Document:

exv10w5

 

Exhibit 10.5

Employment Agreement

          This
Employment Agreement (the “Agreement”) dated as of April 18, 2003,
and effective as of the signing date of the Stock Purchase Agreement (the
“Effective Date”), is made by and between United Aftermarket, Inc. (together
with any successor thereto, the “Company”) and Bruce Zorich (the “Executive”).

RECITALS

	A.	 	It is the desire of the Company to assure itself of the services of the
Executive by engaging the Executive to perform services under the terms
hereof.
	 
	B.	 	The Executive desires to provide services to the Company on the terms
herein provided.

AGREEMENT

          NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below the parties hereto agree as follows:

	1.	 	Certain Definitions.

	 	(a)	 	“Annual Base Salary” shall have the meaning set forth in
Section 3(a).
	 
	 	(b)	 	“Board” shall mean the Board of Directors of the Company.
	 
	 	(c)	 	The Company shall have “Cause” to terminate the Executive’s
employment hereunder upon:

	 	 	 	 	 
	 	 	
(i)
	 	the Executive’s failure to use his reasonable
best efforts to follow a legal written order of the Board,
other than any such failure resulting from the Executive’s
Disability, and such failure is not remedied within 30 days
after receipt of notice;
	 	 	 	 	 
	 	 	
(ii)
	 	Executive’s gross or willful misconduct with
regard to the Company;
	 	 	 	 	 
	 	 	
(iii)
	 	Executive’s conviction of a felony or crime
involving material dishonesty;
	 	 	 	 	 
	 	 	
(iv)
	 	Executive’s fraud or personal dishonesty
involving the Company’s assets (but excluding expense
reimbursement disputes as to which Executive had a reasonable
good faith belief that his conduct was within the policies of
the Company); or
	 	 	 	 	 
	 	 	
(v)
	 	the Executive’s unlawful use (including being
under the influence) or possession of illegal drugs on the
Company’s premises or while performing the Executive’s duties
and responsibilities under this Agreement.

	 	(d)	 	“Company” shall have the meaning set forth in the preamble
hereto.

 

 

	 	(e)	 	“Compensation Committee” means the Compensation Committee of
the Board.
	 
	 	(f)	 	“Closing Date” shall have the meaning set forth in the Stock
Purchase Agreement.
	 
	 	(g)	 	“Date of Termination” shall mean (i) if the Executive’s
employment is terminated by his death, the date of his death; (ii)
if the Executive’s employment is terminated pursuant to Section
4(a)(ii) – (vi) either the date indicated in the Notice of
Termination or the date specified by the Company pursuant to Section
4(b), whichever is earlier; (iii) if the Executive’s employment is
terminated pursuant to Section 4(a)(vii) or Section 4(a)(viii), the
expiration of the then-applicable Term.
	 
	 	(h)	 	“Disability” shall mean the absence of the Executive from the
Executive’s duties to the Company on a full-time basis for a total
of six months during any 12-month period as a result of incapacity
due to mental or physical illness which is determined to be
reasonably likely to extend beyond the completion of the Term and
which determination is made by a physician selected by the Company
and acceptable to the Executive or the Executive’s legal
representative (such agreement as to acceptability not to be
withheld unreasonably). A Disability shall not be “incurred”
hereunder until, at the earliest, the last day of the sixth month of
such absence.
	 
	 	(i)	 	“Executive” shall have the meaning set forth in the preamble
hereto.
	 
	 	(j)	 	“Executive Bonus Plan” shall have the meaning set forth in
Section 3(b).
	 
	 	(k)	 	(i)	The Executive shall have “Good Reason” to resign his
employment upon the occurrence of any of the following:

		
	 	     (A) failure of the Company to continue the Executive in
the position of Chief Executive Officer;

		
	 	     (B) a material diminution in the nature of scope of the
Executive’s responsibilities, duties or authority;

		
	 	     (C) failure of the Principal Shareholders to satisfy
their requirements under Section 2(c)(ii) of the Agreement

		
	 	     (D) failure of the Company to make any payment or
provide any benefit under this Agreement;

		
	 	     (E) the Company’s material breach of this Agreement;

		
	 	     (F) failure of any successor to the Company to assume
the obligations of the Company hereunder; or

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	 	     (G) requirement by the Company to relocate the
Executive’s place of residence outside of the Greater Atlanta
area at any time prior to the second anniversary of the
Effective Date.

	 	 	 	(ii)	The Executive may not resign his employment for
Good Reason unless:

		
	 	     (A) the Executive provided the Company with at least 30
days prior written notice of his intent to resign for Good
Reason; and

		
	 	     (B) the Company has not remedied the alleged
violation(s) within the 30-day period.

	 	(l)	 	“Interim Period” shall have the meaning set forth in Section
3(b)(i).
	 
	 	(m)	 	“Inventions” shall have the meaning set forth in Section 8.
	 
	 	(n)	 	“Notice of Termination” shall have the meaning set forth in
Section 4(b).
	 
	 	(o)	 	“Outside Closing Date” shall mean the later to occur of (i)
October 31, 2003 or (ii) a date selected by the Principal
Stockholders in their sole discretion.
	 
	 	(p)	 	“Principal Stockholders” shall mean Carlyle Partners III,
L.P. a Delaware limited partnership and its affiliates.
	 
	 	(q)	 	“Stock Purchase Agreement” shall mean the contemplated Stock
Purchase Agreement by and among UIS Industries, Inc., UIS, Inc. and
United Aftermarket, Inc.
	 
	 	(r)	 	“Term” shall have the meaning set forth in Section 2(b).

	2.	 	Employment.

	 	(a)	 	The Company shall employ the Executive and the Executive
shall enter the employ of the Company, for the period set forth in
Section 2(b), in the position set forth in Section 2(c), and upon
the other terms and conditions herein provided.
	 
	 	(b)	 	The initial term of employment under this Agreement (the
“Initial Term”) shall be for the period beginning on the Effective
Date of this Agreement and ending on the third anniversary thereof,
unless earlier terminated as provided in Section 4. The employment
term hereunder shall automatically be extended for successive
one-year periods (“Extension Terms” and, collectively with the
Initial Term, the “Term”) unless either party gives notice of
non-extension to the other no later than 90 days prior to the
expiration of the then-applicable Term.
	 
	 	(c)	 	Position and Duties.

		
	 	     (i)     The Executive shall serve as Chief Executive Officer of
the Company and shall have the authorities duties and
responsibilities customarily

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	 	 	 	commensurate with such position and such additional customary
responsibilities, duties and authority as may from time to time be
reasonably assigned to the Executive by the Board. The Executive
shall report to the Board. The Executive shall devote
substantially all his working time and efforts to the business and
affairs of the Company. The Executive agrees to observe and comply
with the Company’s rules and policies as adopted by the Company
from time to time. During the Term, it shall not be a violation of
this Agreement for the Executive to (i) serve on industry trade,
civic or charitable boards or committees; (ii) deliver lectures or
fulfill speaking engagements; or (iii) manage personal investments,
as long as such activities do not materially interfere with the
performance of the Executive’s duties and responsibilities. The
Executive shall be permitted to serve on for-profit corporate
boards of directors and advisory committees if approved in advance
by the Board.
	 
	 	 	 	      (ii)     As of the Effective Date, the Principal Stockholders
shall cause the Executive to be appointed or elected to the Board.
During the Term, the Board shall propose the Executive for
re-election to the Board and the Principal Stockholders shall vote
all of their shares of Common Stock in favor of such re-election.

	3.	 	Compensation and Related
Matters.

	 	(a)	 	Annual Base Salary. During the portion of the Term which
follows the Closing Date, the Executive shall receive a base salary
at a rate of $375,000 per annum, which shall be paid in accordance
with the customary payroll practices of the Company, subject to any
increase as determined by the Compensation Committee in its sole
discretion (the “Annual Base Salary”). Annual Base Salary may be
increased, but not decreased, from time to time by the Board.
	 
	 	(b)	 	Interim Period. During the period between the Effective Date
and the Closing Date (“Interim Period”),
	 
	 	 	 	     (i)     for the period after the last date with respect to which
Executive is entitled to receive periodic salary payments from his
previous employer, Executive shall accrue salary at the rate of his
Annual Base Salary with such accrued amount to be paid in a lump
sum on the earlier of the Closing Date or the Outside Closing Date;
	 
	 	 	 	     (ii)     the Company shall reimburse Executive for any premiums
paid in connection with the Executive’s election to receive COBRA
continuation health care coverage from his previous employer,
provided, however, that such reimbursement shall cease once the
Executive becomes eligible for coverage under the Company’s medical
benefit plan;
	 
	 	 	 	     (iii)     the Company shall reimburse Executive for any reasonable
premiums paid in connection with the Executive’s purchase of a
one-year term life insurance policy that would pay the Executive’s
beneficiary $1 million upon

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	 	 	 	the death of the Executive during any period prior to the
Executive becoming eligible for any amount of life insurance
coverage under the Company’s applicable life insurance plan. Upon
Executive becoming so eligible, he shall cancel such policy and
return the refunded premium to the Company; and
	 
	 	 	 	     (iv)     the Company shall reimburse Executive for any reasonable
premiums paid in connection with the Executive’s purchase of a
long-term disability insurance policy that would pay the Executive
a monthly benefit up to 60% of one-twelfth of his Annual Base
Salary (subject to a reasonable maximum monthly benefit) in the
event the Executive becomes disabled as defined under such policy,
during any period prior to the Executive becoming eligible for any
long-term disability coverage under the Company’s applicable
long-term disability insurance plan. Upon Executive becoming so
eligible, he shall cancel such policy and return the refunded
premium to the Company.

	 	 	 	The Principal Stockholder shall make any payments described in this
Section 3(b) that the Company is unable to make.
	 
	 	(c)	 	Annual Bonus. During the Term, the Executive will
participate in an annual performance-based bonus plan (“Executive
Bonus Plan”) established by the Compensation Committee at a target
level of 60% of his Annual Base Salary (“Target Level”), and a
maximum of 150% of Annual Base Salary. Such bonus shall be payable
at such time as bonuses are paid to other senior executive officers
who participate therein. Notwithstanding the foregoing, with
respect to each of the Company’s fiscal years that ends during the
Term, the amount of the Executive’s annual bonus payable pursuant to
such plan shall be determined as set forth on Exhibit A. With
respect to the fiscal year ending December 31, 2003, the Executive
shall be eligible to receive the greater of (i) a prorated portion
of his annual bonus based on the number of days the Executive was
employed by the Company during such fiscal year or (ii) $100,000,
provided, however, that such bonus shall not be paid prior to the
earlier to occur of (A) the Closing Date or (B) the Outside Closing
Date.
	 
	 	(d)	 	Equity Participation. During the Term, the Executive shall
be entitled to participate in the Stock Option Plan of Company and
on the Effective Date shall be granted options, to purchase two
percent of the Company’s common stock (“Common Stock”) at an
exercise price per share equal to the per share cost paid by the
Principal Shareholders to acquire the Company. The grant of stock
options shall be governed by the terms of the Stock Option Plan and
Stock Option Agreement (attached hereto as Exhibit B and Exhibit C,
respectively).
	 
	 	(e)	 	Benefits. The Executive shall be entitled to participate in
employee benefit plans, programs and arrangements of the Company
which are applicable to the senior officers of the Company at a
level commensurate with the Executive’s position.
	 
	 	(f)	 	Relocation Expenses. If the Company requires the Executive
to relocate his place of residence outside of the Greater Atlanta
area whether before or after the second

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	 	 	 	anniversary of the Effective Date, the Company shall reimburse
Executive for any of the following expenses to the full extent
reasonable: (i) real estate broker commissions and attorney fees
associated with the sale of his former residence and purchase of a
new residence, (ii) moving expenses (as defined in Section 217(b)
of the Internal Revenue Code (the “Code”)), and (iii) to the extent
approved by the Board, necessary temporary lodging for the
Executive and his family, provided that the Executive shall
properly account for such expenses in accordance with the Company’s
policies and procedures.

	4.	 	Termination.

          The Executive’s employment hereunder may be terminated by the Company or
the Executive, as applicable, without any breach of this Agreement only under
the following circumstances:

	 	(a)	 	Circumstances.

	 	 	 	 	 
	 	 	
(i)
	 	Death. The Executive’s employment hereunder
shall terminate upon his death.
	 	 	 	 	 
	 	 	
(ii)
	 	Disability. If the Executive has incurred a
Disability, the Company may give the Executive written notice
of its intention to terminate the Executive’s employment. In
that event, the Executive’s employment with the Company shall
terminate effective on the 30th day after receipt of such
notice by the Executive, provided that within the 30 days
after such receipt, the Executive shall not have returned to
full-time performance of his duties.
	 	 	 	 	 
	 	 	
(iii)
	 	Termination for Cause. The Company may
terminate the Executive’s employment for Cause.
	 	 	 	 	 
	 	 	
(iv)
	 	Termination without Cause. The Company may
terminate the Executive’s employment without Cause.
	 	 	 	 	 
	 	 	
(v)
	 	Resignation for Good Reason. The Executive may
resign his employment for Good Reason.
	 	 	 	 	 
	 	 	
(vi)
	 	Resignation without Good Reason. The Executive
may resign his employment without Good Reason.
	 	 	 	 	 
	 	 	
(vii)
	 	Non-extension of Term by the Company. The
Company may give notice of non-extension to the Executive
pursuant to Section 2(b).
	 	 	 	 	 
	 	 	
(viii)
	 	Non-extension of Term by the Executive. The Executive may
give notice of non-extension to the Company pursuant to
Section 2(b).

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(ix)
	 	Failure to Close. The Executive’s employment
hereunder shall terminate in the event that the Closing Date
does not occur prior to the Outside Closing Date.

	 	(b)	 	Notice of Termination. Any termination of the Executive’s
employment by the Company or by the Executive under this Section 4
(other than termination pursuant to paragraph (a)(i)and (a)(ix))
shall be communicated by a written notice to the other party hereto
indicating the specific termination provision in this Agreement
relied upon, setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated, and
specifying a Date of Termination which, if submitted by the
Executive, shall be at least 30 days following the date of such
notice (a “Notice of Termination”) provided, however, that the
Company may, in its sole discretion, change the Date of Termination
to any date following the Company’s receipt of the Notice of
Termination. A Notice of Termination submitted by the Company may
provide for a Date of Termination on the date the Executive receives
the Notice of Termination, or any date thereafter elected by the
Company in its sole discretion. The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Cause or Good Reason
shall not waive any right of the Executive or the Company hereunder
or preclude the Executive or the Company from asserting such fact or
circumstance in enforcing the Executive’s or the Company’s rights
hereunder.
	 
	 	(c)	 	Company obligations upon termination. Upon termination of
the Executive’s employment, the Executive (or the Executive’s
estate) shall be entitled to receive a lump sum equal to the
Executive’s Annual Base Salary through the Date of Termination not
theretofore paid, any bonus if declared or earned but not yet paid
for a completed fiscal year, any expenses owed to the Executive, any
accrued vacation pay owed to the Executive, and any amount arising
from the Executive’s participation in, or benefits under any
employee benefit plans, programs or arrangements, which amounts
shall be payable in accordance with the terms and conditions of such
employee benefit plans, programs or arrangements.

	5.	 	Severance Payments.

	 	(a)	 	Termination for Cause, Resignation without Good Reason or
upon Non-extension by the Executive. If the Executive’s employment
shall terminate pursuant to Sections 4(a)(iii) for Cause, Section
4(a)(vi) without Good Reason, or pursuant to Sections 4(a)(viii) due
to Non-extension of the Agreement by the Executive, the Executive
shall not be entitled to any severance payment or benefits (other
than as expressly provided for herein or under any benefit plan).
	 
	 	(b)	 	Termination upon death or Disability. If the Executive’s
employment shall terminate pursuant to Sections 4(a)(i) due to the
Executive’s death, or pursuant to Section 4(a)(ii) due to the
Executive’s Disability, the Company shall pay to the Executive (or
the Executive’s estate):

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(i)
	 	in accordance with the Company’s regular payroll
practice following the Date of Termination, an amount equal to
the Annual Base Salary that the Executive would have been
entitled to receive if the Executive had continued his
employment for a period of six months following the Date of
Termination; and
	 	 	 	 	 
	 	 	
(ii)
	 	a prorated amount of the Executive’s annual bonus
based on the Company’s year-to-date performance through the
Date of Termination in relation to the performance targets set
forth in the Executive Bonus Plan (such amount to be
determined in good faith by the Compensation Committee).

	 	(c)	 	Termination without Cause or resignation for Good Reason. If
the Executive’s employment shall terminate without Cause pursuant to
Section 4(a)(iv) or for Good Reason pursuant to Section 4(a)(v), the
Company shall:

	 	 	 	 	 
	 	 	
(i)
	 	pay, in accordance with normal payroll practices,
the Executive’s Annual Base Salary for (A) the remainder of
the Term, as applicable, or (B) twelve months, whichever is
longer;
	 	 	 	 	 
	 	 	
(ii)
	 	within ten days after the Date of Termination,
pay to the Executive a lump sum equal to a pro-rata portion of
the Executive’s Target Level annual bonus for the year of
termination, based on the number of days the Executive was
employed by the Company during the applicable year; and
	 	 	 	 	 
	 	 	
(iii)
	 	continue coverage for the Executive and any
dependents under all Company group health benefit plans in
which the Executive and any dependents were entitled to
participate immediately prior to the Date of Termination
(under the same terms as during employment) for (A) the Term,
as applicable, or (B) twelve months, whichever is longer.

	 	(d)	 	Termination upon Non-extension by the Company. If the
Executive’s employment shall terminate pursuant to Sections
4(a)(vii) due to Non-extension of the Agreement by the Company, the
Company shall:

	 	 	 	 	 
	 	 	
(i)
	 	pay, in accordance with normal payroll practices,
the Executive’s Annual Base Salary for twelve months; and
	 	 	 	 	 
	 	 	
(ii)
	 	within ten days after the Date of Termination,
pay to the Executive a prorated amount of the Executive’s
annual bonus based on the Company’s year-to-date performance
through the Date of Termination in relation to the performance
targets set forth in the Executive Bonus Plan (such amount to
be determined in good faith by the Compensation Committee).

	 	(e)	 	Failure to Close. If the Executive’s employment shall
terminate pursuant to Sections 4(a)(ix) due to the Closing Date not
occurring prior to the Outside Closing Date, the Principal
Stockholders shall, within ten days after the Outside Closing Date,
pay to the Executive a lump sum equal to the sum of (i) the Annual

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	 	 	 	Base Salary and (ii) the excess of (A) the annual bonus calculated
at 100% of the Target Level over (B) the annual bonus payable to
the Executive for the fiscal year ending December 31, 2003 pursuant
to Section 3(c) herein.
	 
	 	(f)	 	Survival. The expiration or termination of the Term shall
not impair the rights or obligations of any party hereto, which
shall have accrued prior to such expiration or termination.
	 
	 	(g)	 	Mitigation. The Executive shall have no duty to mitigate the
amount of any payment provided for hereunder by seeking other
employment, and any income earned by the Executive from other
employment or self-employment shall not be offset against any
obligations of the Company to the Executive hereunder.

	6.	 	Competition.

	 	(a)	 	The Executive shall not, at any time during the Term or
during the 12-month period following the later of the expiration of
the Term or the Date of Termination directly or indirectly engage
in, have any equity interest in, or manage or operate any person,
firm, corporation, partnership or business (whether as director,
officer, employee, agent, representative, partner, security holder,
consultant or otherwise) that engages in any business which
materially competes with any material business of the Company or any
entity owned by the Company anywhere in the world provided, however,
that the Executive shall be permitted to acquire a passive stock or
equity interest in such a business provided the stock or other
equity interest acquired is not more than five percent (5%) of the
outstanding interest in such business. Nothing herein shall prevent
the Executive from engaging in any activity with, or holding a
financial interest in, a non-competitive division, subsidiary or
affiliate of an entity engaged in a business that materially
competes with the Company.
	 
	 	(b)	 	During the Term and during the term set forth in Section
6(a), the Executive will not, and will not permit any of his
affiliates to, directly or indirectly, recruit or otherwise solicit
or induce any non-clerical employee, customer, subscriber or
supplier of the Company to terminate its employment or arrangement
with the Company, otherwise change its relationship with the
Company, or establish any relationship with the Executive or any of
his affiliates for any business purpose that is prohibited by
subjection (a) above. Nothing herein shall prevent the Executive
from serving as a reference.
	 
	 	(c)	 	In the event the terms of this Section 6 shall be determined
by any court of competent jurisdiction to be unenforceable by reason
of its extending for too great a period of time or over too great a
geographical area or by reason of its being too extensive in any
other respect, it will be interpreted to extend only over the
maximum period of time for which it may be enforceable, over the
maximum geographical area as to which it may be enforceable, or to
the maximum extent in all other respects as to which it may be
enforceable, all as determined by such court in such action.

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	 	(d)	 	As used in this Section 6, the term “Company” shall include
the Company, its parent and any of its direct or indirect
subsidiaries.

	7.	 	Nondisclosure of Proprietary Information.

	 	(a)	 	Except as required in the faithful performance of the
Executive’s duties hereunder or pursuant to Section 7(c), the
Executive shall, in perpetuity, maintain in confidence and shall not
directly, indirectly or otherwise, use, disseminate, disclose or
publish, or use for his benefit or the benefit of any person, firm,
corporation or other entity any confidential or proprietary
information or trade secrets of or relating to the Company,
including, without limitation, information with respect to the
Company’s operations, processes, products, inventions, business
practices, finances, principals, vendors, suppliers, customers,
potential customers, marketing methods, costs, prices, contractual
relationships, regulatory status, compensation paid to employees or
other terms of employment, or deliver to any person, firm,
corporation or other entity any document, record, notebook, computer
program or similar repository of or containing any such confidential
or proprietary information or trade secrets. The parties hereby
stipulate and agree that as between them the foregoing matters are
important, material and confidential proprietary information and
trade secrets and affect the successful conduct of the businesses of
the Company (and any successor or assignee of the Company).
	 
	 	(b)	 	Upon termination of the Executive’s employment with the
Company for any reason, the Executive will promptly deliver to the
Company all correspondence, drawings, manuals, letters, notes,
notebooks, reports, programs, plans, proposals, financial documents,
or any other documents concerning the Company’s customers, business
plans, marketing strategies, products or processes. The Executive
shall be permitted to retain his rolodex (and similar address and
telephone directories).
	 
	 	(c)	 	The Executive may respond to a lawful and valid subpoena or
other legal process but shall give the Company the earliest
reasonably possible notice thereof, shall, as much reasonably in
advance of the return date as possible, make available to the
Company and its counsel the documents and other information sought
and shall reasonably assist such counsel in resisting or otherwise
responding to such process. The Executive may disclose information
that is public knowledge.
	 
	 	(d)	 	As used in this Section 7, the term “Company” shall include
the Company, its parent and any of its direct or indirect
subsidiaries.

	8.	 	Inventions.

          All rights to discoveries, inventions, improvements and innovations
(including all data and records pertaining thereto) directly related to the
Company’s business, whether or not patentable, copyrightable, registrable as a
trademark, or reduced to writing, that the Executive may discover, invent or
originate during the Term, either alone or with others and whether or not

10

 

during working hours or by the use of the facilities of the Company
(“Inventions”), shall be the exclusive property of the Company. The Executive
shall promptly disclose all Inventions to the Company, shall execute at the
request of the Company any assignments or other documents the Company may deem
necessary to protect or perfect its rights therein, and shall assist the
Company, at the Company’s expense, in obtaining, defending and enforcing the
Company’s rights therein. The Executive hereby appoints the Company as his
attorney-in-fact to execute on his behalf any assignments or other documents
deemed necessary by the Company to protect or perfect its rights to any
Inventions.

	9.	 	Non-Disparagement.

          At any time during the Term or during the 12-month period following the
later of the expiration of the Term or the Date of Termination, each of the
parties agrees that it will not disparage or denigrate to any person any aspect
of his or its past relationship with the other, nor the character of the other
or the other’s agents, representatives, products, or operating methods, whether
past, present, or future, and whether or not based on or with reference to
their past relationship; provided, however, that this paragraph shall have no
application to any evidence or testimony requested of either party hereto by
any court or government agency.

	10.	 	Injunctive Relief.

          It is recognized and acknowledged by the Executive that a breach of the
covenants contained in Sections 6, 7, 8 and 9 will cause irreparable damage to
Company and its goodwill, the exact amount of which will be difficult or
impossible to ascertain, and that the remedies at law for any such breach will
be inadequate. Accordingly, the Executive agrees that in the event of a breach
of any of the covenants contained in Sections 6, 7, 8 and 9, in addition to any
other remedy which may be available at law or in equity, the Company will be
entitled to specific performance and injunctive relief.

	11.	 	Assignment and Successors.

          The Company may assign its rights and obligations under this Agreement to
any entity, including any successor to all or substantially all the assets of
the Company, by merger or otherwise, and may assign or encumber this Agreement
and its rights hereunder as security for indebtedness of the Company and its
affiliates. The Executive may not assign his rights or obligations under this
Agreement to any individual or entity, except his estate upon his death. This
Agreement shall be binding upon and inure to the benefit of the Company, the
Executive and their respective successors, assigns, personnel and legal
representatives, executors, administrators, heirs, distributees, devisees, and
legatees, as applicable.

	12.	 	Governing Law.

          This Agreement shall be governed, construed, interpreted and enforced in
accordance with the substantive laws of the state of New York, without
reference to the principles of conflicts of law of New York or any other
jurisdiction, and where applicable, the laws of the United States.

	13.	 	Validity.

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          The invalidity or unenforceability of any provision or provisions of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.

	14.	 	Notices.

          Any notice, request, claim, demand, document and other communication
hereunder to any party shall be effective upon receipt (or refusal of receipt)
and shall be in writing and delivered personally or sent by telex, telecopy, or
certified or registered mail, postage prepaid, as follows:

	 	(a)	 	If to the Company:
	 
	 	 	 	The Carlyle Group

1001 Pennsylvania Avenue NW

Suite 220 South

Washington, DC 20004

Fax: (202) 347-9250

Attn: Ian Fujiyama

	 
	 	 	 	and a copy to:
	 
	 	 	 	Latham & Watkins

555 Eleventh Street, N.W.

10th Floor

Washington, DC 20004

Fax: (202) 637-2201

Attn: Daniel T. Lennon
	 
	 	(b)	 	If to the Executive:
	 
	 	 	 	Bruce M. Zorich

1185 Lake Shore Overlook

Alpharetta, GA 30005

Fax: (770) 521-9351

          or at any other address as any party shall have specified by notice in
writing to the other party.

	15.	 	Counterparts.

          This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original, but all of which together will constitute
one and the same Agreement.

	16.	 	Entire Agreement.

          The terms of this Agreement and the other agreements and instruments
contemplated hereby or referred to herein (collectively the “Related
Agreements”) are intended by the parties

12

 

to be the final expression of their agreement with respect to the
employment of the Executive by the Company and may not be contradicted by
evidence of any prior or contemporaneous agreement. The parties further intend
that this Agreement and the Related Agreements shall constitute the complete
and exclusive statement of their terms and that no extrinsic evidence
whatsoever may be introduced in any judicial, administrative, or other legal
proceeding to vary the terms of this Agreement and the Related Agreements.

	17.	 	Amendments; Waivers.

          This Agreement may not be modified, amended, or terminated except by an
instrument in writing, signed by the Executive and a duly authorized officer of
Company. By an instrument in writing similarly executed, the Executive or a
duly authorized officer of the Company may waive compliance by the other party
or parties with any provision of this Agreement that such other party was or is
obligated to comply with or perform, provided, however, that such waiver shall
not operate as a waiver of, or estoppel with respect to, any other or
subsequent failure. No failure to exercise and no delay in exercising any
right, remedy, or power hereunder preclude any other or further exercise of any
other right, remedy, or power provided herein or by law or in equity.

	18.	 	No Inconsistent Actions.

          The parties hereto shall not voluntarily undertake or fail to undertake
any action or course of action inconsistent with the provisions or essential
intent of this Agreement. Furthermore, it is the intent of the parties hereto
to act in a fair and reasonable manner with respect to the interpretation and
application of the provisions of this Agreement.

	19.	 	Construction.

          This Agreement shall be deemed drafted equally by both the parties. Its
language shall be construed as a whole and according to its fair meaning. Any
presumption or principle that the language is to be construed against any party
shall not apply. The headings in this Agreement are only for convenience and
are not intended to affect construction or interpretation. Any references to
paragraphs, subparagraphs, sections or subsections are to those parts of this
Agreement, unless the context clearly indicates to the contrary. Also, unless
the context clearly indicates to the contrary, (a) the plural includes the
singular and the singular includes the plural; (b) “and” and “or” are each used
both conjunctively and disjunctively; (c) “any,” “all,” “each,” or “every”
means “any and all,” and “each and every”; (d) “includes” and “including” are
each “without limitation”; (e) “herein,” “hereof,” “hereunder” and other
similar compounds of the word “here” refer to the entire Agreement and not to
any particular paragraph, subparagraph, section or subsection; and (f) all
pronouns and any variations thereof shall be deemed to refer to the masculine,
feminine, neuter, singular or plural as the identity of the entities or persons
referred to may require.

	20.	 	Arbitration.

          Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before an
arbitrator in Atlanta, Georgia in accordance with the rules of the American
Arbitration Association then in effect. Judgment may

13

 

be entered on the arbitration award in any court having jurisdiction,
provided, however, that the Company shall be entitled to seek a restraining
order or injunction in any court of competent jurisdiction to prevent any
continuation of any violation of the provisions of Sections 6, 7, 8 or 9 of the
Agreement and the Executive hereby consents that such restraining order or
injunction may be granted without requiring the Company to post a bond. Only
individuals who are (i) lawyers engaged fulltime in the practice of law; and
(ii) on the AAA register of arbitrators shall be selected as an arbitrator.
Within 20 days of the conclusion of the arbitration hearing, the arbitrator
shall prepare written findings of fact and conclusions of law. It is mutually
agreed that the written decision of the arbitrator shall be valid, binding,
final and non-appealable, provided however, that the parties hereto agree that
the arbitrator shall not be empowered to award punitive damages against any
party to such arbitration. The arbitrator shall require the non-prevailing
party to pay the arbitrator’s full fees and expenses or, if in the arbitrator’s
opinion there is no prevailing party, the arbitrator’s fees and expenses will
be borne equally by the parties thereto. In the event action is brought to
enforce the provisions of this Agreement pursuant to this Section 20, the
non-prevailing parties shall be required to pay the reasonable attorney’s fees
and expenses of the prevailing parties to the extent determined to be
appropriate by the arbitrator, acting in its sole discretion.

	21.	 	Enforcement.

          If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws effective during the term of this
Agreement, such provision shall be fully severable; this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a portion of this Agreement; and the remaining provisions
of this Agreement shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
from this Agreement. Furthermore, in lieu of such illegal, invalid or
unenforceable provision there shall be added automatically as part of this
Agreement a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.

	22.	 	Income Tax Gross-Up.

          To the extent that any payments made by the Company to the Executive
pursuant Sections 3(b)(ii)-(iv) or 3(f) of the Agreement are included in the
Executive’s taxable compensation and are not otherwise deductible by the
Executive under the Code, the Company shall pay the Executive a lump sum amount
which shall, after payment of all applicable income taxes thereon, be
sufficient to reimburse the Executive for any applicable income taxes imposed
on such taxable compensation.

	23.	 	Withholding.

          The Company shall be entitled to withhold from any amounts payable under
this Agreement any federal, state, local or foreign withholding or other taxes
or charges which the Company is required to withhold. The Company shall be
entitled to rely on an opinion of counsel if any questions as to the amount or
requirement of withholding shall arise.

14

 

	24.	 	Sole Employment Agreement.

          The Executive acknowledges and agrees that he has taken all actions
required under the terms of his prior employment, as set forth in a letter
agreement with a representative of his former employer, Magnatrax Corporation,
dated as of January 7, 2002, in order to terminate that employment and that, to
the best of his knowledge, the provisions contained in that employment
agreement do not bind the Company.

	25.	 	Indemnification and Insurance.

          The Company shall indemnify the Executive to the fullest extent permitted
by the laws of the State of New York, as in effect at the time of the subject
act or omission, and he will be entitled to the protection of any insurance
policies the Company may elect to maintain generally for the benefit of its
directors and senior executive officers against all costs, charges and expenses
incurred or sustained by him in connection with any action, suit or proceeding
to which he may be made a party by reason of his being or having been a
director, officer or employee the Company or any of its subsidiaries or his
serving or having served any other enterprise, plan or trust as a director,
officer, employee or fiduciary at the request of the Company (other than any
dispute, claim or controversy arising under or relating to this Agreement
(except for this Section 24)). The provisions of this Section 25 shall survive
any termination of Executive’s employment or any termination of this Agreement.

	26.	 	Attorney’s Fees.

          The Company shall pay the legal fees reasonably incurred by the Executive
in connection with the negotiation and execution of this Agreement, payable
upon submission of the billing statement or paid receipt for such services
rendered by the Executive’s counsel.

	27.	 	Principal Stockholder Obligation.

          Except as provided in Sections 3(b) and 5(e), the Principal Stockholders
shall have no obligations under this Agreement.

	28.	 	Employee Acknowledgement.

          The Executive acknowledges that he has read and understands this
Agreement, is fully aware of its legal effect, has not acted in reliance upon
any representations or promises made by the Company other than those contained
in writing herein, and has entered into this Agreement freely based on his own
judgment.

15

 

          IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.

	 	 	 	 	 
	 	 	COMPANY
	 	 	 	 	 
	 	 	
By:
	 	      /s/ Authorized Person     .

Name:
	 	 	 	 	Title:
	 	 	 	 	 
	 	 	EXECUTIVE
	 	 	 	 	 
	 	 	
By:
	 	      /s/
Bruce M. Zorich        .

Name:
	 	 	 	 	Address:
	 	 	 	 	 
	 	 	PRINCIPAL STOCKHOLDERS
	 	 	 	 	 
	 	 	
By:
	 	      /s/ Authorized Person     .

Name:
	 	 	 	 	Address:

 

 

Exhibit A

ANNUAL BONUS SCHEDULE

	 	 	 	 	 
	EBITDA as % of	 	 	 	 
	Budgeted EBITDA:	 	% of Target Level*:
	
	 	

	Less than 90%	 	 	
0	%
	 	 	 	 	 
	90% to 100%	 	 	
50% to 100	%
	 	 	 	 	 
	100% to 110%	 	 	
100% to 150	%
	 	 	 	 	 
	110% to 120%	 	 	
150% to 200	%
	 	 	 	 	 
	120% to 130%	 	 	
200% to 250	%
	 	 	 	 	 
	
Over 130%
	 	 	
250	%

	*	 	Target Level percentages between benchmarks shall be determined by means
of linear interpolation.

 

 

UNITED COMPONENTS, INC.

CHAMPION LABORATORIES, INC.

June 20, 2003                  

Mr. Bruce Zorich

1185 Lake Shore Overlook

Alpharetta, GA 30005

Dear Bruce:

Reference is made to the Employment Agreement, dated as of April 18, 2003,
between United Aftermarket, Inc. and you (the “Agreement”). We have
mutually agreed to amend certain provisions of the Agreement.

Accordingly, upon confirmation by you of your agreement thereto, the Agreement
shall be amended as follows:

The preamble of the Agreement shall be amended to read in its entirety as
follows:

“This Employment Agreement (the “Agreement”) dated as of April 18, 2003, and
effective as of the signing date of the Stock Purchase Agreement (the
“Effective Date”), is made by and among Bruce Zorich (the “Executive”),
United Components, Inc. (together with any successor thereto, “UCI”) and
Champion Laboratories Inc. (“Champion”).”

The Recitals of the Agreement shall be amended to read in its entirety as
follows:

		
	 	     “A.     It is the desire of Champion to assure the Company of the
services of the Executive by engaging the Executive to perform services
under the terms hereof.
	 
	 	     B.     The Executive desires to provide services to Champion and the
Company on the terms herein provided.”

Section 1(b) of the Agreement shall be amended by replacing the reference to
the term “Company” with the term “UCI.”

Section 1(c) of the Agreement shall be amended by replacing the first reference
to the term “Company” with the term “Board.”

Section 1(d) of the Agreement shall be amended to read in its entirety as
follows:

		
	 	     ““Company” shall mean, as the context requires, UCI and any of its
direct or indirect subsidiaries, including but not limited to the
Executive’s employer, Champion, individually or collectively.”

Sections 1(g) and 1(k)(ii)(A) of the Agreement shall be amended by replacing
each reference to the term “Company” with the term “Board.”

 

 

Section 1(h) of the Agreement shall be amended by replacing the second
reference to the term “the Company” with the term “Champion.”

Sections 1(k)(i)(D), 1(k)(i)(G), 1(k)(ii)(B), 2(a), 3(a), 3(b), 3(c), 3(e),
3(f), 4(c) 5(b), 5(c), 7(c), 16, 17, 22, 23 and 26 of the Agreement shall
be amended by replacing each reference to the term “the Company” with the
term “Champion.”

Section 1(k)(i)(F) of the Agreement shall be amended by replacing each
reference to the term “Company” with the “Company or Champion.”

Section 2(c)(i) of the Agreement shall be amended by replacing the first
reference to the term “the Company” with “each entity constituting the
Company.”

Section 3(d) of the Agreement shall be amended by replacing each reference to
the term “the Company” with “UCI Acquisition Holding, Inc.”

Except with respect to the third (second reference in Section 4(a)(ii)) and the
eighteenth (first reference in Section 4(c)) reference to the term
“Company”, Section 4 of the Agreement shall be amended by replacing each
reference to the term “Company” with the term “Board.”

Section 5(d) of the Agreement shall be amended by replacing the first and
second reference to the term “Company” with the term “Board.”

Section 5(d) of the Agreement shall be amended by replacing the third reference
to the term “the Company” with the term “Champion.”

Sections 6(d) and 7(d) of the Agreement shall be amended by replacing the
second reference to “the Company, its parent and any of its direct or
indirect subsidiaries” with “the Company and UCI Acquisition Holdings,
Inc.”

Section 7(b) of the Agreement shall be amended by replacing the first and
second reference to the term “the Company” with “Champion.”

Section 8 of the Agreement shall be amended by replacing the tenth reference to
the term “the Company” with “Champion.”

Section 11 of the Agreement shall be amended by replacing the first reference
to the term “The Company” with “Each of Champion and the Company.”

Section 14(a) of the Agreement shall be amended by replacing the term “the
Company” with “the Company, the Board or Champion.”

Section 25 of the Agreement shall be amended by replacing the second and third
references to the term “the Company” with “of any entity which is a part
of the Company.”

Section 25 of the Agreement shall be amended by replacing the third and fourth
references to the term “the Company” with “of any entity constituting the
Company.”

Exhibit A of the Agreement shall be amended by replacing references to the term
“EBITDA” with “Company EBITDA.”

 

 

     Upon your confirmation of your agreement with the amendment to the
Agreement set forth above by signing and returning to me the copy of this
letter provided herein, such amendment shall take effect immediately.

	 	 	 	 	 
	 	 	Very truly yours,
	 	 	 	 	 
	 	 	
UNITED COMPONENTS, INC.	 	 
	 	 	 	 	 
	 	 	
     /s/ Ian Fujiyama                .

	 	 
	 	 	
Ian Fujiyama	 	 
	 	 	
Director	 	 
	 	 	 	 	 
	 	 	
CHAMPION LABORATORIES, INC.	 	 
	 	 	 	 	 
	 	 	
     /s/ Authorized Person       .

Name:	 	 
	 	 	
Title:	 	 

Confirmed and agreed this

     day of          , 2003

     /s/ Bruce Zorich          .

Bruce Zorichexv10w6

 

EXHIBIT 10.6

STOCK OPTION PLAN

OF

UCI ACQUISITION HOLDINGS, INC.

     UCI Acquisition Holdings, Inc., a Delaware corporation (the “Company”),
hereby adopts this Stock Option Plan of UCI Acquisition Holdings, Inc. The
purposes of this Plan are as follows:

		
	 	(1)     To further the growth, development and financial success of the
Company and its Subsidiaries (as defined herein), by providing additional
incentives to employees, consultants and directors of the Company and its
Subsidiaries who have been or will be given responsibility for the
management or administration of the Company’s (or one of its
Subsidiaries’) business affairs, by assisting them to become owners of
Common Stock, thereby benefiting directly from the growth, development
and financial success of the Company and its Subsidiaries.
	 
	 
	 	(2)     To enable the Company (and its Subsidiaries) to obtain and retain the
services of the type of professional, technical and managerial employees,
consultants and directors considered essential to the long-range success
of the Company (and its Subsidiaries) by providing and offering them an
opportunity to become owners of Common Stock under Options, including, in
the case of employees, Options that are intended to qualify as “incentive
stock options” under Section 422 of the Code (as defined herein).

ARTICLE I.

DEFINITIONS

     Whenever the following terms are used in this Plan, they shall have the
meaning specified below unless the context clearly indicates to the contrary.
The singular pronoun shall include the plural where the context so indicates.

     Section 1.1 Affiliate

     “Affiliate” shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with, such Person where “control” shall have the meaning given such term under
Rule 405 of the Securities Act.

     Section 1.2 Board

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

     Section 1.3 CEO

     “CEO” shall mean Chief Executive Officer of the Company.

     Section 1.4 Code

     “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

 

     Section 1.5 Committee

     “Committee” shall mean the Committee appointed as provided in Section 6.1.

     Section 1.6 Common Stock

     “Common Stock” shall mean the Common Stock, par value $0.01 per share, of
the Company.

     Section 1.7 Company

     “Company” shall mean UCI Acquisition Holdings, Inc. In addition,
“Company” shall mean any corporation assuming, or issuing new employee stock
options in substitution for, Incentive Stock Options outstanding under the Plan
in a transaction to which Section 424(a) of the Code applies.

     Section 1.8 Consultant

     “Consultant” shall mean any Person who has entered into a consulting
agreement with the Company.

     Section 1.9 Corporate Event

     “Corporate Event” shall mean, as determined by the Committee (or by the
Board, in the case of Options granted to Independent Directors) in its sole
discretion, any transaction or event described in Section 7.1(a) or any unusual
or nonrecurring transaction or event affecting the Company, any Subsidiary of
the Company, or the financial statements of the Company or any Subsidiary, or
changes in applicable laws, regulations, or accounting principles.

     Section 1.10 Director

     “Director” shall mean a member of the Board.

     Section 1.11 Eligible Representative

     “Eligible Representative” for an Optionee shall mean such Optionee’s
personal representative or such other person as is empowered under the deceased
Optionee’s will or the then applicable laws of descent and distribution to
represent the Optionee hereunder.

     Section 1.12 Employee

     “Employee” shall mean any employee (as defined in accordance with the
regulations and revenue rulings then applicable under Section 3401(c) of the
Code) of the Company or one of its Subsidiaries, whether such employee is so
employed at the time this Plan is adopted or becomes so employed subsequent to
the adoption of this Plan.

     Section 1.13 Exchange Act

     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

2

 

     Section 1.14 Incentive Stock Option

     “Incentive Stock Option” shall mean an Option which qualifies under
Section 422 of the Code and is designated as an Incentive Stock Option by the
Committee.

     Section 1.15 Independent Director

     “Independent Director” shall mean a member of the Board who is not an
Employee of the Company or any of its Subsidiaries.

     Section 1.16 Liquidity Event

     “Liquidity Event” shall mean the consummation of the sale, transfer,
conveyance or other disposition in one or a series of related transactions, of
the equity securities of the Company or its successor held by the Principal
Stockholder(s) in exchange for currency such that immediately following such
transaction (or transactions), the value (at original cost) of all equity
securities held by all of the Principal Stockholder(s) is in the aggregate less
than 20% of the equity securities (at original cost) held by the Principal
Stockholder(s) as of June 20, 2003.

     Section 1.17 Non-Qualified Stock Option

     “Non-Qualified Stock Option” shall mean an Option which is not an
“incentive stock option” under Section 422 of the Code and shall include an
Option which is designated as a Non-Qualified Stock Option by the Committee.

     Section 1.18 Officer

     “Officer” shall mean an officer of the Company, as defined in Rule
16a-l(f) under the Exchange Act, as such Rule may be amended in the future.

     Section 1.19 Option

     “Option” shall mean an option granted under the Plan to purchase Common
Stock. “Options” includes both Incentive Stock Options and Non-Qualified Stock
Options.

     Section 1.20 Optionee

     “Optionee” shall mean an Employee, Consultant or Independent Director to
whom an Option is granted under the Plan.

     Section 1.21 Person

     “Person” shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.

     Section 1.22 Plan

     “Plan” shall mean this Stock Option Plan of UCI Acquisition Holdings, Inc.

3

 

     Section 1.23 Principal Stockholder(s)

     “Principal Stockholder(s)” shall mean Carlyle Partners III, L.P. or any of
its Affiliates to which (a) Carlyle Partners III, L.P. or any other Person
transfers Common Stock, or (b) the Company issues Common Stock.

     Section 1.24 Secretary

     “Secretary” shall mean the Secretary of the Company.

     Section 1.25 Securities Act

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

     Section 1.26 Stockholders Agreement

     “Stockholders Agreement” shall mean that certain agreement by and between
the Optionee and the Company which contains certain restrictions and
limitations applicable to the shares of Common Stock acquired upon Option
exercise (and to other shares of Common Stock, if any, held by the Optionee
during the term of such agreement). The Board, in its discretion, shall
determine the terms of the Stockholders Agreement and may amend the terms
thereof from time to time. If the Optionee is not a party to a Stockholders
Agreement at the time of exercise of the Option (or any portion thereof), the
exercise of the Option shall be subject to the condition that the Optionee
enter a Stockholders Agreement with the Company.

     Section 1.27 Subsidiary

     “Subsidiary” of any entity shall mean any corporation in an unbroken chain
of corporations beginning with such entity if each of the corporations other
than the last corporation in the unbroken chain then owns stock possessing 50%
or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.

     Section 1.28 Termination of Directorship

     “Termination of Directorship” shall mean the time when an Optionee who is
an Independent Director ceases to be a Director for any reason, including but
not by way of limitation, a termination by resignation, failure to be elected
or appointed, death or retirement. The Board, in its sole discretion, shall
determine the effect of all matters and questions relating to Termination of
Directorship.

     Section 1.29 Termination of Employment

     “Termination of Employment” shall mean the time when the employee-employer
relationship between an Optionee and the Company (or one of its Subsidiaries)
is terminated for any reason, with or without cause, including, but not by way
of limitation, a termination by resignation, discharge, death or retirement,
but excluding a termination where there is a simultaneous reemployment by the
Company (or one of its Subsidiaries). The Committee shall determine the effect
of all matters and questions relating to Termination of Employment,

4

 

including, but not by way of limitation, the question of whether a
Termination of Employment resulted from a discharge for good cause, and all
questions of whether a particular leave of absence constitutes a Termination of
Employment; provided, however, that, with respect to Incentive Stock Options, a
leave of absence shall constitute a Termination of Employment if, and to the
extent that, such leave of absence interrupts employment for the purposes of
Section 422(a)(2) of the Code and the then applicable regulations and revenue
rulings under Section 442(a)(2) of the Code.

ARTICLE II.

SHARES SUBJECT TO PLAN

     Section 2.1 Shares Subject to Plan

     The shares of stock subject to Options shall be shares of Common Stock.
Subject to Section 7.1, the aggregate number of such shares which may be issued
under this Plan is 312,000.

     Section 2.2 Unexercised Options

     If any Option (or portion thereof) expires or is canceled without having
been fully exercised, the number of shares subject to such Option (or portion
thereof) but as to which such Option was not exercised prior to its expiration
or cancellation may again be optioned hereunder, subject to the limitations of
Section 2.1.

ARTICLE III.

GRANTING OF OPTIONS AND SALE OF STOCK

     Section 3.1 Eligibility

     Any Employee of the Company or one of its Subsidiaries, any Independent
Director and any Consultant shall be eligible to be granted Options, except as
provided in Section 3.2.

     Section 3.2 Qualification of Incentive Stock Options

     No Incentive Stock Option shall be granted to any person who is not an Employee.

     Section 3.3 Granting of Options to Employees or Consultants

		
	 	(a)     The Committee shall from time to time:

		
	 	(i)     Select from among the Employees or Consultants (including
those to whom Options have been previously granted under the
Plan) such of them as in its opinion should be granted
Options;
	 
	 	(ii)     Determine the number of shares to be subject to such
Options granted to such Employees or Consultants, and
determine whether such Options are to be Incentive Stock
Options or Non-Qualified Stock Options; and

5

 

		
	 	(iii)     Determine the terms and conditions of such Options,
consistent with the Plan.

		
	 	(b)     Upon the selection of an Employee or Consultant to be granted
an Option pursuant to Section 3.3(a), the Committee shall instruct
the Secretary or another authorized Officer of the Company to issue
such Option and may impose such conditions on the grant of such
Option as it deems appropriate. Without limiting the generality of
the preceding sentence, the Committee may require as a condition to
the grant of an Option to an Employee or Consultant that the
Employee or Consultant surrender for cancellation some or all of
the unexercised Options which have been previously granted to him
or her. An Option the grant of which is conditioned upon such
surrender may have an Option price lower (or higher) than the
Option price of the surrendered Option, may cover the same (or a
lesser or greater) number of shares as the surrendered Option, may
contain such other terms as the Committee deems appropriate and
shall be exercisable in accordance with its terms, without regard
to the number of shares, price, period of exercisability or any
other term or condition of the surrendered Option.

     Section 3.4 Granting of Option to Independent Directors

		
	 	(a)     The Board shall from time to time:

		
	 	(i)     Select from among the Independent Directors (including
those to whom Options have previously been granted under the
Plan) such of them as in its opinion should be granted
Options;
	 
	 	(ii)     Determine the number of shares to be subject to such
Options granted to such selected Independent Directors; and
	 
	 	(iii)     Determine the terms and conditions of such Options,
consistent with the Plan; provided, however, that all Options
granted to Independent Directors shall be Non-Qualified Stock
Options.

		
	 	(b)     Upon the selection of an Independent Director to be granted an
Option pursuant to Section 3.4(a), the Board shall instruct the
Secretary or another authorized Officer of the Company to issue
such Option and may impose such conditions on the grant of such
Option as it deems appropriate. Without limiting the generality of
the preceding sentence, the Board may require as a condition to the
grant of an Option to an Independent Director that the Independent
Director surrender for cancellation some or all of the unexercised
Options which have been previously granted to him or her. An
Option the grant of which is conditioned upon such surrender may
have an Option price lower (or higher) than the Option price of the
surrendered Option, may cover the same (or a lesser or greater)
number of shares as the surrendered Option, may contain such other
terms as the Board deems appropriate and shall be exercisable in
accordance with its terms, without regard to the number of shares,
price, period of exercisability or any other term or condition of
the surrendered Option.

6

 

     Section 3.5 Sale of Common Stock to Employees or Consultants

     The Committee, acting in its sole discretion, may from time to time
designate one or more Employees or Consultants to whom an offer to sell shares
of Common Stock shall be made and the terms and conditions thereof, provided,
however, that the price per share of Common Stock shall not be less than the
fair market value (as determined in accordance with Section 4.3(b) hereof)
thereof on the date any such offer is accepted. Each share of Common Stock
sold to an Employee or Consultant under this Section 3.5 shall be evidenced by
a written stock subscription form approved by an authorized Officer of the
Company which shall be consistent with the terms hereof. Any Common Stock sold
under this Section 3.5 shall be subject to the same limitations, restrictions
and administration hereunder as would apply to any Common Stock issued pursuant
to the exercise of an Option under this Plan including but not limited to
conditions and restrictions set forth in Sections 5.4 and 5.6 hereunder.

ARTICLE IV.

TERMS OF OPTIONS

     Section 4.1 Stock Option Agreement

     Each Option shall be evidenced by a written Stock Option Agreement, which
shall be executed by the Optionee and an authorized Officer of the Company and
which shall contain such terms and conditions as the Committee (or the Board,
in the case of Options granted to Independent Directors) shall determine,
consistent with the Plan. Stock Option Agreements evidencing Incentive Stock
Options shall contain such terms and conditions as may be necessary to qualify
such Options as “incentive stock options” under Section 422 of the Code.

     Section 4.2 Exercisability of Options

		
	 	(a)     Each Option shall become exercisable according to the terms of
the applicable Stock Option Agreement; provided, however, that by a
resolution adopted after an Option is granted the Committee (or the
Board, in the case of Options granted to Independent Directors)
may, on such terms and conditions as it may determine to be
appropriate, accelerate the time at which such Option or any
portion thereof may be exercised.
	 
	 	(b)     Except as otherwise provided in the applicable Stock Option
Agreement, no portion of an Option which is unexercisable at
Termination of Employment, Termination of Directorship or
Termination of Consultancy, as applicable, shall thereafter become
exercisable.
	 
	 	(c)     To the extent that the aggregate fair market value of stock
with respect to which “incentive stock options” (within the meaning
of Section 422 of the Code, but without regard to Section 422(d) of
the Code) are exercisable for the first time by an Optionee during
any calendar year (under the Plan and all other incentive stock
option plans of the Company or any Subsidiary thereof) exceeds
$100,000, such options shall be treated and taxable as
Non-Qualified Stock Options. The rule set forth in the preceding
sentence shall be applied by taking options into account in the
order in which they were granted, and the stock issued upon

7

 

		
	 	exercise of options shall designate whether such stock was acquired
upon exercise of an Incentive Stock Option. For purposes of these
rules, the fair market value of stock shall be determined as of the
date of grant of the Option granted with respect to such stock.

     Section 4.3 Option Price

		
	 	(a)     The price of the shares subject to each Option shall be set by
the Committee (or the Board, in the case of Options granted to
Independent Directors); provided, however, that in the case of an
Incentive Stock Option, the price per share shall be not less than
100% of the fair market value of such shares on the date such
Option is granted; and that in the case of an individual then
owning (within the meaning of Section 424(d) of the Code) more than
10% of the total combined voting power of all classes of stock of
the Company, the price per share shall not be less than 110% of the
fair market value of such shares on the date such Incentive Stock
Option is granted.
	 
	 	(b)     For purposes of the Plan, the fair market value of a share of
Common Stock as of a given date shall be:

		
	 	(i)     if the Common Stock is listed on one or more National
Securities Exchanges (within the meaning of the Exchange
Act), each share of Common Stock shall be valued at the
average closing price of a share of such class of Common
Stock on the principal exchange on which such shares are then
trading, on the twenty trading days immediately preceding
such date;
	 
	 	(ii)     if the Common Stock is not traded on a National
Securities Exchange but is quoted on NASDAQ or a successor
quotation system and the Common Stock is listed as a National
Market Issue under the NASD National Market System, each
share of Common Stock shall be valued at the average of the
last sales price on each of the twenty trading days
immediately preceding such date as reported by NASDAQ or such
successor quotation system; or
	 
	 	(iii)     if the class of Common Stock is not publicly traded on
a National Securities Exchange and is not quoted on NASDAQ or
a successor quotation system, the fair market value of the
Common Stock shall be determined in good faith by the
Committee.

     Section 4.4 Expiration of Options

     No Option may be exercised to any extent by anyone after the first to
occur of the following events:

		
	 	(a)     The expiration of ten years from the date the Option was
granted; or

8

 

		
	 	(b)     With respect to an Incentive Stock Option in the case of an
Optionee owning (within the meaning of Section 424(d) of the Code),
at the time the Incentive Stock Option was granted, more than 10%
of the total combined voting power of all classes of stock of the
Company or any subsidiary corporation, the expiration of five years
from the date the Incentive Stock Option was granted.

ARTICLE V.

EXERCISE OF OPTIONS

     Section 5.1 Person Eligible to Exercise

     During the lifetime of the Optionee, only he or she may exercise an Option
(or any portion thereof granted to him or her; provided, however, that the
Optionee’s Eligible Representative may exercise his or her Option during the
period of the Optionee’s disability (as defined in Section 22(e)(3) of the
Code) notwithstanding that an Option so exercised may not qualify as an
Incentive Stock Option. After the death of the Optionee, any exercisable
portion of an Option may, prior to the time when such portion becomes
unexercisable under the Plan or the applicable Stock Option Agreement, be
exercised by his or her Eligible Representative.

     Section 5.2 Partial Exercise

     At any time and from time to time prior to the time when the Option
becomes unexercisable under the Plan or the applicable Stock Option Agreement,
the exercisable portion of an Option may be exercised in whole or in part;
provided, however, that the Company shall not be required to issue fractional
shares and the Committee (or the Board, in the case of Options granted to
Independent Directors) may, by the terms of the Option, require any partial
exercise to exceed a specified minimum number of shares.

     Section 5.3 Manner of Exercise

     An exercisable Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary of all of the following prior to
the time when such Option or such portion becomes unexercisable under the Plan
or the applicable Stock Option Agreement:

		
	 	(a)     Notice in writing signed by the Optionee or his or her Eligible
Representative, stating that such Option or portion is exercised,
and specifically stating the number of shares with respect to which
the Option is being exercised;
	 
	 	(b)     A copy of the Stockholders Agreement signed by the Optionee or
Eligible Representative, as applicable;
	 
	 	(c)     Full payment (in cash or by personal, certified, or bank
cashier check) for the shares with respect to which such Option or
portion is thereby exercised; or

		
	 	(i)     With the consent of the Committee (or the Board, in the
case of Options to Independent Directors), (A) shares of
Common Stock owned by the Optionee duly endorsed for transfer
to the Company; or (B) except with respect to Incentive Stock
Options, shares of the Common Stock

9

 

		
	 	issuable to the Optionee upon exercise of the Option, with a
fair market value (as determined under Section 4.3(b)) on the
date of Option exercise equal to the aggregate Option price
of the shares with respect to which such Option or portion is
thereby exercised; or
	 
	 	(ii)     With the consent of the Committee (or the Board, in the
case of Options granted to Independent Directors), any
combination of the consideration listed in this subsection
(c);

		
	 	(d)     The payment to the Company (in cash or by personal, certified
or bank cashier or by any other means of payment approved by the
Committee) of all amounts necessary to satisfy any and all federal,
state and local tax withholding requirements arising in connection
with the exercise of the Option;
	 
	 	(e)     Such representations and documents as the Committee (or the
Board, in the case of Options granted to Independent Directors)
deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act and any other federal
or state securities laws or regulations. The Committee (or the
Board, in the case of Options granted to Independent Directors)
may, in its sole discretion, also take whatever additional actions
it deems appropriate to effect such compliance including, without
limitation, placing legends on share certificates and issuing
stop-transfer orders to transfer agents and registrars; and
	 
	 	(f)     In the event that the Option or portion thereof shall be
exercised pursuant to Section 5.1 by any person or persons other
than the Optionee, appropriate proof of the right of such person or
persons to exercise the Option or portion thereof.

     Section 5.4 Conditions to Issuance of Stock Certificates

     The shares of stock issuable and deliverable upon the exercise of an
Option, or any portion thereof, may be either previously authorized but
unissued shares or issued shares which have then been reacquired by the
Company. A certificate of shares will be delivered to the Optionee at the
Company’s principal place of business within thirty days of receipt by the
Company of the written notice and payment, unless an earlier date is agreed
upon. Notwithstanding the above, the Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of any Option or portion thereof prior to fulfillment of all of the
following conditions:

		
	 	(a)     The admission of such shares to listing on any and all stock
exchanges on which such class of stock is then listed;
	 
	 	(b)     The completion of any registration or other qualification of
such shares under any state or federal law or under the rulings or
regulations of the Securities and Exchange Commission or any other
governmental regulatory body, which the Committee (or the Board, in
the case of Options granted to Independent Directors) shall, in its
sole discretion, deem necessary or advisable;

10

 

		
	 	(c)     The obtaining of any approval or other clearance from any state
or federal governmental agency which the Committee (or the Board,
in the case of Options granted to Independent Directors) shall, in
its sole discretion, determine to be necessary or advisable; and
	 
	 	(d)     The payment to the Company of all amounts which it is required
to withhold under federal, state or local law in connection with
the exercise of the Option.

     Section 5.5 Rights as Stockholders

     The holder of an Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any shares
purchasable upon the exercise of any part of an Option unless and until such
holder has signed a Stockholders Agreement and certificates representing such
shares have been issued by the Company to such holder.

     Section 5.6 Transfer Restrictions

     Shares acquired upon exercise of an Option shall be subject to the terms
and conditions of a Stockholders Agreement. In addition, the Committee (or the
Board, in the case of Options granted to Independent Directors), in its sole
discretion, may impose further restrictions on the transferability of the
shares purchasable upon the exercise of an Option as it deems appropriate. Any
such restriction shall be set forth in the respective Stock Option Agreement
and may be referred to on the certificates evidencing such shares. The
Committee may require the Employee to give the Company prompt notice of any
disposition of shares of stock, acquired by exercise of an Incentive Stock
Option, within two years from the date of granting such Option or one year
after the transfer of such shares to such Employee. The Committee may direct
that the certificates evidencing shares acquired by exercise of an Incentive
Stock Option refer to such requirement.

ARTICLE VI.

ADMINISTRATION

     Section 6.1 Committee

     The Committee shall be the Compensation Committee of the Board. Any
action required or permitted to be taken by the Committee hereunder or under
any Stock Option Agreement may be taken by the Board.

     Section 6.2 Delegation by Committee

     Except as otherwise determined by the Committee, all rights, powers and
duties of the Committee under the Plan (except those granted pursuant to
Sections 3.3, 4.3, 5.3(c), 5.3(e), 5.6 and Article VII) shall be exercised by
the CEO, subject to the approval of the Committee.

11

 

     Section 6.3 Duties and Powers of CEO and the Committee

     It shall be the duty of the CEO, subject to the approval of the Committee,
to conduct the general administration of the Plan in accordance with its
provisions. The CEO, subject to the approval of the Committee, shall have the
power to interpret the Plan and the Options and to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
therewith and to interpret, amend or revoke any such rules. Notwithstanding
the foregoing, the full Board, acting by a majority of its members in office,
shall conduct the general administration of the Plan with respect to Options
granted to Independent Directors. Any such interpretations and rules in regard
to Incentive Stock Options shall be consistent with the terms and conditions
applicable to “incentive stock options” within the meaning of Section 422 of
the Code. All determinations and decisions made by the CEO and approved by the
Committee under any provision of the Plan or of any Option granted thereunder
shall be final, conclusive and binding on all persons.

     Section 6.4 Compensation, Professional Assistance, Good Faith Actions

     The members of the Committee shall receive such compensation for their
services hereunder as may be determined by the Board. All expenses and
liabilities incurred by the members of the Committee or the Board in connection
with the administration of the Plan shall be borne by the Company. The
Committee or the Board may employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Company and its
Officers and Directors shall be entitled to rely upon the advice, opinions or
valuations of any such persons. All actions taken and all interpretations and
determinations made by the CEO, the Committee and the Board, in good faith
shall be final and binding upon all Optionees, the Company and all other
interested persons. No member of the Board or the CEO shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan or the Options, and all members of the Board shall be fully
protected by the Company in respect to any such action, determination or
interpretation.

ARTICLE VII.

OTHER PROVISIONS

     Section 7.1 Changes in Common Stock; Disposition of Assets and Corporate Events.

		
	 	(a)     Subject to Section 7.1(d), in the event that the Committee (or
the Board, in the case of Options granted to Independent Directors)
determines that any dividend or other distribution (whether in the
form of cash, Common Stock, other securities, or other property),
recapitalization, reclassification, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, liquidation, dissolution, or sale,
transfer, exchange or other disposition of all or substantially all
of the assets of the Company (including, but not limited to, a
Liquidity Event), or exchange of Common Stock or other securities
of the Company, issuance of warrants or other rights to purchase
Common Stock or other securities of the Company, or other similar
corporate transaction or event, in the Committee’s sole discretion
(or in the case of Options granted to Independent Directors, the
Board’s sole discretion), affects the

12

 

		
	 	Common Stock such that an adjustment is determined by the Committee
(or the Board, in the case of Options granted to Independent
Directors) to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to an Option, then
the Committee (or the Board, in the case of Options granted to
Independent Directors) shall, in such manner as it may deem
equitable, adjust any or all of:

		
	 	(i)     The number and kind of shares of Common Stock (or other
securities or property) with respect to which Options may be
granted under the Plan (including, but not limited to,
adjustments of the limitations in Section 2.1 on the maximum
number and kind of shares which may be issued);
	 
	 	(ii)     The number and kind of shares of Common Stock (or other
securities or property) subject to outstanding Options;
	 
	 	(iii)     The exercise price with respect to any Option; and
	 
	 	(iv)     The financial or other “targets” specified in each Stock
Option Agreement for determining the exercisability of
Options.

		
	 	(b)     Subject to Section 7.1(d) and the terms of outstanding Options,
upon the occurrence of a Corporate Event, the Committee (or the
Board, in the case of options granted to Independent Directors), in
its sole discretion, is hereby authorized to take any one or more
of the following actions whenever the Committee (or the Board, in
the case of Options granted to Independent Directors) determines
that such action is appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to any Option under
this Plan, to facilitate such Corporate Event or to give effect to
such changes in laws, regulations or principles:

		
	 	(i)     In its sole discretion, and on such terms and conditions
as it deems appropriate, the Committee (or the Board, in the
case of Options granted to Independent Directors) may
provide, either by the terms of the applicable Stock Option
Agreement or by action taken prior to the occurrence of such
Corporate Event and either automatically or upon the
Optionee’s request, for either the purchase of any such
Option for an amount of cash, securities, or other property
equal to the amount that could have been attained upon the
exercise of the vested portion of such Option (and such
additional portion of the Option as the Board or Committee
may determine) immediately prior to the occurrence of such
transaction or event, or the replacement of such vested (and
other) portion of such Option with other rights or property
selected by the Committee (or the Board, in the case of
Options granted to Independent Directors) in its sole
discretion;

13

 

		
	 	(ii)     In its sole discretion, the Committee (or the Board, in
the case of Options granted to Independent Directors) may
provide, either by the terms of the applicable Stock Option
Agreement or by action taken prior to the occurrence of such
Corporate Event, that the Option (or any portion thereof)
cannot be exercised after such event;
	 
	 	(iii)     In its sole discretion, and on such terms and
conditions as it deems appropriate, the Committee (or the
Board, in the case of Options granted to Independent
Directors) may provide, either by the terms of the applicable
Stock Option Agreement or by action taken prior to the
occurrence of such Corporate Event, that for a specified
period of time prior to such Corporate Event, such Option
shall be exercisable as to all shares covered thereby or a
specified portion of such shares, notwithstanding anything to
the contrary in (A) Section 4.2; or (B) the provisions of the
applicable Stock Option Agreement;
	 
	 	(iv)     In its sole discretion, and on such terms and conditions
as it deems appropriate, the Committee (or the Board, in the
case of Options granted to Independent Directors) may
provide, either by the terms of the applicable Stock Option
Agreement or by action taken prior to the occurrence of such
Corporate Event, that upon such event, such Option (or any
portion thereof) be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be
substituted for by similar options, rights or awards covering
the stock of the successor or survivor corporation, or a
parent or subsidiary thereof, with appropriate adjustments as
to the number and kind of shares and prices; and
	 
	 	(v)     In its sole discretion, and on such terms and conditions
as it deems appropriate, the Committee (or the Board, in the
case of Options granted to Independent Directors) may make
adjustments in the number and type of shares of Common Stock
(or other securities or property) subject to outstanding
Options (or any portion thereof) and/or in the terms and
conditions of (including the exercise price), and the
criteria included in, outstanding Options and Options which
may be granted in the future.

		
	 	(c)     Subject to Section 7.1(d), the Committee (or the Board, in the
case of Options granted to Independent Directors) may, in its sole
discretion, include such further provisions and limitations in any
Stock Option Agreement as it may deem equitable and in the best
interests of the Company and its Subsidiaries.
	 
	 	(d)     With respect to Incentive Stock Options, no adjustment or
action described in this Section 7.1 or in any other provision of
the Plan shall be authorized to the extent that such adjustment or
action would cause the Plan to violate Section 422(b)(1) of the
Code or any successor provisions thereto, unless the Committee
determines that the Plan and/or the Options are not to comply with
Section 422(b)(1) of the Code. The number of shares of Common Stock
subject to any Option shall always be rounded up to the next higher
whole number.

14

 

     Section 7.2 Options Not Transferable

     No Option or interest or right therein or part thereof shall be liable for
the debts, contracts or engagements of the Optionee or his or her successors in
interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law, by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null and
void and of no effect; provided, however, that nothing in this Section 7.2
shall prevent transfers by will or by the applicable laws of descent and
distribution.

     Section 7.3 Amendment, Suspension or Termination of the Plan

     The Plan may be wholly or partially amended or otherwise modified,
suspended or terminated at any time or from time to time by the Board or the
Committee. However, without stockholder approval within 12 months before or
after such action no action of the Board or the Committee may, except as
provided in Section 7.1, increase any limit imposed in Section 2.1 on the
maximum number of shares which may be issued on exercise of Options, reduce the
minimum Option price requirements of Section 4.3(a), or extend the limit
imposed in this Section 7.3 on the period during which options may be granted.
Except as provided by Section 7.1, neither the amendment, suspension nor
termination of the Plan shall, without the consent of the holder of the Option,
alter or impair any rights or obligations under any Option theretofore granted.
No Option may be granted during any period of suspension nor after termination
of the Plan, and in no event may any Option be granted under this Plan after
the expiration of ten years from the date the Plan is adopted by the Board.

     Section 7.4 Effect of Plan Upon Other Option and Compensation Plans

     The adoption of this Plan shall not affect any other compensation or
incentive plans in effect for the Company or any Subsidiary. Nothing in this
Plan shall be construed to limit the right of the Company or any Subsidiary (a)
to establish any other forms of incentives or compensation for directors,
consultants or employees of the Company (or any Subsidiary); or (b) to grant or
assume options otherwise than under this Plan in connection with any proper
corporate purpose, including, but not by way of limitation, the grant or
assumption of options in connection with the acquisition by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, firm or association.

     Section 7.5 Approval of Plan by Stockholders

     This Plan will be submitted for the approval of the Company’s stockholders
within 12 months after the date of the Board’s initial adoption of this Plan
and the Plan and the Options granted hereunder will be effective upon approval
by such stockholders as contemplated by Section 280G(b)(5)(A)(ii) of the Code
and regulations thereunder as if a “change in control” occurred immediately
following such approval. No Option may be exercised to any extent by anyone
unless and until the Plan is so approved by the stockholders, and if such
approval has not been obtained by the end of said 12-month period, the Plan and
all Options theretofore granted shall thereupon be canceled and become null and
void.

15

 

     Section 7.6 Titles

     Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of the Plan.

     Section 7.7 Conformity to Securities Laws

     The Plan is intended to conform to the extent necessary with all
provisions of the Securities Act and the Exchange Act and any and all
regulations and rules promulgated by the Securities and Exchange Commission
thereunder to the extent the Company or any Optionee is subject to the
provisions thereof. Notwithstanding anything herein to the contrary, the Plan
shall be administered, and Options shall be granted and may be exercised, only
in such a manner as to conform to such laws, rules and regulations. To the
extent permitted by applicable law, the Plan and Options granted hereunder
shall be deemed amended to the extent necessary to conform to such laws, rules
and regulations.

     Section 7.8 Governing Law

     To the extent not preempted by federal law, the Plan shall be construed in
accordance with and governed by the laws of the state of Delaware.

     Section 7.9 Severability

     In the event any portion of the Plan or any action taken pursuant thereto
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 provisions had not been
included, and the illegal or invalid action shall be null and void.

16

 

     I hereby certify that the foregoing Plan was duly adopted by the Board on       ,
2003.

     Executed on this      day of        , 2003.

	 	 	 
	 	
/s/ Ian Fujiyama                                   .
	

	Name: 	 	
Ian Fujiyama
	Title: 	 	
Vice President and Secretary

17

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