**Exhibit 10.1**

 

**BEARINGPOINT, INC.**

 

**2000 LONG-TERM INCENTIVE PLAN**

 

**(as amended and restated effective April 22, 2003)**

 

**I. INTRODUCTION**

 

**1.1 Purposes**. The purposes of the 2000 Long-Term Incentive Plan (this “Plan”) of BearingPoint, Inc., a Delaware corporation (the “Company”), are (i) toalign the interests of the Company’s stockholders and the recipients of awards under this Plan by providing a means to increase the proprietary interest of such recipients in the Company’s growth and success, (ii) to advance the interestsof the Company by increasing its ability to attract and retain highly competent officers, other employees, non-employee directors and consultants and (iii) to motivate such persons to act in the long-term best interests of the Company and itsstockholders. 

 

This Plan is a continuation, andamendment and restatement, of the KMPG Consulting, Inc. 2000 Long-Term Incentive Plan, the provisions of which shall continue to control with respect to any options or stock awards outstanding thereunder to the extent necessary to avoidestablishment of a new measurement date for financial accounting purposes. 

 

**1.2 Certain Definitions.**

 

**“Affiliate”** shall mean (i) any subsidiary corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, as described in Section 424(f) ofthe Code and (ii) any other entity in which the Company has an equity interest or with which the Company has a significant business relationship. 

 

**“Agreement”** shall mean the written agreement evidencing an award hereunder between the Company and the recipientof such award. 

 

**“Board”**shall mean the Board of Directors of the Company. 

 

**“Bonus Stock”** shall mean shares of Common Stock which are not subject to a Restriction Period or Performance Measures. 

 

**“Bonus Stock Award”** shall mean an award of Bonus Stock under this Plan. 

 

**“Change in Control”** shall have themeaning set forth in Section 7.8(b). 

 

**“Code”** shall mean the Internal Revenue Code of 1986, as amended. 

 

**“Committee”** shall mean the committee designated by the Board which, following an IPO, shall consist of two or more members of the Board, each of whom may be a “Non-Employee Director” within themeaning of Rule 16b-3 under the Exchange Act. 

 

**“Common Stock”** shall mean the common stock, $0.01 par value, of the Company. 

 

**“Company”** shall have the meaning set forth in Section 1.1. 

 

**“Disability”** shall mean the inabilityof the recipient of an award to perform substantially such recipient’s duties and responsibilities for a continuous period of at least six months, as determined solely by the Committee. 

 

**“Discretionary Director Options”** shallhave the meaning set forth in Section 6.5. 

 

**“Exchange Act”** shall mean the Securities Exchange Act of 1934, as amended. 

 

**“Fair Market Value”** shall mean the last sale price of a share of Common Stock as reported on the New York StockExchange on the date as of which such value is being determined or, if there shall be no reported transactions on such date, on the next preceding date for which a transaction was reported; provided, however, that if the Common Stockis not traded on the New York Stock Exchange, Fair Market Value may be determined by the Committee by whatever means or method as the Committee, in the good faith exercise of its discretion, shall at such time deem appropriate. 

 

**“Free-Standing SAR”** shall mean an SARwhich is not issued in tandem with, or by reference to, an option, which entitles the holder thereof to receive, upon exercise, shares of Common Stock (which may be Restricted Stock), cash or a combination thereof with an aggregate value equal tothe excess of the Fair Market Value of one share of Common Stock on the date of exercise over the base price of such SAR, multiplied by the number of such SARs which are exercised. 

 

**“Incentive Stock Option”** shall mean an option to purchase shares of Common Stock thatmeets the requirements of Section 422 of the Code, or any successor provision, which is intended by the Committee to constitute an Incentive Stock Option. 

 

**“Incumbent Board”** shall have the meaning set forth in Section 7.8(b)(3). 

 

“**IPO”** shall mean the initial publicoffering of Common Stock pursuant to an effective registration statement under the Securities Act of 1933, as amended. 

 

**“Mature Shares”** shall mean previously-acquired shares of Common Stock for which the holder thereof has good title,free and clear of all liens and encumbrances and which such holder either (i) has held for at least six months or (ii) has purchased on the open market. 

 

**“Non-Employee Director”** shall mean any director of the Company who is not an officer or employee of the Company orany subsidiary of the Company and who is not a partner, principal or employee of KPMG LLP. 

 

2 

 

**“Non-Statutory Stock Option”** shall mean an option to purchase shares of Common Stock which is not an Incentive Stock Option. 

 

**“Performance Measures”** shall mean the criteria and objectives, established by theCommittee, which shall be satisfied or met (i) as a condition to the exercisability of all or a portion of an option or SAR, (ii) as a condition to the grant of a Stock Award or (iii) during the applicable Restriction Period or Performance Period asa condition to the holder’s receipt, in the case of a Restricted Stock Award, of the Restricted Stock subject to such award, or, in the case of a Performance Share Award, of the shares of Common Stock subject to such award and/or of paymentwith respect to such award. Such criteria and objectives may include one or more of the following: the attainment by a share of Common Stock of a specified Fair Market Value for a specified period of time, earnings per share, return to stockholders(including dividends), return on equity, earnings of the Company, revenues, market share, cash flow or cost reduction goals, or any combination of the foregoing. In the sole discretion of the Committee, the Committee may amend or adjust thePerformance Measures or other terms and conditions of an outstanding award in recognition of unusual or nonrecurring events affecting the Company or its financial statements or changes in law or accounting principles.****

 

**“Performance Period”** shall mean anyperiod designated by the Committee during which the Performance Measures applicable to a Performance Share Award shall be measured. 

 

**“Performance Share”** shall mean a right, contingent upon the attainment of specified Performance Measures within aspecified Performance Period, to receive one share of Common Stock, which may be Restricted Stock or, in lieu of all or a portion thereof, the Fair Market Value of such share of Common Stock in cash. 

 

**“Performance Share Award”** shall meanan award of Performance Shares under this Plan. 

 

**“Person”** shall have the meaning set forth in Section 7.8(b)(3). 

 

**“Restricted Stock”** shall mean either (i) shares of Common Stock which are subject to a Restriction Period, or (ii)Common Stock equivalent units which are subject to a Restriction Period. 

 

**“Restricted Stock Award”** shall mean an award of Restricted Stock under this Plan. 

 

**“Restriction Period”** shall mean any period designated by the Committee during which the Restricted Stock subjectto a Restricted Stock Award is subject to forfeiture and may not be sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or disposed of, except as provided in this Plan or the Agreement relating to such award. 

 

**“Retirement”** shall mean termination ofemployment with or service to the Company by reason of retirement on or after age 65. 

 

**“SAR”** shall mean a stock appreciation right which may be a Free-Standing SAR or a Tandem SAR. 

 

3 

 

**“Stock Award”** shall mean a Restricted Stock Award or a Bonus Stock Award. 

 

**“Tandem SAR”** shall mean an SAR which is granted in tandem with, or by reference to, an option (including aNon-Statutory Stock Option granted prior to the date of grant of the SAR), which entitles the holder thereof to receive, upon exercise of such SAR and surrender for cancellation of all or a portion of such option, shares of Common Stock (which maybe Restricted Stock), cash or a combination thereof with an aggregate value equal to the excess of the Fair Market Value of one share of Common Stock on the date of exercise over the base price of such SAR, multiplied by the number of shares ofCommon Stock subject to such option, or portion thereof, which is surrendered. 

 

**“Tax Date”** shall have the meaning set forth in Section 7.5. 

 

**“Ten Percent Holder”** shall have the meaning set forth in Section 2.1(a). 

 

**1.3 Administration**. This Plan shall beadministered by the Committee. Any one or a combination of the following awards may be made under this Plan to eligible persons: (i) options to purchase shares of Common Stock in the form of Incentive Stock Options or Non-Statutory Stock Options,(ii) SARs in the form of Tandem SARs or Free-Standing SARs, (iii) Stock Awards in the form of Restricted Stock or Bonus Stock and (iv) Performance Shares. The Committee shall, subject to the terms of this Plan, select eligible persons forparticipation in this Plan and determine the form, amount and timing of each award to such persons and, if applicable, the number of shares of Common Stock, the number of SARs and the number of Performance Shares subject to such an award, theexercise price or base price associated with the award, the time and conditions of exercise or settlement of the award and all other terms and conditions of the award, including, without limitation, the form of the Agreement evidencing the award.The Committee may, in its sole discretion and for any reason at any time, take action such that (i) any or all outstanding options and SARs shall become exercisable in part or in full, (ii) all or a portion of the Restriction Period applicable toany outstanding Restricted Stock Award shall lapse, (iii) all or a portion of the Performance Period applicable to any outstanding Performance Share Award shall lapse and (iv) the Performance Measures applicable to any outstanding award (if any)shall be deemed to be satisfied at the maximum or any other level. The Committee shall, subject to the terms of this Plan, interpret this Plan and the application thereof, establish rules and regulations it deems necessary or desirable for theadministration of this Plan and may impose, incidental to the grant of an award, conditions with respect to the award, such as limiting competitive employment or other activities. All such interpretations, rules, regulations and conditions shall befinal, binding and conclusive. 

 

The Committee maydelegate some or all of its power and authority hereunder to the Board or either of the Co-Chief Executive Officers or other executive officer of the Company as the Committee deems appropriate; provided, however, that the Committee maynot delegate its power and authority to either of the Co-Chief Executive Officers or other executive officer of the Company with regard to the selection for participation in this Plan of an officer or other person subject to Section 16 of theExchange Act or decisions concerning the timing, pricing or amount of an award to such an officer or other person. 

 

4 

 

No member ofthe Board or Committee, and neither a Co-Chief Executive Officer nor any other executive officer to whom the Committee delegates any of its power and authority hereunder, shall be liable for any act, omission, interpretation, construction ordetermination made in connection with this Plan in good faith, and the members of the Board and the Committee and the Co-Chief Executive Officers or other executive officer shall be entitled to indemnification and reimbursement by the Company inrespect of any claim, loss, damage or expense (including attorneys’ fees) arising therefrom to the full extent permitted by law, except as otherwise may be provided in the Company’s Certificate of Incorporation and/or By-laws, and underany directors’ and officers’ liability insurance that may be in effect from time to time. 

 

A majority of the Committee shall constitute a quorum. The acts of the Committee shall be either (i) acts of a majority of the members ofthe Committee present at any meeting at which a quorum is present or (ii) acts approved in writing by all of the members of the Committee without a meeting. 

 

**1.4****Eligibility**. Participants in this Plan shall consist of such officers, other employees and consultants, andpersons expected to become officers, other employees and consultants, of the Company and its Affiliates, as the Committee in its sole discretion may select from time to time, and such other persons designated by the Committee pursuant to Section7.13. For purposes of this Plan, references to employment also shall mean a consulting relationship and references to employment by the Company also shall mean employment by an Affiliate. The Committee’s selection of a person to participate inthis Plan at any time shall not require the Committee to select such person to participate in this Plan at any other time. Non-Employee Directors of the Company shall be eligible to participate in this Plan in accordance with Article VI.

 

**1.5 Shares Available.**

 

(a) Shares Available. The number ofshares of Common Stock that are authorized for grants or awards under this Plan (the “Authorized Shares”) shall at all times be equal to the greater of (i) subject to adjustment as provided in Section 7.7, 177,000,000 shares and (ii) 25%of the sum of (x) the number of issued and outstanding shares of Common Stock of the Company plus (y) the Authorized Shares, provided, however, that the number of Authorized Shares shall never be reduced below the number of shares that arethen issuable under all outstanding grants or awards. The number of shares of Common Stock that shall be available for grants or awards under this Plan (the “Available Shares”) shall be equal to the number of Authorized Shares reduced bythe sum of the aggregate number of shares of Common Stock, adjusted as provided in Section 7.7, which become subject to outstanding options, including Discretionary Director Options, outstanding Free-Standing SARs, outstanding Stock Awards andoutstanding Performance Share Awards. 

 

(b)Maximum Grants of Incentive Stock Options. Subject to adjustment as provided in Section 7.7, the maximum number of shares that may be granted as Incentive Stock Options shall be 177,000,000. 

 

(c) Restoration of Available Shares. To the extent thatshares of Common Stock subject to an outstanding option (except to the extent shares of Common Stock are issued or 

 

5 

delivered by the Company in connection with the exercise of a Tandem SAR), Free-Standing SAR, Stock Awardor Performance Share Award are not issued or delivered by reason of the expiration, termination, cancellation or forfeiture of such award or by reason of the delivery or withholding of shares of Common Stock to pay all or a portion of the purchaseprice of an award, if any, or to satisfy all or a portion of the tax withholding obligations relating to an award, then such shares of Common Stock shall again be available under this Plan. 

 

(d) Available Common Stock. Shares of Common Stockshall be made available from authorized and unissued shares of Common Stock, or authorized and issued shares of Common Stock reacquired and held as treasury shares or otherwise or a combination thereof. 

 

**II. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS**

 

**2.1 Stock Options**. TheCommittee may, in its discretion, grant options to purchase shares of Common Stock to such eligible persons as may be selected by the Committee. Each option, or portion thereof, that is not an Incentive Stock Option shall be a Non-Statutory StockOption. An Incentive Stock Option may not be granted to any person who is not an employee of the Company or any parent or subsidiary (as defined in Section 424 of the Code). Each Incentive Stock Option shall be granted within ten years of the datethis Plan is adopted by the Board. To the extent that the aggregate Fair Market Value (determined as of the date of grant) of shares of Common Stock with respect to which options designated as Incentive Stock Options are exercisable for the firsttime by a participant during any calendar year (under this Plan or any other plan of the Company or any parent or subsidiary as defined in Section 424 of the Code) exceeds the amount (currently $100,000) established by the Code, such options shallconstitute Non-Statutory Stock Options. 

 

Optionsshall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable: 

 

(a) Number of Shares and Purchase Price. The number ofshares of Common Stock subject to an option and the purchase price per share of Common Stock purchasable upon exercise of the option shall be determined by the Committee; provided, however, that the purchase price per share of CommonStock purchasable upon exercise of the option shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant of such option; and providedfurther, that if an Incentive Stock Option shall be grantedto any person who, at the time such option is granted, owns capital stock possessing more than ten percent of the total combined voting power of all classes of capital stock of the Company (or of any parent or subsidiary as defined in Section 424 ofthe Code) (a “Ten Percent Holder”), the purchase price per share of Common Stock shall not be less than the price (currently 110% of Fair Market Value) required by the Code in order to constitute an Incentive Stock Option.

 

(b) Exercise Period and Exercisability.The period during which an option may be exercised shall be determined by the Committee; provided, however, that no Incentive Stock Option shall be exercised later than ten years after its date of grant; and providedfurther, that if an Incentive Stock Option shall be granted to a Ten Percent Holder, such option shall not be exercised later than five years after its date of grant. The Committee may, in its discretion, 

 

6 

establish Performance Measures which shall be satisfied or met as a condition to the grant of an option orto the exercisability of all or a portion of an option. The Committee shall determine whether an option shall become exercisable in cumulative or non-cumulative installments and in part or in full at any time. An exercisable option, or portionthereof, may be exercised only with respect to whole shares of Common Stock. 

 

(c) Method of Exercise. An option may be exercised (i) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and by accompanying suchnotice with payment therefor in full (or by arranging for such payment to the Company’s satisfaction) either (A) in cash, (B) by delivery (either actual delivery or by attestation procedures established by the Company) of Mature Shares havingan aggregate Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (C) in cash by a broker-dealer acceptable to the Company to whom the optionee has submitted anirrevocable notice of exercise or (D) a combination of (A) and (B), in each case to the extent set forth in the Agreement relating to the option, (ii) if applicable, by surrendering to the Company any Tandem SARs which are cancelled by reason of theexercise of the option and (iii) by executing such documents as the Company may reasonably request. The Company shall have sole discretion to disapprove of an election pursuant to any of clauses (i)(B)-(D). Any fraction of a share of Common Stockwhich would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the optionee. No certificate representing Common Stock shall be delivered until the full purchase price therefor and anywithholding taxes thereon, as described in Section 7.5, have been paid (or arrangement made for such payment to the Company’s satisfaction). 

 

**2.2 Stock Appreciation Rights**. The Committee may, in its discretion, grant SARs to such eligible persons as may be selectedby the Committee. The Agreement relating to an SAR shall specify whether the SAR is a Tandem SAR or a Free-Standing SAR. 

 

SARs shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent withthe terms of this Plan, as the Committee shall deem advisable: 

 

(a) Number of SARs and Base Price. The number of SARs subject to an award shall be determined by the Committee. Any Tandem SAR related to an Incentive Stock Option shall be granted at the same time that such Incentive StockOption is granted. The base price of a Tandem SAR shall be the exercise price per share of Common Stock of the related option. The base price of a Free-Standing SAR shall be determined by the Committee; provided, however, that suchbase price shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant of such SAR. 

 

(b) Exercise Period and Exercisability. The Agreement relating to an award of SARs shall specify whether such award may be settledin shares of Common Stock (including shares of Restricted Stock) or cash or a combination thereof. The period for the exercise of an SAR shall be determined by the Committee; provided, however, that no Tandem SAR shall be exercisedlater than the expiration, cancellation, forfeiture or other termination of the related option. The Committee may, in its discretion, establish Performance Measures which shall be satisfied or met as a condition to the grant of an SAR or to theexercisability of all or a portion of an SAR. The 

 

7 

Committee shall determine whether an SAR may be exercised in cumulative or non-cumulative installments andin part or in full at any time. An exercisable SAR, or portion thereof, may be exercised, in the case of a Tandem SAR, only with respect to whole shares of Common Stock and, in the case of a Free-Standing SAR, only with respect to a whole number ofSARs. If an SAR is exercised for shares of Restricted Stock, a certificate or certificates representing such Restricted Stock shall be issued in accordance with Section 3.2(c) and the holder of such Restricted Stock shall have such rights of astockholder of the Company as determined pursuant to Section 3.2(d). Prior to the exercise of an SAR for shares of Common Stock, including Restricted Stock, the holder of such SAR shall have no rights as a stockholder of the Company with respect tothe shares of Common Stock subject to such SAR. 

 

(c) Method of Exercise. A Tandem SAR may be exercised (i) by giving written notice to the Company specifying the number of whole SARs which are being exercised, (ii) by surrendering to the Company any options which arecancelled by reason of the exercise of the Tandem SAR and (iii) by executing such documents as the Company may reasonably request. A Free-Standing SAR may be exercised (i) by giving written notice to the Company specifying the whole number of SARswhich are being exercised and (ii) by executing such documents as the Company may reasonably request. 

 

**2.3 Termination of Employment or Service**. Subject to the requirements of the Code, all of the terms relating to theexercise, cancellation or other disposition of an option or SAR upon a termination of employment with or service to the Company of the recipient of such option or SAR, as the case may be, whether by reason of Disability, Retirement, death or anyother reason, shall be determined by the Committee. 

 

**III. STOCK AWARDS**

 

**3.1Stock Awards**. The Committee may, in its discretion, grant Stock Awards to such eligible persons as may be selected by the Committee. The Agreement relating to a Stock Award shall specify whether the Stock Award is a Restricted Stock Awardor Bonus Stock Award. 

 

**3.2 Terms of StockAwards**. Stock Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable. 

 

(a) Number of Shares and Other Terms. The number ofshares of Common Stock subject to a Restricted Stock Award or Bonus Stock Award and the Performance Measures (if any) and Restriction Period applicable to a Restricted Stock Award shall be determined by the Committee. Bonus Stock Awards shall not besubject to any Performance Measures or Restriction Periods. 

 

(b) Vesting and Forfeiture. The Agreement relating to a Restricted Stock Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vesting of theRestricted Stock subject to such award (i) if specified Performance Measures are satisfied or met during the specified Restriction Period or (ii) if the holder of such award remains continuously in the employment of or service to the 

 

8 

Company during the specified Restriction Period and for the forfeiture of all or a portion of the sharesof Common Stock subject to such award (x) if specified Performance Measures are not satisfied or met during the specified Restriction Period or (y) if the holder of such award does not remain continuously in the employment of or service to theCompany during the specified Restriction Period. 

 

(c) Share Certificates. During the Restriction Period, a certificate or certificates representing a Restricted Stock Award may be registered in the holder’s name or a nominee name at the discretion of the Company and maybear a legend, in addition to any legend which may be required pursuant to Section 7.6, indicating that the ownership of the shares of Common Stock represented by such certificate is subject to the restrictions, terms and conditions of this Plan andthe Agreement relating to the Restricted Stock Award. As determined by the Committee, all certificates registered in the holder’s name shall be deposited with the Company, together with stock powers or other instruments of assignment (includinga power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate by the Company, which would permit transfer to the Company of all or a portion of the shares of Common Stock subject to the RestrictedStock Award in the event such award is forfeited in whole or in part. Upon termination of any applicable Restriction Period (and the satisfaction or attainment of applicable Performance Measures), or upon the grant of a Bonus Stock Award, in eachcase subject to the Company’s right to require payment of any taxes in accordance with Section 7.5, a certificate or certificates evidencing ownership of the requisite number of shares of Common Stock shall be delivered to the holder of suchaward. 

 

(d) Rights with Respect to RestrictedStock Awards.****Unless otherwise set forth in the Agreement relating to a Restricted Stock Award, and subject to the terms and conditions of the Agreement relating to a Restricted Stock Award, (i) the holder of a Restricted Stock Awarddenominated in shares of Common Stock shall have all rights as a stockholder of the Company, including, but not limited to, voting rights, the right to receive dividends and the right to participate in any capital adjustment applicable to allholders of Common Stock; provided, however, that a distribution with respect to shares of Common Stock, other than a regular cash dividend, shall be deposited with the Company and shall be subject to the same restrictions as the sharesof Common Stock with respect to which such distribution was made, and (ii) the holder of a Restricted Stock Award denominated in Common Stock equivalent units shall have no rights as a stockholder of the Company unless and until shares of CommonStock are issued and delivered to the holder of the Restricted Stock Award with respect to such Common Stock equivalent units; provided, however, that a Restricted Stock Award denominated in Common Stock equivalent units may providefor the payment of dividend equivalents which correspond to the payment of dividends on Common Stock. 

 

**3.3 Termination of Employment or Service**. All of the terms relating to the satisfaction of Performance Measures and thetermination of the Restriction Period relating to a Restricted Stock Award, or any forfeiture and cancellation of such award upon a termination of employment with or service to the Company of the recipient of such award, whether by reason ofDisability, Retirement, death or any other reason, shall be determined by the Committee. 

 

9 

 

**IV.PERFORMANCE SHARE AWARDS**

 

**4.1Performance Share Awards**. The Committee may, in its discretion, grant Performance Share Awards to such eligible persons as may be selected by the Committee. 

 

**4.2 Terms of Performance Share Awards**. Performance Share Awards shall be subject to thefollowing terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable. 

 

(a) Number of Performance Shares and Performance Measures. The number of Performance Shares subject toany award and the Performance Measures and Performance Period applicable to such award shall be determined by the Committee. 

 

(b) Vesting and Forfeiture. The Agreement relating to a Performance Share Award shall provide, in the manner determined by theCommittee, in its discretion, and subject to the provisions of this Plan, for the vesting of such award, if specified Performance Measures are satisfied or met during the specified Performance Period, and for the forfeiture of all or a portion ofsuch award, if specified Performance Measures are not satisfied or met during the specified Performance Period. 

 

(c) Settlement of Vested Performance Share Awards. The Agreement relating to a Performance Share Award (i) shall specify whethersuch award may be settled in shares of Common Stock (including shares of Restricted Stock) or cash or a combination thereof and (ii) may specify whether the holder thereof shall be entitled to receive, on a current or deferred basis, dividendequivalents, and, if determined by the Committee, interest on or the deemed reinvestment of any deferred dividend equivalents, with respect to the number of shares of Common Stock subject to such award. If a Performance Share Award is settled inshares of Restricted Stock, a certificate or certificates representing such Restricted Stock shall be issued in accordance with Section 3.2(c) and the holder of such Restricted Stock shall have such rights of a stockholder of the Company asdetermined pursuant to Section 3.2(d). Prior to the settlement of a Performance Share Award in shares of Common Stock, including Restricted Stock, the holder of such award shall have no rights as a stockholder of the Company with respect to theshares of Common Stock subject to such award. 

 

**4.3 Termination of Employment or Service**. All of the terms relating to the satisfaction of Performance Measures and the termination of the Performance Period relating to a Performance Share Award, or any forfeiture andcancellation of such award upon a termination of employment with or service to the Company of the recipient of such award, whether by reason of Disability, Retirement, death or other termination, shall be determined by the Committee. 

 

**V. OTHER STOCK-BASED AWARDS**

 

In addition to Restricted Stock Awards, the Committee may fromtime to time grant other stock-based awards to eligible participants in such amounts, on such terms and conditions, and for such consideration, including no consideration or such minimum consideration as may be required by law, as it shalldetermine. Other stock-based awards may be denominated in cash, in Common Stock or other securities, in stock-equivalent units, in stock appreciation units, in 

 

10 

securities or debentures convertible into Common Stock, or in any combination of the foregoing and may bepaid in Common Stock or other securities, in cash, or in a combination of Common Stock or other securities and cash, all as determined in the sole discretion of the Committee. 

 

**VI. PROVISIONS RELATING TO NON-EMPLOYEE DIRECTORS**

 

**6.1****Eligibility**. Each Non-EmployeeDirector shall be eligible to participate in the Plan as provided in this Article VI. 

 

**6.2****Automatic Grants of Stock Options**. Each Non-Employee Director shall automatically be granted Non-Statutory Stock Options as follows: 

 

(a) Time of Grant. Automatic grants of Non-StatutoryStock Options shall be made on the dates specified below: 

 

(1) Each person who is serving as a Non-Employee Director as of March 20, 2001 shall automatically be granted, on the date that the next Non-Employee Director is elected, an option to purchase 15,000 shares of Common Stock.

 

(2) Each person who is first elected or firstbegins to serve as a Non-Employee Director on or after March 20, 2001 shall automatically be granted, on the date of such initial election or service, an option to purchase 15,000 shares of Common Stock. 

 

(3) Each person who is a Non-Employee Director shallautomatically be granted an option to purchase 5,000 shares of Common Stock on the date he or she is first elected to serve as Chair of the Audit Committee of the Board of Directors of the Company. 

 

(b) Purchase Price. The purchase price per share ofCommon Stock purchasable upon exercise of an option granted under this Section 6.2 shall be 100% of the Fair Market Value of a share of Common Stock on the date of grant of such option. 

 

(c) Exercise Period and Exercisability. Each option granted under Section 6.2(a)(1) or Section6.2(a)(2) shall be fully exercisable on and after the one year anniversary of its date of grant and each option granted under Section 6.2(a)(3) shall be fully exercisable on and after the day preceding the day of the next annual meeting ofstockholders of the Company following its date of grant. Each option granted under this Section 6.2 shall expire 10 years after its date of grant. An exercisable option, or portion thereof, may be exercised in whole or in part only with respect towhole shares of Common Stock. Options granted under this Section 6.2 shall be exercisable in accordance with Section 2.1(c). 

 

**6.3 Termination of Directorship**. (a) Disability. If the recipient of an option granted under Section 6.2 ceases to bea director of the Company by reason of Disability, each such option held by the holder thereof shall be exercisable only to the extent such option is exercisable on the effective date of such recipient’s ceasing to be a director and maythereafter be exercised by such holder (or such holder’s legal representative or similar person) until and including the earlier to occur of the (i) date which is one year after the effective date of such recipient’s ceasing to be adirector and (ii) the expiration date of the term of such option. 

 

11 

 

(b)Retirement. If the recipient of an option granted under Section 6.2 ceases to be a director of the Company by reason of Retirement, each such option held by the holder thereof shall be exercisable only to the extent such option is exercisableon the effective date of such recipient’s ceasing to be a director and may thereafter be exercised by such holder (or such holder’s legal representative or similar person) until and including the earlier to occur of the (i) date which isthree months after the effective date of such recipient’s ceasing to be a director and (ii) the expiration date of the term of such option. 

 

(c) Death. If the recipient of an option granted under Section 6.2 ceases to be a director of the Company by reason of death, eachsuch option held by the holder thereof shall be exercisable only to the extent such option is exercisable on the effective date of such recipient’s ceasing to be a director and may thereafter be exercised by such holder’s executor,administrator, legal representative, beneficiary or similar person until and including the earlier to occur of the (i) date which is one year after the date of such recipient’s death and (ii) the expiration date of the term of such option.

 

(d) Other Termination. If the recipientof an option granted under Section 6.2 ceases to be a director of the Company for any reason other than Disability, Retirement or death, each such option held by the holder thereof shall be exercisable only to the extent such option is exercisableon the effective date of such recipient’s ceasing to be a director and may thereafter be exercised by such holder (or such holder’s legal representative or similar person) until and including the earlier to occur of the (i) date which isthree months after the effective date of such recipient’s ceasing to be a director and (ii) the expiration date of the term of such option. 

 

(e) Death Following Termination of Directorship. If the recipient of an option granted under Section 6.2 dies during the period setforth in Section 6.3(a) following such recipient’s ceasing to be a director of the Company by reason of Disability, or if such recipient dies during the period set forth in Section 6.3(b) following such recipient’s Retirement, or if such arecipient dies during the period set forth in Section 6.3(d) following such recipient’s ceasing to be a director for any reason other than by reason of Disability or Retirement, each such option held by the holder thereof shall be exercisableonly to the extent that such option is exercisable on the date of the recipient’s death and may thereafter be exercised by such holder’s executor, administrator, legal representative, beneficiary or similar person until and including theearlier to occur of the (i) date which is one year after the date of such recipient’s death and (ii) the expiration date of the term of such option. 

 

**6.4 Automatic Grants of Restricted Stock Awards**. Each Non-Employee Director shall be granted a Restricted Stock Award asfollows: 

 

(a) Time of Grant. Each personwho is serving as a Non-Employee Director immediately following any annual meeting of stockholders of the Company held on or after November 11, 2002, shall automatically be granted, on the date of such meeting, a Restricted Stock Award for 4,000shares of Common Stock, unless the Compensation Committee determines that such Restricted Stock Award shall be in Common Stock equivalent units with dividend equivalents. 

 

(b) Vesting. The Restricted Stock Award shall be fully vested upon grant. 

 

12 

 

(c)Restriction Period. The Restriction Period for the Restricted Stock Award shall be the period of time during which the Non-Employee Director provides services as a member of the Board. The Restriction Period shall terminate on the date thatthe Non-Employee Director ceases to serve as a member of the Board. 

 

**6.5 Discretionary Grants of Stock Options**. The Committee may, in its discretion, grant options to purchase shares of Common Stock (“Discretionary Director Options”) to all Non-EmployeeDirectors or to any one or more of them. Each Discretionary Director Option shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committeeshall deem advisable: 

 

(a) Number of Sharesand Purchase Price. The number of shares of Common Stock subject to a Discretionary Director Option and the purchase price per share of Common Stock purchasable upon exercise of the option shall be determined by the Committee; provided,however, that the purchase price per share of Common Stock purchasable upon exercise of the option shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant of such option. 

 

(b) Exercise Period and Exercisability. The periodduring which a Discretionary Director Option may be exercised shall be determined by the Committee. The Committee may, in its discretion, establish Performance Measures which shall be satisfied or met as a condition to the grant of a DiscretionaryDirector Option or to the exercisability of all or a portion of a Discretionary Director Option. The Committee shall determine whether a Discretionary Director Option shall become exercisable in cumulative or non-cumulative installments and in partor in full at any time. An exercisable Director Discretionary Option, or portion thereof, may be exercised only with respect to whole shares of Common Stock. Each Discretionary Director Option shall be exercisable in accordance with Section 2.1(c).

 

(c) Termination of Directorship. All ofthe terms relating to the exercise, cancellation or other disposition of a Discretionary Director Option upon a termination of service as a director of the Company of the recipient of a Discretionary Director Option, whether by reason of Disability,Retirement, death or any other reason, shall be determined by the Committee. 

 

**VII. GENERAL**

 

**7.1****Effective Date and Term of Plan**. This Plan shall be submitted to the stockholders of the Company for approval within 12 months following its adoption by the Board and, if approved, shall becomeeffective as of the date of such adoption by the Board. No option may be exercised prior to the date of such stockholder approval. This Plan shall terminate 10 years after its effective date, unless terminated earlier by the Board. Termination ofthis Plan shall not affect the terms or conditions of any award granted prior to such termination. 

 

**7.2 Amendments**. The Board or the Committee may amend this Plan as it shall deem advisable, subject to any requirement ofstockholder approval required by applicable law, rule or regulation, including Section 422 of the Code; provided, however, that no amendment shall be made without stockholder approval if such amendment would (a) increase the maximumnumber of shares of Common Stock available under this Plan (subject to Section 7.7), (b) effect any 

 

13 

change inconsistent with Section 422 of the Code or (c) extend the term of this Plan. No amendment mayimpair the rights of a holder of an outstanding award without the consent of such holder. 

 

**7.3 Agreement**. No award shall be valid until an Agreement is executed by the Company and the recipient of such award and, upon execution by each party and delivery of the Agreement to theCompany, such award shall be effective as of the effective date set forth in the Agreement. 

 

**7.4 Non-Transferability of Awards**. Unless the Committee provides for the transferability of a particular award and such transferability is specified in the Agreement relating to suchaward, no award shall be transferable other than by will, the laws of descent and distribution or pursuant to beneficiary designation procedures stated in Section 7.11 or otherwise approved by the Company. Except to the extent permitted by theforegoing sentence or the Agreement relating to the Award, each award may be exercised or settled during the recipient’s lifetime only by the recipient or the recipient’s legal representative or similar person. Except to the extentpermitted by the second preceding sentence or the Agreement relating to the Award, no award may be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject toexecution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of any such award, such award and all rights thereunder shall immediately become null and void. 

 

**7.5 Tax Withholding**. The Company shall have theright to require, prior to the issuance or delivery of any shares of Common Stock or the payment of any cash pursuant to an award made hereunder, payment by the holder of such award of any federal, state, local or other taxes which may be requiredto be withheld or paid in connection with such award. An Agreement may provide that (i) the Company shall withhold whole shares of Common Stock which would otherwise be delivered to a holder, having an aggregate Fair Market Value determined as ofthe date the obligation to withhold or pay taxes arises in connection with an award (the “Tax Date”), or withhold an amount of cash which would otherwise be payable to a holder, in the amount necessary to satisfy any such obligationor (ii) the holder may satisfy any such obligation by any of the following means: (A) a cash payment to the Company, (B) delivery (either actual delivery or by attestation procedures established by the Company) to the Company of Mature Shares havingan aggregate Fair Market Value, determined as of the Tax Date, equal to the amount necessary to satisfy any such obligation, (C) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregateFair Market Value, determined as of the Tax Date, or withhold an amount of cash which would otherwise be payable to a holder, equal to the amount necessary to satisfy any such obligation, (D) in the case of the exercise of an option, a cash paymentby a broker-dealer acceptable to the Company to whom the optionee has submitted an irrevocable notice of exercise or (E) any combination of (A), (B) and (C), in each case to the extent set forth in the Agreement relating to the award;provided, however, that the Company shall have sole discretion to disapprove of an election pursuant to any of clauses (ii)(B)-(E). Any fraction of a share of Common Stock which would be required to satisfy such an obligation shall bedisregarded and the remaining amount due shall be paid in cash by the holder. 

 

 

14 

 

**7.6Restrictions on Shares**. Each award made hereunder shall be subject to the requirement that if at any time the Company determines that the listing, registration or qualification of the shares of Common Stock subject to such award upon anysecurities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the exercise or settlement of such award or the deliveryof shares thereunder, such award shall not be exercised or settled and such shares shall not be delivered unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of anyconditions not acceptable to the Company. The Committee may provide for such restrictions upon the transferability of shares of Common Stock delivered pursuant to any award made hereunder as it deems appropriate and such restrictions shall bespecified in the Agreement relating to such award. The Company may require that certificates evidencing shares of Common Stock delivered pursuant to any award made hereunder bear a legend indicating that the sale, transfer or other dispositionthereof by the holder is prohibited except in compliance with the Securities Act of 1933, as amended, and the rules and regulations thereunder and such other restrictions, if any, specified in the Agreement relating to the award pursuant to whichsuch shares were delivered. 

 

**7.7Adjustment**. In the event of any stock split, reverse stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization orevent, or any distribution to holders of Common Stock other than a regular cash dividend, the class of securities available under this Plan, the number and class of securities subject to each outstanding option and the purchase price per security,the terms of each outstanding SAR, the number and class of securities subject to each outstanding Stock Award or Performance Share Award, and the terms of each outstanding Restricted Stock Award or Performance Share Award shall be appropriatelyadjusted by the Committee, such adjustments to be made in the case of outstanding options and SARs without an increase in the aggregate purchase price or base price. The decision of the Committee regarding any such adjustment shall be final, bindingand conclusive. If any such adjustment would result in a fractional security being (a) available under this Plan, such fractional security shall be disregarded, or (b) subject to an award under this Plan, the Company shall pay the holder of suchaward, in connection with the first vesting, exercise or settlement of such award in whole or in part occurring after such adjustment, an amount in cash determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth)by (ii) the excess, if any, of (A) the Fair Market Value on the vesting, exercise or settlement date over (B) the exercise or base price, if any, of such award. 

 

**7.8 Change in Control.**

 

(a) (1) Notwithstanding any provision in this Plan or any Agreement, in the event of a Change in Control inconnection with which the holders of Common Stock receive shares of common stock that are registered under Section 12 of the Exchange Act, (i) all outstanding options and SARS shall immediately become exercisable in full, (ii) the Restriction Periodapplicable to any outstanding Restricted Stock Award shall lapse, (iii) the Performance Period applicable to any outstanding Performance Share Award shall lapse, (iv) the Performance Measures applicable to any outstanding award shall be deemed to besatisfied at the maximum level and (v) there shall be substituted for each share of Common Stock available under this Plan, whether or not then subject to an outstanding award, the number and class of shares into 

 

15 

which each outstanding share of Common Stock shall be converted pursuant to such Change in Control. In theevent of any such substitution, the purchase price per share in the case of an option and the base price in the case of an SAR shall be appropriately adjusted by the Committee (whose determination shall be final, binding and conclusive), suchadjustments to be made in the case of outstanding options and SARs without an increase in the aggregate purchase price or base price. 

 

(2) Notwithstanding any provision in this Plan or any Agreement, in the event of any Change in Control other than a Change in Control inconnection with which the holders of Common Stock receive shares of common stock that are registered under Section 12 of the Exchange Act, each outstanding award shall be surrendered to the Company by the holder thereof, and each such award shallimmediately be cancelled by the Company, and the holder shall receive, within ten days of the occurrence of a Change in Control, a cash payment from the Company in an amount equal to (i) in the case of an option, the number of shares of Common Stockthen subject to such option, multiplied by the excess, if any, of the greater of (A) the highest per share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (B) the Fair Market Value of ashare of Common Stock on the date of occurrence of the Change in Control, over the purchase price per share of Common Stock subject to the option, (ii) in the case of a Free-Standing SAR, the number of shares of Common Stock then subject to suchSAR, multiplied by the excess, if any, of the greater of (A) the highest per share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (B) the Fair Market Value of a share of Common Stock onthe date of occurrence of the Change in Control, over the base price of the SAR, (iii) in the case of a Restricted Stock Award or Performance Share Award, the number of shares of Common Stock or the number of Performance Shares, as the case may be,then subject to such award, multiplied by the greater of (A) the highest per share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (B) the Fair Market Value of a share of Common Stock onthe date of occurrence of the Change in Control. In the event of such a Change in Control, each Tandem SAR shall be surrendered by the holder thereof and shall be cancelled simultaneously with the cancellation of the related option. The Company may,but is not required to, cooperate with any person who is subject to Section 16 of the Exchange Act to assure that any cash payment in accordance with the foregoing to such person is made in compliance with Section 16 and the rules and regulationsthereunder. 

 

(b) “Change in Control”shall mean: 

 

(1) a sale or transfer of all orsubstantially all of the assets of the Company on a consolidated basis in any transaction or series of related transactions; 

 

(2) any merger, consolidation or reorganization to which the Company is a party, except for a merger, consolidation or reorganization inwhich the Company is the surviving corporation and, after giving effect to such merger, consolidation or reorganization, the holders of the Company’s outstanding equity (on a fully diluted basis) immediately prior to the merger, consolidationor reorganization will own in the aggregate immediately following the merger, consolidation or reorganization the Company’s outstanding equity (on a fully diluted basis) either (i) having the ordinary voting power to elect a majority of themembers of the Company’s board of directors to be elected by the holders of Common Stock and any other class which votes 

 

16 

together with the Common Stock as a single class or (ii) representing at least 50% of the equity value ofthe Company as reasonably determined by the Board; 

 

(3) individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of such Board; provided, however, that any individual whobecomes a director of the Company subsequent to the date hereof whose election, or nomination for election by the holders of the Company’s equity, was approved by the vote of at least a majority of the directors then comprising the IncumbentBoard shall be deemed to have been a member of the Incumbent Board; and provided further, that no individual who was initially elected as a director of the Company as a result of an actual or threatened solicitation by any individual, entity orgroup (a “Person”) other than the Board, including any “person” within the meaning of Section 13(d) of the Exchange Act, for the purpose of opposing a solicitation by any other Person with respect to the election orremoval of directors, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall be deemed to have been a member of the Incumbent Board; or 

 

(4) any Person other than KPMG LLP or its affiliates, acquiresbeneficial ownership of 30% or more of the outstanding equity of the Company generally entitled to vote on the election of directors. 

 

**7.9 No Right of Participation or Employment**. No person shall have any right to participate in this Plan. Neither this Plannor any award made hereunder shall confer upon any person any right to continued employment by the Company or any Affiliate of the Company or affect in any manner the right of the Company or any Affiliate of the Company to terminate the employmentof any person at any time without liability hereunder. 

 

**7.10 Rights as Stockholder**. No person shall have any right as a stockholder of the Company with respect to any shares of Common Stock or other equity security of the Company which is subject to an award hereunder unlessand until such person becomes a stockholder of record with respect to such shares of Common Stock or equity security. 

 

**7.11 Designation of Beneficiary**. If permitted by the Company, a holder of an award may file with the Committee a writtendesignation of one or more persons as such holder’s beneficiary or beneficiaries (both primary and contingent) in the event of the holder’s death. To the extent an outstanding option or SAR granted hereunder is exercisable, suchbeneficiary or beneficiaries shall be entitled to exercise such option or SAR. Each beneficiary designation shall become effective only when filed in writing with the Committee during the holder’s lifetime on a form prescribed by the Committee.The spouse of a married holder domiciled in a community property jurisdiction shall join in any designation of a beneficiary other than such spouse. The filing with the Committee of a new beneficiary designation shall cancel all previously filedbeneficiary designations. If a holder fails to designate a beneficiary, or if all designated beneficiaries of a holder predecease the holder, then each outstanding option and SAR hereunder held by such holder, to the extent exercisable, may beexercised by such holder’s executor, administrator, legal representative or similar person. 

 

**7.12 Governing Law**. This Plan, each award hereunder and the related Agreement, and all determinations made and actions taken pursuant thereto, to the extent not otherwise 

 

17 

governed by the Code or the laws of the United States, shall be governed by the laws of the State ofDelaware and construed in accordance therewith without giving effect to principles of conflicts of laws. 

 

**7.13 Granting Awards to Foreign Persons**. Without the amendment of this Plan, the Committee may grant awards to personsdesignated by the Committee from time to time, who otherwise are eligible persons under Section 1.4 and who are subject to the laws of foreign countries or jurisdictions. The Committee may grant awards to such persons on such terms and conditionsdifferent from those specified in this Plan as may in the judgment of the Committee be necessary or desirable to foster and promote achievement of the purposes of this Plan and, in furtherance of such purposes, the Committee may make suchmodifications, amendments, procedures, subplans and the like as may be necessary or advisable to comply with provisions of the laws of other countries or jurisdictions in which the Company or its Affiliates operate or have employees or other personswho are eligible persons under Section 1.4. 

 

**7.14 Additional Provisions Applicable to Options Granted Prior to IPO**. In order to comply with certain requirements of the California Corporate Securities Law of 1968, as amended, this Section shall apply to optionsgranted under this Plan prior to an IPO (a “Pre-IPO Option”). The terms set forth in the Agreements pursuant to which Pre-IPO Options are granted on January 31, 2000 (the “January 31, 2000 Options”) relating to (i) the periodduring which an option may be exercised, (ii) the exercise, cancellation or other disposition of an option upon a termination of employment with the Company of the recipient of such option, whether by reason of Disability, Retirement, death or anyother reason, (iii) restrictions on the transferability of an option and (iv) the providing of annual financial statements to the holder of an option are hereby incorporated into this Plan by reference as if set forth herein verbatim and shall applyin all respects only to all Pre-IPO Options granted to eligible persons; provided, however, that Pre-IPO Options may be granted under this Plan having exercise periods different from those of the January 31, 2000 Options so long as each such Pre-IPOOption becomes exercisable at a rate of at least 20% per year during the five-year period commencing on the date of grant of such Pre-IPO Option. 

 

18