exv10w27






Exhibit 10.27




ZILOG, INC.

2004 OMNIBUS STOCK INCENTIVE PLAN



Section 1. Purpose of Plan.



The name of this plan is the ZiLOG, Inc. 2004 Omnibus Stock Incentive Plan (the
“Plan”). The purpose of the Plan is to provide additional incentive to those
officers, employees, directors, advisors and consultants of the Company and any
of its Subsidiaries and Affiliates (each, as defined below) whose contributions
are essential to the growth and success of the Company’s business, in order to
strengthen the commitment of such persons to the Company and its Subsidiaries
and Affiliates, motivate such persons to faithfully and diligently perform their
responsibilities and attract and retain competent and dedicated persons whose
efforts will result in the long-term growth and profitability of the Company and
its Subsidiaries and Affiliates. To accomplish such purposes, the Plan provides
that the Company may grant Incentive Stock Options, Nonqualified Stock Options
and Restricted Stock (each, as defined below). The Plan is intended to permit
awards that satisfy the requirements of section 162(m) of the Code (as defined
below) and shall be interpreted in a manner consistent with the requirements
thereof.



Section 2. Definitions.



For purposes of the Plan, in addition to terms defined elsewhere in the Plan,
the following terms shall be defined as set forth below:



(a) “Administrator” means the Board, or if and to the extent the Board does not
administer the Plan, the Committee, in accordance with Section 3 hereof.



(b) “Affiliate” means any corporation or other entity, 50% or more of the voting
power of the outstanding voting securities of which is owned by the Company, its
Subsidiaries, or any other Affiliate.



(c) “Award” means an award of Incentive Stock Options, Nonqualified Stock
Options or Restricted Stock under the Plan.



(d) “Award Agreement” means, with respect to any Award, the written agreement
between the Company and the Participant setting forth the terms and conditions
of the Award.



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



(f) “Cause” means, unless a Participant is a party to a written employment
agreement with the Company, Subsidiary or Affiliate which contains a definition
of “cause,” “termination for cause,” or any other similar term or phrase, in
which case “Cause” shall have the meaning set forth in such agreement, or unless
otherwise provided in an Award Agreement, conduct involving one or more of the
following: (i) the substantial and continuing failure of the Participant to
render services to the Company or any Subsidiary or Affiliate in accordance with
the Participant’s obligations and position with the Company, Subsidiary or
Affiliate, provided that the Company or any Subsidiary or Affiliate provides the
Participant with adequate notice of such failure and, if such failure is capable
of cure, the Participant fails to cure such failure within 30 days of the
notice; (ii) dishonesty, gross negligence, or breach of fiduciary duty; (iii)





 









 







the commission by the Participant of an act of theft, fraud or embezzlement;
(iv) the commission of a felony; or a (v) material breach of the terms of an
agreement between the Participant, on the one hand, and the Company or any
Subsidiary or Affiliate on the other hand, provided that the Company or any
Subsidiary or Affiliate provides the Participant with adequate notice of such
breach and, if such breach is capable of cure, the Participant fails to cure
such breach within 30 days of the notice.



(g) “Change in Capitalization” means any increase, reduction, or change or
exchange of Shares for a different number or kind of shares or other securities
or property by reason of a reclassification, recapitalization, merger,
amalgamation, consolidation, reorganization, issuance of warrants or rights,
stock dividend, stock split or reverse stock split, combination or exchange of
shares, repurchase of shares, change in corporate structure or otherwise; or any
other corporate action, such as declaration of a special dividend, that affects
the capitalization of the Company.



(h) “Change in Control” means, unless otherwise provided in an Award Agreement
(i) a dissolution, liquidation or sale of all or substantially all of the assets
of the Company; (ii) the consummation of a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any other
corporation or other entity, other than a merger or consolidation that results
in the voting securities of the Company outstanding immediately prior to such
merger or consolidation continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving entity or any
parent thereof), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
any subsidiary of the Company, at least 50% of the combined voting power of the
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation; (iii) from and after
the Listing Date, the acquisition by any person, entity or group within the
meaning of Section 13(d) or 14(d) of the Exchange Act, or any comparable
successor provisions (excluding any employee benefit plan, or related trust,
sponsored or maintained by the Company or any affiliate of the Company) of the
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act, or comparable successor rule) of securities of the Company
representing at least fifty percent (50%) of the combined voting power entitled
to vote in the election of directors.



(i) “Code” means the Internal Revenue Code of 1986, as amended from time to
time, or any successor thereto.



(j) “Committee” means the Compensation Committee of the Board or any other
committee or subcommittee the Board may appoint to administer the Plan. If at
any time or to any extent the Board shall not administer the Plan, then the
functions of the Administrator specified in the Plan shall be exercised by the
Committee. Unless otherwise determined by the Board, the composition of the
Committee shall at all times consist solely of persons who are (i) “nonemployee
directors” as defined in Rule 16b-3 issued under the Exchange Act, and (ii)
“outside directors” as defined in section 162(m) of the Code and shall be
constituted to satisfy any applicable stock exchange rules or requirements.



(k) “Common Shares” means the common shares, par value $0.01 per share, of the
Company.



(l) “Company” means ZiLOG, Inc., a Delaware corporation (or any successor
corporation).





 









 







(m) “Disability” means, unless otherwise provided in an Award Agreement, (i) any
physical or mental condition that would qualify a Participant for a disability
benefit under any long-term disability plan maintained by the Company (or by the
Subsidiary or Affiliate by which he is employed); (ii) when used in connection
with the exercise of an Incentive Stock Option following termination of
employment, disability within the meaning of section 22(e)(3) of the Code; or
(iii) such other condition as may be determined in the sole discretion of the
Administrator to constitute Disability.



(n) “Eligible Recipient” means an employee, officer, director, advisor or
consultant of the Company or of any Subsidiary or Affiliate.



(o) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended
from time to time.



(p) “Exercise Price” means the per Share price at which a holder of an Option
may purchase the Shares issuable upon exercise of the Option.



(q) “Fair Market Value” of a Share shall mean the fair market value of a Share
as determined by the Administrator in its sole discretion; provided that (i) if
the Shares are admitted to trading on a national securities exchange, Fair
Market Value of a Share on any date shall be the closing sale price reported for
such Share on such exchange on such date or, if no sale was reported on such
date, then the last day on which a sale was reported, (ii) if the Shares are
admitted to quotation on the National Association of Securities Dealers
Automated Quotation (“Nasdaq”) System or other comparable quotation system and
has been designated as a National Market System (“NMS”) security, Fair Market
Value of a Share on any date shall be the closing sale price reported for such
Share on such system on such date or, if no sale was reported on such date, the
last date preceding such date on which a sale was reported, or (iii) if the
Shares are admitted to quotation on the Nasdaq System but has not been
designated as an NMS security, Fair Market Value of a Share on any date shall be
the sale price for such Share on the last sale reported for such date.



(r) “Immediate Family” means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive
relationships of the Participant; trusts for the benefit of such immediate
family members; or partnerships in which such immediate family members are the
only partners.



(s) “Incentive Stock Option” shall mean an Option that is an “incentive stock
option” within the meaning of section 422 of the Code, or any successor
provision, and that is designated by the Administrator as an Incentive Stock
Option.



(t) “Listing Date” means the first date upon which any security of the Company
is listed (or approved for listing) upon notice of issuance on any securities
exchange, or designated (or approved for designation) upon notice of issuance as
a national market security on an interdealer quotation system if such securities
exchange or interdealer quotation system has been certified in accordance with
the provisions of Section 25100(o) of the California Corporate Securities Law of
1968 and any other applicable State securities law.



(u) “Nonqualified Stock Option” means any Option that is not an Incentive Stock
Option, including any Option that provides (as of the time such Option is





 









 







granted) that it will not be treated as an Incentive Stock Option.



(v) “Option” means an Incentive Stock Option, a Nonqualified Stock Option, or
either or both of them, as the context requires.



(w) “Participant” means any Eligible Recipient selected by the Administrator,
pursuant to the Administrator’s authority in Section 3 hereof, to receive the
grant of an Award. A Participant who receives the grant of an Option is
sometimes referred to herein as “Optionee.”



(x) “Performance Goal” shall mean one or more of the following business criteria
applied to a Participant and/or a business unit or the Company and/or a
Subsidiary: (i) income before federal taxes and net interest expense; (ii)
working capital, generally defined to include receivables, inventories and
controllable current liabilities, measured either in absolute dollars or
relative to sales; (iii) earnings growth, revenues, expenses, share price,
market share, return on assets, return on capital, equity or investment,
regulatory compliance, satisfactory internal or external audits, improvement of
financial ratings, or achievement of balance sheet, income statement or cash
flow objectives; (iv) adjusted cash flows or adjusted income derived from
operating activities; (v) adjusted or unadjusted earnings (losses) before
interest, income taxes, depreciation, amortization of intangible assets,
non-cash stock compensation expenses, cumulative effect of change in accounting
principle and special charges; and/or (vi) such other goal or goals as may be
established by the Committee.



(y) “Restricted Stock” means Shares subject to certain restrictions granted
pursuant to Section 8 hereof.



(z) “Securities Act” means the Securities Act of 1933, as amended from time to
time.



(aa) “Shares” means Common Shares and the common equity of any successor
security.



(bb) “Subsidiary” means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company, if each of the corporations
(other than the last corporation) in the unbroken chain owns stock possessing
50% or more of the total combined voting power of all classes of stock in one of
the other corporations in the chain.



Section 3. Administration.



(a) The Plan shall be administered by the Board or, at the Board’s sole
discretion, by the Committee, which shall serve at the pleasure of the Board.
Pursuant to the terms of the Plan, the Administrator shall have the power and
authority, without limitation:



(i) to select those Eligible Recipients who shall be Participants;



(ii) to determine whether and to what extent Options or awards of Restricted
Stock are to be granted hereunder to Participants;



(iii) to determine the number of Shares to be covered by each Award granted
hereunder;







 









 







(iv) to determine the terms and conditions, not inconsistent with the terms of
the Plan, of each Award granted hereunder;



(v) to determine the terms and conditions, not inconsistent with the terms of
the Plan, which shall govern all written instruments evidencing Awards granted
hereunder;



(vi) to adopt, alter and repeal such administrative rules, guidelines and
practices governing the Plan as it shall from time to time deem advisable; and



(vii) to interpret the terms and provisions of the Plan and any Award issued
under the Plan (and any Award Agreement relating thereto), and to otherwise
supervise the administration of the Plan.



(b) All decisions made by the Administrator pursuant to the provisions of the
Plan shall be final, conclusive and binding on all persons, including the
Company and the Participants. No member of the Board or the Committee, nor any
officer or employee of the Company acting on behalf of the Board or the
Committee, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Committee and each and any officer or employee of
the Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.



(c) The Administrator in its discretion may condition entitlement to an Award in
whole or in part on the attainment of one or more Performance Goals. With
respect to Awards intended to satisfy the requirements of section 162(m) of the
Code, the Committee shall establish any such Performance Goal not later than 90
days after the commencement of the period of service to which the Award relates
(or if less, 25% of such period of service), and once granted, the Administrator
shall not have discretion to increase the amount payable under such Award,
provided, however, that whether or not an Award is intended to constitute
qualified performance based compensation within the meaning of section 162(m) of
the Code, the Administrator shall have the authority to make appropriate
adjustments in Performance Goals under an Award to reflect the impact of
extraordinary items not reflected in such Performance Goals. For purposes of the
Plan, extraordinary items shall be defined as (i) any profit or loss
attributable to acquisitions or dispositions of stock or assets, (ii) any
changes in accounting standards that may be required or permitted by the
Financial Accounting Standards Board or adopted by the Company after the goal is
established, (iii) all items of gain, loss or expense for the year related to
restructuring charges for the Company and/or its Subsidiaries, (iv) all items of
gain, loss or expense for the year determined to be extraordinary or unusual in
nature or infrequent in occurrence or related to the disposal of a segment of a
business, (v) all items of gain, loss or expense for the year related to
discontinued operations that do not qualify as a segment of a business as
defined in APB Opinion No. 30, and (vi) such other items as may be prescribed by
section 162(m) of the Code and the Treasury Regulations thereunder as may be in
effect from time to time, and any amendments, revisions or successor provisions
and any changes thereto.



(d) Subject to section 162(m) of the Code and except as required by Rule 16b-3
under the Exchange Act with respect to grants of Awards to individuals who are
subject to section 16 of the Exchange Act, or as otherwise required for





 









 







compliance with Rule 16b-3 under the Exchange Act or other applicable law, the
Administrator may delegate all or any part of its authority under the Plan to an
employee, employees or committee of employees of the Company or any Subsidiary.



(e) If at any time (whether before or after termination of employment or
service) a majority of either the Board or the Committee determines that a
Participant has engaged in fraud, embezzlement, theft, commission of a felony,
dishonesty, or any other conduct inimical to the Company, either the Board or
the Committee (as the case may be) may provide for the immediate forfeiture of
any Award held by the Participant, whether or not then vested. Any determination
by the Board or Committee (as the case may be) under this subsection (e) shall
be final, conclusive and binding on all persons.



Section 4. Shares Reserved for Issuance Under the Plan.



(a) There shall be reserved and available for issuance under the Plan 1,500,000
Common Shares.



(b) To the extent that (i) an Option expires or is otherwise cancelled or
terminated without being exercised as to the underlying Shares, (ii) any Shares
subject to any award of Restricted Stock are forfeited, (iii) payment for an
Option upon exercise is made with Shares or (iv) Shares are withheld from
payment of an Award in satisfaction of any federal, state or local tax
withholding requirements, such Shares shall again be available for issuance in
connection with future Awards granted under the Plan.



(c) The aggregate number of Shares with respect to which Awards may be granted
to any individual Participant during any calendar year shall not exceed 500,000.



Section 5. Equitable Adjustments.



In the event of any Change in Capitalization, an equitable substitution or
proportionate adjustment shall be made in (i) the aggregate number and/or kind
of common shares or other property reserved for issuance under the Plan, (ii)
the kind, number and/or option price of shares or other property subject to
outstanding Options granted under the Plan, and (iii) the kind, number and/or
purchase price of shares or other property subject to outstanding awards of
Restricted Stock granted under the Plan, in each case as may be determined by
the Administrator, in its sole discretion. Such other equitable substitutions or
adjustments shall be made as may be determined by the Administrator, in its sole
discretion. Without limiting the generality of the foregoing, in connection with
a Change in Capitalization, the Administrator may provide, in its sole
discretion, for the cancellation of any outstanding Awards in exchange for
payment in cash or other property of the Fair Market Value of the Shares covered
by such Awards reduced, in the case of Options, by the Exercise Price thereof,
or by any other applicable purchase price.



Section 6. Eligibility.



The Participants under the Plan shall be selected from time to time by the
Administrator, in its sole discretion, from among Eligible Recipients. The
Administrator shall have the authority to grant to any Eligible Recipient
Incentive Stock Options, Nonqualified Stock Options or Restricted Stock.



Section 7. Options.






 









 







(a) General. Options may be granted alone or in addition to other Awards granted
under the Plan. Any Option granted under the Plan shall be evidenced by an Award
Agreement. The provisions of each Option need not be the same with respect to
each Participant. Participants who are granted Options shall enter into an Award
Agreement with the Company, in such form as the Administrator shall determine,
which Award Agreement shall set forth, among other things, the Exercise Price of
the Option, the term of the Option and provisions regarding exercisability of
the Option granted thereunder. The Options granted under the Plan may be of two
types: (i) Incentive Stock Options and (ii) Nonqualified Stock Options. To the
extent that any Option does not qualify as an Incentive Stock Option, it shall
constitute a separate Nonqualified Stock Option. More than one Option may be
granted to the same Participant and be outstanding concurrently hereunder.
Options granted under the Plan shall be subject to the terms and conditions set
forth in paragraphs (b)-(i) of this Section 7 and shall contain such additional
terms and conditions, not inconsistent with the terms of the Plan, as the
Administrator shall deem desirable.



(b) Exercise Price. The per share Exercise Price of Shares purchasable under an
Option shall be determined by the Administrator in its sole discretion at the
time of grant but shall not be less than par value per Share and in the case of
Incentive Stock Options, shall not be less than 100% of the Fair Market Value
per Share on such date (or 110% of the Fair Market Value per Share on such date
if, on such date, the Eligible Recipient owns, or is deemed to own under the
Code, stock possessing more than 10% (a “Ten Percent Owner”) of the total
combined voting power of all classes of shares of the Company or its
Subsidiaries).



(c) Option Term. The term of each Option shall be fixed by the Administrator,
but no Option shall be exercisable more than ten years after the date such
Option is granted. If the Eligible Participant is a Ten Percent Owner, an
Incentive Stock Option may not be exercisable after the expiration of five years
from the date such Incentive Stock Option is granted.



(d) Exercisability. Options shall be exercisable at such time or times and
subject to such terms and conditions, including the attainment of preestablished
Performance Goals or other corporate or individual performance goals, as shall
be determined by the Administrator in its sole discretion. The Administrator may
also provide that any Option shall be exercisable only in installments.



(e) Method of Exercise. Options may be exercised in whole or in part by giving
written notice of exercise to the Company specifying the number of Shares to be
purchased, accompanied by payment in full of the aggregate Exercise Price of the
Shares so purchased in cash or its equivalent, as determined by the
Administrator. As determined by the Administrator, in its sole discretion,
payment in whole or in part may also be made: (i) to the extent permitted by
applicable law, by means of any cashless exercise or same day sale procedure
approved by the Administrator, (ii) in the form of unrestricted Shares already
owned by the Optionee for at least six months on the date of surrender or by the
withholding of Shares that would otherwise be issued pursuant to the option
exercise, in each case to the extent the Shares have a Fair Market Value on the
date of surrender equal to the aggregate option price of the Shares as to which
such Option shall be exercised, provided that, in the case of an Incentive Stock
Option, the right to make payment in the form of already owned Shares or
withheld shares may be authorized only at the time of grant, or (iii) any
combination of the foregoing.



(f) Rights as Shareholder. An Optionee shall have no rights to dividends or any





 









 







other rights of a shareholder with respect to the Shares subject to the Option
until the Optionee has given written notice of exercise, has paid in full for
such Shares, and has satisfied the requirements of Section 12 hereof.



(g) Nontransferability of Options. The Optionee shall not be permitted to sell,
transfer, pledge or assign any Option other than by will and the laws of descent
and distribution and all Options shall be exercisable during the Participant’s
lifetime only by the Participant, in each case, except as set forth in the
following two sentences. During an Optionee’s lifetime, the Administrator may,
in its discretion, permit the transfer, assignment or other encumbrance of an
outstanding Option if such Option is a Nonqualified Stock Option or an Incentive
Stock Option that the Administrator and the Participant intend to change to a
Nonqualified Stock Option. Subject to the approval of the Administrator and to
any conditions that the Administrator may prescribe, an Optionee may, upon
providing written notice to the Company, elect to transfer any or all Options
described in the preceding sentence (i) to members of his or her Immediate
Family, provided that no such transfer by any Participant may be made in
exchange for consideration, or (ii) by instrument to an inter vivos or
testamentary trust in which the Options are to be passed to beneficiaries upon
the death of the Participant.



(h) Termination of Employment or Service. Except as otherwise provided in an
Award Agreement, if a Participant’s employment or service with the Company or
any Subsidiary or Affiliate terminates for any reason, all outstanding Options
granted to such Participant shall expire on the date of such termination
(whether or not then vested or exercisable). Notwithstanding the foregoing, no
Option shall be exercisable after the expiration of its term.



(i) Limitation on Incentive Stock Options. To the extent that the aggregate Fair
Market Value of Shares with respect to which Incentive Stock Options are
exercisable for the first time by an Optionee during any calendar year under the
Plan and any other stock option plan of the Company or any Subsidiary or
Affiliate shall exceed $100,000, such Options shall be treated as Nonqualified
Stock Options. Such Fair Market Value shall be determined as of the date on
which each such Incentive Stock Option is granted.



Section 8. Restricted Stock.



(a) General. Awards of Restricted Stock may be issued either alone or in
addition to other Awards granted under the Plan and shall be evidenced by an
Award Agreement. The Administrator shall determine the Eligible Recipients to
whom, and the time or times at which, Awards of Restricted Stock shall be made;
the number of Shares to be awarded; the price, if any, to be paid by the
Participant for the acquisition of Restricted Stock; and the Restricted Period
(as defined in Section 8(d)) applicable to awards of Restricted Stock. The
provisions of the awards of Restricted Stock need not be the same with respect
to each Participant.



(b) Purchase Price. The price per Share, if any, that a Recipient must pay for
Shares purchasable under an award of Restricted Stock shall be determined by the
Administrator in its sole discretion at the time of grant.



(c) Awards and Certificates. The prospective recipient of an Award of Restricted
Stock shall not have any rights with respect to any such Award, unless and until
such recipient has executed an Award Agreement evidencing the Award and
delivered a fully executed copy thereof to the Company, within such period as
the Administrator may specify after the award date. Each Participant who is





 









 







granted an award of Restricted Stock shall be issued a share certificate in
respect of such shares of Restricted Stock, which certificate shall be
registered in the name of the Participant and shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to any such
Award, provided that the Company may require that the share certificates
evidencing Restricted Stock granted hereunder be held in the custody of the
Company or agent of the Company until the restrictions thereon shall have
lapsed, and that, as a condition of any award of Restricted Stock, the
Participant shall have delivered a stock power, endorsed in blank, relating to
the Shares covered by such Award.



(d) Nontransferability. Any Award of Restricted Stock granted pursuant to this
Section 8 shall be subject to the restrictions on transferability set forth in
this paragraph (d). During such period as may be set by the Administrator in the
Award Agreement (the “Restricted Period”), the Participant shall not be
permitted to sell, transfer, pledge, hypothecate or assign Shares of Restricted
Stock awarded under the Plan except by will or the laws of descent and
distribution. The Administrator may also impose such other restrictions and
conditions, including the attainment of preestablished Performance Goals or
other corporate or individual performance goals, on Restricted Stock as it
determines in its sole discretion. However, in no event shall the Restricted
Period end with respect to a Restricted Stock Award prior to the satisfaction by
the Participant of any liability arising under Section 12 hereof. Any attempt to
dispose of any Restricted Stock in contravention of any such restrictions shall
be null and void and without effect.



(e) Rights as a Shareholder. Except as provided in Section 8(c) and (d) and
unless otherwise provided in an Award Agreement, the Participant shall possess
all incidents of ownership with respect to Shares of Restricted Stock during the
Restricted Period, including the right to receive or reinvest dividends with
respect to such Shares (except that the Administrator may provide in its
discretion that any dividends paid in property other than cash shall be subject
to the same restrictions as those that apply to the underlying Restricted Stock)
and to vote such Shares. Certificates for unrestricted Shares shall be delivered
to the Participant promptly after, and only after, the Restricted Period shall
expire without forfeiture in respect of such awards of Restricted Stock except
as the Administrator, in its sole discretion, shall otherwise determine.



(f) Termination of Employment or Service. The rights of Participants granted an
Award of Restricted Stock upon termination of employment or service with the
Company or any Subsidiary or Affiliate for any reason during the Restricted
Period shall be set forth in the Award Agreement governing such Award.



Section 9. Effect of Change in Control.



Unless otherwise provided in an Award Agreement, upon the occurrence of a Change
in Control, all outstanding Shares of Restricted Stock granted to a Participant
which have not theretofore vested shall immediately vest and all restrictions on
such shares shall immediately lapse, and each Option granted to a
Participant and outstanding at such time shall become fully and immediately
vested and exercisable. However, the Administrator in its sole discretion may
instead provide (a) that upon termination of employment or service under
specified circumstances during a specified period following such a Change in
Control, as specified in the applicable Award Agreement, all outstanding Shares
of Restricted Stock granted to a Participant which have not theretofore vested
shall immediately vest and all restrictions on such shares shall immediately
lapse, and each Option granted to a Participant and outstanding at such time





 









 







shall become fully and immediately exercisable, or (b) for other treatment of
Awards upon the occurrence of a Change in Control.



Section 10. Amendment and Termination.



(a) The Board may amend, alter or discontinue the Plan, but (i) no amendment,
alteration, or discontinuation shall be made that would impair the rights of a
Participant under any Award theretofore granted without such Participant’s
consent, and (ii) any amendment shall be subject to approval of shareholders if
it (A) materially increases the benefits accruing to Participants under the
Plan, (B) materially increases the number of Shares that may be issued under the
Plan, or (C) materially modifies the requirements for participation in the Plan.
Unless the Board determines otherwise, the Board shall obtain approval of
shareholders of the Company for any amendment that would require such approval
in order to satisfy the requirements of section 162(m) of the Code, section 422
of the Code, stock exchange rules or other applicable law.



(b) The Administrator may amend the terms of any Award theretofore granted,
prospectively or retroactively, but subject to Section 4 of Plan, no such
amendment shall impair the rights of any Participant without his or her consent.



(c) Notwithstanding the foregoing provisions of this Section 10, any decrease in
the Exercise Price of any outstanding Option (whether effected by amendment to



the Plan or an Award Agreement) shall be subject to the approval of the
shareholders of the Company.



Section 11. Unfunded Status of Plan.



The Plan is intended to constitute an “unfunded” plan for incentive
compensation. With respect to any payments not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any rights
that are greater than those of a general creditor of the Company.



Section 12. Withholding Taxes.



(a) Upon exercise of an Option, the Optionee shall pay or make adequate
provision for any federal, state, local and other withholding tax obligations of
the Company (or Subsidiary or Affiliate, as the case may be), if applicable.
Whenever cash is to be paid pursuant to an Award, the Company (or Subsidiary or
Affiliate, as the case may be) shall have the right to deduct therefrom an
amount sufficient to satisfy any federal, state and local tax withholding
requirements related thereto. Whenever Shares are to be delivered pursuant to an
Award, the Company (or Subsidiary or Affiliate, as the case may be) shall have
the right to require the Participant to remit to the Company (or Subsidiary or
Affiliate, as the case may be) in cash an amount sufficient to satisfy any
federal, state and local tax withholding requirements related thereto.
Notwithstanding the foregoing, it shall be the obligation of the Participant to
satisfy any and all federal, state and local tax withholding requirements
relating to such Participant’s Award, and any withholding pursuant to this
Section 12 may not be adequate to satisfy such obligation. With the approval of
the Administrator, a Participant may satisfy the foregoing requirement by
electing to have the Company withhold from delivery Shares or by delivering
Shares already owned by the Participant for at least six months, in each case,
having a value equal to the minimum amount of tax required to be withheld. Such
Shares shall be valued at their Fair Market Value on the date on which the
amount of tax to be withheld is determined. Fractional share amounts shall be





 









 







settled in cash. Such an election may be made with respect to all or any portion
of the shares to be delivered pursuant to an Award.



(b) If the Participant makes a disposition, within the meaning of section 424(c)
of the Code and regulations promulgated thereunder, of any Share or Shares
issued to such Participant pursuant to such Participant’s exercise of an
Incentive Stock Option, and such disposition occurs within the two-year period
commencing on the day after the date of grant or within the one-year period
commencing on the day after the date of exercise, such Participant shall, within
ten (10) days of such disposition, notify the Company (or Subsidiary or
Affiliate, as the case may be) thereof and thereafter immediately deliver to the
Company (or Subsidiary or Affiliate, as the case may be) any amount of federal,
state or local income taxes and other amounts which the Company (or Subsidiary
or Affiliate, as the case may be) informs the Participant the Company (or
Subsidiary or Affiliate, as the case may be) is required to withhold.



Section 13. General Provisions.



(a) Shares shall not be issued pursuant to the exercise of any Award granted
hereunder unless the exercise of such Award and the issuance and delivery of
such Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act, the Exchange Act and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance. The Company shall be under no obligation to effect the
registration pursuant to the Securities Act of any interests in the Plan or any
Shares to be issued hereunder or to effect similar compliance under any state
laws.



(b) Unless the Committee determines otherwise, in connection with any
underwritten public offering by the Company or its shareholders of its or their
equity securities pursuant to an effective registration statement filed under
the Securities Act, including the first underwritten public offering of Shares
after the effective date of the Plan, Participants shall not sell, make any
short sale of, loan, hypothecate, pledge, grant any option for the purchase of,
or otherwise dispose or transfer for value or otherwise agree to engage in any
of the foregoing transactions with respect to any Shares relating to Awards
without the prior written consent of the Company or its underwriters, for a
period of (i) 90 days following the closing of any underwritten public offering
of Shares or (ii) such longer period of time as may be reasonably requested by
the Company’s underwriter in connection with such offering.



(c) All certificates for Shares delivered under the Plan shall be subject to
such stock-transfer orders and other restrictions as the Administrator may deem
advisable under the rules, regulations, and other requirements of the Securities
and Exchange Commission, any stock exchange upon which the Shares may then be
listed, and any applicable federal or state securities law, and the
Administrator may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions. The
Administrator may require, as a condition of the issuance and delivery of
certificates evidencing Shares pursuant to the terms hereof, that the recipient
of such Shares make such agreements and representations as the Administrator, in
its sole discretion, deems necessary or desirable.



(d) Nothing contained in the Plan shall prevent the Board from adopting other or
additional compensation arrangements, subject to shareholder approval, if such
approval is required; and such arrangements may be either generally applicable





 









 







or applicable only in specific cases. The adoption of the Plan shall not confer
upon any Eligible Recipient any right to continued employment or service with
the Company or any Subsidiary or Affiliate, as the case may be, nor shall it
interfere in any way with the right of the Company or any Subsidiary or
Affiliate to terminate the employment or service of an Eligible Recipient at any
time.



(e) No fractional Shares shall be issued or delivered pursuant to the Plan. The
Administrator shall determine whether cash, other Awards, or other property
shall be issued or paid in lieu of such fractional shares or whether such
fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.



(f) If any provision of the Plan is held to be invalid or unenforceable, the
other provisions of the Plan shall not be affected but shall be applied as if
the invalid or unenforceable provision had not been included in the Plan.



(g) The Plan and all Awards shall be governed by the laws of the State of
Delaware without regard to its principles of conflict of laws.



(h) Awards may be granted under the Plan from time to time in substitution for
awards held by employees, directors or service providers of other corporations
who are about to become employees of the Company or a Subsidiary or Affiliate as
the result of a merger or consolidation of the employing corporation with the
Company or Subsidiary or Affiliate, or the acquisition by the Company or a
Subsidiary or Affiliate of the assets of the employing corporation, or the
acquisition by the Company or a Subsidiary or Affiliate of the shares of the
employing corporation, as the result of which it becomes a Subsidiary or
Affiliate under the Plan. The terms and conditions of the Awards so granted may
vary from the terms and conditions set forth in this Plan at the time of such
grant as the Administrator may deem appropriate to conform, in whole or in part,
to the provisions of the awards in substitution for which they are made.



Section 14. Shareholder Approval; Effective Date of Plan.



The Plan shall be effective as of the later of (a) the date of its approval by
the Company’s shareholders and (b) the Listing Date.



Section 15. Term of Plan.



No Award shall be granted pursuant to the Plan on or after the tenth anniversary
of the date the Plan is approved by the Company’s shareholders, but Awards
theretofore granted may extend beyond that date.