exv10w1



 




EXHIBIT 10.1




COVANTA HOLDING CORPORATION




EQUITY AWARD PLAN FOR EMPLOYEES AND OFFICERS











 




TABLE OF CONTENTS




	 	 	 	 	 	 	 	 
	 	 	 	 	Page	
	 	 	 	 	 	
	
    
    Section 1.

    	 	
    Purpose; Definitions	 	 	B-1	 
	 	
    
    (a)

    	 	
    “Administrator”	 	 	B-1	 
	 	
    
    (b)

    	 	
    “Affiliate”	 	 	B-1	 
	 	
    
    (c)

    	 	
    “Applicable Laws”	 	 	B-1	 
	 	
    
    (d)

    	 	
    “Award”	 	 	B-1	 
	 	
    
    (e)

    	 	
    “Award Agreement”	 	 	B-1	 
	 	
    
    (f)

    	 	
    “Board”	 	 	B-1	 
	 	
    
    (g)

    	 	
    “Cause”	 	 	B-1	 
	 	
    
    (h)

    	 	
    “Code”	 	 	B-1	 
	 	
    
    (i)

    	 	
    “Committee”	 	 	B-1	 
	 	
    
    (j)

    	 	
    “Common Stock”	 	 	B-1	 
	 	
    
    (k)

    	 	
    “Company”	 	 	B-1	 
	 	
    
    (l)

    	 	
    “Director”	 	 	B-1	 
	 	
    
    (m)

    	 	
    “Disability”	 	 	B-1	 
	 	
    
    (n)

    	 	
    “Effective Date”	 	 	B-1	 
	 	
    
    (o)

    	 	
    “Employee”	 	 	B-2	 
	 	
    
    (p)

    	 	
    “Exchange Act”	 	 	B-2	 
	 	
    
    (q)

    	 	
    “Fair Market Value”	 	 	B-2	 
	 	
    
    (r)

    	 	
    “Incentive Stock Option”	 	 	B-2	 
	 	
    
    (s)

    	 	
    “Mature Shares”	 	 	B-2	 
	 	
    
    (t)

    	 	
    “Non-Qualified Stock Option”	 	 	B-2	 
	 	
    
    (u)

    	 	
    “Officer”	 	 	B-2	 
	 	
    
    (v)

    	 	
    “Option”	 	 	B-2	 
	 	
    
    (w)

    	 	
    “Participant”	 	 	B-2	 
	 	
    
    (x)

    	 	
    “Performance Award”	 	 	B-2	 
	 	
    
    (y)

    	 	
    “Plan”	 	 	B-2	 
	 	
    
    (z)

    	 	
    “Recipient”	 	 	B-2	 
	 	
    
    (aa)

    	 	
    “Restricted Stock”	 	 	B-2	 
	 	
    
    (bb)

    	 	
    “Retirement”	 	 	B-2	 
	 	
    
    (cc)

    	 	
    “Service Provider”	 	 	B-3	 
	 	
    
    (dd)

    	 	
    “Stock Appreciation Right”	 	 	B-3	 
	 	
    
    (ee)

    	 	
    “Share”	 	 	B-3	 
	 	
    
    (ff)

    	 	
    “Subsidiary”	 	 	B-3	 
	
    
    Section 2.
    

    	 	
    Stock Subject to the Plan	 	 	B-3	 
	
    
    Section 3.
    

    	 	
    Administration of the Plan	 	 	B-3	 
	 	
    
    (a)

    	 	
    Administration	 	 	B-3	 
	 	
    
    (b)

    	 	
    Powers of the Committee	 	 	B-3	 
	
    
    Section 4.
    

    	 	
    Eligibility for Awards	 	 	B-4	 
	
    
    Section 5.
    

    	 	
    Limitations on Options	 	 	B-4	 
	
    
    Section 6.
    

    	 	
    Term of Plan	 	 	B-4	 
	
    
    Section 7.
    

    	 	
    Term of Option	 	 	B-4	 




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	 	 	 	 	Page	
	 	 	 	 	 	
	
    
    Section 8.
    

    	 	
    Option Exercise Price and Consideration	 	 	B-5	 
	 	
    
    (a)

    	 	
    Exercise Price	 	 	B-5	 
	 	
    
    (b)

    	 	
    Waiting Period and Exercise Dates	 	 	B-5	 
	 	
    
    (c)

    	 	
    Form of Consideration	 	 	B-5	 
	
    
    Section 9.
    

    	 	
    Exercise of Option	 	 	B-5	 
	 	
    
    (a)

    	 	
    Procedure for Exercise; Rights as a Stockholder	 	 	B-5	 
	 	
    
    (b)

    	 	
    Termination of Relationship as Employee or Officer	 	 	B-6	 
	 	
    
    (c)

    	 	
    Disability of Recipient	 	 	B-6	 
	 	
    
    (d)

    	 	
    Death of Recipient	 	 	B-7	 
	 	
    
    (e)

    	 	
    Retirement of Recipient	 	 	B-7	 
	 	
    
    (f)

    	 	
    Cash out Provisions	 	 	B-8	 
	
    
    Section 10.
    

    	 	
    Restricted Stock	 	 	B-8	 
	 	
    
    (a)

    	 	
    Awards of Restricted Stock	 	 	B-8	 
	 	
    
    (b)

    	 	
    Awards and Certificates	 	 	B-8	 
	 	
    
    (c)

    	 	
    Terms and Conditions	 	 	B-8	 
	 	
    
    (d)

    	 	
    Other Provisions	 	 	B-9	 
	
    
    Section 11.
    

    	 	
    Deferral of Stock Award	 	 	B-9	 
	
    
    Section 12.
    

    	 	
    Other Awards	 	 	B-10	 
	 	
    
    (a)

    	 	
    Stock Appreciation Right	 	 	B-10	 
	 	
    
    (b)

    	 	
    Performance Award	 	 	B-10	 
	 	
    
    (c)

    	 	
    Other Stock-Based Awards	 	 	B-10	 
	
    
    Section 13.
    

    	 	
    Non-Transferability of Awards	 	 	B-10	 
	
    
    Section 14.
    

    	 	
    Adjustments Upon Changes in Capitalization	 	 	B-11	 
	
    
    Section 15.
    

    	 	
    Date of Grant	 	 	B-11	 
	
    
    Section 16.
    

    	 	
    Term; Amendment and Termination of the Plan	 	 	B-11	 
	 	
    
    (a)

    	 	
    Amendment and Termination	 	 	B-11	 
	 	
    
    (b)

    	 	
    Stockholder Approval	 	 	B-11	 
	 	
    
    (c)

    	 	
    Effect of Amendment or Termination	 	 	B-11	 
	
    
    Section 17.
    

    	 	
    Conditions Upon Issuance of Shares	 	 	B-11	 
	 	
    
    (a)

    	 	
    Legal Compliance	 	 	B-11	 
	 	
    
    (b)

    	 	
    Withholding Obligations	 	 	B-12	 
	 	
    
    (c)

    	 	
    Inability to Obtain Authority	 	 	B-12	 
	 	
    
    (d)

    	 	
    Grants Exceeding Allotted Shares	 	 	B-12	 
	
    
    Section 18.
    

    	 	
    General Provisions	 	 	B-12	 
	 	
    
    (a)

    	 	
    Term of Plan	 	 	B-12	 
	 	
    
    (b)

    	 	
    No Contract of Employment	 	 	B-12	 
	 	
    
    (c)

    	 	
    Severability	 	 	B-12	 
	 	
    
    (d)

    	 	
    Governing Law	 	 	B-12	 
	 	
    
    (e)

    	 	
    Dividends	 	 	B-12	 
	 	
    
    (f)

    	 	
    Prohibition on Loans to Participants	 	 	B-12	 
	 	
    
    (g)

    	 	
    Performance-Based Compensation	 	 	B-12	 
	 	
    
    (h)

    	 	
    Unfunded Status of Plan	 	 	B-13	 
	 	
    
    (i)

    	 	
    Liability of Committee Members	 	 	B-13	 




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DANIELSON HOLDING CORPORATION EQUITY AWARD PLAN FOR




EMPLOYEES AND OFFICERS



     
Section 1.     Purpose;
Definitions.



     
The purposes of this Plan are to promote the interests of the
Company (including any Subsidiaries and Affiliates) and its
stockholders by using equity interests in the Company to
attract, retain and motivate its management and other eligible
persons and to encourage and reward their contributions to the
Company’s performance and profitability.



     
The following capitalized terms shall have the following
respective meanings when used in this Plan:






		
	 	     
    (a) “Administrator” means the Board or any
    one of its Committees as shall be administering the Plan, in
    accordance with Section 3 of the Plan.
	 
	 	     
    (b) “Affiliate” means any corporation or
    other entity controlled by the Company and designated by the
    Committee as such.
	 
	 	     
    (c) “Applicable Laws” means the legal
    requirements relating to the administration of plans providing
    one or more of the types of Awards described in the Plan and the
    issuance of Shares thereunder pursuant to U.S. state
    corporate laws, U.S. federal and state securities laws, the
    Code and the applicable laws of any foreign country or
    jurisdiction where Awards are, or will be, granted under the
    Plan.
	 
	 	     
    (d) “Award” means a grant of an Option,
    Restricted Stock, stock appreciation right or other stock-based
    Award under the Plan, all on a stand alone, combination or
    tandem basis, as described in or granted under the Plan.
	 
	 	     
    (e) “Award Agreement” means a written
    agreement between the Company and a Participant evidencing the
    terms and conditions of an individual Award. The Award Agreement
    is subject to the terms and conditions of the Plan.
	 
	 	     
    (f) “Board” means the Board of Directors
    of the Company.
	 
	 	     
    (g) “Cause” shall mean, unless otherwise
    determined by the Committee, (i) the conviction of the
    Recipient for committing, or entering a plea of nolo contendere
    by the Recipient with respect to, a felony under federal or
    state law or a crime involving moral turpitude; (ii) the
    commission of an act of personal dishonesty or fraud involving
    personal profit in connection with the Recipient’s
    employment by the Company; (iii) the willful misconduct,
    gross negligence or deliberate failure on the part of the
    Recipient to perform his or her employment duties with the
    Company in any material respect; or (iv) the failure to
    comply with Company policies or agreements with the Company, in
    any material respect.
	 
	 	     
    (h) “Code” means the Internal Revenue Code
    of 1986, as amended or replaced from time to time.
	 
	 	     
    (i) “Committee” means the
    Compensation Committee of the Board, or another committee
    appointed by the Board to administer the Plan, in accordance
    with Section 3 of the Plan.
	 
	 	     
    (j) “Common Stock” means the common stock,
    par value $.10, of the Company.
	 
	 	     
    (k) “Company” means Danielson Holding
    Corporation, a Delaware corporation.
	 
	 	     
    (l) “Director” means a director serving on
    the Board of the Company who is not also an employee of the
    Company or any Subsidiary or Affiliate thereof; who has not been
    an employee of the Company during the taxable year or an officer
    of the Company at any time; and who has been duly elected to the
    Board by the stockholders of the Company or by the Board under
    applicable corporate law. Neither service as a Director nor
    payment of a director’s fee by the Company shall, without
    more, constitute “employment” by the Company.
	 
	 	     
    (m) “Disability” means permanent and total
    disability as determined under procedures established by the
    Committee for the purposes of the Plan.
	 
	 	     
    (n) “Effective Date” means the date
    described in Section 18(a) of the Plan.



B-1







 






		
	 	     
    (o) “Employee” means any common-law
    employee of the Company or a Subsidiary or Affiliate of the
    Company, including Officers employed by the Company or any
    Subsidiary or Affiliate of the Company. Neither service as a
    Director nor payment of a director’s fee by the Company
    shall, without more, constitute “employment” by the
    Company.
	 
	 	     
    (p) “Exchange Act” means the Securities
    Exchange Act of 1934, as amended from time to time, and any
    successor thereto, or the rules and regulations promulgated
    thereunder.
	 
	 	     
    (q) “Fair Market Value” means, as of any
    date, the value of Common Stock determined as follows:






		
	 	     
    (i) If the Common Stock is listed on the American Stock
    Exchange Composite Tape, its Fair Market Value shall be either
    the mean of the highest and lowest reported sale prices of the
    stock (or, if no sales were reported, the average of the closing
    bid and asked price) or the last reported sales price of the
    stock, as determined by the Committee in its discretion, on the
    American Stock Exchange for any given day or, if not listed on
    such exchange, on any other national securities exchange on
    which the Common Stock is listed or on the NASDAQ Stock Market
    as reported in The Wall Street Journal or such other source as
    the Committee deems reliable;
	 
	 	     
    (ii) If the Common Stock is regularly quoted by a
    recognized securities dealer but selling prices are not
    reported, the Fair Market Value of a Share of Common Stock shall
    be either the mean between the high bid and low asked prices or
    the last asked price, as determined by the Committee for the
    Common Stock on any given day, as reported in The Wall Street
    Journal or such other source as the Committee deems reliable;
	 
	 	     
    (iii) In the absence of an established regular public
    market for the Common Stock, the Fair Market Value shall be
    determined in good faith by the Committee and, with respect to
    an Incentive Stock Option, in accordance with such regulations
    as may be issued under the Code; provided that with
    respect to an individual described in Section 8(a)(i)(A)
    hereof, this Section 1(q)(iii) shall not be available if
    the resulting price fails to represent the Fair Market Value of
    the stock on the date of grant as determined in accordance with
    Sections 1(q)(i) or (ii) above.






		
	 	     
    (r) “Incentive Stock Option” means an
    Option intended to qualify as an incentive stock option within
    the meaning of Section 422 of the Code and the regulations
    promulgated thereunder.
	 
	 	     
    (s) “Mature Shares” means any shares held
    by the Recipient for a minimum period of 6 months.
	 
	 	     
    (t) “Non-Qualified Stock Option” means any
    Option that is not an Incentive Stock Option.
	 
	 	     
    (u) “Officer” unless otherwise noted
    herein, means a person who is an officer of the Company or a
    Subsidiary or Affiliate.
	 
	 	     
    (v) “Option” means a stock option granted
    pursuant to the Plan.
	 
	 	     
    (w) “Participant” means an Employee or
    Officer who holds an outstanding Award.
	 
	 	     
    (x) “Performance Award” means an Award
    granted pursuant to Section 11(b) of the Plan.
	 
	 	     
    (y) “Plan” means this Equity Award Plan.
	 
	 	     
    (z) “Recipient” means an Employee or
    Officer who holds an outstanding Award.
	 
	 	     
    (aa) “Restricted Stock” means shares of
    Common Stock acquired pursuant to an Award granted pursuant to
    Section 10 of the Plan.
	 
	 	     
    (bb) “Retirement” means a Service
    Provider’s retirement from active employment with the
    Company or any Subsidiary or Affiliate as determined under a
    pension plan of the Company or any Subsidiary or Affiliate
    applicable to the Service Provider; or the Service
    Provider’s termination of employment at or after
    age 55 under circumstances that the Committee, in its sole
    discretion, deems equivalent to retirement.



B-2







 






		
	 	     
    (cc) “Service Provider” means an Employee
    or Officer. A Service Provider who is an Employee shall not
    cease to be a Service Provider (i) during any leave of
    absence approved by the Company; provided that, for
    purposes of Incentive Stock Options, no such leave may exceed
    ninety (90) days, unless reemployment upon expiration of
    such leave is guaranteed by statute or contract; or (ii) as
    a result of transfers between locations of the Company or
    between the Company and any Subsidiary or Affiliate. If
    reemployment upon expiration of a leave of absence approved by
    the Company is not guaranteed by statute or contract, then on
    the 91st day of such leave any Incentive Stock Option held
    by the Recipient shall cease to be treated as an Incentive Stock
    Option and shall be treated for tax purposes as a Non-Qualified
    Stock Option.
	 
	 	     
    (dd) “Stock Appreciation Right” means an
    Award granted pursuant to Section 11(a) of the Plan.
	 
	 	     
    (ee) “Share” means a share of the Common
    Stock, as adjusted in accordance with Section 14 of the
    Plan.
	 
	 	     
    (ff) “Subsidiary” means a “subsidiary
    corporation,” whether now or hereafter existing, as defined
    in Section 424(f) of the Code.



     
Section 2.     Stock
Subject to the Plan.



     
Subject to the provisions of Section 14 of the Plan, the
maximum aggregate number of Shares available for grants of
Awards under the Plan is 6,000,000 Shares. The maximum aggregate
number of Incentive Stock Options that may be issued under the
Plan is 6,000,000. The Shares subject to an Award under the Plan
may be authorized but unissued, or reacquired Common Stock or
treasury shares. Except as otherwise provided in Section 14
of the Plan, no Recipient may be granted Awards in any calendar
year with respect to more than 300,000 Shares. In
determining the number of Shares with respect to which a
Recipient may be granted an Award in any calendar year, any
Award which is cancelled shall count against the maximum number
of Shares for which an Award may be granted to a Recipient.



     
If an Award expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject
thereto shall become available for future grant or sale under
the Plan (unless the Plan has terminated); provided,
however, that Shares that have actually been issued under
the Plan, whether upon exercise of an Option or other Award,
shall not be returned to the Plan and shall not become available
for future distribution under the Plan, except that if Shares of
Restricted Stock are repurchased by the Company at their
original purchase price, and the original Recipient of such
Shares did not receive any benefits of ownership of such Shares,
such Shares shall become available for future grant under the
Plan. For purposes of the preceding sentence, voting rights
shall not be considered a benefit of Share ownership.



     
Section 3.     Administration
of the Plan.



     
(a) Administration. The Plan shall be administered
by the Compensation Committee of the Board, or another Committee
that may be appointed by the Board for this purpose in
accordance with Applicable Laws. Such Committee shall consist of
two or more members of the Board each of whom is a
“disinterested person” as defined in
Rule 16b-3(c)(2)(i) of the General Rules and Regulations
promulgated under the Exchange Act; and all of whom, in
addition, shall constitute “outside directors” for
purposes of granting “performance-based compensation”
awards under Treas. Reg. Sec. 1.162-27(e)(3) and
Section 162(m)(4)(C) of the Code. (Such “outside
directors” shall be appointed by, and may be removed by,
such Board.) Committee members shall serve for such term(s) as
the Board may determine, subject to removal by the Board at any
time. The Committee shall act by a majority of its members, or
if there are only two members of such Committee, by unanimous
consent of both members. If at any time there is no Committee in
office, the functions of the Committee specified in the Plan
shall be carried out by the Board.



     
(b) Powers of the Committee. Except for the terms
and conditions explicitly set forth in the Plan, the Committee
shall have exclusive authority, in its discretion, to determine
the Fair Market Value of the Common Stock in accordance with
Section 1(q) of the Plan and to determine all matters
relating to Awards



B-3







 




under the Plan, including the selection of individuals to be
granted an Award, the type of Award, the number of shares of
Common Stock subject to an Award, all terms, conditions,
restrictions and limitations, if any, including, without
limitation, vesting, acceleration of vesting, exercisability,
termination, substitution, cancellation, forfeiture, or
repurchase of an Award and the terms of any instrument that
evidences the Award. The Committee shall also have exclusive
authority to interpret the Plan and its rules and regulations,
and to make all other determinations deemed necessary or
advisable under or for administering the Plan, subject to
Section 16 of the Plan. All actions taken and
determinations made by the Committee pursuant to the Plan shall
be conclusive and binding on all parties involved or affected.
The Committee may, by a majority of its members then in office,
authorize any one or more of its members or any Officer of the
Company to execute and deliver documents on behalf of the
Committee, or delegate to an Officer of the Company the
authority to make decisions pursuant to Section 8 of the
Plan, provided that the Committee may not delegate its
authority with regard to the selection for participation of or
the granting of Awards to persons subject to Section 16 of
the Exchange Act.



     
Section
4.     Eligibility for
Awards.



     
Non-Qualified Stock Options and other Awards may be granted to
Employees and Officers who are Employees. In addition, an Award
may be granted to a person who is offered employment by the
Company, a Subsidiary or an Affiliate, provided that such
Award shall be immediately forfeited if such person does not
accept such offer of employment within such time period as the
Company, Subsidiary or Affiliate may establish. If otherwise
eligible, an Employee or Officer who has been granted an Option
or other Award may be granted additional Options or other Awards.



     
Section
5.     Limitations on
Options.



     
Each Option shall be designated in the written Award Agreement
as either an Incentive Stock Option or a Non-Qualified Stock
Option. However, notwithstanding such designation, to the extent
that the Options are amended; the aggregate Fair Market Value of
the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Recipient during any
calendar year (under all plans of the Company and any Subsidiary
or Affiliate) exceeds $100,000; or other circumstances exist
that would cause the Options to lose their status as Incentive
Stock Options, such Options shall be treated as Non-Qualified
Stock Options. For purposes of this Section 5, Incentive
Stock Options shall be taken into account in the order in which
they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares
is granted. If an Option is granted hereunder that is part
Incentive Stock Option and part Non-Qualified Stock Option due
to becoming first exercisable in any calendar year in excess of
$100,000, the Incentive Stock Option portion of such Option
shall become exercisable first in such calendar year, and the
Non-Qualified Stock Option portion shall commence becoming
exercisable once the $100,000 limit has been reached.



     
Section
6.     Term of Plan.



     
The Plan shall become effective upon the approval by the
stockholders of the Company as described in Section 16 of
the Plan. It shall continue in effect for a term of ten
(10) years unless terminated earlier under Section 16
of the Plan.



     
Section
7.     Term of Option.



     
The term of each Option shall be stated in the Award Agreement
but shall be no longer than ten (10) years from the date of
grant or such shorter term as may be provided in the Award
Agreement. Moreover, in the case of an Incentive Stock Option
granted to a Recipient who, at the time the Incentive Stock
Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company
or any Subsidiary (taking into account the attribution rules
under Section 424(d) of the Code), the term of the
Incentive Stock Option shall be five (5) years from the
date of grant or such shorter term as may be provided in the
Award Agreement.



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Section
8.     Option Exercise Price
and Consideration.



     
(a) Exercise Price. The per share exercise price for
the Shares to be issued pursuant to exercise of an Option shall
be determined by the Committee, subject to the following:






		
	 	     
    (i) In the case of an Incentive Stock Option






		
	 	     
    (A) granted to an Employee who, at the time the Incentive
    Stock Option is granted, owns stock representing more than ten
    percent (10%) of the voting power of all classes of stock of the
    Company or any Subsidiary (taking into account the attribution
    rules under Section 424(d) of the Code), the per Share
    exercise price shall be not less than 110% of the Fair Market
    Value per Share on the date of grant, or
	 
	 	     
    (B) granted to any Employee other than an Employee
    described in paragraph (A) immediately above, the per
    Share exercise price shall be not less than 100% of the Fair
    Market Value per Share on the date of grant.






		
	 	     
    (ii) In the case of a Non-Qualified Stock Option, the per
    Share exercise price shall be not less than 100% of the Fair
    Market Value per Share on the date of grant.



     
(b) Waiting Period and Exercise Dates. The Committee
shall have the authority, subject to the terms of the Plan, to
determine any vesting restriction or limitation or waiting
period with respect to any Option granted to a Recipient or the
Shares acquired pursuant to the exercise of such Option.



     
(c) Form of Consideration. The Committee shall
determine the acceptable form of consideration for exercising an
Option, including the method of payment. In the case of an
Incentive Stock Option, the Committee shall determine the
acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:






		
	 	     
    (i) cash (in the form of a certified or bank check or such
    other instrument as the Company may accept);
	 
	 	     
    (ii) other Mature Shares owned on the date of exercise of
    the Option by the Recipient (and, in the case of the exercise of
    a Non-Qualified Stock Option, Restricted Stock subject to an
    Award hereunder) based on the Fair Market Value of the Common
    Stock on the date the Option is exercised; provided,
    however, that in the case of an Incentive Stock Option, the
    right to make a payment in the form of already owned Shares may
    be authorized only at the time the Option is granted; and
    provided that if payment is made in the form of
    Restricted Stock, the number of equivalent shares of Common
    Stock to be received shall be subject to the same forfeiture
    restrictions to which such Restricted Stock was subject, unless
    otherwise determined by the Committee;
	 
	 	     
    (iii) any combination of (i) and (ii) above;
	 
	 	     
    (iv) at the discretion of the Committee, by delivery of a
    properly executed exercise notice together with such other
    documentation as the Committee and a qualified broker, if
    applicable, shall require to effect an exercise of the Option,
    and delivery to the Company of the sale or loan proceeds
    required to pay the exercise price, subject, however, to
    Section 18(f) of the Plan; or
	 
	 	     
    (v) such other consideration and method of payment for the
    issuance of Shares to the extent permitted by the Committee and
    Applicable Laws.



     
Section
9.     Exercise of Option.



     
(a) Procedure for Exercise; Rights as a Stockholder.
Except as otherwise authorized by the Committee, any Option
granted hereunder shall be exercisable according to the terms of
the Plan and at such times and under such conditions as
determined by the Committee and set forth in the Award
Agreement. If the Committee provides that any Option is
exercisable only in installments, the Committee may at any time
waive such installment exercise provisions, in whole or in part,
based on such factors as the Committee may determine. The
Committee may at any time, in whole or in part, accelerate the
exercisability of any Option.



B-5







 



     
An Option shall be deemed exercised when the Company receives:
(i) written notice of exercise (in accordance with the
Award Agreement) from the person entitled to exercise the
Option, and (ii) full payment for the Shares with respect
to which the Option is exercised. Full payment may consist of
any consideration and method of payment authorized by the
Committee in accordance with Section 8(c) of the Plan and
permitted by the Award Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the
Recipient. Until the stock certificate evidencing such Shares is
issued (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other
rights as a stockholder shall exist with respect to such Shares,
notwithstanding the exercise of the Option. The Company shall
issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to
the date the stock certificate is issued, except as provided in
Section 14 of the Plan.



     
Exercising an Option in any manner shall decrease the number of
Shares thereafter available, both for purposes of the Plan and
for sale under the Option, by the number of Shares as to which
the Option is exercised.



     
(b) Termination of Relationship as Employee or
Officer. Except as otherwise authorized by the Committee, if
a Recipient ceases to be a Service Provider, other than for
Cause or upon the Recipient’s death, Disability or
Retirement, the Recipient, subject to the restrictions of this
Section 9(b), may exercise his or her Option within the
time specified in this Section 9(b) to the extent that the
Option is vested on the date of termination, including any
acceleration of vesting granted by the Committee, and has not
yet expired as set forth in the Award Agreement. Unless
otherwise determined by the Committee, such Option may be
exercised as follows: (i) if the Option is a Non-Qualified
Stock Option, it shall remain exercisable for the lesser of the
remaining term of the Option or twelve (12) months from the
date of such termination of the relationship as a Service
Provider; or (ii) if the Option is an Incentive Stock
Option, it shall remain exercisable for the lesser of the term
of the Option or three (3) months following the
Recipient’s termination of his relationship as a Service
Provider; provided, however, that if the Recipient dies
within such three-month period, any unexercised Option held by
such Recipient shall notwithstanding the expiration of such
three-month period continue to be exercisable (to the extent to
which it was exercisable at the time of death) for the lesser of
a period of twelve (12) months from the date of such death;
the expiration of the stated term of such Option; or the
exercise period that applies for purposes of Section 422 of
the Code. If, on the date of termination, the Recipient is not
vested as to his or her entire Option and the Committee has not
granted any acceleration of vesting, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If a
Recipient ceases to be a Service Provider for Cause, the Option
shall immediately terminate, and the Shares covered by such
Option shall revert to the Plan. If, after termination, the
Recipient does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.



     
Notwithstanding the above, in the event of a Recipient’s
change in status from Employee to non-Employee Officer or
Director, the Recipient shall not automatically be treated as if
the Recipient terminated his relationship as a Service Provider,
nor shall the Recipient be treated as ceasing to provide
services to the Company solely as a result of such change in
status. In the event a Recipient’s status changes from
Employee to non-Employee Officer or Director, an Incentive Stock
Option held by the Recipient shall cease to be treated as an
Incentive Stock Option and shall be treated for tax purposes as
a Non-Qualified Stock Option three months and one day following
such change of status.



     
(c) Disability of Recipient. Except as otherwise
authorized by the Committee, if, as a result of the
Recipient’s Disability, a Recipient ceases to be a Service
Provider, the Recipient may exercise his or her Option subject
to the restrictions of this Section 9(c) and within the
period of time specified herein to the extent the Option is
vested on the date of termination, including any acceleration of
vesting granted by the Committee, and has not yet expired as set
forth in the Award Agreement. Unless otherwise determined by the
Committee or specified in the Award Agreement, such Option shall
be exercisable for the lesser of the remaining period of time
specified in the Award Agreement or twelve (12) months from
the date of such termination. If, on the date of termination,
the Recipient is not vested as to his or her entire Option and
the



B-6







 




Committee has not granted any acceleration of vesting, the
Shares covered by the unvested portion of the Option shall
revert to the Plan. If, after termination, the Recipient does
not exercise his or her Option within the time specified herein,
the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan. In the event of termination of
employment by reason of Disability, if an Incentive Stock Option
is exercised after the expiration of the exercise periods
applicable under Section 422 of the Code, such Option will
thereafter be treated as a Non-Qualified Stock Option.



     
(d) Death of Recipient. Except as otherwise
authorized by the Committee, if a Recipient dies while an
Employee, the Option may be exercised subject to the
restrictions of this Section 9(d) and within such period of
time as is specified in the Award Agreement (but in no event
later than the earlier of twelve (12) months from the date
of such death or the expiration of the term of such Option as
set forth in the Award Agreement), but only to the extent that
the Option is vested on the date of death, including any
acceleration of vesting granted by the Committee, and has not
yet expired as set forth in the Award Agreement. If, at the time
of death, the Recipient is not vested as to his or her entire
Option and the Committee has not granted any acceleration of
vesting, the Shares covered by the unvested portion of the
Option shall immediately revert to the Plan. The Option may be
exercised by the executor or administrator of the
Recipient’s estate or, if none, by the person(s) entitled
to exercise the Option under the Recipient’s will or the
applicable laws of descent or distribution. If the Option is not
so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to
the Plan. In the event of termination of employment by reason of
death, if an Incentive Stock Option is exercised after the
expiration of the exercise periods that apply for purposes of
Section 422 of the Code, such Option will thereafter be
treated as a Non-Qualified Stock Option.



     
(e) Retirement of Recipient.






		
	 	     
    (i) Non-Qualified Stock Options. Except as otherwise
    authorized by the Committee, if, as a result of the
    Recipient’s Retirement, a Recipient ceases to be a Service
    Provider, the Recipient may, subject to the restrictions of this
    Section 9(e), exercise his or her Non-Qualified Stock
    Option within the time specified herein to the extent the Option
    is vested on the date of termination, including any acceleration
    of vesting granted by the Committee, and has not yet expired as
    set forth in the Award Agreement. Unless otherwise determined by
    the Committee, such Option may be exercised for the lesser of
    the remaining period of time specified in the Award Agreement or
    three (3) years following the Recipient’s Retirement.
    Notwithstanding the foregoing, if the Recipient dies within such
    three (3)-year (or shorter) period, any unexercised
    Non-Qualified Stock Option held by such Recipient shall,
    notwithstanding the expiration of such period, continue to be
    exercisable to the extent to which it was exercisable at the
    time of death for a period of twelve (12) months from the date
    of death or the expiration of the stated term of such Option,
    whichever period is shorter.
	 
	 	     
    (ii) Incentive Stock Options. If the Recipient holds
    an Incentive Stock Option and ceases to be a Service Provider by
    reason of his or her Retirement, such Incentive Stock Option may
    continue to be exercisable by the Recipient to the extent to
    which it was exercisable at the time of Retirement for a period
    of three (3) months from the date of Retirement or the
    expiration of the stated term of such Option, whichever period
    is the shorter. Notwithstanding the foregoing, if the Recipient
    dies within such three-month period, any unexercised Incentive
    Stock Option held by such Recipient shall, notwithstanding the
    expiration of such period, continue to be exercisable to the
    extent to which it was exercisable at the time of death for a
    period of twelve (12) months from the date of such death;
    the expiration of the stated term of such Option; or the
    exercise period that applies for purposes of Section 422 of
    the Code, whichever period is the shorter.



     
If, on the date of termination due to Retirement, the Recipient
is not vested as to his or her entire Option and the Committee
has not granted any acceleration of vesting, the Shares covered
by the unvested portion of the Option shall revert to the Plan.
If, after termination due to Retirement, the Option is not
exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to
the Plan.



B-7







 



     
(f) Cash out Provisions. On receipt of written
notice of exercise, the Committee may elect, but shall not be
required to, to cash out all or any part of the shares of Common
Stock for which an Option is being exercised by paying the
Recipient an amount, in cash, equal to the excess of the Fair
Market Value of the Common Stock over the option price times the
number of shares of Common Stock for which an Option is being
exercised on the effective date of such cash out. Cash outs
pursuant to this Section 9(f) relating to Options held by
Recipients who are actually or potentially subject to
Section 16(b) of the Exchange Act shall comply with the
provisions of Section 16 of the Exchange Act and the rules
promulgated thereunder, to the extent applicable.



     
Section
10.     Restricted Stock.



     
(a) Awards of Restricted Stock. Shares of Restricted
Stock may be issued either alone, in addition to, or in tandem
with other Awards granted under the Plan and/or cash awards made
outside of the Plan. The Committee shall determine the
individuals to whom it will award Restricted Stock under the
Plan, and it shall advise the Recipient in writing, by means of
an Award Agreement, of the terms, conditions and restrictions
related to the Award, including the number of Shares to be
awarded to the Recipient, the time or times within which such
Awards may be subject to forfeiture and any other terms and
conditions of the Awards, in addition to those contained in this
Section 10. The Committee may condition the grant or
vesting of Restricted Stock upon the attainment of specified
performance goals of the Recipient or of the Company, Subsidiary
or Affiliate for or within which the Recipient is primarily
employed, or upon such other factors as the Committee shall
determine. The provisions of an Award need not be the same with
respect to each Recipient. The terms of the Award of Restricted
Stock shall comply in all respects with Applicable Law and the
terms of the Plan.



     
(b) Awards and Certificates. Each Award shall be
confirmed by, and subject to the terms of, an Award Agreement.
Shares of Restricted Stock shall be evidenced in such manner as
the Committee may deem appropriate, including book-entry
registration or issuance of one or more stock certificates. The
Committee may require that the certificates evidencing such
Shares be held in custody by the Company until the restrictions
thereon shall have lapsed and that, as a condition of any Award
of Restricted Stock, the Recipient shall have delivered to the
Company a stock power, endorsed in blank, relating to the Common
Stock covered by such Award. Any certificate issued with respect
to Shares of Restricted Stock shall be registered in the name of
such Recipient and shall bear an appropriate legend referring to
the terms, conditions and restrictions applicable to such Award,
substantially in the following form:






		
	 	     
    “The transferability of this certificate and the shares of
    Stock represented hereby are subject to the terms and conditions
    (including forfeiture) of the Danielson Holding Corporation
    Equity Award Plan for Employees and Officers and an Award
    Agreement. Copies of such Plan and Award Agreement are on file
    at the office of the Secretary of Danielson Holding
    Corporation.”



     
If and when the Restriction Period (hereinafter defined) expires
without a prior forfeiture of the Restricted Stock subject to
such Restriction Period, the Recipient may request that
unlegended certificates for such Shares be delivered to the
Recipient.



     
(c) Terms and Conditions. Shares of Restricted Stock
shall be subject to the following terms and conditions:






		
	 	     
    (i) Restriction Period. Subject to the provisions of
    the Plan and the terms of the Award Agreement, during a period
    set by the Committee, commencing with the date of such Award
    (the “Restriction Period”), the Recipient shall not be
    permitted to sell, assign, transfer, pledge or otherwise
    encumber Shares of Restricted Stock (the
    “Restrictions”). The Committee may provide for the
    lapse of such Restrictions in installments or otherwise and may
    accelerate or waive such Restrictions, in whole or in part, in
    each case based on period of service, performance of the
    Recipient or of the Company, Subsidiary or Affiliate, division
    or department for which the Recipient is employed or such other
    factors or criteria as the Committee may determine.
    Notwithstanding the foregoing, if the Recipient of a Restricted
    Stock Award is subject to the provisions of Section 16 of
    the Exchange Act, shares of Common Stock subject to the grant
    may not, without the written consent of the Committee, be sold
    or otherwise disposed of within six (6) months following
    the date of grant. The Committee may, in its



B-8







 


		
	 	
    discretion, impose a limit on the number of Shares that a
    Recipient may receive in any twelve (12)-month period in an
    Award of Restricted Stock.
	 
	 	     
    (ii) Rights. Except as provided in
    Section 10(c) of the Plan, the applicable Award Agreement
    and Applicable Law, the Recipient shall have, with respect to
    the Shares of Restricted Stock, all of the rights of a
    stockholder of the Company holding the class or series of Common
    Stock that is the subject of the Award Agreement, including, if
    so provided in the Award Agreement, the right to vote the Shares
    and the right to receive any cash dividends. Unless otherwise
    determined by the Committee in the applicable Award Agreement
    and subject to Section 18(e) of the Plan, for the
    Restriction Period, (A) cash dividends on the Shares of
    Common Stock that are the subject of the Award Agreement shall
    be automatically deferred and reinvested in additional
    Restricted Stock and (B) dividends payable in Common Stock
    shall be paid in the form of Restricted Stock. If there is a pro
    rata distribution of warrants or other rights to acquire shares
    of Common Stock, then the Recipient shall have the right to
    participate in or receive such warrants or other rights,
    provided, however, that any shares of Common Stock
    acquired pursuant to the exercise of such warrants or other
    rights shall be subject to the same vesting requirements and
    restrictions as the underlying Common Stock.
	 
	 	     
    (iii) Termination of Service Provider Relationship.
    Except to the extent otherwise provided in the applicable Award
    Agreement or the Plan, if a Recipient ceases to be a Service
    Provider for any reason during the Restriction Period, all
    Shares still subject to restriction shall be forfeited by the
    Recipient. Without limiting the foregoing, an Award Agreement
    may, at the Committee’s discretion, allow for vesting to
    continue after termination of employment with the Company,
    provided the Recipient remains an Employee of any Subsidiary or
    Affiliate of the Company.




     
(d) Other Provisions. The Award Agreement shall
contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Committee
in its sole discretion, including, without limitation,
provisions relating to tax matters including wage withholding
requirements; prohibitions on elections by the Recipient under
Section 83(b) of the Code; and “gross-up”
payments to Recipients to satisfy tax liabilities. In addition,
the terms of the Award Agreements for Restricted Stock need not
be the same with respect to each Recipient.



     
Section
11.     Deferral of Stock
Award.



     
(a) The Committee may, in its sole discretion, authorize an
Employee or Officer to elect to defer the ownership of the
Shares of Common Stock otherwise issuable pursuant to
Section 10. Any such election shall be made in writing in
the form prescribed by the Committee, and shall be subject to
such rules and procedures as shall be determined by the
Committee in its sole discretion. In no event, however, shall
any deferral be permitted to the extent prohibited by Applicable
Laws.



     
(b) An election to defer pursuant to (a) above with
respect to Shares of Restricted Stock issuable in a calendar
year must be made on or prior to December 31st of the year
that precedes the year in which such Restricted Stock would
otherwise be issued. Notwithstanding the foregoing, an Employee
or Officer may make an election to defer pursuant to this
Section 11 no later than 30 days after the Effective
Date, for the year in which the Employees Plan is first
effective, or, if later, within 30 days after the date the
Employee or Officer first becomes eligible to participate.



     
(c) At the time of the deferral election described in this
Section 11, the Employee or Officer may select the date for
the issuance or receipt of the deferred Shares. If the Employee
or Officer does not select a date for the issuance of deferred
Shares, the deferred Shares will be issued upon termination of
his or her service as an Employee or Officer.



B-9







 



     
Section
12.     Other Awards.



     
The Committee, in its sole discretion, but subject to the terms
of the Plan, may grant the following types of Awards (in
addition to or in combination with the Awards of Options and
Restricted Stock described above) under this Plan on a stand
alone, combination or tandem basis:






		
	 	     
    (a) Stock Appreciation Right. The Committee may
    grant a right to receive the excess of the Fair Market Value of
    a Share on the date the stock appreciation right is exercised
    over the Fair Market Value of a Share on the date the stock
    appreciation right was granted (the “Spread”). The
    Spread with respect to a stock appreciation right may be payable
    in cash, Shares with a total Fair Market Value equal to the
    Spread or a combination of these two. With respect to stock
    appreciation rights that are subject to Section 16 of the
    Exchange Act, however, the Committee shall retain sole
    discretion (i) to determine the form in which payment of
    the stock appreciation right will be made (cash, Shares or any
    combination thereof) or (ii) to approve an election by a
    Recipient to receive cash in full or partial settlement of stock
    appreciation rights. Each Award Agreement for stock appreciation
    rights shall provide that stock appreciation rights under the
    Plan may not be exercised earlier than six (6) months from
    the date of grant. The terms of the Award Agreements granting
    stock appreciation rights need not be the same with respect to
    each Recipient. A stock appreciation right shall be subject to
    adjustment as provided in Section 14 of the Plan.
	 
	 	     
    (b) Performance Award. The Committee may grant a
    Performance Award based on the performance of the Recipient over
    a specified performance period. A Performance Award may be
    awarded to an Employee contingent upon future performance of the
    Company or any Affiliate, Subsidiary, division or department
    thereof in which such Employee is employed, if applicable,
    during the performance period. The Committee shall establish the
    performance measures applicable to such performance prior to the
    beginning of the performance period, but subject to such later
    revisions as the Committee may deem appropriate to reflect
    significant, unforeseen events or changes. The Performance Award
    may consist of a right to receive Shares (or cash in an amount
    equal to the Fair Market Value thereof) or the right to receive
    an amount equal to the appreciation, if any, in the Fair Market
    Value of Shares over a specified period. Each Performance Award
    shall have a maximum value established by the Committee at the
    time such Award is made. In determining the value of Performance
    Awards, the Committee shall take into account the
    Recipient’s responsibility level, performance, potential,
    other Awards and such other considerations as it deems
    appropriate. Payment of a Performance Award may be made
    following the end of the performance period in cash, Shares
    (based on the Fair Market Value on the payment date) or a
    combination thereof, as determined by the Committee, and in a
    lump sum or installments as determined by the Committee. Except
    as otherwise provided in an Award Agreement or as determined by
    the Committee, a Performance Award shall terminate if the
    Recipient does not remain continuously in the employ of the
    Company at all times during the applicable performance period.
    The terms of the Award Agreements granting a Performance Award
    need not be the same with respect to each Recipient.
	 
	 	     
    (c) Other Stock-Based Awards. The Committee may, in
    its discretion, grant other Share-based Awards which are related
    to or serve a similar function to those Awards set forth in this
    Section 12.



     
Section
13.     Non-Transferability
of Awards.



     
Unless otherwise specified by the Committee in the Award
Agreement, an Award may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other
than by (i) will or by the laws of descent or distribution
or (ii) pursuant to a qualified domestic relations order
(as defined in the Code or Title I of the Employee
Retirement Income Security Act of 1974, as amended, or the rules
thereunder). Options and other Awards may be exercised, during
the lifetime of the Participant, only by the Participant or by
the guardian or legal representative of the Participant or by an
alternate payee pursuant to a qualified domestic relations
order. If the Committee makes an Award transferable, such Award
shall contain such additional terms and conditions as the
Committee deems appropriate. Any attempt to assign, pledge or
otherwise transfer any Award or of any right or privileges
conferred thereby, contrary to the Plan, or the sale or levy or
similar process upon the rights and privileges conferred hereby,
shall be void.



B-10







 



     
Section
14.     Adjustments Upon
Changes in Capitalization.



     
Subject to any required action by the stockholders of the
Company, the number of shares of Common Stock covered by each
outstanding Award, and the number of shares of Common Stock
which have been authorized for issuance under the Plan but as to
which no Awards have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an
Award, as well as the price per share of Common Stock covered by
each such outstanding Award, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of
Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration
by the Company; provided, however, that
(a) conversion of any convertible securities of the Company
shall not be deemed to have been “effected without receipt
of consideration;” and (b) no adjustment shall be made
below par value and no fractional shares of Common Stock shall
be issued. Such adjustment shall be made by the Board in its
sole discretion, whose determination in that respect shall be
final, binding and conclusive. In the event of an extraordinary
cash dividend, the Committee may, in its sole discretion,
equitably adjust the aggregate number of Shares available under
the Plan, as well as the exercise price, number of Shares and
other appropriate terms of any outstanding Award in order to
preserve the intended benefits of the Plan. Except as expressly
provided herein, no issuance by the Company of shares of stock
of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of
Common Stock subject to an Award.



     
Section
15.     Date of Grant.



     
The date of grant of an Award shall be, for all purposes, the
date on which the Committee makes the determination granting
such Award, or such other later date as is determined by the
Committee. Notice of the determination shall be provided to each
Participant within a reasonable time after the date of such
grant.



     
Section
16.     Term; Amendment and
Termination of the Plan.



     
(a) Amendment and Termination. Subject to this
Section 16 and Section 18(f), the Board may at any
time amend, alter, suspend or terminate the Plan, including
without limitation to provide for the transferability of any or
all Options to comply with or take advantage of rules governing
registration of shares. Subject to Section 18(f) and the
other terms of the Plan, the Committee may amend the terms of
any Option theretofore granted, prospectively or retroactively,
but no such amendment shall impair the rights of any Recipient
without the Recipient’s consent.



     
(b) Stockholder Approval. The Company shall obtain
stockholder approval of any material Plan amendment and any
amendment to the extent necessary and desirable to comply with
Section 422 of the Code (or any successor rule or statute
or other applicable law, rule or regulation, including the
requirements of any exchange or quotation system on which the
Common Stock is listed or quoted). Such stockholder approval, if
required, shall be obtained in such a manner and to such a
degree as is required by the Applicable Law, rule or regulation.



     
(c) Effect of Amendment or Termination. No
amendment, alteration, suspension or termination of the Plan
shall impair the rights of any Recipient, unless mutually agreed
otherwise between the Recipient and the Committee, which
agreement must be in writing and signed by the Recipient and the
Company.



     
Section
17.     Conditions Upon
Issuance of Shares.



     
(a) Legal Compliance. Shares shall not be issued
pursuant to the exercise of an Award unless the exercise of such
Award and the issuance and delivery of such Shares shall comply
with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended, the Exchange
Act, the rules and regulations promulgated thereunder,
Applicable Laws, and the requirements of any stock exchange or
quotation system upon which the Shares may then be listed or
quoted and shall be further subject to the approval of counsel
for the Company with respect to such compliance. The Committee
may cause a legend or legends to be placed on any certificates
for Shares or other securities delivered under the Plan as it
may deem appropriate to make reference to such legal rules and
restrictions, or to impose any restrictions on transfer.



B-11







 



     
(b) Withholding Obligations. No later than the date
as of which an amount first becomes includible in the gross
income of the Recipient for federal income tax purposes with
respect to any Award under the Plan, the Recipient shall pay to
the Company, or make arrangements satisfactory to the Company
regarding the payment of, any federal, state, local or foreign
taxes of any kind required by law to be withheld with respect to
such amount. Unless otherwise determined by the Committee,
withholding obligations may be settled with vested Common Stock,
including vested Common Stock that is part of the Award that
gives rise to the withholding requirement. The obligations of
the Company under the Plan shall be conditioned on such payment
or arrangements, and the Company, its Subsidiaries and its
Affiliates shall, to the extent permitted by law, have the right
to deduct any such taxes from any payment otherwise due to the
Recipient. The Committee may establish such procedures as it
deems appropriate, including the making of irrevocable
elections, for the settlement of withholding obligations with
vested Common Stock.



     
(c) Inability to Obtain Authority. The inability of
the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s
counsel to be necessary to the lawful issuance and sale of any
Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.



     
(d) Grants Exceeding Allotted Shares. If the Stock
covered by an Award exceeds, as of the date of grant, the number
of Shares which may be issued under the Plan without additional
stockholder approval, such Award shall be void with respect to
such excess Shares, unless stockholder approval of an amendment
sufficiently increasing the number of Shares subject to the Plan
is timely obtained in accordance with Applicable Law and
Section 16(b) of the Plan.



     
Section
18.     General
Provisions.



     
(a) Term of Plan. This Plan shall become effective
upon its approval by the stockholders of the Company
(“Effective Date”), subject to the approval of the
Company’s stockholders on or before the first anniversary
of the date of its adoption by the Board. Such stockholder
approval shall be obtained in the manner and to the degree
required under Applicable Laws and the rules of any stock
exchange upon which the Common Stock is listed. It shall
continue in effect for a term of ten (10) years unless
terminated earlier under Section 16 of the Plan.



     
(b) No Contract of Employment. Neither the Plan nor
any Award hereunder shall confer upon an individual any right
with respect to continuing such individual’s employment
relationship with the Company, nor shall they interfere in any
way with such individual’s right or the Company’s
right to terminate such employment relationship at any time,
with or without cause.



     
(c) Severability. In the event that any provision of
the Plan shall be held illegal or invalid for any reason, the
illegality or invalidity shall not affect the remaining parts of
the Plan, and the Plan shall be construed and enforced as if the
illegal or invalid provision had not been included.



     
(d) Governing Law. The Plan and all Awards made and
actions thereunder shall be governed by and construed in
accordance with the laws of the state of Delaware.



     
(e) Dividends. The reinvestment of dividends in
additional Restricted Stock at the time of any dividend payment
shall be permissible only if sufficient shares of Common Stock
are available under the Plan for such reinvestment (taking into
account then outstanding Options and other Awards).



     
(f) Prohibition on Loans to Participants. The
Company shall not lend funds to any Participant for the purpose
of paying the exercise or base price associated with any Award
or for the purpose of paying any taxes associated with the
exercise or vesting of an Award.



     
(g) Performance-Based Compensation. The Committee
may designate any Award as “performance-based
compensation” for purposes of Section 162(m) of the
Code. Any Awards designated as “performance-based
compensation” shall be conditioned on the achievement of
one or more performance measures, and the measurement may be
stated in absolute terms or relative to comparable companies.



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(h) Unfunded Status of Plan. It is intended that the
Plan constitute an “unfunded” plan for incentive and
deferred compensation. The Committee may authorize the creation
of trusts or other arrangements to meet the obligations created
under the Plan to deliver Common Stock or make payment;
provided, however, that, unless the Committee otherwise
determines, the existence of such trusts or other arrangements
is consistent with the “unfunded” status of the Plan.



     
(i) Liability of Committee Members. Except as
provided under Applicable Law, no member of the Board or the
Committee will be liable for any action or determination made in
good faith by the Board or the Committee with respect to the
Plan or any Award under it. Neither the Company, the Board of
Directors nor the Committee, nor any Subsidiary or Affiliate,
nor any directors, officers or employees thereof, shall be
liable to any Participant or other person if it is determined
for any reason by the Internal Revenue Service or any court that
an Incentive Stock Option granted hereunder does not qualify for
tax treatment as an “incentive stock option” under
Section 422 of the Code.



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