exv10w1



 





 




    Exhibit 10.1



 




    AETHER
    HOLDINGS, INC.

    



 




    2006
    LONG-TERM EQUITY INCENTIVE PLAN



 




    ARTICLE I

    



 




    Purpose
    of Plan




 



    This plan shall be known as the Aether Holdings, Inc. 2006
    Long-Term Equity Incentive Plan (the “Plan”).
    The purpose of the Plan shall be to promote the long-term growth
    and profitability of Aether Holdings, Inc. (the
    ‘‘Company”), and its Subsidiaries by
    (i) providing certain directors, employees and consultants
    who perform services for, or to whom an offer of employment has
    been extended by, the Company and its Subsidiaries with
    incentives to maximize stockholder value and otherwise
    contribute to the long-term success of the Company and
    (ii) enabling the Company to attract, retain and reward the
    best available persons for positions of responsibility. Grants
    of Incentive Stock Options or Non-Qualified Stock Options, stock
    appreciation rights (“SARs”), either alone or
    in tandem with Options, restricted stock, or any combination of
    the foregoing may be made under the Plan.




 




    ARTICLE II

    



 




    Definitions



 



    For purposes of the Plan, except where the context clearly
    indicates otherwise, the following terms shall have the meanings
    set forth below:



 



    “Affiliate” shall mean, as to any
    specified Person, (i) any stockholder, equity owner,
    officer or director of such Person and any family members of
    such stockholder, equity owner, officer or director or
    (ii) any other Person which, directly or indirectly,
    controls, is controlled by, employed by or is under common
    control with, any of the foregoing. For the purposes of this
    definition, “control” means the possession of
    the power to direct or cause the direction of the management and
    policies of such Person, whether through the ownership of voting
    securities, by contract or otherwise.



 



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



 



    “Cause” means (x) for any employee
    party to an employment agreement, termination of such
    employee’s employment with the Company or any of its
    Subsidiaries for reasons constituting “cause” as
    defined in such employment agreement, and (y) for any other
    employee, the occurrence of one or more of the following events:



 



    (a) the conviction of a felony or a crime involving moral
    turpitude or the commission of any act involving dishonesty,
    disloyalty or fraud with respect to the Company or any of its
    subsidiaries or affiliates, in each instance which has caused or
    is reasonably likely to cause material harm to the Company;



 



    (b) substantial repeated failure to perform duties properly
    assigned, as determined by the Company;



 



    (c) gross negligence or willful misconduct with respect to
    the Company or any of its Subsidiaries or Affiliates, in each
    instance which has caused or is reasonably likely to cause
    material harm to the Company; or



 



    (d) any other material breach of a provision of any written
    agreement or policy with the Company or any of its Subsidiaries
    or Affiliates which is not cured within thirty (30) days
    after written notice thereof is delivered to such employee.




    

    1








 






    “Change in Control” means the occurrence
    of one of the following events:



 



    (a) if any “person” or “group” as those
    terms are used in Sections 13(d) and 14(d) of the
    Securities Exchange Act of 1934, as amended (the
    “Exchange Act”) or any successors thereto,
    other than an Exempt Person, is or becomes the “beneficial
    owner” (as defined in
    Rule 13d-3
    under the Exchange Act or any successor thereto), directly or
    indirectly, of securities of the Company representing 50% or
    more of the combined voting power of the Company’s then
    outstanding securities; or



 



    (b) during any period of two consecutive years, individuals
    who at the beginning of such period constitute the Board and any
    new directors whose election by the Board or nomination for
    election by the Company’s stockholders was approved by at
    least two-thirds of the directors then still in office who
    either were directors at the beginning of the period or whose
    election was previously so approved, cease for any reason to
    constitute a majority thereof other than voluntary resignation
    or death; or



 



    (c) the stockholders of the Company approve a merger or
    consolidation of the Company with any other corporation, other
    than a merger or consolidation (A) which would result in
    all or a portion of the voting securities of the Company
    outstanding immediately prior thereto continuing to represent
    (either by remaining outstanding or by being converted into
    voting securities of the surviving entity) more than 50% of the
    combined voting power of the voting securities of the Company or
    such surviving entity outstanding immediately after such merger
    or consolidation or (B) by which the corporate existence of
    the Company is not affected and following which the
    Company’s chief executive officer and directors retain
    their positions with the Company (and constitute at least a
    majority of the Board); or



 



    (d) the stockholders of the Company approve a plan of
    complete liquidation of the Company or an agreement for the sale
    or disposition by the Company of all or substantially all of the
    Company’s assets, other than a sale to an Exempt Person.



 



    Notwithstanding the foregoing, a transaction or series of
    related transactions shall not constitute a Change in Control
    hereunder unless it or they also constitute a “change in
    control” as defined in Section 409A of the Code.



 



    “Code” shall mean the Internal Revenue
    Code of 1986, as amended, and any successor statute.



 



    “Committee” shall mean the committee of
    the Board which may be designated by the Board to administer the
    Plan. The Committee shall be comprised solely of two or more
    “outside directors” (within the meaning of
    Section 162(m) of the Code and the regulations promulgated
    thereunder) as appointed from time to time to serve by the
    Board. The membership of the Committee shall be constituted so
    as to comply at all times with the applicable requirements of
    Rule 16b-3
    or any successor rule
    (“Rule 16b-3”)
    under the Exchange Act.



 



    “Common Stock” shall mean the
    Company’s common stock, par value $.01 per share, or,
    in the event that the outstanding Common Stock is hereafter
    changed into or exchanged for different stock or securities of
    the Company, such other stock or securities.



 



    “Disability” means a disability that
    would entitle an eligible participant to payment of monthly
    disability payments under any Company disability plan or as
    otherwise determined by the Committee. Notwithstanding the
    foregoing, a participant’s incapacity shall not constitute
    a Disability hereunder unless it also constitutes a
    “disability” as defined in Section 409A of the
    Code.



 



    “Effective Date” means the later of the
    date on which this Plan is approved by the Company’s
    stockholders and the date on which this Plan is approved by the
    Board.



 



    “Executive” shall mean an individual who
    is subject to Section 16 of the Exchange Act or who is a
    “covered employee” under Section 162(m) of the
    Code, in either case because of such individual’s
    relationship with the Company, one of its Subsidiaries or an
    Affiliate.



 



    “Exempt Person” means the Company, any
    Subsidiary, any Company benefit plan, or any underwriter
    temporarily holding securities for an offering of such
    securities.




    

    2








 






    “Exercise Price” has the meaning given
    such term in Section 6.1(a)(iii).



 



    “Fair Market Value” of a share of Common
    Stock means, as of the date in question, the officially quoted
    closing selling price of the stock (or if no selling price is
    quoted, the bid price) on the principal securities exchange on
    which the Common Stock is then listed for trading (including for
    this purpose the Nasdaq National Market) (the
    “Market”) for the applicable trading day or, if the
    Common Stock is not then listed or quoted in the Market, the
    Fair Market Value shall be the fair value of the Common Stock
    determined in good faith by the Board subject to the
    requirements of Section 409A of the Code; provided,
    however, that when shares received upon exercise of an Option
    are immediately sold in the open market, the net sales price
    received may be used to determine the Fair Market Value of any
    shares used to pay the exercise price or applicable withholding
    taxes and to compute the withholding taxes.



 



    “Family Member” shall mean (i) a
    member of a grantee’s immediate family (children,
    grandchildren or spouse), (ii) trusts established solely
    for the benefit of such Persons identified in the immediately
    preceding subclause (i), (iii) or partnerships whose only
    partners are the grantee
    and/or
    Persons identified in subclauses (i) or (ii) hereof.



 



    “Grant Agreement” shall have the meaning
    set forth in Section 7.2 below.



 



    “Incentive Stock Option” means an option
    conforming to the requirements of Section 422 of the Code
    and any successor thereto.



 



    “Non-Qualified Stock Option” means any
    option other than an Incentive Stock Option.



 



    “Options” shall mean the Incentive Stock
    Options and Non-Qualified Stock Options granted under this Plan.



 



    “Performance Conditions” shall mean a
    performance condition (i) that is established (a) at
    the time an award is granted or (b) no later than the
    earlier of (1) 90 days after the beginning of the
    period of service to which it relates, or (2) before the
    elapse of 25% of the period of service to which it relates;
    (ii) that is substantially uncertain of achievement at the
    time it is established; and (iii) the achievement of which
    is determinable by a third party with knowledge of the relevant
    facts. Performance Conditions for awards may be expressed in
    terms of (i) earnings per share, (ii) share price,
    (iii) pre-tax profits, (iv) net earnings,
    (v) return on equity or assets, (vi) sales, or
    (vii) individual grantee financial or non-financial
    performance goals. Performance Conditions may be measured based
    on any of the foregoing either alone or in any combination, and,
    if not based on individual performance, on either a consolidated
    or a division or business unit level, as the Committee may
    determine. Performance Conditions may be absolute or relative
    (to prior performance of the Company or to the performance of
    one or more other entities or external indices) and may be
    expressed in terms of a progression within a specified range.



 



    “Person” means an individual, a
    partnership, a corporation, a limited liability company, an
    association, a joint stock company, a trust (including any
    beneficiary thereof), a joint venture, an unincorporated
    organization and a governmental entity or any department, agency
    or political subdivision thereof.



 



    “Plan” has the meaning given to such
    term in Article I.



 



    “Section 409A Option” means any
    Non-Qualified Stock Option that is treated as providing for
    “deferred compensation” under Section 409A of the
    Code and the guidance issued thereunder.



 



    “Subsidiary” means a corporation or
    other entity of which outstanding shares or ownership interests
    representing 50% or more of the combined voting power of such
    corporation or other entity entitled to elect the management
    thereof, or such lesser percentage as may be approved by the
    Committee, are owned directly or indirectly by the Company.



 



    “Total Shares” has the meaning given
    such term in Section 4.1.




    

    3








 







    ARTICLE III

    



 




    Administration



 



    The Plan shall be administered by the Committee; provided that
    if for any reason the Committee shall not have been appointed by
    the Board, all authority and duties of the Committee under the
    Plan shall be vested in and exercised by the Board. Subject to
    the limitations of the Plan, the Committee shall have the sole
    and complete authority to: (i) select persons to
    participate in the Plan, (ii) determine the form and
    substance of grants made under the Plan to each participant, and
    the conditions and restrictions, if any, subject to which such
    grants will be made, (iii) certify that the conditions and
    restrictions applicable to any grant have been met,
    (iv) modify the terms of grants made under the Plan,
    (v) interpret the Plan and grants made thereunder,
    (vi) make any adjustments necessary or desirable in
    connection with grants made under the Plan to eligible
    participants located outside the United States, and
    (vii) adopt, amend, or rescind such rules and regulations,
    and make such other determinations, for carrying out the Plan as
    it may deem appropriate. The Committee’s determinations on
    matters within its authority shall be conclusive and binding
    upon the participants, the Company and all other Persons. The
    validity, construction and effect of the Plan and any rules and
    regulations relating to the Plan shall be determined in
    accordance with applicable federal and state laws and rules and
    regulations promulgated pursuant thereto. No member of the
    Committee and no officer of the Company shall be liable for any
    action taken or omitted to be taken by such member, by any other
    member of the Committee, or by any officer of the Company in
    connection with the performance of duties under the Plan, except
    for such Person’s own willful misconduct or as expressly
    provided by statute. All expenses associated with the
    administration of the Plan shall be borne by the Company. The
    Committee may, as approved by the Board and to the extent
    permissible by law, delegate any of its authority hereunder to
    such persons as it deems appropriate.



 



    It is the Company’s intent that the Options, SARs and
    restricted stock awards not be treated as deferred compensation
    under Section 409A of the Code (or any regulations or other
    guidance promulgated thereunder) and that any ambiguities in
    construction be interpreted in order to effectuate such intent.
    Options, SARs and restricted stock awards under the Plan shall
    contain such terms as the Committee determines are appropriate
    to avoid the application of Section 409A of the Code. In
    the event that, after the issuance of an Option, SAR or
    restricted stock award under the Plan, Section 409A of the
    Code or regulations thereunder are issued or amended, or the
    Internal Revenue Service or Treasury Department issues
    additional guidance interpreting Section 409A of the Code,
    the Committee may (but shall have no obligation to do so) amend
    or modify, with the consent of the Company’s chief
    executive officer and without the consent of the grantee, the
    terms of any such previously issued Option, SAR or restricted
    stock award to the extent the Committee determines that such
    amendment or modification is necessary to avoid the application
    of, or to comply with, Section 409A of the Code, but only
    so long as such amendment or modification does not adversely
    affect such grantee without his or her prior consent. Neither
    the Company nor any of its Affiliates makes any representations
    with respect to the application of Section 409A of the Code
    to any award made under the Plan and, by the acceptance of any
    such award each participant acknowledges the potential
    application of Section 409A of the Code to such award and
    the other tax consequences to the participant arising or
    resulting from the issuance, vesting, ownership, modification,
    adjustment, exercise and disposition thereunder.



 




    ARTICLE IV

    



 




    Limitation
    on Aggregate Shares; Term of Plan 



 



    4.1  Number of Award
    Shares.  The maximum aggregate number of
    shares of Common Stock that may be issued under the Plan shall
    not exceed, in the aggregate, 3,500,000 shares (the
    “Total Shares”). If any grant under the Plan
    expires or terminates, becomes unexercisable or is forfeited or
    cancelled as to any shares of Common Stock, then such
    unpurchased, forfeited or cancelled shares of Common Stock shall
    thereafter be available for further grants under the Plan
    unless, in the case of Options granted under the Plan, related
    SARs are exercised. The Total Shares available under the Plan
    may be either authorized and unissued shares, treasury shares or
    a combination thereof, as the Committee shall determine. The
    following rules will apply for purposes of the determination of
    the number of Total Shares available for grant under the Plan:
    (a) while an award is outstanding, it shall be counted
    against the authorized pool of Total Shares, regardless of its
    vested status; (b) the grant of an Option shall reduce the




    

    4








 






    Total Shares available for grant under the Plan by the number of
    shares subject to such award; (c) the grant of restricted
    stock shall reduce the Total Shares available for grant under
    the Plan by two times (2x) the number of shares subject to such
    award; and (d) the grant of SARs shall reduce the Total
    Shares available for grant under the Plan by one times (1x) the
    number of shares subject to such award.



 



    4.2  Term of Plan.



 



    (a) This Plan shall be effective, and awards may be granted
    under this Plan, on and after the Effective Date.



 



    (b) Subject to the provisions of Section 7.8,
    awards may be granted under this Plan for a period of ten
    (10) years from the earlier of the date on which the Board
    approves this Plan and the date the Company’s stockholders
    approve this Plan.



 




    ARTICLE V

    



 




    Persons
    Eligible to Receive Awards



 



    5.1  Eligible
    Individuals.  Participation in the Plan shall
    be limited to Executives and employees of, and other individuals
    performing services for (including but not limited to
    consultants), or to whom an offer of employment has been
    extended by, the Company and its Subsidiaries selected by the
    Committee (including participants located outside the United
    States). Nothing in the Plan or in any grant thereunder shall
    confer any right on a participant to continue in the employ as a
    director or officer of or in the performance of services for the
    Company or shall interfere in any way with the right of the
    Company to terminate the employment or performance of services
    or to reduce the compensation or responsibilities of a
    participant at any time. By accepting any award under the Plan,
    each participant and each person claiming under or through him
    or her shall be conclusively deemed to have indicated his or her
    acceptance and ratification of, and consent to, any action taken
    under the Plan by the Company, the Board or the Committee.



 



    No employee who is eligible to receive an award under the
    Company’s 2006 Management Bonus Plan shall be eligible to
    receive restricted Common Stock under this Plan with respect to
    any “Performance Period” (as such term is defined in
    the 2006 Management Bonus Plan) for which the “Performance
    Objectives” (as defined in the 2006 Management Bonus Plan)
    are not met.



 



    5.2  Substitution.  The
    Committee may also grant awards under this Plan in substitution
    for options or other equity interests held by individuals who
    become employees of the Company or of a Subsidiary as a result
    of the Company or Subsidiary acquiring or merging with the
    individual’s employer or acquiring its assets. In addition,
    the Committee may provide for the Plan’s assumption of
    options granted outside the Plan to persons who would have been
    eligible under the terms of the Plan to receive a grant,
    including both persons who provided services to any acquired
    company or business and persons who provided services to the
    Company or any Subsidiary. If necessary to conform the Options
    to the interests for which they are substitutes, the Committee
    may grant substitute Options under terms and conditions that
    vary from those this Plan otherwise requires.



 



    5.3  Section 162(m) Limitations.



 



    (a) Options and SARs.  Subject to
    the provisions of this Section 5.3, for so long as
    the Company is a “publicly held corporation” within
    the meaning of Section 162(m) of the Code: (i) no
    employee may be granted one or more SARs and Options within any
    fiscal year of the Company under this Plan to purchase in the
    aggregate more than 250,000 shares under Options or to
    receive compensation calculated with reference to more than that
    number of shares of Common Stock under SARs, subject to
    adjustment pursuant to Section 7.6, and
    (ii) Options and SARs may be granted to an Executive only
    by the Committee and not by the Board. If an Option or SAR is
    cancelled without being exercised, that cancelled Option or SAR
    shall continue to be counted against the limit on awards that
    may be granted to any individual under this
    Section 5.2. Notwithstanding the foregoing, a new
    employee of the Company, one of its Subsidiaries or an Affiliate
    shall be eligible to receive up to a maximum of
    500,000 shares under Options in the calendar year in which
    he or she commences employment, or such compensation calculated
    with reference to such number of shares under SARs, subject to
    adjustment pursuant to Section 7.6.




    

    5








 






    (b) Restricted Stock Awards.  Any
    grant of restricted stock hereunder intended by the Committee to
    be “qualified performance-based compensation” within
    the meaning of Section 162(m) of the Code must vest or
    become exercisable contingent on the achievement of one or more
    Performance Conditions. The Committee shall have the discretion
    to determine the time and manner of compliance with
    Section 162(m) of the Code. For so long as the Company is a
    “publicly held corporation” within the meaning of
    Section 162(m) of the Code: (i) no employee may be
    granted more than 100,000 shares of restricted stock in any
    fiscal year in the Plan, subject to adjustment pursuant to
    Section 7.6, and (ii) shares of restricted
    stock may be granted to an Executive only by the Committee and
    not by the Board.



 



    (c) Other Section 162(m)
    Provisions.  In the manner required by
    Section 162(m) of the Code, the Committee shall, promptly
    after the date on which the necessary financial and other
    information for a particular performance period becomes
    available, certify the extent to which Performance Conditions
    have been achieved with respect to any award intended to qualify
    as performance-based compensation under Section 162(m) of
    the Code. In addition, the Committee may, in its discretion,
    reduce or eliminate the amount of any award payable to any
    grantee, based on such factors as the Committee may deem
    relevant, but the Committee may not increase the amount of any
    award payable to any grantee above the amount established in
    accordance with the relevant Performance Conditions with respect
    to any award intended to qualify as performance-based
    compensation.



 




    ARTICLE VI

    



 




    Awards



 



    6.1  Grants.  Incentive Stock
    Options or Non-Qualified Stock Options, SARs alone or in tandem
    with Options, restricted stock awards, or any combination
    thereof, may be granted to such persons and for such number of
    shares of Common Stock as the Committee shall determine, subject
    to the restrictions herein (such individuals to whom grants are
    made being sometimes herein called “optionees” or
    “grantees,” as the case may be). Determinations made
    by the Committee under the Plan need not be uniform and may be
    made selectively among eligible participants under the Plan,
    whether or not such individuals are similarly situated. A grant
    of any type made hereunder in any one year to an eligible
    participant shall neither guarantee nor preclude a further grant
    of that or any other type to such participant in that year or
    subsequent years.



 



    (a) Incentive and Non-Qualified Options and
    SARs.



 



    (i) The Committee may from time to time grant Non-Qualified
    Stock Options, SARs, or any combination thereof to eligible
    participants. In addition, the Committee may grant Incentive
    Stock Options to any employee of the Company. The Options
    granted shall take such form as the Committee shall determine,
    subject to the following terms and conditions.



 



    (ii) It is the Company’s intent that Non-Qualified
    Stock Options granted under the Plan not be classified as
    Incentive Stock Options, that Incentive Stock Options be
    consistent with and contain or be deemed to contain all
    provisions required under Section 422 of the Code and any
    successor thereto, and that any ambiguities in construction be
    interpreted in order to effectuate such intent. If an Incentive
    Stock Option granted under the Plan does not qualify as such for
    any reason, then to the extent of such non-qualification, the
    stock option represented thereby shall be regarded as a
    Non-Qualified Stock Option duly granted under the Plan, provided
    that such stock option otherwise meets the Plan’s
    requirements for Non-Qualified Stock Options. It is the intent
    of the Company that no Section 409A Options be issued
    pursuant to the Plan. However, to the extent that the Committee,
    in its reasonable discretion, determines that any other
    Non-Qualified Stock Option is a Section 409A Option, the
    Committee shall notify the participant of such determination and
    the Option shall be governed by the provisions of
    Section 7.10.



 



    (iii) Price.  The price per share
    of Common Stock deliverable upon the exercise of each
    Non-Qualified Option and Incentive Stock Option
    (“Exercise Price”) may not, and may never, be
    less than 100% of the Fair Market Value of a share of Common
    Stock as of the date of grant of the Option, and in the case of
    the grant of any Incentive Stock Option to an employee who, at
    the time of the grant, owns more than 10% of the total combined
    voting power




    

    6








 






    of all classes of stock of the Company or any of its
    Subsidiaries, the exercise price may not be less than 110% of
    the Fair Market Value of a share of Common Stock as of the date
    of grant of the Option, in each case unless otherwise permitted
    by Section 422 of the Code or any successor thereto.



 



    (iv) Payment of Exercise
    Price.  Options shall be exercised in whole or
    in part by written notice to the Company (to the attention of
    the Company’s Secretary) accompanied by payment in full of
    the Exercise Price. Payment of the Exercise Price shall be made
    (i) in cash (including check, bank draft, money order or
    wire transfer of immediately available funds), (ii) by
    delivery of outstanding shares of Common Stock with a Fair
    Market Value on the date of exercise equal to the aggregate
    exercise price payable with respect to the Options’
    exercise, (iii) by simultaneous sale through a broker
    reasonably acceptable to the Committee of shares acquired on
    exercise, as permitted under Regulation T of the Federal
    Reserve Board, (iv) if the shares are traded on an
    established securities market at the time of exercise, by
    authorizing the Company to withhold from issuance a number of
    shares issuable upon exercise of the Options which, when
    multiplied by the Fair Market Value of a share of Common Stock
    on the date of exercise, is equal to the aggregate exercise
    price payable with respect to the Options so exercised, or
    (v) by any combination of the foregoing.



 



    In the event a grantee elects to pay the exercise price payable
    with respect to an Option pursuant to clause (ii) above,
    (A) only a whole number of share(s) of Common Stock (and
    not fractional shares of Common Stock) may be tendered in
    payment, (B) such grantee must present evidence acceptable
    to the Company that he or she has owned any such shares of
    Common Stock tendered in payment of the exercise price (and that
    such tendered shares of Common Stock have not been subject to
    any substantial risk of forfeiture) for at least six months
    prior to the date of exercise, and (C) Common Stock must be
    delivered to the Company either by (I) physical delivery of
    the certificate(s) for all such shares of Common Stock tendered
    in payment of the price, accompanied by duly executed
    instruments of transfer in a form acceptable to the Company, or
    (II) direction to the grantee’s broker to transfer, by
    book entry, such shares of Common Stock from a brokerage account
    of the grantee to a brokerage account specified by the Company.
    When payment of the exercise price is made by delivery of Common
    Stock, the difference, if any, between the aggregate exercise
    price payable with respect to the Option being exercised and the
    Fair Market Value of the shares of Common Stock tendered in
    payment (plus any applicable taxes) shall be paid in cash. No
    grantee may tender shares of Common Stock having a Fair Market
    Value exceeding the aggregate exercise price payable with
    respect to the Option being exercised (plus any applicable
    taxes).



 



    In the event a grantee elects to pay the exercise price payable
    with respect to an Option pursuant to clause (iv) above,
    (A) only a whole number of share(s) (and not fractional
    shares) may be withheld in payment and (B) such grantee
    must present evidence acceptable to the Company that he or she
    has owned a number of shares of Common Stock at least equal to
    the number of shares to be withheld in payment of the exercise
    price (and that such owned shares of Common Stock have not been
    subject to any substantial risk of forfeiture) for at least six
    months prior to the date of exercise. When payment of the
    exercise price is made by withholding of shares, the difference,
    if any, between the aggregate exercise price payable with
    respect to the Option being exercised and the Fair Market Value
    of the shares withheld in payment (plus any applicable taxes)
    shall be paid in cash. No grantee may authorize the withholding
    of shares having a Fair Market Value exceeding the aggregate
    exercise price payable with respect to the Option being
    exercised (plus any applicable taxes). Any withheld shares shall
    no longer be issuable under such Option with respect to any such
    withheld shares).



 



    (v) Terms of Options.  The term
    during which each Option may be exercised shall be determined by
    the Committee and set forth in the applicable Grant Agreement,
    but if required by the Code and except as otherwise provided
    herein, no Option shall be exercisable in whole or in part more
    than ten years from the date it is granted, and no Incentive
    Stock Option granted to an employee who at the time of the grant
    owns more than 10% of the total combined voting power of all
    classes of stock of the Company or any of its Subsidiaries shall
    be exercisable more than five years from the date it is granted.
    All rights to purchase Common Stock pursuant to an Option shall,
    unless sooner terminated, expire at the date designated by the
    Committee and set forth in the applicable Grant Agreement. The
    Committee shall determine and set forth in the applicable Grant
    Agreement the date on which each Option shall become exercisable
    and may provide that an Option shall become exercisable in
    installments. If the Committee does not specify otherwise,
    Options will become exercisable as to 25% of the underlying
    shares per year on each anniversary of the Date of Grant. The
    Common Stock constituting each installment may be purchased in
    whole or in




    

    7








 






    part at any time after such installment becomes exercisable,
    subject to such minimum exercise requirements as may be
    designated by the Committee. Prior to the exercise of an Option
    and delivery of the Common Stock represented thereby, a
    participant shall have no rights as a stockholder with respect
    to any Common Stock covered by such outstanding Option
    (including any dividend or voting rights).



 



    (vi) Limitations on Grants.  If
    required by the Code, the aggregate Fair Market Value
    (determined as of the grant date) of Common Stock for which an
    Incentive Stock Option is exercisable for the first time during
    any calendar year under all equity incentive plans of the
    Company and its Subsidiaries (as defined in Section 422 of
    the Code or any successor thereto) may not exceed $100,000.



 



    (b) Stock Appreciation Rights.  The
    Committee shall have the authority to grant SARs under this
    Plan, either alone or to any optionee in tandem with Options
    (either at the time of grant of the related Option or thereafter
    by amendment to an outstanding Option). SARs shall be subject to
    such terms and conditions as the Committee may specify. The
    exercise price of an SAR may not be less than 100% of the Fair
    Market Value of a share of Common Stock as of the date of the
    grant of the SAR.



 



    (i) No SAR may be exercised unless the Fair Market Value of
    a share of Common Stock of the Company on the date of exercise
    exceeds the exercise price of the SAR or, in the case of SARs
    granted in tandem with Options, any Options to which the SARs
    correspond. Prior to the exercise of the SAR and delivery of the
    cash and/or
    shares represented thereby, the participant shall have no rights
    as a stockholder with respect to shares covered by such
    outstanding SAR (including any dividend or voting rights).



 



    (ii) SARs granted in tandem with Options shall be
    exercisable only when, to the extent and on the conditions that
    any related Option is exercisable. The exercise of an Option
    shall result in an immediate forfeiture of any related SAR to
    the extent the Option is exercised, and the exercise of an SAR
    shall cause an immediate forfeiture of any related Option to the
    extent the SAR is exercised.



 



    (iii) Upon the exercise of an SAR, the participant shall be
    entitled to a distribution in an amount equal to the difference
    between the Fair Market Value of a share of Common Stock on the
    date of exercise and the exercise price of the SAR or, in the
    case of SARs granted in tandem with Options, any Option to which
    the SAR is related, multiplied by the number of shares as to
    which the SAR is exercised. The Committee shall decide whether
    such distribution shall be in cash, in shares having a Fair
    Market Value equal to such amount, in Other Company Securities
    having a Fair Market Value equal to such amount or in a
    combination thereof.



 



    (iv) All SARs will be exercised automatically on the last
    day prior to the expiration date of the SAR or, in the case of
    SARs granted in tandem with Options, any related Option, so long
    as the Fair Market Value of a share of Common Stock on that date
    exceeds the exercise price of the SAR or any related Option, as
    applicable. A SAR granted in tandem with Options shall expire at
    the same time as any related Option expires (which shall, in any
    event, be no later than ten (10) years after the date such
    Option was granted) and shall be transferable only when, and
    under the same conditions as, any related Option is
    transferable. Any SAR not granted in tandem with an Option shall
    expire no later than ten (10) years from the date such SAR
    was issued.



 



    (c) Restricted Stock.  The
    Committee may at any time and from time to time grant shares of
    restricted Common Stock under the Plan to such participants and
    in such amounts as it determines. Each grant of restricted stock
    shall specify the applicable restrictions on such shares, the
    duration of such restrictions (which shall be at least six
    months except as otherwise determined by the Committee or
    provided in Section 5.1(b)), and the time or times
    at which such restrictions shall lapse with respect to all or a
    specified number of shares that are part of the grant.



 



    (i) The participant will be required to pay the Company the
    aggregate par value of any shares of restricted Common Stock (or
    such larger amount as the Board may determine to constitute
    capital under Section 154 of the Delaware General
    Corporation Law, as amended, or any successor thereto) within
    ten days of the date of grant, unless such shares of restricted
    Common Stock are treasury shares. Unless otherwise determined by
    the Committee, certificates representing shares of restricted
    Common Stock granted under the Plan will be held in escrow by
    the Company on the participant’s behalf during any period
    of restriction thereon and will bear an appropriate legend
    specifying the applicable restrictions thereon, and the
    participant will be required to execute a blank stock power
    therefor. Except as otherwise provided by the Committee, during
    such period of restriction the participant shall have




    

    8








 






    all of the rights of a holder of Common Stock, including but not
    limited to the rights to receive dividends and to vote, and any
    stock or other securities received as a distribution with
    respect to such participant’s restricted stock shall be
    subject to the same restrictions as then in effect for the
    restricted stock. Notwithstanding anything herein to the
    contrary, unless the Board determines otherwise, all ordinary
    cash dividends paid upon any share of restricted stock prior to
    its vesting may, at the discretion of the Board, be retained by
    the Company for the account of the relevant participant and upon
    vesting will be paid to the relevant participant.



 



    (ii) Except as otherwise provided by the Committee,
    immediately prior to a Change of Control or at such time as a
    participant ceases to be a director, officer or employee of, or
    to otherwise perform services for, the Company and its
    Subsidiaries due to death or Disability during any period of
    restriction, all restrictions on shares of restricted Common
    Stock granted to such participant shall lapse. At such time as a
    participant ceases to be, or in the event a participant does not
    become, a director, officer or employee of, or otherwise
    performing services for, the Company or its Subsidiaries for any
    other reason, all shares of restricted Common Stock granted to
    such participant on which the restrictions have not lapsed shall
    be immediately forfeited to the Company.



 




    ARTICLE VII

    



 




    General
    Provisions



 



    7.1  Termination; Forfeiture.



 



    (a) Death.  If a participant ceases
    to be a director, officer or employee of, or to perform other
    services for, the Company or any Subsidiary due to death, all of
    the participant’s Options and SARs shall expire or
    terminate on the first anniversary of the participant’s
    termination of employment.



 



    (b)  Disability.  If a participant
    ceases to be a director, officer or employee of, or to perform
    other services for, the Company and any Subsidiary due to
    Disability, all of the participant’s Options and SARs shall
    expire or terminate on the earlier of (i) the first
    anniversary of the participant’s termination of employment
    for Disability and (ii) 60 days after the optionee no
    longer has a Disability.



 



    (c) Discharge for Cause.  If a
    participant ceases to be a director, officer or employee of,
    or to perform other services for, the Company or a
    Subsidiary due to Cause, or if a participant does not become a
    director, officer or employee of, or does not begin performing
    other services for, the Company or a Subsidiary for any reason,
    all of the participant’s Options and SARs shall expire and
    be forfeited immediately upon such cessation or
    non-commencement, whether or not then exercisable.



 



    (d) Other Termination.  Unless
    otherwise determined by the Committee, if a participant ceases
    to be a director, officer or employee of, or to otherwise
    perform services for, the Company or a Subsidiary for any reason
    other than death, Disability, Retirement or Cause, (A) all
    of the participant’s Options and SARs that were exercisable
    on the date of such cessation shall remain exercisable for, and
    shall otherwise terminate at the end of, a period of
    90 days after the date of such cessation, but in no event
    after the expiration date of the Options or SARs and
    (B) all of the participant’s Options and SARs that
    were not exercisable on the date of such cessation shall be
    forfeited immediately upon such cessation.



 



    (e) Change in Control.  Unless the
    participant’s Grant Agreement provides otherwise, if there
    is a Change in Control of the Company, all of the
    participant’s Options and SARs shall become fully vested
    and exercisable upon such termination and shall remain so for up
    to [one year] after the date of termination, but in no event
    after the expiration date of the Options or SARs.
    Notwithstanding the foregoing, a Change of Control shall not be
    deemed to have occurred under any circumstance in which the
    Company files for bankruptcy protection or is reorganized
    following a bankruptcy filing. In addition, the Committee may
    determine that a particular participant’s Options or SARs
    will not become fully exercisable as a result of what the
    Committee, in its sole discretion, determines is the
    participant’s insufficient cooperation with the Company
    with respect to a Change of Control. The Committee may allow
    conditional exercises in advance of the completion of a Change
    of Control that are then rescinded if no Change of Control
    occurs.




    

    9








 






    (f) Other.  Notwithstanding
    anything to the contrary, if exercise is permitted after
    termination of employment, the Option and SARs will nevertheless
    expire as of the date that the participant violates any covenant
    not to compete or other post-employment covenant in effect
    between the Company and such participant. In addition, an
    optionee who exercises an Option or SAR more than 90 days
    after termination of employment with the Company will receive
    Incentive Stock Option treatment only to the extent the law
    permits, and becoming or remaining an employee of another
    related company (that is not a Subsidiary) or an independent
    contractor will not prevent loss of Incentive Stock Option
    status because of the formal termination of employment.



 



    7.2  Written Agreement.  Each
    grant of Options, SARs and restricted stock to a participant
    under this Plan shall be embodied in a written agreement (an
    “Grant Agreement”) which shall be signed by the
    participant and by the Compensation Committee of the Board for
    and in the name and on behalf of the Company and shall be
    subject to the terms and conditions of the Plan prescribed in
    the Grant Agreement (including, but not limited to, (i) the
    right of the Company and such other Persons as the Committee
    shall designate (“Designees”) to repurchase
    from each participant, and such participant’s transferees,
    all shares of Common Stock issued or issuable to such
    participant on the exercise of such award in the event of such
    participant’s termination of employment, (ii) rights
    of first refusal granted to the Company and Designees,
    (iii) holdback and other registration right restrictions in
    the event of a public registration of any equity securities of
    the Company and (iv) any other terms and conditions which
    the Committee shall deem necessary and desirable).



 



    7.3  Listing, Registration and Compliance with
    Laws and Regulations.  If the Committee
    determines that the listing, registration or qualification upon
    any securities exchange or under any law of shares subject to
    any Option, SAR or restricted stock grant is necessary or
    desirable as a condition of, or in connection with, the granting
    of same or the issue or purchase of shares thereunder, no such
    Option or SAR may be exercised in whole or in part, and no
    shares may be issued, unless such listing, registration or
    qualification is effected free of any conditions not acceptable
    to the Committee.



 



    7.4  Nontransferability.  No
    Option, SAR, or restricted stock granted under the Plan shall be
    transferable by a participant other than by will or the laws of
    descent and distribution or, with respect to such grants other
    than grants of Incentive Stock Options, to a participant’s
    Family Member by gift or a qualified domestic relations order as
    defined by the Code. Unless the Committee determines otherwise,
    an Option or SAR may be exercised only by the optionee or
    grantee thereof; by his or her Family Member if such person has
    acquired the Option or SAR by gift or qualified domestic
    relations order; by his or her executor or administrator the
    executor or administrator of the estate of any of the foregoing
    or any person to whom the Option is transferred by will or the
    laws of descent and distribution; or by his or her guardian or
    legal representative or the guardian or legal representative of
    any of the foregoing; provided that Incentive Stock Options may
    be exercised by any Family Member, guardian or legal
    representative only if permitted by the Code and any regulations
    thereunder. All provisions of this Plan shall in any event
    continue to apply to any Option, SAR or restricted stock granted
    under the Plan and transferred as permitted by this
    Section 7.4, and any transferee of any such Option,
    SAR or restricted stock shall be bound by all provisions of this
    Plan as and to the same extent as the applicable original
    grantee.



 



    7.5  Taxes.



 



    (a) Participant Election.  Unless
    otherwise determined by the Committee, a participant may elect
    to deliver shares of Common Stock (or have the Company withhold
    shares acquired upon exercise of an Option or SAR or deliverable
    upon grant or vesting of restricted stock, as the case may be)
    to satisfy, in whole or in part, the amount the Company is
    required to withhold for taxes in connection with the exercise
    of an Option or SAR or the delivery of restricted stock upon
    grant or vesting, as the case may be. Such election must be made
    on or before the date the amount of tax to be withheld is
    determined. Once made, the election shall be irrevocable. The
    fair market value of the shares to be withheld or delivered will
    be the Fair Market Value as of the date the amount of tax to be
    withheld is determined. In the event a participant elects to
    deliver or have the Company withhold shares of Common Stock
    pursuant to this Section 7.5, such delivery or
    withholding must be made subject to the conditions and pursuant
    to the procedures set forth in Section 6.1(a)(iv)
    with respect to the delivery or withholding of Common Stock in
    payment of the exercise price of Options.




    

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    (b) Company Requirement.  The
    Company may require, as a condition to any grant or exercise
    under the Plan or to the delivery of certificates for shares
    issued hereunder, that the grantee make provision for the
    payment to the Company, either pursuant to
    Section 7.5(a) or this Section 7.5(b),
    of federal, state or local taxes of any kind required by law to
    be withheld with respect to any grant or delivery of shares. The
    Company, to the extent permitted or required by law, shall have
    the right to deduct from any payment of any kind (including
    salary or bonus) otherwise due to a grantee, an amount equal to
    any federal, state or local taxes of any kind required by law to
    be withheld with respect to any grant or delivery of shares
    under the Plan.



 



    7.6  Adjustments.  In the
    event of a reorganization, recapitalization, stock split, stock
    dividend, combination of shares, merger, consolidation,
    distribution of assets, or any other change in the corporate
    structure or shares of the Company, the Committee shall make
    such adjustment as it deems appropriate in the number and kind
    of shares or other property available for issuance under the
    Plan (including, without limitation, the total number of shares
    available for issuance under the Plan pursuant to
    Article IV), in the number and kind of Options, SARs,
    shares of restricted Common Stock or other property covered by
    grants previously made under the Plan, and in the exercise price
    of outstanding Options and SARs. Any such adjustment shall be
    final, conclusive and binding for all purposes of the Plan. In
    the event of any merger, consolidation or other reorganization
    in which the Company is not the surviving or continuing
    corporation or in which a Change in Control is to occur, all of
    the Company’s obligations regarding Options, SARs and
    restricted stock that were granted hereunder and that are
    outstanding on the date of such event shall, on such terms as
    may be approved by the Committee prior to such event, be assumed
    by the surviving or continuing corporation or canceled in
    exchange for property (including cash).



 



    Without limitation of the foregoing, in connection with any
    transaction of the type specified by clause (iii) of the
    definition of a Change in Control, the Committee may, in its
    discretion, (i) cancel any or all outstanding Options under
    the Plan in consideration for payment to the holders thereof of
    an amount equal to the portion of the consideration that would
    have been payable to such holders pursuant to such transaction
    if their Options had been fully exercised immediately prior to
    such transaction, less the aggregate exercise price that would
    have been payable therefor, or (ii) if the amount that
    would have been payable to the Option holders pursuant to such
    transaction if their Options had been fully exercised
    immediately prior thereto would be equal to or less than the
    aggregate exercise price that would have been payable therefor,
    cancel any or all such Options for no consideration or payment
    of any kind. Payment of any amount payable pursuant to the
    preceding sentence may be made in cash or, in the event that the
    consideration to be received in such transaction includes
    securities or other property, in cash
    and/or
    securities or other property in the Committee’s discretion.



 



    7.7  No Right to
    Employment.  Nothing in this Plan or in any
    Grant Agreement shall interfere with or limit in any way the
    right of the Company or its Subsidiaries to terminate any
    participant’s employment at any time (with or without
    cause), nor confer upon any participant any right to continue in
    the employ of the Company or its Subsidiaries for any period of
    time or to continue such participant’s present (or any
    other) rate of compensation, and, except as otherwise provided
    under this Plan or by the Committee in the Grant Agreement, in
    the event of any participant’s termination of employment
    (including, but not limited to, the termination of a
    participant’s employment by the Company without cause) any
    portion of such participant’s Option that was not
    previously vested and exercisable shall expire and be forfeited
    as of such participant’s date of termination. No employee
    shall have a right to be selected as a participant or, having
    been so selected, to be selected again as a participant.



 



    7.8  Amendment, Suspension and Termination of
    Plan.  The Board or the Committee may suspend
    or terminate the Plan or any portion thereof at any time and may
    amend the Plan from time to time in such respects as the Board
    or the Committee may deem advisable; provided that no such
    amendment shall be made without stockholder approval to the
    extent such approval is required by law, agreement or the rules
    of any exchange upon which the Common Stock is listed, and no
    such amendment, suspension or termination shall impair the
    rights of participants under outstanding Options, SARs and
    restricted stock awards without the consent of the participants
    affected.



 



    7.9  Amendment, Modification and Cancellation of
    Outstanding Awards.  The terms of any
    outstanding award under the Plan may be amended from time to
    time by the Committee in its discretion in any manner that it
    deems appropriate (including, but not limited to, acceleration
    of the date of exercise of any award
    and/or
    payments thereunder or of the date of lapse of restrictions on
    shares); provided that, except as otherwise provided in
    Sections 7.2




    

    11








 






    and 7.8, no such amendment shall adversely affect in a
    material manner any right of a participant under the award
    without his or her written consent; and provided further that
    the Committee shall not (i) reduce the exercise price of
    any Options or SARs awarded under the Plan or (ii) cancel
    any Option or SAR and issue a new award with a lower exercise
    price in respect of such cancelled Option or SAR without
    approval of the stockholders of the Company. The Committee may,
    in its discretion, permit holders of awards under the Plan to
    surrender outstanding awards in order to exercise or realize
    rights under other awards. Notwithstanding anything to the
    contrary herein, under no circumstances shall the any
    outstanding award under this Plan be repriced other than
    adjustments permitted under Section 7.6.



 



    7.10  Indemnification.  In
    addition to such other rights of indemnification as they may
    have as members of the Board or the Committee, the members of
    the Board and the Committee shall be indemnified by the Company
    against all costs and expenses reasonably incurred by them in
    connection with any action, suit or proceeding to which they or
    any of them may be party by reason of any action taken or
    failure to act under or in connection with the Plan or any award
    granted hereunder, and against all amounts paid by them in
    settlement thereof (provided such settlement is approved by
    independent legal counsel selected by the Company) or paid by
    them in satisfaction of a judgment in any such action, suit or
    proceeding; provided that any such Board or Committee member
    shall be entitled to the indemnification rights set forth in
    this Section 7.10 only if such member has acted in
    good faith and in a manner that such member reasonably believed
    to be in or not opposed to the best interests of the Company
    and, with respect to any criminal action or proceeding, had no
    reasonable cause to believe that such conduct was unlawful, and
    further provided that upon the institution of any such action,
    suit or proceeding, a Committee member shall give the Company
    written notice thereof and an opportunity, at its own expense,
    to handle and defend the same before such Committee member
    undertakes to handle and defend it on his own behalf.



 



    7.11  Commencement Date; Termination
    Date.  The date of commencement of the Plan
    shall be the later of date it is approved by (i) the Board,
    or (ii) the Company’s stockholders. The Plan will also
    be subject to reapproval by the stockholders of the Company when
    and as required by the Code. Unless previously terminated upon
    the adoption of a resolution of the Board terminating the Plan,
    the Plan shall terminate ten years after the earlier of
    (i) commencement date of the Plan or (ii) stockholder
    approval. No termination of the Plan shall materially and
    adversely affect any of the rights or obligations of any person,
    without his or her written consent, under any grant of Options
    or other incentives theretofore granted under the Plan. Upon
    approval of this Plan by the Company’s stockholders, the
    Company shall cease to make any new grants under the 1999 Equity
    Incentive Plan and the Acquisition Incentive Plan.



 



    7.12  Section 409A Savings
    Clause.  Notwithstanding any of the foregoing
    provisions of the Plan, and in addition to the powers of
    amendment set forth in Section 7.9 hereof, the
    provisions hereof and the provisions of any award made hereunder
    may be amended by the Committee from time to time to the extent
    necessary (and only to the extent necessary) to prevent, in the
    Committee’s good faith determination, the implementation,
    application or existence (as the case may be) of any such
    provision that would (i) require the inclusion of any
    compensation deferred pursuant to the provisions of the Plan (or
    an award thereunder) in a participant’s gross income
    pursuant to Section 409A of the Code, and the regulations
    or other guidance issued thereunder from time to time
    and/or
    (ii) inadvertently cause any award hereunder to be treated
    as providing for the deferral of compensation pursuant to such
    Code section and regulations; provided that the amendment
    of any outstanding award pursuant to the provisions of this
    Section 7.12 shall require the consent of the
    affected participant.



 



    * * * * *




    

    12