Exhibit 10.A.51


 


APPLE
COMPUTER, INC.


2003
Employee Stock Plan


(amended and restated effective as of November 9,
2005)


 


 


1.                                       Purposes of
the Plan.  The purposes of this Stock
Plan are:


 


•                  to attract and retain talented
Employees


 


•                  to further align Employee and
shareholder interests; and


 


•                  to closely link Employee compensation
with Company performance.


 


Awards granted under the Plan may be
Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock subject
to Stock Purchase Rights, Stock Appreciation Rights, Performance Shares or
Restricted Stock Units, as determined by the Administrator at the time of
grant.


 


2.                                       Definitions.  As used herein, the following definitions
shall apply:


 


(a)                                  “Administrator”
means the Board or any of its Committees as shall be administering the Plan, in
accordance with Section 4 of the Plan.


 


(b)                                 “Annual Revenue”
means the Company’s or a business unit’s net sales for the Fiscal Year,
determined in accordance with generally accepted accounting principles.


 


(c)                                  “Applicable Laws”
means the requirements relating to the administration of stock plans under U.S.
state corporate laws, U.S. federal and state securities laws, the Code, any
stock exchange or quotation system on which the Common Stock is listed or
quoted and the applicable laws of any foreign country or jurisdiction where
Awards are, or will be, granted under the Plan.


 


(d)                                 “Award” means,
individually or collectively, a grant under the Plan of Options, Restricted
Stock subject to Stock Purchase Rights, Stock Appreciation Rights, Performance
Shares or Restricted Stock Units.


 


(e)                                  “Award Agreement”
means the written or electronic agreement setting forth the terms and
provisions applicable to each Award granted under the Plan.  The Award Agreement is subject to the terms
and conditions of the Plan.


 


(f)                                    “Awarded Stock”
means the Common Stock subject to an Award.


 


(g)                                 “Board” means
the Board of Directors of the Company.


 


(h)                                 “Cash Position”
means the Company’s level of cash and cash equivalents.


 


(i)                                     “Chairman”
means the Chairman of the Board.


 


(j)                                     “Code”
means the Internal Revenue Code of 1986, as amended.


 





















 


(k)                                  “Committee”
means a committee of Directors appointed by the Board in accordance with Section 4
of the Plan.


 


(l)                                     “Common Stock”
means the common stock of the Company.


 


(m)                               “Company” means
Apple Computer, Inc., a California corporation.


 


(n)                                 “Continuous Status
as Chairman” unless determined otherwise by the Administrator, means the
absence of any interruption or termination as Chairman of the Board with the
Company.  Continuous Status as Chairman
shall not be considered interrupted in the case of medical leave, military
leave, family leave, or any other leave of absence approved by the
Administrator, provided, in each case, that such leave does not result in
termination as Chairman with the Company. 
Neither service as a Director nor payment of a director’s fee by the
Company shall be sufficient to constitute status as “Chairman” by the Company.


 


(o)                                 “Continuous Status
as an Employee” means the absence of any interruption or termination of the
employment relationship with the Company or any Subsidiary.  Continuous Status as an Employee shall not be
considered interrupted in the case of (i) medical leave, military leave,
family leave, or any other leave of absence approved by the Administrator,
provided, in each case, that such leave does not result in termination of the
employment relationship with the Company or any Subsidiary, as the case may be,
under the terms of the respective Company policy for such leave; however, vesting
may be tolled while an employee is on an approved leave of absence under the
terms of the respective Company policy for such leave; or (ii) in the case
of transfers between locations of the Company or between the Company, its
Subsidiaries, or its successor.  For
purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract.  If reemployment upon
expiration of a leave of absence approved by the Company is not so guaranteed,
on the 91st day of such leave any Incentive Stock Option held by the
Participant shall cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Nonstatutory Stock Option.  Neither service as a Chairman nor as a
Director nor payment of a director’s fee by the Company shall be sufficient to
constitute “employment” by the Company.


 


(p)                                 “Director”
means a member of the Board.


 


(q)                                 “Dividend
Equivalent” means a credit, payable in cash, made at the discretion of the
Administrator, to the account of a Participant in an amount equal to the cash
dividends paid on one Share for each Share represented by an Award held by such
Participant.


 


(r)                                    “Earnings Per
Share” means as to any Fiscal Year, the Company’s or a business unit’s Net
Income, divided by a weighted average number of common shares outstanding and
dilutive common equivalent shares deemed outstanding, determined in accordance
with generally accepted accounting principles.


 


(s)                                  “Fiscal Year”
means a fiscal year of the Company.


 


(t)                                    “Individual
Performance Objective” means any individual Company business-related
objective that is objectively determinable within the meaning of Code Section 162(m)
and the Treasury Regulations promulgated thereunder.  Individual Performance Objectives shall
include, but not be limited to, improvement in customer satisfaction, opening
of additional retail stores, and


 


2





















 


similar objectively determinable performance objectives related to the
Participant’s job responsibilities with the Company.


 


(u)                                 “Employee”
means any person employed by the Company or any Parent or Subsidiary of the
Company subject to (k) above.


 


(v)                                 “Exchange Act”
means the Securities Exchange Act of 1934, as amended.


 


(w)                               “Fair Market Value”
means, as of any date, the value of Common Stock determined as follows:


 


(i)                                     If the Common
Stock is 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, its Fair Market Value shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or system, on the date of determination or, if the date
of determination is not a trading day, the immediately preceding trading day;


 


(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 the
mean between the high bid and low asked prices for the Common Stock on the date
of determination or, if there are no quoted prices on the date of
determination, on the last day on which there are quoted prices prior to the
date of determination; or


 


(iii)                               In the absence of an
established market for the Common Stock, the Fair Market Value shall be
determined in good faith by the Administrator.


 


(x)                                   “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 and is expressly designated by the Administrator at the
time of grant as an incentive stock option.


 


(y)                                 “Net Income”
means as to any Fiscal Year, the income after taxes of the Company for the
Fiscal Year determined in accordance with generally accepted accounting
principles.


 


(z)                                   “Operating Cash
Flow” means the Company’s or a business unit’s sum of Net Income plus
depreciation and amortization less capital expenditures plus changes in working
capital comprised of accounts receivable, inventories, other current assets,
trade accounts payable, accrued expenses, product warranty, advance payments
from customers and long-term accrued expenses, determined in accordance with
generally acceptable accounting principles.


 


(aa)                            “Operating Income”
means the Company’s or a business unit’s income from operations determined in
accordance with generally accepted accounting principles.


 


(bb)                          “Nonstatutory Stock Option”
means an Option not intended to qualify as an Incentive Stock Option.


 


(cc)                            “Option” means a
stock option granted pursuant to the Plan.


 


3





















 


(dd)                          “Optioned Stock” means
the Common Stock subject to an Option, SAR or Stock Purchase Right.


 


(ee)                            “Participant” means
the holder of an outstanding Award granted under the Plan.


 


(ff)                                “Parent” means a
“parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of
the Code.


 


(gg)                          “Performance Goals”
means the goal(s) (or combined goal(s)) determined by the Committee (in its
discretion) to be applicable to a Participant with respect to an Award.  As determined by the Committee, the
Performance Goals applicable to an Award may provide for a targeted level or
levels of achievement using one or more of the following measures: (a) Annual
Revenue, (b) Cash Position, (c) Earnings Per Share, (d) Net
Income, (e) Operating Cash Flow, (f) Operating Income, (g) Return
on Assets, (h) Return on Equity, (i) Return on Sales, (j) Total
Stockholder Return, and (k) Individual Performance Objectives.  The Performance Goals may differ from
Participant to Participant and from Award to Award.  The Administrator shall appropriately adjust
any evaluation of performance under a Performance Goal to exclude (i) any
extraordinary non-recurring items as described in Accounting Principles Board
Opinion No. 30 and/or in management’s discussion and analysis of financial
conditions and results of operations appearing in the Company’s annual report
to shareholders for the applicable year, or (ii) the effect of any changes
in accounting principles affecting the Company’s or a business units’ reported
results.


 


(hh)                          “Performance Share”
means a performance share Award granted to a Participant pursuant to Section 14.


 


(ii)                                  “Plan” means
this 2003 Employee Stock Plan.


 


(jj)                                  “Restricted Stock”
means shares of Common Stock acquired pursuant to a grant of Stock Purchase
Rights under Section 12 of the Plan.


 


(kk)                            “Restricted Stock Unit”
means a bookkeeping entry representing an amount equal to the Fair Market Value
of one Share, granted pursuant to Section 13.  Each Restricted Stock Unit represents an
unfunded and unsecured obligation of the Company.


 


(ll)                                  “Return on Assets”
means the percentage equal to the Company’s or a business unit’s Operating
Income before incentive compensation, divided by average net Company or
business unit, as applicable, assets, determined in accordance with generally
accepted accounting principles.


 


(mm)                      “Return on Equity” means
the percentage equal to the Company’s Net Income divided by average shareholder’s
equity, determined in accordance with generally accepted accounting principles.


 


(nn)                          “Return on Sales”
means the percentage equal to the Company’s or a business unit’s Operating
Income before incentive compensation, divided by the Company’s or the business
unit’s, as applicable, revenue, determined in accordance with generally
accepted accounting principles.


 


4





















 


(oo)                          “Rule 16b-3”                            means Rule 16b-3
of the Exchange Act or any successor to Rule 16b-3, as in effect when
discretion is being exercised with respect to the Plan.


 


(pp)                          “Stock Appreciation Right”
or “SAR” means a stock appreciation right granted pursuant to Section 10
below.


 


(qq)                          “Section 16(b)”
means Section 16(b) of the Exchange Act.


 


(rr)                                “Share” means a
share of the Common Stock, as adjusted in accordance with Section 17 of
the Plan.


 


(ss)                            “Stock Purchase Right”
means the right to purchase Common Stock pursuant to Section 12 of the
Plan, as evidenced by an Award Agreement.


 


(tt)                                “Subsidiary”
means a “subsidiary corporation”, whether now or hereafter existing, as defined
in Section 424(f) of the Code.


 


(uu)                          “Total Stockholder Return”
means the total return (change in share price plus reinvestment of any
dividends) of a share of the Company’s common stock.


 


3.                                       Stock Subject
to the Plan.  Subject to the
provisions of Section 17 of the Plan, the maximum aggregate number of
Shares which may be issued under the Plan is 145,000,000 Shares. The Shares may
be authorized, but unissued, or reacquired Common Stock.


 


Any Shares subject to Options or SARs shall
be counted against the numerical limits of this Section 3 as one Share for
every Share subject thereto.  With
respect to Awards granted on or after the date of receiving shareholder
approval of the amended Plan in 2005, any Shares subject to Stock Purchase
Rights, Performance Shares or Restricted Stock Units with a per share or unit
purchase price lower than 100% of Fair Market Value on the date of grant shall
be counted against the numerical limits of this Section 3 as two Shares
for every one Share subject thereto.  To
the extent that a Share that was subject to an Award that counted as two Shares
against the Plan reserve pursuant to the preceding sentence is recycled back
into the Plan under the next paragraph of this Section 3, the Plan shall
be credited with two Shares.


 


If an Award expires or becomes unexercisable
without having been exercised in full, or, with respect to Restricted Stock,
Performance Shares or Restricted Stock Units, is forfeited to or repurchased by
the Company, the unpurchased Shares (or for Awards other than Options and SARs,
the forfeited or repurchased shares) which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated).  With respect to SARs,  when a stock settled SAR is exercised, the
Shares subject to a SAR grant agreement shall be counted against the numerical
limits of Section 3 above, as one share for every share subject thereto,
regardless of the number of shares used to settle the SAR upon exercise. Shares
that have actually been issued under the Plan under any Award shall not be
returned to the Plan and shall not become available for future distribution under
the Plan; provided, however, that if Shares of Restricted Stock, Performance
Shares or Restricted Stock Units are repurchased by the Company at their
original purchase price or are forfeited to the Company, such Shares shall
become available for future grant under the Plan.  Shares used to pay the exercise price of an
Option shall not become available for future grant or sale under the Plan.  Shares used to satisfy tax withholding
obligations shall not become available for future grant or sale under the Plan.  To the extent an Award under the Plan is paid
out in cash rather


 


5





















 


than stock, such cash payment shall not reduce the number of Shares
available for issuance under the Plan. 
Any payout of Dividend Equivalents, because they are payable only in
cash, shall not reduce the number of Shares available for issuance under the
Plan.  Conversely, any forfeiture of
Dividend Equivalents shall not increase the number of Shares available for
issuance under the Plan.


 


4.                                       Administration
of the Plan.


 


(a)                                  Procedure.


 


(i)                                     Multiple
Administrative Bodies.  If permitted
by Rule 16b-3 promulgated under the Exchange Act or any successor rule thereto,
as in effect at the time that discretion is being exercised with respect to the
Plan, and by the legal requirements of the Applicable Laws relating to the
administration of stock plans such as the Plan, if any, the Plan may (but need
not) be administered by different administrative bodies with respect to (a) Directors
who are Employees, (b) Officers who are not Directors, and (c) Employees
who are neither Directors nor Officers.


 


(ii)                                  Section 162(m).  To the extent that the Administrator
determines it to be desirable to qualify Awards granted hereunder as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the Plan
shall be administered by a Committee of two or more “outside directors” within
the meaning of Section 162(m) of the Code.


 


(iii)                               Rule 16b-3.  To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions
contemplated hereunder shall be structured to satisfy the requirements for
exemption under Rule 16b-3.


 


(iv)                              Other Administration.  Other than as provided above, the Plan shall
be administered by (a) the Board or (b) a Committee, which committee
shall be constituted to satisfy Applicable Laws.


 


(b)                                 Powers of the
Administrator.  Subject to the
provisions of the Plan, and in the case of a Committee, subject to the specific
duties delegated by the Board to such Committee, the Administrator shall have
the authority, in its discretion:


 


(i)                                     to determine the
Fair Market Value;


 


(ii)                                  to select the
person(s) to whom Awards may be granted hereunder;


 


(iii)                               to determine the number
of shares of Common Stock to be covered by each Award granted hereunder;


 


(iv)                              to approve forms of Award
Agreement for use under the Plan;


 


(v)                                 to determine the terms
and conditions, not inconsistent with the terms of the Plan, of any Award
granted hereunder.  Such terms and
conditions include, but are not limited to, the exercise price, the date of
grant, the time or times when Awards may be exercised (or are earned) (which
may be based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Award
or the shares of Common Stock relating thereto, based in each case on such
factors as the Administrator, in its sole


 


6





















 


discretion, shall determine; 
provided, however, that with respect to Shares of Restricted Stock
subject to Stock Purchase Rights, Performance Shares or Restricted Stock Units
vesting solely based on continuing as an Employee or Chairman, they will vest
in full no earlier (except if accelerated pursuant to Sections 17 or 4(b)(ix) hereof)
than the three (3) year anniversary of the grant date; provided, further,
that if vesting is not solely employment- or Chairmanship-based, they will vest
in full no earlier (except if accelerated pursuant to Sections 17 or 4(b)(ix) hereof)
than the one (1) year anniversary of the grant date;


 


(vi)                              the Administrator may not
“reprice” Options, SARs or Stock Purchase Rights, including 6-months-plus-1-day
option exchange programs, without shareholder approval;


 


(vii)                           to construe and interpret
the terms of the Plan and Awards granted pursuant to the Plan;


 


(viii)                        to prescribe, amend and rescind
rules and regulations relating to the Plan, including rules and
regulations relating to sub-plans established for the purpose of qualifying for
preferred tax treatment under foreign tax laws;


 


(ix)                                to modify or amend each
Award (subject to Section 19(c) of the Plan), including the
discretionary authority to extend the post-termination exercisability period of
Options and SARs longer than is otherwise provided for in the Plan; however,
the Administrator may not extend the post-termination exercisability period
beyond the earlier of the date the Award would otherwise expire by its terms
due to the passage of time from the date of grant or seven (7) years;


 


(x)                                   to allow
Participants to satisfy withholding tax obligations by electing to have the
Company withhold from the Shares to be issued upon exercise of an Option, SAR
or Stock Purchase Right or upon vesting or payout of another Award, that number
of Shares or cash having a Fair Market Value equal to the amount required to be
withheld.  The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined.  All
elections by a Participant to have Shares or cash withheld for this purpose
shall be made in such form and under such conditions as the Administrator may
deem necessary or advisable;


 


(xi)                                to determine whether
Awards will be adjusted for Dividend Equivalents;


 


(xii)                             to authorize any person to
execute on behalf of the Company any instrument required to effect the grant of
an Award previously granted by the Administrator; and


 


(xiii)                          to make all other
determinations deemed necessary or advisable for administering the Plan.


 


(c)                                  Effect of
Administrator’s Decision.  The
Administrator’s decisions, determinations and interpretations shall be final
and binding on all Participants and any other holders of Awards.


 


5.                                       Eligibility.  Awards may be granted to Employees and the Chairman.  Incentive Stock Options may be granted only
to Employees.


 


7





















 


6.                                       No Employment
Rights.  Neither the Plan nor any
Award shall confer upon a Participant any right with respect to continuing the
Participant’s relationship as an Employee with or Chairman of the Company, nor
shall they interfere in any way with the Participant’s right or the Company’s
right to terminate such relationship at any time, with or without cause.


 


7.                                       Code Section 162(m)
Provisions.


 


(a)                                  Option and SAR
Annual Share Limit.  No Participant
shall be granted, in any Fiscal Year, Options and Stock Appreciation Rights to
purchase more than 34,000,000 Shares.


 


(b)                                 Restricted Stock
Subject to Stock Purchase Rights, Performance Share and Restricted Stock Unit
Annual Limit.  No Participant shall
be granted, in any Fiscal Year, more than 10,000,000 Shares in the aggregate of
the following: (i) Restricted Stock subject to Stock Purchase Rights, (ii) Performance
Shares, or (iii) Restricted Stock Units.


 


(c)                                  Section 162(m)
Performance Restrictions.  For
purposes of qualifying grants of Restricted Stock subject to Stock Purchase
Rights, Performance Shares or Restricted Stock Units as “performance-based
compensation” under Section 162(m) of the Code, the Administrator, in its
discretion, may set restrictions based upon the achievement of Performance
Goals.  The Performance Goals shall be
set by the Administrator on or before the latest date permissible to enable the
Restricted Stock subject to Stock Purchase Rights, Performance Shares or
Restricted Stock Units to qualify as “performance-based compensation” under Section 162(m)
of the Code.  In granting Restricted
Stock subject to Stock Purchase Rights, Performance Shares or Restricted Stock
Units which are intended to qualify under Section 162(m) of the Code, the
Administrator shall follow any procedures determined by it from time to time to
be necessary or appropriate to ensure qualification of the Award under Section 162(m)
of the Code (e.g., in determining the Performance Goals).


 


(d)                                 Changes in
Capitalization.  The numerical
limitations in Sections 7(a) and (b) shall be adjusted
proportionately in connection with any change in the Company’s capitalization
as described in Section 18(a).


 


8.                                       Term of Plan.  Subject to Section 23 of the Plan, the
Plan shall continue in effect until February 8, 2015.


 


9.                                       Stock Options.


 


(a)                                  Type of Option.  Each Option shall be designated in the Award
Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.  However, not withstanding such designation,
to the extent that the aggregate Fair Market Value of the Shares with respect
to which Incentive Stock Options are exercisable for the first time by the
Participant during any calendar year (under all plans of the Company and any
Parent or Subsidiary) exceeds $100,000, such Options shall be treated as
Nonstatutory Stock Options.  For purposes
of this Section 9(a), 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.


 


(b)                                 Term.  The term of each Option shall be seven (7) 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 Participant who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the total combined voting power of


 


8





















 


all classes of stock of the Company or any Parent or Subsidiary, 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.


 


(c)                                  Option Exercise
Price and Consideration.


 


(i)                                     Exercise Price.  The per share exercise price for the Shares
to be issued pursuant to exercise of an Option shall be no less than 100% of
the Fair Market Value per Share on the date of grant; provided, however, that
in the case of an Incentive Stock Option 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 Parent or Subsidiary, the per Share exercise price shall be no less than
110% of the Fair Market Value per Share on the date of grant.


 


(ii)                                  Waiting Period and
Exercise Dates.  At the time an
Option is granted, the Administrator shall fix the period within which the Option
may be exercised and shall determine any conditions which must be satisfied
before the Option may be exercised.


 


(iii)                               Form of
Consideration.  The Administrator
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 Administrator shall determine the
acceptable form of consideration at the time of grant.  Such consideration may consist entirely of:


 


(1)                                  cash;


 


(2)                                  check;


 


(3)                                  promissory note;


 


(4)                                  other Shares which
have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which said Option shall be exercised (which
may include Shares that would otherwise be issued pursuant to the Option);


 


(5)                                  consideration
received by the Company under a cashless exercise program implemented by the
Company in connection with the Plan;


 


(6)                                  a reduction in the
amount of any Company liability to the Participant, including any liability
attributable to the Participant’s participation in any Company-sponsored
deferred compensation program or arrangement;


 


(7)                                  any combination of
the foregoing methods of payment; or


 


(8)                                  such other
consideration and method of payment for the issuance of Shares to the extent
permitted by Applicable Laws.


 


10.                                 Stock Appreciation
Rights.


 


(a)                                  Granted in
Connection with Options.  At the sole
discretion of the Administrator, SARs may be granted in connection with all or
any part of an Option, either


 


9





















 


concurrently with the grant of the Option or at any time thereafter
during the term of the Option. The following provisions apply to SARs that are
granted in connection with Options:


 


(i)                                     The SAR shall
entitle the Participant to exercise the SAR by surrendering to the Company
unexercised a portion of the related Option. 
The Participant shall receive in exchange from the Company an amount
equal to the excess of (x) the Fair Market Value on the date of exercise of
the SAR of the Common Stock covered by the surrendered portion of the related
Option over (y) the exercise price of the Common Stock covered by the
surrendered portion of the related Option. 
Notwithstanding the foregoing, the Administrator may place limits on the
amount that may be paid upon exercise of a SAR; provided, however, that such
limit shall not restrict the exercisability of the related Option;


 


(ii)                                  When a SAR is
exercised, the related Option, to the extent surrendered, shall no longer be
exercisable;


 


(iii)                               A SAR shall be
exercisable only when and to the extent that the related Option is exercisable
and shall expire no later than the date on which the related Option expires;
and


 


(iv)                              A SAR may only be
exercised at a time when the Fair Market Value of the Common Stock covered by
the related Option exceeds the exercise price of the Common Stock covered by
the related Option.


 


(b)                                 Independent SARs.  At the sole discretion of the Administrator,
SARs may be granted without related Options. 
The following provisions apply to SARs that are not granted in
connection with Options:


 


(i)                                     The SAR shall
entitle the Participant, by exercising the SAR, to receive from the Company an
amount equal to the excess of (x) the Fair Market Value of the Common
Stock covered by exercised portion of the SAR, as of the date of such exercise,
over (y) the Fair Market Value of the Common Stock covered by the
exercised portion of the SAR, as of the date on which the SAR was granted;
provided, however, that the Administrator may place limits on the amount that may
be paid upon exercise of a SAR; and


 


(ii)                                  SARs shall be
exercisable, in whole or in part, at such times as the Administrator shall
specify in the Participant’s Award Agreement;


 


(iii)                               The
term of each SAR shall be seven (7) years from the date of grant or such
shorter term as may be provided in the Award Agreement.


 


(c)                                  Form of
Payment.  The Company’s obligation
arising upon the exercise of a SAR may be paid in Common Stock or in cash, or
in any combination of Common Stock and cash, as the Administrator, in its sole
discretion, may determine.  Shares issued
upon the exercise of a SAR shall be valued at their Fair Market Value as of the
date of exercise.


 


(d)                                 Rule 16b-3.  SARs granted hereunder shall contain such
additional restrictions as may be required to be contained in the Plan or Award
Agreement in order for the SAR to qualify for the maximum exemption provided by
Rule 16b-3.


 


10





















 


11.                                 Exercise of Option
or SAR.


 


(a)                                  Procedure for
Exercise; Rights as a Shareholder. 
Any Option or SAR granted hereunder shall be exercisable according to
the terms of the Plan and at such times and under such conditions as determined
by the Administrator and set forth in the Award Agreement.  An Option may not be exercised for a fraction
of a Share.


 


An Option or SAR shall be deemed exercised
when the Company receives: (i) written or electronic notice of exercise
(in accordance with the terms of the Option or SAR) from the person entitled to
exercise the Option or SAR, 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 Administrator and permitted by the Award Agreement and the Plan.  Shares issued upon exercise of an Option
shall be issued in the name of the Participant or, if requested by the
Participant, in the name of the Participant and his or her spouse.  Until the Shares are 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 shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. 
The Company shall issue (or cause to be issued) such Shares 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 Shares are issued, except as provided in Section 17
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.  Exercise of a SAR
in any manner shall, to the extent the SAR is exercised, result in a decrease
in the number of Shares which thereafter shall be available for purposes of the
Plan, and the SAR shall cease to be exercisable to the extent it has been
exercised.


 


(b)                                 Termination of
Continuous Status as Chairman.  Upon
termination of a Participant’s Continuous Status as Chairman (other than
termination by reason of the Participant’s death), the Participant may, but
only within ninety (90) days after the date of such termination, exercise his
or her Option or SAR to the extent that it was exercisable at the date of such
termination.  Notwithstanding the
foregoing, however, an Option or SAR may not be exercised after the date the
Option or SAR would otherwise expire by its terms due to the passage of time
from the date of grant.


 


(c)                                  Termination of
Continuous Employment.  Upon
termination of a Participant’s Continuous Status as Employee (other than
termination by reason of the Participant’s death), the Participant may, but
only within ninety (90) days after the date of such termination, exercise his
or her Option or SAR to the extent that it was exercisable at the date of such
termination.  Notwithstanding the
foregoing, however, an Option or SAR may not be exercised after the date the
Option or SAR would otherwise expire by its terms due to the passage of time
from the date of grant.


 


(d)                                 Death of
Participant.  If a Participant dies (i) while
an Employee or Chairman, the Option or SAR may be exercised at any time within
six (6) months (or such other period of time not exceeding twelve (12)
months as determined by the Administrator) following the date of death by the
Participant’s estate or by a person who acquired the right to exercise the
Option by bequest or inheritance, but only to the extent of the right to
exercise that would have accrued had the Participant continued living and
terminated his or her employment six (6) months (or such other period of
time


 


11





















 


not exceeding twelve (12) months as determined by the Administrator)
after the date of death; or (ii) within ninety (90) days after the
termination of Continuous Status as an Employee or Chairman, the Option or SAR
may be exercised, at any time within six (6) months (or such other period
of time not exceeding twelve (12) months as determined by the Administrator)
following the date of death by the Participant’s estate or by a person who
acquired the right to exercise the Option or SAR by bequest or inheritance, but
only to the extent of the right to exercise that had accrued at the date of
termination.  If the Option or SAR is not
so exercised within the time specified herein, the Option or SAR shall
terminate, and the Shares covered by such Option or SAR shall revert to the
Plan.


 


Notwithstanding the foregoing, however, an
Option or SAR may not be exercised after the date the Option or SAR would
otherwise expire by its terms due to the passage of time from the date of
grant.


 


(e)                                  Buyout Provisions.  The Administrator may at any time offer to
buy out for a payment in cash or Shares an Option or SAR previously granted
based on such terms and conditions as the Administrator shall establish and
communicate to the Participant at the time that such offer is made.


 


12.                                 Stock Purchase
Rights.


 


(a)                                  Rights to Purchase.  Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other Awards and/or cash awards made
outside of the Plan.  After the
Administrator determines that it will offer Stock Purchase Rights under the
Plan, it shall advise the Participant in writing or electronically, of the
terms, conditions and restrictions related to the offer, including the number
of Shares that the Participant shall be entitled to purchase, the price to be
paid, and the time within which the Participant must accept such offer.  The offer shall be accepted by execution of
an Award Agreement in the form determined by the Administrator.


 


(b)                                 Repurchase Option.  Unless the Administrator determines
otherwise, the Award Agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser’s
service with the Company for any reason (including death or Disability).  The purchase price for Shares repurchased
pursuant to the Award Agreement shall be the original price paid by the purchaser
and may be paid by cancellation of any indebtedness of the purchaser to the
Company.  The repurchase option shall
lapse at a rate determined by the Administrator.


 


(c)                                  Other Provisions.  The Award Agreement shall contain such other
terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Administrator in its sole discretion.


 


(d)                                 Rights as a
Shareholder.  Once the Stock Purchase
Right is exercised, the purchaser shall have the rights equivalent to those of
a shareholder, and shall be a shareholder when his or her purchase is entered
upon the records of the duly authorized transfer agent of the Company.  No adjustment will be made for a dividend or
other right for which the record date is prior to the date the Stock Purchase
Right is exercised, except as provided in Section 17 of the Plan.


 


12





















 


13.                                 Restricted Stock
Units.


 


(a)                                  Grant.  Restricted Stock Units may be granted at any
time and from time to time as determined by the Administrator.  After the Administrator determines that it
will grant Restricted Stock Units under the Plan, it shall advise the
Participant in writing or electronically of the terms, conditions, and
restrictions related to the grant, including the number of Restricted Stock
Units and the form of payout, which, subject to Section 13(d), may be left
to the discretion of the Administrator.


 


(b)                                 Vesting Criteria
and Other Terms.  The Administrator
shall set vesting criteria in its discretion, which, depending on the extent to
which the criteria are met, will determine the number of Restricted Stock Units
that will be paid out to the Participant. 
The Administrator may set vesting criteria based upon the achievement of
Company-wide, business unit, or individual goals (including, but not limited
to, continued employment), or any other basis determined by the Administrator
in its discretion.


 


(c)                                  Earning Restricted
Stock Units.  Upon meeting the
applicable vesting criteria, the Participant shall be entitled to receive a
payout as specified in the Restricted Stock Unit Award Agreement.  Notwithstanding the foregoing, at any time
after the grant of Restricted Stock Units, the Administrator, in its sole
discretion, may reduce or waive any vesting criteria that must be met to
receive a payout.


 


(d)                                 Form and
Timing of Payment.  Payment of earned
Restricted Stock Units shall be made as soon as practicable after the date(s)
set forth in the Restricted Stock Unit Award Agreement.  The Administrator, in its sole discretion,
may pay earned Restricted Stock Units in cash, Shares, or a combination
thereof.  Shares represented by
Restricted Stock Units that are fully paid in cash again shall be available for
grant under the Plan.


 


(e)                                  Cancellation.  On the date set forth in the Restricted Stock
Unit Award Agreement, all unearned Restricted Stock Units shall be forfeited to
the Company.


 


14.                                 Performance Shares.


 


(a)                                  Grant of
Performance Shares.  Subject to the
terms and conditions of the Plan, Performance Shares may be granted to
Participants at any time as shall be determined by the Administrator, in its
sole discretion.  Subject to Section 7(b) hereof,
the Administrator shall have complete discretion to determine (i) the
number of Shares subject to a Performance Share award granted to any
Participant, and (ii) the conditions that must be satisfied, which
typically will be based principally or solely on achievement of performance
milestones but may include a service-based component, upon which is conditioned
the grant or vesting of Performance Shares. 
Performance Shares shall be granted in the form of units to acquire
Shares.  Each such unit shall be the
equivalent of one Share for purposes of determining the number of Shares
subject to an Award.  Until the Shares
are issued, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the units to acquire Shares.


 


(b)                                 Other Terms.  The Administrator, subject to the provisions
of the Plan, shall have complete discretion to determine the terms and
conditions of Performance Shares granted under the Plan.  Performance Share grants shall be subject to
the terms, conditions, and restrictions


 


13





















 


determined by the Administrator at the time the stock is awarded, which
may include such performance-based milestones as are determined appropriate by
the Administrator.  The Administrator may
require the recipient to sign a Performance Shares Award Agreement as a condition
of the award.  Any certificates
representing the Shares of stock awarded shall bear such legends as shall be
determined by the Administrator.


 


(c)                                  Performance Share
Award Agreement.  Each Performance
Share grant shall be evidenced by an Award Agreement that shall specify such
other terms and conditions as the Administrator, in its sole discretion, shall
determine.


 


15.                                 Transferability of
Awards.  Unless determined otherwise
by the Administrator, an Award may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or
by the laws of descent or distribution or pursuant to a qualified domestic
relations order as defined by the Code or Title 1 of the Employee Retirement
Income Security Act, and may be exercised, during the lifetime of the Participant,
only by the Participant.  If the
Administrator makes an Award transferable, such Award shall contain such
additional terms and conditions as the Administrator deems appropriate.


 


16.                                 Stock Withholding
to Satisfy Withholding Tax Obligations. 
When a Participant incurs tax liability in connection with the exercise,
vesting or payout, as applicable, of an Award, which tax liability is subject
to tax withholding under applicable tax laws, and the Participant is obligated
to pay the Company an amount required to be withheld under applicable tax laws,
the Participant may satisfy the withholding tax obligation by electing to have
the Company withhold from the Shares to be issued upon exercise of the Option,
SAR or Stock Purchase Right or the Shares to be issued upon payout or vesting
of the other Award, if any, that number of Shares having a Fair Market Value
equal to the amount required to be withheld. 
The Fair Market Value of the Shares to be withheld shall be determined
on the date that the amount of tax to be withheld is to be determined (the “Tax
Date”).


 


All elections by a Participant to have Shares
withheld for this purpose shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:


 


(a)                                  the election must be
made on or prior to the applicable Tax Date; and


 


(b)                                 all elections shall be
subject to the consent or disapproval of the Administrator.


 


In the event the election to have Shares
subject to an Option, SAR or Stock Purchase Right withheld is made by a
Participant and the Tax Date is deferred under Section 83 of the Code
because no election is filed under Section 83(b) of the Code, the
Participant shall receive the full number of Shares with respect to which the
Option, SAR or Stock Purchase Right is exercised but such Participant shall be
unconditionally obligated to tender back to the Company the proper number of
Shares on the Tax Date.


 


17.                                 Adjustments Upon
Changes in Capitalization, Dissolution, Merger or Asset Sale.


 


(a)                                  Changes in Capitalization.  Subject to any required action by the
shareholders 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


 


14





















 


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, if any, of Common Stock covered by each such outstanding Award and
the 162(m) fiscal year share issuance limits under Sections 7(a) and (b) hereof
shall, 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 conversion of any convertible securities of the Company
shall not be deemed to have been “effected without receipt of consideration.”
Such adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. 
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.


 


(b)                                 Dissolution or
Liquidation.  In the event of the
proposed dissolution or liquidation of the Company, all outstanding Awards will
terminate immediately prior to the consummation of such proposed action, unless
otherwise provided by the Administrator. 
The Administrator in its discretion may provide for a Participant to
have the right to exercise his or her Option, SAR or Stock Purchase Right until
ten (10) days prior to such transaction as to all of the Awarded Stock covered
thereby, including Shares as to which the Award would not otherwise be
exercisable.  In addition, the
Administrator may provide that any Company repurchase option or forfeiture
rights applicable to any Award shall lapse 100%, and that any Award vesting
shall accelerate 100%, provided the proposed dissolution or liquidation takes
place at the time and in the manner contemplated.  To the extent it has not been previously
exercised (with respect to Options, SARs and Stock Purchase Rights) or vested
(with respect to other Awards), an Award will terminate immediately prior to
the consummation of such proposed action.


 


(c)                                  Merger or Asset
Sale.  Unless otherwise determined by
the Administrator, in the event of a merger of the Company with or into another
corporation, or the sale of substantially all of the assets of the
Company,  each outstanding Award shall be
assumed or an equivalent award substituted by the successor corporation or a
Parent or Subsidiary of the successor corporation.  In the event that the successor corporation
refuses to assume or substitute for the Award, the Participant shall (i) fully
vest in and have the right to exercise the Option, SAR or Stock Purchase Right
as to all of the Awarded Stock, including Shares as to which it would not
otherwise be vested or exercisable, and (ii) fully earn and receive a
payout with respect to other Awards.  If
an Award becomes fully vested and exercisable (or earned, as applicable) in
lieu of assumption or substitution in the event of a merger or sale of assets,
the Administrator shall notify the Participant in writing or electronically
that (i) the Option, SAR or Stock Purchase Right shall be fully vested and
exercisable for a period of thirty (30) days from the date of such notice, and
the Option, SAR or Stock Purchase Right shall terminate upon the expiration of
such period and (ii) the other Award shall be paid out immediately prior
to the merger or sale of assets.  For the
purposes of this paragraph, the Award shall be considered assumed if, following
the merger or sale of assets, the assumed Award confers the right to purchase
or receive, for each Share of Awarded Stock subject to the Award immediately
prior to the merger or sale of assets, the consideration (whether stock, cash,
or other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets is not solely common


 


15





















 


stock of the successor corporation or its Parent, the Administrator
may, with the consent of the successor corporation, provide for the
consideration to be received upon the exercise (or payout or vesting, as
applicable) of the Award, for each Share of Awarded Stock subject to the Award,
to be solely common stock of the successor corporation or its Parent equal in
fair market value to the per share consideration received by holders of Common
Stock in the merger or sale of assets.


 


(d)                                 Change in Control.  In the event of a “Change in Control” of the
Company, as defined in paragraph (e) below, unless otherwise
determined by the Administrator prior to the occurrence of such Change in
Control, the following acceleration and valuation provisions shall apply:


 


(i)                                     Any Options, SARs
and Stock Purchase Rights outstanding as of the date such Change in Control is
determined to have occurred that are not yet exercisable and vested on such
date shall become fully exercisable and vested; and


 


(ii)                                  Any other Awards
outstanding as of the date such Change in Control is determined to have
occurred that are not yet earned on such date shall become fully earned and
vested; and


 


(iii)                               The value of all
outstanding Awards shall, unless otherwise determined by the Administrator at
or after grant, be cashed-out.  The
amount at which such Options, SARs and Stock Purchase Rights shall be cashed
out shall be equal to the excess of 
(x) the Change in Control Price (as defined below) over
(y) the exercise price of the Common Stock covered by the Option, SAR or
Stock Purchase Right, and the amount at which such other Awards shall be cashed
out shall be equal to the Change in Control price (as defined below).  The cash-out proceeds shall be paid to the
Participant or, in the event of death of a Participant prior to payment, to the
estate of the Participant or to a person who acquired the right to exercise the
Option,  SAR or Stock Purchase Right, or
who acquired the right to receive the payout of the other Award, by bequest or
inheritance.


 


(e)                                  Definition of “Change
in Control”.  For purposes of this Section 17,
a “Change in Control” means the happening of any of the following:


 


(i)                                     When any “person”,
as such term is used in Sections 13(d) and 14(d) of the Exchange
Act (other than the Company, a Subsidiary or a Company employee benefit plan,
including any trustee of such plan acting as trustee) is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the combined voting power of the Company’s then outstanding securities;
or


 


(ii)                                  The occurrence of a
transaction requiring shareholder approval, and involving the sale of all or
substantially all of the assets of the Company or the merger of the Company
with or into another corporation (other than the Company’s reincorporation into
another jurisdiction).


 


(f)                                    Change in
Control Price.  For purposes of this Section 17,
“Change in Control Price” shall be, as determined by the Administrator, (i) the
highest Fair Market Value at any time within the 60-day period immediately
preceding the date of determination of the Change in Control


 


16





















 


Price by the Administrator (the “60-Day Period”), or (ii) the
highest price paid or offered, as determined by the Administrator, in any bona
fide transaction or bona fide offer related to the Change in Control of the
Company, at any time within the 60-Day Period.


 


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


 


19.                                 Amendment and
Termination of the Plan.


 


(a)                                  Amendment and
Termination.  The Board may at any
time amend, alter, suspend or terminate the Plan.


 


(b)                                 Shareholder
Approval.  The Company shall obtain
shareholder approval of any material Plan amendments. The Company shall also
obtain shareholder approval of any Plan amendments to the extent necessary and
desirable to comply with Applicable Laws.


 


(c)                                  Effect of
Amendment or Termination.  No
amendment, alteration, suspension or termination of the Plan shall impair the rights
of any Participant, unless mutually agreed otherwise between the Participant
and the Administrator, which agreement must be in writing and signed by the
Participant and the Company.  Termination
of the Plan shall not affect the Administrator’s ability to exercise the powers
granted to it hereunder with respect to Awards granted under the Plan prior to
the date of such termination.


 


20.                                 Conditions Upon
Issuance of Shares.


 


(a)                                  Legal Compliance.  Shares shall not be issued pursuant to the
exercise or payout, as applicable, of an Award unless the exercise or payout,
as applicable, of such Award and the issuance and delivery of such Shares shall
comply with Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance.


 


(b)                                 Investment
Representations.  As a condition to
the exercise or payout, as applicable, of an Award, the Company may require the
person exercising such Option, SAR or Stock Purchase Right, or in the case of
another Award, the person receiving the payout, to represent and warrant at the
time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is
required.


 


21.                                 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.


 


22.                                 Reservation of
Shares.  The Company, during the term
of this Plan, will at all times reserve and keep available such number of
Shares as shall be sufficient to satisfy the requirements of the Plan.


 


17





















 


23.                                 Shareholder
Approval.  The amended and restated
Plan shall be subject to approval by the shareholders of the Company within
twelve (12) months after February 8, 2005. 
Such shareholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.


 


24.                                 Non-U.S. Employees.  Notwithstanding anything in the Plan to the
contrary, with respect to any employee who is resident outside of the United
States, the Committee may, in its sole discretion, amend the terms of the Plan
in order to conform such terms with the requirements of local law or to meet
the objectives of the Plan.  The
Committee may, where appropriate, establish one or more sub-plans for this
purpose.


 


18