Document:

Exhibit 4.3

 

WUF Networks, Inc.

 

2004 Equity Incentive Plan

 

Adopted:  August 16, 2004

Approved By Stockholders:  August
16, 2004

Termination Date:  August 15,
2014

 

1.                                      Purposes.

 

(a)                                  Eligible
Stock Award Recipients.  The persons
eligible to receive Stock Awards are the Employees, Directors and Consultants
of the Company and its Affiliates.

 

(b)                                  Available
Stock Awards.  The purpose of the
Plan is to provide a means by which eligible recipients of Stock Awards may be
given an opportunity to benefit from increases in value of the Common Stock
through the granting of the following Stock Awards:  (i) Incentive Stock Options; (ii)
Nonstatutory Stock Options; (iii) stock bonuses; and (iv) rights to acquire
restricted stock.

 

(c)                                  General
Purpose.  The Company, by means of
the Plan, seeks to retain the services of the group of persons eligible to
receive Stock Awards, to secure and retain the services of new members of this
group and to provide incentives for such persons to exert maximum efforts for
the success of the Company and its Affiliates.

 

2.                                      Definitions.

 

(a)                                  “Affiliate” means any parent corporation or subsidiary
corporation of the Company, whether now or hereafter existing, as those terms
are defined in Sections 424(e) and (f), respectively, of the Code.

 

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

 

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

 

(d)                                  “Committee” means a committee of one or more members of
the Board appointed by the Board in accordance with subsection 3(c).

 

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

 

(f)                                    “Company” means WUF Networks, Inc., a Delaware
corporation.

 

(g)                                 “Consultant” means any person, including an advisor, (i)
engaged by the Company or an Affiliate to render consulting or advisory services
and who is compensated for such services, or (ii) who is a member of the Board
of Directors of an Affiliate.  However,
the term “Consultant” shall not include either Directors who are not
compensated by the Company

 

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for their services as Directors or Directors who are
merely paid a director’s fee by the Company for their services as Directors.

 

(h)                                 “Continuous Service” means that the Participant’s
service with the Company or an Affiliate, whether as an Employee, Director or
Consultant, is not interrupted or terminated. 
The Participant’s Continuous Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Participant
renders service to the Company or an Affiliate as an Employee, Consultant or
Director or a change in the entity for which the Participant renders such
service, provided that there is no interruption or termination of the
Participant’s Continuous Service.  For
example, a change in status from an Employee of the Company to a Consultant of
an Affiliate or a Director will not constitute an interruption of Continuous
Service.  The Board or the chief
executive officer of the Company, in that party’s sole discretion, may
determine whether Continuous Service shall be considered interrupted in the
case of any leave of absence approved by that party, including sick leave,
military leave or any other personal leave.

 

(i)                                    “Covered Employee” means the chief executive officer and
the four (4) other highest compensated officers of the Company for whom total
compensation is required to be reported to stockholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.

 

(j)                                    “Director” means a member of the Board of Directors of
the Company.

 

(k)                                “Disability” means (i) before the Listing Date, the
inability of a person, in the opinion of a qualified physician acceptable to
the Company, to perform the major duties of that person’s position with the
Company or an Affiliate of the Company because of the sickness or injury of the
person; and (ii) after the Listing Date, the permanent and total disability of
a person within the meaning of Section 22(e)(3) of the Code.

 

(l)                                    “Employee” means any person employed by the Company or
an Affiliate.  Mere service as a Director
or payment of a director’s fee by the Company or an Affiliate shall not be
sufficient to constitute “employment” by the Company or an Affiliate.

 

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

 

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

 

(i)                                    If
the Common Stock is listed on any established stock exchange or traded on the
Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value of
a share of Common Stock shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or market
(or the exchange or market with the greatest volume of trading in the Common
Stock) on the last market trading day prior to the day of determination, as
reported in The Wall Street Journal or
such other source as the Board deems reliable.

 

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(ii)                                In
the absence of such markets for the Common Stock, the Fair Market Value shall
be determined in good faith by the Board.

 

(iii)                            Prior
to the Listing Date, the value of the Common Stock shall be determined in a
manner consistent with applicable law.

 

(o)                                  “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.

 

(p)                                  “Listing Date” means the first date upon which any
security of the Company is listed (or approved for listing) upon notice of
issuance on any securities exchange or designated (or approved for designation)
upon notice of issuance as a national market security on an interdealer
quotation system if such securities exchange or interdealer quotation system
has been certified in accordance with applicable state law.

 

(q)                                  “Non-Employee Director”  means a Director who either (i)
is not a current Employee or Officer of the Company or its parent or a
subsidiary, does not receive compensation (directly or indirectly) from the
Company or its parent or a subsidiary for services rendered as a consultant or
in any capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K
promulgated pursuant to the Securities Act (“Regulation S-K”)), does not
possess an interest in any other transaction as to which disclosure would be
required under Item 404(a) of Regulation S-K and is not engaged in a business
relationship as to which disclosure would be required under Item 404(b) of
Regulation S-K; or (ii) is otherwise considered a “non-employee director” for
purposes of Rule 16b-3.

 

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

 

(s)                                  “Officer” means (i) before the Listing Date, any person
designated by the Company as an officer, and (ii) on and after the Listing
Date, a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.

 

(t)                                    “Option” means an Incentive Stock Option or a
Nonstatutory Stock Option granted pursuant to the Plan.

 

(u)                                 “Option Agreement” means a written agreement between the
Company and an Optionholder evidencing the terms and conditions of an
individual Option grant.  Each Option
Agreement shall be subject to the terms and conditions of the Plan.

 

(v)                                   “Optionholder” means a person to whom an Option is
granted pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.

 

(w)                                “Outside Director” means a Director who either (i) is
not a current employee of the Company or an “affiliated corporation” (within
the meaning of Treasury Regulations

 

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promulgated under Section 162(m) of the Code), is not
a former employee of the Company or an “affiliated corporation” receiving
compensation for prior services (other than benefits under a tax-qualified
pension plan), was not an officer of the Company or an “affiliated corporation”
at any time and is not currently receiving direct or indirect remuneration from
the Company or an “affiliated corporation” for services in any capacity other
than as a Director; or (ii) is otherwise considered an “outside director” for
purposes of Section 162(m) of the Code.

 

(x)                                  “Participant” means a person to whom a Stock Award is
granted pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.

 

(y)                                  “Plan” means this WUF Networks, Inc. 2004 Equity
Incentive Plan.

 

(z)                                  “Rule 16b-3” means Rule 16b-3 promulgated under the
Exchange Act or any successor to Rule 16b-3, as in effect from time to time.

 

(aa)                            “Securities Act” means the Securities Act of 1933, as
amended.

 

(bb)                            “Stock Award” means any right granted under the Plan,
including an Option, a stock bonus and a right to acquire restricted stock.

 

(cc)                            “Stock Award Agreement” means a written agreement
between the Company and a holder of a Stock Award evidencing the terms and
conditions of an individual Stock Award grant. 
Each Stock Award Agreement shall be subject to the terms and conditions
of the Plan.

 

(dd)                            “Ten Percent Stockholder” means a person who owns (or is
deemed to own pursuant to Section 424(d) of the Code) stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or of any of its Affiliates.

 

3.                                      Administration.

 

(a)                                  Administration
by Board.  The Board shall administer
the Plan unless and until the Board delegates administration to a Committee, as
provided in subsection 3(c).

 

(b)                                  Powers
of Board.  The Board shall have the
power, subject to, and within the limitations of, the express provisions of the
Plan:

 

(i)                                    To
determine from time to time which of the persons eligible under the Plan shall
be granted Stock Awards; when and how each Stock Award shall be granted; what
type or combination of types of Stock Award shall be granted; the provisions of
each Stock Award granted (which need not be identical), including the time or
times when a person shall be permitted to receive Common Stock pursuant to a
Stock Award; and the number of shares of Common Stock with respect to which a
Stock Award shall be granted to each such person.

 

(ii)                                To
construe and interpret the Plan and Stock Awards granted under it, and to
establish, amend and revoke rules and regulations for its administration.  The Board, in the exercise of this power, may
correct any defect, omission or inconsistency in the Plan or in any

 

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Stock Award Agreement, in
a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.

 

(iii)                            To
amend the Plan or a Stock Award as provided in Section 12.

 

(iv)                               Generally,
to exercise such powers and to perform such acts as the Board deems necessary
or expedient to promote the best interests of the Company which are not in
conflict with the provisions of the Plan.

 

(c)                                  Delegation
to Committee.

 

(i)                                    General.  The Board may delegate administration of the
Plan to a Committee or Committees of one (1) or more members of the Board, and
the term “Committee” shall apply to any person or persons to whom such
authority has been delegated.  If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee any
of the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board.  The Board may abolish the Committee at any
time and revest in the Board the administration of the Plan.

 

(ii)                                Committee
Composition when Common Stock is Publicly Traded.  At such time as the Common Stock is publicly
traded, in the discretion of the Board, a Committee may consist solely of two
or more Outside Directors, in accordance with Section 162(m) of the Code,
and/or solely of two or more Non-Employee Directors, in accordance with Rule
16b-3.  Within the scope of such
authority, the Board or the Committee may (1) delegate to a committee of one or
more members of the Board who are not Outside Directors the authority to grant
Stock Awards to eligible persons who are either (a) not then Covered Employees
and are not expected to be Covered Employees at the time of recognition of
income resulting from such Stock Award or (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code and/or) (2)
delegate to a committee of one or more members of the Board who are not
Non-Employee Directors the authority to grant Stock Awards to eligible persons
who are not then subject to Section 16 of the Exchange Act.

 

(d)                                  Effect of Board’s Decision. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons.

 

4.                                      Shares Subject to the Plan.

 

(a)                                  Share
Reserve.  Subject to the provisions
of Section 11 relating to adjustments upon changes in Common Stock, the Common
Stock that may be issued pursuant to Stock Awards shall not exceed in the
aggregate two million five hundred thousand (2,500,000) shares of Common Stock.

 

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(b)                                  Reversion
of Shares to the Share Reserve.  If any Stock Award shall for any reason expire
or otherwise terminate, in whole or in part, without having been exercised in
full, the shares of Common Stock not acquired under such Stock Award shall
revert to and again become available for issuance under the Plan.

 

(c)                                  Source
of Shares.  The shares of Common
Stock subject to the Plan may be unissued shares or reacquired shares, bought
on the market or otherwise.

 

5.                                      Eligibility.

 

(a)                                  Eligibility
for Specific Stock Awards.  Incentive Stock Options may be granted only
to Employees.  Stock Awards other than
Incentive Stock Options may be granted to Employees, Directors and Consultants.

 

(b)                                  Ten
Percent Stockholders.

 

(i)                                    A
Ten Percent Stockholder shall not be granted an Incentive Stock Option unless
the exercise price of such Option is at least one hundred ten percent (110%) of
the Fair Market Value of the Common Stock at the date of grant and the Option
is not exercisable after the expiration of five (5) years from the date of
grant.

 

(ii)                                Prior
to the Listing Date, a Ten Percent Stockholder shall not be granted a
Nonstatutory Stock Option unless the exercise price of such Option is at least
(i) one hundred ten percent (110%) of the Fair Market Value of the Common Stock
at the date of grant or (ii) such lower percentage of the Fair Market Value of
the Common Stock at the date of grant as is permitted by applicable state law
at the time of the grant of the Option.

 

(iii)                            Prior
to the Listing Date, a Ten Percent Stockholder shall not be granted a
restricted stock award unless the purchase price of the restricted stock is at
least (i) one hundred percent (100%) of the Fair Market Value of the Common
Stock at the date of grant or (ii) such lower percentage of the Fair Market
Value of the Common Stock at the date of grant as is permitted by applicable
state law at the time of the grant of the restricted stock award.

 

(c)                                  Section
162(m) Limitation.  Subject to the
provisions of Section 11 relating to adjustments upon changes in the shares of
Common Stock, no Employee shall be eligible to be granted Options covering more
than Two Hundred Fifty Thousand (250,000) shares of Common Stock during any calendar
year.  This subsection 5(c) shall not
apply prior to the Listing Date and, following the Listing Date, this
subsection 5(c) shall not apply until (i) the earliest of:  (1) the first material modification of the
Plan (including any increase in the number of shares of Common Stock reserved
for issuance under the Plan in accordance with Section 4); (2) the issuance of
all of the shares of Common Stock reserved for issuance under the Plan; (3) the
expiration of the Plan; or (4) the first meeting of stockholders at which
Directors are to be elected that occurs after the close of the third calendar
year following the calendar year in which occurred the first registration of an
equity security under Section 12 of the Exchange Act; or (ii) such other date
required by Section 162(m) of the Code and the rules and regulations
promulgated thereunder.

 

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(d)                                  Consultants.

 

(i)                                    Prior
to the Listing Date, a Consultant shall not be eligible for the grant of a
Stock Award if, at the time of grant, either the offer or the sale of the
Company’s securities to such Consultant is not exempt under Rule 701 of the
Securities Act (“Rule
701”) because of the nature of the services that the Consultant
is providing to the Company, or because the Consultant is not a natural person,
or as otherwise provided by Rule 701, unless the Company determines that such
grant need not comply with the requirements of Rule 701 and will satisfy
another exemption under the Securities Act as well as comply with the
securities laws of all other relevant jurisdictions.

 

(ii)                                From
and after the Listing Date, a Consultant shall not be eligible for the grant of
a Stock Award if, at the time of grant, a Form S-8 Registration Statement under
the Securities Act (“Form
S-8”) is not available to register either the offer or the sale
of the Company’s securities to such Consultant because of the nature of the
services that the Consultant is providing to the Company, or because the
Consultant is not a natural person, or as otherwise provided by the rules
governing the use of Form S-8, unless the Company determines both (i) that such
grant (A) shall be registered in another manner under the Securities Act (e.g., on a Form S-3 Registration Statement) or (B) does not
require registration under the Securities Act in order to comply with the
requirements of the Securities Act, if applicable, and (ii) that such grant
complies with the securities laws of all other relevant jurisdictions.

 

(iii)                            Rule
701 and Form S-8 generally are available to consultants and advisors only if
(i) they are natural persons; (ii) they provide bona fide services to the
issuer, its parents, its majority-owned subsidiaries or majority-owned
subsidiaries of the issuer’s parent; and (iii) the services are not in
connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market for
the issuer’s securities.

 

6.                                      Option Provisions.

 

Each Option shall be in such form and shall
contain such terms and conditions as the Board shall deem appropriate.  All Options shall be separately designated
Incentive Stock Options or Nonstatutory Stock Options at the time of grant,
and, if certificates are issued, a separate certificate or certificates will be
issued for shares of Common Stock purchased on exercise of each type of
Option.  The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:

 

(a)                                  Term.  Subject to the provisions of subsection 5(b)
regarding Ten Percent Stockholders, no Option granted prior to the Listing Date
shall be exercisable after the expiration of ten (10) years from the date it
was granted, and no Incentive Stock Option granted on or after the Listing Date
shall be exercisable after the expiration of ten (10) years from the date it
was granted.

 

(b)                                  Exercise
Price of an Incentive Stock Option. 
Subject to the provisions of subsection 5(b) regarding Ten Percent
Stockholders, the exercise price of each Incentive Stock

 

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Option shall be not less
than one hundred percent (100%) of the Fair Market Value of the Common Stock
subject to the Option on the date the Option is granted.  Notwithstanding the foregoing, an Incentive
Stock Option may be granted with an exercise price lower than that set forth in
the preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of
Section 424(a) of the Code.

 

(c)                                  Exercise
Price of a Nonstatutory Stock Option. 
Subject to the provisions of subsection 5(b) regarding Ten Percent
Stockholders, the exercise price of each Nonstatutory Stock Option granted
prior to the Listing Date shall be not less than eighty-five percent (85%) of
the Fair Market Value of the Common Stock subject to the Option on the date the
Option is granted.  The exercise price of
each Nonstatutory Stock Option granted on or after the Listing Date shall be
not less than eighty-five percent (85%) of the Fair Market Value of the Common
Stock subject to the Option on the date the Option is granted.  Notwithstanding the foregoing, a Nonstatutory
Stock Option may be granted with an exercise price lower than that set forth in
the preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of
Section 424(a) of the Code.

 

(d)                                  Consideration.  The purchase price of Common Stock acquired
pursuant to an Option shall be paid, to the extent permitted by applicable
statutes and regulations, either (i) in cash at the time the Option is
exercised or (ii) at the discretion of the Board at the time of the grant of
the Option (or subsequently in the case of a Nonstatutory Stock Option) (1) by
delivery to the Company of other Common Stock, (2) according to a deferred
payment or other similar arrangement with the Optionholder or (3) in any other
form of legal consideration that may be acceptable to the Board.  Unless otherwise specifically provided in the
Option, the purchase price of Common Stock acquired pursuant to an Option that
is paid by delivery to the Company of other Common Stock acquired, directly or
indirectly from the Company, shall be paid only by shares of the Common Stock
of the Company that have been held for more than six (6) months (or such longer
or shorter period of time required to avoid a charge to earnings for financial
accounting purposes).  At any time that
the Company is incorporated in Delaware, payment of the Common Stock’s “par
value,” as defined in the Delaware General Corporation Law, shall not be made
by deferred payment.

 

In the case of any deferred payment
arrangement, interest shall be compounded at least annually and shall be
charged at the market rate of interest necessary to avoid a charge to earnings
for financial accounting purposes.

 

(e)                                  Transferability
of an Incentive Stock Option.  An
Incentive Stock Option shall not be transferable except by will or by the laws
of descent and distribution and shall be exercisable during the lifetime of the
Optionholder only by the Optionholder. 
Notwithstanding the foregoing, the Optionholder may, by delivering
written notice to the Company, in a form satisfactory to the Company, designate
a third party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option.

 

(f)                                    Transferability
of a Nonstatutory Stock Option.  A
Nonstatutory Stock Option granted prior to the Listing Date shall not be
transferable except by will or by the laws of descent

 

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and distribution and, to
the extent provided in the Option Agreement, to such further extent as
permitted by applicable state law at the time of the grant of the Option, and
shall be exercisable during the lifetime of the Optionholder only by the
Optionholder.  A Nonstatutory Stock
Option granted on or after the Listing Date shall be transferable to the extent
provided in the Option Agreement.  If the
Nonstatutory Stock Option does not provide for transferability, then the
Nonstatutory Stock Option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during the lifetime
of the Optionholder only by the Optionholder. 
Notwithstanding the foregoing, the Optionholder may, by delivering
written notice to the Company, in a form satisfactory to the Company, designate
a third party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option.

 

(g)                                 Vesting
Generally.  The total number of
shares of Common Stock subject to an Option may, but need not, vest and
therefore become exercisable in periodic installments that may, but need not,
be equal.  The Option may be subject to
such other terms and conditions on the time or times when it may be exercised
(which may be based on performance or other criteria) as the Board may deem
appropriate.  The vesting provisions of
individual Options may vary.  The
provisions of this subsection 6(g) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option
may be exercised.

 

(h)                                 Minimum
Vesting Prior to the Listing Date. 
Notwithstanding the foregoing subsection 6(g), to the extent that the
following restrictions on vesting are required by Section 260.140.41(f) of
Title 10 of the California Code of Regulations at the time of the grant of the
Option, then:

 

(i)                                    Options
granted prior to the Listing Date to an Employee who is not an Officer,
Director or Consultant shall provide for vesting of the total number of shares
of Common Stock at a rate of at least twenty percent (20%) per year over five
(5) years from the date the Option was granted, subject to reasonable
conditions such as continued employment; 
and

 

(ii)                                Options
granted prior to the Listing Date to Officers, Directors or Consultants may be
made fully exercisable, subject to reasonable conditions such as continued
employment, at any time or during any period established by the Company.

 

(i)                                    Termination
of Continuous Service.  In the event
an Optionholder’s Continuous Service terminates (other than upon the
Optionholder’s death or Disability), the Optionholder may exercise his or her
Option (to the extent that the Optionholder was entitled to exercise such
Option as of the date of termination) but only within such period of time
ending on the earlier of (i) the date thirty (30) days following the termination
of the Optionholder’s Continuous Service (or such longer or shorter period
specified in the Option Agreement, which period shall not be less than thirty
(30) days for Options granted prior to the Listing Date unless such termination
is for cause); or (ii) the expiration of the term of the Option as set forth in
the Option Agreement.  If, after
termination, the Optionholder does not exercise his or her Option within the
time specified in the Option Agreement, the Option shall terminate.

 

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(j)                                    Extension
of Termination Date.  An Optionholder’s
Option Agreement may also provide that if the exercise of the Option following
the termination of the Optionholder’s Continuous Service (other than upon the
Optionholder’s death or Disability) would be prohibited at any time solely
because the issuance of shares of Common Stock would violate the registration
requirements under the Securities Act, then the Option shall terminate on the
earlier of (i) the expiration of the term of the Option set forth in subsection
6(a) or (ii) the expiration of a period of thirty (30) days after the
termination of the Optionholder’s Continuous Service during which the exercise
of the Option would not be in violation of such registration requirements.

 

(k)                                Disability
of Optionholder.  In the event that
an Optionholder’s Continuous Service terminates as a result of the Optionholder’s
Disability, the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise such Option as of the date of
termination), but only within such period of time ending on the earlier of (i)
the date six (6) months following such termination (or such longer or shorter
period specified in the Option Agreement, which period shall not be less than
six (6) months for Options granted prior to the Listing Date); or (ii) the
expiration of the term of the Option as set forth in the Option Agreement.  If, after termination, the Optionholder does
not exercise his or her Option within the time specified herein, the Option
shall terminate.

 

(l)                                    Death
of Optionholder.  In the event (i) an
Optionholder’s Continuous Service terminates as a result of the Optionholder’s
death or (ii) the Optionholder dies within the period (if any) specified in the
Option Agreement after the termination of the Optionholder’s Continuous Service
for a reason other than death, then the Option may be exercised (to the extent
the Optionholder was entitled to exercise such Option as of the date of death)
by the Optionholder’s estate, by a person who acquired the right to exercise
the Option by bequest or inheritance or by a person designated to exercise the
option upon the Optionholder’s death pursuant to subsection 6(e) or 6(f), but
only within the period ending on the earlier of (1) the date six (6) months
following the date of death (or such longer or shorter period specified in the
Option Agreement, which period shall not be less than six (6) months for
Options granted prior to the Listing Date); or (2) the expiration of the term
of such Option as set forth in the Option Agreement.  If, after death, the Option is not exercised
within the time specified herein, the Option shall terminate.

 

(m)                              Early
Exercise.  The Option may, but need
not, include a provision whereby the Optionholder may elect at any time before
the Optionholder’s Continuous Service terminates to exercise the Option as to
any part or all of the shares of Common Stock subject to the Option prior to
the full vesting of the Option.  Subject
to the “Repurchase Limitation” in subsection 10(h), any unvested shares of
Common Stock so purchased may be subject to a repurchase option in favor of the
Company or to any other restriction the Board determines to be appropriate.

 

(n)                                 Right
of Repurchase.  Subject to the “Repurchase
Limitation” in subsection 10(h), the Option may, but need not, include a
provision whereby the Company may elect, prior to the Listing Date, to
repurchase all or any part of the vested shares of Common Stock acquired by the
Optionholder pursuant to the exercise of the Option.

 

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(o)                                  Right
of First Refusal.  The Option may,
but need not, include a provision whereby the Company may elect, prior to the
Listing Date, to exercise a right of first refusal following receipt of notice
from the Optionholder of the intent to transfer all or any part of the shares
of Common Stock received upon the exercise of the Option.  Except as expressly provided in this
subsection 6(o), such right of first refusal shall otherwise comply with any
applicable provisions of the Bylaws of the Company.

 

7.                                      Provisions of Stock Awards other than Options.

 

(a)                                  Stock
Bonus Awards.  Each stock bonus
agreement shall be in such form and shall contain such terms and conditions as
the Board shall deem appropriate.  The
terms and conditions of stock bonus agreements may change from time to time,
and the terms and conditions of separate stock bonus agreements need not be
identical, but each stock bonus agreement shall include (through incorporation
of provisions hereof by reference in the agreement or otherwise) the substance
of each of the following provisions:

 

(i)                                    Consideration.  A stock bonus may be awarded in consideration
for past services actually rendered to the Company or an Affiliate for its
benefit.

 

(ii)                                Vesting.  Subject to the “Repurchase Limitation” in
subsection 10(h), shares of Common Stock awarded under the stock bonus
agreement may, but need not, be subject to a share repurchase option in favor
of the Company in accordance with a vesting schedule to be determined by the
Board.

 

(iii)                            Termination
of Participant’s Continuous Service. 
Subject to the “Repurchase Limitation” in subsection 10(h), in the event
a Participant’s Continuous Service terminates, the Company may reacquire any or
all of the shares of Common Stock held by the Participant which have not vested
as of the date of termination under the terms of the stock bonus agreement.

 

(iv)                               Transferability.  For a stock bonus award made before the
Listing Date, rights to acquire shares of Common Stock under the stock bonus
agreement shall not be transferable except by will or by the laws of descent
and distribution and shall be exercisable during the lifetime of the
Participant only by the Participant.  For
a stock bonus award made on or after the Listing Date, rights to acquire shares
of Common Stock under the stock bonus agreement shall be transferable by the
Participant only upon such terms and conditions as are set forth in the stock
bonus agreement, as the Board shall determine in its discretion, so long as
Common Stock awarded under the stock bonus agreement remains subject to the
terms of the stock bonus agreement.

 

(b)                                  Restricted
Stock Awards.  Each restricted stock
purchase agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. 
The terms and conditions of the restricted stock purchase agreements may
change from time to time, and the terms and conditions of separate restricted
stock purchase agreements need not be identical, but each restricted stock
purchase agreement shall include (through incorporation of

 

11

 

provisions hereof by
reference in the agreement or otherwise) the substance of each of the following
provisions:

 

(i)                                    Purchase
Price.  Subject to the provisions of
subsection 5(b) regarding Ten Percent Stockholders, the purchase price under
each restricted stock purchase agreement shall be such amount as the Board
shall determine and designate in such restricted stock purchase agreement.  For restricted stock awards made prior to the
Listing Date, the purchase price shall not be less than eighty-five percent
(85%) of the Common Stock’s Fair Market Value on the date such award is made or
at the time the purchase is consummated. 
For restricted stock awards made on or after the Listing Date, the
purchase price shall not be less than eighty-five percent (85%) of the Common
Stock’s Fair Market Value on the date such award is made or at the time the
purchase is consummated.

 

(ii)                                Consideration.  The purchase price of Common Stock acquired
pursuant to the restricted stock purchase agreement shall be paid either:  (i) in cash at the time of purchase; (ii) at
the discretion of the Board, according to a deferred payment or other similar
arrangement with the Participant; or (iii) in any other form of legal
consideration that may be acceptable to the Board in its discretion; provided,
however, that at any time that the Company is incorporated in Delaware, then
payment of the Common Stock’s “par value,” as defined in the Delaware General
Corporation Law, shall not be made by deferred payment.

 

(iii)                            Vesting.  Subject to the “Repurchase Limitation” in
subsection 10(h), shares of Common Stock acquired under the restricted stock
purchase agreement may, but need not, be subject to a share repurchase option
in favor of the Company in accordance with a vesting schedule to be determined
by the Board.

 

(iv)                               Termination
of Participant’s Continuous Service. 
Subject to the “Repurchase Limitation” in subsection 10(h), in the event
a Participant’s Continuous Service terminates, the Company may repurchase or
otherwise reacquire any or all of the shares of Common Stock held by the
Participant, which have not vested as of the date of termination under the
terms of the restricted stock purchase agreement.

 

(v)                                   Transferability.  For a restricted stock award made before the
Listing Date, rights to acquire shares of Common Stock under the restricted
stock purchase agreement shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during the lifetime
of the Participant only by the Participant. 
For a restricted stock award made on or after the Listing Date, rights
to acquire shares of Common Stock under the restricted stock purchase agreement
shall be transferable by the Participant only upon such terms and conditions as
are set forth in the restricted stock purchase agreement, as the Board shall
determine in its discretion, so long as Common Stock awarded under the
restricted stock purchase agreement remains subject to the terms of the
restricted stock purchase agreement.

 

12

 

8.                                      Covenants of the Company.

 

(a)                                  Availability
of Shares.  During the terms of the
Stock Awards, the Company shall keep available at all times the number of
shares of Common Stock required to satisfy such Stock Awards.

 

(b)                                  Securities
Law Compliance.  The Company shall
seek to obtain from each regulatory commission or agency having jurisdiction
over the Plan such authority as may be required to grant Stock Awards and to
issue and sell shares of Common Stock upon exercise of the Stock Awards;
provided, however, that this undertaking shall not require the Company to
register under the Securities Act the Plan, any Stock Award or any Common Stock
issued or issuable pursuant to any such Stock Award.  If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of Common Stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell Common Stock upon exercise of such
Stock Awards unless and until such authority is obtained.

 

9.                                      Use of Proceeds from Stock.

 

Proceeds from the sale of Common Stock
pursuant to Stock Awards shall constitute general funds of the Company.

 

10.                               Miscellaneous.

 

(a)                                  Acceleration
of Exercisability and Vesting.  The
Board shall have the power to accelerate the time at which a Stock Award may
first be exercised or the time during which a Stock Award or any part thereof
will vest in accordance with the Plan, notwithstanding the provisions in the
Stock Award stating the time at which it may first be exercised or the time
during which it will vest.

 

(b)                                  Stockholder
Rights.  No Participant shall be
deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares of Common Stock subject to such Stock Award unless and until
such Participant has satisfied all requirements for exercise of the Stock Award
pursuant to its terms.

 

(c)                                  No
Employment or other Service Rights. 
Nothing in the Plan or any instrument executed or Stock Award granted
pursuant thereto shall confer upon any Participant any right to continue to
serve the Company or an Affiliate in the capacity in effect at the time the
Stock Award was granted or shall affect the right of the Company or an
Affiliate to terminate (i) the employment of an Employee with or without notice
and with or without cause, (ii) the service of a Consultant pursuant to the
terms of such Consultant’s agreement with the Company or an Affiliate, or (iii)
the service of a Director pursuant to the Bylaws of the Company or an
Affiliate, and any applicable provisions of the corporate law of the state in
which the Company or the Affiliate is incorporated, as the case may be.

 

13

 

(d)                                  Incentive
Stock Option $100,000 Limitation.  To
the extent that the aggregate Fair Market Value (determined at the time of
grant) of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionholder during any calendar year
(under all plans of the Company and its Affiliates) exceeds one hundred
thousand dollars ($100,000), the Options or portions thereof which exceed such
limit (according to the order in which they were granted) shall be treated as
Nonstatutory Stock Options.

 

(e)                                  Investment
Assurances.  The Company may require
a Participant, as a condition of exercising or acquiring Common Stock under any
Stock Award:  (i) to give written
assurances satisfactory to the Company as to the Participant’s knowledge and
experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Stock Award; and (ii) to give written assurances
satisfactory to the Company stating that the Participant is acquiring Common
Stock subject to the Stock Award for the Participant’s own account and not with
any present intention of selling or otherwise distributing the Common
Stock.  The foregoing requirements, and
any assurances given pursuant to such requirements, shall be inoperative if (1)
the issuance of the shares of Common Stock upon the exercise or acquisition of
Common Stock under the Stock Award has been registered under a then currently
effective registration statement under the Securities Act or (2) as to any
particular requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then applicable
securities laws.  The Company may, upon
advice of counsel to the Company, place legends on stock certificates issued
under the Plan as such counsel deems necessary or appropriate in order to
comply with applicable securities laws, including, but not limited to, legends
restricting the transfer of the Common Stock.

 

(f)                                    Withholding
Obligations.  To the extent provided
by the terms of a Stock Award Agreement, the Participant may satisfy any
federal, state or local tax withholding obligation relating to the exercise or
acquisition of Common Stock under a Stock Award by any of the following means
(in addition to the Company’s right to withhold from any compensation paid to
the Participant by the Company) or by a combination of such means:  (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares of Common Stock from the shares of
Common Stock otherwise issuable to the Participant as a result of the exercise
or acquisition of Common Stock under the Stock Award, provided, however, that
no shares of Common Stock are withheld with a value exceeding the minimum
amount of tax required to be withheld by law; or (iii) delivering to the
Company owned and unencumbered shares of Common Stock.

 

(g)                                 Information
Obligation.  Prior to the Listing
Date, to the extent required by applicable state law, the Company shall deliver
financial statements to Participants at least annually.  This subsection 10(g) shall not apply to key
Employees whose duties in connection with the Company assure them access to
equivalent information.

 

(h)                                 Repurchase
Limitation.  The terms of any
repurchase option shall be specified in the Stock Award and may be either at
Fair Market Value at the time of repurchase or at not

 

14

 

less than the original
purchase price.  To the extent required
by applicable state law at the time a Stock Award is made, any repurchase
option contained in a Stock Award granted prior to the Listing Date to a person
who is not an Officer, Director or Consultant shall be upon the terms described
below:

 

(i)                                    Fair
Market Value.  If the repurchase
option gives the Company the right to repurchase the shares of Common Stock
upon termination of employment at not less than the Fair Market Value of the
shares of Common Stock to be purchased on the date of termination of Continuous
Service, then:  (i) the right to
repurchase shall be exercised for cash or cancellation of purchase money
indebtedness for the shares of Common Stock within ninety (90) days of
termination of Continuous Service (or in the case of shares of Common Stock
issued upon exercise of Stock Awards after such date of termination, within
ninety (90) days after the date of the exercise) or such longer period as may
be agreed to by the Company and the Participant (for example, for purposes of
satisfying the requirements of Section 1202(c)(3) of the Code regarding “qualified
small business stock”); and (ii) the right terminates when the shares of Common
Stock become publicly traded.

 

(ii)                                Original
Purchase Price.  If the repurchase
option gives the Company the right to repurchase the shares of Common Stock
upon termination of Continuous Service at the original purchase price, then (i)
the right to repurchase at the original purchase price shall lapse at the rate
of at least twenty percent (20%) of the shares of Common Stock per year over
five (5) years from the date the Stock Award is granted (without respect to the
date the Stock Award was exercised or became exercisable) and (ii) the right to
repurchase shall be exercised for cash or cancellation of purchase money
indebtedness for the shares of Common Stock within ninety (90) days of
termination of Continuous Service (or in the case of shares of Common Stock
issued upon exercise of Options after such date of termination, within ninety
(90) days after the date of the exercise) or such longer period as may be
agreed to by the Company and the Participant (for example, for purposes of
satisfying the requirements of Section 1202(c)(3) of the Code regarding “qualified
small business stock”).

 

11.                               Adjustments upon Changes in Stock.

 

(a)                                  Capitalization
Adjustments.  If any change is made
in the Common Stock subject to the Plan, or subject to any Stock Award, without
the receipt of consideration by the Company (through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or other transaction
not involving the receipt of consideration by the Company), the Plan will be
appropriately adjusted in the class(es) and maximum number of securities
subject to the Plan pursuant to subsection 4(a) and the maximum number of
securities subject to award to any person pursuant to subsection 5(c), and the
outstanding Stock Awards will be appropriately adjusted in the class(es) and
number of securities and price per share of Common Stock subject to such
outstanding Stock Awards.  The Board
shall make such adjustments, and its determination shall be final, binding and
conclusive.  (The conversion of any
convertible securities of the Company shall not be treated as a transaction “without
receipt of consideration” by the Company.)

 

15

 

(b)                                  Dissolution
or Liquidation.  In the event of a
dissolution or liquidation of the Company, then all outstanding Stock Awards
shall terminate immediately prior to such event.

 

(c)                                  Asset
Sale, Merger, Consolidation or Reverse Merger.  In the event of (i) a sale, lease or other
disposition of all or substantially all of the assets of the Company, (ii) a
merger or consolidation in which the Company is not the surviving corporation
or (iii) a reverse merger in which the Company is the surviving corporation but
the shares of Common Stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise (individually, a “Corporate Transaction”), then
any surviving corporation or acquiring corporation shall assume any Stock
Awards outstanding under the Plan or shall substitute similar stock awards
(including an award to acquire the same consideration paid to the stockholders
in the Corporate Transaction) for those outstanding under the Plan.  In the event any surviving corporation or
acquiring corporation refuses to assume such Stock Awards or to substitute
similar stock awards for those outstanding under the Plan, then such Stock
Awards (regardless of whether vested or unvested) shall terminate if not
exercised prior to the Corporate Transaction.

 

12.                               Amendment of the Plan and Stock Awards.

 

(a)                                  Amendment
of Plan.  The Board at any time, and
from time to time, may amend the Plan. 
However, except as provided in Section 11 relating to adjustments upon
changes in Common Stock, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary to
satisfy the requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq
or securities exchange listing requirements.

 

(b)                                  Stockholder
Approval.  The Board may, in its sole
discretion, submit any other amendment to the Plan for stockholder approval,
including, but not limited to, amendments to the Plan intended to satisfy the
requirements of Section 162(m) of the Code and the regulations thereunder
regarding the exclusion of performance-based compensation from the limit on
corporate deductibility of compensation paid to certain executive officers.

 

(c)                                  Contemplated
Amendments.  It is expressly
contemplated that the Board may amend the Plan in any respect the Board deems
necessary or advisable to provide eligible Employees with the maximum benefits
provided or to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to Incentive Stock Options and/or to bring the
Plan and/or Incentive Stock Options granted under it into compliance therewith.

 

(d)                                  No
Impairment of Rights.  Rights under
any Stock Award granted before amendment of the Plan shall not be impaired by
any amendment of the Plan unless (i) the Company requests the consent of the
Participant and (ii) the Participant consents in writing.

 

(e)                                  Amendment
of Stock Awards.  The Board at any
time, and from time to time, may amend the terms of any one or more Stock
Awards; provided, however, that the rights under any Stock Award shall not be
impaired by any such amendment unless (i) the Company requests the consent of
the Participant and (ii) the Participant consents in writing.

 

16

 

13.                               Termination or Suspension of the Plan.

 

(a)                                  Plan
Term.  The Board may suspend or
terminate the Plan at any time.  Unless
sooner terminated, the Plan shall terminate on the day before the tenth (10th)
anniversary of the date the Plan is adopted by the Board or approved by the
stockholders of the Company, whichever is earlier.  No Stock Awards may be granted under the Plan
while the Plan is suspended or after it is terminated.

 

(b)                                  No
Impairment of Rights.  Suspension or
termination of the Plan shall not impair rights and obligations under any Stock
Award granted while the Plan is in effect except with the written consent of
the Participant.

 

14.                               Effective Date of Plan.

 

The Plan shall become effective as determined by the
Board, but no Stock Award shall be exercised (or, in the case of a stock bonus,
shall be granted) unless and until the Plan has been approved by the
stockholders of the Company, which approval shall be within twelve (12) months
before or after the date the Plan is adopted by the Board.

 

15.                               Choice of Law.

 

The law of the State of California shall govern all questions
concerning the construction, validity and interpretation of this Plan, without
regard to such state’s conflict of laws rules.

 

17Exhibit
10.1

 

200  
RESTRICTED STOCK UNIT AWARD

 

AGREEMENT EVIDENCING A GRANT OF

RESTRICTED STOCK UNITS

 

1.   GRANT
OF UNITS.  Pursuant
to the Lehman Brothers Holdings Inc. (“Holdings”) 1996 Management Ownership
Plan (the “Plan”), you are hereby granted, as of          ,
200   (the “Date of Grant”), the number of Restricted Stock Units (“Units”)
for shares of Holdings’ common stock, par value $.10 per share (the “Common
Stock”), set forth on the award statement with your name on it delivered to you
herewith (which number of Units may be adjusted pursuant to Paragraph 8 below).

 

2.   ADDITIONAL
DOCUMENTS; DEFINITIONS.  You have been provided with a copy of the
Plan, which is incorporated in this instrument by reference and made a part
hereof, and a copy of the Plan prospectus. 
The Plan and the prospectus should be carefully examined.  In the event of any conflict or ambiguity
between this instrument and the Plan, the terms of the Plan shall govern.  All capitalized terms not defined herein or
on Annex A attached hereto shall have the meaning ascribed to such terms under
the Plan.

 

3.   VESTING.  Subject to Paragraph 4, Units awarded to you
hereunder shall become vested in accordance with the following vesting
schedule:

 

•                              of
the Principal Units (     % of the total award) shall
become vested on          , 200  .

 

•              The
remaining            
Principal Units and all of the Discount Units (    % of the
total award) shall become vested on               ,
200  .

 

4.   ENTITLEMENT
TO RECEIVE COMMON STOCK.

 

(a)   General Rule.  Unless otherwise set forth herein, you shall
receive one share of Common Stock for each Unit that you hold on         ,
200   (the “Maturity Date”) and you shall be entitled to receive
freely transferable Shares of Common Stock as soon as practicable after the
Maturity Date.

 

(b)   Effect of Detrimental Activity.  Notwithstanding any other provision of this
Agreement if you engage in Detrimental Activity at any time prior to the Share
Payment Date, all Units held by you shall be forfeited and canceled.

 

(c)   Effect of Termination.  In the event of your Termination for any
reason or notification of Termination prior to                ,
200  , all Units held by you shall be forfeited and cancelled.  In the event of any Termination not described
in the preceding sentence, the following rules shall apply:

 

(i)            Voluntary
Termination with Competitive Activity. 
In the event of your voluntary Termination with Competitive Activity,
(i) all Discount Units shall be forfeited and canceled, (ii) if such
Termination occurs prior to                 ,
200  , all

 

 

Principal Units shall be forfeited and
canceled and (iii) if such Termination occurs on or subsequent to                ,
200  , you shall be entitled to receive freely transferable shares of
Common Stock for              
of the Principal Units (      % of the total
award).

 

(ii)           Voluntary
Termination without Competitive Activity. 
In the event of your voluntary Termination without Competitive Activity,
you shall be entitled to receive (i) freely transferable shares of Common Stock
for the Principal Units and (ii) freely transferable shares of Common Stock
equal to       % of the Discount Units multiplied
by each full year of your employment with Holdings or a Subsidiary after              ,
200    and before your Termination.  However, if your Termination is a Full Career
Termination, you will be entitled to receive freely transferable shares of
Common Stock for all the Discount Units provided you do not engage in
Competitive Activity prior to the Share Payment Date.  In the event of Competitive Activity prior to
the Share Payment Date, the provisions specified in Paragraph 4(c)(i) shall
apply.

 

(iii)          Involuntary
Termination with Cause.  In the event
of your involuntary Termination with Cause, all Principal Units and Discount
Units shall be immediately forfeited and canceled.

 

(iv)          Involuntary
Termination without Cause.  In the
event of your involuntary Termination without Cause, you shall be entitled to
receive (i) freely transferable shares of Common Stock for the Principal Units
and (ii) freely transferable shares of Common Stock equal to   % of
the Discount Units multiplied by each full year of your employment with
Holdings or a Subsidiary after               ,
200    and before your Termination.  However, if your Termination is a Full Career
Termination, you will be entitled to receive freely transferable shares of
Common Stock for all the Discount Units.

 

(v)           Retirement.  Notwithstanding the foregoing provisions of
Paragraph 4(c)(i), (ii), (iii) and (iv), in the event of your Retirement and
provided you do not engage in Competitive Activity or Detrimental Activity, you
shall be entitled to receive freely transferable shares of Common Stock for all
Principal Units and Discount Units as soon as practicable after the end of the
sixth month following your Retirement. 
If you engage in Competitive Activity, the provisions specified in
Paragraph 4(c)(i) shall apply as of the date of your Retirement, and you shall
be obligated to repay to Holdings the full gross amounts or shares received in
excess of those which you would have received under Paragraph 4(c)(i).  If you engage in Detrimental Activity prior
to the Share Payment Date, you shall be obligated to repay to Holdings the full
gross amounts or shares you received under this Agreement.

 

(vi)          Termination
Due to Death; Disability.  Notwithstanding
the foregoing provisions of Paragraph 4(c)(i), (ii), (iii), (iv) and (v), in
the event of the occurrence (i) your death or Disability or (ii) your death or
Disability following a Termination described in Paragraph 4(c)(ii) or (iv)
hereof, all outstanding Units held by you shall become immediately payable and
you shall, as soon as practicable thereafter, receive freely transferable
shares of Common Stock.

 

2

 

Any shares that become payable pursuant to
this Paragraph 4(c) (other than Paragraph (c)(v) or (vi)) shall be issued to
you on the Share Payment Date, subject to the application of Paragraph 4(b).  Notwithstanding any other provisions of this
Agreement, if any payment otherwise due hereunder would have the effect of
making you subject to the provisions of Code Section 409A(a)(1), such
payment shall be postponed until the earliest date upon which the payment could
be made without subjecting you to the provisions of Code Section 409A(a)(1).  Any remaining Units that are not payable
pursuant to the provisions of the Paragraph 4(c) shall be canceled by Holdings.

 

(d)   Affidavit.  In the event of your Termination on or after                 ,
200  , you may be requested, from time to time after your
Termination, to complete and sign an affidavit with respect to Competitive
Activity or Detrimental Activity, which includes representations and authorizes
Holdings to verify the representations. 
Any failure on your part to complete, sign and return the affidavit
within 60 days may cause you to forfeit all Units held by you at that time.

 

5.   DIVIDEND
EQUIVALENTS. 
With respect to each regular cash dividend or distribution paid or made
on Common Stock to holders of record on or after                 ,
200  , you shall be paid cash and/or credited with a number of
additional Units comparable in value to such dividend or distribution.  Such additional Units shall vest and become
payable at the same time as the Units to which they are attributable.

 

6.   LIMITATION
ON OBLIGATIONS. 
Holdings’ and any Subsidiary’s obligation with respect to the Units
granted hereunder is limited solely to the delivery to you of shares of Common
Stock on the date when such shares are due to be delivered hereunder, and in no
way shall Holdings or any Subsidiary become obligated to pay cash in respect of
such obligation (except for cash paid pursuant to Paragraphs 5 and 9 hereof).

 

7.   NON-ASSIGNMENT.  Units may not be sold, assigned, transferred,
pledged, hypothecated, or otherwise disposed of by you, except by will or the
laws of descent and distribution.  If you
or anyone claiming under or through you attempts to violate this Paragraph 7,
such attempted violation shall be null and void and without effect, and
Holdings’ obligation to issue any Common Stock hereunder shall terminate.

 

8.   EQUITABLE
ADJUSTMENT. 
In the event of a Change in Capitalization occurring on or after the
Date of Grant specified above and prior to the Share Payment Date, the number
and kind of shares of Common Stock which may be issued with respect to Units
shall be adjusted so as to reflect such change.

 

9.   CHANGE
IN CONTROL. 
Except as set forth below, upon the occurrence of a Change in Control
without the prior approval of a majority of the independent members of the
Incumbent Board, your Units shall vest immediately, the sales restrictions
shall lapse and shares of Common Stock shall be issued.  Except as set forth below, upon the
occurrence of a Change in Control with the prior approval of a majority of the
independent members of the Incumbent Board, you shall receive, in the same form
of consideration as that received by shareholders generally, the lesser of (a)
the undiscounted market value (at the time of grant) of the shares of Common
Stock underlying your outstanding Units or (b) the price paid by an

 

3

 

acquirer for such shares of Common Stock, and the excess, if any, of
the price paid by an acquirer over such undiscounted market value shall be
deferred for the shorter of (x) two years following such Change in Control or
(y) the term of any remaining restrictions (the “Deferred Period”), but your
Units shall remain otherwise subject to all issuance restrictions during the
Deferred Period.  Neither of the
foregoing shall be effective to the extent you have tender or voting rights
over shares of Common Stock held in Trust with respect to any Units, in which case
you would only be issued Common Stock or receive the undiscounted market value
in the same form of consideration as that received by shareholders generally
(and after the Deferred Period, the excess price) in respect of such Units upon
successful completion of a Change in Control.

 

10.   TREATMENT
IN BANKRUPTCY. 
(a) If you are an employee of Holdings, Holdings agrees to deliver, and
(b) if you are an employee of a Subsidiary, Holdings agrees to deliver to (or
at the direction of) such Subsidiary, shares of Common Stock on the date when
such shares are due to be delivered under this Agreement in satisfaction of
each Unit granted to you hereunder.  If
you are an employee of a Subsidiary, Holdings’ obligation in clause (b) of the
preceding sentence is created expressly for the benefit of you, and you shall
have the full right to enforce Holdings’ obligation to deliver Common Stock as
if such obligation were made directly in favor of you.  All of your claims arising from, in
connection with, or in any way relating to, any failure of Holdings to deliver
to you, or to a Subsidiary for delivery by such Subsidiary to you, shares of
Common Stock on the date when such shares are due to be delivered under this
Agreement in satisfaction of each Unit granted to you shall be deemed, in the
event of a bankruptcy of Holdings, to be claims for damages arising from the
purchase or sale of Common Stock of Holdings, within the meaning of section 510(b)
of the Bankruptcy Code and shall have in such bankruptcy the same priority as,
and no greater priority than, common stock interests in Holdings.

 

11.   AMENDMENT.  The terms of this Agreement may be amended
from time to time by the Committee in its sole discretion in any manner that it
deems appropriate, provided, however, that no such amendment shall, without
your consent, diminish your rights under this Agreement.

 

12.   BINDING
ACTIONS.  Any
action taken or decision made by the Committee or its designees arising out of
or in connection with the construction, administration, interpretation or
effect of the Plan or this Agreement shall lie within its sole and absolute
discretion, as the case may be, and shall be final, conclusive and binding on
you and all persons claiming under or through you.  By accepting this grant or other benefit
under the Plan, you and each person claiming under or through you shall be
conclusively deemed to have indicated acceptance and ratification of, and
consent to, any action taken under the Plan by the Committee or its designees.

 

13.   NO
RIGHT TO CONTINUED EMPLOYMENT.  The grant of Units shall not confer on you
any right to be retained in the employ of Holdings or a subsidiary, or to
receive subsequent Units or other awards under the Plan.  The right of Holdings or any subsidiary to
terminate your employment with it at any time or as otherwise provided by any
agreement between Holdings or any subsidiary and you is specifically reserved.

 

4

 

14.   APPLICABLE
LAW.  The
validity, construction, interpretation, administration, and effect of the Plan,
and of its rules and regulations, and rights relating to the Plan and to this
Agreement, shall be governed by the substantive laws, but not the choice of law
rules, of the State of Delaware.

 

15.   WITHHOLDING/DEDUCTIONS.  Holdings shall have the right to deduct
applicable taxes from all amounts payable to you.  It shall be a condition to the obligation of
Holdings to issue shares of Common Stock hereunder (a) that you (or, in event
of your death, your estate or any person who acquires the right to this award
by bequest or inheritance or otherwise by reason of your death) pay to Holdings
or its designee, upon its demand, in accordance with the Plan, either in the
form of cash or freely transferable shares of Common Stock such amount as may
be required by law for the purpose of satisfying its obligation or the
obligation of any other person to withhold any taxes required by law which are
incurred by reason of the issuance of such shares of Common Stock, and (b) that
you (or, in the event of your death, your estate or any person who acquires the
right to this award by bequest or inheritance or otherwise by reason of your
death) provide Holdings with any forms, documents or other information
reasonably required by Holdings in connection with the grant.  If the amount requested for the purpose of
satisfying the withholding obligation is not paid, Holdings may refuse to issue
shares of Common Stock and/or related dividend equivalents or take any other
action it deems necessary to fulfill the withholding obligation.  Holdings shall further have the right to
deduct from all amounts remaining payable to you after satisfaction of the
minimum statutory withholding obligations described above, the amount of any
deficit, debt, tax obligation or other liability or obligation of any kind
which you may at that time have with respect to Holdings or any Subsidiary.

 

5

 

ANNEX A

 

DEFINITIONS

 

“Cause” means a
material breach by a person of an employment contract between the person and
Holdings or any Subsidiary, failure by a person to devote substantially all
business time exclusively to the performance of his or her duties for Holdings
or any Subsidiary, willful misconduct, dishonesty related to the business and
affairs of Holdings or any Subsidiary, conviction of a felony or of a
misdemeanor constituting a statutory disqualification under U.S. securities
laws (or failure to contest prosecution for a felony or such a misdemeanor),
habitual or gross negligence in the performance of the person’s duties,
solicitation of employees of Holdings or any Subsidiary to work at another
company, improper use or disclosure of confidential information, the violation
of policies and practices adopted by Holdings or any Subsidiary including, but
not limited to the Code of Conduct, or a material violation of the conflict of
interest, proprietary information or business ethics policies of Holdings or
any Subsidiary.

 

“Change in Capitalization”
means the occurrence of a circumstance described in Section 14 of the
Plan.

 

“Committee” shall
mean the Compensation and Benefits Committee of the Incumbent Board (see
definition of Change in Control in the Plan).

 

“Competitive Activity”
means involvement (whether as an employee, proprietor, consultant or otherwise)
with any person or entity (including any company and its affiliates) engaged in
any business activity which is materially competitive with any business carried
on by Holdings or any of its Subsidiaries or affiliates on the date of
termination of a person’s employment with Holdings and any of its Subsidiaries,
as determined in the sole discretion of the Committee.

 

“Detrimental Activity”
means at any time (i) using confidential information received during a person’s
employment with Holdings or any Subsidiary, their affiliates or their clients,
in breach of such person’s obligations to keep such information confidential;
(ii) directly or indirectly persuading or attempting to persuade, by any means,
any employee of Holdings or any Subsidiary to terminate employment with any of
the foregoing or to breach any of the terms of his or her employment with the
foregoing; (iii) directly or indirectly making any statement that is, or could
be, disparaging of Holdings, its Subsidiaries or affiliates, or any of their
employees (except as necessary to respond truthfully to any inquiry from
applicable regulatory authorities or to provide information pursuant to legal
process); or (iv) directly or indirectly engaging in any activity that is
substantially injurious to the financial condition, reputation, or goodwill of
Holdings or its Subsidiaries or affiliates, in each case as determined in the
sole discretion of the Committee.

 

“Disability” means a
disability under both the Long-Term Disability Insurance Plan and the Social
Security Act.

 

“Discount Units”
shall mean the number of Units (and any dividend equivalents related thereto)
related to the       % discount upon issuance of
the award.

 

“Full Career Termination”
means a Termination when (i) a person has at least 20 years of service or (ii)
a person meets all of the following criteria: (x) the person’s age plus

 

 

years of service with Holdings or any subsidiary equals at least 65,
(y) the person is at least 45 years old, and (z) the person has at least 10
years of service with Holdings or any subsidiary.

 

“Principal Units”
shall mean the number of Units (and any dividend equivalents related thereto)
related to the undiscounted base portion of the award (       %
of the total number of units awarded).

 

“Retirement” shall
mean a Termination of employment which meets the criteria for retirement under
Holdings’ qualified defined benefit pension plan, provided that the person has
signed an agreement not to engage in Competitive Activity or Detrimental
Activity, in a form prescribed in the sole discretion of the Committee.

 

“Share Payment Date”
means as soon as practicable after the earlier of (a) the Maturity Date or (b)
the completion of the fiscal quarter following the one-year anniversary of
termination of employment.

 

“Termination” means
the end of employment with Holdings or a Subsidiary.  The date of Termination and the reason for
Termination are as determined in the sole discretion of the Committee.

 

2

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