Exhibit
4.5


COMFORT SYSTEMS USA, INC.


2006 EQUITY
INCENTIVE PLAN


1.              Purpose; Term


This Comfort Systems
USA, Inc. 2006 Equity Incentive Plan (the “Plan”) provides for the grant
of incentive awards consisting of or based on the Common Stock of the Company.
The purpose of the Plan is to attract and retain key employees, directors and
consultants of the Company and its Affiliates, to provide an incentive for them
to achieve performance goals, and to enable them to participate in the growth
of the Company by granting Awards with respect to the Company’s Common Stock.
No Awards may be granted under the Plan more than ten years after the effective
date of the Plan, but Awards granted prior to that date may continue in
accordance with their terms. Certain capitalized terms used herein are defined
in Section 3 below.


2.              Administration


The Plan shall be administered by
the Committee. Except to the extent action by the Committee is required under
Section 162(m) of the Code in the case of Awards intended to qualify for performance-based
compensation exception thereto, the Board may in any instance perform any of
the functions of the Committee hereunder. The Committee shall select the
Participants to receive Awards and shall determine the terms and conditions of
the Awards. The Committee shall have authority, not inconsistent with the
express provisions of the Plan: (a) to administer the issuance of Awards
granted in accordance with the formula set forth in this Plan to such
Participants as are eligible to receive Awards; (b) to prescribe the form
or forms of instruments evidencing Awards and any other instruments required
under the Plan and to change such forms from time to time; (c) to adopt,
amend and rescind rules and regulations for the administration of the Plan; and
(d) to interpret the Plan and to decide any questions and settle all
controversies and disputes that may arise in connection with the Plan. Such
determinations of the Committee shall be conclusive and shall bind all parties.
Notwithstanding anything else, transactions under this Plan, to the extent they
would otherwise be subject to Section 16 of the Securities Exchange Act of
1934, are intended to comply with all applicable conditions of Rule 16b-3
or its successors under Section 16 of the Securities Exchange Act of 1934
(“Rule 16b-3”). To the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Committee. In the case of an Award
intended to be eligible for the performance-based compensation exception
under Section 162(m) of the Code, the Plan and such Award shall be
construed to the maximum extent permitted by law in a manner consistent with
qualifying the Award for such exception. Consistent with the above
requirements, the Committee may delegate such of its duties, powers and
responsibilities as it may determine (and in the event of any such delegation,
references herein to the Committee shall include the person or persons so
delegated to the extent of such delegation).


In the case of an Award intended
to be eligible for the performance-based compensation exception under
Section 162(m) of the Code, the Committee shall establish in writing
Performance Criteria (in such fashion and with such specificity so that they
qualify as “preestablished objective goals” within the meaning of Treas. Regs.
Section 1-162-27(e)(2)) for any fiscal year not later than 90 days after the commencement of such year
(or such earlier time as is required to qualify Awards as performance-based
under Code Section 162(m) of the Code); provided, however,
that the amount so established by the Committee may be adjusted by the
Committee after the initial determination of the amount to reflect any
significant change of circumstance, including without limitation, the
acquisition or disposition of any business by the Company or any of its
Subsidiaries.


3.              Certain Definitions


“Affiliate” means any corporation
or other entity that stands in a relationship to the Company that would result
in the Company and such corporation or other entity being treated as one
employer under Section 414(b) or Section 414(c) of the Code. The
Company may at any time by amendment provide that different ownership
thresholds (consistent with Section 409A of the Code) apply but any such
change shall not be effective for twelve (12) months.









 



“Award” means any Option, SAR,
Restricted Stock, Unrestricted Stock, Restricted Stock Unit, Unrestricted Stock
Unit), Performance Award (including a cash Performance Award) and other award
convertible into or otherwise based on stock, granted under the Plan.


“Board” means the Board of
Directors of the Company.


“Code” means the Internal Revenue
Code of 1986, as amended from time to time, or any successor law.


“Committee” means one or more
committees each comprised of not less than two members of the Board appointed
by the Board to administer the Plan or a specified portion thereof. Unless
otherwise determined by the Board, if a Committee is authorized to grant Awards
to a Reporting Person or a Covered Employee, each member shall be a “non-employee
director” within the meaning of Rule 16b-3 under the Exchange Act or,
respectively, an “outside director” within the meaning of Section 162(m)
of the Code, respectively.


“Common Stock” or “Stock” means
the Common Stock, $0.01 par value, of the Company.


“Company” means Comfort Systems
USA, Inc., a Delaware corporation.


“Corporate Transaction” means any
of the following: any sale of all or substantially all of the assets of the
Company, change in the ownership of the capital stock of the Company,
reorganization, recapitalization, merger (whether or not the Company is the
surviving entity), consolidation, exchange of capital stock of the Company or
other restructuring involving the Company, provided,
that, in each case, to the extent any amount constituting “nonqualified
deferred compensation” subject to Section 409A of the Code would become
payable under an Award by reason of a Corporate Transaction, it shall become
payable only if the event or circumstances constituting the Corporate
Transaction would also constitute a change in the ownership or effective
control of the Company, or a change in the ownership of a substantial portion
of the Company’s assets, within the meaning of subsection (a)(2)(A)(v) of
Section 409A of the Code.


“Covered Employee” means a “covered
employee” within the meaning of Section 162(m) of the Code.


“Designated Beneficiary” means
the beneficiary designated by a Participant, in a manner determined by the
Committee, to receive amounts due or exercise rights of the Participant in the
event of the Participant’s death. In the absence of an effective designation by
a Participant, “Designated Beneficiary” means the Participant’s estate.


“Exchange Act” means the Securities
Exchange Act of 1934, as amended from time to time, or any successor law.


“Fair Market Value” means,
(i) with respect to Stock, (A) for so long as such Stock is readily
tradeable on an established securities market (within the meaning of
Section 409A), the closing price on the trading day of the grant, and
(B) otherwise, the fair market value of such Stock determined by the
Committee by a reasonable application of a reasonable valuation method (within
the meaning of Section 409A); and, (ii) with respect to any other
property, the fair market value of such property as determined by the Committee
in good faith in the manner established by the Committee from time to time.


“ISO” has the meaning set forth
in Section 6(a).


“NSO” has the meaning set forth
in Section 6(a).


“Option” has the meaning set
forth in Section 6(a).


“Participant” means a person
selected by the Committee to receive an Award under the Plan.


“Performance Award” means an
Award subject to Performance Criteria. The Committee in its discretion may
grant Performance Awards that are intended to qualify for the performance-based
compensation exception under Section 162(m) of the Code and Performance
Awards that are not intended so to qualify.









 



“Performance Criteria” means
specified criteria the satisfaction of which is a condition to the grant,
exercisability, vesting, payment or full enjoyment of an Award. For purposes of
Performance Awards that are intended to qualify for the performance-based
compensation exception under Section 162(m) of the Code, a Performance
Criterion shall mean an objectively determinable measure of performance
relating to any of or to any combination of the following (determined either on
a consolidated basis or, as the context permits, on a divisional, subsidiary,
line of business, project or geographical basis or in combinations thereof):
(i) sales; revenues; assets; expenses; earnings before or after deduction
for all or any portion of interest, taxes, depreciation, amortization or other
items, whether or not on a continuing operations or an aggregate or per share
basis; return on equity, investment, capital or assets; one or more operating
ratios; borrowing levels, leverage ratios or credit rating; market share;
capital expenditures; cash flow; stock price; stockholder return; network
deployment; sales of particular products or services; customer acquisition,
expansion and retention; or any combination of the foregoing; or
(ii) acquisitions and divestitures (in whole or in part); joint ventures
and strategic alliances; spin-offs, split-ups and the like; reorganizations;
recapitalizations, restructurings, financings (issuance of debt or equity), or
refinancings; transactions that would constitute a change of control; or any
combination of the foregoing. A Performance Criterion measure and targets with
respect thereto determined by the Committee need not be based upon an increase,
a positive or improved result or avoidance of loss. Prior to the grant,
exercisability, vesting, payment or full enjoyment of the Performance Award, as
the case may be, the Committee will determine whether the Performance Criteria
have been attained and such determination will be conclusive. If the
Performance Criteria are not attained, no other Award will be provided in
substitution of the Performance Award with respect to which such Performance
Criteria have not been met.


“Reporting Person” means a person
subject to Section 16 of the Exchange Act.


“Restricted Period” has the
meaning set forth in Section 8(a).


“Restricted Stock” has the
meaning set forth in Section 8(a).


“Restricted Stock Unit” has the
meaning set forth in Section 8(b).


“Stock Appreciation Right” or “SAR”
has the meaning set forth in Section 7(a).


“Stock Unit Award” has the
meaning set forth in Section 8(b).


“Unrestricted Stock” has the meaning
set forth in Section 8(a).


“Unrestricted Stock Unit” has the
meaning set forth in Section 8(b).


4.              Eligibility


All key employees, all directors
and all consultants of the Company (or of any Affiliate) whom the Committee
considers to be capable of contributing to the successful performance of the
Company are eligible to be Participants in the Plan, provided that, ISOs may be
granted only to employees of the Company or of any parent or subsidiary
corporation of the Company, as those terms are used in Section 424 of the
Code.


5.              Stock Available for Awards


(a)           Amount.  Subject to
the other subsections of this Section 5 and to Section 10, no more
than 3,200,000 shares of Common Stock in the aggregate may be delivered under
or in satisfaction of Awards. Shares issued under the Plan may consist of
authorized but unissued shares or treasury shares. No fractional shares will be
issued under the Plan.


(b)           Fungible Share Plan.  Each share
of Stock subject to an Award consisting of Options and/or SARs shall be counted
against the limits set forth in Section 5(a) as one (1) share. Each
share of Stock subject to any Award other than an award consisting of Options
and/or SARs shall be counted against the limits set forth in Section 5(a)
as one and six-tenths (1.6) shares.









 



(c)           Reversion to the Plan.  For the
avoidance of doubt, if an outstanding Award for any reason expires or is
terminated or canceled without having been exercised or settled in full, or if
shares of Stock acquired pursuant to an Award subject to forfeiture or
repurchase are forfeited or repurchased by the Company for an amount not
greater than the Participant’s purchase price, the shares of Stock allocable to
the terminated portion of such Award or such forfeited or repurchased shares of
Stock shall again be available for issuance under the Plan. Shares of Stock
shall not be deemed to have been issued pursuant to the Plan with respect to
any portion of an Award that is settled in cash or other property (other than
shares of Stock). Upon payment in shares of Stock pursuant to the exercise of
an SAR, the number of shares available for issuance under the Plan shall be
reduced as provided in Section 7(c).


(d)           Certain Other Company Awards.  Common
Stock issued under awards granted by another company (“other company awards”)
and assumed by the Company in connection with a merger, consolidation, stock
purchase or similar transaction, or issued by the Company under awards
substituted for other company awards in connection with a merger,
consolidation, stock purchase or similar transaction, shall not reduce the
shares available for Awards under the Plan; provided,
that the maximum number of shares that may be issued pursuant to ISOs (as
defined below) shall be determined in a manner consistent with Section 422
of the Code and the rules thereunder.


(e)           Limit on Individual Grants.  In the
case of an Award intended to be eligible for the performance-based
compensation exception under Section 162(m) of the Code: (i) the
maximum number of shares of Common Stock subject to Options and SARs that may
be granted to any Participant in the aggregate in any calendar year shall not
exceed, in each case, 1,000,000, and the maximum number of shares of Common
Stock that may be granted as Stock Awards pursuant to Section 8 to any Participant
in the aggregate in any calendar year shall not exceed 625,000, subject in each
case to adjustment under Section 10 (for purposes of the preceding
sentence, the repricing of an Option or SAR shall be treated as a new grant to
the extent required under Section 162(m) of the Code).


6.              Stock Options


(a)           Grant of Options.  Subject to
the provisions of the Plan, the Committee may grant both (i) options (“Options”)
to purchase shares of Common Stock that are intended to comply with the
requirements of Section 422 of the Code and the rules thereunder (“ISOs”)
and (ii) Options that are not intended to comply with such requirements (“NSOs”).
The Committee shall determine the number of shares subject to each Option and
the exercise price therefor, which shall not be less than 100% of the Fair
Market Value of the Common Stock on the date of grant. An ISO granted to an
employee described in Section 422(b)(6) of the Code must have an exercise
price that is not less than 110% of such fair market value. In no event,
however, shall the exercise price be less, in the case of an original issue of
authorized stock, than par value per share.


(b)           Terms and Conditions.  Each
Option shall be exercisable at such times and subject to such terms and
conditions as the Committee may specify in the applicable grant or thereafter.
An ISO may not be exercised after the period provided in Treas. Reg.
Section 1.422-2(a)(2)(iii) and Treas. Reg. Section 1.422-2(d).
The Committee may impose such conditions with respect to the exercise of
Options, including conditions relating to applicable federal or state
securities laws, as it considers necessary or advisable.


(c)           Payment.  No shares
shall be delivered pursuant to any exercise of an Option until payment in full
of the exercise price therefor is received by the Company. Such payment may be
made in whole or in part in cash or, to the extent legally permissible and
expressly permitted by the Committee at or after the grant of the Option, by
delivery of other property such as shares of Common Stock that have been owned
by the optionee for at least six months (or such other period as the Committee
may determine), valued at their Fair Market Value on the date of delivery or
such other lawful consideration, including a payment commitment of a financial
or brokerage institution, as the Committee may determine; or any combination of
the foregoing permitted forms of payment.


7.              Stock Appreciation Rights


(a)           Grant of SARs.  Subject to
the provisions of the Plan, the Committee may grant rights to receive any
excess in value of shares of Common Stock over the exercise price (“Stock
Appreciation Rights” or “SARs”). The









 



Committee shall determine at the time of grant or
thereafter whether SARs are settled in cash, Common Stock or other securities
of the Company, Awards or other property, and may define the manner of
determining the excess in value of the shares of Common Stock. The Committee
shall fix the exercise price of each SAR, which shall not be less than 100% of
the Fair Market Value of the Common Stock at the date of grant.


(b)           Terms and Conditions.  Each SAR
shall be exercisable at such times and subject to such terms and conditions as
the Committee may specify in the applicable grant or thereafter. The Committee
may impose such conditions with respect to the exercise of SARs, including
conditions relating to applicable federal or state securities laws, as it
considers necessary or advisable.


(c)           No Net Share Counting.  SARs to be
settled in shares of Common Stock shall be counted in full against the number
of shares available for award under the Plan under Section 5(a),
regardless of the number of shares of Common Stock issued upon settlement of
the SAR.


8.              Stock, Units, Other Awards and Performance
Criteria


(a)           Restricted or Unrestricted Stock
Awards.  The Committee may grant shares of Common
Stock subject to forfeiture (“Restricted Stock”) and determine the duration of
the period (the “Restricted Period”) during which, and the conditions under
which, the shares may be forfeited to the Company and the other terms and
conditions of such Awards. Shares of Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered, except as permitted by
the Committee, during the Restricted Period. Shares of Restricted Stock shall
be evidenced in such manner as the Committee may determine. Any certificates
issued in respect of shares of Restricted Stock shall be registered in the name
of the Participant and unless otherwise determined by the Committee, deposited
by the Participant, together with a stock power endorsed in blank, with the
Company. At the expiration of the Restricted Period, the Company shall deliver
such certificates to the Participant or if the Participant has died, to the
Participant’s Designated Beneficiary. The Committee also may make Awards of
shares of Common Stock that are not subject to restrictions or forfeiture, on
such terms and conditions as the Committee may determine from time to time (“Unrestricted
Stock”). Shares of Restricted Stock or Unrestricted Stock may be issued for
such consideration, if any, as the Committee may determine consistent with
applicable law.


(b)           Restricted or Unrestricted Stock
Unit Awards.  The Committee may grant Awards (“Stock Unit
Awards”) consisting of units representing shares of Common Stock. Each Stock
Unit Award shall represent the unfunded and unsecured commitment of the Company
to deliver to the Participant at a specified future date or dates one or more
shares of Common Stock (including, if so provided with respect to the Award, shares
of Restricted Stock), subject to the satisfaction of any vesting or other terms
and conditions established with respect to the Award as the Committee may
determine. No Participant or Designated Beneficiary holding a Stock Unit Award
shall be treated as a stockholder with respect to the shares of Common Stock
subject to the Award unless and until such shares are actually delivered under
the Award. Stock Unit Awards may not be sold, assigned, transferred, pledged or
otherwise encumbered except as permitted by the Committee. The Committee may
make Awards of Stock Units that are subject to restrictions or forfeiture (“Restricted
Stock Units”) or Stock Units that are not subject to such restrictions (“Unrestricted
Stock Units”), in each case on such terms and conditions as the Committee may
determine from time to time.


(c)           Other Awards.  The
Committee may grant Awards (including Performance Awards) other than Options,
SARs, Restricted Stock, Unrestricted Stock or Stock Unit Awards.


(d)           Performance Goals.  The Committee
may establish Performance Criteria on which the granting of Performance Awards,
Restricted Stock, Unrestricted Stock, or Stock Unit Awards, or the vesting of
Restricted Stock or Restricted Stock Unit Awards, will be subject. The
Committee shall determine whether any Performance Criteria so established have
been achieved, and if so to what extent, and its determination shall be binding
on all persons.


9.              General Provisions Applicable to Awards


(a)           Documentation and Legal
Conditions on Delivery of Stock.  Each Award shall be evidenced by a writing
delivered to the Participant or agreement executed by the Participant
specifying the terms and conditions thereof and









 



containing such other terms and conditions not
inconsistent with the provisions of the Plan as the Committee considers
necessary or advisable to achieve the purposes of the Plan or to comply with
applicable tax and regulatory laws and accounting principles. The Company will
not be obligated to deliver any shares of Stock pursuant to the Plan or to
remove any restriction from shares of Stock previously delivered under the Plan
until: the Company’s counsel has approved all legal matters in connection with
the issuance and delivery of such shares; if the outstanding Stock is at the
time of delivery listed on any stock exchange or national market system, the
shares to be delivered have been listed or authorized to be listed on such
exchange or system upon official notice of issuance; and all conditions of the
Award have been satisfied or waived. If the sale of Stock has not been
registered under the Securities Act of 1933, as amended, the Company may
require, as a condition to exercise of the Award, such representations or
agreements as counsel for the Company may consider appropriate to avoid violation
of such Act. The Company may require that certificates evidencing Stock issued
under the Plan bear an appropriate legend reflecting any restriction on
transfer applicable to such Stock.


(b)           Application of Code
Section 409A.  Awards under the Plan are intended either to
be exempt from the rules of Section 409A of the Code or to satisfy those
rules, and shall be construed accordingly. Granted Awards may be modified at
any time, in the Committee’s discretion, so as to increase the likelihood of
exemption from or compliance with the rules of Section 409A of the Code.


(c)           Committee Discretion.  Awards may
be made alone or in combination with other Awards, including Awards of other
types. The terms of Awards of the same type need not be identical, and the Committee
need not treat Participants uniformly (subject to the requirements of
applicable law). Except as otherwise expressly provided by the Plan or a
particular Award, any determination with respect to an Award may be made by the
Committee at the time of grant or at any time thereafter.


(d)           Dividends and Cash Awards.  In the
discretion of the Committee, any Award under the Plan may provide the
Participant with (i) dividends or dividend equivalents payable (in cash or
in the form of Awards under the Plan) currently or deferred with or without
interest and (ii) cash payments in lieu of or in addition to an Award.


(e)           Termination of Service.  Unless the
Committee expressly provides otherwise, the following rules shall apply in
connection with the cessation of a Participant’s employment or other service
relationship with the Company and its Affiliates. Immediately upon the
cessation of the Participant’s employment or other service relationship with
the Company and its Affiliates an Award requiring exercise will cease to be
exercisable and all Awards to the extent not already fully vested will be
forfeited, except that:


(i)            All Options and SARs held by a Participant
immediately prior to his or her death, to the extent then exercisable, will
remain exercisable by such Participant’s executor or administrator or the
person or persons to whom the Option or SAR is transferred by will or the
applicable laws of descent and distribution, in each case for the lesser of
(i) the one year period ending with the first anniversary of the
Participant’s death or (ii) the period ending on the latest date on which
such Option or SAR could have been exercised without regard to this subsection
(e), and shall thereupon terminate; and


(ii)           all Options and SARs held by the Participant immediately
prior to the cessation of the Participant’s employment or other service
relationship for reasons other than death and except as provided in
(iii) below, to the extent then exercisable, will remain exercisable for
the lesser of (1) a period of three months or (2) the period ending
on the latest date on which such Option or SAR could have been exercised
without regard to this subsection (e), and shall thereupon terminate.


(iii)          Unless the Committee expressly provides otherwise,
a Participant’s “employment or other service relationship with the Company and
its Affiliates” will be deemed to have ceased, in the case of an employee
Participant, upon termination of the Participant’s employment with the Company
and its Affiliates (whether or not the Participant continues in the service of
the Company or its Affiliates in some capacity other than that of an employee
of the Company or its Affiliates), and in the case of any other Participant,
when the service relationship in respect of which the Award was granted
terminates (whether or not the Participant continues in the service of the
Company or its Affiliates in some other capacity).









 



(f)            Transferability.  No Award
may be transferred other than by will or the laws of descent and distribution
and may be exercised, during the life of the Participant, only by the
Participant, except that, as to Awards other than ISOs, the Committee may
permit certain transfers to the Participant’s family members or to certain
entities controlled by the Participant or his or her family members.


(g)           Withholding Taxes.  The
Participant shall pay to the Company, or make provision satisfactory to the
Committee for payment of, any taxes or social insurance contributions required
by law to be withheld in respect of Awards under the Plan no later than the
date of the event creating the tax liability. The Company and its Affiliates
may, to the extent permitted by law, deduct any such tax (or social insurance)
obligations from any payment of any kind due to the Participant hereunder or
otherwise. In the Committee’s discretion, the minimum tax (or social insurance)
obligations required by law to be withheld in respect of Awards may be paid in
whole or in part in shares of Common Stock, including shares retained from the
Award creating the obligation, valued at their Fair Market Value on the date of
retention or delivery.


(h)           Amendment of Award.  Except as
otherwise expressly provided in the Plan, the Committee may amend, modify, or
terminate any outstanding Award, including substituting therefor another Award
of the same or a different type, changing the date of exercise or realization
and converting an ISO to an NSO. Any such action shall require the Participant’s
consent unless the Committee determines that the action would not materially
and adversely affect the Participant.


(i)            Foreign Nationals.  The
Committee may take any action consistent with the terms of the Plan, either
before or after an Award has been granted, which the Committee deems necessary
or advisable to comply with government laws or regulatory requirements of any
foreign jurisdiction, including but not limited to modifying or amending the
terms and conditions governing any Awards, establishing sub-plans under the
Plan, or adopting such procedures as the Committee may determine to be
appropriate in response to differences in laws, rules, regulations or customs
of such foreign jurisdictions with respect to tax, securities, currency,
employment, accounting or other matters.


(j)            Option or SAR Repricing.  Without
the affirmative vote of holders of a majority of the shares of Stock cast in
person or by proxy at a meeting of the stockholders of the Company at which a
quorum representing a majority of all outstanding shares of Stock is present or
represented by proxy, neither the Board nor the Committee shall approve either
(a) the cancellation of outstanding Options or SARs and the grant in
substitution therefor of new Options or SARs having a lower exercise price or
(b) the amendment of outstanding Options or SARs to reduce the exercise
price thereof. This paragraph shall not be construed to apply to: (i) ”issuing
or assuming a stock option in a transaction to which section 424(a)
applies,” within the meaning of Section 424 of the Code or (ii) the
substitution or assumption of an Award by reason of or pursuant to a corporate
transaction, to the extent such substitution or assumption would not be treated
as a grant of a new stock right or a change in the form of payment for purposes
of Section 409A of the Code within the meaning of Prop. Treas. Reg.
Section 1.409A-1(b)(5)(iii)(D)(3), Notice 2005-1, A-4(d) and any
subsequent Section 409A guidance (whether administrative or regulatory, or
(iii) adjustments made pursuant to Section 10.


10.           Effect of Certain Transactions


(a)           Assumptions or Substitutions.  Except as
otherwise expressly provided in an Award Agreement:


(i)            In the event of a Corporate Transaction in which
there is an acquiring or surviving entity, the Committee may, unless the
Committee determines that doing so is inappropriate or unfeasible, provide for
the continuation or assumption of some or all outstanding Awards, or for the
grant of new awards in substitution therefor, by the acquiror or survivor or an
entity controlling, controlled by or under common control with the acquiror or
survivor, in each case on such terms and subject to such conditions (including
vesting or other restrictions) as the Committee determines are appropriate.
Unless the Committee determines otherwise, the continuation or assumption shall
be done on terms and conditions consistent with Section 409A of the Code.


(ii)           In the event of a Corporate Transaction (whether
or not there is an acquiring or surviving entity), the Committee may provide
(unless the Committee determines otherwise, on terms and conditions consistent
with









 



Section 409A
of the Code) for (A) treating as satisfied any vesting condition on any
such Award or for (B) the accelerated delivery of shares of Stock issuable
under each such Award consisting of Restricted Stock Units.


(iii)          Except as otherwise expressly provided in an Award
agreement, each Award (unless assumed pursuant to the
Section 10(a)(i) above), will terminate upon consummation of the
Corporate Transaction, provided that Restricted Stock Units accelerated
pursuant to clause (B) of Section 10(a)(ii) shall be treated in
the same manner as other shares of Stock (subject to Section 10(a)(iv))).


(iv)          Any share of Stock delivered pursuant to
Section 10(a)(ii) above with respect to an Award may, in the
discretion of the Committee, contain such restrictions, if any, as the
Committee deems appropriate to reflect any performance or other vesting
conditions to which the Award was subject and that did not lapse in connection
with the Corporate Transaction. In the case of Restricted Stock, the Committee
may require that any amounts delivered, exchanged or otherwise paid in respect
of Stock in connection with the Corporate Transaction be placed in escrow or
otherwise made subject to such restrictions as the Committee deems appropriate
to carry out the intent of the Plan.


(v)           If the Corporate Transaction is one in which
holders of Stock will receive upon consummation a payment (whether cash,
non-cash or a combination of the foregoing), the Committee may provide for
payment (a “cash-out”), with respect to some or all Awards, equal in the case
of each affected Award to the excess, if any, of (A) the Fair Market Value
of one share of Stock times the number of shares of Stock subject to the Award,
over (B) the aggregate exercise price, if any, under the Award, in each
case on such payment terms (which need not be the same as the terms of payment
to holders of Stock) and other terms, and subject to such conditions, as the
Committee determines.


(b)           Changes In, Distributions With
Respect To And Redemptions Of The Stock


(i)            In the event of any stock dividend or other
similar distribution of stock or other securities of the Company, stock split
or combination of shares (including a reverse stock split), recapitalization,
conversion, reorganization, consolidation, split-up, spin-off, combination,
merger, exchange of stock, redemption or repurchase of all or part of the
shares of any class of stock or any change in the capital structure of the
Company or an Affiliate or other transaction or event, the Committee may, as
appropriate in order to prevent enlargement or dilution of benefits intended to
be made available under the Plan, make adjustments to the maximum number of
shares that may be delivered as per Section 5 and may also make
appropriate adjustments to the number and kind of shares of stock or securities
subject to Awards then outstanding or subsequently granted, any exercise prices
relating to Awards and any other provision of Awards affected by such change.


(ii)           The Committee may also make adjustments of the
type described in Section 10(a) and 10(b)(i) above to take into
account distributions to stockholders other than stock dividends or normal cash
dividends, material changes in accounting practices or principles,
extraordinary dividends, mergers, consolidations, acquisitions, dispositions or
similar transactions involving Stock, or any other event, if the Committee
determines that adjustments are appropriate to avoid distortion in the
operation of the Plan and to preserve the value of Awards made hereunder,
having due regard for: the qualification of ISOs under Section 422 of the
Code, the continued exemption of the Awards from (or satisfaction by the Awards
of the rules of) Section 409A of the Code, where applicable and, in the
case of Awards intended to qualify for the performance-based compensation
exception Section 162(m) of the Code, having due regard continued
qualification for that exception.


(iii)          References in the Plan to shares of Stock will be
construed to include any stock or securities resulting from an adjustment
pursuant to this Section 10.


11.           Miscellaneous


(a)           No Right To Employment.  No person
shall have any claim or right to be granted an Award. Neither the adoption,
maintenance, nor operation of the Plan nor any Award hereunder shall constitute
a contract of employment or









 



confer upon any employee, director or consultant of the
Company or of any Affiliate any right with respect to the continuance of
his/her employment by or other service with the Company or any such Affiliate
nor shall it or they be construed as affecting the rights of the Company (or
Affiliate) to terminate the service of any person at any time or otherwise
change the terms of such service, including, without limitation, the right to
promote, demote or otherwise re-assign any employee or other service provider
from one position to another within the Company or any Affiliate.


(b)           No Rights As Stockholder.  Subject to
the provisions of the applicable Award, no Participant or Designated
Beneficiary shall have any rights as a stockholder with respect to any shares
of Common Stock to be issued under the Plan until he or she becomes the holder
thereof. A Participant to whom Restricted Stock or Unrestricted Stock is
awarded shall be considered a stockholder of the Company at the time of the
Award except as otherwise expressly provided in the applicable Award.


(c)           Effective Date.  The Plan
shall be effective on the date it is approved by the stockholders.


(d)           Amendment of Plan.  The Board
may amend, suspend, or terminate the Plan or any portion thereof at any time,
subject to such stockholder approval as the Board determines to be necessary or
advisable. Further, under all circumstances, the Committee may, but shall not
be required to, make non-substantive administrative changes to the Plan as to
conform with or take advantage of governmental requirements, statutes or
regulations. Except as provided in Section 9(h), no such amendment,
modification or termination will adversely affect the rights of any Participant
(without his or her consent) under any Award previously granted and no
amendment will, without the approval of the stockholders of the Company,
effectuate a change for which stockholder approval is required in order for the
Plan to qualify or to continue to qualify under Rule 16b-3 or for the Plan
to qualify or to continue to qualify under Section 422 of the Code or for
Awards intended to be eligible for the performance-based exception under
Section 162(m) of the Code to qualify as such or continue such
eligibility.


(e)           Governing Law.  The
provisions of the Plan shall be governed by and interpreted in accordance with
the laws of the State of Delaware.