exv10w14






Exhibit 10.14









AMENDED AND RESTATED KB HOME 1999 INCENTIVE PLAN




(as amended and restated on October 2, 2008)




     SECTION 1. Purpose. The purposes of the Amended and Restated KB Home 1999 Incentive Plan (the
“Plan”) are to promote the interests of KB Home and its stockholders by (i) attracting and
retaining exceptional employees; (ii) motivating such employees by means of performance-related
incentives to achieve long-range performance goals; (iii) enabling such employees to participate in
the long-term growth and financial success of the Company; and (iv) qualifying compensation paid
under the Plan for deductibility under Section 162(m) of the Internal Revenue Code of 1986, as
amended. The Plan is an amendment and restatement of the KB Home 1999 Incentive Plan which shall be
effective as of October 2, 2008 (the “Amendment Date”).



     SECTION 2. Definitions. As used in the Plan, the following terms shall have the meanings set
forth below:



     “Amendment Date” shall have the meaning set forth in Section 1 hereof.



     “Award” shall mean any Performance-Based Bonus opportunity granted under the Plan, as well as
any Option, Stock Appreciation Right, share of Restricted Stock, Performance Share, Stock Unit, or
Other Stock-Based Award or a Performance-Based Award granted under the Plan or granted in payment
or settlement of a Performance-Based Bonus.



     “Award Agreement” shall mean any written agreement, contract, or other instrument or document
(which may include, if so designated by the Committee, an Employment Agreement, as defined herein),
including through electronic medium, evidencing any Award, which may, but need not, be executed or
acknowledged by a Participant.



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



     “Change of Ownership” means and includes each of the following: (a) Individuals who, as of the
Effective Date of this Plan, constitute the Board of Directors of the Company (the “Board of
Directors” generally and as of the Effective Date, the “Incumbent Board”) cease for any reason to
constitute at least a majority of the directors constituting the Board of Directors, provided that
any person becoming a director subsequent to the Effective Date of this Plan whose election, or
nomination for election by the Company’s shareholders, was approved by a vote of at least
three-quarters (3/4) of the then directors who are members of the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of office is (i) in connection
with the acquisition by a third person, including a “group” as such term is used in
Section 13(d)(3) of the Exchange Act, of beneficial ownership, directly or indirectly, of 20% or
more of the combined voting securities ordinarily having the right to vote for the election of



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directors of the Company (unless such acquisition of beneficial ownership was approved by a
majority of the Board of Directors who are members of the Incumbent Board), or (ii) in connection
with an actual or threatened election contest relating to the election of the directors of the
Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) shall be, for purposes of this Plan, considered as though such person were a member of the
Incumbent Board; or (b) The Board of Directors (a majority of which shall consist of directors who
are members of the Incumbent Board) has determined that a Change of Ownership triggering the
exercisability of Options and the lapse of restrictions on other Awards as described in Section 13
hereof shall have occurred.



     “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time. All
references to the Code or any section thereof shall include the Treasury Regulations and other
Department of Treasury guidance issued thereunder.



     “Committee” shall mean the committee of the Board described in Section 3(a) hereof.



     “Company” shall mean KB Home, together with any successor thereto.



     “Covered Employee” shall mean an Employee who is, or could be, a “covered employee” within the
meaning of Section 162(m) of the Code.



     “Disability” shall mean a Participant’s disability, as determined by the Committee in its sole
discretion.



     “Effective Date” shall have the meaning set forth in Section 16(a) hereof.



     “Eligible Individual” shall mean any person who is an Employee, as determined by the
Committee.



     “Employee” shall mean any employee (as defined in accordance with Section 3401(c) of the Code)
of the Company or any Subsidiary.



     “Employment Agreement” shall mean, with respect to Awards relating to performance in any
fiscal year of the Company, an agreement between the Company and a Participant entered into prior
to the end of the first fiscal quarter of such fiscal year.



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



     “Fair Market Value” shall mean, as of any given date, (a) if Shares are traded on a securities
exchange, the closing price of a Share as reported in the Wall Street Journal for such date or, if
no sale occurred on such date, for the first trading date immediately prior to such date during
which a sale occurred; or (b) if Shares are not traded on a securities exchange, (i) the last sales
price on such date (if Shares are then listed as a Global Market Issue under the NASDAQ Global
Market System) or (ii) the mean between the closing representative bid and asked prices (in all
other cases) for Shares on such date; or, if no sales prices or bid and asked prices, as
applicable, are reported by a national quotation system, the first date immediately prior to such



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date on which sales prices or bid and asked prices, as applicable, are reported by a national
quotation system; or (c) if Shares are not publicly traded, or with respect to any non-Share based
Award or settlement of an Award, the fair market value established by the Committee acting in good
faith.



     “Full Value Award” means any Award other than an Option or Stock Appreciation Right or other
Award for which the Participant pays the intrinsic value.



     “Incentive Stock Option” means an Option that is intended to meet the requirements of
Section 422 of the Code or any successor provision thereto.



     “Non-Qualified Stock Option” shall mean an Option that is not intended to be an Incentive
Stock Option.



     “Option” shall mean a right granted to a Participant pursuant to Section 7 of the Plan to
purchase a specified number of Shares at a specified price during specified time periods. An Option
may be either an Incentive Stock Option or a Non-Qualified Stock Option.



     “Other Stock-Based Award” shall mean any right granted under Section 10 of the Plan.



     “Participant” shall mean any Eligible Individual who has been granted an Award pursuant to the
Plan.



     “Performance-Based Award” shall mean an Award granted to selected Covered Employees pursuant
to Sections 6, 8, 9 or 10 hereof, but which is subject to the terms and conditions set forth in
Section 11 hereof. All Performance-Based Awards are intended to qualify as Qualified
Performance-Based Compensation.



     “Performance-Based Bonus” shall mean a bonus opportunity awarded in accordance with Section 6
of the Plan.



     “Performance Criteria” shall mean the criteria that the Committee selects for purposes of
establishing the Performance Goal or Performance Goals for a Participant for a Performance Period.
The Performance Criteria that may be used to establish Performance Goals are limited to the
following: economic value-added, sales or revenue, net income (either before or after interest,
taxes, depreciation and amortization), operating earnings, cash flow (including, but not limited
to, operating cash flow and free cash flow), cash flow return on capital, return on net assets,
return on stockholders’ equity, return on assets, return on capital, stockholder returns, return on
sales, return on investments, productivity, expense, margins, operating efficiency, customer
satisfaction, working capital, earnings per Share, price per Share, market share, unit volume, net
sales and service quality, any of which may be measured either in absolute terms or as compared to
any incremental change or as compared to results of a peer group. The Committee shall define in an
objective fashion the manner of calculating the Performance Criteria it selects to use for such
Performance Period for such Participant.



     “Performance Goals” shall mean, for a Performance Period, the goals established in



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writing by the Committee for the Performance Period based upon one or more of the Performance
Criteria, as selected by the Committee. Depending on the Performance Criteria used to establish
such Performance Goals, the Performance Goals may be expressed in terms of overall Company
performance or the performance of a division, business unit, or an individual. The Committee, in
its discretion, may, within the time prescribed by Section 162(m) of the Code, adjust or modify the
calculation of Performance Goals for such Performance Period in order to prevent the dilution or
enlargement of the rights of Participants (a) in the event of, or in anticipation of, any unusual
or extraordinary corporate item, transaction, event, or development, or (b) in recognition of, or
in anticipation of, any other unusual or nonrecurring events affecting the Company, or the
financial statements of the Company, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business conditions.



     “Performance Period” shall mean the one or more periods of time, which may be of varying and
overlapping durations, as the Committee may select, over which the attainment of one or more
Performance Goals will be measured for the purpose of determining a Participant’s right to, and the
payment of, a Performance-Based Award.



     “Performance Share” shall mean a right granted to a Participant pursuant to Section 10(a)
hereof, to receive Shares, the payment of which is contingent upon achieving certain Performance
Goals or other performance-based targets established by the Committee.



     “Person” shall mean any individual, corporation, partnership, association, joint-stock
company, trust, unincorporated organization, government or political subdivision thereof or other
entity.



     “Qualified Performance-Based Compensation” shall mean any compensation that is intended to
qualify as “qualified performance-based compensation” as described in Section 162(m)(4)(C) of the
Code.



     “Restricted Stock” shall mean any Share awarded to a Participant pursuant to Section 9 of the
Plan that is subject to certain restrictions and may be subject to risk of forfeiture.



     “Rule 16b-3” shall mean Rule 16b-3 as promulgated and interpreted by the SEC under the
Exchange Act, or any successor rule or regulation thereto as in effect from time to time.



     “SEC” shall mean the Securities and Exchange Commission or any successor thereto and shall
include the Staff thereof.



     “Section 409A” shall mean Section 409A of the Code and, for the avoidance of doubt only, the
Treasury Regulations and other Department of Treasury guidance issued thereunder.



     “Securities Act” shall mean the Securities Act of 1933, as amended.



     “Shares” shall mean shares of the Common Stock, $1 par value, of the Company, and such other
securities of the Company that may be substituted for the Shares pursuant to Section 13 of the
Plan.



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     “Stock Appreciation Right” shall mean any right granted under Section 8 of the Plan.



     “Stock Unit” shall mean any right granted under Section 10(b) of the Plan. 



     “Subsidiary” shall mean any “subsidiary corporation” as defined in Section 424(f) of the Code
and any applicable regulations promulgated thereunder or any other entity of which a majority of
the outstanding voting stock or voting power is beneficially owned directly or indirectly by the
Company.



     SECTION 3. Administration.



     (a) Committee. The Plan shall be administered by the Committee. The Committee shall consist
solely of two or more members of the Board each of whom is an “outside director,” within the
meaning of Section 162(m) of the Code, a member of the Board who qualifies as a “Non-Employee
Director” as defined in Rule 16b-3(b)(3) under the Exchange Act, or any successor rule, and an
“independent director” under the rules of the New York Stock Exchange (or other principal
securities market on which the Shares are traded), as the same may be amended from time to time.
Appointment of Committee members shall be effective upon acceptance of appointment. In its sole
discretion, the Board may at any time and from time to time exercise any and all rights and duties
of the Committee under the Plan except with respect to matters which under Section 162(m) of the
Code or Rule 16b-3, or any regulations or rules issued thereunder, are required to be determined in
the sole discretion of the Committee.



     (b) Authority of Committee. Subject to the terms of the Plan and applicable law, and in
addition to other express powers and authorizations conferred on the Committee by the Plan, the
Committee shall have full power and authority to: (i) designate Participants; (ii) determine the
type or types of Awards to be granted to each Participant; (iii) determine the number of Awards to
be granted and the number of Shares to be covered by, or with respect to which payments, rights, or
other matters are to be calculated in connection with, Awards; (iv) determine the terms and
conditions of any Award granted pursuant to the Plan, including, but not limited to, the grant
date, the exercise price, grant price, or purchase price, any restrictions or limitations on the
Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of
an Award, and accelerations or waivers thereof, and any provisions related to non-competition and
recapture of gain on an Award, based in each case on such considerations as the Committee in its
sole discretion determines; provided, however, that the Committee shall not have the authority to
accelerate the vesting or waive the forfeiture of any Performance-Based Awards; (v) determine
whether, to what extent, and under what circumstances Awards may be settled or exercised in cash,
Shares, other securities, or other property, or canceled, forfeited, or suspended and the method or
methods by which Awards may be settled, exercised, canceled, forfeited, or suspended, provided,
however, that Options and Stock Appreciation Rights may be settled only in cash and Shares;
(vi) interpret and administer the Plan and any instrument or agreement relating to, or Award made
under, the Plan; (vii) recommend to the Board any amendment, alteration, suspension, discontinuance
or termination of the Plan, and subject to the stockholder approval requirement set forth in
Section 14(a) hereof, to take any such action not required by applicable law to be taken by the
Board; (viii) establish, amend, suspend, or waive such rules and



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regulations and appoint such agents as it shall deem appropriate for the proper administration of
the Plan; and (ix) make any other determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan.



     (c) Action by the Committee. A majority of the Committee shall constitute a quorum. The acts
of a majority of the members present at any meeting at which a quorum is present, and acts approved
in writing by all members of the Committee in lieu of a meeting, shall be deemed the acts of the
Committee. Each member of the Committee is entitled to, in good faith, rely or act upon any report
or other information furnished to that member by any Employee of the Company or any Subsidiary, the
Company’s independent registered public accounting firm, or any executive compensation consultant
or other professional retained by the Company or the Committee to assist in the administration of
the Plan.



     (d) Committee Decisions Binding. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations, and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and
shall be final, conclusive, and binding upon all Persons, including, but not limited to, the
Company, any Subsidiary, any Participant, any holder or beneficiary of any Award, any stockholder
and any Employee.



     SECTION 4. Award Limits.



     (a) Plan Shares. Subject to Section 4(b) and Section 13 hereof, the aggregate number of Shares
which may be granted pursuant to Awards under the Plan shall only be the aggregate number of Shares
which are available or may become available for grant under the Amended and Restated KB Home 1999
Incentive Plan as in effect immediately prior to the Amendment Date (the “Prior Plan”); provided,
however, that such aggregate number of Shares available for grant under the Plan shall be reduced
by 1.25 Shares for each Share granted pursuant to any Full Value Award and shall be reduced by 1.0
Share for each Share granted pursuant to any Option or Stock Appreciation Right Award.



     (b) Shares Available for Grant. To the extent that an Award terminates, expires, or lapses for
any reason, or is settled in cash, any Shares subject to the Award shall again be available for the
grant of an Award pursuant to the Plan. Any Shares tendered or withheld to satisfy the grant or
exercise price or tax withholding obligation pursuant to any Award shall not be available for the
grant of an Award pursuant to the Plan. To the extent permitted by applicable law or securities
exchange rules, Shares issued in assumption of, or in substitution for, any outstanding awards of
any entity acquired in any form of combination by the Company or any Subsidiary shall not be
counted against Shares available for grant pursuant to this Plan; provided, however, that any
assumption or substitution pursuant to this Section 4(b) shall not cause a violation of the
requirements of Section 409A. Notwithstanding the provisions of this Section 4(b), no Shares may
again be optioned, granted or awarded if such action would cause an Incentive Stock Option to fail
to qualify as an incentive stock option under Section 422 of the Code.



     (c) Individual Stock-Based Awards. Subject to adjustment as provided in Section 13 hereof, no
Participant may be granted stock-based Awards under the Plan in any fiscal year of



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the Company that relate to more than 1,000,000 Shares. No provision of this Section 4(c) shall be
construed as limiting the amount of any cash-based Award which may be granted to any Participant.



     (d) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may
consist, in whole or in part, of authorized and unissued Shares or of Shares acquired by the
Company on the open market or otherwise.



     (e) Cash Award Limits. (i) Any Participant who is the Chief Executive Officer at the time of
payment of an Award or Awards under the Plan (other than a stock-based Award) shall be eligible to
be paid in cash in any fiscal year of the Company an amount not in excess of $5,000,000 in respect
of any such Award(s), and (ii) no Participant other than a Participant described in clause (i) of
this Section 4(e) shall be eligible to be paid more than $3,000,000 in cash in any fiscal year of
the Company in respect of any Award(s) under the Plan. No provision of this Section 4(e) shall be
construed as limiting the number of stock-based Awards, or other cash-based compensation for
employment, that a Participant may receive.



     SECTION 5. Eligibility and Participation.



     (a) Eligibility. Each Eligible Individual shall be eligible to be granted one or more Awards
pursuant to the Plan.



     (b) Participation. Subject to the provisions of the Plan, the Committee may, from time to
time, select from among all Eligible Individuals, those to whom Awards shall be granted and shall
determine the nature and amount of each Award. No Eligible Individual shall have any right to be
granted an Award pursuant to this Plan.



     SECTION 6. Performance-Based Bonuses.



     (a) Grant. At such times and in such manner as the Committee deems appropriate, the Committee
may select Participants and, subject to Section 4(e) hereof, award to such Participants the
opportunity to earn a cash bonus (a “Performance-Based Bonus”), which shall be contingent upon the
attainment of Performance Goals or other specific performance goals that are established by the
Committee and relate to one or more of the Performance Criteria or other specific performance
criteria, in each case on a specified date or dates or over any period or periods determined by the
Committee, and which shall comply with, or be exempt from, the requirements of Section 409A. Any
such Performance-Based Bonus paid to a Covered Employee shall be a Performance-Based Award and be
based upon objectively determinable bonus formulas established in accordance with Section 11(c)
hereof.



     (b) Employment Agreement. Notwithstanding Section 6(a) above, the formula for determining a
Performance-Based Bonus to any Participant may, if so determined by the Committee, be governed by
the terms of an Employment Agreement applicable to such Participant; provided, however, that such
formula is in accordance with Section 162(m) of the Code.



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     SECTION 7. Stock Options.



     (a) General. The Committee is authorized to grant Options to Participants on the following
terms and conditions, provided that no Option may be granted to a Participant unless the Company is
an “eligible issuer of service recipient stock” within the meaning of Section 409A with respect to
such Participant:







     (1) Exercise Price. The exercise price per Share subject to an Option shall be determined by
the Committee and set forth in the Award Agreement; provided, however, that subject to Section
7(b)(3) hereof, the exercise price for any Option shall not be less than 100% of the Fair Market
Value of a Share on the date of grant.



     (2) Time and Conditions of Exercise. The Committee shall determine the time or times at which
an Option may be exercised in whole or in part; provided, however, that the term of any Option
granted under the Plan shall not exceed ten years. The Committee shall also determine the
performance or other conditions, if any, that must be satisfied before all or part of an Option may
be exercised; provided, however, that no Option granted under the Plan shall become exercisable
after ten years from the date of grant.



     (3) Payment. The Committee shall determine the form in which the exercise price of an Option
may be paid, including, without limitation: (i) cash, (ii) Shares held for such period of time as
may be required by the Committee in order to avoid adverse accounting consequences and having a
Fair Market Value on the date of delivery equal to the aggregate exercise price of the Option or
exercised portion thereof, or (iii) other property acceptable to the Committee (including through
the delivery of a notice that the Participant has placed a market sell order with a broker with
respect to Shares then issuable upon exercise of the Option, and that the broker has been directed
to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the
Option exercise price; provided, however, that payment of such proceeds is then made to the Company
upon settlement of such sale), and the methods by which Shares shall be delivered or deemed to be
delivered to Participants. In the event that the Company establishes, for itself or using the
services of a third party, an automated system for the exercise of Awards, such as a system using
an internet website or interactive voice response, then the paperless exercise of Awards by a
Participant may be permitted through the use of such an automated system. Notwithstanding any other
provision of the Plan to the contrary, no Participant shall be permitted to pay the exercise price
of an Option with a loan from the Company or a loan arranged by the Company in violation of Section
13(k) of the Exchange Act.



     (4) Evidence of Grant; Other Terms and Conditions. All Options shall be evidenced by an Award
Agreement between the Company and the Participant. The Award Agreement shall include such
additional provisions not inconsistent with the Plan as may be specified by the Committee. The
Committee shall determine the number of Shares subject to an Option and the exercise price of such
Option on or before the date of grant of such Option, and shall not amend an Option to reduce the
per Share exercise price (except as permitted by Section 13 hereof), extend the exercise period of
an Option beyond the earlier of the latest date upon which the Option could have expired by its
original terms under any circumstances or the tenth anniversary of the date of grant of such
Option, or otherwise modify an Option or add any feature for the



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deferral of compensation in any manner that would cause a violation of the requirements of Section
409A.




     (5) Prohibition on Reload Grants. The Committee shall not have the authority to grant or
provide for the automatic grant of an Option to any Participant to replace Shares a Participant
delivers in payment of the exercise price of any Option granted hereunder in accordance with
Section 7(a)(3) hereof, or in the event that the withholding tax liability arising upon exercise of
any Option by a Participant is satisfied through the withholding by the Company of Shares otherwise
deliverable upon exercise of the Option.



     (b) Incentive Stock Options. Incentive Stock Options shall be granted only to Employees and
the terms of any Incentive Stock Options granted pursuant to the Plan, in addition to the
requirements of Section 7(a) above, must comply with the provisions of this Section 7(b).






     (1) Expiration. Subject to Section 7(b)(3) below, an Incentive Stock Option shall expire and
may not be exercised to any extent by any Participant (or permitted beneficiary or representative
of such Participant) after the first to occur of the following events:





          (i) Ten years from the date it is granted, unless an earlier time is set in the Award
Agreement;



          (ii) Ninety days after the termination of the Participant’s employment as an Employee for any
reason other than Disability or death; and



          (iii) One year after the date of the termination of the Participant’s employment as an
Employee on account of Disability or death. Upon the Participant’s Disability or death, any
Incentive Stock Options exercisable at the Participant’s Disability or death may be exercised by
the Participant’s legal representative or representatives, by the person or persons entitled to do
so pursuant to the Participant’s last will and testament, or, if the Participant fails to make
testamentary disposition of such Incentive Stock Option or dies intestate, by the person or persons
entitled to receive the Incentive Stock Option pursuant to the applicable laws of descent and
distribution.



     (2) Dollar Limitation. The aggregate Fair Market Value (determined as of the time the Option
is granted) of all Shares with respect to which Incentive Stock Options are first exercisable by a
Participant in any calendar year may not exceed $100,000 or such other limitation as imposed by
Section 422(d) of the Code, or any successor provision. To the extent that Incentive Stock Options
are first exercisable by a Participant in excess of such limitation, the excess shall be considered
Non-Qualified Stock Options.



     (3) Ten Percent Owners. An Incentive Stock Option may be granted to any Participant who, at
the date of grant, owns Shares possessing more than ten percent of the total combined voting power
of all classes of Shares only if such Option is granted at a price that is not less than 110% of
Fair Market Value on the date of grant and the Option is exercisable for no more than five years
from the date of grant.



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     (4) Notice of Disposition. The Participant shall give the Company prompt notice of any
disposition of Shares acquired by exercise of an Incentive Stock Option within (i) two years from
the date of grant of such Incentive Stock Option or (ii) one year after the transfer of such Shares
to the Participant.






     (5) Right to Exercise. Except as provided in Section 7(b)(1)(iii) above, during a
Participant’s lifetime, an Incentive Stock Option may be exercised only by the Participant.






     (6) Failure to Meet Requirements. Any Option (or portion thereof) purported to be an Incentive
Stock Option, which, for any reason, fails to meet the requirements of Section 422 of the Code
shall be considered a Non-Qualified Stock Option.



     SECTION 8. Stock Appreciation Rights.



     (a) Grant. Subject to the provisions of the Plan, the Committee shall have sole and complete
authority to determine the Participants to whom Stock Appreciation Rights shall be granted,
provided that no Stock Appreciation Right may be granted to a Participant unless the Company is an
“eligible issuer of service recipient stock” within the meaning of Section 409A with respect to
such Participant; the number of Shares to be covered by each Stock Appreciation Right Award; the
strike price per Share thereof, provided that such strike price shall not be less than 100% of the
Fair Market Value of a Share on the date of grant; and the conditions and limitations applicable to
the exercise thereof. Stock Appreciation Rights may be granted in tandem with another Award no
later than the grant date of such Award, in addition to another Award, or freestanding and
unrelated to another Award. A Stock Appreciation Right shall be subject to such terms and
conditions not inconsistent with the Plan as the Committee shall impose and shall be evidenced by
an Award Agreement.



     (b) Exercise and Payment. The Committee shall determine the time or times at which a Stock
Appreciation Right may be exercised in whole or in part; provided, however, that the term of any
Stock Appreciation Right granted under the Plan shall not exceed ten years. The Committee shall
also determine the performance or other conditions, if any, that must be satisfied before all or
part of a Stock Appreciation Right may be exercised; provided, however, that no Stock Appreciation
Right granted under the Plan shall become exercisable after ten years from the date of grant. A
Stock Appreciation Right shall entitle the Participant (or other person entitled to exercise the
Stock Appreciation Right pursuant to the Plan) to exercise all or a specified portion of the Stock
Appreciation Right (to the extent then exercisable pursuant to its terms) and to receive from the
Company an amount equal to the product of (i) the excess of (A) the Fair Market Value of Shares on
the date the Stock Appreciation Right is exercised over (B) the strike price and (ii) the number of
Shares with respect to which the Stock Appreciation Right is exercised, subject to any limitations
the Committee may impose and any applicable tax withholding. Payment of the amounts determined
under this Section 8(b) shall be made in cash, in Shares (based on their Fair Market Value as of
the date the Stock Appreciation Right is exercised) or a combination of both, as determined by the
Committee in the Award Agreement.



     (c) Evidence of Grant; Other Terms and Conditions. All Stock Appreciation Rights shall be
evidenced by an Award Agreement between the Company and the Participant. The Award



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Agreement shall include such additional provisions not inconsistent with the Plan as may be
specified by the Committee. Subject to the terms of the Plan and the applicable Award Agreement,
the Committee shall determine, on or before the date of grant of a Stock Appreciation Right, the
number of Shares subject to a Stock Appreciation Right and the strike price thereof, the term,
methods of exercise, methods and form of settlement, and any other terms and conditions of any
Stock Appreciation Right. Any such determination by the Committee may be changed by the Committee
from time to time and may govern the exercise of Stock Appreciation Rights granted or exercised
prior to such determination as well as Stock Appreciation Rights granted or exercised thereafter;
provided, however, that the Committee shall not amend a Stock Appreciation Right to reduce the per
Share strike price (except as permitted by Section 13 hereof), extend the exercise period of a
Stock Appreciation Right beyond the earlier of the latest date upon which the Stock Appreciation
Right could have expired by its original terms under any circumstances or the tenth anniversary of
the date of grant of such Stock Appreciation Right, or otherwise modify a Stock Appreciation Right
or add any feature for the deferral of compensation in any manner that would cause a violation of
the requirements of Section 409A. Except as otherwise set forth herein, the Committee may impose
such conditions or restrictions on the exercise of any Stock Appreciation Right as it shall deem
appropriate.



     SECTION 9. Restricted Stock.



     (a) Grant. Subject to the provisions of the Plan, the Committee shall have sole and complete
authority to determine the Participants to whom Shares of Restricted Stock shall be granted, the
number of Shares of Restricted Stock to be granted to each Participant, the duration of the period
during which, and the conditions under which, the Restricted Stock may be forfeited to the Company,
and the other terms and conditions of such Awards. Subject to Section 13(b) hereof, the period
during which such Awards may be forfeited to the Company shall terminate in three equal annual
installments from the date of grant of such Awards; provided, however, that the Committee may
determine to have such period terminate after the first anniversary of the date of grant of any
such Award if the Committee has established conditions for the earning of such Award that relate to
performance of the Company or one or more divisions or units thereof. All awards of Restricted
Stock shall be evidenced by an Award Agreement.



     (b) Forfeiture. Except as otherwise determined by the Committee at the time of the grant of
the Award or thereafter, upon termination of employment during the applicable restriction period,
Restricted Stock that is at that time subject to restrictions shall be forfeited.



     (c) Certificates for Restricted Stock. Restricted Stock granted pursuant to the Plan may be
evidenced in such manner as the Committee shall determine. If certificates representing shares of
Restricted Stock are registered in the name of the Participant, certificates must bear an
appropriate legend referring to the terms, conditions, and restrictions applicable to such
Restricted Stock, and the Company may, at its discretion, retain physical possession of the
certificate until such time as all applicable restrictions lapse.



     (d) Dividends and Distributions. Dividends and other distributions paid on or in respect of
any Shares of Restricted Stock may be paid directly to the Participant, or may be reinvested in



- 11 -









 







additional Shares of Restricted Stock, as determined by the Committee in its sole discretion.



     SECTION 10. Other Stock-Based Awards. The Committee shall have authority to grant to any
Participant an “Other Stock-Based Award”, which shall consist of any right which is (i) not an
Award described in Section 6 through Section 9 hereof and (ii) an Award of Shares or an Award
denominated or payable in, valued in whole or in part by reference to, or otherwise based on or
related to, Shares (including, without limitation, securities convertible into Shares), as deemed
by the Committee to be consistent with the purposes of the Plan; provided, however, that any such
rights must comply with applicable law and, to the extent deemed desirable by the Committee, with
applicable securities exchange listing requirements, and provided, further, that any Other
Stock-Based Award shall comply with, or be exempt from, the requirements of Section 409A. Subject
to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the
terms and conditions of any such Other Stock-Based Award. Other Stock-Based Awards shall include,
but not be limited to, Performance Share Awards and Stock Unit Awards.



     (a) Performance Share Awards. Any Participant selected by the Committee may be granted one or
more Performance Share Awards which shall be denominated in a number of Shares and which may be
linked to any one or more of the Performance Criteria or other specific performance criteria
determined appropriate by the Committee, in each case on a specified date or dates or over any
period or periods determined by the Committee. In making such determinations, the Committee shall
consider (among such other factors as it deems relevant in light of the specific type of Award) the
contributions, responsibilities and other compensation of the particular Participant. In addition,
the Committee will have the sole and complete authority to determine the duration of the period
during which, and the conditions under which, any such Performance Share Award shall be subject to
restrictions and may be forfeited to the Company; provided, however, that, subject to Sections
10(e) and 13(b) hereof, the period during which any Performance Share Award granted to a
Participant will be restricted from transfer by the Participant and may be forfeited to the Company
will terminate no earlier than the first anniversary of the date of grant, unless otherwise
provided in an applicable Award Agreement.



     (b) Stock Unit Awards.



          (1) Grant of Stock Unit Awards. The Committee shall have authority to grant to Participants
Stock Unit Awards, the value of which is based, in whole or in part, on the Fair Market Value of
Shares. Each Stock Unit shall consist of a bookkeeping entry representing an amount equivalent to
the Fair Market Value of one Share. Such Stock Units represent an unfunded and unsecured obligation
of the Company, except as otherwise provided for by the Committee. Stock Units may be granted as
additional compensation or in lieu of any other compensation, as specified by the Committee,
provided that Stock Units shall not be granted in substitution for or payment of any Award or other
compensation in a manner that causes a violation of the requirements of Section 409A. Subject to
the provisions of the Plan, Stock Unit Awards shall be subject to such terms, restrictions,
conditions, vesting requirements and payment rules as the Committee may determine in its sole
discretion.



          (2) Settlement of Stock Units. Settlement of Stock Units shall be made by issuance of



- 12 -









 







Shares, provided that the Committee may provide for Stock Units to be settled in cash (in the sole
discretion of the Company). The amount of Shares, or other settlement medium, to be so distributed
may be increased by an interest factor or by dividend equivalents, which may be valued as if
reinvested in Shares. Until a Stock Unit is settled, the number of Shares represented by a Stock
Unit shall be subject to adjustment pursuant to Section 13 hereof.



     (c) Term. Except as otherwise provided herein, the term of any Award of Performance Shares,
Stock Units or Other Stock-Based Awards shall be set by the Committee in its discretion.



     (d) Exercise or Purchase Price. The Committee may establish the exercise or purchase price, if
any, of any Other Stock-Based Awards; provided, however, that such price shall not be less than the
par value of a Share on the date of grant, unless otherwise permitted by applicable state law.



     (e) Settlement of Other Stock-Based Awards. Settlement of Other Stock-Based Awards (including
Performance Share and Stock Unit Awards) shall occur within 60 days after the date on which such
Other Stock-Based Awards shall vest. The Committee may provide for Other Stock-Based Awards to be
settled at such other times as it determines appropriate, provided that in no event shall any Other
Stock-Based Award be settled after the later of: (i) the 15th day of the third month
following the end of the Participant’s first taxable year in which the Other Stock-Based Award is
no longer subject to a substantial risk of forfeiture or (ii) the 15th day of the third
month following the end of the Company’s first taxable year in which the Other Stock-Based Award is
no longer subject to a substantial risk of forfeiture. The Committee in its sole and absolute
discretion may provide that an Award of Performance Shares, Stock Units, or Other Stock-Based
Awards may vest upon an involuntary “separation from service” within the meaning of Section 409A,
following a Change of Ownership of the Company, because of the Participant’s death or Disability,
or otherwise; provided, however, that any such provision with respect to Performance Shares or
Stock Units shall be subject to the requirements of Section 162(m) of the Code that apply to
Qualified Performance-Based Compensation, where applicable for Company deductibility purposes.



     (f) Form of Payment. Payments with respect to any Awards granted under this Section 10 shall
be made in cash, in Shares or a combination of both, as determined by the Committee.



     (g) Award Agreement. All Awards under this Section 10 shall be subject to such additional
terms and conditions as determined by the Committee and shall be evidenced by an Award Agreement.



     SECTION 11. Performance-Based Awards



     (a) Purpose. The purpose of this Section 11 is to provide the Committee the ability to qualify
Awards other than Options and that are granted pursuant to Sections 6, 8, 9 and 10 hereof as
Performance-Based Awards. If the Committee, in its discretion, decides to grant a Performance-Based
Award to a Covered Employee, the provisions of this Section 11 shall control over any contrary
provision contained in Section 6, 8, 9 or 10 hereof; provided, however, that the Committee may in
its discretion grant Awards to Covered Employees that are based on



- 13 -









 







Performance Criteria or Performance Goals but that do not satisfy the requirements of this
Section 11.



     (b) Applicability. This Section 11 shall apply only to those Covered Employees selected by the
Committee to receive Performance-Based Awards. The designation of a Covered Employee as a
Participant for a Performance Period shall not in any manner entitle the Participant to receive
payment of an Award for the period. Moreover, designation of a Covered Employee as a Participant
for a particular Performance Period shall not require designation of such Covered Employee as a
Participant in any subsequent Performance Period and designation of one Covered Employee as a
Participant shall not require designation of any other Covered Employees as a Participant in such
period or in any other period.



     (c) Procedures with Respect to Performance-Based Awards. To the extent necessary to comply
with the Qualified Performance-Based Compensation requirements of Section 162(m)(4)(C) of the Code,
with respect to any Award granted under Section 6, 8, 9 or 10 hereof which may be granted to one or
more Covered Employees, no later than ninety (90) days following the commencement of any fiscal
year of the Company in question or any other designated fiscal period or period of service (or such
other time as may be required or permitted by Section 162(m) of the Code), the Committee shall, in
writing, (1) designate one or more Covered Employees, (2) select the Performance Criteria
applicable to the Performance Period, (3) establish the Performance Goals, and amounts of such
Awards, as applicable, which may be earned for such Performance Period, and (4) specify the
relationship between Performance Criteria and the Performance Goals and the amounts of such Awards,
as applicable, to be earned by each Covered Employee for such Performance Period. Following the
completion of each Performance Period, the Committee shall certify in writing whether the
applicable Performance Goals have been achieved for such Performance Period. In determining the
amount earned by a Covered Employee, the Committee shall have the right to reduce or eliminate (but
not to increase) the amount payable at a given level of performance to take into account additional
factors that the Committee may deem relevant to the assessment of individual or corporate
performance for the Performance Period.



     (d) Payment of Performance-Based Awards. Unless otherwise provided in the applicable Award
Agreement, a Covered Employee must be employed by the Company or a Subsidiary on the day a
Performance-Based Award is paid to the Covered Employee. Furthermore, a Covered Employee shall be
eligible to receive payment pursuant to a Performance-Based Award for a Performance Period only if
the Performance Goals for such period are achieved. In determining the amount earned under a
Performance-Based Award, the Committee may reduce or eliminate the amount of the Performance-Based
Award earned for the Performance Period, if in its sole and absolute discretion, such reduction or
elimination is appropriate.



     (e) Additional Limitations. Notwithstanding any other provision of the Plan, any Award which
is granted to a Covered Employee and is intended to constitute Qualified Performance-Based
Compensation shall be subject to any additional limitations set forth in Section 162(m) of the Code
(including any amendment to Section 162(m) of the Code) or any regulations or rulings issued
thereunder that are requirements for qualification as Qualified Performance-Based Compensation, and
the Plan shall be deemed amended to the extent necessary to conform to such




- 14 -









 





requirements.



     SECTION 12. Provisions Applicable to Awards.



     (a) Stand-Alone and Tandem Awards. Awards granted pursuant to the Plan may, in the discretion
of the Committee, be granted either alone, or in tandem with, any other Award granted pursuant to
the Plan. Awards granted in addition to or in tandem with other Awards may be granted no later than
the time of grant of such other Awards, and such grants shall comply with the requirements of
Section 409A (unless exempt therefrom) and the Plan.



     (b) Beneficiaries. Notwithstanding Section 15(b) hereof, a Participant may, in the manner
determined by the Committee, designate a beneficiary to exercise the rights of the Participant and
to receive any distribution with respect to any Award upon the Participant’s death. A beneficiary,
legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is
subject to all terms and conditions of the Plan and any Award Agreement applicable to the
Participant, except to the extent the Plan and Award Agreement otherwise provide, and to any
additional restrictions deemed necessary or appropriate by the Committee. If no beneficiary has
been designated or survives the Participant, payment shall be made to the person entitled thereto
pursuant to the Participant’s will or the laws of descent and distribution. Subject to the
foregoing, a beneficiary designation may be changed or revoked by a Participant at any time
provided the change or revocation is filed with the Committee.



     SECTION 13. Changes in Capital Structure.



     (a) Adjustments.



          (1) In the event of any stock dividend, stock split, combination or exchange of shares,
merger, consolidation, spin-off, recapitalization or other distribution (other than normal cash
dividends) of Company assets to stockholders, or any other change affecting the Shares or the price
of the Shares, the Committee shall make appropriate proportionate adjustments to reflect such
change with respect to (i) the aggregate number and kind of shares that may be issued under the
Plan (including, but not limited to, adjustments of the limitations in Section 4(a) and Section
4(c) hereof); (ii) the terms and conditions of any outstanding Awards (including, without
limitation, any applicable performance targets or criteria with respect thereto); and (iii) subject
to Section 14, the grant, exercise, or strike price per Share for any outstanding Awards under the
Plan. Any adjustment affecting an Award intended as Qualified Performance-Based Compensation shall
be made consistent with the requirements of Section 162(m) of the Code.



          (2) In the event of any transaction or event described in this Section 13 or any unusual or
nonrecurring transactions or events affecting the Company, any Subsidiary, any affiliate of the
Company, or the financial statements of the Company or any Subsidiary or affiliate, or of changes
in applicable laws, regulations or accounting principles, the Committee, in its sole and absolute
discretion, and on such terms and conditions as it deems appropriate, either by the terms of the
Award or by action taken prior to the occurrence of such transaction or event and either
automatically or upon the Participant’s request, is hereby authorized to take any one or more of
the following actions whenever the Committee determines that such action is appropriate in



- 15 -









 







order to prevent dilution or enlargement of the benefits or potential benefits intended to be made
available under the Plan or with respect to any Award under the Plan, to facilitate such
transactions or events or to give effect to such changes in laws, regulations or principles:



          (i) To provide for either (A) termination of any such Award in exchange for an amount of cash,
if any, equal to the amount that would have been attained upon the exercise of such Award or
realization of the Participant’s rights (and, for the avoidance of doubt, if as of the date of the
occurrence of the transaction or event described in this Section 13 the Committee determines in
good faith that no amount would have been attained upon the exercise of such Award or realization
of the Participant’s rights, then such Award may be terminated by the Company without payment) or
(B) the replacement of such Award with other rights or property selected by the Committee in its
sole discretion;



          (ii) To provide that such Award be assumed by the successor or survivor corporation, or a
parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards
covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and prices;



          (iii) To make adjustments in the number and type of Shares (or other securities or property)
subject to outstanding Awards, and in the number and kind of outstanding Restricted Stock,
Performance Shares or Stock Units and/or in the terms and conditions of (including the grant or
exercise price), and the criteria included in, outstanding options, rights and awards and options,
rights and awards which may be granted in the future;



          (iv) To provide that such Award shall be exercisable or payable or fully vested with respect
to all Shares covered thereby, notwithstanding anything to the contrary in the Plan or the
applicable Award Agreement; and



          (v) To provide that the Award cannot vest, be exercised or become payable after such event.



          Any adjustment under this Section 13(a) shall be made only to the extent that such adjustment
will not cause a violation of the requirements of Section 409A.



     (b) Acceleration Upon a Change of Ownership. Notwithstanding Section 13(a) above, and except
as may otherwise be provided in any applicable Award Agreement or other written agreement entered
into between the Company and a Participant, if a Change of Ownership occurs and a Participant’s
Awards are not converted, assumed, or replaced by a successor entity, then immediately prior to the
Change of Ownership such Awards shall become fully exercisable and all forfeiture restrictions on
such Awards shall lapse. Upon, or in anticipation of, a Change of Ownership, the Committee may
cause any and all Awards outstanding hereunder to terminate at a specific time in the future,
including but not limited to the date of such Change of Ownership, and shall give each Participant
the right to exercise such Awards during a period of time as the Committee, in its sole and
absolute discretion, shall determine; provided, however, that the Committee may not extend the
original exercise periods for Options or Stock Appreciation Rights if such extension would cause
such Options or Stock Appreciation Rights to



- 16 -









 







violate the requirements of Section 409A; and provided, further, that the Committee may not change
the time at which any Other Stock-Based Award may be settled, paid, or exercised if such change
would cause a violation of Section 409A. In the event that the terms of any agreement (other than
this Plan and any Award Agreement hereunder) between the Company or any Subsidiary or affiliate of
the Company and a Participant contains provisions that conflict with and are more restrictive than
the provisions of this Section 13(b), this Section 13(b) shall prevail and control and the more
restrictive terms of such agreement (and only such terms) shall be of no force or effect.



     (c) No Other Rights. Except as expressly provided in the Plan, no Participant shall have any
rights by reason of any subdivision or consolidation of shares of stock of any class, the payment
of any dividend, any increase or decrease in the number of shares of stock of any class or any
dissolution, liquidation, merger, or consolidation of the Company or any other corporation. Except
as expressly provided in the Plan or pursuant to action of the Committee under the Plan, no
issuance by the Company of shares of stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect
to, the number of Shares subject to an Award or the grant or exercise price of any Award.



     SECTION 14. Amendment and Termination.



     (a) Amendments to the Plan. Subject to the requirements of Section 409A and of Section 15(s)
hereof, if applicable, with the approval of the Board, at any time and from time to time, the
Committee may terminate, amend or modify the Plan; provided, however, that (1) to the extent
necessary and desirable to comply with any applicable law, regulation, or securities exchange rule,
the Company shall obtain stockholder approval of any Plan amendment in such a manner and to such a
degree as required, and (2) stockholder approval is required for any amendment to the Plan that
(i) increases the number of shares available under the Plan (other than any adjustment as provided
by Section 13 hereof), (ii) permits the Committee to grant Options or Stock Appreciation Rights
with an exercise or strike price that is below Fair Market Value on the date of grant, (iii)
permits the Committee to extend the exercise period for an Option or Stock Appreciation Right
beyond ten years from the date of grant, or (iv) expands the class of persons who are eligible to
participate in the Plan. Notwithstanding any provision in this Plan to the contrary, no Option
may be amended to reduce the per Share exercise price of the Shares subject to such Option below
the per Share exercise price as of the date the Option is granted and, except as permitted by
Section 13 hereof, no Option may be granted in exchange for, or in connection with, the
cancellation or surrender of an Option having a higher per Share exercise price.



     (b) Amendments to Awards. Except with respect to amendments made pursuant to Section 15(s)
hereof, no termination, amendment, or modification of the Plan shall adversely affect in any
material way any Award previously granted pursuant to the Plan without the prior written consent of
the Participant.



     (c) Cancellation. Any provision of this Plan or any Award Agreement to the contrary
notwithstanding, the Committee may cause any Award granted hereunder to be canceled in
consideration of a cash payment or alternative Award made to the holder of such canceled



- 17 -









 







Award equal in value to the Fair Market Value of such canceled Award; provided, however, that no
Option may be amended to reduce the per Share exercise price of the Shares subject to such Option
below the per Share exercise price as of the date the Option is granted and, except as permitted by
Section 13 hereof, no Option or Stock Appreciation Right may be granted in exchange for, or in
connection with, the cancellation or surrender of an Option or Stock Appreciation Right having a
higher per Share exercise price or strike price, and no alternative Award may be made if such
action would cause a violation of Section 409A.



     SECTION 15. General Provisions



     (a) Dividend Equivalents. In the sole and complete discretion of the Committee, any Award
(other than Award made as an Option or a Stock Appreciation Right) may provide the Participant with
dividends or dividend equivalents, payable in cash, Shares, other securities or other property on a
current or deferred basis.



     (b) Nontransferability. No Award shall be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by a Participant, except by will or the laws of descent and
distribution and, in the case of any Award, except by gift or pursuant to a domestic relations
order (as defined in Section 414(p)(1)(B) of the Code, and including acceleration of the time of
payment as permitted under Section 1.409A-3(j)(ii) of the Treasury Regulations) to members of the
Participant’s family, or trusts or other entities whose beneficiaries or beneficial owners are the
Participant or members of the Participant’s family, without approval of the stockholders of the
Company.



     (c) No Rights to Awards. Except as may be provided in an Employment Agreement, no Eligible
Individual or other person shall have any claim to be granted any Award, and there is no obligation
for uniformity of treatment of Employees, Participants, or holders or beneficiaries of Awards. The
terms and conditions of Awards need not be the same with respect to each recipient.



     (d) Share Certificates; Book Entry Procedures.



          (1) Notwithstanding anything herein to the contrary, the Company shall not be required to
issue or deliver any certificates evidencing Shares pursuant to the exercise of any Award, unless
and until the Board has determined, with advice of counsel, that the issuance and delivery of such
certificates is in compliance with all applicable laws, regulations of governmental authorities
and, if applicable, the requirements of any securities exchange on which the Shares are listed or
traded. All Share certificates delivered pursuant to the Plan are subject to any stop-transfer
orders and other restrictions as the Committee deems necessary or advisable to comply with federal,
state, or foreign jurisdiction, securities or other laws, rules and regulations and the rules of
any securities exchange or automated quotation system on which the Shares are listed, quoted, or
traded. The Committee may place legends on any Share certificate to reference restrictions
applicable to the Shares. In addition to the terms and conditions provided herein, the Committee
may require that a Participant make such reasonable covenants, agreements, and representations, or
do or refrain from such acts, as the Committee, in its discretion, deems advisable in order to
comply with any such laws, regulations, or requirements.




- 18 -









 








The Committee shall have the right to require any Participant to comply with any timing or other
restrictions with respect to the settlement or exercise of any Award, including a window-period
limitation, as may be imposed in the discretion of the Committee.




          (2) Notwithstanding any other provision of the Plan, unless otherwise determined by the
Committee or required by any applicable law, rule or regulation, the Company shall not deliver to
any Participant certificates evidencing Shares issued in connection with any Award and instead such
Shares shall be recorded in the books of the Company (or, as applicable, its transfer agent or
stock plan administrator).




     (e) Withholding. The Company or any Subsidiary shall have the authority and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to
satisfy federal, state, local and foreign taxes (including the Participant’s employment tax
obligations) required by law to be withheld with respect to any taxable event concerning a
Participant arising as a result of this Plan. The Committee may in its discretion and in
satisfaction of the foregoing requirement allow a Participant to elect to have the Company withhold
Shares otherwise issuable under an Award (or allow the return of Shares) having a Fair Market Value
equal to the sums required to be withheld. Notwithstanding any other provision of the Plan, the
number of Shares which may be withheld with respect to the issuance, vesting, exercise or payment
of any Award (or which may be repurchased from the Participant of such Award) in order to satisfy
the Participant’s federal, state, local and foreign income and payroll tax liabilities with respect
to the issuance, vesting, exercise or payment of the Award shall be limited to the number of Shares
which have a Fair Market Value on the date of withholding or repurchase equal to the aggregate
amount of such liabilities based on the minimum statutory withholding rates for federal, state,
local and foreign income tax and payroll tax purposes that are applicable to such supplemental
taxable income.



     (f) Award Agreements. Each Award hereunder shall be evidenced by an Award Agreement which
shall be delivered to the Participant and shall specify the terms and conditions of the Award and
any rules applicable thereto, including but not limited to the effect on such Award of the death,
Disability, retirement or other termination of employment of a Participant, and the Company’s
authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an Award.



     (g) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent
the Company or any Subsidiary from adopting or continuing in effect other compensation
arrangements, which may, but need not, provide for the grant of bonuses, options, restricted stock,
Shares and other types of Awards provided for hereunder (subject to stockholder approval if such
approval is required), and such arrangements may be either generally applicable or applicable only
in specific cases.



     (h) No Right to Employment. Nothing in the Plan or any Award shall be construed as giving a
Participant the right to be retained in the employ of the Company or any Subsidiary. Further, the
Company or a Subsidiary may at any time dismiss a Participant from employment, with or without
cause, free from any liability or any claim under the Plan.



- 19 -









 





     (i) No Rights as Stockholder. Subject to the provisions of the applicable Award, no
Participant or holder or beneficiary of any Award shall have any rights as a stockholder with
respect to any Shares to be distributed under the Plan until he or she has become the record or
beneficial owner of such Shares. Notwithstanding the foregoing, in connection with each grant of
Restricted Stock hereunder, the applicable Award shall specify if and to what extent the
Participant shall not be entitled to the rights of a stockholder in respect of such Restricted
Stock.



     (j) Governing Law. The validity, construction, and effect of the Plan and any rules and
regulations relating to the Plan and any Award Agreement shall be determined in accordance with the
laws of the State of California, except to the extent that the General Corporation Law of the State
of Delaware is applicable.



     (k) Severability. If any provision of the Plan or any Award is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would
disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision
shall be construed or deemed amended to conform the applicable laws, or if it cannot be construed
or deemed amended without, in the determination of the Committee, materially altering the intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award
and the remainder of the Plan and any such Award shall remain in full force and effect.



     (l) Other Laws. The obligation of the Company to make payment of awards in Shares or otherwise
shall be subject to all applicable laws, rules, and regulations, and to such approvals by
government agencies as may be required. The Company may refuse to issue or transfer any Shares or
other consideration under an Award if, acting in its sole discretion, it determines that the
issuance or transfer of such Shares or such other consideration might violate any applicable law or
regulation or entitle the Company to recover the same under Section 16(b) of the Exchange Act, and
any payment tendered to the Company by a Participant, other holder or beneficiary in connection
with the exercise of such Award shall be promptly refunded to the relevant Participant, holder or
beneficiary. Without limiting the generality of the foregoing, no Award granted hereunder shall be
construed as an offer to sell securities of the Company, and no such offer shall be outstanding,
unless and until the Committee in its sole discretion has determined that any such offer, if made,
would be in compliance with all applicable requirements of the U.S. federal securities laws and any
other laws to which such offer, if made, would be subject. The Company shall be under no obligation
to register pursuant to the Securities Act any of the Shares paid pursuant to the Plan. If Shares
paid pursuant to the Plan may in certain circumstances be exempt from registration pursuant to the
Securities Act, the Company may restrict the transfer of such shares in such manner as it deems
advisable to ensure the availability of any such exemption.



     (m) No Trust or Fund Created. The Plan is intended to be an “unfunded” plan for incentive
compensation. Neither the Plan nor any Award shall create or be construed to create a trust or
separate fund of any kind or a fiduciary relationship between the Company or any Subsidiary or any
affiliate and a Participant or any other Person. To the extent that any Person acquires a right to
receive payments from the Company or any Subsidiary pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or




- 20 -









 






any Subsidiary.



     (n) Indemnification. To the extent allowable pursuant to applicable law, each member of the
Committee and each member of the Board shall be indemnified and held harmless by the Company from
any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such
member in connection with or resulting from any claim, action, suit, or proceeding to which he or
she may be a party or in which he or she may be involved by reason of any action or failure to act
pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of
judgment in such action, suit, or proceeding against him or her; provided, however, that he or she
gives the Company an opportunity, at its own expense, to handle and defend the same before he or
she undertakes to handle and defend it on his or her own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to which such persons
may be entitled pursuant to the Company’s Certificate of Incorporation or Bylaws, as a matter of
law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.



     (o) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the
Plan or any Award, and cash shall be paid in lieu of any fractional Shares, and such fractional
Shares shall be eliminated by rounding down.



     (p) Expenses. The expenses of administering the Plan shall be borne by the Company and its
Subsidiaries.



     (q) Headings. Headings are given to the Sections and subsections of the Plan solely as a
convenience to facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of the Plan or any provision thereof and, in the
event of any conflict, the text of the Plan, rather than such titles or headings, shall control.



     (r) Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the
Plan, the Plan, and any Award granted or awarded to any Participant who is then subject to
Section 16 of the Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to
Rule 16b-3) that are requirements for the application of such exemptive rule. To the extent
permitted by applicable law, the Plan and Awards granted or awarded hereunder shall be deemed
amended to the extent necessary to conform to such applicable exemptive rule.



     (s) Section 409A.



          (1) To the extent that the Committee determines that any Award granted under the Plan is
subject to Section 409A, the Award Agreement evidencing such Award shall comply with the
requirements of Section 409A. To the extent applicable, the Plan and Award Agreements shall be
interpreted in accordance with Section 409A, including without limitation any Treasury Regulations
or other Department of Treasury guidance that may be issued or amended after the Effective Date or
the Amendment Date. Notwithstanding any provision of the Plan to the contrary, in the event that
following the Effective Date the Committee determines that any Award may be subject to Section
409A, including such Department of Treasury guidance as



- 21 -









 






may be issued after the Effective Date or the Amendment Date, the Committee may adopt such
amendments to the Plan and the applicable Award Agreement or adopt other policies and procedures
(including amendments, policies and procedures with retroactive effect), or take any other actions,
that the Committee determines are necessary or appropriate to (A) exempt the Award from
Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to
the Award, or (B) comply with the requirements of Section 409A.




          (2) If, at the time of a Participant’s “separation from service” (within the meaning of
Section 409A), (A) such Participant is a “specified employee” (within the meaning of Section 409A
as determined annually by the Committee in accordance with the methodology specified by resolution
of the Board or the Committee and in accordance with Section 1.409A-1(i) of the Treasury
Regulations) and (B) the Company shall make a good-faith determination that an amount payable
pursuant to an Award constitutes “deferred compensation” (within the meaning of Section 409A) the
payment of which is required to be delayed pursuant to the six-month delay rule set forth in
Section 409A in order to preserve the tax treatment intended for such payment or to avoid
additional tax, interest, or penalties under Section 409A, then the Company shall not pay such
amount on the otherwise scheduled payment date but shall instead pay it on the first business day
after such six-month period. Such amount shall be paid without interest, unless otherwise
determined by the Committee, in its sole discretion, or as otherwise provided in any applicable
agreement between the Company and the relevant Participant.



          (3) For purposes of this Plan, a “separation from service” within the meaning of Section 409A
shall mean termination of services provided by a Participant to his or her Company, whether
voluntary or involuntary, as determined by the Committee in accordance with Treasury Regulation
Section 1.409A-1(h). In determining whether a Participant has experienced a Separation from
Service, the following provisions shall apply:



          (i) For a Participant who provides services to the Company as an employee, except as otherwise
provided in part (iii) of this Subsection, a separation from service shall occur when such
Participant has experienced a termination of employment with the Company. Such Participant shall
be considered to have experienced a termination of employment when the facts and circumstances
indicate that the Participant and the Company reasonably anticipate that either (A) no further
services will be performed for the Company after a certain date, or (B) the level of bona fide
services the Participant will perform for the Company after such date (whether as an employee or as
an independent contractor) will permanently decrease to no more than 20% of the average level of
bona fide services performed by such Participant (whether as an employee or an independent
contractor) over the immediately preceding 36-month period (or the full period of services to the
Company if the Participant has been providing services to the Company less than 36 months).



     If such Participant is on military leave, sick leave, or other bona fide leave of absence, the
employment relationship between the Participant and the Company shall be treated as continuing
intact, provided that the period of such leave does not exceed 6 months, or if longer, so long as
the Participant retains a right to reemployment with the Company under an applicable statute or by
contract. If the period of a military leave, sick leave, or other bona fide leave of absence
exceeds 6 months and the Participant does not retain a right to reemployment under an applicable
statute or by contract, the employment relationship shall be considered to be terminated for



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purposes of this Plan as of the first day immediately following the end of such 6-month period. In
applying the provisions of this paragraph, a leave of absence shall be considered a bona fide leave
of absence only if there is a reasonable expectation that the Participant will return to perform
services for the Company. For purposes of this paragraph, where a leave of absence is due to any
physical or mental impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than six months, where such impairment causes the Participant
to be unable to perform the duties of his or her position of employment or any substantially
similar position of employment, a 29-month period of absence shall be substituted for such 6-month
period.



          (ii) For a Participant who provides services to the Company as an independent contractor,
except as otherwise provided in part (iii) of this Subsection, a separation from service shall
occur upon the expiration of the contract (or in the case of more than one contract, all contracts)
under which services are performed for the Company, provided that the expiration of such
contract(s) is determined by the Committee to constitute a good-faith and complete termination of
the contractual relationship between the Participant and the Company.



          (iii) For a Participant who provides services to the Company as both an employee and an
independent contractor, a separation from service generally shall not occur until the Participant
has ceased providing services for such Company as both as an employee and as an independent
contractor, as determined in accordance with the provisions set forth in parts (i) and (ii) of this
Subsection, respectively. Similarly, if a Participant either (A) ceases providing services for the
Company as an independent contractor and begins providing services for the Company as an employee,
or (B) ceases providing services for the Company as an employee and begins providing services for
the Company as an independent contractor, the Participant will not be considered to have
experienced a separation from service until the Participant has ceased providing services for the
Company in both capacities, as determined in accordance with the applicable provisions set forth in
parts (i) and (ii) of this Subsection.



          Notwithstanding the foregoing provisions in this part (iii), if a Participant provides
services for the Company as both an employee and as a director of the Board of the Company, to the
extent permitted by Treas. Reg. §1.409A-1(h)(5) the services provided by such Participant as a
director of the Board of the Company shall not be taken into account in determining whether the
Participant has experienced a Separation from Service as an employee.



          (iv) For purposes of this Subsection, services performed for the Company shall include service
performed both for the Company and for any other corporation that is a member of the same
“controlled group” of corporations as the Company under Section 414(b) of the Code or any other
trade or business (such as a partnership)_that is under common control with the Company as
determined under Section 414(c) of the Code, in each case as modified by Treasury Regulation
Section 1.409A-1(h)(3) and substituting “at least 50 percent” for “at least 80 percent” each place
it appears in Section 1563(a) of the Code or Treasury Regulation Section 1.414(c)-2.



          (4) A Participant shall be solely responsible and liable for the satisfaction of all taxes,
interest, and penalties that may be imposed on such Participant or for such Participant’s account
in connection with an Award (including any taxes, interest, and penalties under Section 409A), and
neither the Company nor its affiliates shall have any obligation to indemnify or otherwise



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hold such Participant harmless from any or all of such taxes, interest, or penalties.



     SECTION 16. Term of the Plan.



     (a) Effective Date. The Plan first became effective on April 2, 1999, the date on which the
Plan was adopted and approved by the Board (the “Effective Date”), and was subsequently approved by
the Company’s stockholders. This amendment and restatement shall be effective as of the Amendment
Date as defined herein.



     (b) Expiration Date. The Plan will expire on, and no Option or Award shall be granted under
the Plan after, April 2, 2009, or after such earlier date as the Committee may determine, in its
sole discretion. Any Awards that are outstanding on April 2, 2009 shall remain in force according
to the terms of the Plan and the applicable Award Agreement.




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