Exhibit 4.1


 


XYRATEX
LTD

2006 INCENTIVE AWARD PLAN


ARTICLE
1.


PURPOSE


The purpose of the Xyratex Ltd 2006 Incentive Award
Plan (the “Plan”) is to promote the success and enhance the value of Xyratex
Ltd (the “Company”) by linking the personal interests of the members of
the Board, Employees, and Consultants to those of Company shareholders and by
providing such individuals with an incentive for outstanding performance to
generate superior returns to Company shareholders.  The Plan is further intended to provide
flexibility to the Company in its ability to motivate, attract, and retain the
services of members of the Board, Employees, and Consultants upon whose
judgment, interest, and special effort the successful conduct of the Company’s
operation is largely dependent.


ARTICLE
2.


DEFINITIONS
AND CONSTRUCTION


Wherever the following terms are used in the Plan they
shall have the meanings specified below, unless the context clearly indicates
otherwise.  The singular pronoun shall
include the plural where the context so indicates.


2.1           “Award” means an Option, a Restricted Stock award,
a Stock Appreciation Right award, a Performance Share award, a Performance
Stock Unit award, a Dividend Equivalents award, a Stock Payment award, a
Deferred Stock award, a Restricted Stock Unit award, a Performance Bonus Award,
or a Performance-Based Award granted to a Participant pursuant to the Plan.


2.2           “Award Agreement” means any written agreement,
contract, or other instrument or document evidencing an Award, including
through electronic medium.


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


2.4           “Change of Control” means and includes each of the
following:


(a)           the acquisition, directly or indirectly, by any “person”
or “group” (as those terms are defined in Sections 3(a)(9), 13(d) and 14(d) of
the Exchange Act and the rules thereunder) of “beneficial ownership” (as
determined pursuant to Rule 13d-3 under the Exchange Act) of securities
entitled to vote generally in the election of directors (“voting securities”)
of the Company that represent 50% or more of the combined voting power of the
Company’s then outstanding voting securities, other than


(i)            an acquisition by a trustee or other fiduciary holding
securities under any employee benefit plan (or related trust) sponsored or
maintained by the Company or 









 



any person controlled by the Company or by
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any person controlled by the Company, or


(ii)           an acquisition of voting securities by the Company or a
corporation owned, directly or indirectly by the shareholders of the Company in
substantially the same proportions as their ownership of the shares of the
Company, or


(iii)          an acquisition of voting securities pursuant to a
transaction described in clause (c) of this Section 2.4 that would not be a
Change of Control under clause (c);


Notwithstanding the
foregoing, the following event shall not constitute an “acquisition” by any
person or group for purposes of this Section 2.4: an acquisition of the Company’s
securities by the Company which causes the Company’s voting securities
beneficially owned by a person or group to represent 50% or more of the
combined voting power of the Company’s then outstanding voting securities; provided, however, that if a person or
group shall become the beneficial owner of 50% or more of the combined voting
power of the Company’s then outstanding voting securities by reason of share
acquisitions by the Company as described above and shall, after such share
acquisitions by the Company, become the beneficial owner of any additional
voting securities of the Company, then such acquisition shall constitute a
Change of Control; or


(b)           during any period of two consecutive years, individuals
who, at the beginning of such period, constitute the Board together with any
new director(s) (other than a director designated by a person who shall have
entered into an agreement with the Company to effect a transaction described in
clauses (a) or (c) of this Section 2.4) whose election by the Board
or nomination for election by the Company’s shareholders was approved by a vote
of at least two-thirds of the directors then still in office who either were
directors at the beginning of the two year period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof; or


(c)           the consummation by the Company (whether directly
involving the Company or indirectly involving the Company through one or more
intermediaries) of (X) a merger, consolidation, reorganization, or
business combination or (Y) a sale or other disposition of all or
substantially all of the Company’s assets or (Z) the acquisition of assets
or shares of another entity, in each case other than a transaction


(i)            which results in the Company’s voting securities
outstanding immediately before the transaction continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
Company or the person that, as a result of the transaction, controls, directly
or indirectly, the Company or owns, directly or indirectly, all or
substantially all of the Company’s assets or otherwise succeeds to the business
of the Company (the Company or such person, the “Successor Entity”))
directly or indirectly, at least a majority of the combined voting power of the
Successor Entity’s outstanding voting securities immediately after the
transaction, and



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(ii)           after which no person or group beneficially owns voting
securities representing 50% or more of the combined voting power of the
Successor Entity; provided, however,
that no person or group shall be treated for purposes of this clause (B)
as beneficially owning 50% or more of combined voting power of the Successor
Entity solely as a result of the voting power held in the Company prior to the
consummation of the transaction; or


(d)           the Company’s shareholders approve a liquidation or
dissolution of the Company.


The Committee shall have
full and final authority, which shall be exercised in its discretion, to determine
conclusively whether a Change of Control of the Company has occurred pursuant
to the above definition, and the date of the occurrence of such Change of
Control and any incidental matters relating thereto.


2.5           “Code” means the Internal Revenue Code of 1986, as
amended.


2.6           “Committee” means the Board or the Compensation Committee
of the Board as further described in Article 12.


2.7           “Consultant” means any consultant or adviser if:
(a) the consultant or adviser renders bona fide services to the Company; (b)
the services rendered by the consultant or adviser are not in connection with
the offer or sale of securities in a capital-raising transaction and do not
directly or indirectly promote or maintain a market for the Company’s
securities; and (c) the consultant or adviser is a natural person who has
contracted directly with the Company to render such services.


2.8           “Covered Employee” means an Employee who is, or
could be, a “covered employee” within the meaning of Section 162(m) of the
Code.


2.9           “Deferred Stock” means a right to receive a
specified number of Shares during specified time periods pursuant to Section 8.5.


2.10         “Director” means a member of the Board.


2.11         “Disability” means,
for purposes of this Plan, that the Participant qualifies to receive long-term
disability payments under the Company’s long-term disability insurance program,
as it may be amended from time to time.


2.12         “Dividend Equivalents” means a right granted to a Participant
pursuant to Section 8.3 to receive the equivalent value (in cash or Shares)
of dividends paid on Shares.


2.13         “Effective Date” shall have the meaning set forth in
Section 13.1.


2.14         “Eligible Individual” means any person who is an
Employee, a Consultant or an Independent Director, as determined by the
Committee.


2.15         “Employee” means any officer or other employee (as
defined in accordance with Section 3401(c) of the Code) of the Company or any
Subsidiary.



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2.16         “Exchange Act” means the Securities Exchange Act of
1934, as amended.


2.17         “Fair Market Value” shall mean, as of any date, the
value of Shares determined as follows:


(a)           If the Shares are listed on any established stock exchange
or a national market system, including without limitation the Nasdaq National
Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, the Fair
Market Value shall be the closing sales price for a Share (or the closing bid,
if no sales were reported) as quoted on such exchange or system for the last
market trading day prior to the date of determination, as reported in The Wall Street Journal or such other source as the
Committee deems reliable;


(b)           If the Shares are regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value
shall be the mean of the closing bid and asked prices for a Share on the date
prior to the date of determination as reported in The Wall
Street Journal or such other source as the Committee deems reliable;
or


(c)           In the absence of an established market for the Shares,
the Fair Market Value of a Share shall be determined in good faith by the
Committee.


2.18         “Incentive Stock Option” means an Option that is
intended to meet the requirements of Section 422 of the Code or any successor
provision thereto.


2.19         “Independent Director” means a Director who is not an
Employee of the Company and who qualifies as “independent” within the meaning
of NASD Rule 4200(a)(14), if the Company’s securities are traded on the Nasdaq National
Market, or the requirements of any other established stock exchange on which
the Company’s securities are traded, as such rules or requirements may be
amended from time to time.


2.20         “Non-Employee Director” means a Director who
qualifies as a “Non-Employee Director” as defined in Rule 16b-3(b)(3) under the
Exchange Act, or any successor rule.


2.21         “Non-Qualified Stock Option” means an Option that is
not intended to be an Incentive Stock Option.


2.22         “Option” means a
right granted to a Participant pursuant to Article 5 of the Plan to purchase a
specified number of Shares at a specified price during specified time
periods.  An Option may be either an
Incentive Stock Option or a Non-Qualified Stock Option.


2.23         “Participant”
means any Eligible Individual who, as an Independent Director, Consultant or
Employee, has been granted an Award pursuant to the Plan.


2.24         “Performance-Based
Award” means an Award granted to selected Covered Employees pursuant to Section
8.7, but which is subject to the terms and conditions set forth in Article 9.


2.25         “Performance Bonus Award” has the meaning set forth
in Section 8.7.



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2.26         “Performance Criteria”
means the criteria that the Committee selects for purposes of establishing the
Performance Goal or Performance Goals for a Participant for a Performance
Period.  The Performance Criteria that
will be used to establish Performance Goals are limited to the following: net
earnings (either before or after interest, taxes, depreciation and amortization),
economic value-added, sales or revenue, net income (either before or after
taxes), operating earnings, cash flow (including, but not limited to, operating
cash flow and free cash flow), cash flow return on capital, return on net
assets, return on shareholders’ equity, return on assets, return on capital, shareholder
returns, return on sales, gross or net profit margin, productivity, expense,
margins, operating efficiency, customer satisfaction, working capital, earnings
per share, price per Share, and market share, any of which may be measured
either in absolute terms or as compared to any incremental increase or as
compared to results of a peer group.  The
Committee shall define in an objective fashion the manner of calculating the
Performance Criteria it selects to use for such Performance Period for such
Participant.


2.27         “Performance Goals” means, for a Performance Period,
the goals established in writing by the Committee for the Performance Period
based upon the Performance Criteria. 
Depending on the Performance Criteria used to establish such Performance
Goals, the Performance Goals may be expressed in terms of overall Company
performance or the performance of a division, business unit, or an
individual.  The Committee, in its
discretion, may, within the time prescribed by Section 162(m) of the Code,
adjust or modify the calculation of Performance Goals for such Performance Period
in order to prevent the dilution or enlargement of the rights of Participants
(a) in the event of, or in anticipation of, any unusual or extraordinary
corporate item, transaction, event, or development, or (b) in recognition of,
or in anticipation of, any other unusual or nonrecurring events affecting the
Company, or the financial statements of the Company, or in response to, or in
anticipation of, changes in applicable laws, regulations, accounting
principles, or business conditions.


2.28         “Performance Period” means the one or more periods of
time, which may be of varying and overlapping durations, as the Committee may
select, over which the attainment of one or more Performance Goals will be
measured for the purpose of determining a Participant’s right to, and the
payment of, a Performance-Based Award.


2.29         “Performance Share” means a right granted to a
Participant pursuant to Section 8.1, to receive Shares, the payment of which is
contingent upon achieving certain Performance Goals or other performance-based
targets established by the Committee.


2.30         “Performance Stock Unit” means a right granted to a
Participant pursuant to Section 8.2, to receive Shares, the payment of which is
contingent upon achieving certain Performance Goals or other performance-based
targets established by the Committee.


2.31         “Prior Plans” means, collectively, the following
plans of the Company: the Unapproved Plan, the Approved Plan, the Unapproved
Schedule, the Sharesave Plan, the 2004 Stock Option Plan, the 2004 Employee
Stock Purchase Plan, the Approved Company Share Option Plan, the Unapproved
Company Share Option Plan, the Deputy Chairman’s Stock Option Plan and the 2005
Employment Incentive Plan, in each case as such plan may be amended from time
to time.



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2.32         “Plan” means this Xyratex Ltd 2006 Incentive Award
Plan, as it may be amended from time to time.


2.33         “Qualified Performance-Based Compensation” means any
compensation that is intended to qualify as “qualified performance-based
compensation” as described in Section 162(m)(4)(C) of the Code.


2.34         “Restricted Stock” means Shares awarded to a
Participant pursuant to Article 6 that are subject to certain restrictions and
may be subject to risk of forfeiture.


2.35         “Restricted Stock Unit” means an Award granted
pursuant to Section 8.6.


2.36         “Securities Act” shall mean the Securities Act of
1933, as amended.


2.37         “Shares” means the common shares of the Company or such
other securities of the Company that may be substituted for Shares pursuant to
Article 11.


2.38         “Stock Appreciation Right” or “SAR” means a
right granted pursuant to Article 7 to receive a payment equal to the excess of
the Fair Market Value of a specified number of Shares on the date the SAR is
exercised over the Fair Market Value on the date the SAR was granted as set
forth in the applicable Award Agreement.


2.39         “Stock Payment” means (a) a payment in the form of Shares,
or (b) an option or other right to purchase Shares, as part of any bonus,
deferred compensation or other arrangement, made in lieu of all or any portion
of the compensation, granted pursuant to Section 8.4.


2.40         “Subsidiary” means any “subsidiary corporation” as
defined in Section 424(f) of the Code and any applicable regulations
promulgated thereunder or any other entity of which a majority of the
outstanding voting shares or voting power is beneficially owned directly or
indirectly by the Company.


ARTICLE
3.


SHARES
SUBJECT TO THE PLAN


3.1           Number of Shares.


(a)           Subject to Article 11 and Section 3.1(b), the aggregate
number of Shares which may be issued or transferred pursuant to Awards under
the Plan or the Prior Plans following the Company’s initial public offering of
June 29, 2004 shall be 5,632,648 Shares. 
For the avoidance of doubt, no more than 5,632,648 Shares may be
delivered upon the exercise of Incentive Stock Options under the Plan.


(b)           To the extent that an Award, or an option or other award
under the Prior Plans, terminates, expires, or lapses for any reason, any Shares
subject to the Award or such option or other award shall again be available for
the grant of an Award pursuant to the Plan. 
Additionally, any Shares tendered or withheld to satisfy the grant or
exercise price or tax 



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withholding obligation pursuant to any Award,
or any option or other award under the Prior Plans, shall again be available
for the grant of an Award pursuant to the Plan. 
To the extent permitted by applicable law or any exchange rule, Shares
issued in assumption of, or in substitution for, any outstanding awards of any
entity acquired in any form of combination by the Company or any Subsidiary
shall not be counted against Shares available for grant pursuant to this
Plan.  The payment of Dividend
Equivalents in cash in conjunction with any outstanding Awards shall not be
counted against the Shares available for issuance under the Plan.  Notwithstanding the provisions of this
Section 3.1(b), no Shares may again be optioned, granted or awarded if such
action would cause an Incentive Stock Option to fail to qualify as an incentive
stock option under Section 422 of the Code.


3.2           Shares Distributed. 
Any Shares distributed pursuant to an Award may consist, in whole or in
part, of authorized and unissued Shares or Shares purchased on the open market.


3.3           Limitation on Number of Shares Subject to Awards.  Notwithstanding any provision in the Plan to
the contrary, and subject to Article 11, the maximum number of Shares with
respect to one or more Awards that may be granted to any one Participant during
any calendar year shall be 500,000 and the maximum amount that may be paid in
cash during any calendar year with respect to any Performance-Based Award
(including, without limitation, any Performance Bonus Award) shall be $2,000,000.


ARTICLE
4.


ELIGIBILITY
AND PARTICIPATION


4.1           Eligibility.  Each Eligible Individual shall be eligible to
be granted one or more Awards pursuant to the Plan.


4.2           Participation. 
Subject to the provisions of the Plan, the Committee may, from time to
time, select from among all Eligible Individuals, those to whom Awards shall be
granted and shall determine the nature and amount of each Award.  No Eligible Individual shall have any right
to be granted an Award pursuant to this Plan.


4.3           Foreign Participants.  In order to assure the viability of Awards
granted to Participants employed in foreign countries, the Committee may
provide for such special terms as it may consider necessary or appropriate to
accommodate differences in local law, tax policy, or custom.  Moreover, the Committee may approve such
supplements to, or amendments, restatements, or alternative versions of, the
Plan as it may consider necessary or appropriate for such purposes without
thereby affecting the terms of the Plan as in effect for any other purpose; provided, however, that no such supplements, amendments,
restatements, or alternative versions shall increase the Share limitations
contained in Section 3.1 of the Plan.


ARTICLE
5.


STOCK
OPTIONS


5.1           General.  The Committee is authorized to grant Options
to Participants on the following terms and conditions:



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(a)           Exercise Price. 
The exercise price per Share subject to an Option shall be determined by
the Committee and set forth in the Award Agreement.


(b)           Time and Conditions of Exercise.  The Committee shall determine the time or
times at which an Option may be exercised in whole or in part.  The Committee shall also determine the
performance or other conditions, if any, that must be satisfied before all or
part of an Option may be exercised.


(c)           Payment.  The
Committee shall determine the methods by which the exercise price of an Option
may be paid, the form of payment, including, without limitation: (i) cash, (ii)
promissory note bearing interest at no less than such rate as shall then
preclude the imputation of interest under the Code, (iii) Shares held for longer
than six months having a Fair Market Value on the date of delivery equal to the
aggregate exercise price of the Option or exercised portion thereof, or (iv)
other property acceptable to the Committee (including through the delivery of a
notice that the Participant has placed a market sell order with a broker with
respect to Shares then issuable upon exercise of the Option, and that the
broker has been directed to pay a sufficient portion of the net proceeds of the
sale to the Company in satisfaction of the Option exercise price; provided that payment of such proceeds is
then made to the Company upon settlement of such sale), and the methods by
which Shares shall be delivered or deemed to be delivered to Participants.  Notwithstanding any other provision of the
Plan to the contrary, no Participant who is a member of the Board or an “executive
officer” of the Company within the meaning of Section 13(k) of the Exchange Act
shall be permitted to pay the exercise price of an Option in any method which
would violate Section 13(k) of the Exchange Act.


(d)           Evidence of Grant. 
All Options shall be evidenced by an Award Agreement between the Company
and the Participant.  The Award Agreement
shall include such additional provisions as may be specified by the Committee.


5.2           Incentive Stock Options. 
Incentive Stock Options shall be granted only to Employees and the terms
of any Incentive Stock Options granted pursuant to the Plan, in addition to the
requirements of Section 5.1, must comply with the provisions of this Section 5.2.


(a)           Exercise Price. 
Subject to Section 5.2(d), the per share exercise price of an Incentive
Stock Option shall not be less than the Fair Market Value of a Share on the
date of grant.


(b)           Expiration. 
Subject to Section 5.2(d), an Incentive Stock Option shall expire and may
not be exercised to any extent by anyone after the first to occur of the
following events:


(i)            Ten years from the date it is granted, unless an earlier
time is set in the Award Agreement;


(ii)           Three months after the Participant’s termination of employment
as an Employee; and


(iii)          One year after the date of the Participant’s termination of
employment or service on account of Disability or death.  Upon the Participant’s Disability or 



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death, any Incentive Stock Options
exercisable at the Participant’s Disability or death may be exercised by the
Participant’s legal representative or representatives, by the person or persons
entitled to do so pursuant to the Participant’s last will and testament, or, if
the Participant fails to make testamentary disposition of such Incentive Stock
Option or dies intestate, by the person or persons entitled to receive the
Incentive Stock Option pursuant to the applicable laws of descent and
distribution.


(c)           Dollar Limitation. 
The aggregate Fair Market Value (determined as of the time the Option is
granted) of all Shares with respect to which Incentive Stock Options are first
exercisable by a Participant in any calendar year may not exceed $100,000 or
such other limitation as imposed by Section 422(d) of the Code, or any
successor provision.  To the extent that
Incentive Stock Options are first exercisable by a Participant in excess of
such limitation, the excess shall be considered Non-Qualified Stock Options.


(d)           Ten Percent Owners. 
An Incentive Stock Option shall be granted to any individual who, at the
date of grant, owns shares possessing more than ten percent of the total
combined voting power of all classes of shares of the Company only if such
Option is granted with a per share exercise price that is not less than 110% of
the Fair Market Value of a Share on the date of grant and the Option is
exercisable for no more than five years from the date of grant.


(e)           Notice of Disposition.  The Participant shall give the Company prompt
notice of any disposition of Shares acquired by exercise of an Incentive Stock
Option within (i) two years from the date of grant of such Incentive Stock
Option or (ii) one year after the transfer of such Shares to the Participant.


(f)            Right to Exercise. 
During a Participant’s lifetime, an Incentive Stock Option may be
exercised only by the Participant.


(g)           Failure to Meet Requirements.  Any Option (or portion thereof) purported to
be an Incentive Stock Option, which, for any reason, fails to meet the
requirements of Section 422 of the Code shall be considered a Non-Qualified
Stock Option.


5.3           Substitution of Stock Appreciation Rights.  The Committee may provide in the Award
Agreement evidencing the grant of an Option that the Committee, in its sole
discretion, shall have to right to substitute a Stock Appreciation Right for
such Option at any time prior to or upon exercise of such Option; provided, that such Stock Appreciation
Right shall be exercisable with respect to the same number of Shares for which
such substituted Option would have been exercisable.


ARTICLE
6.


RESTRICTED
STOCK AWARDS


6.1           Grant of Restricted Stock. 
The Committee is authorized to make Awards of Restricted Stock to any
Participant selected by the Committee in such amounts and subject to such terms
and conditions as determined by the Committee. 
All Awards of Restricted Stock shall be evidenced by an Award Agreement.



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6.2           Issuance and Restrictions. 
Restricted Stock shall be subject to such restrictions on
transferability and other restrictions as the Committee may impose (including,
without limitation, limitations on the right to vote Restricted Stock or the
right to receive dividends on the Restricted Stock).  These restrictions may lapse separately or in
combination at such times, pursuant to such circumstances, in such installments,
or otherwise, as the Committee determines at the time of the grant of the Award
or thereafter.


6.3           Forfeiture.  Except as otherwise determined by the
Committee at the time of the grant of the Award or thereafter, upon termination
of employment or service during the applicable restriction period, Restricted
Stock that is at that time subject to restrictions shall be forfeited and,
subject to the requirements of the Companies Act 1981 of Bermuda, repurchased
by the Company for an aggregate price of US$1.00; provided,
however, that, the Committee may (a) provide in any Restricted Stock
Award Agreement that restrictions or forfeiture conditions relating to
Restricted Stock will be waived in whole or in part in the event of
terminations resulting from specified causes, and (b) in other cases waive in
whole or in part restrictions or forfeiture conditions relating to Restricted
Stock.


6.4           Certificates for Restricted Stock.  Restricted Stock granted pursuant to the Plan
may be evidenced in such manner as the Committee shall determine.  If certificates representing shares of
Restricted Stock are registered in the name of the Participant, certificates
must bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Stock, and the Company may, at its
discretion, retain physical possession of the certificate until such time as
all applicable restrictions lapse.


ARTICLE
7.


STOCK
APPRECIATION RIGHTS


7.1           Grant of Stock Appreciation Rights.


(a)           A Stock Appreciation Right may be granted to any
Participant selected by the Committee.  A
Stock Appreciation Right shall be subject to such terms and conditions not
inconsistent with the Plan as the Committee shall impose and shall be evidenced
by an Award Agreement.


(b)           A Stock Appreciation Right shall entitle the Participant
(or other person entitled to exercise the Stock Appreciation Right pursuant to
the Plan) to exercise all or a specified portion of the Stock Appreciation
Right (to the extent then exercisable pursuant to its terms) and to receive
from the Company an amount equal to the product of (i) the excess of (A) the
Fair Market Value of a Share on the date the Stock Appreciation Right is
exercised over (B) the Fair Market Value of a Share on the date the Stock Appreciation
Right was granted and (ii) the number of Shares with respect to which the Stock
Appreciation Right is exercised, subject to any limitations the Committee may
impose.


7.2           Payment and Limitations on Exercise.


(a)           Subject to Sections 7.2(b) and 7.2(c), payment of the
amounts determined under Sections 7.1(b) above shall be in cash, in Shares
(based on its Fair Market Value as of the 



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date the Stock Appreciation Right is
exercised) or a combination of both, as determined by the Committee in the
Award Agreement.


(b)           To the extent payment for a Stock Appreciation Right is to
be made in cash, the Award Agreement shall, to the extent necessary to comply
with the requirements to Section 409A of the Code, specify the date of payment
which may be different than the date of exercise of the Stock Appreciation
Right.  If the date of payment for a
Stock Appreciation Right is later than the date of exercise, the Award
Agreement may specify that the Participant be entitled to earnings on such
amount until paid.


(c)           To the extent any payment under Section 7.1(b) is effected
in Shares, it shall be made subject to satisfaction of all provisions of
Article 5 above pertaining to Options.


ARTICLE
8.


OTHER
TYPES OF AWARDS


8.1           Performance Share Awards.  Any Participant selected by the Committee may
be granted one or more Performance Share awards which shall be denominated in a
number of Shares and which may be linked to any one or more of the Performance
Criteria or other specific performance criteria determined appropriate by the
Committee, in each case on a specified date or dates or over any period or
periods determined by the Committee.  In
making such determinations, the Committee shall consider (among such other
factors as it deems relevant in light of the specific type of award) the
contributions, responsibilities and other compensation of the particular
Participant.


8.2           Performance Stock Units.  Any Participant
selected by the Committee may be granted one or more Performance Stock Unit
awards which shall be denominated in unit equivalent of Shares and/or units of
value including dollar value of Shares and which may be linked to any one or
more of the Performance Criteria or other specific performance criteria
determined appropriate by the Committee, in each case on a specified date or
dates or over any period or periods determined by the Committee.  In making such determinations, the Committee
shall consider (among such other factors as it deems relevant in light of the
specific type of award) the contributions, responsibilities and other
compensation of the particular Participant.


8.3           Dividend Equivalents.


(a)           Any Participant selected by the Committee may be granted
Dividend Equivalents based on the dividends declared on the Shares that are
subject to any Award, to be credited as of dividend payment dates, during the
period between the date the Award is granted and the date the Award is
exercised, vests or expires, as determined by the Committee.  Such Dividend Equivalents shall be converted
to cash or additional Shares by such formula and at such time and subject to
such limitations as may be determined by the Committee.


(b)           Dividend Equivalents granted with respect to Options or
SARs that are intended to be Qualified Performance-Based Compensation shall be
payable, with respect to pre-exercise periods, regardless of whether such
Option or SAR is subsequently exercised.



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8.4           Stock Payments. 
Any Participant selected by the Committee may receive Stock Payments in
the manner determined from time to time by the Committee.  The number of shares shall be determined by
the Committee and may be based upon the Performance Criteria or other specific
performance criteria determined appropriate by the Committee, determined on the
date such Stock Payment is made or on any date thereafter.


8.5           Deferred Stock. 
Any Participant selected by the Committee may be granted an award of
Deferred Stock in the manner determined from time to time by the
Committee.  The number of shares of Deferred
Stock shall be determined by the Committee and may be linked to the Performance
Criteria or other specific performance criteria determined to be appropriate by
the Committee, in each case on a specified date or dates or over any period or
periods determined by the Committee.  Shares
underlying a Deferred Stock award will not be issued until the Deferred Stock
award has vested, pursuant to a vesting schedule or performance criteria set by
the Committee.  Unless otherwise provided
by the Committee, a Participant awarded Deferred Stock shall have no rights as a
Company shareholder with respect to such Deferred Stock until such time as the
Deferred Stock Award has vested and the Shares underlying the Deferred Stock
Award have been issued.


8.6           Restricted Stock Units.  The Committee is authorized to make Awards of
Restricted Stock Units to any Participant selected by the Committee in such
amounts and subject to such terms and conditions as determined by the
Committee.  At the time of grant, the
Committee shall specify the date or dates on which the Restricted Stock Units
shall become fully vested and nonforfeitable, and may specify such conditions
to vesting as it deems appropriate.  At
the time of grant, the Committee shall specify the maturity date applicable to
each grant of Restricted Stock Units which shall be no earlier than the vesting
date or dates of the Award and may be determined at the election of the
grantee.  On the maturity date, the
Company shall, subject to Section 10.5(b), issue to the Participant one
unrestricted, fully transferable Share for each Restricted Stock Unit scheduled
to be paid out on such date and not previously forfeited.


8.7           Performance Bonus Awards.  Any Participant selected by the Committee may
be granted one or more Performance-Based Awards in the form of a cash bonus (a “Performance
Bonus Award”) payable upon the attainment of Performance Goals that are
established by the Committee and relate to one or more of the Performance
Criteria, in each case on a specified date or dates or over any period or
periods determined by the Committee.  Any
such Performance Bonus Award paid to a Covered Employee shall be based upon
objectively determinable bonus formulas established in accordance with Article 9.


8.8           Term.  Except
as otherwise provided herein, the term of any Award of  Performance Shares, Performance Stock Units,
Dividend Equivalents, Stock Payments, Deferred Stock or Restricted Stock Units
shall be set by the Committee in its discretion.


8.9           Exercise or Purchase Price.  The Committee shall establish the exercise or
purchase price, if any, of any Award of Performance Shares, Performance Stock
Units, Deferred Stock, Stock Payments or Restricted Stock Units; provided, however, that such price shall not be less than
the par value of a Share on the date of grant, unless otherwise permitted by
applicable law.  The Committee shall
specify such exercise or purchase price in any Award Agreement.



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8.10         Exercise upon Termination of Employment or Service.  An Award of Performance Shares, Performance
Stock Units, Dividend Equivalents, Deferred Stock, Stock Payments and
Restricted Stock Units shall only be exercisable or payable while the
Participant is an Employee, Consultant or a member of the Board, as applicable;
provided, however, that the Committee in
its sole and absolute discretion may provide that an Award of Performance
Shares, Performance Stock Units, Dividend Equivalents, Stock Payments, Deferred
Stock or Restricted Stock Units may be exercised or paid subsequent to a
termination of employment or service, as applicable, or following a Change of
Control of the Company, or because of the Participant’s retirement, death or
disability, or otherwise; provided, however,
that any such provision with respect to Performance Shares or Performance Stock
Units shall be subject to the requirements of Section 162(m) of the Code that
apply to Qualified Performance-Based Compensation.


8.11         Form of Payment. 
Payments with respect to any Awards granted under this Article 8 shall
be made in cash, in Shares or a combination of both, as determined by the
Committee.


8.12         Award Agreement. 
All Awards under this Article 8 shall be subject to such additional
terms and conditions as determined by the Committee and shall be evidenced by an
Award Agreement.


ARTICLE
9.


PERFORMANCE-BASED
AWARDS


9.1           Purpose.  The purpose
of this Article 9 is to provide the Committee the ability to qualify Awards
other than Options and SARs and that are granted pursuant to Articles 6  and 8 as Qualified Performance-Based
Compensation.  If the Committee, in its
discretion, decides to grant a Performance-Based Award to a Covered Employee,
the provisions of this Article 9 shall control over any contrary provision
contained in Articles 6 or 8; provided, however,
that the Committee may in its discretion grant Awards to Covered Employees that
are based on Performance Criteria or Performance Goals but that do not satisfy
the requirements of this Article 9.


9.2           Applicability.  This
Article 9 shall apply only to those Covered Employees selected by the Committee
to receive Performance-Based Awards.  The
designation of a Covered Employee as a Participant for a Performance Period
shall not in any manner entitle the Participant to receive an Award for the
period.  Moreover, designation of a
Covered Employee as a Participant for a particular Performance Period shall not
require designation of such Covered Employee as a Participant in any subsequent
Performance Period and designation of one Covered Employee as a Participant
shall not require designation of any other Covered Employees as a Participant
in such period or in any other period.


9.3           Procedures with Respect to Performance-Based Awards.  To the extent necessary to comply with the
Qualified Performance-Based Compensation requirements of Section 162(m)(4)(C)
of the Code, with respect to any Award granted under Articles 6 or 8 which may
be granted to one or more Covered Employees, no later than ninety (90) days
following the commencement of any fiscal year in question or any other
designated fiscal period or period of 



 13
 






 



service (or such other time as may be
required or permitted by Section 162(m) of the Code), the Committee shall, in
writing, (a) designate one or more Covered Employees, (b) select the
Performance Criteria applicable to the Performance Period, (c) establish the
Performance Goals, and amounts of such Awards, as applicable, which may be
earned for such Performance Period, and (d) specify the relationship between
Performance Criteria and the Performance Goals and the amounts of such Awards,
as applicable, to be earned by each Covered Employee for such Performance
Period.  Following the completion of each
Performance Period, the Committee shall certify in writing whether the
applicable Performance Goals have been achieved for such Performance Period.  In determining the amount earned by a Covered
Employee, the Committee shall have the right to reduce or eliminate (but not to
increase) the amount payable at a given level of performance to take into
account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the Performance Period.


9.4           Payment of Performance-Based Awards.  Unless otherwise provided in the applicable
Award Agreement, a Participant must be employed by the Company or a Subsidiary
on the day a Performance-Based Award for such Performance Period is paid to the
Participant.  Furthermore, a Participant
shall be eligible to receive payment pursuant to a Performance-Based Award for
a Performance Period only if the Performance Goals for such period are
achieved.  In determining the amount
earned under a Performance-Based Award, the Committee may reduce or eliminate
the amount of the Performance-Based Award earned for the Performance Period, if
in its sole and absolute discretion, such reduction or elimination is
appropriate.


9.5           Additional Limitations.  Notwithstanding any other provision of the
Plan, any Award which is granted to a Covered Employee and is intended to
constitute Qualified Performance-Based Compensation shall be subject to any
additional limitations set forth in Section 162(m) of the Code (including any
amendment to Section 162(m) of the Code) or any regulations or rulings issued
thereunder that are requirements for qualification as qualified
performance-based compensation as described in Section 162(m)(4)(C) of the Code,
and the Plan shall be deemed amended to the extent necessary to conform to such
requirements.


ARTICLE
10.


PROVISIONS
APPLICABLE TO AWARDS


10.1         Stand-Alone and Tandem Awards.  Awards granted pursuant to the Plan may, in
the discretion of the Committee, be granted either alone, in addition to, or in
tandem with, any other Award granted pursuant to the Plan. Awards granted in
addition to or in tandem with other Awards may be granted either at the same
time as or at a different time from the grant of such other Awards.


10.2         Award Agreement. 
Awards under the Plan shall be evidenced by Award Agreements that set
forth the terms, conditions and limitations for each Award which may include
the term of an Award, the provisions applicable in the event the Participant’s
employment or service terminates, and the Company’s authority to unilaterally
or bilaterally amend, modify, suspend, cancel or rescind an Award.



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10.3         Limits on Transfer. 
No right or interest of a Participant in any Award may be pledged,
encumbered, or hypothecated to or in favor of any party other than the Company
or a Subsidiary, or shall be subject to any lien, obligation, or liability of
such Participant to any other party other than the Company or a
Subsidiary.  No Award shall be assigned,
transferred, or otherwise disposed of by a Participant other than by will or
the laws of descent and distribution.


10.4         Beneficiaries. 
Notwithstanding Section 10.3, a Participant may, in the manner
determined by the Committee, designate a beneficiary to exercise the rights of
the Participant and to receive any distribution with respect to any Award upon
the Participant’s death.  A beneficiary,
legal guardian, legal representative, or other person claiming any rights
pursuant to the Plan is subject to all terms and conditions of the Plan and any
Award Agreement applicable to the Participant, except to the extent the Plan
and Award Agreement otherwise provide, and to any additional restrictions
deemed necessary or appropriate by the Committee.  If the Participant is married and resides in
a community property state, a designation of a person other than the
Participant’s spouse as his or her beneficiary with respect to more than 50% of
the Participant’s interest in the Award shall not be effective without the
prior written consent of the Participant’s spouse.  If no beneficiary has been designated or
survives the Participant, payment shall be made to the person entitled thereto
pursuant to the Participant’s will or the laws of descent and
distribution.  Subject to the foregoing,
a beneficiary designation may be changed or revoked by a Participant at any
time provided the change or revocation is filed with the Committee.


10.5         Share Certificates;
Book Entry Procedures.


(a)           Notwithstanding
anything herein to the contrary, the Company shall not be required to issue or
deliver any certificates evidencing Shares pursuant to the exercise of any
Award, unless and until the Board has determined, with advice of counsel, that
the issuance and delivery of such certificates is in compliance with all
applicable laws, regulations of governmental authorities and, if applicable,
the requirements of any exchange on which the Shares are listed or traded.  All Share certificates delivered pursuant to
the Plan are subject to any stop-transfer orders and other restrictions as the
Committee deems necessary or advisable to comply with federal, state, or
foreign jurisdiction, securities or other laws, rules and regulations and the
rules of any national securities exchange or automated quotation system on
which the Shares are listed, quoted, or traded. 
The Committee may place legends on any Share certificate to reference
restrictions applicable to the Shares. 
In addition to the terms and conditions provided herein, the Board may
require that a Participant make such reasonable covenants, agreements, and
representations as the Board, in its discretion, deems advisable in order to
comply with any such laws, regulations, or requirements. The Committee shall
have the right to require any Participant
to comply with any timing or other restrictions with respect to the settlement
or exercise of any Award, including a window-period limitation, as may be
imposed in the discretion of the Committee.


(b)           Notwithstanding any other provision of the Plan, unless otherwise
determined by the Committee or required by any applicable law, rule or
regulation, the Company shall not deliver to any Participant certificates
evidencing Shares issued in connection with any Award and instead such Shares
shall be recorded in the books of the Company (or, as applicable, its transfer
agent or share plan administrator).



 15
 






 



 


10.6         Paperless Exercise. 
In the event that the Company establishes, for itself or using the
services of a third party, an automated system for the exercise of Awards, such
as a system using an internet website or interactive voice response, then the
paperless exercise of Awards by a Participant may be permitted through the use
of such an automated system.


ARTICLE
11.


CHANGES
IN CAPITAL STRUCTURE


11.1         Adjustments.  In the event of any stock
dividend, stock split, combination or exchange of shares, merger,
consolidation, spin-off, recapitalization or other distribution (other than
normal cash dividends) of Company assets to shareholders, or any other change
affecting the Shares or the Share price, the Committee shall make such
proportionate adjustments, if any, as the Committee in its discretion may deem
appropriate to reflect such change with respect to (a) the aggregate number and
type of shares that may be issued under the Plan (including, but not limited
to, adjustments of the limitations in Sections 3.1 and 3.3); (b) the terms and
conditions of any outstanding Awards (including, without limitation, any
applicable performance targets or criteria with respect thereto); and (c) the
grant or exercise price per share for any outstanding Awards under the
Plan.  Any adjustment affecting an Award
intended as Qualified Performance-Based Compensation shall be made consistent
with the requirements of Section 162(m) of the Code.


11.2         Acceleration Upon a Change of Control.  If a Change of Control occurs and a
Participant’s Awards are not converted, assumed, or replaced by a successor,
such Awards shall become fully exercisable and all forfeiture restrictions on
such Awards shall lapse.  Upon, or in
anticipation of, a Change of Control, the Committee may cause any and all
Awards outstanding hereunder to terminate at a specific time in the future and
shall give each Participant the right to exercise such Awards during a period
of time as the Committee, in its sole and absolute discretion, shall
determine.  In the event that the terms
of any agreement between the Company or any Subsidiary or affiliate and a
Participant contains provisions that conflict with and are more restrictive than
the provisions of this Section 11.2, this Section 11.2 shall prevail and
control and the more restrictive terms of such agreement (and only such terms)
shall be of no force or effect.


11.3         Outstanding Awards — Certain Amalgamations.  Subject to any required action by the
shareholders of the Company, in the event that the Company shall be the
surviving corporation in any amalgamation or other such re-organisation (except
an amalgamation or other such re-organisation as a result of which the holders
of Shares receive securities of another corporation), each Award outstanding on
the date of such amalgamation or other such re-organisation shall pertain to
and apply to the securities that a holder of the number of Shares subject to
such Award would have received in such amalgamation or other such
re-organisation.


11.4         Outstanding Awards — Other Changes.  In the event of any other change in the
capitalization of the Company or corporate change other than those specifically
referred to in this Article 11, the Committee may, in its absolute discretion,
make such adjustments in the number and class of shares subject to Awards
outstanding on the date on which such change occurs and 



 16
 






 



in the per share grant or exercise price of
each Award as the Committee may consider appropriate to prevent dilution or
enlargement of rights.


11.5         No Other Rights. 
Except as expressly provided in the Plan, no Participant shall have any
rights by reason of any subdivision or consolidation of shares of any class,
the payment of any dividend, any increase or decrease in the number of shares
of any class or any dissolution, liquidation, merger, or consolidation of the
Company or any other corporation.  Except
as expressly provided in the Plan or pursuant to action of the Committee under
the Plan, no issuance by the Company of Shares of any class, or securities
convertible into shares of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number of Shares subject to an Award
or the grant or exercise price of any Award.


ARTICLE
12.


ADMINISTRATION


12.1         Committee.  Unless and
until the Board delegates administration of the Plan to a Committee as set
forth below, the Plan shall be administered by the Board, which shall, in any
event, constitute the “Committee” for the purposes of this Plan.  The Board, at its discretion or as otherwise
necessary to comply with the requirements of Section 162(m) of the Code, Rule
16b-3 promulgated under the Exchange Act or to the extent required by any other
applicable rule or regulation, shall delegate administration of the Plan to a
Committee.  The Committee shall consist
solely of two or more members of the Board each of whom is an “outside
director,” within the meaning of Section 162(m) of the Code, a Non-Employee
Director and an Independent Director. 
Notwithstanding the foregoing: (a) the Board, acting by a majority of
its members in office, shall conduct the general administration of the Plan
with respect to all Awards granted to Independent Directors and for purposes of
such Awards the term “Committee” as used in this Plan shall be deemed to refer
to the Board and (b) the Committee may delegate its authority hereunder to the
extent permitted by Section 12.5. 
Appointment of Committee members shall be effective upon acceptance of
appointment.  In its sole discretion, the
Board may at any time and from time to time exercise any and all rights and
duties of the Committee under the Plan except with respect to matters which
under Rule 16b-3 under the Exchange Act or Section 162(m) of the Code, or
any regulations or rules issued thereunder, are required to be determined in
the sole discretion of the Committee.  Committee
members may resign at any time by delivering written notice to the Board.  Vacancies in the Committee may only be filled
by the Board.  If administration is
delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
including the power to delegate to a subcommittee any of the administrative
powers the Committee is authorized to exercise (and references in this Plan to
the Board shall thereafter be to the Committee or subcommittee), subject,
however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board.


12.2         Action by the Committee. 
A majority of the Committee shall constitute a quorum.  The acts of a majority of the members present
at any meeting at which a quorum is present, and acts approved in writing by a
majority of the Committee in lieu of a meeting, shall 



 17
 






 



be deemed the acts of the Committee.  Each member of the Committee is entitled to,
in good faith, rely or act upon any report or other information furnished to
that member by any officer or other employee of the Company or any Subsidiary,
the Company’s independent certified public accountants, or any executive
compensation consultant or other professional retained by the Company to assist
in the administration of the Plan.


12.3         Authority of Committee. 
Subject to any specific designation in the Plan, the Committee has the
exclusive power, authority and discretion to:


(a)           Designate Participants to receive Awards;


(b)           Determine the type or types of Awards to be granted to
each Participant;


(c)           Determine the number of Awards to be granted and the
number of Shares to which an Award will relate;


(d)           Determine the terms and conditions of any Award granted
pursuant to the Plan, including, but not limited to, the exercise price, grant
price, or purchase price, any reload provision, any restrictions or limitations
on the Award, any schedule for lapse of forfeiture restrictions or restrictions
on the exercisability of an Award, and accelerations or waivers thereof, any
provisions related to non-competition and recapture of gain on an Award, based
in each case on such considerations as the Committee in its sole discretion
determines; provided, however,
that the Committee shall not have the authority to accelerate the vesting or
waive the forfeiture of any Performance-Based Awards;


(e)           Determine whether, to what extent, and pursuant to what
circumstances an Award may be settled in, or the exercise price of an Award may
be paid in, cash, Shares, other Awards, or other property, or an Award may be
canceled, forfeited, or surrendered;


(f)            Prescribe the form of each Award Agreement, which need
not be identical for each Participant;


(g)           Decide all other matters that must be determined in
connection with an Award;


(h)           Establish, adopt, or revise any rules and regulations as
it may deem necessary or advisable to administer the Plan;


(i)            Interpret the terms of, and any matter arising pursuant
to, the Plan or any Award Agreement; and


(j)            Make all other decisions and determinations that may be
required pursuant to the Plan or as the Committee deems necessary or advisable
to administer the Plan.


12.4         Decisions Binding. 
The Committee’s interpretation of the Plan, any Awards granted pursuant
to the Plan, any Award Agreement and all decisions and determinations by the
Committee with respect to the Plan are final, binding, and conclusive on all
parties.



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12.5         Delegation of Authority.  To the extent permitted by applicable law,
the Committee may from time to time delegate to a committee of one or more
members of the Board or one or more officers of the Company the authority to
grant or amend Awards to Participants other than (a) senior executives of the
Company who are subject to Section 16 of the Exchange Act, (b) Covered
Employees, or (c) officers of the Company (or members of the Board) to whom
authority to grant or amend Awards has been delegated hereunder.  Any delegation hereunder shall be subject to
the restrictions and limits that the Committee specifies at the time of such
delegation, and the Committee may at any time rescind the authority so
delegated or appoint a new delegatee.  At
all times, the delegatee appointed under this Section 12.5 shall serve in such
capacity at the pleasure of the Committee.


ARTICLE
13.


EFFECTIVE
AND EXPIRATION DATE


13.1         Effective Date.  The
Plan is effective as of the date the Plan is approved by the Company’s shareholders
(the “Effective Date”).  The Plan
will be deemed to be approved by the shareholders if it receives the
affirmative vote of the holders of a simple majority of all issued voting shares
of the Company in accordance with the applicable provisions of the Company’s Bye-laws.


13.2         Expiration Date.  The
Plan will expire on, and no Award may be granted pursuant to the Plan after the
tenth anniversary of the Effective Date, except that no Incentive Stock Options
may be granted under the Plan after the earlier of the tenth anniversary of (i)
the date the Plan is approved by the Board or (ii) the Effective Date.  Any Awards that are outstanding on the tenth
anniversary of the Effective Date shall remain in force according to the terms
of the Plan and the applicable Award Agreement.


ARTICLE
14.


AMENDMENT,
MODIFICATION, AND TERMINATION


14.1         Amendment, Modification, and Termination.  Subject to Section 15.14, with the approval
of the Board, at any time and from time to time, the Committee may terminate,
amend or modify the Plan; provided, however,
that (a) to the extent necessary and desirable to comply with any applicable
law, regulation, or stock exchange rule, the Company shall obtain shareholder
approval of any Plan amendment in such a manner and to such a degree as
required, and (b) shareholder approval is required for any amendment to the
Plan that (i) increases the number of Shares available under the Plan (other
than any adjustment as provided by Article 11), (ii) permits the Committee to
grant Options with an exercise price that is below Fair Market Value on the
date of grant, or (iii) permits the Committee to extend the exercise period for
an Option beyond ten years from the date of grant.  Notwithstanding any provision in this Plan to
the contrary, absent approval of the shareholders of the Company, no Option may
be amended to reduce the per share exercise price of the shares subject to such
Option below the per share exercise price as of the date the Option is granted
and, except as permitted by Article 11, no Option may be granted in exchange
for, or in connection with, the cancellation or surrender of an Option having a
higher per share exercise price.



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14.2         Awards Previously Granted. 
Except with respect to amendments made 
pursuant to Section 15.14, no termination, amendment, or modification of
the Plan shall adversely affect in any material way any Award previously
granted pursuant to the Plan without the prior written consent of the Participant.


ARTICLE
15.


GENERAL
PROVISIONS


15.1         No Rights to Awards. 
No Eligible Individual or other person shall have any claim to be
granted any Award pursuant to the Plan, and neither the Company nor the
Committee is obligated to treat Eligible Individuals, Participants or any other
persons uniformly.


15.2         No Shareholders Rights. 
Except as otherwise provided herein, a Participant shall have none of
the rights of a shareholder with respect to Shares covered by any Award until
the Participant becomes the record owner of such Shares.


15.3         Withholding.  The
Company or any Subsidiary shall have the authority and the right to deduct or
withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state, local and foreign taxes (including the
Participant’s employment tax obligations) required by law to be withheld with
respect to any taxable event concerning a Participant arising as a result of
this Plan.  The Committee may in its
discretion and in satisfaction of the foregoing requirement allow a Participant
to elect to have the Company withhold Shares otherwise issuable under an Award
(or allow the return of Shares) having a Fair Market Value equal to the sums
required to be withheld.  Notwithstanding
any other provision of the Plan, the number of Shares which may be withheld
with respect to the issuance, vesting, exercise or payment of any Award (or
which may be repurchased from the Participant of such Award within six months
(or such other period as may be determined by the Committee) after such Shares
were acquired by the Participant from the Company) in order to satisfy the
Participant’s federal, state, local and foreign income and payroll tax
liabilities with respect to the issuance, vesting, exercise or payment of the
Award shall be limited to the number of shares which have a Fair Market Value
on the date of withholding or repurchase equal to the aggregate amount of such
liabilities based on the minimum statutory withholding rates for federal,
state, local and foreign income tax and payroll tax purposes that are
applicable to such supplemental taxable income.


15.4         No Right to Employment or Services.  Nothing in the Plan or any Award Agreement
shall interfere with or limit in any way the right of the Company or any Subsidiary
to terminate any Participant’s employment or services at any time, nor confer
upon any Participant any right to continue in the employ or service of the
Company or any Subsidiary.


15.5         Unfunded Status of Awards. 
The Plan is intended to be an “unfunded” plan for incentive
compensation.  With respect to any
payments not yet made to a Participant pursuant to an Award, nothing contained
in the Plan or any Award Agreement shall give the Participant any rights that
are greater than those of a general creditor of the Company or any Subsidiary.



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15.6         Indemnification.  To
the extent allowable pursuant to applicable law, each member of the Committee
or of the Board shall be indemnified and held harmless by the Company from any
loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by such member in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action or failure to act pursuant to the Plan and
against and from any and all amounts paid by him or her in satisfaction of
judgment in such action, suit, or proceeding against him or her; provided he or she gives the Company an opportunity, at its
own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf. 
The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled pursuant
to the Company’s Memorandum and Articles of Association or Bye-laws, as a
matter of law, or otherwise, or any power that the Company may have to
indemnify them or hold them harmless.


15.7         Relationship to other Benefits.  No payment pursuant to the Plan shall be
taken into account in determining any benefits pursuant to any pension,
retirement, savings, profit sharing, group insurance, welfare or other benefit
plan of the Company or any Subsidiary except to the extent otherwise expressly
provided in writing in such other plan or an agreement thereunder.


15.8         Expenses.  The
expenses of administering the Plan shall be borne by the Company and its
Subsidiaries.


15.9         Titles and Headings. 
The titles and headings of the Sections in the Plan are for convenience
of reference only and, in the event of any conflict, the text of the Plan,
rather than such titles or headings, shall control.


15.10       Fractional Shares.  No
fractional Shares shall be issued and the Committee shall determine, in its
discretion, whether cash shall be given in lieu of fractional shares or whether
such fractional shares shall be eliminated by rounding up or down as
appropriate.


15.11       Limitations Applicable to Section 16 Persons.  Notwithstanding any other provision of the
Plan, the Plan, and any Award granted or awarded to any Participant who is then
subject to Section 16 of the Exchange Act, shall be subject to any additional
limitations set forth in any applicable exemptive rule under Section 16 of the
Exchange Act (including any amendment to Rule 16b-3 under the Exchange Act)
that are requirements for the application of such exemptive rule.  To the extent permitted by applicable law,
the Plan and Awards granted or awarded hereunder shall be deemed amended to the
extent necessary to conform to such applicable exemptive rule.


15.12       Government and Other Regulations.  The obligation of the Company to make payment
of awards in Shares or otherwise shall be subject to all applicable laws,
rules, and regulations, and to such approvals by government agencies as may be
required.  The Company shall be under no
obligation to register pursuant to the Securities Act, as amended, any of the Shares
paid pursuant to the Plan.  If the shares
paid pursuant to the Plan may in certain circumstances be exempt from
registration pursuant to the Securities Act, as amended, the 



 21
 






 



Company may restrict the transfer of such
shares in such manner as it deems advisable to ensure the availability of any
such exemption.


15.13       Governing Law.  The
Plan and all Award Agreements shall be construed in accordance with and
governed by the laws of the State of California.


15.14       Section 409A.  To the extent that the Committee determines
that any Award granted under the Plan is subject to Section 409A of the Code,
the Award Agreement evidencing such Award shall incorporate the terms and
conditions required by Section 409A of the Code.  To the extent applicable, the Plan and Award Agreements shall be
interpreted in accordance with Section 409A of the Code and Department of
Treasury regulations and other interpretive guidance issued thereunder,
including without limitation any such regulations or other guidance that may be
issued after the Effective Date. 
Notwithstanding any provision of the Plan to the contrary, in the event
that following the Effective Date the Committee determines that any Award may
be subject to Section 409A of the Code and related Department of Treasury
guidance (including such Department of Treasury guidance as may be issued after
the Effective Date), the Committee may adopt such amendments to the Plan and
the applicable Award Agreement or adopt other policies and procedures
(including amendments, policies and procedures with retroactive effect), or
take any other actions, that the Committee determines are necessary or
appropriate to (a) exempt the Award from Section 409A of the Code and/or
preserve the intended tax treatment of the benefits provided with respect to
the Award, or (b) comply with the requirements of Section 409A of the Code and
related Department of Treasury guidance.


 



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