Exhibit 4.4


 


Zoran Corporation


2005 Equity Incentive Plan


 


1.             ESTABLISHMENT, PURPOSE AND TERM OF PLAN.


 


1.1           Establishment.  The Zoran Corporation 2005 Equity Incentive Plan
(the “Plan”) is hereby
established effective as of July 29, 2005, the date of its approval by the
stockholders of the Company (the “Effective Date”).


 


1.2           Purpose.  The purpose of
the Plan is to advance the interests of the Participating Company Group and its
stockholders by providing an incentive to attract, retain and reward persons performing
services for the Participating Company Group and by motivating such persons to
contribute to the growth and profitability of the Participating Company
Group.  The Plan seeks to achieve this purpose by providing for Awards in
the form of Options, Stock Appreciation Rights, Restricted Stock Purchase
Rights, Restricted Stock Bonuses, Restricted Stock Units, Performance Shares,
Performance Units, Deferred Compensation Awards, Cash-Based Awards and Other
Stock-Based Awards.


 


1.3           Term of Plan.  The Plan shall continue in
effect until its termination by the Committee; provided, however, that all
Awards shall be granted, if at all, within ten (10) years from the
Effective Date.


 


2.             DEFINITIONS AND CONSTRUCTION.


 


2.1           Definitions.  Whenever used herein, the following
terms shall have their respective meanings set forth below:


 


(a)           “Affiliate” means (i) an
entity, other than a Parent Corporation, that directly, or indirectly through
one or more intermediary entities, controls the Company or (ii) an entity,
other than a Subsidiary Corporation, that is controlled by the Company directly
or indirectly through one or more intermediary entities.  For this
purpose, the term “control” (including the term “controlled by”) means the
possession, direct or indirect, of the power to direct or cause the direction
of the management and policies of the relevant entity, whether through the
ownership of voting securities, by contract or otherwise; or shall have such
other meaning assigned such term for the purposes of registration on Form S-8
under the Securities Act.


 


(b)           “Award” means any Option,
Stock Appreciation Right, Restricted Stock Purchase Right, Restricted Stock
Bonus, Restricted Stock Unit, Performance Share, Performance Unit, Deferred
Compensation Award, Cash-Based Award or Other Stock-Based Award granted under
the Plan.


 


(c)           “Award Agreement” means a written or
electronic agreement between the Company and a Participant setting forth the
terms, conditions and restrictions of the Award granted to the Participant.


 


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


 


(e)           “Cash-Based Award” means an Award denominated in
cash and granted pursuant to Section 12.


 


(f)            “Cause” means, unless such term or an equivalent
term is otherwise defined with respect to an Award by the Participant’s Award
Agreement or by a written contract of employment or service, any of the
following: (i) the Participant’s theft, dishonesty, willful misconduct,
breach of fiduciary duty for personal profit, or falsification of any
Participating Company documents or records; (ii) the Participant’s
material failure to abide by a Participating Company’s code of conduct or other
policies (including, without limitation, policies relating to confidentiality
and reasonable workplace conduct); (iii) the Participant’s unauthorized
use, misappropriation, destruction or diversion of any tangible or intangible
asset or corporate opportunity of a Participating Company (including, without
limitation, the Participant’s improper use or disclosure of a Participating Company’s
confidential or proprietary information); (iv) any intentional act by the
Participant which has a material detrimental effect on a Participating Company’s
reputation or business; (v) the Participant’s repeated failure or
inability to perform any 


 

















 


reasonable assigned
duties after written notice from a Participating Company of, and a reasonable
opportunity to cure, such failure or inability; (vi) any material breach
by the Participant of any employment, service, non-disclosure, non-competition,
non-solicitation or other similar agreement between the Participant and a
Participating Company, which breach is not cured pursuant to the terms of such
agreement; or (vii) the Participant’s conviction (including any plea of
guilty or nolo contendere) of any criminal act involving fraud, dishonesty,
misappropriation or moral turpitude, or which impairs the Participant’s ability
to perform his or her duties with a Participating Company.


 


(g)           “Change in Control” means, unless such
term or an equivalent term is otherwise defined with respect to an Award by the
Participant’s Award Agreement or by a written contract of employment or
service, the occurrence of any of the following:


 


(i)            any “person” (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than (1) a trustee or other
fiduciary holding securities of the Company under an employee benefit plan of a
Participating Company or (2) a corporation owned directly or indirectly by
the stockholders of the Company in substantially the same proportions as their
ownership of the stock of the Company, becomes the “beneficial owner” (as
defined in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of (i) the outstanding shares of common stock of the Company or (ii) the
total combined voting power of the Company’s then-outstanding securities
entitled to vote generally in the election of directors; or


 


(ii)           an Ownership Change Event or series of related Ownership
Change Events (collectively, a “Transaction”) in which the
stockholders of the Company immediately before the Transaction do not retain
immediately after the Transaction direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting securities of the Company or, in the case of an Ownership
Change Event described in Section 2.1(dd)(iii), the entity to which the
assets of the Company were transferred (the “Transferee”), as the case may be;
or


 


(iii)          a liquidation or dissolution of the Company.For purposes of
the preceding sentence, indirect beneficial ownership shall include, without
limitation, an interest resulting from ownership of the voting securities of
one or more corporations or other business entities which own the Company or
the Transferee, as the case may be, either directly or through one or more
subsidiary corporations or other business entities.  The Committee shall
have the right to determine whether multiple sales or exchanges of the voting
securities of the Company or multiple Ownership Change Events are related, and
its determination shall be final, binding and conclusive.


 


(h)           “Code” means the Internal
Revenue Code of 1986, as amended, and any applicable regulations promulgated
thereunder.


 


(i)            “Committee” means the
Compensation Committee and such other committee or subcommittee of the Board,
if any, duly appointed to administer the Plan and having such powers in each
instance as shall be specified by the Board.  If, at any time, there is no
committee of the Board then authorized or properly constituted to administer
the Plan, the Board shall exercise all of the powers of the Committee granted
herein, and, in any event, the Board may in its discretion exercise any or all
of such powers.


 


(j)            “Company” means Zoran
Corporation, a Delaware corporation, or any successor corporation thereto.


 


(k)           “Consultant” means a person engaged to
provide consulting or advisory services (other than as an Employee or a member
of the Board) to a Participating Company, provided that the identity of such
person, the nature of such services or the entity to which such services are
provided would not preclude the Company from offering or selling securities to
such person pursuant to the Plan in reliance on registration on a Form S-8
Registration Statement under the Securities Act.


 


(l)            “Covered Employee” means any Employee
who is or may become a “covered employee” as defined in Section 162(m), or
any successor statute, and who is designated, either as an individual 


 


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Employee
or a member of a class of Employees, by the Committee no later than (i) the
date ninety (90) days after the beginning of the Performance Period, or (ii) the
date on which twenty-five percent (25%) of the Performance Period has elapsed,
as a “Covered Employee” under this Plan for such applicable Performance Period.


 


(m)          “Deferred Compensation
Award” means an award granted to a
Participant pursuant to Section 11.


 


(n)           “Director” means a member of the
Board.


 


(o)           “Disability” means the permanent
and total disability of the Participant, within the meaning of Section 22(e)(3) of
the Code.


 


(p)           “Dividend Equivalent” means a credit, made
at the discretion of the Committee or as otherwise provided by the Plan, to the
account of a Participant in an amount equal to the cash dividends paid on one
share of Stock for each share of Stock represented by an Award held by such
Participant.


 


(q)           “Employee” means any person
treated as an employee (including an Officer or a member of the Board who is
also treated as an employee) in the records of a Participating Company and,
with respect to any Incentive Stock Option granted to such person, who is an
employee for purposes of Section 422 of the Code; provided, however, that
neither service as a member of the Board nor payment of a director’s fee shall
be sufficient to constitute employment for purposes of the Plan.  The
Company shall determine in good faith and in the exercise of its discretion
whether an individual has become or has ceased to be an Employee and the
effective date of such individual’s employment or termination of employment, as
the case may be.  For purposes of an individual’s rights, if any, under
the terms of the Plan as of the time of the Company’s determination of whether
or not the individual is an Employee, all such determinations by the Company
shall be final, binding and conclusive as to such rights, if any,
notwithstanding that the Company or any court of law or governmental agency
subsequently makes a contrary determination as to such individual’s status as
an Employee.


 


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


 


(s)           “Fair Market Value” means, as of any
date, the value of a share of Stock or other property as determined by the
Committee, in its discretion, or by the Company, in its discretion, if such
determination is expressly allocated to the Company herein, subject to the
following:


 


(i)            Except as otherwise determined by
the Committee, if, on such date, the Stock is listed on a national or regional
securities exchange or market system, the Fair Market Value of a share of Stock
shall be the closing price of a share of Stock (or the mean of the closing bid
and asked prices of a share of Stock if the Stock is so quoted instead) as
quoted on the Nasdaq National Market, The Nasdaq SmallCap Market or such other
national or regional securities exchange or market system constituting the
primary market for the Stock, as reported in The
Wall Street Journal or such other source as the Company deems
reliable.  If the relevant date does not fall on a day on which the Stock
has traded on such securities exchange or market system, the date on which the
Fair Market Value shall be established shall be the last day on which the Stock
was so traded prior to the relevant date, or such other appropriate day as
shall be determined by the Committee, in its discretion.


 


(ii)           Notwithstanding the foregoing, the Committee may, in its discretion,
determine the Fair Market Value on the basis of the opening, closing, or
average of the high and low sale prices of a share of Stock on such date, the
preceding trading day or the next succeeding trading day; and, for purposes
other than determining the exercise price or purchase price of shares pursuant
to an Award, the high or low sale price of a share of Stock on such date, the
preceding trading day or the next succeeding trading day, the average of any
such prices determined over a period of trading days or the actual sale price
of a share of Stock received by a Participant. The Committee may vary its
method of determination of the Fair Market Value as provided in this Section for
different purposes under the Plan.


 


(iii)          If, on
such date, the Stock is not listed on a national or regional securities
exchange or market system, the Fair Market Value of a share of Stock shall be
as determined by the 


 


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Committee
in good faith without regard to any restriction other than a restriction which,
by its terms, will never lapse.


 


(t)            “Full Value Award” means any Award
settled in Stock, other than (i) an Option, (ii) a Stock Appreciation
Right, (iii) a Restricted Stock Purchase Right or an Other Stock-Based
Award under which the Company will receive monetary consideration equal to the
Fair Market Value of the shares subject to such Award or (iv)  an Other
Stock-Based award based on appreciation in the Fair Market Value of the Stock.


 


(u)           “Incentive Stock Option” means an Option
intended to be (as set forth in the Award Agreement) and which qualifies as an
incentive stock option within the meaning of Section 422(b) of the
Code.


 


(v)           “Insider” means an Officer,
Director or any other person whose transactions in Stock are subject to Section 16
of the Exchange Act.


 


(w)          “Insider Trading Policy” means the written
policy of the Company pertaining to the purchase, sale, transfer or other
disposition of the Company’s equity securities by Directors, Officers,
Employees or other service providers who may possess material, nonpublic
information regarding the Company or its securities.


 


(x)            “Net-Exercise” means a procedure by
which the Participant will be issued a number of shares of Stock determined in
accordance with the following formula:


 


N = X(A-B)/A, where


 


“N” = the number of shares of Stock to be issued to
the Participant upon exercise of the Option;


 


“X” = the total number of shares with respect to which
the Participant has elected to exercise the Option;


 


“A” = the Fair Market Value of one (1) share of
Stock determined on the exercise date; and


 


“B” = the exercise price per share (as defined in the
Participant’s Award Agreement)


 


(y)           “Nonstatutory Stock
Option” means an Option not intended to be
(as set forth in the Award Agreement) an incentive stock option within the
meaning of Section 422(b) of the Code.


 


(z)            “Officer” means any person
designated by the Board as an officer of the Company.


 


(aa)         “Option” means an Incentive
Stock Option or a Nonstatutory Stock Option granted pursuant to Section 6.


 


(bb)        “Option for Full Value
Award Exchange Program” means a program, approved by the
affirmative vote of holders of a majority of the shares of Stock cast in person
or by proxy at a meeting of the stockholders of the Company at which a quorum
representing a majority of all outstanding shares of Stock is present or
represented by proxy, which provides for the cancellation of outstanding
options, including options granted pursuant to a Predecessor Plan, and the
grant in substitution therefore of Full Value Awards.


 


(cc)         “Other Stock-Based Award” means an Award denominated in
shares of Stock and granted pursuant to Section 12.


 


(dd)         “Ownership Change Event” means the occurrence
of any of the following with respect to the Company: (i) the direct or
indirect sale or exchange in a single or series of related transactions by the
stockholders of the Company of more than fifty percent (50%) of the voting
stock of the Company; (ii) a merger or consolidation in which the Company
is a party; or (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company (other than a sale, exchange or
transfer to one or more subsidiaries of the Company).


 


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(ee)         “Parent Corporation” means any present or
future “parent corporation” of the Company, as defined in Section 424(e) of
the Code.


 


(ff)           “Participant” means any eligible
person who has been granted one or more Awards.


 


(gg)         “Participating Company” means the Company or
any Parent Corporation, Subsidiary Corporation or Affiliate.


 


(hh)         “Participating Company Group” means, at any point
in time, all entities collectively which are then Participating Companies.


 


(ii)           “Performance Award” means an Award of
Performance Shares or Performance Units.


 


(jj)           “Performance Award Formula” means, for any
Performance Award, a formula or table established by the Committee pursuant to Section 10.3
which provides the basis for computing the value of a Performance Award at one
or more threshold levels of attainment of the applicable Performance Goal(s) measured
as of the end of the applicable Performance Period.


 


(kk)         “Performance-Based Compensation” means compensation
under an Award that satisfies the requirements of Section 162(m) for
certain performance-based compensation paid to Covered Employees.


 


(ll)           “Performance Goal” means a performance
goal established by the Committee pursuant to Section 10.3.


 


(mm)       “Performance Period” means a period
established by the Committee pursuant to Section 10.3 at the end of which
one or more Performance Goals are to be measured.


 


(nn)         “Performance Share” means a bookkeeping
entry representing a right granted to a Participant pursuant to Section 10
to receive a payment equal to the value of a Performance Share, as determined
by the Committee, based on performance.


 


(oo)         “Performance Unit” means a bookkeeping
entry representing a right granted to a Participant pursuant to Section 10
to receive a payment equal to the value of a Performance Unit, as determined by
the Committee, based upon performance.


 


(pp)         “Predecessor Plan” means each of the
Company’s 1993 Stock Option Plan and 2000 Nonstatutory Stock Option Plan and
options granted by Oak Technology, Inc. and assumed by the Company
pursuant to its acquisition of Oak Technology, Inc.


 


(qq)         “Restricted Stock Award” means an Award of a
Restricted Stock Bonus or a Restricted Stock Purchase Right.


 


(rr)           “Restricted Stock Bonus” means Stock granted
to a Participant pursuant to Section 8.


 


(ss)         “Restricted Stock Purchase Right” means a right to
purchase Stock granted to a Participant pursuant to Section 8.


 


(tt)           “Restricted Stock Unit” or “Stock Unit” means a right granted
to a Participant pursuant to Section 9 or Section 11, respectively,
to receive a share of Stock on a date determined in accordance with the
provisions of such Sections, as applicable, and the Participant’s Award
Agreement.


 


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(uu)         “Restriction Period” means the period
established in accordance with Section 8.5 during which shares subject to
a Restricted Stock Award are subject to Vesting Conditions.


 


(vv)         “Retirement” means termination of
Service at or after the normal retirement age as set forth in the retirement
plan of the Company that is applicable to the Participant, or, if the
Participant is not covered by such a retirement plan, the normal retirement age
as defined by the social insurance program in effect in the country where the
Participant resides.


 


(ww)       “Rule 16b-3” means Rule 16b-3
under the Exchange Act, as amended from time to time, or any successor rule or
regulation.


 


(xx)          “SAR” or “Stock Appreciation Right” means a right granted
to a Participant pursuant to Section 7 to receive payment, for each share
of Stock subject to such SAR, of an amount equal to the excess, if any, of the Fair
Market Value of a share of Stock on the date of exercise of the SAR over the
exercise price.


 


(yy)         “Section 162(m)” means Section 162(m) of
the Code.


 


(zz)          “Section 409A” means Section 409A
of the Code (including regulations or administrative guidelines thereunder).


 


(aaa)       “Securities Act” means the Securities
Act of 1933, as amended.


 


(bbb)      “Service” means a Participant’s
employment or service with the Participating Company Group, whether in the
capacity of an Employee, a Director or a Consultant.  Unless otherwise
provided by the Committee, a Participant’s Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Participant
renders such Service or a change in the Participating Company for which the
Participant renders such Service, provided that there is no interruption or
termination of the Participant’s Service.  Furthermore, a Participant’s
Service shall not be deemed to have terminated if the Participant takes any
military leave, sick leave, or other bona fide leave of absence approved by the
Company.  However, if any such leave taken by a Participant exceeds ninety
(90) days, then on the ninety-first (91st) day following the commencement of
such leave the Participant’s Service shall be deemed to have terminated, unless
the Participant’s right to return to Service is guaranteed by statute or
contract.  Notwithstanding the foregoing, unless otherwise designated by
the Company or required by law, a leave of absence shall not be treated as
Service for purposes of determining vesting under the Participant’s Award
Agreement.  A Participant’s Service shall be deemed to have terminated
either upon an actual termination of Service or upon the entity for which the
Participant performs Service ceasing to be a Participating Company. 
Subject to the foregoing, the Company, in its discretion, shall determine
whether the Participant’s Service has terminated and the effective date of such
termination.


 


(ccc)       “Stock” means the common
stock of the Company, as adjusted from time to time in accordance with Section 4.4.


 


(ddd)      “Subsidiary Corporation” means any present or
future “subsidiary corporation” of the Company, as defined in Section 424(f) of
the Code.


 


(eee)       “Ten Percent Owner” means a Participant who,
at the time an Option is granted to the Participant, owns stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of a Participating Company (other than an Affiliate) within the meaning
of Section 422(b)(6) of the Code.


 


(fff)         “Vesting Conditions” mean those conditions
established in accordance with the Plan prior to the satisfaction of which
shares subject to an Award remain subject to forfeiture or a repurchase option
in favor of the Company exercisable for the Participant’s purchase price for
such shares upon the Participant’s termination of Service.


 


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2.2           Construction.  Captions and
titles contained herein are for convenience only and shall not affect the
meaning or interpretation of any provision of the Plan.  Except when
otherwise indicated by the context, the singular shall include the plural and
the plural shall include the singular.  Use of the term “or” is not
intended to be exclusive, unless the context clearly requires otherwise.


 


3.             ADMINISTRATION.


 


3.1           Administration
by the Committee.  The Plan shall be administered by the
Committee.  All questions of interpretation of the Plan or of any Award
shall be determined by the Committee, and such determinations shall be final
and binding upon all persons having an interest in the Plan or such Award.


 


3.2           Authority
of Officers.  Any Officer shall have the authority to act on
behalf of the Company with respect to any matter, right, obligation,
determination or election which is the responsibility of or which is allocated
to the Company herein, provided the Officer has apparent authority with respect
to such matter, right, obligation, determination or election.  The Board
or Committee may, in its discretion, delegate to a committee comprised of one
or more Officers the authority to grant one or more Awards, without further
approval of the Board or the Committee, to any Employee, other than a person
who, at the time of such grant, is an Insider or a Covered Person; provided, however,
that (a) such Awards shall not be granted for shares in excess of the
maximum aggregate number of shares of Stock authorized for issuance pursuant to
Section 4.1, (b) each such Award which is a Full Value Award shall be
subject to the minimum vesting provisions described in Section 5.3(b), (c) each
such Award shall be subject to the terms and conditions of the appropriate
standard form of Award Agreement approved by the Board or the Committee and
shall conform to the provisions of the Plan, and (d) each such Award shall
conform to such limits and guidelines as shall be established from time to time
by resolution of the Board or the Committee.


 


3.3           Administration
with Respect to Insiders.  With respect to participation by Insiders in
the Plan, at any time that any class of equity security of the Company is
registered pursuant to Section 12 of the Exchange Act, the Plan shall be
administered in compliance with the requirements, if any, of Rule 16b-3.


 


3.4           Committee
Complying with Section 162(m).  If the Company is a “publicly
held corporation” within the meaning of Section 162(m), the Board may
establish a Committee of “outside directors” within the meaning of Section 162(m) to
approve the grant of any Award intended to result in the payment of
Performance-Based Compensation.


 


3.5           Powers
of the Committee.  In addition to
any other powers set forth in the Plan and subject to the provisions of the
Plan, the Committee shall have the full and final power and authority, in its
discretion:


 


(a)           to determine the persons to whom, and the time or times at
which, Awards shall be granted and the number of shares of Stock, units or
monetary value to be subject to each Award;


 


(b)           to determine the type of Award granted;


 


(c)           to determine the Fair Market Value of shares of Stock or
other property;


 


(d)           to determine the terms, conditions and restrictions applicable to each
Award (which need not be identical) and any shares acquired pursuant thereto,
including, without limitation, (i) the exercise or purchase price of
shares pursuant to any Award, (ii) the method of payment for shares
purchased pursuant to any Award, (iii) the method for satisfaction of any
tax withholding obligation arising in connection with Award, including by the
withholding or delivery of shares of Stock, (iv) the timing, terms and
conditions of the exercisability or vesting of any Award or any shares acquired
pursuant thereto, (v) the Performance Measures, Performance Period,
Performance Award Formula and Performance Goals applicable to any Award and the
extent to which such Performance Goals have been attained, (vi) the time
of the expiration of any Award, (vii) the effect of the Participant’s
termination of Service on any of the foregoing, and (viii) all other
terms, conditions and restrictions applicable to any Award or shares acquired
pursuant thereto not inconsistent with the terms of the Plan;


 


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(e)           to determine whether an Award will
be settled in shares of Stock, cash, or in any combination thereof;


 


(f)            to approve one or more forms of
Award Agreement;


 


(g)           to amend, modify, extend, cancel or
renew any Award or to waive any restrictions or conditions applicable to any
Award or any shares acquired pursuant thereto;


 


(h)           to accelerate, continue, extend or
defer the exercisability or vesting of any Award or any shares acquired
pursuant thereto, including with respect to the period following a Participant’s
termination of Service;


 


(i)            without the consent of the affected
Participant and notwithstanding the provisions of any Award Agreement to the
contrary, to unilaterally substitute at any time a Stock Appreciation Right
providing for settlement solely in shares of Stock in place of any outstanding
Option, provided that such Stock Appreciation Right covers the same number of
shares of Stock and provides for the same exercise price (subject in each case
to adjustment in accordance with Section 4.4) as the replaced Option and
otherwise provides substantially equivalent terms and conditions as the
replaced Option, as determined by the Committee;


 


(j)            to prescribe, amend or rescind
rules, guidelines and policies relating to the Plan, or to adopt sub-plans or
supplements to, or alternative versions of, the Plan, including, without
limitation, as the Committee deems necessary or desirable to comply with the
laws or regulations of or to accommodate the tax policy, accounting principles
or custom of, foreign jurisdictions whose citizens may be granted Awards; and


 


(k)           to correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award Agreement and
to make all other determinations and take such other actions with respect to
the Plan or any Award as the Committee may deem advisable to the extent not
inconsistent with the provisions of the Plan or applicable law.


 


3.6           Option
or SAR Repricing.  Without the affirmative vote of holders of a
majority of the shares of Stock cast in person or by proxy at a meeting of the
stockholders of the Company at which a quorum representing a majority of all outstanding
shares of Stock is present or represented by proxy, the Board shall not approve
(a) the cancellation of outstanding Options or SARs and the grant in
substitution therefore of new Options or SARs having a lower exercise price, (b) the
amendment of outstanding Options or SARs to reduce the exercise price thereof,
or (c) the cancellation of outstanding Options or SARs having exercise
prices per share greater than the then current Fair Market Value of a share of
Stock and the grant in substitution therefore of Full Value Awards.  This
paragraph shall not be construed to apply to “issuing or assuming a stock
option in a transaction to which section 424(a) applies,” within the
meaning of Section 424 of the Code.


 


3.7           Indemnification.  In addition to such other rights of indemnification as they may
have as members of the Board or the Committee or as officers or employees of
the Participating Company Group, members of the Board or the Committee and any
officers or employees of the Participating Company Group to whom authority to
act for the Board, the Committee or the Company is delegated shall be
indemnified by the Company against all reasonable expenses, including attorneys’
fees, actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan, or any right granted hereunder, and
against all amounts paid by them in settlement thereof (provided such
settlement is approved by independent legal counsel selected by the Company) or
paid by them in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be adjudged in
such action, suit or proceeding that such person is liable for gross
negligence, bad faith or intentional misconduct in duties; provided, however,
that within sixty (60) days after the institution of such action, suit or
proceeding, such person shall offer to the Company, in writing, the opportunity
at its own expense to handle and defend the same.


 


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4.             SHARES SUBJECT TO PLAN.


 


4.1           Maximum
Number of Shares Issuable.  Subject to adjustment as provided in
Sections 4.2, 4.3 and 4.4, the maximum aggregate number of shares of Stock
that may be issued under the Plan shall be equal to seven million fifty-six
thousand six hundred and sixty-three (7,056,663) shares, and shall
consist of authorized but unissued or reacquired shares of Stock or any
combination thereof.


 


4.2           Share
Accounting.


 


(a)           Each share of Stock subject to an
Award other than a Full Value Award shall be counted against the limit set
forth in Section 4.1 as one (1) share.  Each share of Stock
subject to a Full Value Award shall be counted against the limit set forth in Section 4.1
as one and three-tenths (1.3) shares.


 


(b)           If an outstanding Award for any
reason expires or is terminated or canceled without having been exercised or settled
in full, or if shares of Stock acquired pursuant to an Award subject to
forfeiture or repurchase are forfeited or repurchased by the Company for an
amount not greater than the Participant’s original purchase price, the shares
of Stock allocable to the terminated portion of such Award or such forfeited or
repurchased shares of Stock shall again be available for issuance under the
Plan.  Shares of Stock shall not be deemed to have been issued pursuant to
the Plan with respect to any portion of an Award that is settled in cash. 
Upon payment in shares of Stock pursuant to the exercise of an SAR, the number
of shares available for issuance under the Plan shall be reduced by the gross
number of shares for which the SAR is exercised.  If the exercise price of
an Option is paid by tender to the Company, or attestation to the ownership, of
shares of Stock owned by the Participant, or by means of a Net-Exercise, the
number of shares available for issuance under the Plan shall be reduced by the
gross number of shares for which the Option is exercised.  If Options,
SARs or Performance Awards are settled in the form of Stock Units issued
pursuant to a stock issuance deferral award described in Section 11.1(b),
the number of shares available for issuance under the Plan shall be reduced by
the number of shares to be counted with respect to such Full Value Awards, as
determined in accordance with Section 4.2(a), but shall not be further
reduced by the number of shares of Stock originally subject to such Options,
SARs or Performance Awards settled in such manner.  Shares withheld or
reacquired by the Company in satisfaction of tax withholding obligations
pursuant to Section 16.2 shall not again be available for issuance under
the Plan.


 


4.3           Adjustment
for Certain Unissued Predecessor Plan Shares.  The maximum aggregate number
of shares of Stock that may be issued under the Plan as set forth in Section 4.1
shall be cumulatively increased from time to time by the number of shares of
Stock subject to that portion of any option outstanding pursuant to a
Predecessor Plan as of the Effective Date which, on or after the Effective
Date, is canceled pursuant to an Option for Full Value Award Exchange Program,
but only to the extent of a maximum of one million two hundred fifty thousand
(1,250,000) shares made subject to Full Value Awards granted pursuant to such
program in replacement of such cancelled options.


 


4.4           Adjustments for Changes in Capital
Structure.  Subject to any required action by the stockholders of the Company,
in the event of any change in the Stock effected without receipt of
consideration by the Company, whether through merger, consolidation,
reorganization, reincorporation, recapitalization, reclassification, stock
dividend, stock split, reverse stock split, split-up, split-off, spin-off,
combination of shares, exchange of shares, or similar change in the capital
structure of the Company, or in the event of payment of a dividend or
distribution to the stockholders of the Company in a form other than Stock
(excepting normal cash dividends) that has a material effect on the Fair Market
Value of shares of Stock, appropriate adjustments shall be made in the number
and kind of shares subject to the Plan and to any outstanding Awards, in the
Award limits set forth in Section 5.3 and in the exercise or purchase
price per share under any outstanding Award in order to prevent dilution or
enlargement of Participants’ rights under the Plan.  For purposes of the
foregoing, conversion of any convertible securities of the Company shall not be
treated as “effected without receipt of consideration by the Company.”  If
a majority of the shares which are of the same class as the shares that are
subject to outstanding Awards are exchanged for, converted into, or otherwise
become (whether or not pursuant to an Ownership Change Event) shares of another
corporation (the “New Shares”),
the Committee may unilaterally amend the outstanding Awards to provide that
such Awards are for New Shares.  In the event of any such amendment, the
number of shares subject to, and the exercise or purchase price per share of,
the outstanding Awards shall be adjusted in a fair and equitable manner as
determined by the Committee, in its discretion.  Any fractional share
resulting from an adjustment pursuant to this Section 4.4 shall be rounded
down to the nearest whole number, and in no event may the exercise or purchase
price under any Award be decreased to an amount less than the par value, if
any, of the stock 


 


9





















 


subject
to such Award.  The Committee in its sole discretion, may also make such
adjustments in the terms of any Award to reflect, or related to, such changes
in the capital structure of the Company or distributions as it deems
appropriate, including modification of Performance Goals, Performance Award
Formulas and Performance Periods.  The adjustments determined by the
Committee pursuant to this Section shall be final, binding and conclusive.


 


The Committee may,
without affecting the number of Shares reserved or available hereunder,
authorize the issuance or assumption of benefits under this Plan in connection
with any merger, consolidation, acquisition of property or stock, or
reorganization upon such terms and conditions as it may deem appropriate, subject
to compliance with Sections 409A and 422 and any related guidance issued
by the U.S. Treasury Department, where applicable.


 


5.             ELIGIBILITY, PARTICIPATION AND AWARD LIMITATIONS.


 


5.1           Persons
Eligible for Awards.  Awards may be granted only to Employees and
Consultants.


 


5.2           Participation
in Plan.  Awards are granted solely at the discretion of the
Committee.  Eligible persons may be granted more than one Award. 
However, eligibility in accordance with this Section shall not entitle any
person to be granted an Award, or, having been granted an Award, to be granted
an additional Award.


 


5.3           Award
Limitations.


 


(a)           Incentive Stock Option Limitations.


 


(i)            Maximum Number of Shares Issuable Pursuant to
Incentive Stock Options.  Subject to adjustment as provided in Section 4.4,
the maximum aggregate number of shares of Stock that may be issued under the
Plan pursuant to the exercise of Incentive Stock Options shall not exceed seven
million fifty-six thousand six hundred and sixty-three (7,056,663) shares.  The maximum aggregate number of shares of
Stock that may be issued under the Plan pursuant to all Awards other than
Incentive Stock Options shall be the number of shares determined in accordance
with Section 4.1, subject to adjustment as provided in Sections 4.2,
4.3 and 4.4.


 


(ii)           Persons Eligible.  An Incentive Stock Option
may be granted only to a person who, on the effective date of grant, is an
Employee of the Company, a Parent Corporation or a Subsidiary Corporation (each
being an “ISO-Qualifying Corporation”).  Any person
who is not an Employee of an ISO-Qualifying Corporation on the effective date
of the grant of an Option to such person may be granted only a Nonstatutory
Stock Option.  An Incentive Stock Option granted to a prospective Employee
upon the condition that such person become an Employee of an ISO-Qualifying
Corporation shall be deemed granted effective on the date such person commences
Service with an ISO-Qualifying Corporation, with an exercise price determined
as of such date in accordance with Section 6.1.


 


(iii)          Fair Market Value Limitation.  To the
extent that options designated as Incentive Stock Options (granted under all
stock option plans of the Participating Company Group, including the Plan)
become exercisable by a Participant for the first time during any calendar year
for stock having a Fair Market Value greater than One Hundred Thousand Dollars
($100,000), the portion of such options which exceeds such amount shall be
treated as Nonstatutory Stock Options.  For purposes of this Section,
options designated as Incentive Stock Options shall be taken into account in
the order in which they were granted, and the Fair Market Value of stock
shall be determined as of the time the option with respect to such stock is
granted.  If the Code is amended to provide for a limitation different
from that set forth in this Section, such different limitation shall be deemed
incorporated herein effective as of the date and with respect to such Options
as required or permitted by such amendment to the Code.  If an Option is
treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option
in part by reason of the limitation set forth in this Section, the Participant
may designate which portion of such Option the Participant is exercising. 
In the absence of such designation, the Participant shall be deemed to have
exercised the Incentive Stock Option portion of the Option first.  Upon
exercise, shares issued pursuant to each such portion shall be separately
identified.


 


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(b)           Limit on Full Value
Awards without Minimum Vesting.  Except with respect to a maximum of
five percent (5%) of the maximum aggregate number of shares of Stock that may
be issued under the Plan, as provided in Section 4.1, and except with
respect to Full Value Awards granted pursuant to an Option for Full Value Award
Exchange Program, Full Value Awards which vest on the basis of the Participant’s
continued Service shall not provide for vesting which is any more rapid than
over a three (3) year period, and Full Value Awards which vest on the
basis of the attainment of performance goals shall not provide for a
performance period of less than twelve (12) months.  Full Value Awards
granted pursuant to an Option for Full Value Award Exchange Program which vest
on the basis of the Participant’s continued Service shall not provide for
vesting which is any more rapid than over a two (2) year period.  The
foregoing limitations shall not preclude the acceleration of vesting of any
such Award upon the death, disability, retirement or involuntary termination of
Service of the Participant or upon or following a Change in Control, as
determined by the Committee in its discretion.


 


(c)           Section 162(m) Award
Limits.  The following limits shall apply to the grant of any Award
intended to qualify for treatment as Performance-Based Compensation:


 


(i)            Options and SARs.  Subject to
adjustment as provided in Section 4.4, no Employee shall be granted within
any fiscal year of the Company one or more Options or Freestanding SARs which
in the aggregate are for more than five hundred thousand (500,000) shares.


 


(ii)           Restricted Stock Awards and Restricted
Stock Unit Awards.  Subject to adjustment as provided in Section 4.4,
no Employee shall be granted within any fiscal year of the Company one or more
Restricted Stock Awards or Restricted Stock Unit Awards for more than two
hundred fifty thousand (250,000) shares.


 


(iii)          Performance Awards.  Subject to adjustment as
provided in Section 4.4, no Employee shall be granted (1) Performance
Shares which could result in such Employee receiving more than one hundred
thousand (100,000) shares for each full fiscal year of the Company contained in
the Performance Period for such Award, or (2) Performance Units which
could result in such Employee receiving more than one million five hundred
thousand dollars ($1,500,000) for each full fiscal year of the Company
contained in the Performance Period for such Award.  No Participant may be
granted more than one Performance Award for the same Performance Period.


 


(iv)          Cash-Based Awards and Other Stock-Based Awards.  Subject to
adjustment as provided in Section 4.4, no Employee shall be granted (1) Cash-Based
Awards in any fiscal year of the Company which could result in such Employee
receiving more than one million five hundred thousand dollars ($1,500,000) for
each full fiscal year of the Company contained in the Performance Period for
such Award, or (2) Other Stock-Based Awards in any fiscal year of the
Company which could result in such Employee receiving more than one hundred
thousand (100,000) shares for each full fiscal year of the Company contained in
the Performance Period for such Award.


 


6.             STOCK OPTIONS.


 


Options
shall be evidenced by Award Agreements specifying the number of shares of Stock
covered thereby, in such form as the Committee shall from time to time
establish.  No Option or purported Option shall be a valid and binding
obligation of the Company unless evidenced by a fully executed Award
Agreement.  Award Agreements evidencing Options may incorporate all or any
of the terms of the Plan by reference, including the provisions of Section 18
with respect to Section 409A if applicable, and shall comply with and be
subject to the following terms and conditions:


 


6.1           Exercise Price.  The exercise price for each
Option shall be established in the discretion of the Committee; provided,
however, that (a) the exercise price per share shall be not less than the
Fair Market Value of a share of Stock on the effective date of grant of the
Option and (b) no Incentive Stock Option granted to a Ten Percent Owner
shall have an exercise price per share less than one hundred ten percent (110%)
of the Fair Market Value of a share of Stock on the effective date of grant of
the Option.  Notwithstanding the foregoing, an Option (whether an
Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an
exercise price 


 


11





















 


lower
than the minimum exercise price set forth above if such Option is granted pursuant
to an assumption or substitution for another option in a manner qualifying
under the provisions of Section 424(a) of the Code.


 


6.2           Exercisability
and Term of Options.  Options shall be exercisable at such time or times,
or upon such event or events, and subject to such terms, conditions,
performance criteria and restrictions as shall be determined by the Committee
and set forth in the Award Agreement evidencing such Option; provided, however,
that (a) no Option shall be exercisable after the expiration of ten (10) years
after the effective date of grant of such Option and (b) no Incentive
Stock Option granted to a Ten Percent Owner shall be exercisable after the
expiration of five (5) years after the effective date of grant of such
Option.  Subject to the foregoing, unless otherwise specified by the
Committee in the grant of an Option, each Option shall terminate ten (10) years
after the effective date of grant of the Option, unless earlier terminated in
accordance with its provisions.


 


6.3           Payment
of Exercise Price.


 


(a)           Forms of Consideration Authorized.  Except as
otherwise provided below, payment of the exercise price for the number of
shares of Stock being purchased pursuant to any Option shall be made (i) in
cash or by check or cash equivalent, (ii) by tender to the Company, or
attestation to the ownership, of shares of Stock owned by the Participant
having a Fair Market Value not less than the exercise price, (iii) by
delivery of a properly executed notice of exercise together with irrevocable instructions
to a broker providing for the assignment to the Company of the proceeds of a
sale or loan with respect to some or all of the shares being acquired upon the
exercise of the Option (including, without limitation, through an exercise
complying with the provisions of Regulation T as promulgated from time to time
by the Board of Governors of the Federal Reserve System) (a “Cashless Exercise”), (iv) by
delivery of a properly executed notice electing a Net-Exercise, (v) by
such other consideration as may be approved by the Committee from time to time
to the extent permitted by applicable law, or (vi) by any combination
thereof.  The Committee may at any time or from time to time grant Options
which do not permit all of the foregoing forms of consideration to be used in
payment of the exercise price or which otherwise restrict one or more forms of
consideration.


 


(b)           Limitations on Forms of Consideration.


 


(i)            Tender of Stock.  Notwithstanding the
foregoing, an Option may not be exercised by tender to the Company, or
attestation to the ownership, of shares of Stock to the extent such tender or
attestation would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company’s
stock.  Unless otherwise provided by the Committee, an Option may not be
exercised by tender to the Company, or attestation to the ownership, of shares
of Stock unless such shares either have been owned by the Participant for more
than six (6) months (or such other period, if any, as the Committee may
permit) and not used for another Option exercise by attestation during such
period, or were not acquired, directly or indirectly, from the Company.


 


(ii)           Cashless Exercise.  The Company reserves, at any and all times,
the right, in the Company’s sole and absolute discretion, to establish, decline
to approve or terminate any program or procedures for the exercise of Options
by means of a Cashless Exercise, including with respect to one or more
Participants specified by the Company notwithstanding that such program or
procedures may be available to other Participants.


 


6.4           Effect
of Termination of Service.


 


(a)           Option Exercisability.  Subject to earlier
termination of the Option as otherwise provided herein and unless otherwise
provided by the Committee in the grant of an Option and set forth in the Award
Agreement, an Option shall terminate immediately upon the Participant’s
termination of Service to the extent that it is then unvested and shall be
exercisable after the Participant’s termination of Service to the extent it is
then vested only during the applicable time period determined in accordance
with this Section and thereafter shall terminate:


 


(i)            Disability.  If the Participant’s Service
terminates because of the Disability of the Participant, the Option, to the
extent unexercised and exercisable for vested shares on the date on 


 


12





















 


which
the Participant’s Service terminated, may be exercised by the Participant (or
the Participant’s guardian or legal representative) at any time prior to the
expiration of twelve (12) months after the date on which the Participant’s
Service terminated, but in any event no later than the date of expiration of
the Option’s term as set forth in the Award Agreement evidencing such Option
(the “Option Expiration Date”).


 


(ii)           Death.  If the Participant’s Service
terminates because of the death of the Participant, the Option, to the extent
unexercised and exercisable for vested shares on the date on which the Participant’s
Service terminated, may be exercised by the Participant’s legal representative
or other person who acquired the right to exercise the Option by reason of the
Participant’s death at any time prior to the expiration of twelve (12) months
after the date on which the Participant’s Service terminated, but in any event
no later than the Option Expiration Date.  The Participant’s Service shall
be deemed to have terminated on account of death if the Participant dies within
three (3) months after the Participant’s termination of Service.


 


(iii)          Other Termination of Service.  If the
Participant’s Service terminates for any reason, except Disability or death,
the Option, to the extent unexercised and exercisable for vested shares on the
date on which the Participant’s Service terminated, may be exercised by the
Participant at any time prior to the expiration of three (3) months after
the date on which the Participant’s Service terminated, but in any event no
later than the Option Expiration Date.


 


(b)           Extension if Exercise Prevented by Law.  Notwithstanding
the foregoing, if the exercise of an Option within the applicable time periods
set forth in Section 6.4(a) is prevented by the provisions of Section 15
below, the Option shall remain exercisable until three (3) months (or such
longer period of time as determined by the Committee, in its discretion) after
the date the Participant is notified by the Company that the Option is
exercisable, but in any event no later than the Option Expiration Date.


 


(c)           Extension if Participant Subject to Section 16(b).  Notwithstanding
the foregoing, if a sale within the applicable time periods set forth in Section 6.4(a) of
shares acquired upon the exercise of the Option would subject the Participant
to suit under Section 16(b) of the Exchange Act, the Option shall
remain exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which a sale of such shares by the Participant would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th)
day after the Participant’s termination of Service, or (iii) the Option
Expiration Date.


 


6.5           Transferability
of Options.  During the lifetime of the Participant, an Option shall be
exercisable only by the Participant or the Participant’s guardian or legal
representative.  An Option shall not be subject in any manner to
anticipation, alienation, sale, exchange, transfer, assignment, pledge,
encumbrance, or garnishment by creditors of the Participant or the Participant’s
beneficiary, except transfer by will or by the laws of descent and
distribution.  Notwithstanding the foregoing, to the extent permitted by
the Committee, in its discretion, and set forth in the Award Agreement
evidencing such Option, a Nonstatutory Stock Option shall be assignable or
transferable subject to the applicable limitations, if any, described in the
General Instructions to Form S-8 Registration Statement under the
Securities Act.


 


7.             STOCK APPRECIATION RIGHTS.


 


Stock
Appreciation Rights shall be evidenced by Award Agreements specifying the
number of shares of Stock subject to the Award, in such form as the Committee
shall from time to time establish.  No SAR or purported SAR shall be a
valid and binding obligation of the Company unless evidenced by a fully
executed Award Agreement.  Award Agreements evidencing SARs may
incorporate all or any of the terms of the Plan by reference, including
provisions of Section 18 with respect to Section 409A if applicable,
and shall comply with and be subject to the following terms and conditions:


 


7.1           Types of SARs Authorized.  SARs may be granted in
tandem with all or any portion of a related Option (a “Tandem SAR”) or may be granted
independently of any Option (a “Freestanding SAR”).  A Tandem SAR
may only be granted concurrently with the grant of the related Option.


 


7.2           Exercise Price.  The exercise price for each
SAR shall be established in the discretion of the Committee; provided, however,
that (a) the exercise price per share subject to a Tandem SAR shall be the



 


13





















 


exercise
price per share under the related Option and (b) the exercise price per
share subject to a Freestanding SAR shall be not less than the Fair Market
Value of a share of Stock on the effective date of grant of the SAR.


 


7.3           Exercisability
and Term of SARs.


 


(a)           Tandem SARs.  Tandem SARs
shall be exercisable only at the time and to the extent, and only to the
extent, that the related Option is exercisable, subject to such provisions as
the Committee may specify where the Tandem SAR is granted with respect to less
than the full number of shares of Stock subject to the related Option. 
The Committee may, in its discretion, provide in any Award Agreement evidencing
a Tandem SAR that such SAR may not be exercised without the advance approval of
the Company and, if such approval is not given, then the Option shall
nevertheless remain exercisable in accordance with its terms.  A Tandem
SAR shall terminate and cease to be exercisable no later than the date on which
the related Option expires or is terminated or canceled.  Upon the
exercise of a Tandem SAR with respect to some or all of the shares subject to
such SAR, the related Option shall be canceled automatically as to the number
of shares with respect to which the Tandem SAR was exercised.  Upon the
exercise of an Option related to a Tandem SAR as to some or all of the shares
subject to such Option, the related Tandem SAR shall be canceled automatically
as to the number of shares with respect to which the related Option was
exercised.


 


(b)           Freestanding SARs.  Freestanding
SARs shall be exercisable at such time or times, or upon such event or events,
and subject to such terms, conditions, performance criteria and restrictions as
shall be determined by the Committee and set forth in the Award Agreement
evidencing such SAR; provided, however, that no Freestanding SAR shall be
exercisable after the expiration of ten (10) years after the effective
date of grant of such SAR.


 


7.4           Exercise
of SARs.  Upon the exercise (or deemed exercise pursuant to Section 7.5)
of an SAR, the Participant (or the Participant’s legal representative or other
person who acquired the right to exercise the SAR by reason of the Participant’s
death) shall be entitled to receive payment of an amount for each share with
respect to which the SAR is exercised equal to the excess, if any, of the Fair
Market Value of a share of Stock on the date of exercise of the SAR over the
exercise price.  Payment of such amount shall be made (a) in the case
of a Tandem SAR, solely in shares of Stock in a lump sum as soon as practicable
following the date of exercise of the SAR and (b) in the case of a
Freestanding SAR, in cash, shares of Stock, or any combination thereof as
determined by the Committee in compliance with Section 409A.  Unless
otherwise provided in the Award Agreement evidencing a Freestanding SAR,
payment shall be made in a lump sum as soon as practicable following the date
of exercise of the SAR.  The Award Agreement evidencing any Freestanding
SAR may provide for deferred payment in a lump sum or in installments in
compliance with Section 409A.  When payment is to be made in shares
of Stock, the number of shares to be issued shall be determined on the basis of
the Fair Market Value of a share of Stock on the date of exercise of the
SAR.  For purposes of Section 7, an SAR shall be deemed exercised on
the date on which the Company receives notice of exercise from the Participant
or as otherwise provided in Section 7.5.


 


7.5           Deemed Exercise of SARs.  If, on the date on which an SAR would otherwise terminate or
expire, the SAR by its terms remains exercisable immediately prior to such
termination or expiration and, if so exercised, would result in a payment to
the holder of such SAR, then any portion of such SAR which has not previously
been exercised shall automatically be deemed to be exercised as of such date
with respect to such portion.


 


7.6           Effect
of Termination of Service.  Subject to earlier termination of the SAR as
otherwise provided herein and unless otherwise provided by the Committee in the
grant of an SAR and set forth in the Award Agreement, an SAR shall be
exercisable after a Participant’s termination of Service only to the extent and
during the applicable time period determined in accordance with Section 6.4
(treating the SAR as if it were an Option) and thereafter shall terminate.


 


7.7           Transferability
of SARs.  During the lifetime of the Participant, an SAR shall be
exercisable only by the Participant or the Participant’s guardian or legal
representative.  An SAR shall not be subject in any manner to
anticipation, alienation, sale, exchange, transfer, assignment, pledge,
encumbrance, or garnishment by creditors of the Participant or the Participant’s
beneficiary, except transfer by will or by the laws of descent and
distribution.  Notwithstanding the foregoing, to the extent permitted by
the Committee, in its discretion, and set forth in the Award Agreement
evidencing such Award, a Tandem SAR related to a Nonstatutory Stock Option or a



 


14





















 


Freestanding
SAR shall be assignable or transferable subject to the applicable limitations,
if any, described in the General Instructions to Form S-8 Registration
Statement under the Securities Act.


 


8.             RESTRICTED STOCK AWARDS.


 


Restricted
Stock Awards shall be evidenced by Award Agreements specifying whether the
Award is a Restricted Stock Bonus or a Restricted Stock Purchase Right and the
number of shares of Stock subject to the Award, in such form as the Committee
shall from time to time establish.  No Restricted Stock Award or purported
Restricted Stock Award shall be a valid and binding obligation of the Company
unless evidenced by a fully executed Award Agreement.  Award Agreements
evidencing Restricted Stock Awards may incorporate all or any of the terms of
the Plan by reference and shall comply with and be subject to the following
terms and conditions:


 


8.1           Types of Restricted Stock Awards Authorized.  Restricted
Stock Awards may be granted in the form of either a Restricted Stock Bonus or a
Restricted Stock Purchase Right.  Restricted Stock Awards may be granted
upon such conditions as the Committee shall determine, including, without
limitation, upon the attainment of one or more Performance Goals described in Section 10.4. 
If either the grant of a Restricted Stock Award or the lapsing of the
Restriction Period is to be contingent upon the attainment of one or more
Performance Goals, the Committee shall follow procedures substantially
equivalent to those set forth in Sections 10.3 through 10.5(a).


 


8.2           Purchase Price.  The purchase price for
shares of Stock issuable under each Restricted Stock Purchase Right shall be
established by the Committee in its discretion.  No monetary payment
(other than applicable tax withholding) shall be required as a condition of
receiving shares of Stock pursuant to a Restricted Stock Bonus, the
consideration for which shall be services actually rendered to a Participating
Company or for its benefit.  Notwithstanding the foregoing, if required by
applicable state corporate law, the Participant shall furnish consideration in
the form of cash or past services rendered to a Participating Company or for
its benefit having a value not less than the par value of the shares of Stock
subject to a Restricted Stock Award.


 


8.3           Purchase Period.  A Restricted Stock Purchase
Right shall be exercisable within a period established by the Committee, which
shall in no event exceed thirty (30) days from the effective date of the grant
of the Restricted Stock Purchase Right.


 


8.4           Payment of Purchase Price.  Except as otherwise
provided below, payment of the purchase price for the number of shares of Stock
being purchased pursuant to any Restricted Stock Purchase Right shall be made (a) in
cash or by check or cash equivalent, (b) by such other consideration as
may be approved by the Committee from time to time to the extent permitted by
applicable law, or (c) by any combination thereof.  The Committee may
at any time or from time to time grant Restricted Stock Purchase Rights which
do not permit all of the foregoing forms of consideration to be used in payment
of the purchase price or which otherwise restrict one or more forms of
consideration.


 


8.5           Vesting and Restrictions on Transfer.  Subject to Section 5.3(b),
Shares issued pursuant to any Restricted Stock Award may (but need not) be made
subject to Vesting Conditions based upon the satisfaction of such Service
requirements, conditions, restrictions or performance criteria, including,
without limitation, Performance Goals as described in Section 10.4, as
shall be established by the Committee and set forth in the Award Agreement
evidencing such Award.  During any Restriction Period in which shares
acquired pursuant to a Restricted Stock Award remain subject to Vesting
Conditions, such shares may not be sold, exchanged, transferred, pledged,
assigned or otherwise disposed of other than pursuant to an Ownership Change
Event or as provided in Section 8.8.  The Committee, in its
discretion, may provide in any Award Agreement evidencing a Restricted Stock
Award that, if the satisfaction of Vesting Conditions with respect to any
shares subject to such Restricted Stock Award would otherwise occur on a day on
which the sale of such shares would violate the Company’s Insider Trading
Policy, then the satisfaction of the Vesting Conditions automatically be deemed
to occur on the next day on which the sale of such shares would not violate the
Insider Trading Policy.  Upon request by the Company, each Participant
shall execute any agreement evidencing such transfer restrictions prior to the
receipt of shares of Stock hereunder and shall promptly present to the Company
any and all certificates representing shares of Stock acquired hereunder for
the placement on such certificates of appropriate legends evidencing any such
transfer restrictions.


 


15





















 


8.6           Voting Rights; Dividends and Distributions.  Except as
provided in this Section, Section 8.5 and any Award Agreement, during any
Restriction Period applicable to shares subject to a Restricted Stock Award,
the Participant shall have all of the rights of a stockholder of the Company
holding shares of Stock, including the right to vote such shares and to receive
all dividends and other distributions paid with respect to such shares. 
However, in the event of a dividend or distribution paid in shares of Stock or
other property or any other adjustment made upon a change in the capital
structure of the Company as described in Section 4.4, any and all new,
substituted or additional securities or other property (other than normal cash
dividends) to which the Participant is entitled by reason of the Participant’s
Restricted Stock Award shall be immediately subject to the same Vesting
Conditions as the shares subject to the Restricted Stock Award with respect to
which such dividends or distributions were paid or adjustments were made.


 


8.7           Effect of Termination of Service.  Unless
otherwise provided by the Committee in the Award Agreement evidencing a
Restricted Stock Award, if a Participant’s Service terminates for any reason,
whether voluntary or involuntary (including the Participant’s death or
disability), then (a) the Company shall have the option to repurchase for
the purchase price paid by the Participant any shares acquired by the
Participant pursuant to a Restricted Stock Purchase Right which remain subject
to Vesting Conditions as of the date of the Participant’s termination of
Service and (b) the Participant shall forfeit to the Company any shares
acquired by the Participant pursuant to a Restricted Stock Bonus which remain
subject to Vesting Conditions as of the date of the Participant’s termination
of Service.  The Company shall have the right to assign at any time any
repurchase right it may have, whether or not such right is then exercisable, to
one or more persons as may be selected by the Company.


 


8.8           Nontransferability of Restricted Stock Award Rights.  Rights to
acquire shares of Stock pursuant to a Restricted Stock Award shall not be
subject in any manner to anticipation, alienation, sale, exchange, transfer,
assignment, pledge, encumbrance or garnishment by creditors of the Participant
or the Participant’s beneficiary, except transfer by will or the laws of
descent and distribution.  All rights with respect to a Restricted Stock
Award granted to a Participant hereunder shall be exercisable during his or her
lifetime only by such Participant or the Participant’s guardian or legal
representative.


 


9.             RESTRICTED STOCK UNIT AWARDS.


 


Restricted
Stock Unit Awards shall be evidenced by Award Agreements specifying the number
of Restricted Stock Units subject to the Award, in such form as the Committee
shall from time to time establish.  No Restricted Stock Unit Award or
purported Restricted Stock Unit Award shall be a valid and binding obligation
of the Company unless evidenced by a fully executed Award Agreement. 
Award Agreements evidencing Restricted Stock Units may incorporate all or any
of the terms of the Plan by reference, including the provisions of Section 18
with respect to Section 409A, if applicable, and shall comply with and be
subject to the following terms and conditions:


 


9.1           Grant of Restricted Stock Unit Awards.  Restricted Stock Unit Awards may be granted upon such conditions
as the Committee shall determine, including, without limitation, upon the
attainment of one or more Performance Goals described in Section 10.4. 
If either the grant of a Restricted Stock Unit Award or the Vesting Conditions
with respect to such Award is to be contingent upon the attainment of one or
more Performance Goals, the Committee shall follow procedures substantially
equivalent to those set forth in Sections 10.3 through 10.5(a).


 


9.2           Purchase Price.  No monetary payment (other
than applicable tax withholding, if any) shall be required as a condition of
receiving a Restricted Stock Unit Award, the consideration for which shall be
services actually rendered to a Participating Company or for its benefit. 
Notwithstanding the foregoing, if required by applicable state corporate law,
the Participant shall furnish consideration in the form of cash or past
services rendered to a Participating Company or for its benefit having a value
not less than the par value of the shares of Stock issued upon settlement of
the Restricted Stock Unit Award.


 


9.3           Vesting.  Subject to Section 5.3(b),
Restricted Stock Unit Awards may (but need not) be made subject to Vesting
Conditions based upon the satisfaction of such Service requirements,
conditions, restrictions or performance criteria, including, without
limitation, Performance Goals as described in Section 10.4, as shall be
established by the Committee and set forth in the Award Agreement evidencing
such Award.


 


16





















 


9.4           Voting Rights, Dividend Equivalent Rights and
Distributions.  Participants shall have no voting rights with
respect to shares of Stock represented by Restricted Stock Units until the date
of the issuance of such shares (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the
Company).  However, the Committee, in its discretion, may provide in the
Award Agreement evidencing any Restricted Stock Unit Award that the Participant
shall be entitled to receive Dividend Equivalents with respect to the payment
of cash dividends on Stock during the period beginning on the date such Award
is granted and ending, with respect to the particular shares subject to the
Award, on the earlier of the date the Award is settled or the date on which it
is terminated.  Such Dividend Equivalents, if any, shall be paid by
crediting the Participant with additional whole Restricted Stock Units as of
the date of payment of such cash dividends on Stock.  The number of additional
Restricted Stock Units (rounded to the nearest whole number) to be so credited
shall be determined by dividing (a) the amount of cash dividends paid on
such date with respect to the number of shares of Stock represented by the
Restricted Stock Units previously credited to the Participant by (b) the
Fair Market Value per share of Stock on such date.  Such additional
Restricted Stock Units shall be subject to the same terms and conditions and
shall be settled in the same manner and at the same time (or as soon thereafter
as practicable) as the Restricted Stock Units originally subject to the
Restricted Stock Unit Award.  In the event of a dividend or distribution
paid in shares of Stock or other property or any other adjustment made upon a
change in the capital structure of the Company as described in Section 4.4,
appropriate adjustments shall be made in the Participant’s Restricted Stock
Unit Award so that it represents the right to receive upon settlement any and
all new, substituted or additional securities or other property (other than
normal cash dividends) to which the Participant would be entitled by reason of
the shares of Stock issuable upon settlement of the Award, and all such new,
substituted or additional securities or other property shall be immediately
subject to the same Vesting Conditions as are applicable to the Award.


 


9.5           Effect of Termination of Service.  Unless
otherwise provided by the Committee and set forth in the Award Agreement
evidencing a Restricted Stock Unit Award, if a Participant’s Service terminates
for any reason, whether voluntary or involuntary (including the Participant’s
death or disability), then the Participant shall forfeit to the Company any
Restricted Stock Units pursuant to the Award which remain subject to Vesting
Conditions as of the date of the Participant’s termination of Service.


 


9.6           Settlement of Restricted Stock Unit Awards.  The Company shall issue to a Participant on the date on which
Restricted Stock Units subject to the Participant’s Restricted Stock Unit Award
vest or on such other date determined by the Committee, in its discretion, and
set forth in the Award Agreement one (1) share of Stock (and/or any other
new, substituted or additional securities or other property pursuant to an
adjustment described in Section 9.4) for each Restricted Stock Unit then
becoming vested or otherwise to be settled on such date, subject to the
withholding of applicable taxes, if any.  If permitted by the Committee,
subject to the provisions of Section 18 with respect to Section 409A,
the Participant may elect in accordance with terms specified in the Award
Agreement to defer receipt of all or any portion of the shares of Stock or
other property otherwise issuable to the Participant pursuant to this Section,
and such deferred issuance date(s) elected by the Participant shall be set
forth in the Award Agreement.  Notwithstanding the foregoing, the
Committee, in its discretion, may provide for settlement of any Restricted
Stock Unit Award by payment to the Participant in cash of an amount equal to
the Fair Market Value on the payment date of the shares of Stock or other
property otherwise issuable to the Participant pursuant to this Section. 
The Committee, in its discretion, may provide in any Award Agreement evidencing
a Restricted Stock Unit Award that, if the settlement of the Award with respect
to any shares would otherwise occur on a day on which the sale of such shares
would violate the Company’s Insider Trading Policy, then the settlement with
respect to such shares shall occur on the next day on which the sale of such
shares would not violate the Insider Trading Policy.


 


9.7           Nontransferability of Restricted Stock Unit Awards.  The right to
receive shares pursuant to a Restricted Stock Unit Award shall not be subject
in any manner to anticipation, alienation, sale, exchange, transfer,
assignment, pledge, encumbrance, or garnishment by creditors of the Participant
or the Participant’s beneficiary, except transfer by will or by the laws of
descent and distribution.  All rights with respect to a Restricted Stock
Unit Award granted to a Participant hereunder shall be exercisable during his
or her lifetime only by such Participant or the Participant’s guardian or legal
representative.


 


17





















 


10.           PERFORMANCE
AWARDS.


 


Performance
Awards shall be evidenced by Award Agreements in such form as the Committee
shall from time to time establish.  No Performance Award or purported
Performance Award shall be a valid and binding obligation of the Company unless
evidenced by a fully executed Award Agreement.  Award Agreements
evidencing Performance Awards may incorporate all or any of the terms of the
Plan by reference, including the provisions of Section 18 with respect to Section 409A,
if applicable, and shall comply with and be subject to the following terms and
conditions:


 


10.1         Types
of Performance Awards Authorized.  Performance Awards may be
granted in the form of either Performance Shares or Performance Units. 
Each Award Agreement evidencing a Performance Award shall specify the number of
Performance Shares or Performance Units subject thereto, the Performance Award
Formula, the Performance Goal(s) and Performance Period applicable to the
Award, and the other terms, conditions and restrictions of the Award.


 


10.2         Initial
Value of Performance Shares and Performance Units.  Unless otherwise provided by
the Committee in granting a Performance Award, each Performance Share shall
have an initial monetary value equal to the Fair Market Value of one (1) share
of Stock, subject to adjustment as provided in Section 4.4, on the
effective date of grant of the Performance Share, and each Performance Unit
shall have an initial monetary value established by the Committee at the time
of grant.  The final value payable to the Participant in settlement of a
Performance Award determined on the basis of the applicable Performance Award
Formula will depend on the extent to which Performance Goals established by the
Committee are attained within the applicable Performance Period established by
the Committee.


 


10.3         Establishment
of Performance Period, Performance Goals and Performance Award Formula.  In granting
each Performance Award, the Committee shall establish in writing the applicable
Performance Period (subject to Section 5.3(b)), Performance Award Formula
and one or more Performance Goals which, when measured at the end of the
Performance Period, shall determine on the basis of the Performance Award
Formula the final value of the Performance Award to be paid to the Participant. 
Unless otherwise permitted in compliance with the requirements under Section 162(m) with
respect to each Performance Award intended to result in the payment of
Performance-Based Compensation, the Committee shall establish the Performance
Goal(s) and Performance Award Formula applicable to each Performance Award
no later than the earlier of (a) the date ninety (90) days after the
commencement of the applicable Performance Period or (b) the date on which
25% of the Performance Period has elapsed, and, in any event, at a time when
the outcome of the Performance Goals remains substantially uncertain. 
Once established, the Performance Goals and Performance Award Formula
applicable to a Covered Employee shall not be changed during the Performance
Period.  The Company shall notify each Participant granted a Performance
Award of the terms of such Award, including the Performance Period, Performance
Goal(s) and Performance Award Formula.


 


10.4         Measurement
of Performance Goals.  Performance Goals shall be established by the
Committee on the basis of targets to be attained (“Performance Targets”) with respect to one
or more measures of business or financial performance (each, a “Performance Measure”), subject to the
following:


 


(a)           Performance Measures.  Performance
Measures shall have the same meanings as used in the Company’s financial
statements, or, if such terms are not used in the Company’s financial
statements, they shall have the meaning applied pursuant to generally accepted
accounting principles, or as used generally in the Company’s industry. 
Performance Measures shall be calculated with respect to the Company and each
Subsidiary Corporation consolidated therewith for financial reporting purposes
or such division or other business unit as may be selected by the
Committee.  For purposes of the Plan, the Performance Measures applicable
to a Performance Award shall be calculated in accordance with generally
accepted accounting principles, but prior to the accrual or payment of any
Performance Award for the same Performance Period and excluding the effect
(whether positive or negative) of any change in accounting standards or any
extraordinary, unusual or nonrecurring item, as determined by the Committee,
occurring after the establishment of the Performance Goals applicable to the
Performance Award.  Each such adjustment, if any, shall be made solely for
the purpose of providing a consistent basis from period to period for the
calculation of Performance Measures in order to prevent the dilution or enlargement
of the Participant’s rights with respect to a Performance Award. 
Performance Measures may be one or more of the following, as determined by the
Committee:


 


18





















 


	
   

  	
  (i)

  	
   

  	
  revenue;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
   

  	
  sales;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
   

  	
  expenses;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
   

  	
  operating
  income;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (v)

  	
   

  	
  gross
  margin;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (vi)

  	
   

  	
  operating
  margin;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (vii)

  	
   

  	
  earnings
  before any one or more of: stock-based compensation expense, interest,

  
	
  taxes,
  depreciation and amortization;

  
	
   

  	
  (viii)

  	
   

  	
  pre-tax
  profit;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ix)

  	
   

  	
  net
  operating income;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (x)

  	
   

  	
  net
  income;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xi)

  	
   

  	
  economic
  value added;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xii)

  	
   

  	
  free
  cash flow;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xiii)

  	
   

  	
  operating
  cash flow;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xiv)

  	
   

  	
  stock
  price;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xv)

  	
   

  	
  earnings
  per share;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xvi)

  	
   

  	
  return
  on stockholder equity;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xvii)

  	
   

  	
  return
  on capital;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xviii)

  	
   

  	
  return
  on assets;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xix)

  	
   

  	
  return
  on investment;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xx)

  	
   

  	
  employee
  satisfaction;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xxi)

  	
   

  	
  employee
  retention;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xxii)

  	
   

  	
  balance
  of cash, cash equivalents and marketable securities;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xxiii)

  	
   

  	
  market
  share;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xxiv)

  	
   

  	
  customer
  satisfaction;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xxv)

  	
   

  	
  product
  development;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xxvi)

  	
   

  	
  research
  and development expenses;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xxvii)

  	
   

  	
  completion
  of an identified special project; and

  



 


19





















 


	
   

  	
  (xxviii)

  	
   

  	
  completion
  of a joint venture or other corporate transaction.

  



 


(b)           Performance Targets.  Performance
Targets may include a minimum, maximum, target level and intermediate levels of
performance, with the final value of a Performance Award determined under the
applicable Performance Award Formula by the level attained during the
applicable Performance Period.  A Performance Target may be stated as an
absolute value or as a value determined relative to an index, budget or other
standard selected by the Committee.


 


10.5         Settlement
of Performance Awards.


 


(a)           Determination of Final Value.  As soon as
practicable following the completion of the Performance Period applicable to a
Performance Award, the Committee shall certify in writing the extent to which
the applicable Performance Goals have been attained and the resulting final
value of the Award earned by the Participant and to be paid upon its settlement
in accordance with the applicable Performance Award Formula.


 


(b)           Discretionary Adjustment of Award
Formula.  In its discretion, the Committee may, either at the
time it grants a Performance Award or at any time thereafter, provide for the
positive or negative adjustment of the Performance Award Formula applicable to
a Performance Award granted to any Participant who is not a Covered Employee to
reflect such Participant’s individual performance in his or her position with
the Company or such other factors as the Committee may determine.  If
permitted under a Covered Employee’s Award Agreement, the Committee shall have
the discretion, on the basis of such criteria as may be established by the
Committee, to reduce some or all of the value of the Performance Award that
would otherwise be paid to the Covered Employee upon its settlement
notwithstanding the attainment of any Performance Goal and the resulting value
of the Performance Award determined in accordance with the Performance Award
Formula.  No such reduction may result in an increase in the amount
payable upon settlement of another Participant’s Performance Award that is
intended to result in Performance-Based Compensation.


 


(c)           Effect of Leaves of Absence.  Unless
otherwise required by law or a Participant’s Award Agreement, payment of the
final value, if any, of a Performance Award held by a Participant who has taken
in excess of thirty (30) days in leaves of absence during a Performance Period
shall be prorated on the basis of the number of days of the Participant’s
Service during the Performance Period during which the Participant was not on a
leave of absence.


 


(d)           Notice to Participants.  As soon as
practicable following the Committee’s determination and certification in
accordance with Sections 10.5(a) and (b), the Company shall notify
each Participant of the determination of the Committee.


 


(e)           Payment in Settlement of Performance
Awards.  Subject to the provisions of Section 18 with respect to Section 409A,
as soon as practicable following the Committee’s determination and
certification in accordance with Sections 10.5(a) and (b), payment
shall be made to each eligible Participant (or such Participant’s legal
representative or other person who acquired the right to receive such payment
by reason of the Participant’s death) of the final value of the Participant’s
Performance Award.  Payment of such amount shall be made in cash, shares
of Stock, or a combination thereof as determined by the Committee.  Unless
otherwise provided in the Award Agreement evidencing a Performance Award,
payment shall be made in a lump sum.  If permitted by the Committee, and
subject to the provisions of Section 18 with respect to Section 409A,
the Participant may elect to defer receipt of all or any portion of the payment
to be made to Participant pursuant to this Section, and such deferred payment
date(s) elected by the Participant shall be set forth in the Award
Agreement.  If any payment is to be made on a deferred basis, the
Committee may, but shall not be obligated to, provide for the payment during
the deferral period of Dividend Equivalents or interest.


 


(f)            Provisions Applicable to Payment in
Shares.  If payment is to be made in shares of Stock, the number of such
shares shall be determined by dividing the final value of the Performance Award
by the value of a share of Stock determined by the method specified in the
Award Agreement.  Such methods may include, without limitation, the
closing market price on a specified date (such as the settlement date) or an
average of market prices over a series of trading days.  Shares of Stock
issued in payment of any Performance Award may be fully vested and freely
transferable shares or may be shares of Stock subject to Vesting Conditions as


 


20




















 


provided
in Section 8.5.  Any shares subject to Vesting Conditions shall be
evidenced by an appropriate Award Agreement and shall be subject to the
provisions of Sections 8.5 through 8.8 above.


 


10.6         Voting Rights; Dividend Equivalent Rights and
Distributions.  Participants shall have no voting rights with
respect to shares of Stock represented by Performance Share Awards until the
date of the issuance of such shares, if any (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company).  However, the Committee, in its discretion, may provide in the
Award Agreement evidencing any Performance Share Award that the Participant
shall be entitled to receive Dividend Equivalents with respect to the payment
of cash dividends on Stock during the period beginning on the date the Award is
granted and ending, with respect to the particular shares subject to the Award,
on the earlier of the date on which the Performance Shares are settled or the
date on which they are forfeited.  Such Dividend Equivalents, if any,
shall be credited to the Participant in the form of additional whole
Performance Shares as of the date of payment of such cash dividends on
Stock.  The number of additional Performance Shares (rounded to the
nearest whole number) to be so credited shall be determined by dividing (a) the
amount of cash dividends paid on the dividend payment date with respect to the
number of shares of Stock represented by the Performance Shares previously
credited to the Participant by (b) the Fair Market Value per share of
Stock on such date.  Dividend Equivalents may be paid currently or may be
accumulated and paid to the extent that Performance Shares become
nonforfeitable, as determined by the Committee.  Settlement of Dividend
Equivalents may be made in cash, shares of Stock, or a combination thereof as
determined by the Committee, and may be paid on the same basis as settlement of
the related Performance Share as provided in Section 10.5.  Dividend
Equivalents shall not be paid with respect to Performance Units.  In the
event of a dividend or distribution paid in shares of Stock or other property
or any other adjustment made upon a change in the capital structure of the
Company as described in Section 4.4, appropriate adjustments shall be made
in the Participant’s Performance Share Award so that it represents the right to
receive upon settlement any and all new, substituted or additional securities
or other property (other than normal cash dividends) to which the Participant
would entitled by reason of the shares of Stock issuable upon settlement of the
Performance Share Award, and all such new, substituted or additional securities
or other property shall be immediately subject to the same Performance Goals as
are applicable to the Award.


 


10.7         Effect of Termination of Service.  Unless
otherwise provided by the Committee and set forth in the Award Agreement
evidencing a Performance Award, the effect of a Participant’s termination of
Service on the Performance Award shall be as follows:


 


(a)           Death, Disability or
Retirement. 
If the Participant’s Service terminates because of
the death, Disability or Retirement of the Participant before the completion of
the Performance Period applicable to the Performance Award, the final value of
the Participant’s Performance Award shall be determined by the extent to which
the applicable Performance Goals have been attained with respect to the entire
Performance Period and shall be prorated based on the number of months of the
Participant’s Service during the Performance Period.  Payment shall be
made following the end of the Performance Period in any manner permitted by Section 10.5.


 


(b)           Other Termination of Service.  If the
Participant’s Service terminates for any reason except death, Disability or
Retirement before the completion of the Performance Period applicable to the
Performance Award, such Award shall be forfeited in its entirety; provided,
however, that in the event of an involuntary termination of the Participant’s
Service, the Committee, in its sole discretion, may waive the automatic
forfeiture of all or any portion of any such Award and provide for payment of
such Award or portion thereof on the same basis as if the Participant’s Service
had terminated by reason of Retirement.


 


10.8         Nontransferability of Performance Awards.  Prior to
settlement in accordance with the provisions of the Plan, no Performance Award
shall be subject in any manner to anticipation, alienation, sale, exchange,
transfer, assignment, pledge, encumbrance, or garnishment by creditors of the
Participant or the Participant’s beneficiary, except transfer by will or by the
laws of descent and distribution.  All rights with respect to a
Performance Award granted to a Participant hereunder shall be exercisable during
his or her lifetime only by such Participant or the Participant’s guardian or
legal representative.


 


21





















 


11.           DEFERRED
COMPENSATION AWARDS.


 


11.1         Establishment of Deferred Compensation Award Programs.  This Section 11
shall not be effective unless and until the Committee determines to establish a
program pursuant to this Section.  The Committee, in its discretion and
upon such terms and conditions as it may determine, subject to the provisions
of Section 18 with respect to Section 409A, may establish one or more
programs pursuant to the Plan under which:


 


(a)           Elective Cash Compensation Reduction Awards.  Participants
designated by the Committee who are Insiders or otherwise among a select group
of highly compensated Employees may irrevocably elect, prior to a date
specified by the Committee and complying with Section 409A, to reduce such
Participant’s compensation otherwise payable in cash (subject to any minimum or
maximum reductions imposed by the Committee) and to be granted automatically at
such time or times as specified by the Committee one or more Awards of Stock
Units with respect to such numbers of shares of Stock as determined in
accordance with the rules of the program established by the Committee and
having such other terms and conditions as established by the Committee.


 


(b)           Stock Issuance Deferral Awards.  Participants
designated by the Committee who are Insiders or otherwise among a select group
of highly compensated Employees may irrevocably elect, prior to a date
specified by the Committee and complying with Section 409A, to be granted
automatically an Award of Stock Units with respect to such number of shares of
Stock and upon such other terms and conditions as established by the Committee
in lieu of:


 


(i)            shares of Stock otherwise issuable
to such Participant upon the exercise of an Option;


 


(ii)           cash or shares of Stock otherwise
issuable to such Participant upon the exercise of an SAR; or


 


(iii)          cash or shares of Stock otherwise
issuable to such Participant upon the settlement of a Performance Award.


 


11.2         Terms
and Conditions of Deferred Compensation Awards.  Deferred Compensation Awards
granted pursuant to this Section 11 shall be evidenced by Award Agreements
in such form as the Committee shall from time to time establish.  No such
Deferred Compensation Award or purported Deferred Compensation Award shall be a
valid and binding obligation of the Company unless evidenced by a fully
executed Award Agreement.  Award Agreements evidencing Deferred
Compensation Awards may incorporate all or any of the terms of the Plan by
reference, including the provisions of Section 18 with respect to Section 409A,
and, except as provided below, shall comply with and be subject to the terms
and conditions of Section 9.


 


(a)           Voting Rights; Dividend Equivalent Rights and
Distributions.  Participants
shall have no voting rights with respect to shares of Stock represented by
Stock Units until the date of the issuance of such shares (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company).  However, a Participant shall be entitled to
receive Dividend Equivalents with respect to the payment of cash dividends on
Stock during the period beginning on the date the Stock Units are granted
automatically to the Participant and ending on the earlier of the date on which
such Stock Units are settled or the date on which they are forfeited. 
Such Dividend Equivalents shall be paid by crediting the Participant with
additional whole Stock Units as of the date of payment of such cash dividends
on Stock.  The number of additional Stock Units (rounded to the nearest
whole number) to be so credited shall be determined by dividing (A) the
amount of cash dividends paid on the dividend payment date with respect to the
number of shares of Stock represented by the Stock Units previously credited to
the Participant by (B) the Fair Market Value per share of Stock on such
date.  Such additional Stock Units shall be subject to the same terms and
conditions and shall be settled in the same manner and at the same time (or as
soon thereafter as practicable) as the Stock Units originally subject to the
Stock Unit Award.  In the event of a dividend or distribution paid in
shares of Stock or other property or any other adjustment made upon a change in
the capital structure of the Company as described in Section 4.4,
appropriate adjustments shall be made in the Participant’s Stock Unit Award so
that it represents the right to receive upon settlement any and all new,
substituted or additional securities or other property (other than normal cash
dividends) to which the Participant would entitled by reason of the shares of
Stock issuable upon settlement of the Award.


 


22





















 


(b)           Settlement of Stock Unit Awards.  A Participant
electing to receive an Award of Stock Units pursuant to this Section 11
shall specify at the time of such election a settlement date with respect to
such Award which complies with Section 409A.  The Company shall issue
to the Participant on the settlement date elected by the Participant, or as
soon thereafter as practicable, a number of whole shares of Stock equal to the
number of vested Stock Units subject to the Stock Unit Award.  Such shares
of Stock shall be fully vested, and the Participant shall not be required to
pay any additional consideration (other than applicable tax withholding) to
acquire such shares.


 


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


 


Cash-Based
Awards and Other Stock-Based Awards shall be evidenced by Award Agreements in
such form as the Committee shall from time to time establish.  No such
Award or purported Award shall be a valid and binding obligation of the Company
unless evidenced by a fully executed Award Agreement.  Award Agreements
evidencing Cash-Based Awards and Other Stock-Based Awards may incorporate all
or any of the terms of the Plan by reference, including the provisions of Section 18
with respect to Section 409A, if applicable, and shall comply with and be
subject to the following terms and conditions:


 


12.1         Grant
of Cash-Based Awards.  Subject to the provisions of the Plan, the
Committee, at any time and from time to time, may grant Cash-Based Awards to
Participants in such amounts and upon such terms and conditions, including the
achievement of performance criteria, as the Committee may determine.


 


12.2         Grant
of Other Stock-Based Awards.  The Committee may grant other types of
equity-based or equity-related Awards not otherwise described by the terms of
this Plan (including the grant or offer for sale of unrestricted securities,
stock-equivalent units, stock appreciation units, securities or debentures
convertible into common stock or other forms determined by the Committee) in such
amounts and subject to such terms and conditions as the Committee shall
determine.  Such Awards may involve the transfer of actual shares of Stock
to Participants, or payment in cash or otherwise of amounts based on the value
of Stock and may include, without limitation, Awards designed to comply with or
take advantage of the applicable local laws of jurisdictions other than the
United States.


 


12.3         Value of Cash-Based and Other Stock-Based Awards.  Each Cash-Based Award shall specify a monetary payment amount or
payment range as determined by the Committee.  Each Other Stock-Based
Award shall be expressed in terms of shares of Stock or units based on such
shares of Stock, as determined by the Committee.  Subject to Section 5.3(b),
the Committee may require the satisfaction of such Service requirements,
conditions, restrictions or performance criteria, including, without
limitation, Performance Goals as described in Section 10.4, as shall be
established by the Committee and set forth in the Award Agreement evidencing
such Award.  If the Committee exercises its discretion to establish
performance criteria, the final value of Cash-Based Awards or Other Stock-Based
Awards that will be paid to the Participant will depend on the extent to which
the performance criteria are met.  The establishment of performance
criteria with respect to the grant or vesting of any Cash-Based Award or Other
Stock-Based Award intended to result in Performance-Based Compensation shall
follow procedures substantially equivalent to those applicable to Performance
Awards set forth in Section 10.


 


12.4         Payment
or Settlement of Cash-Based Awards and Other Stock-Based Awards.  Payment or
settlement, if any, with respect to a Cash-Based Award or an Other Stock-Based
Award shall be made in accordance with the terms of the Award, in cash, shares
of Stock or other securities or any combination thereof as the Committee
determines.  The determination and certification of the final value with
respect to any Cash-Based Award or Other Stock-Based Award intended to result
in Performance-Based Compensation shall comply with the requirements applicable
to Performance Awards set forth in Section 10.  To the extent
applicable, payment or settlement with respect to each Cash-Based Award and
Other Stock-Based Award shall be made in compliance with the provisions of Section 18
with respect to Code Section 409A.


 


12.5         Voting
Rights; Dividend Equivalent Rights and Distributions.  Participants
shall have no voting rights with respect to shares of Stock represented by
Other Stock-Based Awards until the date of the issuance of such shares of Stock
(as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), if any, in settlement of such
Award.  However, the Committee, in its discretion, may provide in the
Award Agreement evidencing any Other Stock-Based Award that the Participant
shall 


 


23





















 


be
entitled to receive Dividend Equivalents with respect to the payment of cash
dividends on Stock during the period beginning on the date such Award is
granted and ending, with respect to the particular shares subject to the Award,
on the earlier of the date the Award is settled or the date on which it is
terminated.  Such Dividend Equivalents, if any, shall be paid in
accordance with the provisions set forth in Section 9.4.  Dividend
Equivalent rights shall not be granted with respect to Cash-Based Awards.


 


12.6         Effect
of Termination of Service.  Each Award Agreement evidencing a Cash-Based
Award or Other Stock-Based Award shall set forth the extent to which the
Participant shall have the right to retain such Award following termination of
the Participant’s Service.  Such provisions shall be determined in the
sole discretion of the Committee, need not be uniform among all Cash-Based
Awards or Other Stock-Based Awards, and may reflect distinctions based on the
reasons for termination.


 


12.7         Nontransferability
of Cash-Based Awards and Other Stock-Based Awards.  Prior to the payment
or settlement of a Cash-Based Award or Other Stock-Based Award, the Award shall
not be subject in any manner to anticipation, alienation, sale, exchange,
transfer, assignment, pledge, encumbrance, or garnishment by creditors of the
Participant or the Participant’s beneficiary, except transfer by will or by the
laws of descent and distribution.  The Committee may impose such
additional restrictions on any shares of Stock issued in settlement of
Cash-Based Awards and Other Stock-Based Awards as it may deem advisable,
including, without limitation, minimum holding period requirements,
restrictions under applicable federal securities laws, under the requirements
of any stock exchange or market upon which such shares of Stock are then listed
and/or traded, or under any state securities laws applicable to such shares of
Stock.


 


13.           STANDARD
FORMS OF AWARD AGREEMENT.


 


13.1         Award
Agreements.  Each Award
shall comply with and be subject to the terms and conditions set forth in the
appropriate form of Award Agreement approved by the Committee and as amended
from time to time.  Any Award Agreement may consist of an appropriate form
of Notice of Grant and a form of Agreement incorporated therein by reference,
or such other form or forms, including electronic media, as the Committee may
approve from time to time.


 


13.2         Authority
to Vary Terms.  The Committee
shall have the authority from time to time to vary the terms of any standard
form of Award Agreement either in connection with the grant or amendment of an
individual Award or in connection with the authorization of a new standard form
or forms; provided, however, that the terms and conditions of any such new,
revised or amended standard form or forms of Award Agreement are not
inconsistent with the terms of the Plan.


 


14.           CHANGE
IN CONTROL. 
Subject
to the requirements and limitations of Section 409A if applicable, the
Committee may provide for any one or more of the following:


 


14.1         Accelerated
Vesting.  The Committee may, in its discretion, provide in any Award Agreement
or, in the event of a Change in Control, may take such actions as it deems
appropriate to provide for the acceleration of the exercisability, vesting
and/or settlement in connection with such Change in Control of each or any
outstanding Award or portion thereof and shares acquired pursuant thereto upon
such conditions, including termination of the Participant’s Service prior to,
upon, or following such Change in Control, to such extent as the Committee
shall determine.


 


14.2         Assumption,
Continuation or Substitution.  In the event of
a Change in Control, the surviving, continuing, successor, or purchasing
corporation or other business entity or parent thereof, as the case may be (the
“Acquiror”), may, without the
consent of any Participant, either assume or continue the Company’s rights and
obligations under each or any Award or portion thereof outstanding immediately
prior to the Change in Control or substitute for each or any such outstanding
Award or portion thereof a substantially equivalent award with respect to the
Acquiror’s stock, as applicable.  For purposes of this Section, if so
determined by the Committee, in its discretion, an Award denominated in shares
of Stock shall be deemed assumed if, following the Change in Control, the Award
confers the right to receive, subject to the terms and conditions of the Plan
and the applicable Award Agreement, for each share of Stock subject to the
Award immediately prior to the Change in Control, the consideration (whether
stock, cash, other securities or property or a combination thereof) to which a
holder of a 


 


24





















 


share
of Stock on the effective date of the Change in Control was entitled; provided,
however, that if such consideration is not solely common stock of the Acquiror,
the Committee may, with the consent of the Acquiror, provide for the
consideration to be received upon the exercise or settlement of the Award, for
each share of Stock subject to the Award, to consist solely of common stock of
the Acquiror equal in Fair Market Value to the per share consideration received
by holders of Stock pursuant to the Change in Control.  Any Award or
portion thereof which is neither assumed or continued by the Acquiror in
connection with the Change in Control nor exercised or settled as of the time
of consummation of the Change in Control shall terminate and cease to be
outstanding effective as of the time of consummation of the Change in Control.


 


14.3         Cash-Out
of Outstanding Stock-Based Awards.  The Committee may, in its
discretion and without the consent of any Participant, determine that, upon the
occurrence of a Change in Control, each or any Award denominated in shares of
Stock or portion thereof outstanding immediately prior to the Change in Control
and not previously exercised or settled shall be canceled in exchange for a
payment with respect to each vested share (and each unvested share, if so
determined by the Committee) of Stock subject to such canceled Award in (i) cash,
(ii) stock of the Company or of a corporation or other business entity a
party to the Change in Control, or (iii) other property which, in any such
case, shall be in an amount having a Fair Market Value equal to the Fair Market
Value of the consideration to be paid per share of Stock in the Change in
Control, reduced by the exercise or purchase price per share, if any, under
such Award.  In the event such determination is made by the Committee, the
amount of such payment (reduced by applicable withholding taxes, if any) shall
be paid to Participants in respect of the vested portions of their canceled
Awards as soon as practicable following the date of the Change in Control and
in respect of the unvested portions of their canceled Awards in accordance with
the vesting schedules applicable to such Awards.


 


15.           COMPLIANCE
WITH SECURITIES LAW.


 


The
grant of Awards and the issuance of shares of Stock pursuant to any Award shall
be subject to compliance with all applicable requirements of federal, state and
foreign law with respect to such securities and the requirements of any stock
exchange or market system upon which the Stock may then be listed.  In
addition, no Award may be exercised or shares issued pursuant to an Award
unless (a) a registration statement under the Securities Act shall at the
time of such exercise or issuance be in effect with respect to the shares
issuable pursuant to the Award or (b) in the opinion of legal counsel to
the Company, the shares issuable pursuant to the Award may be issued in
accordance with the terms of an applicable exemption from the registration
requirements of the Securities Act.  The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company’s legal counsel to be necessary to the lawful issuance
and sale of any shares hereunder shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained.  As a condition to issuance of any
Stock, the Company may require the Participant to satisfy any qualifications
that may be necessary or appropriate, to evidence compliance with any
applicable law or regulation and to make any representation or warranty with
respect thereto as may be requested by the Company.


 


16.           TAX
WITHHOLDING.


 


16.1         Tax
Withholding in General.  The Company shall have the right to deduct from any
and all payments made under the Plan, or to require the Participant, through
payroll withholding, cash payment or otherwise, to make adequate provision for,
the federal, state, local and foreign taxes, if any, required by law to be
withheld by the Participating Company Group with respect to an Award or the
shares acquired pursuant thereto.  The Company shall have no obligation to
deliver shares of Stock, to release shares of Stock from an escrow established
pursuant to an Award Agreement, or to make any payment in cash under the Plan
until the Participating Company Group’s tax withholding obligations have been
satisfied by the Participant.


 


16.2         Withholding
in Shares.  The Company shall have the right, but not the obligation, to
deduct from the shares of Stock issuable to a Participant upon the exercise or
settlement of an Award, or to accept from the Participant the tender of, a
number of whole shares of Stock having a Fair Market Value, as determined by
the Company, equal to all or any part of the tax withholding obligations of the
Participating Company Group.  The Fair Market Value of any shares of Stock
withheld or tendered to satisfy any such tax withholding obligations shall not
exceed the amount determined by the applicable minimum statutory withholding
rates.


 


25





















 


17.           AMENDMENT
OR TERMINATION OF PLAN.


 


The
Committee may amend, suspend or terminate the Plan at any time.  However,
without the approval of the Company’s stockholders, there shall be (a) no
increase in the maximum aggregate number of shares of Stock that may be issued
under the Plan (except by operation of the provisions of Section 4.4), (b) no
change in the class of persons eligible to receive Incentive Stock Options, and
(c) no other amendment of the Plan that would require approval of the
Company’s stockholders under any applicable law, regulation or rule, including
the rules of any stock exchange or market system upon which the Stock may
then be listed.  No amendment, suspension or termination of the Plan shall
affect any then outstanding Award unless expressly provided by the
Committee.  Except as provided by the next sentence, no amendment,
suspension or termination of the Plan may adversely affect any then outstanding
Award without the consent of the Participant.  Notwithstanding any other
provision of the Plan to the contrary, the Committee may, in its sole and
absolute discretion and without the consent of any Participant, amend the Plan
or any Award Agreement, to take effect retroactively or otherwise, as it deems
necessary or advisable for the purpose of conforming the Plan or such Award
Agreement to any present or future law, regulation or rule applicable to
the Plan, including, but not limited to, Section 409A.


 


18.           COMPLIANCE
WITH SECTION 409A.


 


18.1         Awards
Subject to Section 409A.  The provisions of this Section 18 shall
apply to any Award or portion thereof that is or becomes subject to Section 409A,
notwithstanding any provision to the contrary contained in the Plan or the
Award Agreement applicable to such Award.  Awards subject to Section 409A
include, without limitation:


 


(a)           Any Nonstatutory Stock Option that
permits the deferral of compensation other than the deferral of recognition of
income until the exercise of the Award.


 


(b)           Each Deferred Compensation Award.


 


(c)           Any Restricted Stock Unit Award,
Performance Award, Cash-Based Award or Other Stock-Based Award that either (i) provides
by its terms for settlement of all or any portion of the Award on one or more
dates following the Short-Term Deferral Period (as defined below) or (ii) permits
or requires the Participant to elect one or more dates on which the Award will
be settled.


 


Subject to any
applicable U.S. Treasury Regulations promulgated pursuant to Section 409A
or other applicable guidance, the term “Short-Term Deferral Period” means the period ending on the later of (i) the
date that is two and one-half months from the end of the Company’s fiscal year
in which the applicable portion of the Award is no longer subject to a
substantial risk of forfeiture or (ii) the date that is two and one-half
months from the end of the Participant’s taxable year in which the applicable
portion of the Award is no longer subject to a substantial risk of
forfeiture.  For this purpose, the term “substantial risk of forfeiture”
shall have the meaning set forth in any applicable U.S. Treasury Regulations
promulgated pursuant to Section 409A or other applicable guidance.


 


18.2         Deferral
and/or Distribution Elections.  Except as otherwise
permitted or required by Section 409A or any applicable U.S. Treasury
Regulations promulgated pursuant to Section 409A or other applicable
guidance, the following rules shall apply to any deferral and/or
distribution elections (each, an “Election”) that may be
permitted or required by the Committee pursuant to an Award subject to Section 409A:


 


(a)           All Elections must be in writing
and specify the amount of the distribution in settlement of an Award being
deferred, as well as the time and form of distribution as permitted by this
Plan.


 


(b)           All Elections shall be made by the
end of the Participant’s taxable year prior to the year in which services
commence for which an Award may be granted to such Participant; provided,
however, that if the Award qualifies as “performance-based compensation” for
purposes of Section 409A and is based on services performed over a period
of at least twelve (12) months, then the Election may be made no later than six
(6) months prior to the end of such period.


 


26





















 


(c)           Elections shall continue in effect
until a written election to revoke or change such Election is received by the
Company, except that a written election to revoke or change such Election must
be made prior to the last day for making an Election determined in accordance
with paragraph (b) above or as permitted by Section 18.3.


 


18.3         Subsequent
Elections.  Any Award
subject to Section 409A which permits a subsequent Election to delay the
distribution or change the form of distribution in settlement of such Award
shall comply with the following requirements:


 


(a)           No subsequent Election may take
effect until at least twelve (12) months after the date on which the subsequent
Election is made;


 


(b)           Each subsequent Election related to
a distribution in settlement of an Award not described in Section 18.3(b),
18.4(b), or 18.4(f) must result in a delay of the distribution for a period
of not less than five (5) years from the date such distribution would
otherwise have been made; and


 


(c)           No subsequent Election related to a
distribution pursuant to Section 18.4(d) shall be made less than
twelve (12) months prior to the date of the first scheduled payment under such
distribution.


 


18.4         Distributions
Pursuant to Deferral Elections.  No distribution
in settlement of an Award subject to Section 409A may commence earlier
than:


 


(a)           Separation from service (as
determined by the Secretary of the United States Treasury);


 


(b)           The date the Participant becomes
Disabled (as defined below);


 


(c)           Death;


 


(d)           A specified time (or pursuant to a
fixed schedule) that is either (i) specified by the Committee upon the
grant of an Award and set forth in the Award Agreement evidencing such Award or
(ii) specified by the Participant in an Election complying with the
requirements of Section 18.2 and/or 18.3, as applicable;


 


(e)           To the extent provided by the
Secretary of the U.S. Treasury, a change in the ownership or effective control
or the Company or in the ownership of a substantial portion of the assets of
the Company; or


 


(f)            The occurrence of an Unforeseeable
Emergency (as defined below).


 


Notwithstanding
anything else herein to the contrary, to the extent that a Participant is a “Specified
Employee” (as defined in Section 409A(a)(2)(B)(i)) of the Company, no
distribution pursuant to Section 18.4(a) in settlement of an Award
subject to Section 409A may be made before the date which is six (6) months
after such Participant’s date of separation from service, or, if earlier, the
date of the Participant’s death.


 


18.5         Unforeseeable
Emergency.  The Committee shall have the authority to provide in the Award
Agreement evidencing any Award subject to Section 409A for distribution in
settlement of all or a portion of such Award in the event that a Participant
establishes, to the satisfaction of the Committee, the occurrence of an
Unforeseeable Emergency.  In such event, the amount(s) distributed
with respect to such Unforeseeable Emergency cannot exceed the amounts
necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay
taxes reasonably anticipated as a result of such distribution(s), after taking
into account the extent to which such hardship is or may be relieved through
reimbursement or compensation by insurance or otherwise or by liquidation of
the Participant’s assets (to the extent the liquidation of such assets would
not itself cause severe financial hardship).  All distributions with respect
to an Unforeseeable Emergency shall be made in a lump sum as soon as
practicable following the Committee’s determination that an Unforeseeable
Emergency has occurred.


 


27





















 


The occurrence of
an Unforeseeable Emergency shall be judged and determined by the
Committee.  The Committee’s decision with respect to whether an
Unforeseeable Emergency has occurred and the manner in which, if at all, the
distribution in settlement of an Award shall be altered or modified, shall be
final, conclusive, and not subject to approval or appeal.


 


18.6         Disabled.  The Committee
shall have the authority to provide in any Award subject to Section 409A
for distribution in settlement of such Award in the event that the Participant
becomes Disabled.  A Participant shall be considered “Disabled” if either:


 


(a)           the Participant is 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 twelve (12)
months, or


 


(b)           the Participant is, 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 twelve (12) months, receiving income replacement benefits for a
period of not less than three (3) months under an accident and health plan
covering employees of the Participant’s employer.


 


All distributions
payable by reason of a Participant becoming Disabled shall be paid in a lump
sum or in periodic installments as established by the Participant’s Election,
commencing as soon as practicable following the date the Participant becomes
Disabled.  If the Participant has made no Election with respect to
distributions upon becoming Disabled, all such distributions shall be paid in a
lump sum as soon as practicable following the date the Participant becomes
Disabled.


 


18.7         Death.  If a
Participant dies before complete distribution of amounts payable upon
settlement of an Award subject to Section 409A, such undistributed amounts
shall be distributed to his or her beneficiary under the distribution method
for death established by the Participant’s Election as soon as administratively
possible following receipt by the Committee of satisfactory notice and
confirmation of the Participant’s death.  If the Participant has made no
Election with respect to distributions upon death, all such distributions shall
be paid in a lump sum as soon as practicable following the date of the
Participant’s death.


 


18.8         No
Acceleration of Distributions.  Notwithstanding anything to the
contrary herein, this Plan does not permit the acceleration of the time or
schedule of any distribution under this Plan, except as provided by Section 409A
and/or the Secretary of the U.S. Treasury.


 


19.           MISCELLANEOUS
PROVISIONS.


 


19.1         Repurchase
Rights.  Shares issued
under the Plan may be subject to one or more repurchase options, or other
conditions and restrictions as determined by the Committee in its discretion at
the time the Award is granted.  The Company shall have the right to assign
at any time any repurchase right it may have, whether or not such right is then
exercisable, to one or more persons as may be selected by the Company. 
Upon request by the Company, each Participant shall execute any agreement
evidencing such transfer restrictions prior to the receipt of shares of Stock
hereunder and shall promptly present to the Company any and all certificates
representing shares of Stock acquired hereunder for the placement on such
certificates of appropriate legends evidencing any such transfer restrictions.


 


19.2         Forfeiture
Events.


 


(a)           The Committee may specify in an
Award Agreement that the Participant’s rights, payments, and benefits with
respect to an Award shall be subject to reduction, cancellation, forfeiture, or
recoupment upon the occurrence of specified events, in addition to any
otherwise applicable vesting or performance conditions of an Award.  Such
events may include, but shall not be limited to, termination of Service for
Cause or any act by a Participant, whether before or after termination of
Service, that would constitute Cause for termination of Service.


 


28





















 


(b)           If the Company is required to
prepare an accounting restatement due to the material noncompliance of the
Company, as a result of misconduct, with any financial reporting requirement
under the securities laws, any Participant who knowingly or through gross
negligence engaged in the misconduct, or who knowingly or through gross
negligence failed to prevent the misconduct, and any Participant who is one of
the individuals subject to automatic forfeiture under Section 304 of the
Sarbanes-Oxley Act of 2002, shall reimburse the Company the amount of any
payment in settlement of an Award earned or accrued during the twelve- (12-)
month period following the first public issuance or filing with the United
States Securities and Exchange Commission (whichever first occurred) of the
financial document embodying such financial reporting requirement.


 


19.3         Provision
of Information.  Each Participant shall be given access to
information concerning the Company equivalent to that information generally made
available to the Company’s common stockholders.


 


19.4         Rights
as Employee, Consultant or Director.  No person, even though
eligible pursuant to Section 5, shall have a right to be selected as a
Participant, or, having been so selected, to be selected again as a
Participant.  Nothing in the Plan or any Award granted under the Plan
shall confer on any Participant a right to remain an Employee, Consultant or
Director or interfere with or limit in any way any right of a Participating
Company to terminate the Participant’s Service at any time.  To the extent
that an Employee of a Participating Company other than the Company receives an
Award under the Plan, that Award shall in no event be understood or interpreted
to mean that the Company is the Employee’s employer or that the Employee has an
employment relationship with the Company.


 


19.5         Rights
as a Stockholder.  A Participant shall have no rights as a stockholder
with respect to any shares covered by an Award until the date of the issuance
of such shares (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company).  No
adjustment shall be made for dividends, distributions or other rights for which
the record date is prior to the date such shares are issued, except as provided
in Section 4.4 or another provision of the Plan.


 


19.6         Delivery of Title to Shares.  Subject to any governing rules or regulations, the Company
shall issue or cause to be issued the shares of Stock acquired pursuant to an
Award and shall deliver such shares to or for the benefit of the Participant by
means of one or more of the following: (a) by delivering to the
Participant evidence of book entry shares of Stock credited to the account of
the Participant, (b) by depositing such shares of Stock for the benefit of
the Participant with any broker with which the Participant has an account
relationship, or (c) by delivering such shares of Stock to the Participant
in certificate form.


 


19.7         Fractional
Shares.  The Company shall not be required to issue fractional shares
upon the exercise or settlement of any Award.


 


19.8         Retirement
and Welfare Plans.  Neither Awards made under this Plan nor shares of
Stock or cash paid pursuant to such Awards may be included as “compensation”
for purposes of computing the benefits payable to any Participant under any
Participating Company’s retirement plans (both qualified and non-qualified) or
welfare benefit plans unless such other plan expressly provides that such
compensation shall be taken into account in computing a Participant’s benefit.


 


19.9         Beneficiary
Designation.  Subject to local laws and procedures, each
Participant may file with the Company a written designation of a beneficiary
who is to receive any benefit under the Plan to which the Participant is
entitled in the event of such Participant’s death before he or she receives any
or all of such benefit.  Each designation will revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Company, and will be effective only when filed by the Participant in writing
with the Company during the Participant’s lifetime.  If a married
Participant designates a beneficiary other than the Participant’s spouse, the
effectiveness of such designation may be subject to the consent of the
Participant’s spouse.  If a Participant dies without an effective
designation of a beneficiary who is living at the time of the Participant’s
death, the Company will pay any remaining unpaid benefits to the Participant’s
legal representative.


 


19.10       Severability.  If any one or more of the
provisions (or any part thereof) of this Plan shall be held invalid, illegal or
unenforceable in any respect, such provision shall be modified so as to make it
valid, legal 


 


29





















 


and
enforceable, and the validity, legality and enforceability of the remaining
provisions (or any part thereof) of the Plan shall not in any way be affected
or impaired thereby.


 


19.11       No
Constraint on Corporate Action.  Nothing in this Plan shall be
construed to: (a) limit, impair, or otherwise affect the Company’s or
another Participating Company’s right or power to make adjustments,
reclassifications, reorganizations, or changes of its capital or business
structure, or to merge or consolidate, or dissolve, liquidate, sell, or
transfer all or any part of its business or assets; or (b) limit the right
or power of the Company or another Participating Company to take any action
which such entity deems to be necessary or appropriate.


 


19.12       Unfunded Obligation.  Participants shall have the
status of general unsecured creditors of the Company.  Any amounts payable
to Participants pursuant to the Plan shall be unfunded and unsecured
obligations for all purposes, including, without limitation, Title I of
the Employee Retirement Income Security Act of 1974.  No Participating
Company shall be required to segregate any monies from its general funds, or to
create any trusts, or establish any special accounts with respect to such
obligations.  The Company shall retain at all times beneficial ownership
of any investments, including trust investments, which the Company may make to
fulfill its payment obligations hereunder.  Any investments or the
creation or maintenance of any trust or any Participant account shall not
create or constitute a trust or fiduciary relationship between the Committee or
any Participating Company and a Participant, or otherwise create any vested or
beneficial interest in any Participant or the Participant’s creditors in any
assets of any Participating Company.  The Participants shall have no claim
against any Participating Company for any changes in the value of any assets
which may be invested or reinvested by the Company with respect to the Plan.


 


19.13       Choice
of Law.  Except to the extent governed by applicable federal law, the
validity, interpretation, construction and performance of the Plan and each
Award Agreement shall be governed by the laws of the State of California,
without regard to its conflict of law rules.


 


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