EXHIBIT 10.13

     

    Multimedia
Games, Inc.

    2008
Employment Inducement Award Plan

     

    
      TABLE OF
CONTENTS

       

      
        
          
            
              
                
                  
                    
                      
                        
                          	 	 	 	Page
	
                                  1.

                                	
                                  Establishment,
      Purpose and Term of Plan

                                	 	
                                  1

                                
	 
      	 
      	 
      	 	 
      
	 
      	
                                  1.1

                                	
                                  Establishment

                                	 	
                                  1

                                
	 
      	
                                  1.2

                                	
                                  Purpose

                                	 	
                                  1

                                
	 
      	
                                  1.3

                                	
                                  Term
      of Plan

                                	 	
                                  1

                                
	 
      	 
      	 
      	 	 
      
	
                                  2.

                                	
                                  Definitions
      and Construction

                                	 	
                                  1

                                
	 
      	 
      	 
      	 	 
      
	 
      	
                                  2.1

                                	
                                  Definitions

                                	 	
                                  1

                                
	 
      	
                                  2.2

                                	
                                  Construction

                                	 	
                                  9

                                
	 
      	 
      	 
      	 	 
      
	
                                  3.

                                	
                                  Administration

                                	 	
                                  9

                                
	 
      	 
      	 
      	 	 
      
	 
      	
                                  3.1

                                	
                                  Administration
      by the Committee

                                	 	
                                  9

                                
	 
      	
                                  3.2

                                	
                                  Authority
      of Officers

                                	 	
                                  10

                                
	 
      	
                                  3.3

                                	
                                  Administration
      with Respect to Insiders

                                	 	
                                  10

                                
	 
      	
                                  3.4

                                	
                                  Powers
      of the Committee

                                	 	
                                  10

                                
	 
      	
                                  3.5

                                	
                                  Option
      or SAR Repricing

                                	 	
                                  11

                                
	 
      	
                                  3.6

                                	
                                  Indemnification

                                	 	
                                  11

                                
	 
      	 
      	 
      	 	 
      
	
                                  4.

                                	
                                  Shares
      Subject to Plan

                                	 	
                                  12

                                
	 
      	 
      	 
      	 	 
      
	 
      	
                                  4.1

                                	
                                  Maximum
      Number of Shares Issuable

                                	 	
                                  12

                                
	 
      	
                                  4.2

                                	
                                  Share
      Counting

                                	 	
                                  12

                                
	 
      	
                                  4.3

                                	
                                  Adjustments
      for Changes in Capital Structure

                                	 	
                                  12

                                
	 
      	 
      	 
      	 	 
      
	
                                  5.

                                	
                                  Eligibility,
      Participation and Award Limitations

                                	 	
                                  13

                                
	 
      	 
      	 
      	 	 
      
	 
      	
                                  5.1

                                	
                                  Persons
      Eligible for Awards

                                	 	
                                  13

                                
	 
      	
                                  5.2

                                	
                                  Participation
      in the Plan

                                	 	
                                  13

                                
	 
      	
                                  5.3

                                	
                                  Award
      Limitations

                                	 	
                                  13

                                
	 
      	 
      	 
      	 	 
      
	
                                  6.

                                	
                                  Stock
      Options

                                	 	
                                  14

                                
	 
      	 
      	 
      	 	 
      
	 
      	
                                  6.1

                                	
                                  Exercise
      Price

                                	 	
                                  14

                                
	 
      	
                                  6.2

                                	
                                  Exercisability
      and Term of Options

                                	 	
                                  14

                                
	 
      	
                                  6.3

                                	
                                  Payment
      of Exercise Price

                                	 	
                                  14

                                
	 
      	
                                  6.4

                                	
                                  Effect
      of Termination of Service

                                	 	
                                  15

                                
	 
      	
                                  6.5

                                	
                                  Transferability
      of Options

                                	 	
                                  16

                                
	 
      	 
      	 
      	 	 
      
	
                                  7.

                                	
                                  Stock
      Appreciation Rights

                                	 	
                                  16

                                
	 
      	 
      	 
      	 	 
      
	 
      	
                                  7.1

                                	
                                  Types
      of SARs Authorized

                                	 	
                                  16

                                
	 
      	
                                  7.2

                                	
                                  Exercise
      Price

                                	 	
                                  16

                                
	 
      	
                                  7.3

                                	
                                  Exercisability
      and Term of SARs

                                	 	
                                  17

                                


                        

                      

                    

                  

                

              

            

          

        

      


      
        
           


        

        
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      TABLE OF
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      (continued)

      


      
        
          
            
              
                
                  
                    
                      
                        	 	 	 	 	Page
	 
      	
                                7.4

                              	
                                Exercise
      of SARs

                              	 	
                                17

                              
	 
      	
                                7.5

                              	
                                Deemed
      Exercise of SARs

                              	 	
                                17

                              
	 
      	
                                7.6

                              	
                                Effect
      of Termination of Service

                              	 	
                                17

                              
	 
      	
                                7.7

                              	
                                Transferability
      of SARs

                              	 	
                                18

                              
	 
      	 
      	 
      	 	 
      
	
                                8.

                              	
                                Restricted
      Stock Awards

                              	 	
                                18

                              
	 
      	 
      	 
      	 	 
      
	 
      	
                                8.1

                              	
                                Types
      of Restricted Stock Awards Authorized

                              	 	
                                18

                              
	 
      	
                                8.2

                              	
                                Purchase
      Price

                              	 	
                                18

                              
	 
      	
                                8.3

                              	
                                Purchase
      Period

                              	 	
                                18

                              
	 
      	
                                8.4

                              	
                                Payment
      of Purchase Price

                              	 	
                                19

                              
	 
      	
                                8.5

                              	
                                Vesting
      and Restrictions on Transfer

                              	 	
                                19

                              
	 
      	
                                8.6

                              	
                                Voting
      Rights; Dividends and Distributions

                              	 	
                                19

                              
	 
      	
                                8.7

                              	
                                Effect
      of Termination of Service

                              	 	
                                19

                              
	 
      	
                                8.8

                              	
                                Nontransferability
      of Restricted Stock Award Rights

                              	 	
                                20

                              
	 
      	 
      	 
      	 	 
      
	
                                9.

                              	
                                Restricted
      Stock Unit Awards

                              	 	
                                20

                              
	 
      	 
      	 
      	 	 
      
	 
      	
                                9.1

                              	
                                Grant
      of Restricted Stock Unit Awards

                              	 	
                                20

                              
	 
      	
                                9.2

                              	
                                Purchase
      Price

                              	 	
                                20

                              
	 
      	
                                9.3

                              	
                                Vesting

                              	 	
                                20

                              
	 
      	
                                9.4

                              	
                                Voting
      Rights, Dividend Equivalent Rights and Distributions

                              	 	
                                21

                              
	 
      	
                                9.5

                              	
                                Effect
      of Termination of Service

                              	 	
                                21

                              
	 
      	
                                9.6

                              	
                                Settlement
      of Restricted Stock Unit Awards

                              	 	
                                21

                              
	 
      	
                                9.7

                              	
                                Nontransferability
      of Restricted Stock Unit Awards

                              	 	
                                22

                              
	 
      	 
      	 
      	 	 
      
	
                                10.

                              	
                                Performance
      Awards

                              	 	
                                22

                              
	 
      	 
      	 
      	 	 
      
	 
      	
                                10.1

                              	
                                Types
      of Performance Awards Authorized

                              	 	
                                22

                              
	 
      	
                                10.2

                              	
                                Initial
      Value of Performance Shares and Performance Units

                              	 	
                                22

                              
	 
      	
                                10.3

                              	
                                Establishment
      of Performance Period, Performance Goals and Performance Award
      Formula

                              	 	
                                22

                              
	 
      	
                                10.4

                              	
                                Measurement
      of Performance Goals

                              	 	
                                23

                              
	 
      	
                                10.5

                              	
                                Settlement
      of Performance Awards

                              	 	
                                24

                              
	 
      	
                                10.6

                              	
                                Voting
      Rights; Dividend Equivalent Rights and Distributions

                              	 	
                                26

                              
	 
      	
                                10.7

                              	
                                Effect
      of Termination of Service

                              	 	
                                26

                              
	 
      	
                                10.8

                              	
                                Nontransferability
      of Performance Awards

                              	 	
                                26

                              
	 
      	 
      	 
      	 	 
      
	
                                11.

                              	
                                Deferred
      Compensation Awards

                              	 	
                                27

                              
	 
      	 
      	 
      	 	 
      
	 
      	
                                11.1

                              	
                                Establishment
      of Deferred Compensation Award Programs

                              	 	
                                27

                              
	 
      	
                                11.2

                              	
                                Terms
      and Conditions of Deferred Compensation Awards

                              	 	
                                27

                              


                      

                    

                  

                

              

            

          

        

      


      
        
           


        

        
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      TABLE OF
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      (continued)

      


      
        
          
            
              
                
                  
                    
                      	 	 	 	Page
	
                              12.

                            	
                              Cash-Based
      Awards and Other Stock-Based Awards

                            	 	
                              28

                            
	 
      	 
      	 
      	 	 
      
	 
      	
                              12.1

                            	
                              Grant
      of Cash-Based Awards

                            	 	
                              28

                            
	 
      	
                              12.2

                            	
                              Grant
      of Other Stock-Based Awards

                            	 	
                              28

                            
	 
      	
                              12.3

                            	
                              Value
      of Cash-Based and Other Stock-Based Awards

                            	 	
                              29

                            
	 
      	
                              12.4

                            	
                              Payment
      or Settlement of Cash-Based Awards and Other Stock-Based
      Awards

                            	 	
                              29

                            
	 
      	
                              12.5

                            	
                              Voting
      Rights; Dividend Equivalent Rights and Distributions

                            	 	
                              29

                            
	 
      	
                              12.6

                            	
                              Effect
      of Termination of Service

                            	 	
                              29

                            
	 
      	
                              12.7

                            	
                              Nontransferability
      of Cash-Based Awards and Other Stock-Based Awards

                            	 	
                              29

                            
	 
      	 
      	 
      	 	 
      
	
                              13.

                            	
                              Standard
      Forms of Award Agreement

                            	 	
                              30

                            
	 
      	 
      	 
      	 	 
      
	 
      	
                              13.1

                            	
                              Award
      Agreements

                            	 	
                              30

                            
	 
      	
                              13.2

                            	
                              Authority
      to Vary Terms

                            	 	
                              30

                            
	 
      	 
      	 
      	 	 
      
	
                              14.

                            	
                              Change
      in Control

                            	 	
                              30

                            
	 
      	 
      	 
      	 	 
      
	 
      	
                              14.1

                            	
                              Effect
      of Change in Control on Awards

                            	 	
                              30

                            
	 
      	
                              14.2

                            	
                              Federal
      Excise Tax Under Section 4999 of the Code

                            	 	
                              32

                            
	 
      	 
      	 
      	 	 
      
	
                              15.

                            	
                              Compliance
      with Securities Law

                            	 	
                              32

                            
	 
      	 
      	 
      	 	 
      
	
                              16.

                            	
                              Compliance
      with Section 409A

                            	 	
                              33

                            
	 
      	 
      	 
      	 	 
      
	 
      	
                              16.1

                            	
                              Awards
      Subject to Section 409A

                            	 	
                              33

                            
	 
      	
                              16.2

                            	
                              Deferral
      and/or Distribution Elections

                            	 	
                              33

                            
	 
      	
                              16.3

                            	
                              Subsequent
      Elections

                            	 	
                              34

                            
	 
      	
                              16.4

                            	
                              Distributions
      Pursuant to Deferral Elections

                            	 	
                              34

                            
	 
      	
                              16.5

                            	
                              Unforeseeable
      Emergency

                            	 	
                              35

                            
	 
      	
                              16.6

                            	
                              Disabled

                            	 	
                              35

                            
	 
      	
                              16.7

                            	
                              Death

                            	 	
                              36

                            
	 
      	
                              16.8

                            	
                              No
      Acceleration of Distributions

                            	 	
                              36

                            
	 
      	 
      	 
      	 	 
      
	
                              17.

                            	
                              Tax
      Withholding

                            	 	
                              36

                            
	 
      	 
      	 
      	 	 
      
	 
      	
                              17.1

                            	
                              Tax
      Withholding in General

                            	 	
                              36

                            
	 
      	
                              17.2

                            	
                              Withholding
      in Shares

                            	 	
                              36

                            
	 
      	 
      	 
      	 	 
      
	
                              18.

                            	
                              Amendment
      or Termination of Plan

                            	 	
                              36

                            
	 
      	 
      	 
      	 	 
      
	
                              19.

                            	
                              Miscellaneous
      Provisions

                            	 	
                              37

                            
	 
      	 
      	 
      	 	 
      
	 
      	
                              19.1

                            	
                              Repurchase
      Rights

                            	 	
                              37

                            
	 
      	
                              19.2

                            	
                              Forfeiture
      Events

                            	 	
                              37

                            


                    

                  

                

              

            

          

        

      


      
        
           


        

        
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                              19.3

                            	
                              Provision
      of Information

                            	 	
                              37

                            
	 
      	
                              19.4

                            	
                              Rights
      as Employee

                            	 	
                              37

                            
	 
      	
                              19.5

                            	
                              Rights
      as a Stockholder

                            	 	
                              38

                            
	 
      	
                              19.6

                            	
                              Delivery
      of Title to Shares

                            	 	
                              38

                            
	 
      	
                              19.7

                            	
                              Fractional
      Shares

                            	 	
                              38

                            
	 
      	
                              19.8

                            	
                              Retirement
      and Welfare Plans

                            	 	
                              38

                            
	 
      	
                              19.9

                            	
                              Beneficiary
      Designation

                            	 	
                              38

                            
	 
      	
                              19.10

                            	
                              Severability

                            	 	
                              38

                            
	 
      	
                              19.11

                            	
                              No
      Constraint on Corporate Action

                            	 	
                              38

                            
	 
      	
                              19.12

                            	
                              Unfunded
      Obligation

                            	 	
                              39

                            
	 
      	
                              19.13

                            	
                              Choice
      of Law

                            	 	
                              39

                            


                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
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    1.           Establishment,
Purpose and Term of Plan.

     

    1.1           Establishment.  The
Multimedia Games, Inc. 2008 Employment Inducement Award Plan (the “Plan”) is hereby established
effective as of June 15, 2008 (the “Effective
Date”).

     

    1.2           Purpose.  The
purpose of the Plan is to advance the interests of the Participating Company
Group and its stockholders by providing an incentive to attract, retain and
reward persons performing services for the Participating Company Group and by
motivating such persons to contribute to the growth and profitability of the
Participating Company Group.  The Plan seeks to achieve this purpose
by providing for Awards in the form of Options, Stock Appreciation Rights,
Restricted Stock Purchase Rights, Restricted Stock Bonuses, Restricted Stock
Units, Performance Shares, Performance Units, Deferred Compensation Awards,
Cash-Based and Other Stock-Based Awards.  The Company intends that
Awards granted pursuant to the Plan be exempt from or comply with
Section 409A of the Code (including any amendments or replacements of such
section), and the Plan shall be so construed.

     

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

     

    2.           Definitions
and Construction.

     

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

     

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

     

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


    
      
         


      

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

     

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

     

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

     

    (f)           “Cause” means, unless such term or
an equivalent term is otherwise defined with respect to an Award by the
Participant’s Award Agreement or by a written contract of employment or service,
any of the following: (i) the Participant’s theft, dishonesty, willful
misconduct, breach of fiduciary duty for personal profit, or falsification of
any Participating Company documents or records; (ii) the Participant’s
material failure to abide by a Participating Company’s code of conduct or other
policies (including, without limitation, policies relating to confidentiality
and reasonable workplace conduct); (iii) the Participant’s unauthorized
use, misappropriation, destruction or diversion of any tangible or intangible
asset or corporate opportunity of a Participating Company (including, without
limitation, the Participant’s improper use or disclosure of a Participating
Company’s confidential or proprietary information); (iv) any intentional
act by the Participant which has a material detrimental effect on a
Participating Company’s reputation or business; (v) the Participant’s
repeated failure or inability to perform any reasonable assigned duties after
written notice from a Participating Company of, and a reasonable opportunity to
cure, such failure or inability; (vi) any material breach by the
Participant of any employment, service, non-disclosure, non-competition,
non-solicitation or other similar agreement between the Participant and a
Participating Company, which breach is not cured pursuant to the terms of such
agreement; or (vii) the Participant’s conviction (including any plea of
guilty or nolo contendere) of any criminal act involving fraud, dishonesty,
misappropriation or moral turpitude, or which impairs the Participant’s ability
to perform his or her duties with a Participating Company.

     

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

     

    (i)           any
“person” (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) becomes the “beneficial owner” (as defined in Rule 13d-3 promulgated
under the Exchange Act), directly or indirectly, of securities of the Company
representing more than fifty percent (50%) of the total combined voting power of
the Company’s then-outstanding securities entitled to vote generally in the
election of Directors; provided, however, that the following acquisitions shall
not constitute a Change in Control: (1) an acquisition by any such person
who on the Effective Date is the beneficial owner of more than fifty percent
(50%) of such voting power, (2) any acquisition directly from the Company,
including, without limitation, a public offering of securities, (3) any
acquisition by the Company, (4) any acquisition by a trustee or other
fiduciary under an employee benefit plan of a Participating Company or
(5) any acquisition by an entity owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as their
ownership of the voting securities of the Company; or


    
      
         


      

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

     

    (iii)           a
liquidation or dissolution of the Company;

     

    provided,
however, that a Change in Control shall be deemed not to include a transaction
described in subsections (i) or (ii) of this Section 2.1(g)
in which a majority of the members of the board of directors of the continuing,
surviving or successor entity, or parent thereof, immediately after such
transaction is comprised of Incumbent Directors.  Notwithstanding the
foregoing, to the extent that any amount constituting Section 409A Deferred
Compensation would become payable under this Plan by reason of a Change in
Control, such amount shall become payable only if the event constituting a
Change in Control would also constitute a change in ownership or effective
control of the Company or a change in the ownership of a substantial portion of
the assets of the Company within the meaning of Section 409A.

     

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

     

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

     

    (i)           “Committee” means the Compensation
Committee and such other committee of the Board comprised of a majority of
Independent Directors, if any, duly appointed to administer the Plan and having
such powers in each instance as shall be specified by the Board.

     

    (j)           “Company” means Multimedia Games,
Inc., a Texas corporation, or any successor corporation thereto.

     

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

     

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

     

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


    
      
         


      

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

     

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

     

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

     

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

     

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

     

    (ii)           Notwithstanding
the foregoing, the Committee may, in its discretion, determine the Fair Market
Value of a share of Stock on the basis of the opening, closing, or average of
the high and low sale prices of a share of Stock on such date or the preceding
trading day, the actual sale price of a share of Stock received by a
Participant, any other reasonable basis using actual transactions in the Stock
as reported on a national or regional securities exchange or market system and
consistently applied, or on any other basis consistent with the requirements of
Section 409A.  The Committee may also determine the Fair Market Value
upon the average selling price of the Stock during a specified period that is
within thirty (30) days before or thirty (30) days after such date, provided
that, with respect to the grant of an Option or SAR, the commitment to grant
such Award based on such valuation method must be irrevocable before the
beginning of the specified period and such valuation method must be used
consistently for grants of Options and SARs under the same and substantially
similar programs.  The Committee may vary its method of determination
of the Fair Market Value as provided in this Section for different purposes
under the Plan to the extent consistent with the requirements of Section
409A.


    
      
         


      

      
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    (iii)           If,
on such date, the Stock is not listed on a national or regional securities
exchange or market system, the Fair Market Value of a share of Stock shall be as
determined by the Committee in good faith, without regard to any restriction
other than a restriction which, by its terms, will never lapse, and in a manner
consistent with the requirements of Section 409A.

     

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

     

    (s)            “Incumbent
Director” means
a director who either (i) is a member of the Board as of the Effective Date
or (ii) is elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the Incumbent Directors at the time
of such election or nomination, but who was not elected or nominated in
connection with an actual or threatened proxy contest relating to the election
of directors of the Company.

     

    (t)           “Independent
Director” means a person other than an executive officer or Employee or
any other individual having a relationship which, in the opinion of the Board,
would interfere with the exercise of independent judgment in carrying out the
responsibilities of a Director.  The following persons shall not be
considered independent:

     

    (A) a Director who is, or at any time
during the past three years was, employed by the Company;

    


    (B) a Director who accepted or who has
a family member who accepted any compensation from the company in excess of
$100,000 during any period of twelve (12) consecutive months within the three
(3) years preceding the determination of independence, other than the
following:

    


    (i) compensation for Board or
Committee service;

    


    (ii) compensation paid to a family
member who is an Employee (other than an Officer) of the Company;
or

    


    (iii) benefits under a tax-qualified
retirement plan, or non-discretionary compensation.

    


    Provided, however, that in addition to
the requirements contained in this paragraph (B), audit committee members are
also subject to additional, more stringent requirements under Nasdaq Marketplace
Rule 4350(d).


    
      
         


      

      
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    (C) a Director who is a family member
of an individual who is, or at any time during the past three (3) years was,
employed by the Company as an Officer;

    


    (D) a Director who is, or has a family
member who is, a partner in, or a controlling shareholder or an Officer of, any
organization to which the Company made, or from which the Company received,
payments for property or services in the current or any of the past three (3)
fiscal years that exceed 5% of the recipient's consolidated gross revenues for
that year, or $200,000, whichever is more, other than the
following:

    


    (i) payments arising solely from
investments in the company's securities; or

    


    (ii) payments under non-discretionary
charitable contribution matching programs.

    


    (E) a Director who is, or has a family
member who is, employed as an Officer of another entity where at any time during
the past three (3) years any of the Officers serve on the compensation committee
of such other entity; or

    


    (F) a Director who is, or has a family
member who is, a current partner of the Company's outside auditor, or was a
partner or employee of the Company's outside auditor who worked on the Company's
audit at any time during any of the past three (3) years.

    


    (G) in the case of an investment
company, in lieu of paragraphs (A)–(F), a Director who is an "interested person"
of the Company as defined in Section 2(a)(19) of the Investment Company Act of
1940, other than in his or her capacity as a member of the Board or any
Committee.

    


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

     

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

     

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

     

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

    


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


    
      
         


      

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

    


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

    


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

    


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

     

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

     

    (z)           “Option” means a Nonstatutory Stock
Option granted pursuant to Section 6.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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


    
      
         


      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (ss)            “Section 409A” means Section 409A of
the Code.

     

    (tt)           “Section 409A
Deferred Compensation” means compensation provided
pursuant to the Plan that constitutes deferred compensation subject to and not
exempted from the requirements of Section 409A.

     

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


    
      
         


      

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

     

    (ww)         “Stock” means the common stock of
the Company, as adjusted from time to time in accordance with
Section 4.3.

     

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

     

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

     

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

     

    3.           Administration.

     

    3.1           Administration by the
Committee.  The Plan shall be administered by the
Committee.  All questions of interpretation of the Plan, of any Award
Agreement or of any other form of agreement or other document employed by the
Company in the administration of the Plan or of any Award shall be determined by
the Committee, and such determinations shall be final, binding and conclusive
upon all persons having an interest in the Plan or such Award, unless fraudulent
or made in bad faith.  Any and all actions, decisions and
determinations taken or made by the Committee in the exercise of its discretion
pursuant to the Plan or Award Agreement or other agreement thereunder (other
than determining questions of interpretation pursuant to the preceding sentence)
shall be final, binding and conclusive upon all persons having an interest
therein.


    
      
         


      

      
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    3.2           Authority of
Officers.  Any Officer shall have the authority to act on
behalf of the Company with respect to any matter, right, obligation,
determination or election which is the responsibility of or which is allocated
to the Company herein, provided the Officer has apparent authority with respect
to such matter, right, obligation, determination or election.

     

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

     

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

     

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

     

    (b)           to
determine the type of Award granted;

     

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

     

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

     

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

     

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

     

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


    
      
         


      

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

     

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

     

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

     

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

     

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


    
      
         


      

      
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    4.           Shares
Subject to Plan.

     

    4.1           Maximum Number of Shares
Issuable.  Subject to adjustment as provided in Section 4.3,
the maximum aggregate number of shares of Stock that may be issued under the
Plan shall be equal to one million three hundred thousand (1,300,000) shares,
and shall consist of authorized but unissued or reacquired shares of Stock or
any combination thereof.

     

    4.2           Share Counting.  If
an outstanding Award for any reason expires or is terminated or canceled without
having been exercised or settled in full, or if shares of Stock acquired
pursuant to an Award subject to forfeiture or repurchase are forfeited or
repurchased by the Company for an amount not greater than the Participant’s
purchase price, the shares of Stock allocable to the terminated portion of such
Award or such forfeited or repurchased shares of Stock shall again be available
for issuance under the Plan.  Shares of Stock shall not be deemed to
have been issued pursuant to the Plan with respect to any portion of an Award
that is settled in cash.  Upon payment in shares of Stock pursuant to
the exercise of an SAR, the number of shares available for issuance under the
Plan shall be reduced by the gross number of shares for which the SAR is
exercised.  If the exercise price of an Option is paid by tender to
the Company, or attestation to the ownership, of shares of Stock owned by the
Participant, or by means of a Net-Exercise, the number of shares available for
issuance under the Plan shall be reduced by the gross number of shares for which
the Option is exercised.  If Options, SARs or Performance Awards are
settled in the form of Stock Units issued pursuant to a stock issuance deferral
award described in Section 11.1(b), the number of shares available for issuance
under the Plan shall be reduced by the number of shares subject to such Stock
Units, but shall not be further reduced by the number of shares of Stock
originally subject to such Options, SARs or Performance Awards settled in such
manner.  Shares withheld or reacquired by the Company in satisfaction
of tax withholding obligations pursuant to Section 17.2 shall not again be available for issuance under
the Plan.

     

    4.3           Adjustments for Changes in Capital
Structure.  Subject
to any required action by the stockholders of the Company, in the event of any
change in the Stock effected without receipt of consideration by the Company,
whether through merger, consolidation, reorganization, reincorporation,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, split-up, split-off, spin-off, combination of shares, exchange of shares,
or similar change in the capital structure of the Company, or in the event of
payment of a dividend or distribution to the stockholders of the Company in a
form other than Stock (excepting normal cash dividends) that has a material
effect on the Fair Market Value of shares of Stock, appropriate and
proportionate adjustments shall be made in the number and kind of shares subject
to the Plan and to any outstanding Awards, in the Award limits set forth in
Section 5.3 and in the exercise or purchase
price per share under any outstanding Award in order to prevent dilution or
enlargement of Participants’ rights under the Plan.  For purposes of
the foregoing, conversion of any convertible securities of the Company shall not
be treated as “effected without receipt of consideration by the
Company.”  If a majority of the shares which are of the same class as
the shares that are subject to outstanding Awards are exchanged for, converted
into, or otherwise become (whether or not pursuant to an Ownership Change Event)
shares of another corporation (the “New
Shares”),
the Committee may unilaterally amend the outstanding Awards to provide that such
Awards are for New Shares.  In the event of any such amendment, the
number of shares subject to, and the exercise or purchase price per share of,
the outstanding Awards shall be adjusted in a fair and equitable manner as
determined by the Committee, in its discretion.  Any fractional share
resulting from an adjustment pursuant to this Section 4.3 shall be rounded
down to the nearest whole number, and in no event may the exercise or purchase
price under any Award be decreased to an amount less than the par value, if any,
of the stock subject to such Award.  The Committee in its sole
discretion, may also make such adjustments in the terms of any Award to reflect,
or related to, such changes in the capital structure of the Company or
distributions as it deems appropriate.  The adjustments determined by
the Committee pursuant to this Section shall be final, binding and
conclusive.


    
      
         


      

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

     

    5.           Eligibility,
Participation and Award Limitations.

     

    5.1           Persons Eligible for
Awards.  Awards may be granted only to Employees who, prior to
the offer of an Award as an inducement to become an Employee, were (i) neither
Employees nor Directors or (ii) former Employees or Directors whose period of
Service was followed by a bona-fide period of
non-employment.  Deferred Compensation Awards may be granted only to
individuals who are among a select group of management or highly compensated
Employees.

     

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

     

    5.3           Award
Limitations.

     

    (a)           Aggregate Limit
on Full Value Awards.  In no event shall more than forty
percent (40%) of the maximum aggregate number of shares of Stock that may be
issued under the Plan, determined in accordance with Sections 4.1, 4.2, and
4.3, be issued pursuant to Full Value Awards.

     

    (b)           Limit on Full
Value Awards without Minimum Vesting.  Except with respect to a
maximum of five percent (5%) of the maximum aggregate number of shares of Stock
that may be issued under the Plan, determined in accordance with
Sections 4.1, 4.2, and 4.3, Full Value Awards which vest on the basis of
the Participant’s continued Service shall provide for vesting over a period of
not less than three (3) years, and Full Value Awards which vest on the basis of
the attainment of performance goals shall provide for a performance period of
not less than twelve (12) months.  The foregoing limitations shall not
preclude the acceleration of vesting of any such Award upon the death,
disability, retirement or involuntary termination of Service of the Participant
or upon or following a Change in Control, as determined by the Committee in its
discretion.


    
      
         


      

      
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    6.           Stock
Options.

     

    Options
shall be evidenced by Award Agreements specifying the number of shares of Stock
covered thereby, in such form as the Committee shall from time to time
establish.  Award Agreements evidencing Options may incorporate all or
any of the terms of the Plan by reference and shall comply with and be subject
to the following terms and conditions:

     

    6.1           Exercise Price.  The
exercise price for each Option shall be established in the discretion of the
Committee; provided, however, that the exercise price per share shall be not
less than the Fair Market Value of a share of Stock on the effective date of
grant of the Option.  Notwithstanding the foregoing, an Option may be
granted with an exercise price lower than the minimum exercise price set forth
above if such Option is granted pursuant to an assumption or substitution for
another option in a manner qualifying under the provisions of
Section 424(a) of the Code.

     

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

     

    6.3           Payment of Exercise
Price.

     

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

     

    (b)           Limitations on
Forms of Consideration.

     

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


    
      
         


      

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

     

    6.4           Effect of Termination of
Service.

     

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

     

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

     

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

     

    (iii)           Termination for
Cause.  Notwithstanding any other provision of the Plan to the
contrary, if the Participant’s Service is terminated for Cause or if, following
the Participant’s termination of Service and during any period in which the
Option otherwise would remain exercisable, the Participant engages in any act
that would constitute Cause, the Option shall terminate in its entirety and
cease to be exercisable immediately upon such termination of Service or
act.


    
      
         


      

      
        15

        
          

        

      

      
         


      

    


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

     

    (b)           Extension if
Exercise Prevented by Law or Insider Trading
Policy.  Notwithstanding the foregoing, other than termination
of Service for Cause, if the exercise of an Option within the applicable time
periods set forth in Section 6.4(a) is prevented by the provisions of
Section 15 below or a sale of shares pursuant to a Cashless Exercise of the
Option would violate the provisions of the Insider Trading Policy, the Option
shall remain exercisable until thirty (30) days after the date such exercise or
sale, as the case may be, first would no longer be prevented by such provisions,
but in any event no later than the Option Expiration Date.

     

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

     

    7.           Stock
Appreciation Rights.

     

    Stock
Appreciation Rights shall be evidenced by Award Agreements specifying the number
of shares of Stock subject to the Award, in such form as the Committee shall
from time to time establish.  Award Agreements evidencing SARs may
incorporate all or any of the terms of the Plan by reference and shall comply
with and be subject to the following terms and conditions:

     

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

     

    7.2           Exercise Price.  The
exercise price for each SAR shall be established in the discretion of the
Committee; provided, however, that (a) the exercise price per share subject
to a Tandem SAR shall be the exercise price per share under the related Option
and (b) the exercise price per share subject to a Freestanding SAR shall be
not less than the Fair Market Value of a share of Stock on the effective date of
grant of the SAR.


    
      
         


      

      
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    7.3           Exercisability and Term of
SARs.

     

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

     

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

     

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

     

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

     

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


    
      
         


      

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

     

    8.           Restricted
Stock Awards.

     

    Restricted
Stock Awards shall be evidenced by Award Agreements specifying whether the Award
is a Restricted Stock Bonus or a Restricted Stock Purchase Right and the number
of shares of Stock subject to the Award, in such form as the Committee shall
from time to time establish.  Award Agreements evidencing Restricted
Stock Awards may incorporate all or any of the terms of the Plan by reference
and shall comply with and be subject to the following terms and
conditions:

     

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

     

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

     

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


    
      
         


      

      
        18

        
          

        

      

      
         


      

    


    8.4           Payment of Purchase
Price.  Except as otherwise provided below, payment of the
purchase price for the number of shares of Stock being purchased pursuant to any
Restricted Stock Purchase Right shall be made (a) in cash or by check or
cash equivalent, (b) by such other consideration as may be approved by the
Committee from time to time to the extent permitted by applicable law, or
(c) by any combination thereof.

     

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

     

    8.6           Voting Rights; Dividends and
Distributions.  Except as provided in this Section,
Section 8.5 and any Award Agreement, during any period in which shares
acquired pursuant to a Restricted Stock Award remain subject to Vesting
Conditions, the Participant shall have all of the rights of a stockholder of the
Company holding shares of Stock, including the right to vote such shares and to
receive all dividends and other distributions paid with respect to such
shares.  However, in the event of a dividend or distribution paid in
shares of Stock or other property or any other adjustment made upon a change in
the capital structure of the Company as described in Section 4.3, any and
all new, substituted or additional securities or other property (other than
normal cash dividends) to which the Participant is entitled by reason of the
Participant’s Restricted Stock Award shall be immediately subject to the same
Vesting Conditions as the shares subject to the Restricted Stock Award with
respect to which such dividends or distributions were paid or adjustments were
made.

     

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


    
      
         


      

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

     

    9.           Restricted
Stock Unit Awards.

     

    Restricted
Stock Unit Awards shall be evidenced by Award Agreements specifying the number
of Restricted Stock Units subject to the Award, in such form as the Committee
shall from time to time establish.  Award Agreements evidencing
Restricted Stock Units may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and
conditions:

     

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

     

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

     

    9.3           Vesting.  Subject to
Section 5.3(b), Restricted Stock Unit Awards may (but need not) be made
subject to Vesting Conditions based upon the satisfaction of such Service
requirements, conditions, restrictions or performance criteria, including,
without limitation, Performance Goals as described in Section 10.4, as shall be
established by the Committee and set forth in the Award Agreement evidencing
such Award.  The Committee, in its discretion, may provide in any
Award Agreement evidencing a Restricted Stock Unit Award that, if the
satisfaction of Vesting Conditions with respect to any shares subject to the
Award would otherwise occur on a day on which the sale of such shares would
violate the provisions of the Insider Trading Policy, then satisfaction of the
Vesting Conditions automatically shall be determined on the first to occur of
(a) the next trading day on which the sale of such shares would not violate
the Insider Trading Policy or (b) the later of (i) the last day of the
calendar year in which the original vesting date occurred or (ii) the last
day of the Company’s taxable year in which the original vesting date
occurred.


    
      
         


      

      
        20

        
          

        

      

      
         


      

    


    9.4           Voting Rights, Dividend Equivalent
Rights and Distributions.  Participants shall have no voting
rights with respect to shares of Stock represented by Restricted Stock Units
until the date of the issuance of such shares (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company).  However, the Committee, in its discretion, may provide in
the Award Agreement evidencing any Restricted Stock Unit Award that the
Participant shall be entitled to Dividend Equivalent Rights with respect to the
payment of cash dividends on Stock during the period beginning on the date such
Award is granted and ending, with respect to each share subject to the Award, on
the earlier of the date the Award is settled or the date on which it is
terminated.  Such Dividend Equivalent Rights, if any, shall be paid by
crediting the Participant with additional whole Restricted Stock Units as of the
date of payment of such cash dividends on Stock.  The number of
additional Restricted Stock Units (rounded to the nearest whole number) to be so
credited shall be determined by dividing (a) the amount of cash dividends
paid on such date with respect to the number of shares of Stock represented by
the Restricted Stock Units previously credited to the Participant by
(b) the Fair Market Value per share of Stock on such date.  Such
additional Restricted Stock Units shall be subject to the same terms and
conditions and shall be settled in the same manner and at the same time as the
Restricted Stock Units originally subject to the Restricted Stock Unit
Award.  In the event of a dividend or distribution paid in shares of
Stock or other property or any other adjustment made upon a change in the
capital structure of the Company as described in Section 4.3, appropriate
adjustments shall be made in the Participant’s Restricted Stock Unit Award so
that it represents the right to receive upon settlement any and all new,
substituted or additional securities or other property (other than normal cash
dividends) to which the Participant would be entitled by reason of the shares of
Stock issuable upon settlement of the Award, and all such new, substituted or
additional securities or other property shall be immediately subject to the same
Vesting Conditions as are applicable to the Award.

     

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

     

    9.6           Settlement of Restricted Stock Unit
Awards.  The Company shall issue to a Participant on the date
on which Restricted Stock Units subject to the Participant’s Restricted Stock
Unit Award vest or on such other date determined by the Committee, in its
discretion, and set forth in the Award Agreement one (1) share of Stock (and/or
any other new, substituted or additional securities or other property pursuant
to an adjustment described in Section 9.4) for each Restricted Stock Unit
then becoming vested or otherwise to be settled on such date, subject to the
withholding of applicable taxes, if any.  If permitted by the
Committee, the Participant may elect, consistent with the requirements of
Section 409A, to defer receipt of all or any portion of the shares of Stock
or other property otherwise issuable to the Participant pursuant to this
Section, and such deferred issuance date(s) and amount(s) elected by the
Participant shall be set forth in the Award
Agreement.  Notwithstanding the foregoing, the Committee, in its
discretion, may provide in any Award Agreement for settlement of any Restricted
Stock Unit Award by payment to the Participant in cash of an amount equal to the
Fair Market Value on the payment date of the shares of Stock or other property
otherwise issuable to the Participant pursuant to this Section.


    
      
         


      

      
        21

        
          

        

      

      
         


      

    


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

     

    10.           Performance
Awards.

     

    Performance
Awards shall be evidenced by Award Agreements in such form as the Committee
shall from time to time establish.  Award Agreements evidencing
Performance Awards may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and
conditions:

     

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

     

    10.2           Initial Value of Performance Shares
and Performance Units.  Unless otherwise provided by the
Committee in granting a Performance Award, each Performance Share shall have an
initial monetary value equal to the Fair Market Value of one (1) share of Stock,
subject to adjustment as provided in Section 4.3, on the effective date of
grant of the Performance Share, and each Performance Unit shall have an initial
monetary value established by the Committee at the time of grant.  The
final value payable to the Participant in settlement of a Performance Award
determined on the basis of the applicable Performance Award Formula will depend
on the extent to which Performance Goals established by the Committee are
attained within the applicable Performance Period established by the
Committee.

     

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


    
      
         


      

      
        22

        
          

        

      

      
         


      

    


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

     

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

     

    (i)               revenue;

     

    (ii)              sales;

     

    (iii)             expenses;

     

    (iv)             operating
income;

     

    (v)              gross
margin;

     

    (vi)             operating
margin;

     

    (vii)            earnings
before any one or more of: stock-based compensation expense, interest, taxes,
depreciation and amortization;

     

    (viii)           pre-tax
profit;

     

    (ix)              net
operating income;

     

    (x)               net
income;


    
      
         


      

      
        23

        
          

        

      

      
         


      

    


    (xi)              economic
value added;

     

    (xii)             free
cash flow;

     

    (xiii)            operating
cash flow;

     

    (xiv)            balance
of cash, cash equivalents and marketable securities;

     

    (xv)             stock
price;

     

    (xvi)            earnings
per share;

     

    (xvii)           return
on stockholder equity;

     

    (xviii)          return
on capital;

     

    (xix)             return
on assets;

     

    (xx)              return
on investment;

     

    (xxi)             employee
satisfaction;

     

    (xxii)            employee
retention;

     

    (xxiii)           market
share;

     

    (xxiv)           customer
satisfaction;

     

    (xxv)            product
development;

     

    (xxvi)           research
and development expenses;

     

    (xxvii)          completion
of an identified special project; and

     

    (xxviii)         completion
of a joint venture or other corporate transaction.

     

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

     

    10.5           Settlement of Performance
Awards.

     

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


    
      
         


      

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

     

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

     

    (d)           Payment in
Settlement of Performance Awards.  As soon as practicable
following the Committee’s determination and certification in accordance with
Sections 10.5(a), but in any event within the Short-Term Deferral Period
described in Section 16.1 (except as otherwise provided below or consistent
with the requirements of Section 409A), payment shall be made to each
eligible Participant (or such Participant’s legal representative or other person
who acquired the right to receive such payment by reason of the Participant’s
death) of the final value of the Participant’s Performance
Award.  Payment of such amount shall be made in cash, shares of Stock,
or a combination thereof as determined by the Committee.  Unless
otherwise provided in the Award Agreement evidencing a Performance Award,
payment shall be made in a lump sum.  If permitted by the Committee,
the Participant may elect, consistent with the requirements of
Section 409A, to defer receipt of all or any portion of the payment to be
made to the Participant pursuant to this Section, and such deferred payment
date(s) elected by the Participant shall be set forth in the Award
Agreement.  If any payment is to be made on a deferred basis, the
Committee may, but shall not be obligated to, provide for the payment during the
deferral period of Dividend Equivalent Rights or interest.

     

    (e)           Provisions
Applicable to Payment in Shares.  If payment is to be made in
shares of Stock, the number of such shares shall be determined by dividing the
final value of the Performance Award by the Fair Market Value of a share of
Stock determined by the method specified in the Award
Agreement.  Shares of Stock issued in payment of any Performance Award
may be fully vested and freely transferable shares or may be shares of Stock
subject to Vesting Conditions as provided in Section 8.5.  Any
shares subject to Vesting Conditions shall be evidenced by an appropriate Award
Agreement and shall be subject to the provisions of Sections 8.5 through
8.8 above.


    
      
         


      

      
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    10.6           Voting Rights; Dividend Equivalent
Rights and Distributions.  Participants shall have no voting
rights with respect to shares of Stock represented by Performance Share Awards
until the date of the issuance of such shares, if any (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company).  However, the Committee, in its discretion, may
provide in the Award Agreement evidencing any Performance Share Award that the
Participant shall be entitled to Dividend Equivalent Rights with respect to the
payment of cash dividends on Stock during the period beginning on the date the
Award is granted and ending, with respect to each share subject to the Award, on
the earlier of the date on which the Performance Shares are settled or the date
on which they are forfeited.  Such Dividend Equivalent Rights, if any,
shall be credited to the Participant in the form of additional whole Performance
Shares as of the date of payment of such cash dividends on Stock.  The
number of additional Performance Shares (rounded to the nearest whole number) to
be so credited shall be determined by dividing (a) the amount of cash
dividends paid on the dividend payment date with respect to the number of shares
of Stock represented by the Performance Shares previously credited to the
Participant by (b) the Fair Market Value per share of Stock on such
date.  Dividend Equivalent Rights may be paid currently or may be
accumulated and paid to the extent that Performance Shares become
nonforfeitable, as determined by the Committee.  Settlement of
Dividend Equivalent Rights may be made in cash, shares of Stock, or a
combination thereof as determined by the Committee, and may be paid on the same
basis as settlement of the related Performance Share as provided in
Section 10.5.  Dividend Equivalent Rights shall not be paid with
respect to Performance Units.  In the event of a dividend or
distribution paid in shares of Stock or other property or any other adjustment
made upon a change in the capital structure of the Company as described in
Section 4.3, appropriate adjustments shall be made in the Participant’s
Performance Share Award so that it represents the right to receive upon
settlement any and all new, substituted or additional securities or other
property (other than normal cash dividends) to which the Participant would be
entitled by reason of the shares of Stock issuable upon settlement of the
Performance Share Award, and all such new, substituted or additional securities
or other property shall be immediately subject to the same Performance Goals as
are applicable to the Award.

     

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

     

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

     

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

     

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


    
      
         


      

      
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    11.           Deferred
Compensation Awards.

     

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

     

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

     

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

     

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

     

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

     

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

     

    11.2           Terms and Conditions of Deferred
Compensation Awards.  Deferred Compensation Awards granted
pursuant to this Section 11 shall be evidenced by Award Agreements in such
form as the Committee shall from time to time establish.  Award
Agreements evidencing Deferred Compensation Awards may incorporate all or any of
the terms of the Plan by reference and, except as provided below, shall comply
with and be subject to the terms and conditions of
Section 9.


    
      
         


      

      
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    (a)           Voting Rights; Dividend Equivalent
Rights and Distributions.  Participants
shall have no voting rights with respect to shares of Stock represented by Stock
Units until the date of the issuance of such shares (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company).  However, a Participant shall be entitled to
Dividend Equivalent Rights with respect to the payment of cash dividends on
Stock during the period beginning on the date the Stock Units are granted
automatically to the Participant and ending on the earlier of the date on which
such Stock Units are settled or the date on which they are
forfeited.  Such Dividend Equivalent Rights shall be paid by crediting
the Participant with additional whole Stock Units as of the date of payment of
such cash dividends on Stock.  The number of additional Stock Units
(rounded to the nearest whole number) to be so credited shall be determined by
dividing (A) the amount of cash dividends paid on the dividend payment date
with respect to the number of shares of Stock represented by the Stock Units
previously credited to the Participant by (B) the Fair Market Value per
share of Stock on such date.  Such additional Stock Units shall be
subject to the same terms and conditions and shall be settled in the same manner
and at the same time as the Stock Units originally subject to the Stock Unit
Award.  In the event of a dividend or distribution paid in shares of
Stock or other property or any other adjustment made upon a change in the
capital structure of the Company as described in Section 4.3, appropriate
adjustments shall be made in the Participant’s Stock Unit Award so that it
represents the right to receive upon settlement any and all new, substituted or
additional securities or other property (other than normal cash dividends) to
which the Participant would be entitled by reason of the shares of Stock
issuable upon settlement of the Award.

     

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

     

    12.           Cash-Based
Awards and Other Stock-Based Awards.

     

    Cash-Based Awards and Other Stock-Based
Awards shall be evidenced by Award Agreements in such form as the Committee
shall from time to time establish.  Award Agreements evidencing
Cash-Based Awards and Other Stock-Based Awards may incorporate all or any of the
terms of the Plan by reference and shall comply with and be subject to the
following terms and conditions:

    


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

     

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


    
      
         


      

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

     

    12.4           Payment or Settlement of Cash-Based
Awards and Other Stock-Based Awards.  Payment or settlement, if
any, with respect to a Cash-Based Award or an Other Stock-Based Award shall be
made in accordance with the terms of the Award, in cash, shares of Stock or
other securities or any combination thereof as the Committee
determines.  To the extent applicable, payment or settlement with
respect to each Cash-Based Award and Other Stock-Based Award shall be made in
compliance with the requirements of Section 409A.

     

    12.5           Voting Rights; Dividend Equivalent
Rights and Distributions.  Participants shall have no voting
rights with respect to shares of Stock represented by Other Stock-Based Awards
until the date of the issuance of such shares of Stock (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), if any, in settlement of such Award.  However,
the Committee, in its discretion, may provide in the Award Agreement evidencing
any Other Stock-Based Award that the Participant shall be entitled to Dividend
Equivalent Rights with respect to the payment of cash dividends on Stock during
the period beginning on the date such Award is granted and ending, with respect
to each share subject to the Award, on the earlier of the date the Award is
settled or the date on which it is terminated.  Such Dividend
Equivalent Rights, if any, shall be paid in accordance with the provisions set
forth in Section 9.4.  Dividend Equivalent Rights shall not be granted
with respect to Cash-Based Awards.

     

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

     

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


    
      
         


      

      
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    13.           Standard
Forms of Award Agreement.

     

    13.1           Award Agreements.  Each
Award shall comply with and be subject to the terms and conditions set forth in
the appropriate form of Award Agreement approved by the Committee and as amended
from time to time.  No Award or purported Award shall be a valid and
binding obligation of the Company unless evidenced by a fully executed Award
Agreement.  Any Award Agreement may consist of an appropriate form of
Notice of Grant and a form of Agreement incorporated therein by reference, or
such other form or forms, including electronic media, as the Committee may
approve from time to time.

     

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

     

    14.           Change in
Control.

     

    14.1           Effect of Change in Control on
Awards.  Subject to the requirements and limitations of Section
409A if applicable, the Committee may provide for any one or more of the
following:

     

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

     

    (b)           Assumption,
Continuation or Substitution.  In the event of a Change in
Control, the surviving, continuing, successor, or purchasing corporation or
other business entity or parent thereof, as the case may be (the “Acquiror”), may, without the consent
of any Participant, either assume or continue the Company’s rights and
obligations under each or any Award or portion thereof outstanding immediately
prior to the Change in Control or substitute for each or any such outstanding
Award or portion thereof a substantially equivalent award with respect to the
Acquiror’s stock, as applicable.  For purposes of this Section, if so
determined by the Committee, in its discretion, an Award denominated in shares
of Stock shall be deemed assumed if, following the Change in Control, the Award
confers the right to receive, subject to the terms and conditions of the Plan
and the applicable Award Agreement, for each share of Stock subject to the Award
immediately prior to the Change in Control, the consideration (whether stock,
cash, other securities or property or a combination thereof) to which a holder
of a share of Stock on the effective date of the Change in Control was entitled;
provided, however, that if such consideration is not solely common stock of the
Acquiror, the Committee may, with the consent of the Acquiror, provide for the
consideration to be received upon the exercise or settlement of the Award, for
each share of Stock subject to the Award, to consist solely of common stock of
the Acquiror equal in Fair Market Value to the per share consideration received
by holders of Stock pursuant to the Change in Control.  If any portion
of such consideration may be received by holders of Stock pursuant to the Change
in Control on a contingent or delayed basis, the Committee may, in its sole
discretion, determine such Fair Market Value per share as of the time of the
Change in Control on the basis of the Committee’s good faith estimate of the
present value of the probable future payment of such
consideration.  Any Award or portion thereof which is neither assumed
or continued by the Acquiror in connection with the Change in Control nor
exercised or settled as of the time of consummation of the Change in Control
shall terminate and cease to be outstanding effective as of the time of
consummation of the Change in Control.


    
      
         


      

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


    
      
         


      

      
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    14.2           Federal Excise Tax Under Section 4999
of the Code.

     

    (a)           Excess Parachute
Payment.  In the event that any acceleration of vesting
pursuant to an Award and any other payment or benefit received or to be received
by a Participant would subject the Participant to any excise tax pursuant to
Section 4999 of the Code due to the characterization of such acceleration of
vesting, payment or benefit as an “excess parachute payment” under Section 280G
of the Code, the Participant may elect, in his or her sole discretion, to reduce
the amount of any acceleration of vesting called for under the Award in order to
avoid such characterization.

     

    (b)           Determination by
Independent Accountants.  To aid the Participant in making any
election called for under Section 14.2(a), no later than the date of the
occurrence of any event that might reasonably be anticipated to result in an
“excess parachute payment” to the Participant as described in
Section 14.2(a), the Company shall request a determination in writing by
independent public accountants selected by the Company (the “Accountants”).  As soon as
practicable thereafter, the Accountants shall determine and report to the
Company and the Participant the amount of such acceleration of vesting, payments
and benefits which would produce the greatest after-tax benefit to the
Participant.  For the purposes of such determination, the Accountants
may rely on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code.  The Company and the Participant
shall furnish to the Accountants such information and documents as the
Accountants may reasonably request in order to make their required
determination.  The Company shall bear all fees and expenses the
Accountants may reasonably charge in connection with their services contemplated
by this Section.

     

    15.           Compliance
with Securities Law.

     

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


    
      
         


      

      
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    16.           Compliance
with Section 409A.

     

    16.1           Awards Subject to
Section 409A.  The provisions of this Section 16
shall apply to any Award or portion thereof that is or becomes subject to
Section 409A, notwithstanding any provision to the contrary contained in
the Plan or the Award Agreement applicable to such Award.  Awards
subject to Section 409A include, without limitation:

     

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

     

    (b)           Each
Deferred Compensation Award.

     

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

     

    Subject
to any applicable U.S. Treasury Regulations promulgated pursuant to
Section 409A or other applicable guidance, the term “Short-Term
Deferral Period”
means the period ending on the later of (i) the 15th day of the third month
following the end of the Company’s fiscal year in which the applicable portion
of the Award is no longer subject to a substantial risk of forfeiture or
(ii) the 15th day of the third month following the end of the Participant’s
taxable year in which the applicable portion of the Award is no longer subject
to a substantial risk of forfeiture.  For this purpose, the term
“substantial risk of forfeiture” shall have the meaning set forth in any
applicable U.S. Treasury Regulations promulgated pursuant to Section 409A
or other applicable guidance.

     

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

     

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

     

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

     

    (c)           Elections
shall continue in effect until a written election to revoke or change such
Election is received by the Company, except that a written election to revoke or
change such Election must be made prior to the last day for making an Election
determined in accordance with paragraph (b) above or as permitted by
Section 16.3.


    
      
         


      

      
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    16.3           Subsequent Elections.  Except
as otherwise permitted or required by Section 409A or any applicable U.S.
Treasury Regulations promulgated pursuant to Section 409A or other
applicable guidance, any Award subject to Section 409A which permits a
subsequent Election to delay the distribution or change the form of distribution
in settlement of such Award shall comply with the following
requirements:

     

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

     

    (b)           Each
subsequent Election related to a distribution in settlement of an Award not
described in Section 16.4(b), 16.4(c) or 16.4(f) must result in a delay of
the distribution for a period of not less than five (5) years from the date such
distribution would otherwise have been made; and

     

    (c)           No
subsequent Election related to a distribution pursuant to Section 16.4(d)
shall be made less than twelve (12) months prior to the date of the first
scheduled payment under such distribution.

     

    16.4           Distributions Pursuant to Deferral
Elections.  Except
as otherwise permitted or required by Section 409A or any applicable U.S.
Treasury Regulations promulgated pursuant to Section 409A or other
applicable guidance, no distribution in settlement of an Award subject to
Section 409A may commence earlier than:

     

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

     

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

     

    (c)           Death;

     

    (d)           A
specified time (or pursuant to a fixed schedule) that is either
(i) specified by the Committee upon the grant of an Award and set forth in
the Award Agreement evidencing such Award or (ii) specified by the
Participant in an Election complying with the requirements of Section 16.2
and/or 16.3, as applicable;

     

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

     

    (f)           The
occurrence of an Unforeseeable Emergency (as defined by applicable U.S. Treasury
Regulations promulgated pursuant to Section 409A).

     

    Notwithstanding
anything else herein to the contrary, to the extent that a Participant is a
“Specified Employee” (as defined in Section 409A(a)(2)(B)(i) of the Code) of the
Company, no distribution pursuant to Section 16.4(a) in settlement of an
Award subject to Section 409A may be made before the date (the “Delayed Payment
Date”) which is
six (6) months after such Participant’s date of separation from service, or, if
earlier, the date of the Participant’s death.  All such amounts that
would, but for this paragraph, become payable prior to the Delayed Payment Date
shall be accumulated and paid on the Delayed Payment Date.


    
      
         


      

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

     

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

     

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

     

    (a)           the
Participant is unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of not
less than twelve (12) months, or

     

    (b)           the
Participant is, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than twelve (12) months, receiving income
replacement benefits for a period of not less than three (3) months under an
accident and health plan covering employees of the Participant’s
employer.

     

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


    
      
         


      

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

     

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

     

    17.           Tax
Withholding.

     

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

     

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

     

    18.           Amendment
or Termination of Plan.

     

    The
Committee may amend, suspend or terminate the Plan at any time.  No
amendment, suspension or termination of the Plan shall affect any then
outstanding Award unless expressly provided by the Committee.  Except
as provided by the next sentence, no amendment, suspension or termination of the
Plan may adversely affect any then outstanding Award without the consent of the
Participant.  Notwithstanding any other provision of the Plan to the
contrary, the Committee may, in its sole and absolute discretion and without the
consent of any Participant, amend the Plan or any Award Agreement, to take
effect retroactively or otherwise, as it deems necessary or advisable for the
purpose of conforming the Plan or such Award Agreement to any present or future
law, regulation or rule applicable to the Plan, including, but not limited to,
Section 409A.

     


    
      
         


      

      
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    19.           Miscellaneous
Provisions.

     

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

     

    19.2           Forfeiture
Events.

     

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

     

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

     

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

     

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


    
      
         


      

      
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    19.5           Rights as a
Stockholder.  A Participant shall have no rights as a
stockholder with respect to any shares covered by an Award until the date of the
issuance of such shares (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the
Company).  No adjustment shall be made for dividends, distributions or
other rights for which the record date is prior to the date such shares are
issued, except as provided in Section 4.3 or another provision of the
Plan.

     

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

     

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

     

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

     

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

     

    19.10                      Severability.  If
any one or more of the provisions (or any part thereof) of this Plan shall be
held invalid, illegal or unenforceable in any respect, such provision shall be
modified so as to make it valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions (or any part thereof) of
the Plan shall not in any way be affected or impaired thereby.

     

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


    
      
         


      

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

     

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

     

    IN
WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the
foregoing sets forth the Multimedia Games, Inc. 2008 Employment Inducement Award
Plan as duly adopted by the Board on June 15, 2008.

     

    
      
        
          
            	 
      	
                    /s/ Randy Cieslewicz

                  
	 
      	
                    Printed
      Name: Randy
  Cieslewicz

                  


          

        

      

    


    
      
         


      

      
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    PLAN HISTORY AND NOTES TO
COMPANY

    


    
      
        
          
            
              
                
                  
                    	
                            June 15,
      2008

                          	 	
                            Board
      adopts Plan with a share reserve equal to 1,300,000
  shares.

                          
	 	 	 
	
                            IMPORTANT
      NOTE:  Implementation of Section 11—Deferred Compensation
      Awards or deferral of settlement of any Award

                          	 	
                            Upon
      establishment of a provision for deferral of settlement of any Award,
      determine whether such program will constitute a “top-hat” pension plan
      under ERISA.  If so, file notice with Dept. of Labor under ERISA
      Reg. 2520.104-23 within 120 days of adoption of resolutions by the
      Committee to establish the program to obtain exemption from reporting and
      disclosure requirements of ERISA.  Include claims procedure in
      award agreements evidencing such awards.

                          
	 	 	 
	
                            July 22,
      2008

                          	 	
                            Committee
      amends Plan to increase share reserve to 1,800,000
  shares.

                          
	 	 	 
	
                            September 14,
      2008

                          	 	
                            Committee
      amends Plan to increase share reserve to 2,100,000
  shares.

                          
	 	 	 
	      
                            November
      10, 2008

                          	 	      
                            Committee
      amends Plan to increase share reserve to 2,500,000
      shares.