exv10w1



 



Exhibit 10.1



SUNRISE ASSISTED LIVING, INC.

2003 STOCK OPTION AND RESTRICTED STOCK PLAN



     SUNRISE ASSISTED LIVING, INC., a Delaware corporation (the “Corporation”),
sets forth herein the terms of this 2003 Stock Option and Restricted Stock Plan
(the “Plan”) as follows:


1. PURPOSE



     The Plan is intended to advance the interests of the Corporation and any
subsidiary thereof within the meaning of Rule 405 of Regulation C under the
Securities Act of 1933, as amended (the “Securities Act”), with the term
“person” as used in such Rule 405 being defined as in Section 2(2) of the
Securities Act (a “Subsidiary”), by providing eligible individuals (as
designated pursuant to section 4 below) with incentives to improve business
results, by providing an opportunity to acquire or increase a proprietary
interest in the Corporation, which thereby will create a stronger incentive to
expend maximum effort for the growth and success of the Corporation and its
Subsidiaries, and will encourage such eligible individuals to continue to serve
the Corporation and its Subsidiaries, whether as an employee, as a director, as
a consultant or advisor or in some other capacity. To this end, the Plan
provides for the grant of stock options (each of which is an “Option”),
restricted stock (“Restricted Stock”) and stock units (“Stock Units,” and
together with Options and Restricted Stock, “Awards”), as set out herein. Each
Award shall be evidenced by a written agreement between the Corporation and the
recipient individual (the “Award Agreement”) that sets out the terms and
conditions of the Award. A person who is granted an Award under the Plan is
referred to herein as a Grantee.


     An Option may be an incentive stock option (an “ISO”) intended to satisfy
the applicable requirements under Section 422 of the Internal Revenue Code of
1986, as amended from time to time, or the corresponding provision of any
subsequently-enacted tax statute (the “Code”), or a nonqualified stock option
(an “NSO”). An Option is an NSO to the extent that the Option would exceed the
limitations set forth in section 7 below. An Option is also an NSO if either
(i) the Option is specifically designated at the time of grant as an NSO or not
being an ISO or (ii) the Option does not otherwise satisfy the requirements of
Code Section 422 at the time of grant.


2. ADMINISTRATION



     (a)  Board


     The Plan shall be administered by the Board of Directors of the
Corporation (the “Board”), which shall have the full power and authority to
take all actions and to make all determinations required or provided for under
the Plan or any Award
granted or Award Agreement entered into hereunder and all such other
actions and determinations not inconsistent with the specific terms and
provisions of the Plan deemed by the Board to be necessary or appropriate to
the administration of the Plan or any Award granted or Award Agreement entered
into hereunder. The interpretation and construction by the Board of any
provision of the Plan or of any Award granted or Award Agreement entered into
hereunder shall be final, binding and conclusive.


 






 


     (b)  Action by Committee


     The Board from time to time may appoint a committee consisting of two or
more members of the Board of Directors who, in the sole discretion of the
Board, may be the same Directors who serve on the Compensation Committee, or
may appoint the Compensation Committee to serve as such committee (the
“Committee”). The Board, in its sole discretion, may provide that the role of
the Committee shall be limited to making recommendations to the Board
concerning any determinations to be made and actions to be taken by the Board
pursuant to or with respect to the Plan, or the Board may delegate to the
Committee such powers and authorities related to the administration of the
Plan, as set forth in section 2(a) above, as the Board shall determine,
consistent with the Restated Certificate of Incorporation and Amended and
Restated Bylaws of the Corporation and applicable law. In the event that the
Plan or any Award granted or Award Agreement entered into hereunder provides
for any action to be taken by or determination to be made by the Board, such
action may be taken by or such determination may be made by the Committee if
the power and authority to do so has been delegated to the Committee by the
Board as provided for in this section. Unless otherwise expressly determined by
the Board, any such action or determination by the Committee shall be final and
conclusive.


     (c)  No Liability


     No member of the Board or of the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Award
granted or Award Agreement entered into hereunder.


3. STOCK



     The stock that may be issued pursuant to Awards under the Plan shall be
shares of common stock, par value $.01 per share, of the Corporation (the
“Stock”), which shares may be treasury shares or authorized but unissued
shares. The number of shares of Stock that may be issued pursuant to Awards
under the Plan shall not exceed, in the aggregate, 750,000 shares. If any
Award expires or terminates, or is terminated or canceled, for any reason prior
to exercise or delivery of shares thereunder, the shares of Stock that were
subject to the unexercised, forfeited, terminated or canceled portion of such
Award shall be available immediately for future grants of Awards under the
Plan.


4. ELIGIBILITY



     (a)  Designated Recipients


     Subject to the next sentence, Awards may be granted under the Plan to (i)
any director, officer or employee of the Corporation or any Subsidiary as the
Board shall determine and designate from time to time or (ii) any consultant or
advisor providing bona fide services to the Corporation or any Subsidiary
(provided that such services must not be in connection with the offer or sale
of securities in a capital-raising transaction) whose participation in the Plan
is determined by the Board to be in the best interests of the Corporation and
is so designated by the Board. Options granted to a full-time employee of the
Corporation or a “subsidiary corporation” thereof within the meaning of Section
424(f) of the Code shall be either ISOs or NSOs, as determined in the sole
discretion of the Board, and Options granted to any other eligible


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individual
shall be NSOs.


     (b)  Successive Grants


     An individual may hold more than one Award, subject to such restrictions
as are provided herein.


5. EFFECTIVE DATE AND TERM OF THE PLAN



     (a)  Effective Date


     The Plan shall be effective as of the date of adoption by the Board,
subject to approval of the Plan within one year of such effective date by the
vote of the Corporation’s stockholders in accordance with applicable law. Upon
approval of the Plan by the stockholders of the Corporation as set forth above,
however, all Awards granted under the Plan on or after the effective date shall
be fully effective as if the stockholders of the Corporation had approved the
Plan on the Plan’s effective date. If the stockholders fail to approve the Plan
within one year of such effective date, any Awards granted hereunder shall be
null and void and of no effect.


     (b)  Term


     The Plan shall terminate ten years after the effective date.


6. GRANT OF OPTIONS



     (a)  General


     Subject to the terms and conditions of the Plan, the Board may, at any
time and from time to time, grant to such eligible individuals as the Board may
determine (each of the whom is an “Optionee”), Options to purchase such number
of shares of Stock on such terms and conditions as the Board may determine,
including any terms or conditions that may be necessary to qualify such Options
as ISOs under Section 422 of the Code. Such authority specifically includes the
authority, in order to
effectuate the purposes of the Plan but without amending the Plan, to
modify grants to eligible individuals who are foreign nationals or are
individuals who are employed outside the United States to recognize differences
in local law, tax policy or custom.


     (b)  Limitations on Grant of Awards


     During any time when the Corporation has a class of equity security
registered under Section 12 of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), the maximum number of shares that can be granted under
the Plan to any person eligible for a grant of an Award under section 4, is
250,000 shares per year subject to an Option and 250,000 shares per year
pursuant to an Award of Restricted Stock or Stock Units (subject to adjustment
as provided in section 18(a) hereof).


7. LIMITATIONS ON INCENTIVE STOCK OPTIONS



     An Option that is designated as being one that is intended to qualify as
an ISO shall qualify for treatment as an ISO only to the extent that the
aggregate fair market value


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(determined at the time the Option is granted) of
the Stock with respect to which all options that are intended to constitute
“incentive stock options,” within the meaning of Code Section 422, are
exercisable for the first time by any Optionee during any calendar year (under
the Plan and all other plans of the Optionee’s employer corporation and its
parent and subsidiary corporations within the meaning of Section 422(d) of the
Code) does not exceed $100,000. If Stock acquired by exercise of an ISO granted
under this Plan is disposed of within two years following the date of grant of
the ISO or one year following the transfer of the subject Stock to the Optionee
(a “disqualifying disposition”), the holder of the Stock shall, immediately
prior to such disqualifying disposition, notify the Corporation in writing of
the date and terms of such disposition and provide such other information
regarding the disposition as the Corporation may reasonably require.


8. OPTION AGREEMENTS



     All Options granted pursuant to the Plan shall be evidenced by agreements
(“Option Agreements”), to be executed by the Corporation and by the Optionee,
in such form or forms as the Board shall from time to time determine. Option
Agreements covering Options granted from time to time or at the same time need
not contain similar provisions; provided, however, that all such Option
Agreements shall comply with all terms of the Plan.


9. OPTION PRICE



     The purchase price of each share of Stock subject to an Option (the
“Option Price”) shall be fixed by the Board and stated in each Option
Agreement. The Option Price shall be not less than the greater of par value or
100 percent of the fair market value of a share of Stock on the date on which
the Option is granted (as determined in good faith by the Board); provided,
however, that in the event the Optionee would otherwise be ineligible to
receive an ISO by reason of the provisions of Sections
422(b)(6) and 424(d) of the Code (relating to stock ownership of more than
ten percent), the Option Price of an Option that is intended to be an ISO shall
not be less than the greater of par value or 110 percent of the fair market
value of a share of Stock at the time such Option is granted. In the event that
the Stock is listed on an established national or regional stock exchange or
The Nasdaq Stock Market, is admitted to quotation on the National Association
of Securities Dealers Automated Quotation System, or is publicly traded in an
established securities market, in determining the fair market value of the
Stock, the Board shall use the closing price of the Stock on such exchange or
system or in such market (the highest such closing price if there is more than
one such exchange or market) on the trading date immediately before the Option
is granted (or, if there is no such closing price, then the Board shall use the
mean between the highest bid and lowest asked prices or between the high and
low prices on such date), or, if no sale of the Stock has been made on such
day, on the next preceding day on which any such sale shall have been made.


10. TERM AND EXERCISE OF OPTIONS



     (a)  Term


     Upon the expiration of ten years from the date on which an ISO is granted
or on such date prior thereto as may be fixed by the Board and stated in the
Option Agreement relating to such Option, that ISO shall be ineligible for
treatment as an “incentive stock option,” as defined in Section 422 of the
Code, and shall be exercisable only as an NSO. In the event the Optionee


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otherwise would be ineligible to receive an “incentive stock option” by reason
of the provisions of Sections 422(b)(6) and 424(d) of the Code (relating to
stock ownership of more than 10 percent), such ten year restriction on
exercisability as an ISO shall be read to impose a five year restriction on
such exercisability. If an Optionee shall terminate employment prior to the
ten-year or five-year limitation described in the immediately preceding
sentences, other than due to death, any outstanding ISO shall be ineligible for
treatment as an “incentive stock option,” as defined in Section 422 of the
Code, and shall be exercisable only as an NSO, unless exercised within three
months after such termination or, in the case of termination on account of
“permanent and total disability” (within the meaning of Section 22(e)(3) of the
Code), within one year after such termination.


     (b)  Option Period and Limitations on Exercise


     Each Option granted under the Plan shall be exercisable, in whole or in
part, at any time and from time to time, over a period commencing on or after
the date of grant and, to the extent that the Board determines and sets forth a
termination date for such Option in the Option Agreement (including any
amendment thereto), ending upon the stated expiration or termination date. The
Board in its sole discretion may specify events or circumstances, including the
giving of notice, which will cause an Option to terminate as set forth in the
Option Agreement or in this Plan. Without limiting the foregoing but subject to
the terms and conditions of the Plan, the Board
may in its sole discretion provide that an Option may not be exercised in
whole or in part for any period or periods of time during which such Option is
outstanding and may condition exercisability (or vesting) of an Option upon the
attainment of performance objectives, upon continued service, upon certain
events or transactions, or a combination of one or more of such factors, or
otherwise, as set forth in the Option Agreement. Subject to the parachute
payment restrictions under section 15(b), however, the Board, in its sole
discretion, may rescind, modify or waive any such limitation or condition on
the exercise of an Option contained in any Option Agreement, so as to
accelerate the time at which the Option may be exercised or extend the period
during which the Option may be exercised. Notwithstanding any other provisions
of the Plan, no Option granted to an Optionee under the Plan shall be
exercisable in whole or in part prior to the date on which the stockholders of
the Corporation approve the Plan, as provided in section 5 above.


     (c)  Method of Exercise


     An Option that is exercisable hereunder may be exercised by delivery to
the Corporation on any business day, at the Corporation’s principal office,
addressed to the attention of the President, of written notice of exercise,
which notice shall specify the number of shares with respect to which the
Option is being exercised and shall be accompanied by payment in full of the
Option Price of the shares for which the Option is being exercised. The minimum
number of shares of Stock with respect to which an Option may be exercised, in
whole or in part, at any time shall be the lesser of (i) 100 shares or such
lesser number set forth in the applicable Option Agreement and (ii) the maximum
number of shares available for purchase under the Option at the time of
exercise. Payment of the Option Price for the shares of Stock purchased
pursuant to the exercise of an Option shall be made (i) in cash or in cash
equivalents; (ii) to the extent permitted by applicable law and under the terms
of the Option Agreement with respect to such Option, through the tender to the
Corporation of shares of Stock, (by either actual delivery or by attestation),
which shares, if acquired from the Corporation, shall have been held for at
least six months at the time of tender and shall be valued, for purposes of
determining the extent to which


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the Option Price has been paid thereby, at
their fair market value (determined in accordance with section 9) on the date
of exercise; (iii) in the case of Optionees who are not Executive Officers or
Directors, to the extent permitted by applicable law and under the terms of the
Option Agreement with respect to such Option, by the delivery of a promissory
note of the person exercising the Option to the Corporation on such terms as
shall be set out in such Option Agreement; or (iv) by a combination of the
methods described in (i), (ii) and (iii). An attempt to exercise any Option
granted hereunder other than as set forth above shall be invalid and of no
force and effect. Payment in full of the Option Price need not accompany the
written notice of exercise provided the notice directs that the Stock
certificate or certificates for the shares for which the Option is exercised be
delivered to a licensed broker acceptable to the Corporation as the agent for
the individual exercising the Option and, at the time such Stock certificate or
certificates are delivered, the broker tenders to the Corporation cash (or cash
equivalents acceptable to the Corporation) equal to the Option Price.
Executive Officers and Directors will not be permitted to use the
cashless method of exercise described in this Section 10(c) without the
express prior consent of the Corporation. Promptly after the exercise of an
Option and the payment in full of the Option Price of the shares of Stock
covered thereby, the individual exercising the Option shall be entitled to the
issuance of a Stock certificate or Stock certificates evidencing his ownership
of such shares. A separate Stock certificate or separate Stock certificates
shall be issued for any shares purchased pursuant to the exercise of an Option
that is an ISO, which certificate or certificates shall not include any shares
that were purchased pursuant to the exercise of an Option that is an NSO.
Unless otherwise stated in the applicable Option Agreement, an individual
holding or exercising an Option shall have none of the rights of a stockholder
(for example, the right to receive cash or stock dividend payments attributable
to the subject shares or to direct the voting of the subject shares) until the
shares of Stock covered thereby are fully paid and issued to him. Except as
provided in section 18 below, no adjustment shall be made for dividends or
other rights for which the record date is prior to the date of such issuance.


     (d)  Date of Grant


     The date of grant of an Option under this Plan shall be the date as of
which the Board approves the grant or such date as is specified by the Board.


     (e)  Book Entry


     Notwithstanding any other provision of the Plan to the contrary, the
Corporation may, in its discretion, use the book entry method for recording
stock issuances in lieu of issuing stock certificates.


11. TRANSFERABILITY OF OPTIONS



     During the lifetime of an Optionee, only such Optionee (or, in the event
of legal incapacity or incompetence, the guardian or legal representative of
the Optionee) may exercise the Option, except as otherwise specifically
permitted by this section 11. No Option shall be assignable or transferable
other than by will or in accordance with the laws of descent and distribution;
provided, however, subject to the terms of the applicable Option Agreement, and
to the extent the transfer is in compliance with any applicable restrictions on
transfers, an Optionee may transfer an NSO to a family member of the Optionee
(defined as an individual who is related to the Optionee by blood, adoption, or
marriage) or to a trust established and maintained for the benefit of the
Optionee or a family member of the Optionee (as determined under


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applicable
state law and the Code).


12. TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP OF OPTIONEE



     In the Board’s sole discretion, the Board may include language in an
Option Agreement providing for the termination of any unexercised Option in
whole or in part upon or at any time after the termination of employment or
other relationship of
the Optionee with the Corporation or a Subsidiary (whether as an employee,
a director, a consultant or advisor providing bona fide services to the
Corporation or a Subsidiary, or otherwise). Whether a leave of absence or leave
on military or government service shall constitute a termination of employment
or other relationship of the Optionee with the Corporation or a Subsidiary for
purposes of the Plan shall be determined by the Board, which determination
shall be final and conclusive.


13. RESTRICTED STOCK AND STOCK UNITS



     (a)  Grant of Restricted Stock or Stock Units


     The Board may from time to time grant Restricted Stock or Stock Units to
persons eligible to receive Awards under section 4 hereof, subject to such
restrictions, conditions and other terms, if any, as the Board may determine.
Awards of Restricted Stock may be made for no consideration (other than par
value of the shares which is deemed paid by services already rendered).


     (b)  Restrictions


     At the time a grant of Restricted Stock or Stock Units is made, the Board
may, in its sole discretion, establish a period of time (a “restricted period”)
applicable to such Restricted Stock or Stock Units. Each Award of Restricted
Stock or Stock Units may be subject to a different restricted period. The Board
may, in its sole discretion, at the time a grant of Restricted Stock or Stock
Units is made, prescribe restrictions in addition to or other than the
expiration of the restricted period, including the satisfaction of corporate or
individual performance objectives, which may be applicable to all or any
portion of the Restricted Stock or Stock Units in accordance with subsection
(i) below. Restricted Stock or Stock Units may not be sold, transferred,
assigned, pledged or otherwise encumbered or disposed of during the restricted
period or prior to the satisfaction of any other restrictions prescribed by the
Board with respect to such Restricted Stock or Stock Units.


     (c)  Restricted Stock Certificates


     The Corporation shall issue, in the name of each Grantee to whom
Restricted Stock has been granted, stock certificates representing the total
number of shares of Restricted Stock granted to the Grantee, as soon as
reasonably practicable after the Grant Date. The Board may provide in an Award
Agreement that either (i) the Secretary of the Corporation shall hold such
certificates for the Grantee’s benefit until such time as the Restricted Stock
is forfeited to the Corporation or the restrictions lapse, or (ii) such
certificates shall be delivered to the Grantee, provided, however, that such
certificates shall bear a legend or legends that comply with the applicable
securities laws and regulations and makes appropriate reference to the
restrictions imposed under the Plan and the Award Agreement.


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     (d)  Rights of Holders of Restricted Stock


     Unless the Board otherwise provides in an Award Agreement, holders of
Restricted Stock shall have the right to vote such Stock and the right to
receive any dividends declared or paid with respect to such Stock. The Board
may provide that any dividends paid on Restricted Stock must be reinvested in
shares of Stock, which may or may not be subject to the same vesting conditions
and restrictions applicable to such Restricted Stock. All distributions, if
any, received by a Grantee with respect to Restricted Stock as a result of any
stock split, stock dividend, combination of shares, or other similar
transaction shall be subject to the restrictions applicable to the original
Grant.


     (e)  Rights of Holders of Stock Units


          (i) Voting and Dividend Rights


     Unless the Board otherwise provides in an Award Agreement, holders of
Stock Units shall have no rights as stockholders of the Corporation. The Board
may provide in an Award Agreement evidencing a grant of Stock Units that the
holder of such Stock Units shall be entitled to receive, upon the Corporation’s
payment of a cash dividend on its outstanding Stock, a cash payment for each
Stock Unit held equal to the per-share dividend paid on the Stock. Such Award
Agreement may also provide that such cash payment will be deemed reinvested in
additional Stock Units at a price per unit equal to the fair market value of a
share of Stock on the date that such dividend is paid (determined in accordance
with section 9).


          (ii) Creditor’s Rights


     A holder of Stock Units shall have no rights other than those of a general
creditor of the Corporation. Stock Units represent an unfounded and unsecured
obligation of the Corporation, subject to the terms and conditions of the
applicable Award Agreement.


     (f)  Termination of Employment or Other Relationship


     Unless the Board otherwise provides in an Award Agreement or in writing
after the Award Agreement is issued, upon the termination of a Grantee’s
employment or other relationship with the Corporation or a Subsidiary, any
Restricted Stock or Stock Units held by such Grantee that have not vested, or
with respect to which all applicable restrictions and conditions have not
lapsed, shall immediately be deemed forfeited. Upon forfeiture of Restricted
Stock or Stock Units, the Grantee shall have no further rights with respect to
such Award, including but not limited to any right to vote Restricted Stock or
any right to receive dividends with respect to shares of Restricted Stock or
Stock Units.


     (g)  Purchase of Restricted Stock


     The Grantee shall be required, to the extent required by applicable law,
to purchase the Restricted Stock from the Corporation at a purchase price
(the “Purchase Price”) equal to the greater of (i) the aggregate par value of
the shares of Stock represented by such Restricted Stock or (ii) the Purchase
Price, if any, specified in the Award Agreement relating to such Restricted
Stock. The Purchase Price shall be payable in a form determined by the Board
and set forth in


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the Award Agreement.


     (h)  Delivery of Stock


     Upon the expiration or termination of any restricted period and the
satisfaction of any other conditions prescribed by the Board, the restrictions
applicable to shares of Restricted Stock or Stock Units settled in Stock shall
lapse, and, unless otherwise provided in the Award Agreement, a stock
certificate for such shares shall be delivered, free of all such restrictions,
to the Grantee or the Grantee’s beneficiary or estate, as the case may be.


     (i)  Performance Criteria


     To the extent that the Committee determines that an Award of Restricted
Stock or Stock Units shall meet the requirements of Code section 162(m) and the
regulations thereunder for qualifying as performance-based compensation, one or
more of the following business criteria for the Corporation, on a consolidated
basis, and/or specified subsidiaries or business units of the Corporation
(except with respect to the total stockholder return and earnings per share
criteria), shall be used exclusively by the Committee in establishing
performance goals for Restricted Stock or Stock Unit Awards: (1) total
stockholder return; (2) such total stockholder return as compared to total
return (on a comparable basis) of a publicly available index such as, but not
limited to, the Standard & Poor’s 500 Stock Index; (3) net income; (4) pretax
earnings; (5) earnings before interest expense, taxes, depreciation and
amortization; (6) pretax operating earnings after interest expense and before
bonuses, service fees, and extraordinary or special items; (7) operating
margin; (8) earnings per share; (9) return on equity; (10) return on capital;
(11) return on investment; (12) operating earnings; (13) working capital; (14)
ratio of debt to stockholders’ equity and (15) revenue.


14. USE OF PROCEEDS



     The proceeds received by the Corporation from the sale of Stock under the
Plan shall constitute general funds of the Corporation.


15. PARACHUTE LIMITATIONS



     Notwithstanding any other provision of this Plan or of any other
agreement, contract or understanding heretofore or hereafter entered into by
the Grantee with the Corporation, except an agreement, contract or
understanding hereafter entered into that expressly modifies or excludes
application of this paragraph (an “Other Agreement”), and notwithstanding any
formal or informal plan or other arrangement for the direct or indirect
provision of compensation to the Grantee (including groups
or classes of participants or beneficiaries of which the Grantee is a
member), whether or not such compensation is deferred, is in cash, or is in the
form of a benefit to or for the Grantee (a “Benefit Arrangement”), if the
Grantee is a “disqualified individual,” as defined in Section 280G(c) of the
Code, any Award held by that Grantee and any right to receive any payment or
other benefit under this Plan shall not become exercisable or vested (i) to the
extent that such right to exercise, vesting, payment or benefit, taking into
account all other rights, payments or benefits to or for the Grantee under this
Plan, all Other Agreements and all Benefit Arrangements, would cause any
payment or benefit to the Grantee under this Plan to be considered a “parachute
payment” within the meaning of Section 280G(b)(2) of the Code as then in effect
(a “Parachute Payment”) and (ii) if, as a result of receiving a Parachute
Payment, the


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aggregate after-tax amounts received by the Grantee from the
Corporation under this Plan, all Other Agreements and all Benefit Arrangements
would be less than the maximum after-tax amount that could be received by him
without causing any such payment or benefit to be considered a Parachute
Payment. In the event that the receipt of any such right to exercise, vesting,
payment or benefit under this Plan, in conjunction with all other rights,
payments or benefits to or for the Grantee under any Other Agreement or any
Benefit Arrangement would cause the Grantee to be considered to have received a
Parachute Payment under this Plan that would have the effect of decreasing the
after-tax amount received by the Grantee as described in clause (ii) of the
preceding sentence, then the Grantee shall have the right, in the Grantee’s
sole discretion, to designate those rights, payments or benefits under this
Plan, any Other Agreements and any Benefit Arrangements that should be reduced
or eliminated so as to avoid having the payment or benefit to the Grantee under
this Plan be deemed to be a Parachute Payment.


16. REQUIREMENTS OF LAW



     The Corporation shall not be required to sell or issue any shares of Stock
under any Award if the sale or issuance of such shares would constitute a
violation by the Grantee, the individual exercising the Award or the
Corporation of any provisions of any law or regulation of any governmental
authority, including without limitation any federal or state securities laws or
regulations. If at any time the Corporation shall determine, in its discretion,
that the listing, registration or qualification of any shares subject to the
Award upon any securities exchange or under any state or federal law, or the
consent or approval of any government regulatory or self-regulatory body is
necessary or desirable as a condition of, or in connection with, the issuance
or purchase of shares, the Award may not be exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Corporation, and any delay caused thereby shall in no way affect the date of
termination of the Award. Specifically in connection with the Securities Act,
upon the exercise of any Award, unless a registration statement under the
Securities Act is in effect with respect to the shares of Stock covered
thereby, the Corporation shall not be required to sell or issue such shares
unless the Board has received evidence satisfactory to it that the holder of
such Award may acquire such shares pursuant to an exemption from registration
under the Securities Act. Any determination in this connection by
the Board shall be final, binding and conclusive. The Corporation may, but
shall in no event be obligated to, register any securities covered hereby
pursuant to the Securities Act. The Corporation shall not be obligated to take
any affirmative action in order to cause the exercisability or vesting of an
Award or to cause the exercise of an Award or the issuance of shares pursuant
thereto to comply with any law or regulation of any governmental authority. As
to any jurisdiction that expressly imposes the requirement that an Award shall
not be exercisable unless and until the shares of Stock covered by such Award
are registered or are subject to an available exemption from registration, the
exercise of such Award (under circumstances in which the laws of such
jurisdiction apply) shall be deemed conditioned upon the effectiveness of such
registration or the availability of such an exemption.


17. AMENDMENT AND TERMINATION OF THE PLAN



     The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Awards have not been
granted. The Corporation may retain the right in an Award Agreement to convert
an ISO into an NSO. The Corporation may also retain the right in an Award
Agreement to cause a forfeiture of the shares of Stock or gain


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realized by a
holder of an Award (a) if the holder violates any agreement covering
non-competition with the Corporation or any Subsidiary or nondisclosure of
confidential information of the Corporation or any Subsidiary, (b) if the
holder’s employment is terminated for cause or (c) if the Board determines that
the holder committed acts or omissions which would have been the basis for a
termination of holder’s employment for cause had such acts or omissions been
discovered prior to termination of holder’s employment. Furthermore, the
Corporation may, in the Award Agreement, retain the right to annul the grant of
an Award, if the holder of such grant was an employee of the Corporation or a
Subsidiary and the holder’s employment is terminated for cause, as defined in
the applicable Award Agreement. Except as permitted under this section 17 or
section 18 hereof, no amendment, suspension or termination of the Plan shall,
without the consent of the holder of the Award, alter or impair rights or
obligations under any Award theretofore granted under the Plan.


18. EFFECT OF CHANGES IN CAPITALIZATION



     (a)  Changes in Stock


     If the number of outstanding shares of Stock is increased or decreased or
the shares of Stock are changed into or exchanged for a different number or
kind of shares or other securities of the Corporation on account of any
recapitalization, reclassification, stock split-up, combination of shares,
exchange of shares, stock dividend or other distribution payable in capital
stock, or other increase or decrease in such shares effected without receipt of
consideration by the Corporation, occurring after the effective date of the
Plan, the number and kind of shares for the acquisition of which Awards may be
granted under the Plan, and the limitations on the maximum number of shares
subject to Awards that can be granted to any individual under the Plan as set
forth in section 6(b) hereof, shall be adjusted proportionately
and accordingly by the Corporation. In addition, the number and kind of
shares for which Options are outstanding shall be adjusted proportionately and
accordingly so that the proportionate interest of the holder of the Option
immediately following such event shall, to the extent practicable, be the same
as immediately before such event. Any such adjustment in outstanding Options
shall not change the aggregate Option Price payable with respect to shares that
are subject to the unexercised portion of the Option outstanding but shall
include a corresponding proportionate adjustment in the Option Price per share.


     (b)  Reorganization in which the Corporation is the Surviving
Corporation


     Subject to subsection (c)(iv) hereof, if the Corporation shall be the
surviving corporation in any reorganization, merger or consolidation of the
Corporation with one or more other corporations, any Award theretofore granted
pursuant to the Plan shall pertain to and apply to the securities to which a
holder of the number of shares of Stock subject to such Award would have been
entitled immediately following such reorganization, merger or consolidation,
with, in the case of an Option, a corresponding proportionate adjustment of the
Option Price per share so that the aggregate Option Price thereafter shall be
the same as the aggregate Option Price of the shares remaining subject to the
Option immediately prior to such reorganization, merger or consolidation. In
the event of any distribution to the Corporation’s stockholders of securities
of any other entity or other assets (other than dividends payable in cash or
stock of the Corporation) without receipt of consideration by the Corporation,
the Corporation may, in such manner as the Corporation deems appropriate,
adjust (i) the number and kind of shares subject to the


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outstanding Awards
and/or (ii) the exercise price of outstanding Options to reflect such
distribution.


     (c)  Dissolution, Liquidation, Sale of Assets, Reorganization in
which the Corporation is not the Surviving Corporation, Etc.


     All Options outstanding hereunder shall terminate, all outstanding shares of
Restricted Stock shall be deemed to have vested, and all restrictions on Stock
Units shall be deemed to have lapsed: (i) upon the dissolution or liquidation
of the Corporation, (ii) upon a merger, consolidation or reorganization of the
Corporation with one or more other corporations in which the Corporation is not
the surviving corporation, (iii) upon a sale of substantially all of the assets
of the Corporation to another person or entity or (iv) upon a merger,
consolidation or reorganization (or other transaction if so determined by the
Board in its sole discretion) in which the Corporation is the surviving
corporation, that is approved by the Board and that results in any person or
entity (other than persons who are holders of Stock of the Corporation at the
time the Plan is approved by the stockholders and other than an Affiliate)
owning 80 percent or more of the combined voting power of all classes of stock
of the Corporation, except to the extent provision is made in writing in
connection with any such transaction covered by clauses (i) through (iv) for
the assumption of such Awards theretofore granted, or for the substitution for
such
Awards of new options or restricted stock covering the stock of a successor
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to the number and kind of shares and exercise prices, in which event the Awards
theretofore granted shall continue in the manner and under the terms so
provided. In the event of any such termination of the Options, either (x) each
individual holding an Option shall have the right (subject to the general
limitations on exercise set forth in section 10(b) above), during such period
occurring before such termination as the Board in its sole discretion shall
determine and designate, and in any event immediately before the occurrence of
such termination, to exercise such Option in whole or in part, to the extent
that such Option was otherwise exercisable at the time such termination occurs,
except that, by inclusion of appropriate language in an Option Agreement, the
Board may provide that the Option may be exercised before termination without
regard to any installment limitation or other condition on exercise imposed
pursuant to section 10(b) above or (y) the Board may elect, in its sole
discretion, to cancel any outstanding Options, Restricted Stock and/or Stock
Units and pay or deliver, or cause to be paid or delivered, to the holder
thereof an amount in cash or securities having a value (as determined by the
Board acting in good faith), in the case of each share of Restricted Stock or
Stock Units, equal to the formula or fixed price per share paid to holders of
shares of Stock and, in the case of Options, equal to the product of the number
of shares of Stock subject to the Option multiplied by the amount, if any, by
which (I) the formula or fixed price per share paid to holders of shares of
Stock pursuant to such transaction exceeds (II) the Option Price applicable to
such Option shares. The Corporation shall send written notice of a transaction
or event that will result in such a termination to all individuals who hold
Awards not later than the time at which the Corporation gives notice thereof to
its stockholders.


     (d)  Adjustments


     Adjustments under this section 18 related to stock or securities of the
Corporation shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. No fractional shares of Stock or units
of other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case
by rounding downward to the nearest whole share or unit.


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     (e)  No Limitations on Corporation


     The grant of an Award pursuant to the Plan shall not affect or limit in
any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.


19. DISCLAIMER OF RIGHTS



     No provision in the Plan or in any Award granted or Award Agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual
the right to remain in the employ or service of or to maintain a
relationship with the Corporation or any Subsidiary, or to interfere in any way
with any contractual or other right or authority of the Corporation or any
Subsidiary either to increase or decrease the compensation or other payments to
any individual at any time, or to terminate any employment or other
relationship between any individual and the Corporation or any Subsidiary. The
obligation of the Corporation to pay any benefits pursuant to this Plan shall
be interpreted as a contractual obligation to pay only those amounts described
herein, in the manner and under the conditions prescribed herein. The Plan
shall in no way be interpreted to require the Corporation to transfer any
amounts to a third party trustee or otherwise hold any amounts in trust or
escrow for payment to any participant or beneficiary under the terms of the
Plan.


20. NONEXCLUSIVITY OF THE PLAN



     Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of the Corporation for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or specifically to a
particular individual or particular individuals) as the Board in its discretion
determines desirable, including, without limitation, the granting of stock
options otherwise than under the Plan.


21. CAPTIONS



     The use of captions in this Plan or any Award Agreement is for the
convenience of reference only and shall not affect the meaning of any provision
of the Plan or such Award Agreement.


22. WITHHOLDING TAXES



     The Corporation shall have the right to deduct from payments of any kind
otherwise due to a Grantee any Federal, state or local taxes of any kind
required by law to be withheld with respect to the vesting of or other lapse of
restrictions applicable to Restricted Stock or upon the issuance of any shares
of Stock upon the exercise of an Option. At the time of such vesting, lapse, or
exercise, the Grantee shall pay to the Corporation, any amount that the
Corporation may reasonably determine to be necessary to satisfy such
withholding obligation. Subject to the prior approval of the Corporation, which
may be withheld by the Corporation, as the case may be, in its sole discretion,
the Grantee may elect to satisfy such obligations, in whole or in part, (i) by


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causing the Corporation to withhold shares of Stock otherwise issuable to the
Grantee or (ii) by delivering to the Corporation shares of Stock already owned
by the Grantee. The shares of Stock so delivered or withheld shall have an
aggregate fair market value equal to such withholding obligations. The fair
market value of the shares of Stock used to satisfy such withholding obligation
shall be determined by the Corporation as of the date that the amount of tax to
be withheld is to be determined. A Grantee who has made an election pursuant to
this Section 22
may satisfy his or her withholding obligation only with shares of Stock
that are not subject to any repurchase, forfeiture, unfulfilled vesting, or
other similar requirements.


23. OTHER PROVISIONS



     Each Award granted under the Plan may be subject to, and the Award
Agreement relating to such Award may contain, such other terms and conditions
not inconsistent with the Plan as may be determined by the Board, in its sole
discretion. Notwithstanding the foregoing, each ISO granted under the Plan
shall include those terms and conditions that are necessary to qualify the ISO
as an “incentive stock option” within the meaning of Section 422 of the Code or
the regulations thereunder and shall not include any terms or conditions that
are inconsistent therewith.


24. NUMBER AND GENDER



     With respect to words used in this Plan, the singular form shall include
the plural form, the masculine gender shall include the feminine gender, etc.,
as the context requires.


25. SEVERABILITY



     If any provision of the Plan or any Award Agreement shall be determined to
be illegal or unenforceable by any court of law in any jurisdiction, the
remaining provisions hereof and thereof shall be severable and enforceable in
accordance with their terms, and all provisions shall remain enforceable in any
other jurisdiction.


26. GOVERNING LAW



     The validity and construction of this Plan and the instruments evidencing
the Awards granted hereunder shall be governed by the laws of the State of
Delaware (excluding its choice of law rules).



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