EX-4.1






EXHIBIT 4.1




Approved by Board of Directors on February 22, 2000

Approved by Stockholders on November 28, 2000

Amendments Approved by Board of Directors on August 16, 2007

Amendments Approved by Shareholders on January 23, 2008




[Amended and Restated through January 28, 2008]




 






FREDERICK’S OF HOLLYWOOD GROUP INC.




 






2000 Performance Equity Plan




Section 1. Purpose; Definitions.




     1.1 Purpose. The purpose of the Frederick’s of Hollywood Group Inc. 2000 Performance
Equity Plan is to enable the Company to offer to its employees, officers, directors and consultants
whose past, present and/or potential contributions to the Company and its Subsidiaries have been,
are or will be important to the success of the Company, an opportunity to acquire a proprietary
interest in the Company. The various types of long-term incentive awards that may be provided
under the Plan will enable the Company to respond to changes in compensation practices, tax laws,
accounting regulations and the size and diversity of its businesses.



     1.2 Definitions. For purposes of the Plan, the following terms shall be defined as
set forth below:



          (a) “Agreement” means the agreement between the Company and the Holder setting forth the terms
and conditions of an award under the Plan and any other agreement between the Company and the
Holder governing the terms and conditions of the Holder’s employment by the Company.




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




          (c) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any
successor thereto and the regulations promulgated thereunder.




          (d) “Committee” means the Compensation Committee of the Board or any other committee of the
Board that the Board may designate to administer the Plan or any portion thereof. If no Committee
is so designated, then all references in this Plan to “Committee” shall mean the Board.




 









 





          (e) “Common Stock” means the Common Stock of the Company, $0.01 par value per share.




          (f) “Company” means Frederick’s of Hollywood Group Inc., a corporation organized under the
laws of the State of New York.




          (g) “Deferred Stock” means Common Stock to be received, under an award made pursuant to
Section 8, below, at the end of a specified deferral period.




          (h) “Disability” means physical or mental impairment as determined under procedures
established by the Committee for purposes of the Plan.




          (i) “Effective Date” means the date set forth in Section 11.1, below.




          (j) “Fair Market Value”, unless otherwise required by any applicable provision of the Code or
any regulations issued thereunder, means, as of any given date: (i) if the Common Stock is listed
on a national securities exchange or quoted on the Nasdaq Stock Market, the last sale price of the
Common Stock in the principal trading market for the Common Stock on such date, as reported by the
exchange or Nasdaq, as the case may be; (ii) if the Common Stock is not listed on a national
securities exchange or quoted on the Nasdaq Stock Market, but is traded in the over-the-counter
market, the closing bid price for the Common Stock on such date, as reported by the OTC Bulletin
Board or the National Quotation Bureau, Incorporated or similar publisher of such quotations; and
(iii) if the fair market value of the Common Stock cannot be determined pursuant to clause (i) or
(ii) above, such price as the Committee shall determine, in good faith.




          (k) “Holder” means a person who has received an award under the Plan.




          (l) “Incentive Stock Option” means any Stock Option intended to be and designated as an
“incentive stock option” within the meaning of Section 422 of the Code.




          (m) “Nonqualified Stock Option” means any Stock Option that is not an Incentive Stock Option.




          (n) “Normal Retirement” means retirement from active employment with the Company or any
Subsidiary on or after age 65.




          (o) “Other Stock-Based Award” means an award under Section 8, below, that is valued in whole
or in part by reference to, or is otherwise based upon, Common Stock.




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




          (q) “Plan” means the Frederick’s of Hollywood Group Inc. 2000 Performance Equity Plan, as
hereinafter amended from time to time.




          (r) “Repurchase Value” shall mean the Fair Market Value in the event the award to be
repurchased under Section 9.1 is comprised of shares of Common Stock and the difference between
Fair Market Value and the Exercise Price (if lower than Fair Market Value)




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in the event the award is a Stock Option or Stock Appreciation Right; in each case, multiplied
by the number of shares subject to the award.




          (s) “Restricted Stock” means Common Stock, received under an award made pursuant to Section 6,
below, that is subject to restrictions under said Section 6.




          (t) “Stock Option” or “Option” means any option to purchase shares of Common Stock which is
granted pursuant to the Plan.




          (u) “Stock Reload Option” means any option granted under Section 5.3 of the Plan.




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




Section 2. Administration.




     2.1 Committee Membership. The Plan shall be administered by the Board or the
Committee. Committee members shall serve for such term as the Board may in each case determine, and
shall be subject to removal at any time by the Board. The Committee members, to the extent
possible and deemed to be appropriate by the Board, shall be “non-employees” as defined in Rule
16b-3 promulgated under the Securities Exchange Act of 1934, as amended (“Exchange Act”), and
“outside directors” within the meaning of Section 162(m) of the Code.



     2.2 Powers of Committee. The Committee shall have full authority to award, pursuant
to the terms of the Plan: (i) Stock Options, (ii) Restricted Stock, (iii) Deferred Stock, (iv)
Stock Reload Options and/or (v) Other Stock-Based Awards. For purposes of illustration and not of
limitation, the Committee shall have the authority (subject to the express provisions of this
Plan):



          (a) to select the officers, employees, directors and consultants of the Company or any
Subsidiary to whom Stock Options, Restricted Stock, Deferred Stock, Reload Stock Options and/or
Other Stock-Based Awards may from time to time be awarded hereunder.




          (b) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any
award granted hereunder (including, but not limited to, number of shares, share exercise price or
types of consideration paid upon exercise of such options, such as other securities of the Company
or other property, any restrictions or limitations, and any vesting, exchange, surrender,
cancellation, acceleration, termination, exercise or forfeiture provisions, as the Committee shall
determine);




          (c) to determine any specified performance goals or such other factors or criteria which need
to be attained for the vesting of an award granted hereunder;




          (d) to determine the terms and conditions under which awards granted hereunder are to operate
on a tandem basis and/or in conjunction with or apart from other equity awarded under this Plan and
cash awards made by the Company or any Subsidiary outside of this Plan;




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          (e) to permit a Holder to elect to defer a payment under the Plan under such rules and
procedures as the Committee may establish, including the crediting of interest on deferred amounts
denominated in cash and of dividend equivalents on deferred amounts denominated in Common Stock;




          (f) to determine the extent and circumstances under which Common Stock and other amounts
payable with respect to an award hereunder shall be deferred that may be either automatic or at the
election of the Holder; and




          (g) to substitute (i) new Stock Options for previously granted Stock Options, which previously
granted Stock Options have higher option exercise prices and/or contain other less favorable terms,
and (ii) new awards of any other type for previously granted awards of the same type, which
previously granted awards are upon less favorable terms.




     Notwithstanding anything contained herein to the contrary, the Committee shall not grant to
any one Holder in any one calendar year awards for more than 250,000 shares in the aggregate.



     2.3 Interpretation of Plan.



          (a) Committee Authority. Subject to Section 11, below, the Committee shall have the
authority to adopt, alter and repeal such administrative rules, guidelines and practices governing
the Plan as it shall, from time to time, deem advisable, to interpret the terms and provisions of
the Plan and any award issued under the Plan (and to determine the form and substance of all
Agreements relating thereto), and to otherwise supervise the administration of the Plan. Subject
to Section 11, below, all decisions made by the Committee pursuant to the provisions of the Plan
shall be made in the Committee’s sole discretion and shall be final and binding upon all persons,
including the Company, its Subsidiaries and Holders.




          (b) Incentive Stock Options. Anything in the Plan to the contrary notwithstanding, no
term or provision of the Plan relating to Incentive Stock Options (including but limited to Stock
Reload Options or Stock Appreciation Rights granted in conjunction with an Incentive Stock Option)
or any Agreement providing for Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted under the Plan be so exercised, so as to disqualify
the Plan under Section 422 of the Code, or, without the consent of the Holder(s) affected, to
disqualify any Incentive Stock Option under such Section 422.




          (c) Section 162(m) Limitations. Anything in the Plan to the contrary notwithstanding,
no term or provision of the Plan or any Agreement providing for awards hereunder shall be
interpreted, amended or altered, nor should any discretion or authority granted under the Plan be
exercised, so as to disqualify the Plan under Section 162(m) of the Code.




Section 3. Stock Subject to Plan.




     3.1 Number of Shares. The total number of shares of Common Stock reserved and
available for issuance under the Plan shall be 2,000,000 shares. Shares of Common Stock under the
Plan may consist, in whole or in part, of authorized and unissued shares or treasury shares. If
any shares of Common Stock that have been granted pursuant to a Stock Option cease to be



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subject to a Stock Option, or if any shares of Common Stock that are subject to any Stock
Appreciation Right, Restricted Stock, Deferred Stock award, Reload Stock Option or Other
Stock-Based Award granted hereunder are forfeited or any such award otherwise terminates without a
payment being made to the Holder in the form of Common Stock, such shares shall again be available
for distribution in connection with future grants and awards under the Plan. If a Holder pays the
exercise price of a Stock Option by surrendering any previously owned shares and/or arranges to
have the appropriate number of shares otherwise issuable upon exercise withheld to cover the
withholding tax liability associated with the Stock Option exercise, then the number of shares
available under the Plan shall be increased by the lesser of (i) the number of such surrendered
shares and shares used to pay taxes; and (ii) the number of shares purchased under such Stock
Option.




     3.2 Adjustment Upon Changes in Capitalization, Etc. In the event of any merger,
reorganization, consolidation, dividend (other than a cash dividend) payable on shares of Common
Stock, stock split, reverse stock split, combination or exchange of shares, or other extraordinary
or unusual event occurring after the grant of an award which results in a change in the shares of
Common Stock of the Company as a whole, the Committee shall determine, in its sole discretion,
whether such change equitably requires an adjustment in the terms of any award or the aggregate
number of shares reserved for issuance under the Plan. Any such adjustments will be made by the
Committee, whose determination will be final, binding and conclusive.



Section 4. Eligibility.




     Awards may be made or granted to employees, officers, directors and consultants who are deemed
to have rendered or to be able to render significant services to the Company or its Subsidiaries
and who are deemed to have contributed or to have the potential to contribute to the success of the
Company. No Incentive Stock Option shall be granted to any person who is not an employee of the
Company or a Subsidiary at the time of grant.



Section 5. Stock Options.




     5.1 Grant and Exercise. Stock Options granted under the Plan may be of two types:
(i) Incentive Stock Options and (ii) Nonqualified Stock Options. Any Stock Option granted under
the Plan shall contain such terms, not inconsistent with this Plan, or with respect to Incentive
Stock Options, not inconsistent with the Plan and the Code, as the Committee may from time to time
approve. The Committee shall have the authority to grant Incentive Stock Options or Non-Qualified
Stock Options, or both types of Stock Options which may be granted alone or in addition to other
awards granted under the Plan. To the extent that any Stock Option intended to qualify as an
Incentive Stock Option does not so qualify, it shall constitute a separate Nonqualified Stock
Option.



     5.2 Terms and Conditions. Stock Options granted under the Plan shall be subject to
the following terms and conditions:



          (a) Option Term. The term of each Stock Option shall be fixed by the Committee;
provided, however, that an Incentive Stock Option may be granted only within the ten-year period
commencing from the Effective Date and may only be exercised within ten years of the date of grant
(or five years in the case of an Incentive Stock Option granted to an optionee



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who, at the time of grant, owns Common Stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company (“10% Stockholder”).




          (b) Exercise Price. The exercise price per share of Common Stock purchasable under a
Stock Option shall be determined by the Committee at the time of grant and may not be less than
100% of the Fair Market Value on the day of grant; provided, however, that the exercise price of an
Incentive Stock Option granted to a 10% Stockholder shall not be less than 110% of the Fair Market
Value on the date of grant.




          (c) Exercisability. Stock Options shall be exercisable at such time or times and
subject to such terms and conditions as shall be determined by the Committee and as set forth in
Section 10, below. If the Committee provides, in its discretion, that any Stock Option is
exercisable only in installments, i.e., that it vests over time, the Committee may waive such
installment exercise provisions at any time at or after the time of grant in whole or in part,
based upon such factors as the Committee shall determine.




          (d) Method of Exercise. Subject to whatever installment, exercise and waiting period
provisions are applicable in a particular case and as provided in the Agreement, Stock Options may
be exercised in whole or in part at any time during the term of the Option, by giving written
notice of exercise to the Company specifying the number of shares of Common Stock to be purchased.
Such notice shall be accompanied by payment in full of the purchase price, which shall be in cash
or, if provided in the Agreement, either in shares of Common Stock (including Restricted Stock and
other contingent awards under this Plan) or partly in cash and partly in such Common Stock, or such
other means which the Committee determines are consistent with the Plan’s purpose and applicable
law. Cash payments shall be made by wire transfer, certified or bank check or personal check, in
each case payable to the order of the Company; provided, however, that the Company shall not be
required to deliver certificates for shares of Common Stock with respect to which an Option is
exercised until the Company has confirmed the receipt of good and available funds in payment of the
purchase price thereof. Payments in the form of Common Stock shall be valued at the Fair Market
Value on the date prior to the date of exercise. Such payments shall be made by delivery of stock
certificates in negotiable form that are effective to transfer good and valid title thereto to the
Company, free of any liens or encumbrances. Subject to the terms of the Agreement, the Committee
may, in its sole discretion, at the request of the Holder, deliver upon the exercise of a
Nonqualified Stock Option a combination of shares of Deferred Stock and Common Stock; provided
that, notwithstanding the provisions of Section 8 of the Plan, such Deferred Stock shall be fully
vested and not subject to forfeiture. A Holder shall have none of the rights of a Stockholder with
respect to the shares subject to the Option until such shares shall be transferred to the Holder
upon the exercise of the Option.




          (e) Transferability. Except as may be set forth in the Agreement, no Stock Option
shall be transferable by the Holder other than by will or by the laws of descent and distribution,
and all Stock Options shall be exercisable, during the Holder’s lifetime, only by the Holder (or,
to the extent of legal incapacity or incompetency, the Holder’s guardian or legal representative).




          (f) Termination by Reason of Death. If a Holder’s employment by the Company or a
Subsidiary terminates by reason of death, any Stock Option held by such Holder, unless otherwise
determined by the Committee at the time of grant and set forth in the




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Agreement, shall thereupon automatically terminate, except that the portion of such Stock
Option that has vested on the date of death may thereafter be exercised by the legal representative
of the estate or by the legatee of the Holder under the will of the Holder, for a period of one
year (or such other greater or lesser period as the Committee may specify at grant) from the date
of such death or until the expiration of the stated term of such Stock Option, whichever period is
the shorter.




          (g) Termination by Reason of Disability. If a Holder’s employment by the Company or
any Subsidiary terminates by reason of Disability, any Stock Option held by such Holder, unless
otherwise determined by the Committee at the time of grant and set forth in the Agreement, shall
thereupon automatically terminate, except that the portion of such Stock Option that has vested on
the date of termination may thereafter be exercised by the Holder for a period of one year (or such
other greater or lesser period as the Committee may specify at the time of grant) from the date of
such termination of employment or until the expiration of the stated term of such Stock Option,
whichever period is the shorter.




          (h) Other Termination. Subject to the provisions of Section 12.3, below, and unless
otherwise determined by the Committee at the time of grant and set forth in the Agreement, if a
Holder is an employee of the Company or a Subsidiary at the time of grant and if such Holder’s
employment by the Company or any Subsidiary terminates for any reason other than death or
Disability, the Stock Option shall thereupon automatically terminate, except that if the Holder’s
employment is terminated by the Company or a Subsidiary without cause or due to Normal Retirement,
then the portion of such Stock Option that has vested on the date of termination of employment may
be exercised for the lesser of three months after termination of employment or the balance of such
Stock Option’s term.




          (i) Additional Incentive Stock Option Limitation. In the case of an Incentive Stock
Option, the aggregate Fair Market Value (on the date of grant of the Option) with respect to which
Incentive Stock Options become exercisable for the first time by a Holder during any calendar year
(under all such plans of the Company and its Parent and Subsidiary) shall not exceed $100,000.




          (j) Buyout and Settlement Provisions. The Committee may at any time, in its sole
discretion, offer to repurchase a Stock Option previously granted, based upon such terms and
conditions as the Committee shall establish and communicate to the Holder at the time that such
offer is made.




     5.3 Stock Reload Option. If a Holder tenders shares of Common Stock to pay the
exercise price of a Stock Option (“Underlying Option”), and/or arranges to have a portion of the
shares otherwise issuable upon exercise withheld to pay the applicable withholding taxes, the
Holder may receive, at the discretion of the Committee, a new Stock Reload Option to purchase that
number of shares of Common Stock equal to the number of shares tendered to pay the exercise price
and the withholding taxes ( but only if such shares were held by the Holder for at least six
months). Stock Reload Options may be any type of option permitted under the Code and will be
granted subject to such terms, conditions, restrictions and limitations as may be determined by the
Committee, from time to time. Such Stock Reload Option shall have an exercise price equal to 100%
of the Fair Market Value on the day of grant of the Stock Reload Option. Unless the Committee
determines otherwise, a Stock Reload Option may be exercised



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commencing one year after it is granted and shall expire on the date of expiration of the
Underlying Option to which the Reload Option is related.




Section 6. Restricted Stock.




     6.1 Grant. Shares of Restricted Stock may be awarded either alone or in addition to
other awards granted under the Plan. The Committee shall determine the eligible persons to whom,
and the time or times at which, grants of Restricted Stock will be awarded, the number of shares to
be awarded, the price (if any) to be paid by the Holder, the time or times within which such awards
may be subject to forfeiture (“Restriction Period”), the vesting schedule and rights to
acceleration thereof, and all other terms and conditions of the awards.



     6.2 Terms and Conditions. Each Restricted Stock award shall be subject to the
following terms and conditions:



          (a) Certificates. Restricted Stock, when issued, will be represented by a stock
certificate or certificates registered in the name of the Holder to whom such Restricted Stock
shall have been awarded. During the Restriction Period, certificates representing the Restricted
Stock and any securities constituting Retained Distributions (as defined below) shall bear a legend
to the effect that ownership of the Restricted Stock (and such Retained Distributions), and the
enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms and conditions
provided in the Plan and the Agreement. Such certificates shall be deposited by the Holder with the
Company, together with stock powers or other instruments of assignment, each endorsed in blank,
which will permit transfer to the Company of all or any portion of the Restricted Stock and any
securities constituting Retained Distributions that shall be forfeited or that shall not become
vested in accordance with the Plan and the Agreement.




          (b) Rights of Holder. Restricted Stock shall constitute issued and outstanding shares
of Common Stock for all corporate purposes. The Holder will have the right to vote such Restricted
Stock, to receive and retain all regular cash dividends and other cash equivalent distributions as
the Board may in its sole discretion designate, pay or distribute on such Restricted Stock and to
exercise all other rights, powers and privileges of a holder of Common Stock with respect to such
Restricted Stock, with the exceptions that (i) the Holder will not be entitled to delivery of the
stock certificate or certificates representing such Restricted Stock until the Restriction Period
shall have expired and unless all other vesting requirements with respect thereto shall have been
fulfilled; (ii) the Company will retain custody of the stock certificate or certificates
representing the Restricted Stock during the Restriction Period; (iii) other than regular cash
dividends and other cash equivalent distributions as the Board may in its sole discretion
designate, pay or distribute, the Company will retain custody of all distributions (“Retained
Distributions”) made or declared with respect to the Restricted Stock (and such Retained
Distributions will be subject to the same restrictions, terms and conditions as are applicable to
the Restricted Stock) until such time, if ever, as the Restricted Stock with respect to which such
Retained Distributions shall have been made, paid or declared shall have become vested and with
respect to which the Restriction Period shall have expired; (iv) a breach of any of the
restrictions, terms or conditions contained in this Plan or the Agreement or otherwise established
by the Committee with respect to any Restricted Stock or Retained Distributions will cause a
forfeiture of such Restricted Stock and any Retained Distributions with respect thereto.




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          (c) Vesting; Forfeiture. Upon the expiration of the Restriction Period with respect
to each award of Restricted Stock and the satisfaction of any other applicable restrictions, terms
and conditions (i) all or part of such Restricted Stock shall become vested in accordance with the
terms of the Agreement, subject to Section 9, below, and (ii) any Retained Distributions with
respect to such Restricted Stock shall become vested to the extent that the Restricted Stock
related thereto shall have become vested, subject to Section 9, below. Any such Restricted Stock
and Retained Distributions that do not vest shall be forfeited to the Company and the Holder shall
not thereafter have any rights with respect to such Restricted Stock and Retained Distributions
that shall have been so forfeited.




Section 7. Deferred Stock.




     7.1 Grant. Shares of Deferred Stock may be awarded either alone or in addition to
other awards granted under the Plan. The Committee shall determine the eligible persons to whom and
the time or times at which grants of Deferred Stock will be awarded, the number of shares of
Deferred Stock to be awarded to any person, the duration of the period (“Deferral Period”) during
which, and the conditions under which, receipt of the shares will be deferred, and all the other
terms and conditions of the awards.



     7.2 Terms and Conditions. Each Deferred Stock award shall be subject to the following
terms and conditions:



          (a) Certificates. At the expiration of the Deferral Period (or the Additional
Deferral Period referred to in Section 7.2 (d) below, where applicable), share certificates shall
be issued and delivered to the Holder, or his legal representative, representing the number equal
to the shares covered by the Deferred Stock award.




          (b) Rights of Holder. A person entitled to receive Deferred Stock shall not have any
rights of a Stockholder by virtue of such award until the expiration of the applicable Deferral
Period and the issuance and delivery of the certificates representing such Common Stock. The
shares of Common Stock issuable upon expiration of the Deferral Period shall not be deemed
outstanding by the Company until the expiration of such Deferral Period and the issuance and
delivery of such Common Stock to the Holder.




          (c) Vesting; Forfeiture. Upon the expiration of the Deferral Period with respect to
each award of Deferred Stock and the satisfaction of any other applicable restrictions, terms and
conditions all or part of such Deferred Stock shall become vested in accordance with the terms of
the Agreement, subject to Section 9, below. Any such Deferred Stock that does not vest shall be
forfeited to the Company and the Holder shall not thereafter have any rights with respect to such
Deferred Stock.




Section 8. Other Stock-Based Awards.




     Other Stock-Based Awards may be awarded, subject to limitations under applicable law, that are
denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or
related to, shares of Common Stock, as deemed by the Committee to be consistent with the purposes
of the Plan, including, without limitation, purchase rights, shares of Common Stock awarded which
are not subject to any restrictions or conditions, convertible or exchangeable debentures, or other
rights convertible into shares of Common Stock and awards valued by



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reference to the value of securities of or the performance of specified Subsidiaries. Other
Stock-Based Awards may be awarded either alone or in addition to or in tandem with any other awards
under this Plan or any other plan of the Company. Each other Stock-Based Award shall be subject to
such terms and conditions as may be determined by the Committee.




Section 9. Accelerated Vesting and Exercisability.




     Approved Transactions. Except as otherwise expressly provided in the Agreement, the
Committee may, in the event of a Change in Control as defined below, which has been approved by the
Company’s Board of Directors, (i) accelerate the vesting of any and all Stock Options and other
awards granted and outstanding under the Plan, and (ii) require a Holder of any award granted under
this Plan to relinquish such award to the Company upon the tender by the Company to Holder of cash
in an amount equal to the Repurchase Value of such award.



     A “Change in Control” shall mean the occurrence of any of the following events:




	 	(i)	 	any one person, or more than one person acting as a group, acquires ownership
of stock of the Company that, together with stock held by such person or group,
constitutes more than 50 percent of the total fair market value or total voting power
of the outstanding stock of the Company;
	 
	 	(ii)	 	a majority of members of the Company’s board of directors is replaced during
any 12-month period by directors whose appointment or election is not endorsed by a
majority of the members of the Company’s board of directors prior to the date of the
appointment or election; or
	 
	 	(iii)	 	the sale of assets from the Company that have a total gross fair market value
equal to or more than 40 percent of the total gross fair market value of all of the
assets of the Company immediately prior to such acquisition or acquisitions.





Section 10. Amendment and Termination.




     The Board may at any time, and from time to time, amend alter, suspend or discontinue any of
the provisions of the Plan, but no amendment, alteration, suspension or discontinuance shall be
made that would impair the rights of a Holder under any Agreement theretofore entered into
hereunder, without the Holder’s consent.



Section 11. Term of Plan.




     11.1 Effective Date. The Plan shall be effective as of February 22, 2000, subject to
the approval of the Plan by the Company’s stockholders within one year after the Effective Date.
Any awards granted under the Plan prior to such approval shall be effective when made (unless
otherwise specified by the Committee at the time of grant), but shall be conditioned upon, and
subject to, such approval of the Plan by the Company’s stockholders and no awards shall vest or
otherwise become free of restrictions prior to such approval.



     11.2 Termination Date. Unless terminated by the Board, this Plan shall continue to
remain effective until such time as no further awards may be granted and all awards granted under
the Plan are no longer outstanding. Notwithstanding the foregoing, grants of Incentive Stock
Options may be made only during the ten year period following the Effective Date.



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Section 12. General Provisions.




     12.1 Written Agreements. Each award granted under the Plan shall be confirmed by, and
shall be subject to the terms, of the Agreement executed by the Company and the Holder. The
Committee may terminate any award made under the Plan if the Agreement relating thereto is not
executed and returned to the Company within 10 days after the Agreement has been delivered to the
Holder for his or her execution.



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



     12.3 Employees.



          (a) Engaging in Competition With the Company; Disclosure of Confidential Information. Except
as otherwise expressly provided in the Agreement, if a Holder’s employment with the Company or a
Subsidiary is terminated as a result of the voluntary resignation of the Holder, and within one
hundred and eighty (180) days after the date thereof such Holder either (i) accepts employment with
any competitor of, or otherwise engages in competition with, the Company or (ii) discloses to
anyone outside the Company or uses any confidential information or material of the Company in
violation of the Company’s policies or any agreement between the Holder and the Company, the
Committee, in its sole discretion, may require such Holder to return to the Company the economic
value of any award that was realized or obtained by such Holder at any time during the period
beginning on the date that is one hundred and eighty (180) days prior to the date such Holder’s
employment with the Company is terminated, unless the award is a stock option which the Holder
exercised at least one hundred and eighty (180) days prior to such voluntary resignation. The
provisions of this Section 12.3(a) shall not apply to any awards granted prior to the date upon
which the Plan shall have been approved by the Company’s stockholders.




          (b) Termination for Cause. Except as otherwise expressly provided in the Agreement,
the Committee may, if a Holder’s employment with the Company or a Subsidiary is terminated for
cause, annul any award granted under this Plan to such employee and, in such event, the Committee,
in its sole discretion, may require such Holder to return to the Company the economic value of any
award that was realized or obtained by such Holder at any time during the period beginning on the
date that is one hundred and eighty (180) days prior to the date such Holder’s employment with the
Company is terminated.




          (c) No Right of Employment. Nothing contained in the Plan or in any award hereunder
shall be deemed to confer upon any Holder who is an employee of the Company or any Subsidiary any
right to continued employment with the Company or any Subsidiary, nor shall it interfere in any way
with the right of the Company or any Subsidiary to terminate the employment of any Holder who is an
employee at any time.




     12.4 Investment Representations; Company Policy. The Committee may require each
person acquiring shares of Common Stock pursuant to a Stock Option or other award under the Plan to
represent to and agree with the Company in writing that the Holder is acquiring the shares for
investment without a view to distribution thereof. Each person acquiring shares of



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Common Stock pursuant to a Stock Option or other award under the Plan shall be required to
abide by all policies of the Company in effect at the time of such acquisition and thereafter with
respect to the ownership and trading of the Company’s securities.




     12.5 Additional Incentive Arrangements. Nothing contained in the Plan shall prevent
the Board from adopting such other or additional incentive arrangements as it may deem desirable,
including, but not limited to, the granting of Stock Options and the awarding of Common Stock and
cash otherwise than under the Plan; and such arrangements may be either generally applicable or
applicable only in specific cases.



     12.6 Withholding Taxes. Not later than the date as of which an amount must first be
included in the gross income of the Holder for Federal income tax purposes with respect to any
option or other award under the Plan, the Holder shall pay to the Company, or make arrangements
satisfactory to the Committee regarding the payment of, any Federal, state and local taxes of any
kind required by law to be withheld or paid with respect to such amount. If permitted by the
Committee, tax withholding or payment obligations may be settled with Common Stock, including
Common Stock that is part of the award that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditioned upon such payment or arrangements
and the Company or the Holder’s employer (if not the Company) shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of any kind otherwise due to the
Holder from the Company or any Subsidiary.



     12.7 Governing Law. The Plan and all awards made and actions taken thereunder shall
be governed by and construed in accordance with the laws of the State of New York (without regard
to choice of law provisions); provided, however, that all matters relating to or involving
corporate law shall be governed by the laws of the State of New York.



     12.8 Other Benefit Plans. Any award granted under the Plan shall not be deemed
compensation for purposes of computing benefits under any retirement plan of the Company or any
Subsidiary and shall not affect any benefits under any other benefit plan now or subsequently in
effect under which the availability or amount of benefits is related to the level of compensation
(unless required by specific reference in any such other plan to awards under this Plan).



     12.9 Non-Transferability. Except as otherwise expressly provided in the Plan or the
Agreement, no right or benefit under the Plan may be alienated, sold, assigned, hypothecated,
pledged, exchanged, transferred, encumbered or charged, and any attempt to alienate, sell, assign,
hypothecate, pledge, exchange, transfer, encumber or charge the same shall be void.



     12.10 Applicable Laws. The obligations of the Company with respect to all Stock
Options and awards under the Plan shall be subject to (i) all applicable laws, rules and
regulations and such approvals by any governmental agencies as may be required, including, without
limitation, the Securities Act of 1933, as amended, and (ii) the rules and regulations of any
securities exchange on which the Common Stock may be listed.



     12.11 Conflicts. If any of the terms or provisions of the Plan or an Agreement (with
respect to Incentive Stock Options) conflict with the requirements of Sections 162(m) or 422 of the
Code, then such terms or provisions shall be deemed inoperative to the extent they so conflict with
such requirements. Additionally, if this Plan or any Agreement does not contain any



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provision required to be included herein under Sections 162(m) or 422 of the Code, such
provision shall be deemed to be incorporated herein and therein with the same force and effect as
if such provision had been set out at length herein and therein. If any of the terms or provisions
of any Agreement conflict with any terms or provisions of the Plan, then such terms or provisions
shall be deemed inoperative to the extent they so conflict with the requirements of the Plan.
Additionally, if any Agreement does not contain any provision required to be included therein under
the Plan, such provision shall be deemed to be incorporated therein with the same force and effect
as if such provision had been set out at length therein.




     12.12 Non-Registered Stock. The shares of Common Stock to be distributed under this
Plan have not been, as of the Effective Date, registered under the Securities Act of 1933, as
amended, or any applicable state or foreign securities laws and, except as otherwise expressly
provided in the Agreement, the Company has no obligation to any Holder to register the Common Stock
or to assist the Holder in obtaining an exemption from the various registration requirements, or to
list the Common Stock on a national securities exchange or any other trading or quotation system,
including the Nasdaq National Market and Nasdaq SmallCap Market.



     12.13 Section 409A. The Plan and all Awards shall be construed and administered in a
manner so as to comply with the applicable requirements of Code section 409A.




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