Exhibit 10.1



 







EXHIBIT 10.1




QLOGIC CORPORATION




2005 PERFORMANCE INCENTIVE PLAN





	1.	 	PURPOSE OF PLAN






The purpose of this QLogic Corporation 2005 Performance Incentive Plan (this “Plan”) of
QLogic Corporation, a Delaware corporation (the “Corporation”), is to promote the success of
the Corporation and to increase stockholder value by providing an additional means through
the grant of awards to attract, motivate, retain and reward selected employees and other
eligible persons.




	2.	 	ELIGIBILITY






The Administrator (as such term is defined in Section 3.1) may grant awards under this Plan
only to those persons that the Administrator determines to be Eligible Persons. An
“Eligible Person” is any person who is either: (a) an officer (whether or not a director) or
employee of the Corporation or one of its Subsidiaries; (b) a director of one of the
Corporation’s Subsidiaries; or (c) an individual consultant or advisor who renders or has
rendered bona fide services (other than services in connection with the offering or sale of
securities of the Corporation or one of its Subsidiaries in a capital-raising transaction or
as a market maker or promoter of securities of the Corporation or one of its Subsidiaries)
to the Corporation or one of its Subsidiaries and who is selected to participate in this
Plan by the Administrator; provided, however, that a person who is otherwise an Eligible
Person under clause (c) above may participate in this Plan only if such participation would
not adversely affect either the Corporation’s eligibility to use Form S-8 to register under
the Securities Act of 1933, as amended (the “Securities Act”), the offering and sale of
shares issuable under this Plan by the Corporation or the Corporation’s compliance with any
other applicable laws. An Eligible Person who has been granted an award may, if otherwise
eligible, be granted additional awards if the Administrator shall so determine. A
Non-Employee Director shall be eligible only for awards pursuant to Appendix A to
this Plan and shall not be eligible for discretionary awards granted by the Administrator.
As used herein, “Subsidiary” means any corporation or other entity a majority of whose
outstanding voting stock or voting power is beneficially owned directly or indirectly by the
Corporation; “Board” means the Board of Directors of the Corporation; “Non-Employee
Director” means a member of the Board who is not employed by the Corporation or a
Subsidiary; and “participant” means an Eligible Person or a Non-Employee Director who has
received an award under this Plan.




	3.	 	PLAN ADMINISTRATION






	 	3.1	 	The Administrator. This Plan shall be administered by and all awards under
this Plan shall be authorized by the Administrator. The “Administrator” means the
Board or one or more committees appointed by the Board or another committee (within its
delegated authority) to administer all or certain aspects of this Plan. Any such
committee shall be comprised solely of one or more directors or such number of
directors as may be required under applicable law. A committee may delegate some or
all of its authority to another committee so constituted. The Board or a committee
comprised solely of directors may also delegate, to the





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	 	 	 	extent permitted by Section 157(c) of the Delaware General Corporation Law and any
other applicable law, to one or more officers of the Corporation, its powers under
this Plan (a) to designate the officers and employees of the Corporation and its
Subsidiaries who will receive grants of awards under this Plan, and (b) to determine
the number of shares subject to, and the other terms and conditions of, such awards.
The Board may delegate different levels of authority to different committees with
administrative and grant authority under this Plan. Unless otherwise provided in
the Bylaws of the Corporation or the applicable charter of any Administrator: (a) a
majority of the members of the acting Administrator shall constitute a quorum, and
(b) the vote of a majority of the members present assuming the presence of a quorum
or the unanimous written consent of the members of the Administrator shall
constitute action by the acting Administrator.
	 
	 	 	 	With respect to awards intended to satisfy the requirements for performance-based
compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the “Code”), this Plan shall be administered by a committee consisting solely of
two or more outside directors (as this requirement is applied under Section 162(m)
of the Code); provided, however, that the failure to satisfy such requirement shall
not affect the validity of the action of any committee otherwise duly authorized and
acting in the matter. Award grants, and transactions in or involving awards,
intended to be exempt under Rule 16b-3 under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), must be duly and timely authorized by the Board or a
committee consisting solely of two or more non-employee directors (as this
requirement is applied under Rule 16b-3 promulgated under the Exchange Act). To the
extent required by any applicable listing agency, this Plan shall be administered by
a committee composed entirely of independent directors (within the meaning of the
applicable listing agency).
	 
	 	3.2	 	Powers of the Administrator. Subject to the express provisions of this Plan,
the Administrator is authorized and empowered to do all things necessary or desirable
in connection with the authorization of awards and the administration of this Plan (in
the case of a committee or delegation to one or more officers, within the authority
delegated to that committee or person(s)), including, without limitation, the authority
to:






	 	(a)	 	determine eligibility and, from among those persons determined
to be eligible, the particular Eligible Persons who will receive an award under
this Plan;
	 
	 	(b)	 	grant awards to Eligible Persons, determine the price at which
securities will be offered or awarded and the number of securities to be
offered or awarded to any of such persons, determine the other specific terms
and conditions of such awards consistent with the express limits of this Plan,
establish the installments (if any) in which such awards shall become
exercisable or shall vest (which may include, without limitation, performance
and/or time-based schedules), or determine that no delayed exercisability or
vesting is required, establish any applicable performance





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	 	 	 	targets, and establish the events of termination or reversion of such
awards;
	 
	 	(c)	 	approve the forms of award agreements (which need not be
identical either as to type of award or among participants);
	 
	 	(d)	 	construe and interpret this Plan and any agreements defining
the rights and obligations of the Corporation, its Subsidiaries, and
participants under this Plan, further define the terms used in this Plan, and
prescribe, amend and rescind rules and regulations relating to the
administration of this Plan or the awards granted under this Plan;
	 
	 	(e)	 	cancel, modify, or waive the Corporation’s rights with respect
to, or modify, discontinue, suspend, or terminate any or all outstanding
awards, subject to any required consent under Section 8.6.5;
	 
	 	(f)	 	accelerate or extend the vesting or exercisability or extend
the term of any or all such outstanding awards (in the case of options or stock
appreciation rights, within the maximum ten-year term of such awards) in such
circumstances as the Administrator may deem appropriate (including, without
limitation, in connection with a termination of employment or services or other
events of a personal nature) subject to any required consent under Section
8.6.5;
	 
	 	(g)	 	adjust the number of shares of Common Stock subject to any
award, adjust the price of any or all outstanding awards or otherwise change
previously imposed terms and conditions, in such circumstances as the
Administrator may deem appropriate, in each case subject to Sections 4 and 8.6,
and provided that in no case (except due to an adjustment contemplated by
Section 7 or any repricing that may be approved by stockholders) shall such an
adjustment constitute a repricing (by amendment, cancellation and regrant,
exchange or other means) of the per share exercise or base price of any option
or stock appreciation right;
	 
	 	(h)	 	determine the date of grant of an award, which may be a
designated date after but not before the date of the Administrator’s action
(unless otherwise designated by the Administrator, the date of grant of an
award shall be the date upon which the Administrator took the action granting
an award);
	 
	 	(i)	 	determine whether, and the extent to which, adjustments are
required pursuant to Section 7 hereof and authorize the termination,
conversion, substitution or succession of awards upon the occurrence of an
event of the type described in Section 7;
	 
	 	(j)	 	acquire or settle (subject to Sections 7 and 8.6) rights under
awards in cash, stock of equivalent value, or other consideration; and




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	 	(k)	 	determine the fair market value of the Common Stock or awards
under this Plan from time to time and/or the manner in which such value will be
determined.






Awards granted to Non-Employee Directors pursuant to Appendix A to this Plan
are, however, intended to be automatic and, to the maximum extent possible,
self-effectuating.




	 	3.4	 	Binding Determinations. Any action taken by, or inaction of, the Corporation, any
Subsidiary, or the Administrator relating or pursuant to this Plan and within its authority
hereunder or under applicable law shall be within the absolute discretion of that entity or body
and shall be conclusive and binding upon all persons. Neither the Board nor any Board committee,
nor any member thereof or person acting at the direction thereof, shall be liable for any act,
omission, interpretation, construction or determination made in good faith in connection with this
Plan (or any award made under this Plan), and all such persons shall be entitled to indemnification
and reimbursement by the Corporation in respect of any claim, loss, damage or expense (including,
without limitation, attorneys’ fees) arising or resulting therefrom to the fullest extent permitted
by law and/or under any directors and officers liability insurance coverage that may be in effect
from time to time.
	 
	 	3.4	 	Reliance on Experts. In making any determination or in taking or not taking
any action under this Plan, the Board or a committee, as the case may be, may obtain
and may rely upon the advice of experts, including employees and professional advisors
to the Corporation. No director, officer or agent of the Corporation or any of its
Subsidiaries shall be liable for any such action or determination taken or made or
omitted in good faith.
	 
	 	3.5	 	Delegation. The Administrator may delegate ministerial, non-discretionary
functions to individuals who are officers or employees of the Corporation or any of its
Subsidiaries or to third parties.






	4.	 	SHARES OF COMMON STOCK SUBJECT TO THE PLAN; SHARE LIMITS






	 	4.1	 	Shares Available. Subject to the provisions of Section 7.1, the capital stock
that may be delivered under this Plan shall be shares of the Corporation’s authorized
but unissued Common Stock and any shares of its Common Stock held as treasury shares.
For purposes of this Plan, “Common Stock” means the common stock of the Corporation and
such other securities or property as may become the subject of awards under this Plan,
or may become subject to such awards, pursuant to an adjustment made under Section 7.1.
	 
	 	4.2	 	Share Limits. The maximum number of shares of Common Stock that may be
delivered pursuant to awards granted to Eligible Persons under this Plan (the “Share
Limit”) is equal to the sum of: (i) 7,000,000 shares of Common Stock, plus (ii) the
number of any shares subject to stock options granted under the Corporation’s Stock
Awards Plan (the “Prior Plan”) and outstanding as of the date of stockholder approval
of this Plan (the “Stockholder Approval Date”) which expire, or for any reason are
cancelled or terminated, after the Stockholder Approval Date without being exercised;
provided, that in no event shall the Share





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	 	 	 	Limit exceed 20,450,792 shares (which is the sum of 7,000,000 shares set forth
above, plus the aggregate number of shares subject to options previously granted and
outstanding under the Prior Plan as of the Effective Date).
	 
	 	 	 	The following limits also apply with respect to awards granted under this Plan:






	 	(a)	 	The maximum number of shares of Common Stock that may be
delivered pursuant to options qualified as incentive stock options granted
under this Plan is 20,000,000 shares.
	 
	 	(b)	 	The maximum number of shares of Common Stock subject to those
options and stock appreciation rights that are granted during any calendar year
to any individual under this Plan is 2,000,000 shares.
	 
	 	(c)	 	The maximum number of shares of Common Stock that may be
delivered pursuant to awards granted under this Plan, other than those
described in the next sentence, is 1,400,000 shares. This limit on so-called
“full-value awards” does not apply, however, to (1) shares delivered in respect
of stock option grants, and (2) shares delivered in respect of stock
appreciation right grants.
	 
	 	(d)	 	Additional limits with respect to Performance-Based Awards are
set forth in Section 5.2.3.
	 
	 	Each of the foregoing numerical limits is subject to adjustment as contemplated by
Section 4.3, Section 7.1, and Section 8.10.








	 	4.3	 	Awards Settled in Cash, Reissue of Awards and Shares. To the extent that an
award is settled in cash or a form other than shares of Common Stock, the shares that
would have been delivered had there been no such cash or other settlement shall not be
counted against the shares available for issuance under this Plan. In the event that
shares of Common Stock are delivered in respect of a dividend equivalent right, only
the actual number of shares delivered with respect to the award shall be counted
against the share limits of this Plan. To the extent that shares of Common Stock are
delivered pursuant to the exercise of a stock appreciation right or stock option, the
number of underlying shares as to which the exercise related shall be counted against
the applicable share limits under Section 4.2, as opposed to only counting the shares
actually issued. (For purposes of clarity, if a stock appreciation right relates to
100,000 shares and is exercised at a time when the payment due to the participant is
15,000 shares, 100,000 shares shall be charged against the applicable share limits
under Section 4.2 with respect to such exercise.) Shares that are subject to or
underlie awards which expire or for any reason are cancelled or terminated, are
forfeited, fail to vest, or for any other reason are not paid or delivered under this
Plan shall again be available for subsequent awards under this Plan. Refer to Section
8.10 for application of the foregoing share limits with respect to assumed awards. The
foregoing adjustments to the share limits of this Plan are subject to any applicable
limitations under Section 162(m) of the Code with respect to awards intended as
performance-based compensation thereunder.




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	 	4.4	 	Reservation of Shares; No Fractional Shares; Minimum Issue. The Corporation
shall at all times reserve a number of shares of Common Stock sufficient to cover the
Corporation’s obligations and contingent obligations to deliver shares with respect to
awards then outstanding under this Plan (exclusive of any dividend equivalent
obligations to the extent the Corporation has the right to settle such rights in cash).
No fractional shares shall be delivered under this Plan. The Administrator may pay
cash in lieu of any fractional shares in settlements of awards under this Plan. No
fewer than 100 shares may be purchased on exercise of any award (or, in the case of
stock appreciation or purchase rights, no fewer than 100 rights may be exercised at any
one time) unless the total number purchased or exercised is the total number at the
time available for purchase or exercise under the award.






	5.	 	AWARDS






	 	5.1	 	Type and Form of Awards. The Administrator shall determine the type or types
of award(s) to be made to each selected Eligible Person. Awards may be granted singly,
in combination or in tandem. Awards also may be made in combination or in tandem with,
in replacement of, as alternatives to, or as the payment form for grants or rights
under any other employee or compensation plan of the Corporation or one of its
Subsidiaries. The types of awards that may be granted under this Plan are:
	 
	 	 	 	5.1.1   Stock Options. A stock option is the grant of a right to purchase a specified
number of shares of Common Stock during a specified period as determined by the
Administrator. An option may be intended as an incentive stock option within the
meaning of Section 422 of the Code (an “ISO”) or a nonqualified stock option (an
option not intended to be an ISO). The award agreement for an option will indicate
if the option is intended as an ISO; otherwise it will be deemed to be a
nonqualified stock option. The maximum term of each option (ISO or nonqualified)
shall be ten (10) years. The per share exercise price for each option shall be not
less than 100% of the fair market value of a share of Common Stock on the date of
grant of the option, except that in the case of a stock option granted retroactively
in tandem with or as a substitution for another award, the per share exercise price
may be no lower than the fair market value of a share of Common Stock on the date
such other award was granted (to the extent consistent with Sections 422 and 424 of
the Code in the case of options intended as incentive stock options). When an
option is exercised, the exercise price for the shares to be purchased shall be paid
in full in cash or such other method permitted by the Administrator consistent with
Section 5.5.
	 
	 	 	 	5.1.2   Additional Rules Applicable to ISOs. To the extent that the aggregate fair
market value (determined at the time of grant of the applicable option) of stock
with respect to which ISOs first become exercisable by a participant in any calendar
year exceeds $100,000, taking into account both Common Stock subject to ISOs under
this Plan and stock subject to ISOs under all other plans of the Corporation or one
of its Subsidiaries (or any parent or predecessor corporation to the extent required
by and within the meaning of Section 422 of the Code and the regulations promulgated
thereunder), such options shall be treated as nonqualified





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	 	 	 	stock options. In reducing the number of options treated as ISOs to meet the
$100,000 limit, the most recently granted options shall be reduced first. To the
extent a reduction of simultaneously granted options is necessary to meet the
$100,000 limit, the Administrator may, in the manner and to the extent permitted by
law, designate which shares of Common Stock are to be treated as shares acquired
pursuant to the exercise of an ISO. ISOs may only be granted to employees of the
Corporation or one of its subsidiaries (for this purpose, the term “subsidiary” is
used as defined in Section 424(f) of the Code, which generally requires an unbroken
chain of ownership of at least 50% of the total combined voting power of all classes
of stock of each subsidiary in the chain beginning with the Corporation and ending
with the subsidiary in question). There shall be imposed in any award agreement
relating to ISOs such other terms and conditions as from time to time are required
in order that the option be an “incentive stock option” as that term is defined in
Section 422 of the Code. No ISO may be granted to any person who, at the time the
option is granted, owns (or is deemed to own under Section 424(d) of the Code)
shares of outstanding Common Stock possessing more than 10% of the total combined
voting power of all classes of stock of the Corporation, unless the exercise price
of such option is at least 110% of the fair market value of the stock subject to the
option and such option by its terms is not exercisable after the expiration of five
years from the date such option is granted.
	 
	 	 	 	5.1.3   Stock Appreciation Rights. A stock appreciation right or “SAR” is a right to
receive a payment, in cash and/or Common Stock, equal to the excess of the fair
market value of a specified number of shares of Common Stock on the date the SAR is
exercised over the fair market value of a share of Common Stock on the date the SAR
was granted (the “base price”) as set forth in the applicable award agreement,
except that in the case of a SAR granted retroactively in tandem with or as a
substitution for another award, the base price may be no lower than the fair market
value of a share of Common Stock on the date such other award was granted. The
maximum term of an SAR shall be ten (10) years.
	 
	 	 	 	5.1.4   Other Awards. The other types of awards that may be granted under this Plan
include: (a) stock bonuses, restricted stock, performance stock, stock units,
phantom stock, dividend equivalents, or similar rights to purchase or acquire
shares, whether at a fixed or variable price or ratio related to the Common Stock,
upon the passage of time, the occurrence of one or more events, or the satisfaction
of performance criteria or other conditions, or any combination thereof; (b) any
similar securities with a value derived from the value of or related to the Common
Stock and/or returns thereon; or (c) cash awards granted consistent with Section 5.2
below.






	 	5.2	 	Section 162(m) Performance-Based Awards. Without limiting the generality of
the foregoing, any of the types of awards listed in Section 5.1.4 above may be granted
as awards intended to satisfy the requirements for “performance-based compensation”
within the meaning of Section 162(m) of the Code (“Performance-Based Awards”). The
grant, vesting, exercisability or payment of Performance-Based Awards may depend (or,
in the case of stock options and SARs, may also depend) on the degree of achievement of
one or more





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	 	 	 	performance goals relative to a pre-established targeted level or level using one or
more of the Business Criteria set forth below (on an absolute or relative basis) for
the Corporation on a consolidated basis or for one or more of the Corporation’s
subsidiaries, segments, divisions or business units, or any combination of the
foregoing. Any stock option or SAR intended as a Performance-Based Award shall be
subject only to the requirements of Section 5.2.1 and 5.2.3 in order for such award
to satisfy the requirements for “performance-based compensation” under Section
162(m) of the Code. Any other Performance-Based Award shall be subject to all of
the following provisions of this Section 5.2.
	 
	 	 	 	5.2.1   Class; Administrator. The eligible class of persons for Performance-Based
Awards under this Section 5.2 shall be officers and employees of the Corporation or
one of its Subsidiaries. The Administrator approving Performance-Based Awards or
making any certification required pursuant to Section 5.2.4 must be constituted as
provided in Section 3.1 for awards that are intended as performance-based
compensation under Section 162(m) of the Code.
	 
	 	 	 	5.2.2   Performance Goals. The specific performance goals for Performance-Based
Awards (other than stock options or SARs intended as a Performance-Based Award)
shall be, on an absolute or relative basis, established based on one or more of the
following business criteria (“Business Criteria”) as selected by the Administrator
in its sole discretion: earnings per share, cash flow (which means cash and cash
equivalents derived from either net cash flow from operations or net cash flow from
operations, financing and investing activities), total stockholder return, gross
revenue, revenue growth, operating income (before or after taxes), net earnings
(before or after interest, taxes, depreciation and/or amortization), return on
equity or on assets or on net investment, cost containment or reduction, the fair
market value of a share of Common Stock, or any combination thereof. These terms
are used as applied under generally accepted accounting principles or in the
financial reporting of the Corporation or of its Subsidiaries. To qualify awards as
performance-based under Section 162(m), the applicable Business Criterion (or
Business Criteria, as the case may be) and specific performance goal or goals
(“targets”) must be established and approved by the Administrator during the first
90 days of the performance period (and, in the case of performance periods of less
than one year, in no event after 25% or more of the performance period has elapsed)
and while performance relating to such target(s) remains substantially uncertain
within the meaning of Section 162(m) of the Code. Performance targets shall be
adjusted to mitigate the unbudgeted impact of material, unusual or nonrecurring
gains and losses, accounting changes or other extraordinary events not foreseen at
the time the targets were set unless the Administrator provides otherwise at the
time of establishing the targets. The applicable performance measurement period may
not be less than three months nor more than 10 years.
	 
	 	 	 	5.2.3   Form of Payment; Maximum Performance-Based Award. Grants or awards under this
Section 5.2 may be paid in cash or shares of Common Stock or any combination
thereof. The maximum aggregate payment which may be made pursuant to
Performance-Based Awards that are payable or relate to shares of Common Stock
(including, without limitation, stock options and SARs, whether





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	 	 	 	payable in cash or stock) and that are granted to any one participant in any one
calendar year is 2,000,000 shares of Common Stock (or cash of equivalent value at
the time of payment), either individually or in the aggregate, subject to adjustment
as provided in Section 7.1. The aggregate amount of compensation that may be paid
to any one participant in respect of all Performance-Based Awards payable only in
cash and not related to shares of Common Stock and granted to that participant in
any one calendar year shall not exceed $5,000,000. Awards that are cancelled during
the year shall be counted against these limits to the extent permitted by Section
162(m) of the Code.
	 
	 	 	 	5.2.4   Certification of Payment. Before any Performance-Based Award under this
Section 5.2 (other than stock options and SARs) is paid and to the extent required
to qualify the award as performance-based compensation within the meaning of Section
162(m) of the Code, the Administrator must certify in writing that the performance
target(s) and any other material terms of the Performance-Based Award were in fact
timely satisfied.
	 
	 	 	 	5.2.5   Reservation of Discretion. The Administrator will have the discretion to
determine the restrictions or other limitations of the individual awards granted
under this Section 5.2 including the authority to reduce awards, payouts or vesting
or to pay no awards, in its sole discretion, if the Administrator preserves such
authority at the time of grant by language to this effect in its authorizing
resolutions or otherwise.
	 
	 	 	 	5.2.6   Expiration of Grant Authority. As required pursuant to Section 162(m) of the
Code and the regulations promulgated thereunder, the Administrator’s authority to
grant new awards that are intended to qualify as performance-based compensation
within the meaning of Section 162(m) of the Code (other than stock options and SARs)
shall terminate upon the first meeting of the Corporation’s stockholders that occurs
in the fifth year following the year in which the Corporation’s stockholders first
approve this Plan.






	 	5.3	 	Award Agreements. Each award shall be evidenced by a written award agreement
in the form approved by the Administrator and executed on behalf of the Corporation
and, if required by the Administrator, executed by the recipient of the award. The
Administrator may authorize any officer of the Corporation (other than the particular
award recipient) to execute any or all award agreements on behalf of the Corporation.
The award agreement shall set forth the material terms and conditions of the award as
established by the Administrator consistent with the express limitations of this Plan.
	 
	 	5.4	 	Deferrals and Settlements. Payment of awards may be in the form of cash,
Common Stock, other awards or combinations thereof as the Administrator shall
determine, and with such restrictions as it may impose. The Administrator may also
permit participants to elect to defer the issuance of shares or the settlement of
awards in cash under such rules and procedures as it may establish under this Plan.
The Administrator may also provide that deferred settlements include the payment or
crediting of interest or other earnings on the deferral amounts, or the





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	 	 	 	payment or crediting of dividend equivalents where the deferred amounts are
denominated in shares.
	 
	 	5.5	 	Consideration for Common Stock or Awards. The purchase price for any award
granted under this Plan or the Common Stock to be delivered pursuant to an award, as
applicable, may be paid by means of any lawful consideration as determined by the
Administrator, including, without limitation, one or a combination of the following
methods:






	 	•	 	services rendered by the recipient of such award;
	 
	 	•	 	cash, check payable to the order of the Corporation, or electronic funds
transfer;
	 
	 	•	 	notice and third party payment in such manner as may be authorized by the
Administrator;
	 
	 	•	 	the delivery of previously owned shares of Common Stock;
	 
	 	•	 	by a reduction in the number of shares otherwise deliverable pursuant to the
award; or
	 
	 	•	 	subject to such procedures as the Administrator may adopt, pursuant to a
“cashless exercise” with a third party who provides financing for the purposes
of (or who otherwise facilitates) the purchase or exercise of awards.






	 	 	 	In no event shall any shares newly-issued by the Corporation be issued for less than
the minimum lawful consideration for such shares or for consideration other than
consideration permitted by applicable state law. In the event that the
Administrator allows a participant to exercise an award by delivering shares of
Common Stock previously owned by such participant and unless otherwise expressly
provided by the Administrator, any shares delivered which were initially acquired by
the participant from the Corporation (upon exercise of a stock option or otherwise)
must have been owned by the participant at least six months as of the date of
delivery. Shares of Common Stock used to satisfy the exercise price of an option
shall be valued at their fair market value on the date of exercise. The Corporation
will not be obligated to deliver any shares unless and until it receives full
payment of the exercise or purchase price therefor and any related withholding
obligations under Section 8.5 and any other conditions to exercise or purchase have
been satisfied. Unless otherwise expressly provided in the applicable award
agreement, the Administrator may at any time eliminate or limit a participant’s
ability to pay the purchase or exercise price of any award or shares by any method
other than cash payment to the Corporation.
	 
	 	5.6	 	Definition of Fair Market Value. For purposes of this Plan, “fair market
value” means, unless otherwise determined or provided by the Administrator in the
circumstances, the last price for a share of Common Stock as furnished by the National
Association of Securities Dealers, Inc. (the “NASD”) through the NASDAQ National Market
Reporting System (the “National Market”) for the





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	 	 	 	date in question or, if no sales of Common Stock were reported by the NASD on the
National Market on that date, the last price for a share of Common Stock as
furnished by the NASD through the National Market for the next preceding day on
which sales of Common Stock were reported by the NASD. The Administrator may,
however, provide with respect to one or more awards that the fair market value shall
equal the last price for a share of Common Stock as furnished by the NASD through
the National Market available on the date in question or the average of the high and
low trading prices of a share of Common Stock as furnished by the NASD through the
National Market for the date in question or the most recent trading day. If the
Common Stock is no longer listed or is no longer actively traded on the National
Market as of the applicable date, the fair market value of the Common Stock shall be
the value as reasonably determined by the Administrator for purposes of the award in
the circumstances. The Administrator also may adopt a different methodology for
determining fair market value with respect to one or more awards if a different
methodology is necessary or advisable to secure any intended favorable tax, legal or
other treatment for the particular award(s) (for example, and without limitation,
the Administrator may provide that fair market value for purposes of one or more
awards will be based on an average of closing prices (or the average of high and low
daily trading prices) for a specified period preceding the relevant date).
	 
	 	5.7	 	Transfer Restrictions.
	 
	 	 	 	5.7.1   Limitations on Exercise and Transfer. Unless otherwise expressly provided in
(or pursuant to) this Section 5.7, by applicable law and by the award agreement, as
the same may be amended, (a) all awards are non-transferable and shall not be
subject in any manner to sale, transfer, anticipation, alienation, assignment,
pledge, encumbrance or charge; (b) awards shall be exercised only by the
participant; and (c) amounts payable or shares issuable pursuant to any award shall
be delivered only to (or for the account of) the participant.
	 
	 	 	 	5.7.2   Exceptions. The Administrator may permit awards to be exercised by and paid
to, or otherwise transferred to, other persons or entities pursuant to such
conditions and procedures, including limitations on subsequent transfers, as the
Administrator may, in its sole discretion, establish in writing. Any permitted
transfer shall be subject to compliance with applicable federal and state securities
laws.
	 
	 	 	 	5.7.3   Further Exceptions to Limits on Transfer. The exercise and transfer
restrictions in Section 5.7.1 shall not apply to:






	 	(a)	 	transfers to the Corporation,
	 
	 	(b)	 	the designation of a beneficiary to receive benefits in the
event of the participant’s death or, if the participant has died, transfers to
or exercise by the participant’s beneficiary, or, in the absence of a validly
designated beneficiary, transfers by will or the laws of descent and
distribution,




11









 






	 	(c)	 	subject to any applicable limitations on ISOs and subject to
such rules as the Administrator may adopt, transfers to a family member (or
former family member) pursuant to a domestic relations order,
	 
	 	(d)	 	if the participant has suffered a disability, permitted
transfers or exercises on behalf of the participant by his or her legal
representative, or
	 
	 	(e)	 	the authorization by the Administrator of “cashless exercise”
procedures with third parties who provide financing for the purpose of (or who
otherwise facilitate) the exercise of awards consistent with applicable laws
and the express authorization of the Administrator.






	 	5.8	 	International Awards. One or more awards may be granted to Eligible Persons
who provide services to the Corporation or one of its Subsidiaries outside of the
United States. Any awards granted to such persons may be granted pursuant to the terms
and conditions of any applicable sub-plans, if any, appended to this Plan and approved
by the Administrator.






	6.	 	EFFECT OF TERMINATION OF SERVICE ON AWARDS






	 	6.1	 	General. The Administrator shall establish the effect of a termination of
employment or service on the rights and benefits under each award under this Plan and
in so doing may make distinctions based upon, inter alia, the cause of termination and
type of award. If the participant is not an employee of the Corporation or one of its
Subsidiaries and provides other services to the Corporation or one of its Subsidiaries,
the Administrator shall be the sole judge for purposes of this Plan (unless a contract
or the award otherwise provides) of whether the participant continues to render
services to the Corporation or one of its Subsidiaries and the date, if any, upon which
such services shall be deemed to have terminated.
	 
	 	6.2	 	Events Not Deemed Terminations of Service. Unless the express policy of the
Corporation or one of its Subsidiaries, or the Administrator, otherwise provides, the
employment relationship shall not be considered terminated in the case of (a) sick
leave, (b) military leave, or (c) any other leave of absence authorized by the
Corporation or one of its Subsidiaries, or the Administrator. In the case of any
employee of the Corporation or one of its Subsidiaries on an approved leave of absence,
continued vesting of the award while on leave from the employ of the Corporation or one
of its Subsidiaries may be suspended until the employee returns to service, unless the
Administrator otherwise provides or applicable law otherwise requires. In no event
shall an award be exercised after the expiration of the term set forth in the award
agreement.
	 
	 	6.3	 	Effect of Change of Subsidiary Status. For purposes of this Plan and any
award, if an entity ceases to be a Subsidiary of the Corporation a termination of
employment or service shall be deemed to have occurred with respect to each Eligible
Person in respect of such Subsidiary who does not continue as an Eligible Person in
respect of another entity within the Corporation or another Subsidiary




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	 	 	 	that continues as such after giving effect to the transaction or other event giving
rise to the change in status.






	7.	 	ADJUSTMENTS; ACCELERATION






	 	7.1	 	Adjustments. Upon or in contemplation of: any reclassification,
recapitalization, stock split (including a stock split in the form of a stock dividend)
or reverse stock split (“stock split”); any merger, combination, consolidation, or
other reorganization; any spin-off, split-up, or similar extraordinary dividend
distribution in respect of the Common Stock (whether in the form of securities or
property); any exchange of Common Stock or other securities of the Corporation, or any
similar, unusual or extraordinary corporate transaction in respect of the Common Stock;
or a sale of all or substantially all the business or assets of the Corporation as an
entirety; then the Administrator shall, in such manner, to such extent (if any) and at
such time as it deems appropriate and equitable in the circumstances:






	 	(a)	 	proportionately adjust any or all of (1) the number and type of
shares of Common Stock (or other securities) that thereafter may be made the
subject of awards (including the specific share limits, maximums and numbers of
shares set forth elsewhere in this Plan), (2) the number, amount and type of
shares of Common Stock (or other securities or property) subject to any or all
outstanding awards, (3) the grant, purchase, or exercise price (which term
includes the base price of any SAR or similar right) of any or all outstanding
awards, (4) the securities, cash or other property deliverable upon exercise or
payment of any outstanding awards, or (5) (subject to Section 8.8.3(a)) the
performance standards applicable to any outstanding awards, or
	 
	 	(b)	 	make provision for a cash payment or for the assumption,
substitution or exchange of any or all outstanding share-based awards or the
cash, securities or property deliverable to the holder of any or all
outstanding share-based awards, based upon the distribution or consideration
payable to holders of the Common Stock upon or in respect of such event.
	 
	 	The Administrator may adopt such valuation methodologies for outstanding awards as
it deems reasonable in the event of a cash or property settlement and, in the case
of options, SARs or similar rights, but without limitation on other methodologies,
may base such settlement solely upon the excess if any of the per share amount
payable upon or in respect of such event over the exercise or base price of the
award. With respect to any award of an ISO, the Administrator may make such an
adjustment that causes the option to cease to qualify as an ISO without the consent
of the affected participant.
	 
	 	In any of such events, the Administrator may take such action prior to such event to
the extent that the Administrator deems the action necessary to permit the
participant to realize the benefits intended to be conveyed with respect to the
underlying shares in the same manner as is or will be available to stockholders
generally. In the case of any stock split or reverse stock split, if no action is
taken




13









 






	 	by the Administrator, the proportionate adjustments contemplated by clause (a) above
shall nevertheless be made.






	 	7.2	 	Automatic Acceleration of Awards. Upon a dissolution of the Corporation or
other event described in Section 7.1 that the Corporation does not survive (or does not
survive as a public company in respect of its Common Stock), then each then-outstanding
option and SAR shall become fully vested, all shares of restricted stock then
outstanding shall fully vest free of restrictions, and each other award granted under
this Plan that is then outstanding shall become payable to the holder of such award;
provided that such acceleration provision shall not apply, unless otherwise expressly
provided by the Administrator, with respect to any award to the extent that the
Administrator has made a provision for the substitution, assumption, exchange or other
continuation or settlement of the award, or the award would otherwise continue in
accordance with its terms, in the circumstances.
	 
	 	7.3	 	Possible Acceleration of Awards. Without limiting Section 7.2, in the event of
a Change in Control Event (as defined below), the Administrator may, in its discretion,
provide that any outstanding option or SAR shall become fully vested, that any share of
restricted stock then outstanding shall fully vest free of restrictions, and that any
other award granted under this Plan that is then outstanding shall be payable to the
holder of such award. The Administrator may take such action with respect to all
awards then outstanding or only with respect to certain specific awards identified by
the Administrator in the circumstances. For purposes of this Plan, “Change in Control
Event” means any of the following:






	 	(a)	 	The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”)) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of more than 30% of either (1) the then-outstanding shares of
common stock of the Corporation (the “Outstanding Company Common Stock”) or (2)
the combined voting power of the then-outstanding voting securities of the
Corporation entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); provided, however, that, for purposes
of this clause (a), the following acquisitions shall not constitute a Change in
Control Event; (A) any acquisition directly from the Corporation, (B) any
acquisition by the Corporation, (C) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Corporation or any
affiliate of the Corporation or a successor, or (D) any acquisition by any
entity pursuant to a transaction that complies with Sections (c)(1), (2) and
(3) below;
	 
	 	(b)	 	Individuals who, as of the Effective Date, constitute the Board
(the “Incumbent Board”) cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the Effective Date whose election, or nomination for election by
the Corporation’s stockholders, was approved by a vote of at





14









 






	 	 	 	least two-thirds of the directors then comprising the Incumbent Board
(including for these purposes, the new members whose election or nomination
was so approved, without counting the member and his predecessor twice)
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual
or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board;
	 
	 	(c)	 	Consummation of a reorganization, merger, statutory share
exchange or consolidation or similar corporate transaction involving the
Corporation or any of its Subsidiaries, a sale or other disposition of all or
substantially all of the assets of the Corporation, or the acquisition of
assets or stock of another entity by the Corporation or any of its Subsidiaries
(each, a “Business Combination”), in each case unless, following such Business
Combination, (1) all or substantially all of the individuals and entities that
were the beneficial owners of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the election
of directors, as the case may be, of the entity resulting from such Business
Combination (including, without limitation, an entity that, as a result of such
transaction, owns the Corporation or all or substantially all of the
Corporation’s assets directly or through one or more subsidiaries (a “Parent”))
in substantially the same proportions as their ownership immediately prior to
such Business Combination of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be, (2) no Person
(excluding any entity resulting from such Business Combination or a Parent or
any employee benefit plan (or related trust) of the Corporation or such entity
resulting from such Business Combination or Parent) beneficially owns, directly
or indirectly, more than 30% of, respectively, the then-outstanding shares of
common stock of the entity resulting from such Business Combination or the
combined voting power of the then-outstanding voting securities of such entity,
except to the extent that the ownership in excess of 30% existed prior to the
Business Combination, and (3) at least a majority of the members of the board
of directors or trustees of the entity resulting from such Business Combination
or a Parent were members of the Incumbent Board at the time of the execution of
the initial agreement or of the action of the Board providing for such Business
Combination; or
	 
	 	(d)	 	Approval by the stockholders of the Corporation of a complete
liquidation or dissolution of the Corporation other than in the context of a
transaction that does not constitute a Change in Control Event under clause (c)
above.






	 	7.4	 	Early Termination of Awards. Any award that has been accelerated as required
or contemplated by Section 7.2 or 7.3 (or would have been so accelerated but for





15









 






	 	 	 	Section 7.5, 7.6 or 7.7) shall terminate upon the related event referred to in
Section 7.2 or 7.3, as applicable, subject to any provision that has been expressly
made by the Administrator, through a plan of reorganization or otherwise, for the
survival, substitution, assumption, exchange or other continuation or settlement of
such award and provided that, in the case of options and SARs that will not survive,
be substituted for, assumed, exchanged, or otherwise continued or settled in the
transaction, the holder of such award shall be given reasonable advance notice of
the impending termination and a reasonable opportunity to exercise his or her
outstanding options and SARs in accordance with their terms before the termination
of such awards (except that in no case shall more than ten days’ notice of
accelerated vesting and the impending termination be required and any acceleration
may be made contingent upon the actual occurrence of the event).
	 
	 	7.5	 	Other Acceleration Rules. Any acceleration of awards pursuant to this Section
7 shall comply with applicable legal requirements and, if necessary to accomplish the
purposes of the acceleration or if the circumstances require, may be deemed by the
Administrator to occur a limited period of time not greater than 30 days before the
event. Without limiting the generality of the foregoing, the Administrator may deem an
acceleration to occur immediately prior to the applicable event and/or reinstate the
original terms of an award if an event giving rise to an acceleration does not occur.
The Administrator may override the provisions of Section 7.2, 7.3, 7.4 and/or 7.6 by
express provision in the award agreement and may accord any Eligible Person a right to
refuse any acceleration, whether pursuant to the award agreement or otherwise, in such
circumstances as the Administrator may approve. The portion of any ISO accelerated in
connection with a Change in Control Event or any other action permitted hereunder shall
remain exercisable as an ISO only to the extent the applicable $100,000 limitation on
ISOs is not exceeded. To the extent exceeded, the accelerated portion of the option
shall be exercisable as a nonqualified stock option under the Code.
	 
	 	7.6	 	Possible Rescission of Acceleration. If the vesting of an award has been
accelerated expressly in anticipation of an event or upon stockholder approval of an
event and the Administrator later determines that the event will not occur, the
Administrator may rescind the effect of the acceleration as to any then outstanding and
unexercised or otherwise unvested awards.
	 
	 	7.7	 	Golden Parachute Limitation. Notwithstanding anything else contained in this
Section 7 to the contrary, in no event shall an award be accelerated under this Plan to
an extent or in a manner which would not be fully deductible by the Corporation or one
of its Subsidiaries for federal income tax purposes because of Section 280G of the
Code, nor shall any payment hereunder be accelerated to the extent any portion of such
accelerated payment would not be deductible by the Corporation or one of its
Subsidiaries because of Section 280G of the Code. If a participant would be entitled
to benefits or payments hereunder and under any other plan or program that would
constitute “parachute payments” as defined in Section 280G of the Code, then the
participant may by written notice to the Corporation designate the order in which such
parachute payments will be reduced or modified so that the Corporation or one of its
Subsidiaries is not




16









 






	 	 	 	denied federal income tax deductions for any “parachute payments” because of Section
280G of the Code. Notwithstanding the foregoing, if a participant is a party to an
employment or other agreement with the Corporation or one of its Subsidiaries, or is
a participant in a severance program sponsored by the Corporation or one of its
Subsidiaries, that contains express provisions regarding Section 280G and/or Section
4999 of the Code (or any similar successor provision), the Section 280G and/or
Section 4999 provisions of such employment or other agreement or plan, as
applicable, shall control as to any awards held by that participant (for example,
and without limitation, a participant may be a party to an employment agreement with
the Corporation or one of its Subsidiaries that provides for a “gross-up” as opposed
to a “cut-back” in the event that the Section 280G thresholds are reached or
exceeded in connection with a change in control and, in such event, the Section 280G
and/or Section 4999 provisions of such employment agreement shall control as to any
awards held by that participant).






	8.	 	OTHER PROVISIONS






	 	8.1	 	Compliance with Laws. This Plan, the granting and vesting of awards under this
Plan, the offer, issuance and delivery of shares of Common Stock, the acceptance of
promissory notes and/or the payment of money under this Plan or under awards are
subject to compliance with all applicable federal and state laws, rules and regulations
(including but not limited to state and federal securities law, federal margin
requirements) and to such approvals by any listing, regulatory or governmental
authority as may, in the opinion of counsel for the Corporation, be necessary or
advisable in connection therewith. The person acquiring any securities under this Plan
will, if requested by the Corporation or one of its Subsidiaries, provide such
assurances and representations to the Corporation or one of its Subsidiaries as the
Administrator may deem necessary or desirable to assure compliance with all applicable
legal and accounting requirements.
	 
	 	8.2	 	No Rights to Award. Except as expressly provided in Appendix A to this
Plan as to automatic award grants to Non-Employee Directors, no person shall have any
claim or rights to be granted an award (or additional awards, as the case may be) under
this Plan, subject to any express contractual rights (set forth in a document other
than this Plan) to the contrary.
	 
	 	8.3	 	No Employment/Service Contract. Nothing contained in this Plan (or in any
other documents under this Plan or in any award) shall confer upon any Eligible Person
or other participant any right to continue in the employ or other service of the
Corporation or one of its Subsidiaries, constitute any contract or agreement of
employment or other service or affect an employee’s status as an employee at will, nor
shall interfere in any way with the right of the Corporation or one of its Subsidiaries
to change a person’s compensation or other benefits, or to terminate his or her
employment or other service, with or without cause. Nothing in this Section 8.3,
however, is intended to adversely affect any express independent right of such person
under a separate employment or service contract other than an award agreement.




17









 












	 	8.4	 	Plan Not Funded. Awards payable under this Plan shall be payable in shares or
from the general assets of the Corporation, and no special or separate reserve, fund or
deposit shall be made to assure payment of such awards. No participant, beneficiary or
other person shall have any right, title or interest in any fund or in any specific
asset (including shares of Common Stock, except as expressly otherwise provided) of the
Corporation or one of its Subsidiaries by reason of any award hereunder. Neither the
provisions of this Plan (or of any related documents), nor the creation or adoption of
this Plan, nor any action taken pursuant to the provisions of this Plan shall create,
or be construed to create, a trust of any kind or a fiduciary relationship between the
Corporation or one of its Subsidiaries and any participant, beneficiary or other
person. To the extent that a participant, beneficiary or other person acquires a right
to receive payment pursuant to any award hereunder, such right shall be no greater than
the right of any unsecured general creditor of the Corporation.
	 
	 	8.5	 	Tax Withholding. Upon any exercise, vesting, or payment of any award or upon
the disposition of shares of Common Stock acquired pursuant to the exercise of an ISO
prior to satisfaction of the holding period requirements of Section 422 of the Code,
the Corporation or one of its Subsidiaries shall have the right at its option to:






	 	(a)	 	require the participant (or the participant’s personal
representative or beneficiary, as the case may be) to pay or provide for
payment of at least the minimum amount of any taxes which the Corporation or
one of its Subsidiaries may be required to withhold with respect to such award
event or payment; or
	 
	 	(b)	 	deduct from any amount otherwise payable in cash to the
participant (or the participant’s personal representative or beneficiary, as
the case may be) the minimum amount of any taxes which the Corporation or one
of its Subsidiaries may be required to withhold with respect to such cash
payment.






In any case where a tax is required to be withheld in connection with the delivery
of shares of Common Stock under this Plan, the Administrator may in its sole
discretion (subject to Section 8.1) grant (either at the time of the award or
thereafter) to the participant the right to elect, pursuant to such rules and
subject to such conditions as the Administrator may establish, to have the
Corporation reduce the number of shares to be delivered by (or otherwise reacquire)
the appropriate number of shares, valued in a consistent manner at their fair market
value or at the sales price in accordance with authorized procedures for cashless
exercises, necessary to satisfy the minimum applicable withholding obligation on
exercise, vesting or payment. In no event shall the shares withheld exceed the
minimum whole number of shares required for tax withholding under applicable law.
The Corporation may, with the Administrator’s approval, accept one or more
promissory notes from any Eligible Person in connection with taxes required to be
withheld upon the exercise, vesting or payment of any award under this Plan;
provided that any such note shall be subject to terms and conditions established by
the Administrator and the requirements of applicable law.



18









 






	 	8.6	 	Effective Date, Termination and Suspension, Amendments.
	 
	 	 	 	8.6.1   Effective Date. This Plan is effective as of June 9, 2005, the date of its
approval by the Board (the “Effective Date”). This Plan shall be submitted for and
subject to stockholder approval no later than twelve months after the Effective
Date. Unless earlier terminated by the Board, this Plan shall terminate at the
close of business on the day before the tenth anniversary of the Effective Date.
After the termination of this Plan either upon such stated expiration date or its
earlier termination by the Board, no additional awards may be granted under this
Plan, but previously granted awards (and the authority of the Administrator with
respect thereto, including the authority to amend such awards) shall remain
outstanding in accordance with their applicable terms and conditions and the terms
and conditions of this Plan.
	 
	 	 	 	8.6.2   Board Authorization. The Board may, at any time, terminate or, from time to
time, amend, modify or suspend this Plan, in whole or in part. No awards may be
granted during any period that the Board suspends this Plan.
	 
	 	 	 	8.6.3   Stockholder Approval. To the extent then required by applicable law or any
applicable listing agency or required under Sections 162, 422 or 424 of the Code to
preserve the intended tax consequences of this Plan, or deemed necessary or
advisable by the Board, any amendment to this Plan shall be subject to stockholder
approval.
	 
	 	 	 	8.6.4   Amendments to Awards. Without limiting any other express authority of the
Administrator under (but subject to) the express limits of this Plan, the
Administrator by agreement or resolution may waive conditions of or limitations on
awards to participants that the Administrator in the prior exercise of its
discretion has imposed, without the consent of a participant, and (subject to the
requirements of Sections 3.2 and 8.6.5) may make other changes to the terms and
conditions of awards. Any amendment or other action that would constitute a
repricing of an award is subject to the limitations set forth in Section 3.2(g).
	 
	 	 	 	8.6.5   Limitations on Amendments to Plan and Awards. No amendment, suspension or
termination of this Plan or amendment of any outstanding award agreement shall,
without written consent of the participant, affect in any manner materially adverse
to the participant any rights or benefits of the participant or obligations of the
Corporation under any award granted under this Plan prior to the effective date of
such change. Changes, settlements and other actions contemplated by Section 7 shall
not be deemed to constitute changes or amendments for purposes of this Section 8.6.
	 
	 	8.7	 	Privileges of Stock Ownership. Except as otherwise expressly authorized by the
Administrator or this Plan, a participant shall not be entitled to any privilege of
stock ownership as to any shares of Common Stock not actually delivered to and held of
record by the participant. No adjustment will be made for dividends or other rights as
a stockholder for which a record date is prior to such date of delivery.





19









 






	 	8.8	 	Governing Law; Construction; Severability.
	 
	 	 	 	8.8.1   Choice of Law. This Plan, the awards, all documents evidencing awards and all
other related documents shall be governed by, and construed in accordance with the
laws of the State of Delaware.
	 
	 	 	 	8.8.2   Severability. If a court of competent jurisdiction holds any provision
invalid and unenforceable, the remaining provisions of this Plan shall continue in
effect.
	 
	 	 	 	8.8.3   Plan Construction.






	 	(a)	 	Rule 16b-3. It is the intent of the
Corporation that the awards and transactions permitted by awards be
interpreted in a manner that, in the case of participants who are or
may be subject to Section 16 of the Exchange Act, qualify, to the
maximum extent compatible with the express terms of the award, for
exemption from matching liability under Rule 16b-3 promulgated under
the Exchange Act. Notwithstanding the foregoing, the Corporation shall
have no liability to any participant for Section 16 consequences of
awards or events under awards if an award or event does not so qualify.
	 
	 	(b)	 	Section 162(m). Awards under Section
5.1.4 to persons described in Section 5.2 that are either granted or
become vested, exercisable or payable based on attainment of one or
more performance goals related to the Business Criteria, as well as
stock options and SARs intended as Performance-Based Awards granted to
persons described in Section 5.2, that are approved by a committee
composed solely of two or more outside directors (as this requirement
is applied under Section 162(m) of the Code) shall be deemed to be
intended as performance-based compensation within the meaning of
Section 162(m) of the Code unless such committee provides otherwise at
the time of grant of the award. It is the further intent of the
Corporation that (to the extent the Corporation or one of its
Subsidiaries or awards under this Plan may be or become subject to
limitations on deductibility under Section 162(m) of the Code) any such
awards and any other Performance-Based Awards under Section 5.2 that
are granted to or held by a person subject to Section 162(m) will
qualify as performance-based compensation or otherwise be exempt from
deductibility limitations under Section 162(m).






	 	8.9	 	Captions. Captions and headings are given to the sections and subsections of
this Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of this
Plan or any provision thereof.
	 
	 	8.10	 	Stock-Based Awards in Substitution for Stock Options or Awards Granted by Other
Corporation. Awards may be granted to Eligible Persons in substitution





20









 






	 	 	 	for or in connection with an assumption of employee stock options, SARs, restricted
stock or other stock-based awards granted by other entities to persons who are or
who will become Eligible Persons in respect of the Corporation or one of its
Subsidiaries, in connection with a distribution, merger or other reorganization by
or with the granting entity or an affiliated entity, or the acquisition by the
Corporation or one of its Subsidiaries, directly or indirectly, of all or a
substantial part of the stock or assets of the employing entity. The awards so
granted need not comply with other specific terms of this Plan, provided the awards
reflect only adjustments giving effect to the assumption or substitution consistent
with the conversion applicable to the Common Stock in the transaction and any change
in the issuer of the security. Any shares that are delivered and any awards that
are granted by, or become obligations of, the Corporation, as a result of the
assumption by the Corporation of, or in substitution for, outstanding awards
previously granted by an acquired company (or previously granted by a predecessor
employer (or direct or indirect parent thereof) in the case of persons that become
employed by the Corporation or one of its Subsidiaries in connection with a business
or asset acquisition or similar transaction) shall not be counted against the Share
Limit or other limits on the number of shares available for issuance under this
Plan.
	 
	 	8.11	 	Non-Exclusivity of Plan. Nothing in this Plan shall limit or be deemed to
limit the authority of the Board or the Administrator to grant awards or authorize any
other compensation, with or without reference to the Common Stock, under any other plan
or authority.
	 
	 	8.12	 	No Corporate Action Restriction. The existence of this Plan, the award
agreements and the awards granted hereunder shall not limit, affect or restrict in any
way the right or power of the Board or the stockholders of the Corporation to make or
authorize: (a) any adjustment, recapitalization, reorganization or other change in the
capital structure or business of the Corporation or any Subsidiary, (b) any merger,
amalgamation, consolidation or change in the ownership of the Corporation or any
Subsidiary, (c) any issue of bonds, debentures, capital, preferred or prior preference
stock ahead of or affecting the capital stock (or the rights thereof) of the
Corporation or any Subsidiary, (d) any dissolution or liquidation of the Corporation or
any Subsidiary, (e) any sale or transfer of all or any part of the assets or business
of the Corporation or any Subsidiary, or (f) any other corporate act or proceeding by
the Corporation or any Subsidiary. No participant, beneficiary or any other person
shall have any claim under any award or award agreement against any member of the Board
or the Administrator, or the Corporation or any employees, officers or agents of the
Corporation or any Subsidiary, as a result of any such action.
	 
	 	8.13	 	Other Company Benefit and Compensation Programs. Payments and other benefits
received by a participant under an award made pursuant to this Plan shall not be deemed
a part of a participant’s compensation for purposes of the determination of benefits
under any other employee welfare or benefit plans or arrangements, if any, provided by
the Corporation or any Subsidiary, except where the Administrator expressly otherwise
provides or authorizes in writing. Awards under this Plan may be made in addition to,
in combination with, as
alternatives to or in payment of grants, awards or commitments under any other plans
or arrangements of the Corporation or its Subsidiaries.




21









 











APPENDIX A




NON-EMPLOYEE DIRECTOR OPTIONS



A.1     Participation



Options under this Appendix A shall be made only to Non-Employee Directors who have
not, within three (3) years immediately preceding such time, received any stock option, stock
bonus, SAR, or other similar stock award from the Corporation or any of its Subsidiaries, except as
provided by this Appendix A or pursuant to the Corporation’s Non-Employee Director Stock
Option Plan (an “Eligible Director”).



A.2     Annual Option Grants



(a)    Time of Initial Grant. After approval of this Plan by the stockholders of the
Corporation, if any person who is not then an officer or employee of the Company shall first become
a Non-Employee Director (including any person who may first become a Non-Employee Director on the
date the stockholders of the Corporation approve this Plan), there shall be granted automatically
to such person (without any action by the Board or the Administrator) on such date a nonqualified
stock option to purchase 40,000 shares of Common Stock; provided that no such grant shall be made
to any Non-Employee Director who does not qualify as an Eligible Director.



(b)    Subsequent Annual Options. In each calendar year during the term of this Plan, commencing
in 2005, there shall be granted automatically (without any action by the Administrator or the
Board) at the close of business on the date of each annual meeting of stockholders of the
Corporation at which the members of the Board are elected or reelected a nonqualified stock option
to purchase 20,000 shares of Common Stock (such number of shares subject to the following two
sentences) to each Eligible Director who is re-elected as a director of the Corporation at such
meeting. Subject to the next sentence, if the Eligible Director is serving as the Chairman of the
Board on such date, such nonqualified stock option shall be an option to purchase 54,000 shares of
Common Stock (as opposed to 20,000 shares of common stock). If a period of less than twelve (12)
months has elapsed between (i) the date that the director first received a stock option grant
pursuant to Section A.2(a) above or pursuant to Section 6.1(a) of the Corporation’s Non-Employee
Director Stock Option Plan (the date of grant of any such option, “Initial Award Date”) and (ii)
the date of the annual meeting referred to in the first sentence of this Section A.2(b) (the
“Annual Meeting Date”), the nonqualified stock option granted to the Eligible Director pursuant to
the first sentence of this Section A.2(b) shall be an option to purchase the number of shares of
Common Stock equal to the following (as opposed to 20,000 shares of common stock or 54,000 shares
of common stock, as applicable): (x) the number of shares that would have otherwise been granted to
the director on such date pursuant to this Section A.2(b) (20,000 or 54,000 shares, as applicable),
multiplied by (y) a fraction, the numerator of which shall be the number of days from and including
the Initial Grant Date through and including the Annual Meeting Date and the denominator of which
shall be the number of days since the last annual meeting of stockholders at which the members of
the Board were elected or reelected preceding the Annual Meeting Date through and including the
Annual Meeting Date (but in no event shall such fraction be greater than one (1)).



(c)    Maximum Number of Shares. Annual grants that would otherwise exceed the Share Limit of
Section 4.2 of the Plan shall be prorated within such limitation.




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A.3    Option Price



The purchase price per share of the Common Stock covered by each stock option granted pursuant
to this Appendix A shall be 100% of the fair market value (as that term is defined in
Section 5.6 of the Plan) of the Common Stock on the Award Date. The exercise price of any stock
option granted under this Appendix A shall be paid in full at the time of each purchase in
any of the following methods (or combination thereof): (i) cash, check payable to the order of the
Corporation, or electronic funds transfer, (ii) subject to compliance with all applicable laws,
rules and regulations, and subject to such procedures as the Administrator may adopt, the delivery
of previously owned shares of Common Stock or pursuant to a “cashless exercise” with a third party
who provides financing for the purposes of (or who otherwise facilitates) the purchase or exercise
of awards. In the event that the participant exercises a stock option by delivering shares of
Common Stock previously owned by such participant and unless otherwise expressly provided by the
Administrator, any shares delivered which were initially acquired by the participant from the
Corporation (upon exercise of a stock option or otherwise) must have been owned by the participant
at least six months as of the date of delivery. Shares of Common Stock used to satisfy the
exercise price of an option shall be valued at their fair market value on the date of exercise.



A.4    Option Period and Exercisability



Each nonqualified stock option granted under this Appendix A and all rights or
obligations thereunder shall commence on the date of grant of the award and expire ten years
thereafter and shall be subject to earlier termination as provided below. Subject to earlier
termination as provided below, each nonqualified stock option granted under this Appendix A
shall become vested as to one-third (1/3) of the total number of shares of Common Stock subject to
the option on each of the first, second and third anniversaries of the date of grant of the award.



A.5    Termination of Directorship



If an Eligible Director’s services as a member of the Board terminate for any reason, any
portion of a stock option granted pursuant to this Appendix A which is not then vested and
exercisable shall terminate and any portion of such option which is then vested and exercisable may
be exercised within a period of one (1) year after the date of such termination, or until the
expiration of the option or termination of the option pursuant to Section 7.4 of the Plan,
whichever first occurs.



A.6    Plan Provisions; Award Agreement



Each option granted under this Appendix A shall otherwise be subject to the terms of
the Plan (including, without limitation, the provisions of Section 7 of the Plan). Each such award
shall be evidenced by a written award agreement in the form approved by the Board or the
Compensation Committee of the Board for use in evidencing stock option grants made pursuant to this
Appendix A.





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