferee of a Participant shall have any rights as a shareholder of the
Company with respect to any Shares underlying any Award until the date of
issuance of a share certificate to a Participant or a transferee of a
Participant for such Shares in accordance with the Company’s governing
instruments and Applicable Law.  Prior to the issuance of Shares
pursuant to an Award, a Participant shall not have the right to vote or to
receive dividends or any other rights as a shareholder with respect to the
Shares underlying the Award, notwithstanding its exercise in the case of Options
and SARs.  No adjustment will be made for a dividend or other right
that is determined based on a record date prior to the date the stock
certificate is issued, except as otherwise specifically provided for in this
Plan.

    


    24.           No
Employment Rights

     

    The Plan shall not confer upon any
Participant any right to continue an employment, service or consulting
relationship with the Company, nor shall it affect in any way a Participant’s
right or the Company’s right to terminate the Participant’s employment, service,
or consulting relationship at any time, with or without Cause.

     

    25.           Termination,
Rescission and Recapture

     

    (a)           Each
Award under the Plan is intended to align the Participant’s long-term interest
with those of the Company.  If the Participant engages in certain
activities discussed below, either during employment or after employment with
the Company terminates for any reason, the Participant is acting contrary to the
long-term interests


    
      
         


      

      
        18

        
          

        

      

      
         


      

    


    of the
Company.  Accordingly, except as otherwise expressly provided in the
Award Agreement, the Company may terminate any outstanding, unexercised,
unexpired, unpaid, or deferred Awards (“Termination”), rescind any exercise,
payment or delivery pursuant to the Award (“Rescission”), or recapture any
Common Stock (whether restricted or unrestricted) or proceeds from the
Participant’s sale of Shares issued pursuant to the Award (“Recapture”), if the
Participant does not comply with the conditions of subsections (b) and (c)
hereof (collectively, the “Conditions”).

     

    (b)           A
Participant shall not during his or her Continuous Service or within one year
thereafter, without the Company’s prior written authorization, disclose to
anyone outside the Company, or use in other than the Company’s business, any
proprietary or confidential information or material, as those or other similar
terms are used in any applicable patent, confidentiality, inventions, secrecy,
or other agreement between the Participant and the Company with regard to any
such proprietary or confidential information or
material.  Notwithstanding the foregoing provision, to the extent such
proprietary or confidential information or material constitutes a “trade secret”
under applicable law, Participant’s obligations hereunder shall continue until
such information or material is no longer a trade secret.

     

    (c)           Pursuant
to any agreement between the Participant and the Company with regard to
intellectual property (including but not limited to patents, trademarks,
copyrights, trade secrets, inventions, developments, improvements, proprietary
information, confidential business and personnel information), a Participant
shall promptly disclose and assign to the Company or its designee all right,
title, and interest in such intellectual property, and shall take all reasonable
steps necessary to enable the Company to secure all right, title and interest in
such intellectual property in the United States and in any foreign
country.

     

    (d)           Upon
exercise, payment, or delivery of cash or Common Stock pursuant to an Award, the
Participant shall certify on a form acceptable to the Company that he or she is
in compliance with the terms and conditions of the Plan and, if a severance of
Continuous Service has occurred for any reason, shall state the name and address
of the Participant’s then-current employer or any entity for which the
Participant performs business services and the Participant’s title, and shall
identify any organization or business in which the Participant owns a
greater-than-five-percent equity interest.

     

    (e)           If
the Company determines, in its sole and absolute discretion, that (i) a
Participant has violated any of the Conditions or (ii) during his or her
Continuous Service, or within one year after its termination for any reason, a
Participant (a) has participated in any business or enterprise which is a direct
competitor of the Company or its Affiliates and which is located in the United
States, Canada or Mexico; (b) has solicited any non-administrative employee of
the Company to terminate employment with the Company; or (c) has engaged in
activities which are materially prejudicial to or in conflict with the interests
of the Company, including any breaches of fiduciary duty or the duty of loyalty,
then the Company may, in its sole and absolute discretion, impose a Termination,
Rescission, and/or Recapture with respect to any or all of the Participant’s
relevant Awards, Shares, and the proceeds thereof.  For purposes of
this subsection, “participated” means performed services that are the same or
substantially similar to the services Participant provides or has provided to
the Company or its Affiliates.

     

    (f)           Within
ten days after receiving notice from the Company of any such activity, the
Participant shall deliver to the Company the Shares acquired pursuant to the
Award, or, if Participant has sold the Shares, the gain realized, or payment
received as a result of the rescinded exercise, payment, or delivery; provided,
that if the Participant returns Shares that the Participant purchased pursuant
to the exercise of an Option (or the gains realized from the sale of such Common
Stock), the Company shall promptly refund the exercise price, without earnings,
that the Participant paid for the Shares.  Any payment by the
Participant to the Company pursuant to this Section 21 shall be made either in
cash or by returning to the Company the number of Shares that the Participant
received in connection with the rescinded exercise, payment, or
delivery.  It shall not be a basis for Termination, Rescission or
Recapture if after termination of a Participant’s Continuous Service, the
Participant purchases, as an investment or otherwise, stock or other securities
of such an organization or business, so long as (i) such stock or other
securities are listed upon a recognized securities exchange or traded
over-the-counter, and (ii) such investment does not represent more than a five
percent (5%) equity interest in the organization or business.

     

    (g)           Notwithstanding
the foregoing provisions of this Section, the Company has sole and absolute
discretion not to require Termination, Rescission and/or Recapture, and its
determination not to require Termination,


    
      
         


      

      
        19

        
          

        

      

      
         


      

    


    Rescission
and/or Recapture with respect to any particular act by a particular Participant
or Award shall not in any way reduce or eliminate the Company’s authority to
require Termination, Rescission and/or Recapture with respect to any other act
or Participant or Award.  Nothing in this Section shall be construed
to impose obligations on the Participant to refrain from engaging in lawful
competition with the Company after the termination of employment that does not
violate subsections (b) or (c) of this Section, other than any obligations that
are part of any separate agreement between the Company and the Participant or
that arise under applicable law.

     

    (h)           All
administrative and discretionary authority given to the Company under this
Section shall be exercised by the most senior human resources executive of the
Company or such other person or committee (including without limitation the
Committee) as the Committee may designate from time to time.

     

    (i)           Notwithstanding
any provision of this Section, if any provision of this Section is determined to
be unenforceable or invalid under any applicable law, such provision will be
applied to the maximum extent permitted by applicable law, and shall
automatically be deemed amended in a manner consistent with its objectives to
the extent necessary to conform to any limitations required under applicable
law.  Furthermore, if any provision of this Section is illegal under
any applicable law, such provision shall be null and void to the extent
necessary to comply with applicable law.

     

    Notwithstanding the foregoing, but
subject to any contrary terms set forth in any Award Agreement, this Section
shall not be applicable: (i) to any Participant who is not, on the Award Date,
an Employee of the Company or its Affiliates; and (ii) to any Participant from
and after his or her termination of Continuous Service after a Change in
Control.

     

     

     

     

     

     

     

     

     

     

    20