EXHIBIT
      10.3

     

     

    LIVEPERSON,
      INC.

    2000
      STOCK INCENTIVE PLAN

    (as
      Amended and Restated as of April 22, 2004)

    (as
      Amended as of April 21, 2005)

     

    ARTICLE
      ONE

     

    GENERAL
      PROVISIONS

     

    
      	
            	I.	
              PURPOSE
                OF THE PLAN

            


    

     

    This
      2000
      Stock Incentive Plan (the “Plan”) is intended to promote the interests of
      LivePerson, Inc., a Delaware corporation, by providing eligible persons with
      the
      opportunity to acquire a proprietary interest, or otherwise increase their
      proprietary interest, in the Corporation as an incentive for them to remain
      in
      the service of the Corporation. The Plan was amended and restated as of April
      22, 2004 and approved by stockholders at the Corporation’s 2004 Annual Meeting
      of Stockholders on May 27, 2004. The Plan is further amended as of April 21,
      2005, subject to stockholder approval at the Corporation’s 2005 Annual Meeting
      of Stockholders.

     

    Capitalized
      terms shall have the meanings assigned to such terms in the attached
Appendix
      A.

     

    
      	
            	II.	
              STRUCTURE
                OF THE PLAN

            


    

     

    A.  The
      Plan
      shall be divided into five separate equity incentive programs:

     

    (i)  the
      Discretionary Option Grant Program under which eligible persons may, at the
      discretion of the Plan Administrator, be granted options to purchase shares
      of
      Common Stock, 

     

    (ii)  the
      Salary Investment Option Grant Program under which eligible employees may elect
      to have a portion of their base salary invested each year in special options,
      

     

    (iii)  the
      Stock
      Issuance Program under which eligible persons may, at the discretion of the
      Plan
      Administrator, be issued shares of Common Stock directly, either through the
      immediate purchase of such shares or as a bonus for services rendered the
      Corporation (or any Parent or Subsidiary), 

     

    (iv)  the
      Automatic Option Grant Program under which eligible non-employee Board members
      shall automatically receive options at periodic intervals to purchase shares
      of
      Common Stock, and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (v)  the
      Director Fee Option Grant Program under which non-employee Board members may
      elect to have all or any portion of their annual retainer fee otherwise payable
      in cash applied to a special option grant.

     

    B.  The
      provisions of Articles One and Seven shall apply to all equity programs under
      the Plan and shall govern the interests of all persons under the
      Plan.

     

    
      	
            	III.	
              ADMINISTRATION
                OF THE PLAN

            


    

     

    A.  Prior
      to
      the Section 12 Registration Date, the Discretionary Option Grant and Stock
      Issuance Programs shall be administered by the Board unless otherwise determined
      by the Board. Beginning with the Section 12 Registration Date, the
      following provisions shall govern the administration of the Plan:

     

    (i)  The
      Board
      shall have the authority to administer the Discretionary Option Grant and Stock
      Issuance Programs with respect to Section 16 Insiders but may delegate such
      authority in whole or in part to the Primary Committee. 

     

    (ii)  Administration
      of the Discretionary Option Grant and Stock Issuance Programs with respect
      to
      all other persons eligible to participate in those programs may, at the Board’s
      discretion, be vested in the Primary Committee or a Secondary Committee, or
      the
      Board may retain the power to administer those programs with respect to all
      such
      persons. 

     

    (iii)  The
      Board
      (or Primary Committee) shall select the Section 16 Insiders and other
      highly compensated Employees eligible to participate in the Salary Investment
      Option Grant Program. However, all option grants under the Salary Investment
      Option Grant Program shall be made in accordance with the terms of that program
      and the Primary Committee shall not exercise any administrative discretion
      with
      respect to option grants made under the program.

     

    (iv)  Administration
      of the Automatic Option Grant and Director Fee Option Grant Programs shall
      be
      self-executing in accordance with the terms of those programs.

     

    B.  Each
      Plan
      Administrator shall, within the scope of its administrative jurisdiction under
      the Plan, have full power and authority subject to the provisions of the
      Plan:

     

    (i)  to
      establish such rules as it may deem appropriate for proper administration of
      the
      Plan, to make all factual determinations, to construe and interpret the
      provisions of the Plan and the awards thereunder and to resolve any and all
      ambiguities thereunder;

     

    (ii)  to
      determine, with respect to awards made under the Discretionary Option Grant
      and
      Stock Issuance Programs, which eligible persons are to receive such awards,
      the
      time or times when such awards are to be made, the number of shares to be
      covered by each such award, the vesting schedule (if any) applicable to the
      award, the status of a granted option as either an Incentive Option or a
      Non-Statutory Option and the maximum term for which the option is to remain
      outstanding;

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    (iii)  to
      amend,
      modify or cancel any outstanding award with the consent of the holder or
      accelerate the vesting of such award; and

     

    (iv)  to
      take
      such other discretionary actions as permitted pursuant to the terms of the
      applicable program.

     

    Decisions
      of each Plan Administrator within the scope of its administrative functions
      under the Plan shall be final and binding on all parties.

     

    C.  Members
      of the Primary Committee or any Secondary Committee shall serve for such period
      of time as the Board may determine and may be removed by the Board at any time.
      The Board may also at any time terminate the functions of any Secondary
      Committee and reassume all powers and authority previously delegated to such
      committee.

     

    D.  Service
      on the Primary Committee or the Secondary Committee shall constitute service
      as
      a Board member, and members of each such committee shall accordingly be entitled
      to full indemnification and reimbursement as Board members for their service
      on
      such committee. No member of the Primary Committee or the Secondary Committee
      shall be liable for any act or omission made in good faith with respect to
      the
      Plan or any options or stock issuances under the Plan.

     

    
      	
            	IV.	
              ELIGIBILITY

            


    

     

    A.  The
      persons eligible to participate in the Discretionary Option Grant and Stock
      Issuance Programs are as follows:

     

    (i)  Employees,

     

    (ii)  non-employee
      members of the Board or the board of directors of any Parent or Subsidiary,
      and

     

    (iii)  consultants
      and other independent advisors (whether natural persons or entities) who provide
      services to the Corporation (or any Parent or Subsidiary).

     

    B.  Only
      Employees who are Section 16 Insiders or other highly compensated individuals
      shall be eligible to participate in the Salary Investment Option Grant
      Program.

     

    C.  Only
      non-employee Board members shall be eligible to participate in the Automatic
      Option Grant and Director Fee Option Grant Programs.

     

    
      	
            	V.	
              STOCK
                SUBJECT TO THE PLAN

            


    

     

    A.  The
      stock
      issuable under the Plan shall be shares of authorized but unissued or reacquired
      Common Stock, including shares repurchased by the Corporation on the open
      market. The number of shares of Common Stock initially reserved for issuance
      over the term of the Plan shall be Ten Million (10,000,000) shares. Such reserve
      shall consist of (i) the number of shares estimated to remain available
      for
      issuance, as of the Section 12 Registration Date, under the Predecessor Plan,
      including the shares subject to the outstanding options to be incorporated
      into
      the Plan and the additional shares which would otherwise be available for future
      grant, plus (ii) an increase of Four Million One Hundred Sixty Five Thousand
      Three Hundred Fifteen (4,165,315) shares authorized by the Board subject to
      stockholder approval prior to the Section 12 Registration Date.

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    B.  The
      number of shares of Common Stock available for issuance under the Plan shall
      automatically increase on the first trading day of January each calendar year
      during the term of the Plan, beginning with the calendar year 2001, by an amount
      equal to three percent (3%) of the total number of shares of Common Stock
      outstanding on the last trading day in December of the immediately preceding
      calendar year, but in no event shall such annual increase exceed One Million
      Five Hundred Thousand (1,500,000) shares.

     

    C.  No
      one
      person participating in the Plan may receive options, separately exercisable
      stock appreciation rights and direct stock issuances for more than Five Hundred
      Thousand (500,000) shares of Common Stock in the aggregate per calendar
      year.

     

    D.  Shares
      of
      Common Stock subject to outstanding options (including options incorporated
      into
      this Plan from the Predecessor Plan) shall be available for subsequent issuance
      under the Plan to the extent those options expire, terminate or are cancelled
      for any reason prior to exercise in full. Unvested shares issued under the
      Plan
      and subsequently repurchased by the Corporation, at the original exercise or
      issue price paid per share, pursuant to the Corporation’s repurchase rights
      under the Plan shall be added back to the number of shares of Common Stock
      reserved for issuance under the Plan and shall accordingly be available for
      reissuance through one or more subsequent options or direct stock issuances
      under the Plan. However, should the exercise price of an option under the Plan
      be paid with shares of Common Stock or should shares of Common Stock otherwise
      issuable under the Plan be withheld by the Corporation in satisfaction of the
      exercise price of an option under the Plan or withholding taxes incurred in
      connection with the exercise of an option or the vesting of a stock issuance
      under the Plan, then the number of shares of Common Stock available for issuance
      under the Plan shall be reduced by the gross number of shares for which the
      option is exercised or which vest under the stock issuance, and not by the
      net
      number of shares of Common Stock issued to the holder of such option or stock
      issuance. Shares of Common Stock underlying one or more stock appreciation
      rights exercised under the Plan shall not
      be
      available for subsequent issuance.

     

    E.  If
      any
      change is made to the Common Stock by reason of any stock split, stock dividend,
      recapitalization, combination of shares, exchange of shares or other change
      affecting the outstanding Common Stock as a class without the Corporation’s
      receipt of consideration, appropriate adjustments shall be made to (i) the
      maximum number and/or class of securities issuable under the Plan, (ii) the
      number and/or class of securities by which the share reserve is to increase
      each
      calendar year pursuant to the automatic share increase provisions of the Plan,
      (iii) the number and/or class of securities for which any one person may be
      granted options, separately exercisable stock appreciation rights and direct
      stock issuances under the Plan per calendar year, (iv) the number and/or class
      of securities for which grants are subsequently to be made under the Automatic
      Option Grant Program to new and continuing non-employee Board members, (v)
      the
      number and/or class of securities and the exercise price per share in effect
      under each outstanding option under the Plan and (vi) the number and/or class
      of
      securities and price per share in effect under each outstanding option
      incorporated into this Plan from the Predecessor Plan. Such adjustments to
      the
      outstanding options are to be effected in a manner which shall preclude the
      enlargement or dilution of rights and benefits under such options. The
      adjustments determined by the Plan Administrator shall be final, binding and
      conclusive.

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    ARTICLE
      TWO

     

    DISCRETIONARY
      OPTION GRANT PROGRAM

     

    
      	
            	I.	
              OPTION
                TERMS

            


    

     

    Each
      option shall be evidenced by one or more documents in the form approved by
      the
      Plan Administrator; provided,
      however, that each such document shall comply with the terms specified below.
      Each document evidencing an Incentive Option shall, in addition, be subject
      to
      the provisions of the Plan applicable to such options.

     

    A.  Exercise
      Price.

     

    1.  The
      exercise price per share shall be fixed by the Plan Administrator at the time
      of
      the option grant and may be less than, equal to or greater than the Fair Market
      Value per share of Common Stock on the option grant date.

     

    2.  The
      exercise price shall become immediately due upon exercise of the option and
      shall, subject to the provisions of Section II of Article Seven
      and
      the documents evidencing the option, be payable in one or more of the following
      forms: 

     

    (i)  in
      cash
      or check made payable to the Corporation;

     

    (ii)  shares
      of
      Common Stock held for the requisite period necessary to avoid a charge to the
      Corporation’s earnings for financial reporting purposes and valued at Fair
      Market Value on the Exercise Date; 

     

    (iii)  to
      the
      extent the option is exercised for vested shares, through a special sale and
      remittance procedure pursuant to which the Optionee shall concurrently provide
      irrevocable instructions to (a) a Corporation-designated brokerage firm to
      effect the immediate sale of the purchased shares and remit to the Corporation,
      out of the sale proceeds available on the settlement date, sufficient funds
      to
      cover the aggregate exercise price payable for the purchased shares plus all
      applicable Federal, state and local income and employment taxes required to
      be
      withheld by the Corporation by reason of such exercise and (b) the
      Corporation to deliver the certificates for the purchased shares directly to
      such brokerage firm in order to complete the sale; or

     

    (iv)  on
      such
      other terms and conditions as may be acceptable to the Plan Administrator
      (including, without limitation, the relinquishment of options). No shares of
      Common Stock shall be issued until payment therefore, as provided herein, has
      been made or provided for.

     

    Except
      to
      the extent such sale and remittance procedure is utilized, payment of the
      exercise price for the purchased shares must be made on the Exercise
      Date.

     

    B.  Exercise
      and Term of Options.
      Each
      option shall be exercisable at such time or times, during such period and for
      such number of shares as shall be determined by the Plan Administrator and
      set
      forth in the documents evidencing the option. However, no option shall have
      a
      term in excess of ten (10) years measured from the option grant
      date.

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    C.  Cessation
      of Service.

     

    1.  The
      following provisions shall govern the exercise of any options outstanding at
      the
      time of the Optionee’s cessation of Service or death:

     

    (i)  Any
      option outstanding at the time of the Optionee’s cessation of Service for any
      reason shall remain exercisable for such period of time thereafter as shall
      be
      determined by the Plan Administrator and set forth in the documents evidencing
      the option, but no such option shall be exercisable after the expiration of
      the
      option term.

     

    (ii)  Any
      option exercisable in whole or in part by the Optionee at the time of death
      may
      be subsequently exercised by his or her Beneficiary.

     

    (iii)  During
      the applicable post-Service exercise period, the option may not be exercised
      in
      the aggregate for more than the number of vested shares for which the option
      is
      exercisable on the date of the Optionee’s cessation of Service. Upon the
      expiration of the applicable exercise period or (if earlier) upon the expiration
      of the option term, the option shall terminate and cease to be outstanding
      for
      any vested shares for which the option has not been exercised. However, the
      option shall, immediately upon the Optionee’s cessation of Service, terminate
      and cease to be outstanding to the extent the option is not otherwise at that
      time exercisable for vested shares.

     

    (iv)  Should
      the Optionee’s Service be terminated for Misconduct or should the Optionee
      engage in Misconduct while his or her options are outstanding, then all such
      options shall terminate immediately and cease to be outstanding.

     

    2.  The
      Plan
      Administrator shall have complete discretion, exercisable either at the time
      an
      option is granted or at any time while the option remains
      outstanding:

     

    (v)  to
      extend
      the period of time for which the option is to remain exercisable following
      the
      Optionee’s cessation of Service to such period of time as the Plan Administrator
      shall deem appropriate, but in no event beyond the expiration of the option
      term, and/or

     

    (vi)  to
      permit
      the option to be exercised, during the applicable post-Service exercise period,
      for one or more additional installments in which the Optionee would have vested
      had the Optionee continued in Service.

     

    D.  Stockholder
      Rights.
      The
      holder of an option shall have no stockholder rights with respect to the shares
      subject to the option until such person shall have exercised the option, paid
      the exercise price and become a holder of record of the purchased
      shares.

     

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    E.  Repurchase
      Rights.
      The Plan
      Administrator shall have the discretion to grant options which are exercisable
      for unvested shares of Common Stock. Should the Optionee cease Service while
      holding such unvested shares, the Corporation shall have the right to
      repurchase, at the exercise price paid per share, any or all of those unvested
      shares. The terms upon which such repurchase right shall be exercisable
      (including the period and procedure for exercise and the appropriate vesting
      schedule for the purchased shares) shall be established by the Plan
      Administrator and set forth in the document evidencing such repurchase right.
      

     

    F.  Limited
      Transferability of Options.
      During
      the lifetime of the Optionee, Incentive Options shall be exercisable only by
      the
      Optionee and shall not be assignable or transferable other than by will or
      by
      the laws of inheritance following the Optionee’s death. Non-Statutory Options
      shall be subject to the same restrictions, except that a Non-Statutory Option
      may, to the extent permitted by the Plan Administrator, be assigned in whole
      or
      in part during the Optionee’s lifetime (i) as a gift to one or more members of
      the Optionee’s immediate family, to a trust in which Optionee and/or one or more
      such family members hold more than fifty percent (50%) of the beneficial
      interest or to an entity in which more than fifty percent (50%) of the voting
      interests are owned by one or more such family members or (ii) pursuant to
      a
      domestic relations order. The terms applicable to the assigned portion shall
      be
      the same as those in effect for the option immediately prior to such assignment
      and shall be set forth in such documents issued to the assignee as the Plan
      Administrator may deem appropriate. Notwithstanding the foregoing, the Plan
      Administrator may, in its discretion, permit a consultant or independent advisor
      entity that is awarded Non-Statutory Options to transfer any or all such
      Non-Statutory Options awarded.

     

    Notwithstanding
      the foregoing, the Optionee may also designate one or more persons as the
      beneficiary or beneficiaries of his or her outstanding options, and those
      options shall, in accordance with such designation, automatically be transferred
      to such beneficiary or beneficiaries upon the Optionee’s death while holding
      those options. Such beneficiary or beneficiaries shall take the transferred
      options subject to all the terms and conditions of the applicable agreement
      evidencing each such transferred option, including (without limitation) the
      limited time period during which the option may be exercised following the
      Optionee’s death.

     

    
      	
            	II.	
              INCENTIVE
                OPTIONS

            


    

     

    The
      terms
      specified below shall be applicable to all Incentive Options. Except as modified
      by the provisions of this Section II, all the provisions of Articles One, Two
      and Six shall be applicable to Incentive Options. Options which are specifically
      designated as Non-Statutory Options when issued under the Plan shall
not
      be
      subject to the terms of this Section II.

     

    A.  Eligibility.
      Incentive Options may only be granted to Employees. 

     

    B.  Exercise
      Price.
      The
      exercise price per share shall not be less than one hundred percent (100%)
      of
      the Fair Market Value per share of Common Stock on the option grant
      date.

     

    C.  Dollar
      Limitation.
      The
      aggregate Fair Market Value of the shares of Common Stock (determined as of
      the
      respective date or dates of grant) for which one or more options granted to
      any
      Employee under the Plan (or any other option plan of the Corporation or any
      Parent or Subsidiary) may for the first time become exercisable as Incentive
      Options during any one calendar year shall not exceed the sum of One Hundred
      Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more
      such options which become exercisable for the first time in the same calendar
      year, the foregoing limitation on the exercisability of such options as
      Incentive Options shall be applied on the basis of the order in which such
      options are granted.

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    D.  10%
      Stockholder.
      If any
      Employee to whom an Incentive Option is granted is a 10% Stockholder, then
      the
      exercise price per share shall not be less than one hundred ten percent (110%)
      of the Fair Market Value per share of Common Stock on the option grant date,
      and
      the option term shall not exceed five (5) years measured from the option grant
      date.

     

    
      	
            	III.	
              CHANGE
                IN CONTROL/HOSTILE
                TAKE-OVER

            


    

     

    A.  Each
      option outstanding at the time of a Change in Control but not otherwise
      fully-vested shall automatically accelerate so that each such option shall,
      immediately prior to the effective date of the Change in Control, become
      exercisable for all of the shares of Common Stock at the time subject to that
      option and may be exercised for any or all of those shares as fully-vested
      shares of Common Stock. However, an outstanding option shall not so accelerate
      if and to the extent: (i) such option is, in connection with the Change in
      Control, assumed or otherwise continued in full force and effect by the
      successor corporation (or parent thereof) pursuant to the terms of the Change
      in
      Control, (ii) such option is replaced with a cash incentive program of the
      successor corporation which preserves the spread existing at the time of the
      Change in Control on the shares of Common Stock for which the option is not
      otherwise at that time exercisable and provides for subsequent payout in
      accordance with the same vesting schedule applicable to those option shares
      or
      (iii) the acceleration of such option is subject to other limitations imposed
      by
      the Plan Administrator at the time of the option grant. Each option outstanding
      at the time of the Change in Control shall terminate as provided in Section
      III.C. of this Article Two.

     

    B.  All
      outstanding repurchase rights shall also terminate automatically, and the shares
      of Common Stock subject to those terminated rights shall immediately vest in
      full, in the event of any Change in Control, except to the extent: (i) those
      repurchase rights are assigned to the successor corporation (or parent thereof)
      or otherwise continue in full force and effect pursuant to the terms of the
      Change in Control or (ii) such accelerated vesting is precluded by other
      limitations imposed by the Plan Administrator at the time the repurchase right
      is issued.

     

    C.  Immediately
      following the consummation of the Change in Control, all outstanding options
      shall terminate and cease to be outstanding, except to the extent assumed by
      the
      successor corporation (or parent thereof) or otherwise expressly continued
      in
      full force and effect pursuant to the terms of the Change in Control.


     

    D.  Each
      option which is assumed in connection with a Change in Control shall be
      appropriately adjusted, immediately after such Change in Control, to apply
      to
      the number and class of securities which would have been issuable to the
      Optionee in consummation of such Change in Control had the option been exercised
      immediately prior to such Change in Control. Appropriate adjustments to reflect
      such Change in Control shall also be made to (i) the exercise price payable
      per
      share under each outstanding option, provided
      the
      aggregate exercise price payable for such securities shall remain the same,
      (ii)
      the maximum number and/or class of securities available for issuance over the
      remaining term of the Plan and (iii) the maximum number and/or class of
      securities for which any one person may be granted options, separately
      exercisable stock appreciation rights and direct stock issuances under the
      Plan
      per calendar year. To the extent the actual holders of the Corporation’s
      outstanding Common Stock receive cash consideration for their Common Stock
      in
      consummation of the Change in Control, the successor corporation may, in
      connection with the assumption of the outstanding options, substitute one or
      more shares of its own common stock with a fair market value equivalent to
      the
      cash consideration paid per share of Common Stock in such Change in
      Control.

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    E.  The
      Plan
      Administrator may at any time provide that one or more options will
      automatically accelerate in connection with a Change in Control, whether or
      not
      those options are assumed or otherwise continued in full force and effect
      pursuant to the terms of the Change in Control. Any such option shall
      accordingly become exercisable, immediately prior to the effective date of
      such
      Change in Control, for all of the shares of Common Stock at the time subject
      to
      that option and may be exercised for any or all of those shares as fully-vested
      shares of Common Stock. In addition, the Plan Administrator may at any time
      provide that one or more of the Corporation’s repurchase rights shall not be
      assignable in connection with such Change in Control and shall terminate upon
      the consummation of such Change in Control.

     

    F.  The
      Plan
      Administrator may at any time provide that one or more options will
      automatically accelerate upon an Involuntary Termination of the Optionee’s
      Service within a designated period (not to exceed eighteen (18) months)
      following the effective date of any Change in Control in which those options
      do
      not otherwise accelerate. Any options so accelerated shall remain exercisable
      for fully-vested shares until the earlier
      of (i)
      the expiration of the option term or (ii) the expiration of the one (1) year
      period measured from the effective date of the Involuntary Termination. In
      addition, the Plan Administrator may at any time provide that one or more of
      the
      Corporation’s repurchase rights shall immediately terminate upon such
      Involuntary Termination. 

     

    G.  The
      Plan
      Administrator may at any time provide that one or more options will
      automatically accelerate in connection with a Hostile Take-Over. Any such option
      shall become exercisable, immediately prior to the effective date of such
      Hostile Take-Over, for all of the shares of Common Stock at the time subject
      to
      that option and may be exercised for any or all of those shares as fully-vested
      shares of Common Stock. In addition, the Plan Administrator may at any time
      provide that one or more of the Corporation’s repurchase rights shall terminate
      automatically upon the consummation of such Hostile Take-Over. Alternatively,
      the Plan Administrator may condition such automatic acceleration and termination
      upon an Involuntary Termination of the Optionee’s Service within a designated
      period (not to exceed eighteen (18) months) following the effective date of
      such
      Hostile Take-Over. Each option so accelerated shall remain exercisable for
      fully-vested shares until the expiration or sooner termination of the option
      term.

     

    H.  The
      portion of any Incentive Option accelerated in connection with a Change in
      Control or Hostile Take Over shall remain exercisable as an Incentive Option
      only to the extent the applicable One Hundred Thousand Dollar ($100,000)
      limitation is not exceeded. To the extent such dollar limitation is exceeded,
      the accelerated portion of such option shall be exercisable as a Non-Statutory
      Option under the Federal tax laws.

     

    
      	
            	IV.	
              STOCK
                APPRECIATION RIGHTS

            


    

     

    The
      Plan
      Administrator may, subject to such conditions as it may determine, grant to
      selected Optionees stock appreciation rights which will allow the holders of
      those rights to elect between the exercise of the underlying option for shares
      of Common Stock and the surrender of that option in exchange for a distribution
      from the Corporation in an amount equal to the excess of (a) the Option
      Surrender Value of the number of shares for which the option is surrendered
      over
      (b) the aggregate exercise price payable for such shares. The distribution
      may be made in shares of Common Stock valued at Fair Market Value on the option
      surrender date, in cash, or partly in shares and partly in cash, as the Plan
      Administrator shall in its sole discretion deem appropriate.

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    ARTICLE
      THREE

     

    SALARY
      INVESTMENT OPTION GRANT PROGRAM

     

    
      	
            	I.	
              OPTION
                GRANTS

            


    

     

    The
      Primary Committee may implement the Salary Investment Option Grant Program
      for
      one or more calendar years beginning after the Underwriting Date and select
      the
      Section 16 Insiders and other highly compensated Employees eligible to
      participate in the Salary Investment Option Grant Program for each such calendar
      year. Each selected individual who elects to participate in the Salary
      Investment Option Grant Program must, prior to the start of each calendar year
      of participation, file with the Plan Administrator (or its designate) an
      irrevocable authorization directing the Corporation to reduce his or her base
      salary for that calendar year by an amount not less than Five Thousand Dollars
      ($5,000) nor more than Fifty Thousand Dollars ($50,000). Each individual who
      files such a timely election shall be granted an option under the Salary
      Investment Grant Program on the first trading day in January for the calendar
      year for which the salary reduction is to be in effect.

     

    
      	
            	II.	
              OPTION
                TERMS

            


    

     

    Each
      option shall be a Non-Statutory Option evidenced by one or more documents in
      the
      form approved by the Plan Administrator; provided,
      however, that each such document shall comply with the terms specified
      below.

     

    A.  Exercise
      Price.

     

    1.  The
      exercise price per share shall be thirty-three and one-third percent (33-1/3%)
      of the Fair Market Value per share of Common Stock on the option grant
      date.

     

    2.  The
      exercise price shall become immediately due upon exercise of the option and
      shall be payable in one or more of the alternative forms authorized under the
      Discretionary Option Grant Program. Except to the extent the sale and remittance
      procedure specified thereunder is utilized, payment of the exercise price for
      the purchased shares must be made on the Exercise Date.

     

    B.  Number
      of Option Shares.
      The
      number of shares of Common Stock subject to the option shall be determined
      pursuant to the following formula (rounded down to the nearest whole
      number):

     

    X
      = A ÷
      (B x 66-2/3%), where

     

    X
      is the
      number of option shares,

     

    A
      is the
      dollar amount of the approved reduction in the Optionee’s base salary for the
      calendar year, and

     

    B
      is the
      Fair Market Value per share of Common Stock on the option grant date.


     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    C.  Exercise
      and Term of Options.
      The
      option shall become exercisable in a series of twelve (12) successive equal
      monthly installments upon the Optionee’s completion of each calendar month of
      Service in the calendar year for which the salary reduction is in effect. Each
      option shall have a maximum term of ten (10) years measured from the option
      grant date. 

     

    D.  Cessation
      of Service.
      Each
      option outstanding at the time of the Optionee’s cessation of Service shall
      remain exercisable, for any or all of the shares for which the option is
      exercisable at the time of such cessation of Service, until the earlier
      of (i)
      the expiration of the option term or (ii) the expiration of the three (3)-year
      period following the Optionee’s cessation of Service. To the extent the option
      is held by the Optionee at the time of his or her death, the option may be
      exercised by his or her Beneficiary. However, the option shall, immediately
      upon
      the Optionee’s cessation of Service, terminate and cease to remain outstanding
      with respect to any and all shares of Common Stock for which the option is
      not
      otherwise at that time exercisable.

     

    
      	
            	III.	
              CHANGE
                IN CONTROL/HOSTILE
                TAKE-OVER

            


    

     

    A.  In
      the
      event of any Change in Control or Hostile Take-Over while the Optionee remains
      in Service, each outstanding option shall automatically accelerate so that
      each
      such option shall, immediately prior to the effective date of the Change in
      Control or Hostile Take-Over, become fully exercisable with respect to the
      total
      number of shares of Common Stock at the time subject to such option and may
      be
      exercised for any or all of those shares as fully-vested shares of Common Stock.
      Each such option accelerated in connection with a Change in Control shall
      terminate upon the Change in Control, except to the extent assumed by the
      successor corporation (or parent thereof) or otherwise continued in full force
      and effect pursuant to the terms of the Change in Control. Each such option
      accelerated in connection with a Hostile Take-Over shall remain exercisable
      until the expiration or sooner termination of the option term.

     

    B.  Each
      option which is assumed in connection with a Change in Control shall be
      appropriately adjusted to apply to the number and class of securities which
      would have been issuable to the Optionee in consummation of such Change in
      Control had the option been exercised immediately prior to such Change in
      Control. Appropriate adjustments shall also be made to the exercise price
      payable per share under each outstanding option, provided
      the
      aggregate exercise price payable for such securities shall remain the same.
      To
      the extent the actual holders of the Corporation’s outstanding Common Stock
      receive cash consideration for their Common Stock in consummation of the Change
      in Control, the successor corporation may, in connection with the assumption
      of
      the outstanding options, substitute one or more shares of its own common stock
      with a fair market value equivalent to the cash consideration paid per share
      of
      Common Stock in such Change in Control.

     

    C.  Upon
      the
      occurrence of a Hostile Take-Over, the Optionee shall have a thirty (30)-day
      period in which to surrender to the Corporation each of his or her outstanding
      options. The Optionee shall in return be entitled to a cash distribution from
      the Corporation in an amount equal to the excess of (i) the Option Surrender
      Value of the shares of Common Stock at the time subject to each surrendered
      option (whether or not the Optionee is otherwise at the time vested in those
      shares) over (ii) the aggregate exercise price payable for such shares. Such
      cash distribution shall be paid within five (5) days following the surrender
      of
      the option to the Corporation. 

     

    
      	
            	IV.	
              REMAINING
                TERMS

            


    

     

    The
      remaining terms of each option granted under the Salary Investment Option Grant
      Program shall be the same as the terms in effect for options made under the
      Discretionary Option Grant Program. 

     

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

    ARTICLE
      FOUR

     

    STOCK
      ISSUANCE PROGRAM

     

    
      	
            	I.	
              STOCK
                ISSUANCE TERMS

            


    

     

    Shares
      of
      Common Stock may be issued under the Stock Issuance Program through direct
      and
      immediate stock issuances without any intervening options. Shares of Common
      Stock may also be issued under the Stock Issuance Program pursuant to stock
      issuances which entitle the recipients to receive those shares upon the
      attainment of designated performance objectives or Service requirements. Each
      such stock issuance shall be evidenced by one or more documents which comply
      with the terms specified below.

     

    A.  Purchase
      Price.

     

    1.  The
      purchase price per share of Common Stock subject to direct issuance shall be
      fixed by the Plan Administrator and may be less than, equal to or greater than
      the Fair Market Value per share of Common Stock on the issue date.

     

    2.  Subject
      to the provisions of Section II of Article Seven, shares of Common Stock may
      be
      issued under the Stock Issuance Program for any of the following items of
      consideration which the Plan Administrator may deem appropriate in each
      individual instance:

     

    (i)  cash
      or
      check made payable to the Corporation, or

     

    (ii)  past
      services rendered to the Corporation (or any Parent or Subsidiary).

     

    B.  Vesting/Issuance
      Provisions.

     

    1.  The
      Plan
      Administrator may issue shares of Common Stock which are fully and immediately
      vested upon issuance or which are to vest in one or more installments over
      the
      Participant’s period of Service or upon attainment of specified performance
      objectives (including the Performance Goals specified in Appendix
      B
      hereto)
      or such other factors as the Plan Administrator may determine, in its sole
      discretion, including to comply with the requirements of Section 162(m) of
      the
      Code. Alternatively, the Plan Administrator may issue stock issuances which
      shall entitle the recipient to receive a specified number of vested shares
      of
      Common Stock upon the attainment of one or more Performance Goals or Service
      requirements established by the Plan Administrator.

     

    2.  Notwithstanding
      the foregoing, if the stock issuance is intended to comply with the “performance
      based” compensation exception under Section 162(m) of the Code and if the lapse
      of restrictions on such stock issuance is based on the attainment of Performance
      Goals, the Plan Administrator shall establish the objective Performance Goals
      or
      grant conditions relating to the applicable vesting percentage of the Common
      Stock applicable to each Participant or class of Participants in writing prior
      to the beginning of the applicable fiscal year or at such later date as
      otherwise determined by the Plan Administrator and while the outcome of the
      Performance Goals are substantially uncertain. Such Performance Goals may
      incorporate provisions for disregarding (or adjusting for) changes in accounting
      methods, corporate transactions (including, without limitation, dispositions
      and
      acquisitions) and other similar type events or circumstances. The Performance
      Goals are set forth in Appendix
      B
      hereto.

     

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

    3.  A
      Participant selected to receive a stock issuance shall not have any rights
      with
      respect to such issuance, unless and until such Participant has delivered a
      fully executed copy of the award agreement evidencing the stock issuance to
      the
      Corporation and has otherwise complied with the applicable terms and conditions
      of such issuance.

     

    4.  Any
      new,
      substituted or additional securities or other property (including money paid
      other than as a regular cash dividend) which the Participant may have the right
      to receive with respect to his or her unvested shares of Common Stock by reason
      of any stock dividend, stock split, recapitalization, combination of shares,
      exchange of shares or other change affecting the outstanding Common Stock as
      a
      class without the Corporation’s receipt of consideration shall be issued subject
      to (i) the same vesting requirements applicable to the Participant’s
      unvested shares of Common Stock and (ii) such escrow arrangements as
      the
      Plan Administrator shall deem appropriate.

     

    5.  The
      Participant shall have full stockholder rights with respect to the issued shares
      of Common Stock, whether or not the Participant’s interest in those shares is
      vested. Accordingly, the Participant shall have the right to vote such shares
      and to receive any regular cash dividends paid on such shares, but shall have
      no
      right to transfer such shares until vested. Unless otherwise determined by
      the
      Plan Administrator, the Participant shall not be permitted to transfer shares
      of
      Common Stock awarded under this Plan during a period set by the Plan
      Administrator commencing with the date of such award, as set forth in the
      applicable award agreement.

     

    6.  Should
      the Participant cease to remain in Service while holding one or more unvested
      shares of Common Stock, or should the performance objectives not be attained
      with respect to one or more such unvested shares of Common Stock, then those
      shares shall be immediately surrendered to the Corporation for cancellation,
      and
      the Participant shall have no further stockholder rights with respect to those
      shares. To the extent the surrendered shares were previously issued to the
      Participant for consideration paid in cash or cash equivalent (including the
      Participant’s purchase-money indebtedness), the Corporation shall repay to the
      Participant the cash consideration paid for the surrendered shares and shall
      cancel the unpaid principal balance of any outstanding purchase-money note
      of
      the Participant attributable to the surrendered shares.

     

    7.  The
      Plan
      Administrator may waive the surrender and cancellation of one or more unvested
      shares of Common Stock (or other assets attributable thereto) which would
      otherwise occur upon the cessation of the Participant’s Service or the
      non-attainment of the performance objectives applicable to those shares. Such
      waiver shall result in the immediate vesting of the Participant’s interest in
      the shares of Common Stock as to which the waiver applies. Such waiver may
      be
      effected at any time, whether before or after the Participant’s cessation of
      Service or the attainment or non-attainment of the applicable performance
      objectives.

     

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

    8.  Outstanding
      stock issuances shall automatically terminate, and no shares of Common Stock
      shall actually be issued in satisfaction of those issuances, if the performance
      objectives or Service requirements established for such issuances are not
      attained. The Plan Administrator, however, shall have the authority to issue
      shares of Common Stock in satisfaction of one or more outstanding stock
      issuances as to which the designated performance objectives or Service
      requirements are not attained.

     

    
      	
            	II.	
              CHANGE
                IN CONTROL/HOSTILE
                TAKE-OVER

            


    

     

    A.  All
      of
      the Corporation’s outstanding repurchase rights shall terminate automatically,
      and all the shares of Common Stock subject to those terminated rights shall
      immediately vest in full, in the event of any Change in Control, except to
      the
      extent (i) those repurchase rights are assigned to the successor corporation
      (or
      parent thereof) or otherwise continue in full force and effect pursuant to
      the
      terms of the Change in Control or (ii) such accelerated vesting is precluded
      by
      other limitations imposed by the Plan Administrator at the time the repurchase
      right is issued.

     

    B.  The
      Plan
      Administrator may at any time provide for the automatic termination of one
      or
      more of those outstanding repurchase rights and the immediate vesting of the
      shares of Common Stock subject to those terminated rights upon (i) a Change
      in
      Control or Hostile Take-Over or (ii) an Involuntary Termination of the
      Participant’s Service within a designated period (not to exceed eighteen (18)
      months) following the effective date of any Change in Control or Hostile
      Take-Over in which those repurchase rights are assigned to the successor
      corporation (or parent thereof) or otherwise continue in full force and
      effect.

     

    
      	
            	III.	
              SHARE
                ESCROW/LEGENDS

            


    

     

    Unvested
      shares may, in the Plan Administrator’s discretion, be held in escrow by the
      Corporation until the Participant’s interest in such shares vests or may be
      issued directly to the Participant with restrictive legends on the certificates
      evidencing those unvested shares.

     

    
      
         

      

      
        -14-

        
          

        

      

      
         

      

    

    ARTICLE
      FIVE 

     

    AUTOMATIC
      OPTION GRANT PROGRAM

     

    
      	
            	I.	
              OPTION
                TERMS

            


    

     

    A.  Grant
      Dates.
      Options
      shall be made on the dates specified below:

     

    1.  Each
      individual who is first elected or appointed as a non-employee Board member
      at
      any time after April 21, 2005 shall automatically be granted, on the date of
      such initial election or appointment, a Non-Statutory Option to purchase Thirty
      Five Thousand (35,000) shares of Common Stock, provided that individual has
      not
      previously been in the employ of the Corporation (or any Parent or
      Subsidiary).

     

    2.  On
      the
      date of the 2005 Annual Stockholder Meeting, each individual who is to continue
      to serve as a non-employee Board member shall automatically be granted a
      Non-Statutory Option to purchase Thirty Five Thousand (35,000) shares of Common
      Stock. On the date of each Annual Stockholders Meeting beginning with the 2006
      Annual Stockholder Meeting, each individual who is to continue to serve as
      a
      non-employee Board member shall automatically be granted a Non-Statutory Option
      to purchase Ten Thousand (10,000) shares of Common Stock, provided that
      individual has served as a non-employee Board member for at least six (6)
      months.

     

    B.  Exercise
      Price.

     

    1.  The
      exercise price per share shall be equal to one hundred percent (100%) of the
      Fair Market Value per share of Common Stock on the option grant
      date.

     

    2.  The
      exercise price shall be payable in one or more of the alternative forms
      authorized under the Discretionary Option Grant Program. Except to the extent
      the sale and remittance procedure specified thereunder is utilized, payment
      of
      the exercise price for the purchased shares must be made on the Exercise
      Date.

     

    C.  Option
      Term.
      Each
      option shall have a term of ten (10) years measured from the option grant
      date.

     

    D.  Exercise
      and Vesting of Options.
      Each
      option shall be immediately exercisable for any or all of the option shares.
      However, any unvested shares purchased under the option shall be subject to
      repurchase by the Corporation, at the exercise price paid per share, upon the
      Optionee’s cessation of Board service prior to vesting in those shares. Each
      initial 35,000-share option shall vest, and the Corporation’s repurchase right
      shall lapse, in a series of three (3) successive equal annual installments
      over
      the Optionee’s period of continued service as a Board member, with the first
      such installment to vest upon the Optionee’s completion of one (1) year of Board
      service measured from the option grant date. Each 35,000-share option granted
      on
      the date of the 2005 Annual Stockholder Meeting, and each annual 10,000-share
      option granted thereafter, shall vest, and the Corporation’s repurchase right
      shall lapse, upon the Optionee’s completion of one (1) year of Board service
      measured from the option grant date.

     

    
      
         

      

      
        -15-

        
          

        

      

      
         

      

    

    E.  Cessation
      of Board Service.
      The
      following provisions shall govern the exercise of any options outstanding at
      the
      time of the Optionee’s cessation of Board service:

     

    (i)  Any
      option outstanding at the time of the Optionee’s cessation of Board service for
      any reason shall remain exercisable for a twelve (12)-month period following
      the
      date of such cessation of Board service, but in no event shall such option
      be
      exercisable after the expiration of the option term.

     

    (ii)  Any
      option exercisable in whole or in part by the Optionee at the time of death
      may
      be subsequently exercised by his or her Beneficiary.

     

    (iii)  Following
      the Optionee’s cessation of Board service, the option may not be exercised in
      the aggregate for more than the number of shares for which the option was
      exercisable on the date of such cessation of Board service. Upon the expiration
      of the applicable exercise period or (if earlier) upon the expiration of the
      option term, the option shall terminate and cease to be outstanding for any
      vested shares for which the option has not been exercised. However, the option
      shall, immediately upon the Optionee’s cessation of Board service, terminate and
      cease to be outstanding for any and all shares for which the option is not
      otherwise at that time exercisable.

     

    (iv)  However,
      should the Optionee cease to serve as a Board member by reason of death or
      Permanent Disability, then all shares at the time subject to the option shall
      immediately vest so that such option may, during the twelve (12)-month exercise
      period following such cessation of Board service, be exercised for all or any
      portion of those shares as fully-vested shares of Common Stock.

     

    
      	
            	II.	
              CHANGE
                IN CONTROL/HOSTILE
                TAKE-OVER

            


    

     

    A.  In
      the
      event of any Change in Control or Hostile Take-Over, the shares of
      Common
      Stock at the time subject to each outstanding option but not otherwise vested
      shall automatically vest in full so that each such option may, immediately
      prior
      to the effective date of such Change in Control or Hostile Take-Over, became
      fully exercisable for all of the shares of Common Stock at the time subject
      to
      such option and maybe exercised for all or any of those shares as fully-vested
      shares of Common Stock. Each such option accelerated in connection with a Change
      in Control shall terminate upon the Change in Control, except to the extent
      assumed by the successor corporation (or parent thereof) or otherwise continued
      in full force and effect pursuant to the terms of the Change in Control. Each
      such option accelerated in connection with a Hostile Take-Over shall remain
      exercisable until the expiration or sooner termination of the option
      term.

     

    B.  All
      outstanding repurchase rights shall automatically terminate and the shares
      of
      Common Stock subject to those terminated rights shall immediately vest in full,
      in the event of any Change in Control or Hostile Take-Over.

     

    C.  Upon
      the
      occurrence of a Hostile Take-Over, the Optionee shall have a thirty (30)-day
      period in which to surrender to the Corporation each of his or her outstanding
      options. The Optionee shall in return be entitled to a cash distribution from
      the Corporation in an amount equal to the excess of (i) the Option Surrender
      Value of the shares of Common Stock at the time subject to each surrendered
      option (whether or not the option is otherwise at the time exercisable for
      those
      shares) over (ii) the aggregate exercise price payable for such shares. Such
      cash distribution shall be paid within five (5) days following the surrender
      of
      the option to the Corporation. 

     

    D.  Each
      option which is assumed in connection with a Change in Control shall be
      appropriately adjusted to apply to the number and class of securities which
      would have been issuable to the Optionee in consummation of such Change in
      Control had the option been exercised immediately prior to such Change in
      Control. Appropriate adjustments shall also be made to the exercise price
      payable per share under each outstanding option, provided
      the
      aggregate exercise price payable for such securities shall remain the same.
      To
      the extent the actual holders of the Corporation’s outstanding Common Stock
      receive cash consideration for their Common Stock in consummation of the Change
      in Control, the successor corporation may, in connection with the assumption
      of
      the outstanding options, substitute one or more shares of its own common stock
      with a fair market value equivalent to the cash consideration paid per share
      of
      Common Stock in such Change in Control.

     

    
      	
               

               

            	III.	
              REMAINING
                TERMS

            


    

     

    The
      remaining terms of each option granted under the Automatic Option Grant Program
      shall be the same as the terms in effect for options made under the
      Discretionary Option Grant Program.

     

    
      
         

      

      
        -16-

        
          

        

      

      
         

      

    

    ARTICLE
      SIX

     

    DIRECTOR
      FEE OPTION GRANT PROGRAM

     

    
      	
            	I.	
              OPTION
                GRANTS

            


    

     

    The
      Board
      may implement the Director Fee Option Grant Program as of the first day of
      any
      calendar year beginning after the Underwriting Date. Upon such implementation
      of
      the Program, each non-employee Board member may elect to apply all or any
      portion of the annual retainer fee otherwise payable in cash for his or her
      service on the Board to the acquisition of a special option grant under this
      Director Fee Option Grant Program. Such election must be filed with the
      Corporation’s Chief Financial Officer prior to the first day of the calendar
      year for which the election is to be in effect. Each non-employee Board member
      who files such a timely election with respect to the annul retainer fee shall
      automatically be granted an option under this Director Fee Option Grant Program
      on the first trading day in January in the calendar year for which that fee
      would otherwise be payable. 

     

    
      	
            	II.	
              OPTION
                TERMS

            


    

     

    Each
      option shall be a Non-Statutory Option governed by the terms and conditions
      specified below.

     

    A.  Exercise
      Price.

     

    1.  The
      exercise price per share shall be thirty-three and one-third percent (33-1/3%)
      of the Fair Market Value per share of Common Stock on the option grant
      date.

     

    2.  The
      exercise price shall become immediately due upon exercise of the option and
      shall be payable in one or more of the alternative forms authorized under the
      Discretionary Option Grant Program. Except to the extent the sale and remittance
      procedure specified thereunder is utilized, payment of the exercise price for
      the purchased shares must be made on the Exercise Date.

     

    B.  Number
      of Option Shares.
      The
      number of shares of Common Stock subject to the option shall be determined
      pursuant to the following formula (rounded down to the nearest whole
      number):

     

    X
      = A ÷
      (B x 66-2/3%), where

     

    X
      is the
      number of option shares,

     

    A
      is the
      portion of the annual retainer fee subject to the non-employee Board member’s
      election, and 

     

    B
      is the
      Fair Market Value per share of Common Stock on the option grant date.


     

    
      
         

      

      
        -17-

        
          

        

      

      
         

      

    

    C.  Exercise
      and Term of Options.
      The
      option shall become exercisable in a series of twelve (12) successive equal
      monthly installments upon the Optionee’s completion of each month of Board
      service during the calendar year in which the option is granted. Each option
      shall have a maximum term of ten (10) years measured from the option grant
      date.


     

    D.  Cessation
      of Board Service.
      Should
      the Optionee cease Board service for any reason (other than death or Permanent
      Disability) while holding one or more options, then each such option shall
      remain exercisable, for any or all of the shares for which the option is
      exercisable at the time of such cessation of Board service, until the
earlier
      of (i)
      the expiration of the ten (10)-year option term or (ii) the expiration of the
      three (3)-year period measured from the date of such cessation of Board service.
      However, each option held by the Optionee at the time of such cessation of
      Board
      service shall immediately terminate and cease to remain outstanding with respect
      to any and all shares of Common Stock for which the option is not otherwise
      at
      that time exercisable. 

     

    E.  Death
      or Permanent Disability.
      Should
      the Optionee’s service as a Board member cease by reason of death or Permanent
      Disability, then each option held by such Optionee shall immediately become
      exercisable for all the shares of Common Stock at the time subject to that
      option, and the option may be exercised for any or all of those shares as
      fully-vested shares until the earlier
      of (i)
      the expiration of the ten (10)-year option term or (ii) the expiration of the
      three (3)-year period measured from the date of such cessation of Board
      service.

     

    Should
      the Optionee die after cessation of Board service but while holding one or
      more
      options, then each such option may be exercised, for any or all of the shares
      for which the option is exercisable at the time of the Optionee’s cessation of
      Board service (less any shares subsequently purchased by Optionee prior to
      death), by the Optionee’s Beneficiary. Such right of exercise shall lapse, and
      the option shall terminate, upon the earlier
      of (i)
      the expiration of the ten (10)-year option term or (ii) the three (3)-year
      period measured from the date of the Optionee’s cessation of Board service.


     

    
      	
            	III.	
              CHANGE
                IN CONTROL/HOSTILE
                TAKE-OVER

            


    

     

    A.  In
      the
      event of any Change in Control or Hostile Take-Over while the Optionee remains
      in Board service, each outstanding option held by such Optionee shall
      automatically accelerate so that each such option shall, immediately prior
      to
      the effective date of the Change in Control or Hostile Take-Over, become fully
      exercisable with respect to the total number of shares of Common Stock at the
      time subject to such option and may be exercised for any or all of those shares
      as fully-vested shares of Common Stock. Each such option accelerated in
      connection with a Change in Control shall terminate upon the Change in Control,
      except to the extent assumed by the successor corporation (or parent thereof)
      or
      otherwise expressly continued in full force and effect pursuant to the terms
      of
      the Change in Control. Each such option accelerated in connection with a Hostile
      Take-Over shall remain exercisable until the expiration or sooner termination
      of
      the option term.

     

    B.  Upon
      the
      occurrence of a Hostile Take-Over, the Optionee shall have a thirty (30)-day
      period in which to surrender to the Corporation each of his or her outstanding
      options. The Optionee shall in return be entitled to a cash distribution from
      the Corporation in an amount equal to the excess of (i) the Option Surrender
      Value of the shares of Common Stock at the time subject to each surrendered
      option (whether or not the Optionee is otherwise at the time vested in those
      shares) over (ii) the aggregate exercise price payable for such shares. Such
      cash distribution shall be paid within five (5) days following the surrender
      of
      the option to the Corporation. 

     

    C.  Each
      option which is assumed in connection with a Change in Control shall be
      appropriately adjusted, immediately after such Change in Control, to apply
      to
      the number and class of securities which would have been issuable to the
      Optionee in consummation of such Change in Control had the option been exercised
      immediately prior to such Change in Control. Appropriate adjustments shall
      also
      be made to the exercise price payable per share under each outstanding option,
      provided
      the
      aggregate exercise price payable for such securities shall remain the same.
      To
      the extent the actual holders of the Corporation’s outstanding Common Stock
      receive cash consideration for their Common Stock in consummation of the Change
      in Control, the successor corporation may, in connection with the assumption
      of
      the outstanding options under the Director Fee Option Grant Program, substitute
      one or more shares of its own common stock with a fair market value equivalent
      to the cash consideration paid per share of Common Stock in such Change in
      Control.

     

    
      	
            	IV.	
              REMAINING
                TERMS

            


    

     

    The
      remaining terms of each option granted under this Director Fee Option Grant
      Program shall be the same as the terms in effect for options made under the
      Discretionary Option Grant Program. 

     

    
      
         

      

      
        -18-

        
          

        

      

      
         

      

    

    ARTICLE
      SEVEN

     

    MISCELLANEOUS

     

    
      	
            	I.	
              NO
                IMPAIRMENT OF AUTHORITY

            


    

     

    Outstanding
      awards shall in no way affect the right of the Corporation to adjust,
      reclassify, reorganize or otherwise change its capital or business structure
      or
      to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
      of its business or assets.

     

    
      	
            	II.	
              FINANCING

            


    

     

    The
      Plan
      Administrator may permit any Optionee or Participant to pay the option exercise
      price under the Discretionary Option Grant Program or the purchase price of
      shares issued under the Stock Issuance Program by delivering a full-recourse,
      interest bearing promissory note payable in one or more installments. The terms
      of any such promissory note (including the interest rate and the terms of
      repayment) shall be established by the Plan Administrator in its sole
      discretion. In no event may the maximum credit available to the Optionee or
      Participant exceed the sum of (i) the aggregate option exercise price or
      purchase price payable for the purchased shares (less the par value of such
      shares) plus (ii) any Federal, state and local income and employment tax
      liability incurred by the Optionee or the Participant in connection with the
      option exercise or share purchase. Notwithstanding the foregoing, no Optionee
      or
      Participant may utilize this Section in violation of the prohibition on personal
      loans to or for executive officers or directors contained in Section 402 of
      the
      Sarbanes-Oxley Act of 2002.

     

    
      	
            	III.	
              TAX
                WITHHOLDING 

            


    

     

    A.  The
      Corporation’s obligation to deliver shares of Common Stock upon the exercise of
      options or the issuance or vesting of such shares under the Plan shall be
      subject to the satisfaction of all applicable Federal, state and local income
      and employment tax withholding requirements.

     

    B.  The
      Plan
      Administrator may, in its discretion, provide any or all holders of
      Non-Statutory Options or unvested shares of Common Stock under the Plan with
      the
      right to use shares of Common Stock in satisfaction of all or part of the
      Withholding Taxes incurred by such holders in connection with the exercise
      of
      their options or the vesting of their shares. Such right may be provided to
      any
      such holder in either or both of the following formats:

     

    Stock
      Withholding:
      The
      election to have the Corporation withhold, from the shares of Common Stock
      otherwise issuable upon the exercise of such Non-Statutory Option or the vesting
      of such shares, a portion of those shares with an aggregate Fair Market Value
      equal to the percentage of the Withholding Taxes (not to exceed one hundred
      percent (100%)) designated by the holder.

     

    Stock
      Delivery:
      The
      election to deliver to the Corporation, at the time the Non-Statutory Option
      is
      exercised or the shares vest, one or more shares of Common Stock previously
      acquired by such holder (other than in connection with the option exercise
      or
      share vesting triggering the Withholding Taxes) with an aggregate Fair Market
      Value equal to the percentage of the Taxes (not to exceed one hundred percent
      (100%)) designated by the holder.

     

    
      
         

      

      
        -19-

        
          

        

      

      
         

      

    

     

    
      	
            	IV.	
              EFFECTIVE
                DATE AND TERM OF THE PLAN

            


    

     

    A.  The
      Plan
      shall become effective immediately upon the Plan Effective Date. However, the
      Salary Investment Option Grant and Director Fee Option Grant Programs shall
      not
      be implemented until such time as the Primary Committee or the Board may deem
      appropriate. Options may be granted under the Discretionary Option Grant Program
      at any time on or after the Plan Effective Date. However, no options granted
      under the Plan may be exercised, and no shares shall be issued under the Plan,
      until the Plan is approved by the Corporation’s stockholders. If such
      stockholder approval is not obtained within twelve (12) months after the Plan
      Effective Date, then all options previously granted under this Plan shall
      terminate and cease to be outstanding, and no further options shall be granted
      and no shares shall be issued under the Plan.

     

    B.  The
      Plan
      shall serve as the successor to the Predecessor Plan, and no further options
      or
      direct stock issuances shall be made under the Predecessor Plan after the
      Section 12 Registration Date. All options outstanding under the Predecessor
      Plan
      on the Section 12 Registration Date shall be incorporated into the Plan at
      that
      time and shall be treated as outstanding options under the Plan. However, each
      outstanding option so incorporated shall continue to be governed solely by
      the
      terms of the documents evidencing such option, and no provision of the Plan
      shall be deemed to affect or otherwise modify the rights or obligations of
      the
      holders of such incorporated options with respect to their acquisition of shares
      of Common Stock.

     

    C.  One
      or
      more provisions of the Plan, including (without limitation) the option/vesting
      acceleration provisions of Article Two relating to Changes in Control, may,
      in
      the Plan Administrator’s discretion, be extended to one or more options
      incorporated from the Predecessor Plan which do not otherwise contain such
      provisions.

     

    D.  The
      Plan
      shall terminate upon the earliest
      of
      (i) March 20, 2010, (ii) the date on which all shares available
      for
      issuance under the Plan shall have been issued as fully-vested shares or (iii)
      the termination of all outstanding options in connection with a Change in
      Control. Upon such plan termination, all outstanding options and unvested stock
      issuances shall thereafter continue to have force and effect in accordance
      with
      the provisions of the documents evidencing such grants or
      issuances.

     

    
      	
            	V.	
              AMENDMENT
                OF THE PLAN

            


    

     

    A.  The
      Board
      shall have complete and exclusive power and authority to amend or modify the
      Plan in any or all respects. However, no such amendment or modification shall
      adversely affect the rights and obligations with respect to stock options or
      unvested stock issuances at the time outstanding under the Plan unless the
      Optionee or the Participant consents to such amendment or modification. In
      addition, certain amendments may require stockholder approval pursuant to
      applicable laws or regulations. 

     

    
      
         

      

      
        -20-

        
          

        

      

      
         

      

    

    B.  Options
      to purchase shares of Common Stock may be granted under the Discretionary Option
      Grant and Salary Investment Option Grant Programs and shares of Common
      Stock may be issued under the Stock Issuance Program that are in each instance
      in excess of the number of shares then available for issuance under the Plan,
      provided any excess shares actually issued under those programs shall be held
      in
      escrow until there is obtained stockholder approval of an amendment sufficiently
      increasing the number of shares of Common Stock available for issuance under
      the
      Plan. If such stockholder approval is not obtained within twelve (12) months
      after the date the first such excess issuances are made, then (i) any
      unexercised options granted on the basis of such excess shares shall terminate
      and cease to be outstanding and (ii) the Corporation shall promptly refund
      to
      the Optionees and the Participants the exercise or purchase price paid for
      any
      excess shares issued under the Plan and held in escrow, together with interest
      (at the applicable Short Term Federal Rate) for the period the shares were
      held
      in escrow, and such shares shall thereupon be automatically cancelled and cease
      to be outstanding.

     

    
      	
            	VI.	
              USE
                OF PROCEEDS

            


    

     

    Any
      cash
      proceeds received by the Corporation from the sale of shares of Common Stock
      under the Plan shall be used for general corporate purposes.

     

    
      	
            	VII.	
              REGULATORY
                APPROVALS

            


    

     

    A.  The
      implementation of the Plan, the granting of any stock option under the Plan
      and
      the issuance of any shares of Common Stock (i) upon the exercise of any granted
      option or (ii) under the Stock Issuance Program shall be subject to the
      Corporation’s procurement of all approvals and permits required by regulatory
      authorities having jurisdiction over the Plan, the stock options granted under
      it and the shares of Common Stock issued pursuant to it.

     

    B.  No
      shares
      of Common Stock or other assets shall be issued or delivered under the Plan
      unless and until there shall have been compliance with all applicable
      requirements of Federal and state securities laws and all applicable listing
      requirements of any stock exchange (or the Nasdaq Stock Market, if applicable)
      on which Common Stock is then listed for trading, and shall be further subject
      to the approval of counsel for the Corporation with respect to such compliance.
      

     

    
      	
            	VIII.	
              NO
                EMPLOYMENT/SERVICE RIGHTS

            


    

     

    Nothing
      in the Plan shall confer upon the Optionee or the Participant any right to
      continue in Service for any period of specific duration or interfere with or
      otherwise restrict in any way the rights of the Corporation (or any Parent
      or
      Subsidiary employing or retaining such person) or of the Optionee or the
      Participant, which rights are hereby expressly reserved by each, to terminate
      such person’s Service at any time for any reason, with or without
      cause.

     

    
      
         

      

      
        -21-

        
          

        

      

      
         

      

    

    APPENDIX
      A 

     

     

    The
      following definitions shall be in effect under the Plan:

     

    A.  Automatic
      Option Grant Program
      shall
      mean the automatic option grant program in effect under the Plan.

     

    B.  Beneficiary
      shall
      mean, in the event the Plan Administrator implements a beneficiary designation
      procedure, the person designated by an Optionee or Participant, pursuant to
      such
      procedure, to succeed to such person’s rights under any outstanding awards held
      by him or her at the time of death. In the absence of such designation or
      procedure, the Beneficiary shall be the personal representative of the estate
      of
      the Optionee or Participant or the person or persons to whom the award is
      transferred by will or the laws of inheritance.

     

    C.  Board
      shall
      mean the Corporation’s Board of Directors.

     

    D.  Change
      in Control shall
      mean a change in ownership or control of the Corporation effected through any
      of
      the following transactions:

     

    (i)  a
      merger,
      consolidation or reorganization approved by the Corporation’s stockholders,
unless
      securities representing more than fifty percent (50%) of the total combined
      voting power of the voting securities of the successor corporation are
      immediately thereafter beneficially owned, directly or indirectly and in
      substantially the same proportion, by the persons who beneficially owned the
      Corporation’s outstanding voting securities immediately prior to such
      transaction,

     

    (ii)  any
      stockholder-approved transfer or other disposition of all or substantially
      all
      of the Corporation’s assets, or

     

    (iii)  the
      acquisition, directly or indirectly by any person or related group of persons
      (other than the Corporation or a person that directly or indirectly controls,
      is
      controlled by, or is under common control with, the Corporation), of beneficial
      ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities
      possessing more than fifty percent (50%) of the total combined voting power
      of
      the Corporation’s outstanding securities pursuant to a tender or exchange offer
      made directly to the Corporation’s stockholders which the Board recommends such
      stockholders accept.

     

    E.  Code shall
      mean the Internal Revenue Code of 1986, as amended.

     

    F.  Common
      Stock
      shall
      mean the Corporation’s common stock.

     

    G.  Corporation shall
      mean LivePerson, Inc., a Delaware corporation, and any corporate successor
      to
      all or substantially all of the assets or voting stock of LivePerson, Inc.
      which
      shall by appropriate action adopt the Plan.

     

    
      
         

      

      
        A-1

        
          

        

      

      
         

      

    

    H.  Director
      Fee Option Grant Program
      shall
      mean the director fee option grant program in effect under the
      Plan.

     

    I.  Discretionary
      Option Grant Program shall
      mean the discretionary option grant program in effect under the
      Plan.

     

    J.  Employee shall
      mean an individual who is in the employ of the Corporation (or any Parent or
      Subsidiary), subject to the control and direction of the employer entity as
      to
      both the work to be performed and the manner and method of
      performance.

     

    K.  Exercise
      Date shall
      mean the date on which the Corporation shall have received written notice of
      the
      option exercise.

     

    L.  Fair
      Market Value per
      share
      of Common Stock on any relevant date shall be determined in accordance with
      the
      following provisions:

     

    (i)  If
      the
      Common Stock is at the time traded on the Nasdaq Stock Market, then the Fair
      Market Value shall be the closing selling price per share of Common Stock on
      the
      date in question, as such price is reported on the Nasdaq Stock Market or any
      successor system and in The Wall Street Journal. If there is no closing selling
      price for the Common Stock on the date in question, then the Fair Market Value
      shall be the closing selling price on the last preceding date for which such
      quotation exists.

     

    (ii)  If
      the
      Common Stock is at the time listed on any Stock Exchange, then the Fair Market
      Value shall be the closing selling price per share of Common Stock on the date
      in question on the Stock Exchange determined by the Plan Administrator to be
      the
      primary market for the Common Stock, as such price is officially quoted in
      the
      composite tape of transactions on such exchange and reported in The Wall Street
      Journal. If there is no closing selling price for the Common Stock on the date
      in question, then the Fair Market Value shall be the closing selling price
      on
      the last preceding date for which such quotation exists.

     

    (iii)  For
      purposes of any option grants made on the Underwriting Date, the Fair Market
      Value shall be deemed to be equal to the price per share at which the Common
      Stock is to be sold in the initial public offering pursuant to the Underwriting
      Agreement.

     

    (iv)  For
      purposes of any options made prior to the Underwriting Date, the Fair Market
      Value shall be determined by the Plan Administrator, after taking into account
      such factors as it deems appropriate.

     

    M.  Hostile
      Take-Over
      shall
      mean: 

     

    (i)  the
      acquisition, directly or indirectly, by any person or related group of persons
      (other than the Corporation or a person that directly or indirectly controls,
      is
      controlled by, or is under common control with, the Corporation) of beneficial
      ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities
      possessing more than fifty percent (50%) of the total combined voting power
      of
      the Corporation’s outstanding securities pursuant to a tender or exchange offer
      made directly to the Corporation’s stockholders which the Board does not
      recommend such stockholders to accept, or 

     

    
      
         

      

      
        A-2

        
          

        

      

      
         

      

    

    (ii)  a
      change
      in the composition of the Board over a period of thirty-six (36) consecutive
      months or less such that a majority of the Board members ceases, by reason
      of
      one or more contested elections for Board membership, to be comprised of
      individuals who either (A) have been Board members continuously since the
      beginning of such period or (B) have been elected or nominated for election
      as
      Board members during such period by at least a majority of the Board members
      described in clause (A) who were still in office at the time the Board approved
      such election or nomination. 

     

    N.  Incentive
      Option
      shall
      mean an option which satisfies the requirements of Code Section
      422.

     

    O.  Involuntary
      Termination shall
      mean the termination of the Service of any individual which occurs by reason
      of:


     

    (i)  such
      individual’s involuntary dismissal or discharge by the Corporation for reasons
      other than Misconduct, or 

     

    (ii)  such
      individual’s voluntary resignation following (A) a change in his or her position
      with the Corporation or Parent or Subsidiary employing the individual which
      materially reduces his or her duties and responsibilities or the level of
      management to which he or she reports, (B) a reduction in his or her level
      of
      compensation (including base salary, fringe benefits and target bonus under
      any
      corporate-performance based bonus or incentive programs) by more than fifteen
      percent (15%) or (C) a relocation of such individual’s place of employment by
      more than fifty (50) miles, provided and only if such change, reduction
      or
      relocation is effected by the Corporation without the individual’s
      consent.

     

    P.  Misconduct shall
      mean the commission of any act of fraud, embezzlement or dishonesty by the
      Optionee or Participant, any unauthorized use or disclosure by such person
      of
      confidential information or trade secrets of the Corporation (or any Parent
      or
      Subsidiary), or any intentional wrongdoing by such person, whether by omission
      or commission, which adversely affects the business or affairs of the
      Corporation (or any Parent or Subsidiary) in a material manner. This shall
      not
      limit the grounds for the dismissal or discharge of any person in the Service
      of
      the Corporation (or any Parent or Subsidiary). 

     

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

     

    R.  Non-Statutory
      Option shall
      mean an option not intended to satisfy the requirements of Code Section
      422.

     

    S.  Option
      Surrender Value
      shall
      mean the Fair Market Value per share of Common Stock on the date the option
      is
      surrendered to the Corporation or, in the event of a Hostile Take-Over, effected
      through a tender offer, the highest reported price per share of Common Stock
      paid by the tender offeror in effecting such Hostile Take-Over, if greater.
      However, if the surrendered option is an Incentive Option, the Option Surrender
      Value shall not exceed the Fair Market Value per share.

     

    
      
         

      

      
        A-3

        
          

        

      

      
         

      

    

    T.  Optionee shall
      mean any person to whom an option is granted under the Discretionary Option
      Grant, Salary Investment Option Grant, Automatic Option Grant or Director Fee
      Option Grant Program.

     

    U.  Parent shall
      mean any corporation (other than the Corporation) in an unbroken chain of
      corporations ending with the Corporation, provided each corporation in the
      unbroken chain (other than the Corporation) owns, at the time of the
      determination, stock possessing fifty percent (50%) or more of the total
      combined voting power of all classes of stock in one of the other corporations
      in such chain. 

     

    V.  Participant shall
      mean any person who is issued shares of Common Stock under the Stock Issuance
      Program.

     

    W.  Performance
      Goals, as
      defined in Article Four and Appendix
      B,
      shall
      mean specified performance objectives as determined by the Plan
      Administrator.

     

    X.  Permanent
      Disability or Permanently Disabled shall
      mean the inability of the Optionee or the Participant to engage in any
      substantial gainful activity by reason of any medically determinable physical
      or
      mental impairment expected to result in death or to be of continuous duration
      of
      twelve (12) months or more. However, solely for purposes of the Automatic Option
      Grant and Director Fee Option Grant Programs, Permanent Disability or
      Permanently Disabled shall mean the inability of the non-employee Board member
      to perform his or her usual duties as a Board member by reason of any medically
      determinable physical or mental impairment expected to result in death or to
      be
      of continuous duration of twelve (12) months or more.

     

    Y.  Plan shall
      mean the Corporation’s 2000 Stock Incentive Plan, as set forth in this
      document.

     

    Z.  Plan
      Administrator shall
      mean the particular entity, whether the Primary Committee, the Board or the
      Secondary Committee, which is authorized to administer the Discretionary Option
      Grant, Salary Investment Option Grant and Stock Issuance Programs with respect
      to one or more classes of eligible persons, to the extent such entity is
      carrying out its administrative functions under those programs with respect
      to
      the persons under its jurisdiction. However, the Primary Committee shall have
      the plenary authority to make all factual determinations and to construe and
      interpret any and all ambiguities under the Plan to the extent such authority
      is
      not otherwise expressly delegated to any other Plan Administrator.

     

    AA.  Plan
      Effective Date
      shall
      mean March 21, 2000, the date on which the Plan was adopted by the
      Board.

     

    
      
         

      

      
        A-4

        
          

        

      

      
         

      

    

    BB.  Predecessor
      Plan
      shall
      mean the Corporation’s pre-existing Stock Option and Restricted Stock Purchase
      Plan in effect immediately prior to the Plan Effective Date
      hereunder.

     

    CC.  Primary
      Committee shall
      mean the committee of two (2) or more non-employee Board members appointed
      by
      the Board (each of whom is intended to be a “Non-Employee Director” (within the
      meaning of Rule 16b-3), an “independent director” (within the meaning of NASD
      Rule 4200(a)(15) or such other applicable stock exchange rule) and an “outside
      director” (within the meaning of Code Section 162(m)) to administer the
      Discretionary Option Grant and Stock Issuance Programs with respect to Section
      16 Insiders and to administer the Salary Investment Option Grant Program with
      respect to all eligible individuals.

     

    DD.  Rule
      16b-3
      shall
      mean Rule 16b-3 of the 1934 Act or any successor to Rule 16b-3, as in effect
      when discretion is being exercised with respect to the Plan.

     

    EE.  Salary
      Investment Option Grant Program
      shall
      mean the salary investment grant program in effect under the Plan.

     

    FF.  Secondary
      Committee shall
      mean a committee of one (1) or more Board members appointed by the Board to
      administer the Discretionary Option Grant and Stock Issuance Programs with
      respect to eligible persons other than Section 16 Insiders. 

     

    GG.  Section
      12 Registration Date
      shall
      mean the date on which the Common Stock is first registered under Section 12(g)
      of the 1934 Act.

     

    HH.  Section
      16 Insider shall
      mean an officer or director of the Corporation subject to the short-swing profit
      liabilities of Section 16 of the 1934 Act.

     

    II.  Service shall
      mean the performance of services for the Corporation (or any Parent or
      Subsidiary) by a person in the capacity of an Employee, a non-employee member
      of
      the board of directors or a consultant or independent advisor (whether a natural
      person or entity), except to the extent otherwise specifically provided in
      the
      documents evidencing the option grant or stock issuance.

     

    JJ.  Stock
      Exchange shall
      mean either the American Stock Exchange or the New York Stock
      Exchange.

     

    KK.  Stock
      Issuance Program shall
      mean the stock issuance program in effect under the Plan.

     

    LL.  Subsidiary
      shall
      mean any corporation (other than the Corporation) in an unbroken chain of
      corporations beginning with the Corporation, provided each corporation (other
      than the last corporation) in the unbroken chain owns, at the time of the
      determination, stock possessing fifty percent (50%) or more of the total
      combined voting power of all classes of stock in one of the other corporations
      in such chain.

     

    
      
         

      

      
        A-5

        
          

        

      

      
         

      

    

    MM.  10%
      Stockholder
      shall
      mean the owner of stock (as determined under Code Section 424(d)) possessing
      more than ten percent (10%) of the total combined voting power of all classes
      of
      stock of the Corporation (or any Parent or Subsidiary).

     

    NN.  Underwriting
      Agreement
      shall
      mean the agreement between the Corporation and the underwriter or underwriters
      managing the initial public offering of the Common Stock.

     

    OO.  Underwriting
      Date
      shall
      mean the date on which the Underwriting Agreement is executed and priced in
      connection with an initial public offering of the Common Stock.

     

    PP.  Withholding
      Taxes
      shall
      mean the Federal, state and local income and employment withholding tax
      liabilities to which the holder of Non-Statutory Options or unvested shares
      of
      Common Stock may become subject in connection with the exercise of those options
      or the vesting of those shares.

     

    


    


    
      
         

      

      
        A-6

        
          

        

      

      
         

        
        

      

    

    APPENDIX
      B 

     

    Performance
      Goals

     

    Performance
      goals established for purposes of the grant and/or vesting of Common Stock
      intended to be “performance-based” under Section 162(m) of the Code shall be
      based on one or more of the following performance goals (“Performance Goals”):
      (i) the attainment of certain target levels of, or a specified increase in,
      enterprise value or value creation targets of the Corporation (or any
      subsidiary, division or other operational unit of the Corporation); (ii) the
      attainment of certain target levels of, or a percentage increase in after-tax
      or
      pre-tax profits of the Corporation, including without limitation that
      attributable to continuing and/or other operations of the Corporation (or in
      either case a subsidiary, division, or other operational unit of the
      Corporation); (iii) the attainment of certain target levels of, or a specified
      increase in, operational cash flow of the Corporation (or a subsidiary,
      division, or other operational unit of the Corporation); (iv) the attainment
      of
      a certain level of reduction of, or other specified objectives with regard
      to
      limiting the level of increase in all or a portion of, the Corporation’s bank
      debt or other long-term or short-term public or private debt or other similar
      financial obligations of the Corporation, which may be calculated net of cash
      balances and/or other offsets and adjustments as may be established by the
      Plan
      Administrator; (v) the attainment of a specified percentage increase in earnings
      per share or earnings per share from continuing operations of the Corporation
      (or a subsidiary, division or other operational unit of the Corporation); (vi)
      the attainment of certain target levels of, or a specified percentage increase
      in, net sales, revenues, net income or earnings before income tax or other
      exclusions of the Corporation (or a subsidiary, division, or other operational
      unit of the Corporation); (vii) the attainment of certain target levels of,
      or a
      specified increase in, return on capital employed or return on invested capital
      of the Corporation (or any subsidiary, division or other operational unit of
      the
      Corporation); (viii) the attainment of certain target levels of, or a percentage
      increase in, after-tax or pre-tax return on stockholder equity of the
      Corporation (or any subsidiary, division or other operational unit of the
      Corporation); (ix) the attainment of certain target levels in the fair market
      value of the shares of the Corporation’s Common Stock; or (x) the growth in the
      value of an investment in the Corporation’s Common Stock assuming the
      reinvestment of dividends.

     

    In
      addition, such Performance Goals may be based upon the attainment of specified
      levels of Corporation (or subsidiary, division or other operational unit of
      the
      Corporation) performance under one or more of the measures described above
      relative to the performance of other corporations. To the extent permitted
      under
      Section 162(m) of the Code, but only to the extent permitted under Section
      162(m) of the Code (including, without limitation, compliance with any
      requirements for stockholder approval), the Plan Administrator may: (i)
      designate additional business criteria on which the Performance Goals may be
      based, or (ii) adjust, modify or amend the aforementioned business
      criteria.

     

    
      
         

      

      
        B-1