Document:

Exhibit 10.103

CATALYST
SEMICONDUCTOR, INC.

AMENDED
AND RESTATED EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement (the “Agreement”)
is entered into as of May 23, 2007, (the “Effective Date”) by and between
Catalyst Semiconductor, Inc. (the ”Company”), and Gelu Voicu (“Executive”),
and replaces and supersedes in its entirety the employment agreement entered
into between the Company and Executive as of May 23, 2003.

1.             Duties and Scope
of Employment.

(a)           Positions and Duties.  As of the Effective Date, Executive will
continue to serve as Chief Executive Officer of the Company.  Executive will render such business and
professional services in the performance of his duties, consistent with
Executive’s position within the Company, as will reasonably be assigned to him
by the Company’s Board of Directors (the “Board”).

(b)           Board Membership.  During the Employment Term (as defined
below), Executive will continue to serve as a member of the Board, subject to
any required Board and/or shareholder approval. 
In the event of Executive’s termination of employment with the Company
for any reason, Executive agrees to resign his position on the Board within
three (3) business days of his termination of employment.

(c)           Obligations. 
During the Employment Term, Executive will perform his duties faithfully
and to the best of his ability and will devote his full business efforts and
time to the Company.  For the duration of
the Employment Term, Executive agrees not to actively engage in any other
employment, occupation or consulting activity for any direct or indirect
remuneration without the prior approval of the Board.

2.             At-Will
Employment.  Executive’s employment
with the Company pursuant to this Agreement (the “Employment Term”) will
commence on the Effective Date and will continue, until otherwise terminated as
provided herein.  The parties agree that
Executive’s employment with the Company will be “at-will” employment and may be
terminated at any time with or without cause by giving Executive a written notice.  Executive understands and agrees that neither
his job performance nor promotions, commendations, bonuses or the like from the
Company give rise to or in any way serve as the basis for continuation,
modification, amendment, or extension, by implication or otherwise, of his
employment with the Company.  However, as
described in this Agreement, Executive may be entitled to severance benefits
depending on the circumstances of Executive’s termination of employment with
the Company.

3.             Compensation.

(a)           Base Salary. 
During the Employment Term, the Company will pay Executive as
compensation for his services a base salary at the annualized rate of $350,000.00
(the “Base Salary”) or such other rate not below $350,000.00 as the
Compensation Committee of the Board (the “Committee”) may determine from time
to time.  The Base Salary will be paid
periodically in 

accordance with the Company’s normal payroll
practices and be subject to applicable withholding taxes.

Once
the Committee has increased such Base Salary, it thereafter will not be
reduced; provided, however, that if a Change of Control (as defined below) has
not occurred, such salary may be reduced by the Committee if such reduction is
in proportion to a salary reduction program approved by the Board which affects
a majority of the other executive officers of the Company generally.

(b)           Bonus.  For each fiscal year of the Company,
Executive will be eligible to receive an annual bonus in an amount targeted at sixty-five
percent (65%) of his Base Salary based upon the achievement of performance
criteria specified by the Committee (the “Target Bonus”).  In the event that the Company
and Executive far exceed the performance goals specified by the Committee, the
maximum annual bonus Executive can earn is two times the Target Bonus (that is,
130% of his Base Salary).  The actual amount of the bonus payable for
any fiscal quarter will depend upon the extent to which the applicable quarterly
or annual performance criteria have been satisfied, as determined by the Committee
at the end of each fiscal quarter.  Any bonus
that actually is earned will be paid as soon as practicable (but no later than
sixty (60) days after the bonus is earned) after the end of the fiscal quarter
for which the bonus is earned, but only if Executive was employed with the
Company through the end of such fiscal quarter.  The bonus will be subject to all applicable
withholding taxes.

4.             Employee
Benefits.  During the Employment
Term, Executive will be entitled to participate in the employee benefit plans
currently and hereafter maintained by the Company of general applicability to
other senior executives of the Company. 
The Company reserves the right to cancel or change the benefit plans and
programs it offers to its employees at any time.  During the Employment Term, the Company will
provide Executive with a $1,000,000 term life insurance policy.  

5.             Expenses.  The Company will reimburse Executive for
reasonable travel, entertainment or other expenses incurred by Executive in the
furtherance of or in connection with the performance of Executive’s duties
hereunder, in accordance with the Company’s expense reimbursement policy as in
effect from time to time.

6.     Severance.

(a)           Involuntary Termination.  If (i) the Company involuntarily terminates Executive’s
employment without “Cause” (as defined herein), but excluding a termination
based on Executive’s death or “Disability” (as defined herein); or (ii)
Executive voluntarily terminates his employment with the Company due to a “Good
Reason Termination” (as defined herein); and (iii) Executive signs and
does not revoke a standard release of claims with the Company, then, subject to
Section 9, Executive will be entitled to receive:

(i)    the “Severance Payments” (as defined herein);

(ii)   accelerated vesting (including, the lapse of restrictions) of the unvested
shares of common stock subject to outstanding equity awards granted to
Executive by the Company 

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that vest based on the passage of time and
continued service (the “Time-Based Awards”) in an amount equal to the greater
of (A) the number of shares that would have vested under such Time-Based Awards
had Executive remained employed an additional twelve (12) months from the
termination date or (B) fifty percent (50%) of the unvested shares of common
stock subject to the Time-Based Awards as of the date of Executive’s
termination of employment;

(iii)  the immediate vesting of fifty percent (50%) of the unvested shares
of common stock subject to outstanding equity awards granted to Executive by
the Company that vest based on the achievement of performance objectives (the “Performance-Based
Awards” and, together with the Time-Based Awards, the “Awards”);

(iv)  all shares of common stock subject to outstanding stock options
granted to Executive by the Company (the “Options”) which are vested as of the
date of Executive’s termination of employment (including pursuant to this Section
6(a)) will be exercisable for a period of one (1) year following the date of
such termination, provided, however, that in no event will this provision
operate to extend an Option beyond the term/expiration date of such Option; and

(v)   reimbursement for the cost of continued health plan coverage
Executive timely elects pursuant to the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended (“COBRA”) and life insurance coverage for Executive and
his dependents for a period of twelve (12) months from the date of such
termination of employment.

(b)           Voluntary Termination; Termination for Cause.  If Executive’s employment with the Company
terminates voluntarily by Executive (including death or disability) or for
Cause by the Company, then (i) all vesting of all options to purchase the
common stock of the Company will terminate immediately and all payments of
compensation by the Company to Executive hereunder will terminate immediately
(except as to amounts already earned), and (ii) Executive will not receive any
severance benefits or the continuation of any other benefits.

(c)           Change of Control.

(i)    If within twelve (12) months following a “Change of Control” (as
defined below) (A) the Company or the Successor terminates Executive’s
employment with the Company or any Successor for other than (x) Cause, (y) death
or (z) Disability, or (B) Executive terminates his employment with the Company
or a Successor due to a Good Reason Termination, and (C) Executive signs and
does not revoke a standard release of claims with the Company, then, in lieu of
the benefits pursuant to Section 6(a) and subject to Section 9, Executive will
be entitled to receive:

(1)           the Severance Payments;

(2)           accelerated vesting (including, the lapse of restrictions)
of the unvested shares of common stock subject to Executive’s Time-Based Awards
in an amount equal to the greater of (A) the number of shares that would have
vested under such Time-Based Awards had Executive remained employed an
additional twelve (12) months from the termination date or (B) fifty percent
(50%) of the unvested shares of common stock subject to the Time-Based Awards
as of the date of Executive’s termination of employment;

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(3)           the immediate vesting of fifty percent (50%) of the
unvested shares of common stock subject to Performance-Based Awards;

(4)           all shares of common stock subject to Executive’s Options
which are vested as of the date of Executive’s termination of employment
(including pursuant to this Section 6(a)) will be exercisable for a period of
one (1) year following the date of such termination, provided, however, that in
no event will this provision operate to extend an Option beyond the term/expiration
date of such Option; and

(5)           reimbursement for the cost of continued health plan
coverage Executive timely elects pursuant to COBRA and life insurance coverage for Executive and
his dependents for a period of fifteen (15) months from the date of such
termination of employment.

(ii)   If in connection with a Change of Control Executive is not made
the Chief Executive Officer of the Successor or does not remain employed as the
Chief Executive Officer of the Company where the Company is the surviving
corporation in a Change of Control, then, any unvested shares of common stock
subject to the Options will fully accelerate and become exercisable immediately
upon such Change of Control (or, if later, upon the date it is determined that
Executive will not become or remain the Chief Executive Officer).  In addition, all shares of common stock
subject to the Options will be exercisable for that period of time following
the closing date of the Change of Control which is equal to the longest period
of time for which any shares of common stock subject to stock options granted
to any non-employee director of the Company are exercisable following such
Change of Control (as determined at the closing date of such Change of Control)
or twelve (12) months, whichever is greater; provided, however, that in no
event will this provision operate to extend an Option beyond the
term/expiration date of such Option.

(d)           Timing of Severance Payments.

(i)    Unless otherwise required to be delayed pursuant to Section
6(d)(ii) below, the Severance Payments shall be paid in equal installments over
a period of twelve (12) months from the date of such termination of employment
in accordance with the Company’s normal payroll policies.

(ii)   If Executive is a “specified employee” within the meaning of
Section 409A of the Code and the final regulations thereunder (“Section 409A”)
at the time of Executive’s termination, and the Severance Payments (and any
other benefits payable under this Agreement which may be considered deferred
compensation under Section 409A (the “deferred compensation benefits”)) to be
made to Executive pursuant to this Agreement will not be paid in full by March
15 of the year following the year in which Executive’s termination of
employment occurs, then only that portion of such Severance Payments (and any
other benefits which may be considered deferred compensation under Section
409A) which does not exceed the “Section 409A Limit” (as defined below) may be
made within the first six months following Executive’s termination of
employment in accordance with the payment schedule set forth in Section 6(d)(i)
above.  Any portion of such Severance
Payments (and any deferred compensation benefits) in excess of the Section 409A
Limit (when the Severance Payments and any such other deferred compensation
benefits are considered in the aggregate) shall accrue and, to the extent such
portion of the Severance Payments (and any deferred compensation benefits)
would otherwise have been payable within the first six (6) months 

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following Executive’s termination of
employment pursuant to Section 6(d)(i) above, will become payable the date that
is six (6) months and one (1) day following the date of Executive’s
termination of employment.  All
subsequent Severance Payments (and any deferred compensation benefits), if any,
will be payable as provided in Section 6(d)(i) of this Agreement.  It is the intent of this provision to comply
with the requirements of Section 409A, and any ambiguities herein will be
interpreted to so comply.

7.             Definitions.

(a)           Cause.  For
purposes of this Agreement, “Cause” is defined as (i) Executive engaging in
knowing and intentional illegal conduct that is injurious to the Company;
(ii) Executive’s conviction of, or plea of nolo contendere to, a
felony; (iii) Executive’s gross misconduct; or (iv) Executive’s
continued substantial violations of his employment duties after Executive has
received a written demand for performance from the Company which specifically
sets forth the factual basis for the Company’s belief that Executive has not
substantially performed his duties.

(b)           Change of Control. 
For purposes of this Agreement, “Change of Control” of the Company is
defined as: (i) any “person” (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the total voting power represented by the Company’s then outstanding
voting securities; or (ii) a change in the composition of the Board
occurring within a two-year period, as a result of which fewer than a majority
of the directors are Incumbent Directors. 
“Incumbent Directors” will mean directors who either (A) are
directors of the Company as of the date hereof, or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or nomination
(but will not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to the election
of directors to the Company); or (iii) the date of the consummation of a
merger or consolidation of the Company with any other corporation that has been
approved by the shareholders of the Company, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the shareholders
of the Company approve a plan of complete liquidation of the Company; or
(iv) the date of the consummation of 
the sale or disposition by the Company of all or substantially all the
Company’s assets.

(c)           Disability. 
For purposes of this Agreement, “Disability” means the inability of
Executive, due to a physical or mental impairment, to perform the essential
functions of Executive’s position, with or without reasonable accommodation,
for a period of ninety (90) days.  Whether
Executive is disabled will be determined by the Company based on evidence
provided by one or more physicians selected by the Company.

(d)           Good Reason Termination.  For purposes of this Agreement, “Good Reason
Termination” means Executive’s termination of employment within ninety (90)
days following the 

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end of the Cure Period (as defined below) as
a result of the occurrence of any of the following without the Executive’s
consent: (i) a material diminution in Executive’s Base Salary, except for reductions
that are in proportion to any salary reduction program approved by the Board
that affects a majority of the senior executives of the Company; (ii) a
material diminution in Executive’s authority, duties, or responsibilities;
(iii) a material diminution in the authority, duties, or responsibilities of
the supervisor to whom Executive is required to report, including a
requirements that Executive report to a corporate officer or employee instead
of reporting directly to the Board; (iv) a material diminution in the
budget over which Executive retains authority; (v) a material change in the
geographic location at which Executive must perform his services of not less
than fifty (50) miles from the Company’s primary place of business immediately
prior to such relocation; or (vi) any other action or inaction that constitutes
a material breach by the Company of this Agreement; provided, however, that
Executive must provide written notice to the Board of the condition that could
constitute a “Good Reason” event within ninety (90) days of the initial
existence of such condition and such condition must not have been remedied by
the Company within thirty (30) days (the “Cure Period”) of such written notice.

(e)           Section 409A Limit. 
For the purposes of this Agreement, “Section 409A Limit” means the
lesser of two (2) times: (i) the Executive’s annualized compensation based upon
the Executive’s annual rate of pay (unless otherwise defined by applicable
guidance issued by the Internal Revenue Service after the date of this
Agreement, “annual rate of pay” shall include base salary and bonus compensation)
paid to Executive during the Company’s taxable year preceding the Company’s
taxable year during which such termination of employment occurs; or
(ii) the maximum amount that may be taken into account under a qualified
plan pursuant to Section 401(a)(17) for the year in which the Executive’s
employment is terminated.

(f)            Severance Payments.  For purposes of this Agreement, “Severance
Payments” shall mean
payments in cash, and less all applicable withholding taxes, equal to the sum
of (i) twelve (12) months of the Executive’s Base Salary, as then in effect,
for any terminations pursuant to Section 6(a), or fifteen (15) months of the
Executive’s Base Salary, as then in effect, for any terminations pursuant to
Section 6(c), and (ii) the Target Bonus for the fiscal year in
which such termination of employment occurs, pro-rated to the date of
termination (less applicable withholding taxes).  The pro rata portion of the Target Bonus will
be calculated by multiplying the applicable year’s Target Bonus by a fraction with a numerator equal to the
number of days inclusive between the start of the current calendar year and the
date of termination and a denominator equal to 365.

(g)           Successor. 
For purposes of this Agreement, “Successor” means any person, firm,
corporation or other business entity which at any time, whether by purchase,
merger or otherwise, directly or indirectly acquires all or substantially all
of the assets or business of the Company.

8.             Confidential
Information.  Executive covenants
that he has executed the Company’s standard Confidential Information and
Invention Assignment Agreement (the “Confidential Information Agreement”) and
such agreement is and will remain in full force and effect upon continuing
employment with the Company as its Chief Executive Officer.  Executive further agrees to sign any future
amendments to the Confidential Information Agreement provided that such
amendment is also signed by a majority of the officers of the Company.

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9.             Conditional Nature of Severance
Payments.

(a)           Noncompete.  Executive acknowledges that the nature of the
Company’s business is such that if Executive were to become employed by, or
substantially involved in, the business of a competitor of the Company during
the twelve (12) months following the termination of Executive’s employment with
the Company, it would be very difficult for Executive not to rely on or use the
Company’s trade secrets and confidential information.  Thus, to avoid the inevitable disclosure of
the Company’s trade secrets and confidential information, and as a condition of
the Company’s obligation to pay Executive any amounts or benefits under this
Section 9, Executive agrees and acknowledges that Executive’s right to receive
the severance payments set forth in Section 6 (to the extent Executive is
otherwise entitled to such payments) will be conditioned upon Executive not
directly or indirectly engaging in (whether as an employee, consultant, agent,
proprietor, principal, partner, shareholder, corporate officer, director or
otherwise), nor having any ownership interested in or participating in the
financing, operation, management or control of, any person, firm, corporation
or business that competes with Company or is a customer of the Company.  Upon any breach of this section, all
severance payments pursuant to this Agreement will immediately cease.

(b)           Non-Solicitation. 
Until the date twelve (12) months after the termination of
Executive’s employment with the Company for any reason, Executive agrees and
acknowledges that Executive’s right to receive the severance payments set forth
in Section 6 (to the extent Executive is otherwise entitled to such
payments) will be conditioned upon Executive not either directly or indirectly
soliciting, inducing, attempting to hire, recruiting, encouraging, taking away,
hiring any employee of the Company or causing an employee to leave his or her
employment either for Executive or for any other entity or person.

(c)           Consequences of Breach of Section 9(a) or 9(b).  Executive agrees and acknowledges that upon
any breach by Executive of either Section 9(a) or (b), the Company will have
the right (i) to terminate all severance benefits set forth in this Agreement;
(ii) to seek reimbursement from Executive for all severance payments previously
made to Executive pursuant to this Agreement; (iii) to reclaim ownership of any
shares of Common Stock owned by Executive for which vesting was accelerated
pursuant to this Agreement; and (iv) to immediately cancel all outstanding
Options held by Executive.

(d)           Understanding of Covenants.  Executive represents that he (i) is
familiar with the foregoing covenants not to compete and not to solicit, and
(ii) is fully aware of his obligations hereunder, including, without
limitation, the reasonableness of the length of time, scope and geographic
coverage of these covenants.

10.           Excise Tax.  In the event that the benefits provided for
in this Agreement constitute “parachute payments” within the meaning of Section
280G of the Internal Revenue Code of 1986, as amended (the “Code”) and will be
subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”),
then Executive’s severance benefits payable under the terms of this Agreement
will be either (a) delivered in full, or (b) delivered as to such lesser extent
which would result in no portion of such severance benefits being subject to
the Excise Tax, whichever of the foregoing amounts, taking into account the
applicable federal, state and local income taxes and the Excise Tax, results in
the receipt by Executive on an after-tax basis, of the greatest amount of
severance benefits, 

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notwithstanding
that all or some portion of such severance benefits may be taxable under
Section 4999 of the Code.  Unless
Executive and the Company agree otherwise in writing, the determination of
Executive’s Excise Tax liability, if any, and the amount, if any, required to
be paid under this Section 10 will be made in writing by the independent
auditors who are primarily used by the Company immediately prior to the Change
of Control (the “Accountants”).  For
purposes of making the calculations required by this Section 10, the
Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the Code.  Executive and the Company agree to furnish
such information and documents as the Accountants may reasonably request in
order to make a determination under this Section 10.  The Company will bear all costs the
Accountants may incur in connection with any calculations contemplated by this
Section 10.

11.           Assignment.  This Agreement will be binding upon and inure
to the benefit of (a) the heirs, executors and legal representatives of
Executive upon Executive’s death and (b) any Successor of the
Company.  Any Successor of the Company
will be deemed substituted for the Company under the terms of this Agreement
for all purposes.  None of the rights of
Executive to receive any form of compensation payable pursuant to this
Agreement may be assigned or transferred except by will or the laws of descent
and distribution.  Any other attempted
assignment, transfer, conveyance or other disposition of Executive’s right to
compensation or other benefits will be null and void.

12.           Notices.  All notices, requests, demands and other
communications called for hereunder will be in writing and will be deemed given
(a) on the date of delivery if delivered personally; (b) one (1)
day after being sent by a well established commercial overnight service; or (c) four (4)
days after being mailed by registered or certified mail, return receipt
requested, prepaid and addressed to the parties or their successors at the
following addresses, or at such other addresses as the parties may later
designate in writing:

If to the Company:

Catalyst Semiconductor, Inc.

2975 Stender Way

Santa Clara, CA  95959-3214

Attn:  Chairman of the Board of Directors

If to Executive:

at the last residential address known by the Company.

13.           Severability.  In the event that any provision hereof
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement will continue in full force and effect without
said provision.

14.           Arbitration.

(a)           General.  In
consideration of Executive’s service to the Company, its promise to arbitrate
all employment related disputes and Executive’s receipt of the compensation,
pay raises and other benefits paid to Executive by the Company, at present and
in the future, Executive agrees 

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that any and all controversies, claims, or
disputes with anyone (including the Company and any employee, officer,
director, shareholder or benefit plan of the Company in their capacity as such
or otherwise) arising out of, relating to, or resulting from Executive’s
service to the Company under this Agreement or otherwise or the termination of
Executive’s service with the Company, including any breach of this Agreement, will
be subject to binding arbitration under the Arbitration Rules set forth in
California Code of Civil Procedure Section 1280 through 1294.2, including
Section 1283.05 (the “Rules”) and pursuant to California law. Disputes which
Executive agrees to arbitrate, and thereby agrees to waive any right to a trial
by jury, include any statutory claims under state or federal law, including,
but not limited to, claims under Title VII of the Civil Rights Act of 1964, the
Americans with Disabilities Act of 1990, the Age Discrimination in Employment
Act of 1967, the Older Workers Benefit Protection Act, the Worker Adjustment
and Retraining Notification Act, the California Fair Employment and Housing
Act, the Family and Medical Leave Act, the California Family Rights Act, the
California Labor Code, claims of harassment, discrimination or wrongful
termination and any statutory claims. Executive further understands that this
Agreement to arbitrate also applies to any disputes that the Company may have
with Executive.

(b)           Procedure. 
Executive agrees that any arbitration will be administered by Judicial
Arbitration & Mediation Services, Inc. (“JAMS”) and that a neutral
arbitrator will be selected in a manner consistent with its Employment
Arbitration Rules & Procedures (the “JAMS Rules”).  The arbitration proceedings will allow for
discovery according to the rules set forth in the JAMS Rules or California Code of Civil Procedure.  Executive agrees that the arbitrator will
have the power to decide any motions brought by any party to the arbitration,
including motions for summary judgment and/or adjudication and motions to
dismiss and demurrers, prior to any arbitration hearing.  Executive agrees that the arbitrator will
issue a written decision on the merits. 
Executive also agrees that the arbitrator will have the power to award
any remedies, including attorneys’ fees and costs, available under applicable
law.  Executive and the Company agree
that the Company will pay for any administrative or hearing fees charged by the
arbitrator or JAMS except that Executive will pay any filing fees associated
with any arbitration that Executive initiates, but only so much of the filing
fees as Executive would have instead paid had Executive filed a complaint in a
court of law.  Executive agrees that the
arbitrator will administer and conduct any arbitration in a manner consistent
with the Rules and that to the extent that the JAMS Rules conflict with the
Rules, the Rules will take precedence. 
The Company and Executive agree that the arbitration proceedings will
take place in San Jose, California.

(c)           Remedy. 
Except as provided by the Rules, arbitration will be the sole, exclusive
and final remedy for any dispute between Executive and the Company.  Accordingly, except as provided for by the
Rules, neither Executive nor the Company will be permitted to pursue court
action regarding claims that are subject to arbitration.  Notwithstanding, the arbitrator will not have
the authority to disregard or refuse to enforce any lawful Company policy, and
the arbitrator will not order or require the Company to adopt a policy not
otherwise required by law which the Company has not adopted.

(d)           Availability of Injunctive Relief.  In addition to the right under the Rules to
petition the court for provisional relief, Executive agrees that any party may
also petition the court for injunctive relief where either party alleges or
claims a violation of this Agreement or the Confidentiality Agreement or any
other agreement regarding trade secrets, confidential information,

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nonsolicitation or Labor Code §2870.  In the event either party seeks injunctive
relief, the prevailing party will be entitled to recover reasonable costs and
attorneys fees.

(e)           Administrative Relief.  Executive understands that this Agreement
does not prohibit Executive from pursuing an administrative claim with a local,
state or federal administrative body such as the Department of Fair Employment
and Housing, the Equal Employment Opportunity Commission or the workers’
compensation board.  This Agreement does,
however, preclude Executive from pursuing court action regarding any such
claim.

(f)            Voluntary Nature of Agreement.  Executive acknowledges and agrees that
Executive is executing this Agreement voluntarily and without any duress or
undue influence by the Company or anyone else. 
Executive further acknowledges and agrees that Executive has carefully
read this Agreement and that Executive has asked any questions needed for
Executive to understand the terms, consequences and binding effect of this
Agreement and fully understand it, including that Executive is waiving
Executive’s right to a jury trial.  Finally,
Executive agrees that Executive has been provided an opportunity to seek the
advice of an attorney of Executive’s choice before signing this Agreement.

15.           Integration.  This Agreement, together with the Company’s
stock option plan, any stock option agreements and the Confidential Information
Agreement represents the entire agreement and understanding between the parties
as to the subject matter herein and supersedes all prior or contemporaneous
agreements whether written or oral, including, but not limited to, the
employment agreement entered into between the Company and Executive as of May
23, 2003.  No waiver, alteration, or
modification of any of the provisions of this Agreement will be binding unless
in writing and signed by duly authorized representatives of the parties hereto.

16.           Tax Withholding.  All payments made pursuant to this Agreement
will be subject to withholding of applicable taxes.

17.           Governing Law.  This Agreement will be governed by the laws
of the State of California (with the exception of its conflict of laws
provisions).

18.           Acknowledgment.  Executive acknowledges that he has had the
opportunity to discuss this matter with and obtain advice from his private
attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.

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IN WITNESS WHEREOF, each of the parties has executed
this Agreement, in the case of the Company by their duly authorized officers,
as of the day and year first above written.

COMPANY:

	
  CATALYST SEMICONDUCTOR, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Garrett Garrettson

  	
   

  	
  Date:

  	
  May 12, 2007

  	
   

  	
   

  
	
   

  	
  Garrett A. Garrettson

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Chairman of the Compensation Committee of the Board
  of Directors

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXECUTIVE:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ Gelu Voicu

  	
   

  	
  Date:

  	
  May 14, 2007

  	
   

  	
   

  
	
   

  	
  Gelu Voicu

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 11Exhibit 4.6

 

2005

OMNIBUS STOCK AND INCENTIVE PLAN

FOR

THOMAS GROUP, INC.

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  Purpose

  	
  1

  
	
  2.

  	
  Definitions

  	
  1

  
	
   

  	
  (a)

  	
  “Administrator

  	
  1

  
	
   

  	
  (b)

  	
  “Agreed Price

  	
  1

  
	
   

  	
  (c)

  	
  “Applicable Laws

  	
  1

  
	
   

  	
  (d)

  	
  “Award

  	
  1

  
	
   

  	
  (e)

  	
  “Board

  	
  1

  
	
   

  	
  (f)

  	
  “Cause

  	
  1

  
	
   

  	
  (g)

  	
  “Change in Control

  	
  1

  
	
   

  	
  (h)

  	
  “Change in Control Price

  	
  2

  
	
   

  	
  (i)

  	
  “Code

  	
  3

  
	
   

  	
  (j)

  	
  “Committee

  	
  3

  
	
   

  	
  (k)

  	
  “Common Stock

  	
  3

  
	
   

  	
  (l)

  	
  “Company

  	
  3

  
	
   

  	
  (m)

  	
  “Consultant

  	
  3

  
	
   

  	
  (n)

  	
  “Date of Grant

  	
  3

  
	
   

  	
  (o)

  	
  “Director

  	
  3

  
	
   

  	
  (p)

  	
  “Disability

  	
  3

  
	
   

  	
  (q)

  	
  “Effective Date

  	
  3

  
	
   

  	
  (r)

  	
  “Eligible Person(s)

  	
  3

  
	
   

  	
  (s)

  	
  “Employee(s)

  	
  3

  
	
   

  	
  (t)

  	
  “Fair Market Value

  	
  3

  
	
   

  	
  (u)

  	
  “Holder

  	
  4

  
	
   

  	
  (v)

  	
  “Incentive Stock Option

  	
  4

  
	
   

  	
  (w)

  	
  “Non-Qualified Stock
  Option

  	
  4

  
	
   

  	
  (x)

  	
  “Option

  	
  4

  
	
   

  	
  (y)

  	
  “Option Price

  	
  4

  
	
   

  	
  (z)

  	
  “Performance Award

  	
  4

  
	
   

  	
  (aa)

  	
  “Performance Measures

  	
  4

  
	
   

  	
  (bb)

  	
  “Performance Period

  	
  4

  
	
   

  	
  (cc)

  	
  “Plan

  	
  4

  
	
   

  	
  (dd)

  	
  “Plan Year

  	
  4

  
	
   

  	
  (ee)

  	
  “Reserved Shares

  	
  5

  
	
   

  	
  (ff)

  	
  “Restriction(s)

  	
  5

  
	
   

  	
  (gg)

  	
  “Restricted Period

  	
  5

  
	
   

  	
  (hh)

  	
  “Restricted Shares

  	
  5

  
	
   

  	
  (ii)

  	
  “Restricted Share Award

  	
  5

  
	
   

  	
  (jj)

  	
  “Restricted Share
  Distributions

  	
  5

  
	
   

  	
  (kk)

  	
  “SAR

  	
  5

  
	
   

  	
  (ll)

  	
  “Share(s)

  	
  5

  
	
   

  	
  (mm)

  	
  “Shareholders

  	
  5

  
	
   

  	
  (nn)

  	
  “Spread

  	
  5

  
	
   

  	
  (oo)

  	
  “Separation

  	
  5

  
	
   

  	
  (pp)

  	
  “Subsidiary

  	
  5

  
	
   

  	
  (qq)

  	
  “1933 Act

  	
  6

  

 

i

 

	
   

  	
  (rr)

  	
  “1934 Act

  	
  6

  
	
   

  	
  (ss)

  	
  “Vested

  	
  6

  
	
   

  	
  (tt)

  	
  “10% Person

  	
  6

  
	
  3.

  	
  Award of Reserved Shares.

  	
  6

  
	
  4.

  	
  Conditions for Grant of Awards.

  	
  6

  
	
  5.

  	
  Grant of Options.

  	
  7

  
	
  6.

  	
  Option Price.

  	
  8

  
	
  7.

  	
  Exercise of Options

  	
  8

  
	
  8.

  	
  Vesting of Award

  	
  8

  
	
  9.

  	
  Termination of Option Period.

  	
  8

  
	
  10.

  	
  Acceleration

  	
  9

  
	
  11.

  	
  Adjustment of Reserved Shares.

  	
  9

  
	
  12.

  	
  Transferability of Awards

  	
  11

  
	
  13.

  	
  Issuance of Reserved Shares

  	
  11

  
	
  14.

  	
  Exercise of Discretion and Administration of the Plan.

  	
  12

  
	
  15.

  	
  Tax Withholding

  	
  13

  
	
  16.

  	
  Restricted Share Awards.

  	
  13

  
	
  17.

  	
  Performance Awards.

  	
  14

  
	
  18.

  	
  Stock Appreciation Rights.

  	
  15

  
	
  19.

  	
  Section 83(b) Election

  	
  17

  
	
  20.

  	
  Interpretation.

  	
  17

  
	
  21.

  	
  Amendment and Discontinuation of the Plan

  	
  17

  
	
  22.

  	
  Effective Date and Termination Date

  	
  18

  

 

ii

 

2005 OMNIBUS STOCK AND INCENTIVE PLAN FOR

 

THOMAS GROUP, INC.

 

1.                                      Purpose.  The purpose of this Plan is to advance the
interests of Thomas Group, Inc., and increase Shareholder value by providing
additional incentives to attract, retain and motivate those qualified and
competent employees and consultants, upon whose efforts and judgment its
success is largely dependent.

 

2.                                      Definitions.  As used herein, the following terms shall
have the meaning indicated:

 

(a)                                  “Administrator”
shall mean the person(s) designated by the Committee to carry out
nondiscretionary administrative duties with respect to the Plan and Awards.

 

(b)                                  “Agreed
Price” shall relate to the grant of an Award in the form of a SAR, and
shall mean the value assigned to the Award’s Reserved Shares which will form
the basis for calculating the Spread on the date of exercise of the SAR, which
assigned value shall be the Fair Market Value of such Reserved Shares on the
Date of Grant.

 

(c)                                  “Applicable
Laws” means the requirements relating to the administration of stock option
plans under U.S. state corporate laws, U.S. federal and state securities laws,
and the Code; and the similar laws of any foreign country or jurisdiction where
Options are, or will be, granted.

 

(d)                                  “Award”
shall mean either an Option, a SAR, a Restricted Share Award, or a Performance
Award, except that where it shall be appropriate to identify the specific type
of Award, reference shall be made to the specific type of Award; and provided,
further, that references to Award shall be deemed to be references to the
written agreement evidencing such Award, and provided, finally, without
limitation, that unless expressly provided to the contrary in the terms of the
Award, in the event of a conflict between the terms of the Plan and the terms
of an Award, the terms of the Plan are controlling.

 

(e)                                  “Board”
shall mean the Board of Directors of the Company.

 

(f)                                    “Cause”
shall mean the occurrence of any one or more of the following: (i) Holder
engages in any act of gross misconduct that is injurious to the Company or its
business: (ii) Holder engages in any act of dishonesty, misconduct, fraud,
misappropriation, embezzlement, theft, moral turpitude or the like; (iii)
Holder refuses to perform the duties or responsibilities properly assigned to
him by the Company, or the dereliction of duty by Holder; or (iv) a material
breach or a violation by Holder of any material provision of Holder’s
employment agreement.

 

(g)                                 “Change in Control” shall mean the first date, if any, upon
which any of the following occurs:

 

(1)                                  any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) (a “Person”) is or becomes the “beneficial owner” (as

 

 

defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 50 percent or more of the combined voting power of the
Company’s then outstanding securities; provided,
however, that the term “Person” shall not include (A) the Company,
(B) any employee benefits plan of the Company, (C) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company and acting in
such capacity, (D) a subsidiary of a corporation owned, directly or indirectly,
by the Shareholders in substantially the same proportions as their ownership of
voting securities of the Company, (E) any other person whose acquisitions of
shares of voting securities is approved in advance by a majority of the Board, or
(F) General John T. Chain, Jr. or Edward P. Evans;

 

(2)                                  individuals
who, as of December 20, 2005, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute more than 50 percent of the members of the
Board; provided, however, that
any individual becoming a director subsequent to the date hereof whose election
or nomination for election by the Company’s Shareholders was approved by a vote
of at least two-thirds of the directors then constituting the Incumbent Board,
shall be considered as though such individual were a member of the Incumbent
Board;

 

(3)                                  Shareholders
approve a merger, consolidation, or reorganization of the Company with or into
another corporation or other legal person and, as a result of such merger, consolidation
or reorganization, the holders of the Company’s Shares immediately prior to
such transaction do not have the same proportionate ownership of the common
stock of the surviving entity immediately after such transaction;

 

(4)                                  Shareholders
approve a sale or disposition of all or substantially all of the Company’s
assets to any other corporation or other legal person and as a result of such
transaction, the holders of the Company’s Shares immediately prior to such
transaction do not have the same proportionate ownership of the common stock of
the surviving entity immediately after such transaction;

 

(5)                                  Shareholders
approve a plan of liquidation or dissolution of the Company;

 

(6)                                  a
public announcement is made of a tender or exchange offer by any Person for
fifty percent or more of the outstanding voting securities of the Company, and
the Board approves or fails to oppose that tender or exchange offer in its
statements in Schedule 14D-9 under the Exchange Act; or

 

(7)                                  in
a Title 11 Bankruptcy Proceeding, there is the appointment of a trustee or the
conversion of a case involving the Company to a case under Chapter 7.

 

(h)                                 “Change
in Control Price” shall mean the higher of (i) the highest price per Share
paid in any transaction reported on the NASDAQ or such other exchange or market
as is the principal trading market for the Shares, or (ii) the highest price
per Share paid in any bona fide transaction related to a Change in Control, at
any time during the 60 day period immediately preceding such occurrence; with
such occurrence date to be determined by the Committee.

 

2

 

(i)                                    “Code”
shall mean the Internal Revenue Code of 1986, as now or hereafter amended.

 

(j)                                    “Committee”
shall mean the Compensation and Corporate Governance Committee of the Board,
provided, further, that in granting Performance Awards, Committee shall refer
to only those members of the Compensation and Corporate Governance Committee who
are “Outside Directors” within the meaning of Section 162(m) of the Code.

 

(k)                                “Common
Stock” shall mean the common stock, par value $.01 per Share, of the Company.

 

(l)                                    “Company”
shall mean the Thomas Group, Inc.

 

(m)                              “Consultant”
shall mean, any person or entity who or which is engaged by the Company or a
Subsidiary to render consulting services and is compensated for such consulting
services, and meets the definition of “employee” as set forth in the
instructions to Form S-8 Registration Statement under the 1933 Act.

 

(n)                                 “Date
of Grant” shall mean the date on which the Committee takes formal action to
grant an Award, provided that it is followed, as soon as reasonably
practicable, by written notice to the Eligible Person receiving the Award.

 

(o)                                  “Director”
shall mean a member of the Board of the Company.

 

(p)                                  “Disability”
shall mean a Holder’s present incapacity resulting from an injury or illness
(either mental or physical) which, in the reasonable opinion of the Committee
based on such medical evidence as it deems necessary, will result in death or
can be expected to continue for a period of at least twelve (12) months and
will prevent the Holder from performing the normal services required of the
Holder by the Company; provided, however, that such disability did not result,
in whole or in part:  (i) from chronic
alcoholism; (ii) from addiction to narcotics; (ii) from a felonious
undertaking; or (iv) from an intentional self inflicted wound.

 

(q)                                  “Effective
Date” shall mean December 20, 2005.

 

(r)                                  “Eligible
Person(s)” shall mean those persons or entities, as applicable, who are
Employees, or Consultants.

 

(s)                                  “Employee(s)”
shall mean each person who is designated as an employee on the books of the
Company, including, without limitation, persons so designated who are employed
by a Subsidiary.

 

(t)                                    “Fair
Market Value” per Share shall be determined by the Committee and, on the
date of reference, shall be the Closing Price on such date, provided, further,
that if the actual transaction involving the Shares occurs at a time when the
NASDAQ National Market System (“NASDAQ”) (or
other exchange on which Shares are traded) is closed for regular trading, then
it shall be the most recent Closing Price; provided, further, that “Closing
Price” means the closing price of the Shares on the NASDAQ as reported in any
newspaper of general circulation,

 

3

 

or in the absence
of such report, as reflected on the records of the system on which the Shares
are reported or quoted.

 

(u)                                 “Holder”
shall mean, at each time of reference, each person with respect to whom an
Award is in effect; provided, further, that following the death of a Holder, it
shall refer to the person who succeeds to the rights of such Holder.

 

(v)                                   “Incentive
Stock Option” shall mean an Option that is an incentive stock option as
defined in Section 422 of the Code.

 

(w)                                “Non-Qualified
Stock Option” shall mean an Option that is not an Incentive Stock Option.

 

(x)                                  “Option”
(when capitalized) shall mean the grant of the right to purchase Reserved
Shares through the payment of the Option Price and taking the form of either an
Incentive Stock Option or a Non-Qualified Stock Option; except that, where it
shall be appropriate to identify a specific type of Option, reference shall be
made to the specific type of Option; provided, further, without limitation,
that a single Option may include both Incentive Stock Option and Non-Qualified
Stock Option provisions.

 

(y)                                  “Option
Price” shall mean the price per Reserved Share which is required to be paid
by the Holder in order to exercise his or her right to acquire the Reserved
Share under the terms of the Option.

 

(z)                                  “Performance
Award” shall mean the award which is granted contingent upon the attainment
of the performance objectives during the Performance Period, all as described
more fully in Section 17.

 

(aa)                            “Performance
Measures” shall mean one or more of the following: (i) Share price (ii) earnings
per Share, (iii) return on average common equity, (iv) pre-tax income, (iv)
pre-tax operating income, (v) net revenue, (vi) net income, (vii) profits
before taxes, (viii) Fair Market Value per Share, (ix) net asset value, (x) net
asset value per Share, (xi) operating cost reductions, or (xii) such other
similar measures as the Committee may select, and provided that such measures
may be made before or after adjustments as determined by the Committee at the
time of the grant of the Award and designated in writing in the Award,
provided, without limitation, that while a performance standard can include
remaining in the employ of the Company for a period of time, it shall not be
based on merely remaining in the employ of the Company for a specified period
of time.

 

(bb)                            “Performance
Period” shall mean the period selected by the Committee with respect to
which the performance objectives relate or a measured.

 

(cc)                            “Plan”
shall mean this 2005 Omnibus Stock and Incentive Plan for Thomas Group, Inc..

 

(dd)                            “Plan
Year” shall mean the calendar year.

 

4

 

(ee)                            “Reserved
Shares” shall mean, at each time of reference, the total number of Shares
described in Section 3 with respect to which
the Committee may grant an Award, all of which Reserved Shares shall be held in
the Company’s treasury or shall be made available from the Company’s authorized
and unissued Shares.

 

(ff)                                “Restriction(s)”
“Restricted” and similar shall mean the
restrictions applicable to Reserved Shares subject to an Award which constitute
“a substantial risk of forfeiture” of such Reserved Shares within the meaning
of Section 83(a)(1) of the Code.

 

(gg)                          “Restricted
Period” shall mean the period during which Restricted Shares are subject to
Restrictions.

 

(hh)                          “Restricted
Shares” shall mean the Reserved Shares granted to an Eligible Person which
are subject to Restrictions; provided, further, that the Committee may, in its
sole discretion, determine that the Restrictions which otherwise would have
been imposed have been fully satisfied on the Date of Grant by reason of prior
service and/or other considerations, and thus provide that such Restricted
Shares shall be fully Vested on the Date of Grant.

 

(ii)                                “Restricted
Share Award” shall mean the award of Restricted Shares.

 

(jj)                                “Restricted
Share Distributions” shall mean any amounts, whether Shares, cash or other
property (other than regular cash dividends) paid or distributed by the Company
with respect to Restricted Shares during a Restricted Period.

 

(kk)                        “SAR”
shall mean a stock appreciation right as defined in Section 18 hereof.

 

(ll)                                “Share(s)”
shall mean a share or shares of Common Stock.

 

(mm)                    “Shareholders”
shall mean persons owning one or more Shares at the time of reference.

 

(nn)                          “Spread”
shall mean the difference between the Option Price, or the Agreed Price, as the
case may be, of the Share(s) on the Date of Grant of the Award, and the Fair
Market Value of such Share(s) on the later date of reference.

 

(oo)                            “Separation”
shall mean the date on which a Holder ceases to have an employment relationship
with the Company for any reason, including death or Disability; and provided,
further, without limitation, such employment relationship will cease, in the
case of a consultant, upon his or her ceasing to render services to the
Company, as determined by the Committee in its sole discretion; provided,
however, that a Separation will not be considered to have occurred while an
Employee is on sick leave, military leave, or any other leave of absence
approved by the Company, if the period of such leave does not exceed 90 days,
or, if longer, so long as the Employee’s right to redeployment with the Company
is guaranteed either by statute or by contract.

 

(pp)                            “Subsidiary”
shall mean, where the Award is an Incentive Stock Option, a “subsidiary corporation”, as defined in Section 424(f) of
the Code, and where the Award is not

 

5

 

an Incentive Stock
Option, any entity which would be a “subsidiary corporation” as defined in
Section 424(f) of the Code if it were a corporation.

 

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

 

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

 

(ss)                            “Vested”
and similar terms shall mean the number of Option Shares which have become
nonforfeitable and the portion of an Award on which the Restrictions have
lapsed; provided, further, and without limitation, that the lapse of
Restrictions based on the attainment of performance objectives may also be a
Vesting event to the extent provided in the Award.

 

(tt)                                “10%
Person” shall mean a person who owns directly (or indirectly through
attribution under Section 425(d) of the Code) at the Date of Grant of an
Incentive Stock Option, stock possessing more than 10% of the total combined
voting power of all classes of voting stock (as defined in Section 424 of the
Code) of the Company on the Date of Grant.

 

3.                                      Award
of Reserved Shares.

 

(a)                                  As
of the Effective Date, One Million (1,000,000) Shares shall automatically, and
without further action, become Reserved Shares. 
To the extent any Award shall terminate, expire or be canceled, the
Reserved Shares subject to such Award (or with respect to which the Award is
measured), shall remain Reserved Shares. 
Where an Award is settled on a basis other than the issuance of Reserved
Shares, the Reserved Shares which measured the amount of such Award settlement
shall be canceled and no longer considered Reserved Shares.

 

(b)                                  Notwithstanding
any provision in this Plan to the contrary, in order to insure that Performance
Awards are performance-based compensation within the meaning of Section 162(m)
of the Code, no person whose compensation may be subject to the limitations on
deductibility under Section 162(m) of the Code shall be eligible for a grant
during a single calendar year of an Award with respect to, or measured by, more
than Seven Hundred Thousand (700,000) Reserved Shares.  The limitation under this Section 3(b) shall be construed so as to comply with the
requirements of Section 162(m) of the Code.

 

4.                                      Conditions
for Grant of Awards.

 

(a)                                  Without
limiting the generality of the provisions hereof which deal specifically with
each form of Award, Awards shall only be granted to such one or more Eligible
Persons as shall be selected by the Committee.

 

(b)                                  In
granting Awards, the Committee shall take into consideration the contribution
the Eligible Person has made or may be reasonably expected to make to the
success of the Company and such other factors as the Committee shall determine.  The Committee shall also have the authority
to consult with and receive recommendations from officers and other personnel
of the Company with regard to these matters. 
The Committee may from time to time in granting Awards under the Plan
prescribe such terms and conditions concerning such Awards as it deems
appropriate, including, without limitation, relating an Award to achievement of
specific goals established by the Committee or to the continued employment of
the Eligible

 

6

 

Person for a
specified period of time, provided that such terms and conditions are not
inconsistent with the provisions of this Plan.

 

(c)                                  Incentive
Stock Options may be granted only to Employees, and all other Awards may be
granted to any Eligible Person.

 

(d)                                  The
Plan shall not confer upon any Holder any right with respect to continuation of
employment by the Company, or any right to provide services to the Company, nor
shall it interfere in any way with his or her right or the Company’s right to
terminate his or her employment at any time.

 

(e)                                  The
Awards granted to Eligible Persons shall be in addition to regular salaries,
pension, life insurance or other benefits (if any) related to their service to
the Company, and nothing herein shall be deemed to limit the ability of the
Company to enter into any other compensation arrangements with any Eligible
Person.

 

(f)                                    The
Committee shall determine in each case whether periods of military or
government service shall constitute a continuation of employment or service for
the purposes of this Plan or any Award.

 

(g)                                 Notwithstanding
any provision hereof to the contrary, each Award which in whole or in part
involves the issuance of Reserved Shares may provide for the issuance of such
Reserved Shares for consideration consisting of cash or cash equivalents, or
such other consideration as the Committee may determine, including (without
limitation) as compensation for past services rendered.

 

5.                                      Grant
of Options.

 

(a)                                  The
Committee may grant Options to Eligible Persons from time to time, alone, in
addition to, or in tandem with, other Awards granted under the Plan.  An Option granted hereunder shall be either
an Incentive Stock Option or a Non-Qualified Stock Option, and shall clearly
state whether it is (in whole or in part) an Incentive Stock Option or a
Non-Qualified Stock Option; provided, further, that failure of an Option
designated as an Incentive Stock Option to qualify as an Incentive Stock Option
will not affect its validity, and the portion which does not qualify as an
Incentive Stock Option shall be a Non-Qualified Stock Option.

 

(b)                                  If
both Incentive Stock Options and Non-Qualified Stock Options are granted to a
Holder, the right to exercise, to the full extent thereof, Options of either
type shall not be contingent in whole or in part upon the exercise of, or
failure to exercise, Options of the other type.

 

(c)                                  The
aggregate Fair Market Value (determined as of the Date of Grant) of the
Reserved Shares with respect to which any Incentive Stock Option is exercisable
for the first time by a Holder during any calendar year under the Plan and all
such plans of the Company (as defined in Section 425 of the Code) shall not
exceed $100,000; provided, further, without limitation, that any portion of an
Option designated as an Incentive Stock Option which exceeds such $100,000
limit will, notwithstanding such designation, be a validly granted
Non-Qualified Stock Option.

 

7

 

(d)                                  The
Committee may at any time offer to buy out for a payment in cash, an Option
previously granted, based on such terms and conditions as the Committee shall
establish and as communicated to the Holder by the Committee at the time that
such offer is made.

 

6.                                      Option
Price.

 

(a)                                  The
Option Price shall be any price determined by the Committee which is not less
than one hundred percent (100%) of the Fair Market Value per Share as
determined under the terms of the Plan on the Date of Grant; provided, however,
that in the case of an Incentive Stock Option granted to a 10% Person the
Option Price shall not be less than 110% of the Fair Market Value per Share as
determined under the terms of the Plan on the Date of Grant.  The Committee shall determine the Fair Market
Value per Share.

 

(b)                                  Unless
further limited by the Committee in any Option, the Option Price may be paid in
cash, by certified or cashier’s check, by wire transfer, by money order,
through a Broker Assisted Exercise, with Shares (but with Shares only if
expressly permitted by the terms of the Option), or by a combination of the
above; provided, however, that the Committee may accept a personal check in
full or partial payment.  If the Option
Price is permitted to be, and is, paid in whole or in part with Shares, the
value of the Shares surrendered shall be the Shares’ Fair Market Value on the
date delivered to the Administrator.

 

7.                                      Exercise
of Options.  An Option shall be
deemed exercised when (i) the Administrator has received written notice of such
exercise in accordance with the terms of the Option, and (ii) full payment of
the aggregate Option Price plus required withholding tax amounts, if any,
described in Section 15, of the Reserved Shares
as to which the Option is exercised has been made.  Separate stock certificates shall be issued
by the Company for any Reserved Shares acquired as a result of exercising an
Incentive Stock Option and a Non-Qualified Stock Option.

 

8.                                      Vesting
of Award

 

(a)                                  Without
limitation, each Award shall Vest in whole or in part, and shall expire,
according to the terms of the Award.

 

(b)                                  The
Committee, in its sole discretion, may accelerate the date on which all or any
portion of an otherwise unVested Award shall Vest.

 

9.                                      Termination
of Option Period.

 

(a)                                  Unless
the terms of an Option expressly provide for a different date of termination,
the unexercised portion of an Option shall automatically and without notice
terminate and become null and void at the time of the earliest to occur of the
following:

 

(1)                                  on
the 90th day following Holder’s Separation for any reason except death,
Disability or for Cause; or

 

(2)                                  immediately
upon Separation as a result, in whole or in material part, of a discharge for
Cause; or

 

8

 

(3)                                  on
the one hundred-eightieth (180th) day following a Separation by reason of death
or Disability;

 

(4)                                  in
the case of a 10% Person, on the fifth (5th ) anniversary of the Date of Grant;
or

 

(5)                                  on
the tenth (10th) anniversary of the Date of Grant.

 

(b)                                  Notwithstanding
any provision of the Plan to the contrary, in the event of the proposed
dissolution or liquidation of the Company, or in the event of a proposed sale
of all or substantially all of the assets of the Company, or the proposed
merger of the Company with or into another corporation (collectively, the “Transaction”),
unless otherwise expressly provided (by express reference to this Section 9(b)) in the terms of an Option, after the public
announcement of the Transaction, the Committee may, in its sole discretion,
deliver a written notice (“Cancellation Notice”)
to any Holder of an Option, canceling the unexercised Vested portion (including
the portion which becomes Vested by reason of acceleration), if any, of such
Option, effective on the date specified in the Cancellation Notice (“Cancellation Date”). 
Notwithstanding the forgoing, the Cancellation Date may not be earlier
than the last to occur of (i) the 15th day following delivery of the
Cancellation Notice, and (ii) the 60th day prior to the proposed date for the
consummation of the Transaction (“Proposed Date”).  Without limitation, the Cancellation Notice
will provide that, unless the Holder elects in writing to waive, in whole or in
part, a Conditional Exercise, that the exercise of the Option will be a
Conditional Exercise.  A “Conditional Exercise” shall mean that in the event the
Transaction does not occur within 180 days of the Proposed Date, the exercising
Holder shall be refunded any amounts paid to exercise such Holder’s Option,
such Option will be reissued, and the purported exercise of such Option shall
be null and void ab intitio.

 

10.                               Acceleration.  In the event of a Change in Control, in the
sole discretion of the Committee, the Committee may provide that an Award will become
fully or partially exercisable, Vested, or the Restricted Period shall
terminate, as the case may be (hereafter, in this Section 10,
such Award shall be “accelerated”), and (ii) thereafter, in the sole discretion
of the Committee, the value of some or all Vested Awards may be cashed out on
the basis of the Change in Control Price, at any time during the 60 day period
immediately preceding any bona fide transaction related to a Change in Control;
provided, further, that if a date prior to such occurrence is selected for a
cash out, any subsequent increase in the Change in Control Price shall be
computed with respect to such Awards which have been cashed-out and will be
paid to each Holder on the date of such occurrence, or as soon thereafter as
reasonably possible.

 

11.                               Adjustment
of Reserved Shares.

 

(a)                                  If
at any time while the Plan is in effect or Awards with respect to Reserved Shares
are outstanding, there shall be any increase or decrease in the number of
issued and outstanding Shares through the declaration of a stock dividend or
through any recapitalization resulting in a stock split up, combination or
exchange of Shares, then and in such event:

 

(i)                                     appropriate
adjustment shall be made in the maximum number of Reserved Shares which may be
granted under Section 3, and equitably in the
Reserved

 

9

 

Shares which are
then subject to each Award, so that the same proportion of the Company’s issued
and outstanding Common Stock shall continue to be subject to grant under Section 3, and to such Award, and

 

(ii)                                  
in addition, and without limitation, in the case of each Award (including,
without limitation, Options) which requires the payment of consideration by the
Holder in order to acquire Reserved Shares, an appropriate equitable adjustment
shall be made in the consideration (including, without limitation the Option
Price) required to be paid to acquire the each Reserved Share, so that (i) the
aggregate consideration to acquire all of the Reserved Shares subject to the
Award remains the same and, (ii) so far as possible, (and without disqualifying
an Incentive Stock Option) the relative cost of acquiring each Reserved Share
subject to such Award remains the same; and

 

(iii)                               in addition, shall make
appropriate adjustment in the Performance Measures for each Performance Award
so as to reasonably insure that the same level of performance will result in
the same Vesting and other material rights and benefits under the Performance
Award.

 

All such determinations
shall be made by the Board in its sole discretion.

 

(b)                                  The
Committee may change, or may direct the Administrator to change, the terms of Awards
outstanding under this Plan when, in the Committee’s judgment, such adjustments
become appropriate by reason of a corporate transaction (as defined in Treasury
Regulation § 1.425 1(a)(1)(ii)); provided, however, that if by reason of such
corporate transaction an Incentive Stock Option is assumed or a new Incentive
Stock Option is substituted therefore, the Committee, or at the direction of
the Committee, the Administrator, may only change the terms of such Incentive
Stock Option such that (i) the excess of the aggregate Fair Market Value of the
Reserved Shares subject to the substituted Incentive Stock Option immediately
after the substitution or assumption, over the aggregate Option Price of such
Reserved Shares at such time, is not more than the excess of the aggregate Fair
Market Value of all Reserved Shares subject to the Incentive Stock Option
immediately before such substitution or assumption over the aggregate Option
Price of such Reserved Shares at such time, and (ii) the substituted Incentive
Stock Option, or the assumption of the original Incentive Stock Option does not
give the Holder additional benefits which such Holder did not have under the
original Incentive Stock Option.  Without
limiting the generality of any other provisions hereof, including, without
limitation, Section 21, except to the minimum
extent, if any, required by Section 424(a) of the Code with respect to
Incentive Stock Options, no change made under the authority of this Section 11(b) in the terms of an Award shall alter such Award’s
material provisions in a way that makes such Award less valuable to its Holder.

 

(c)                                  Except
as otherwise expressly provided herein, the issuance by the Company of shares
of its capital stock of any class, or securities convertible into shares of capital
stock of any class, either in connection with direct sale for adequate
consideration, or upon the exercise of rights or warrants to subscribe
therefore, or upon conversion of Shares or obligations of the Company
convertible into such Shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, Reserved Shares
subject to Awards granted under

 

10

 

the Plan;
provided, further, that such issuance shall require the Committee to make such
adjustments as are required under Section 11(a)(iii).

 

(d)                                  Without
limiting the generality of the foregoing, except for making the adjustments
required under Section 11(a)(iii), the existence
of outstanding Awards with respect to Reserved Shares granted under the Plan
shall not affect in any manner the right or power of the Company to make,
authorize or consummate (1) any or all adjustments, recapitalizations,
reorganizations or other changes in the Company’s capital structure or its
business; (2) any merger or consolidation of the Company; (3) any issue by the Company
of debt securities, or preferred or preference stock which would rank above the
Reserved Shares subject to outstanding Awards; (4) the dissolution or liquidation
of the Company; (5) any sale, transfer or assignment of all or any part of the
assets or business of the Company; or (6) any other corporate act or
proceeding, whether of a similar character or otherwise.

 

12.                               Transferability
of Awards.  Each Award which is an
Incentive Stock Option shall not be transferable by the Holder otherwise than
(i) by will or the laws of descent and distribution, or (ii) pursuant to a
domestic relations order as that term is defined in section 414(p)(1)(B) of the
Internal Revenue Code, provided that such order satisfies Section 414(p)(1)(A)
of the Internal Revenue Code; and in the case of each other Award, subject to
the same transfer restrictions in (i) and (ii) except that, if expressly
provided in the Award, it is transferable, in whole or in part, without payment
of consideration (i) to members of the Holder’s Immediate Family, (ii) to
trusts for such Immediate Family members, or (iii) to partnerships whose only
partners are such Immediately Family members, or (iv) except as prohibited by
Rule 16b-3, to a person or other entity for which the Holder is entitled to a
deduction for a “charitable contribution” under Section 170(a)(i) of the Code
(provided, in each such case that no further transfer by any such permitted
transferee(s) shall be permitted); provided, further that, except for the right
to exercise an Award which is subject to exercise, the Holder retains all of
the rights, duties and obligations under the Award (including, without
limitation, satisfaction of the Vesting requirements and the payment of
withholding.)

 

13.                               Issuance
of Reserved Shares.  No Holder shall
be, or have any of the rights or privileges of, the owner of Reserved Shares
subject to an Award unless and until certificates representing such Shares
shall have been issued and delivered to such Holder or, where Vested Shares are
held by the Company to ensure compliance with specific requirements of an Award,
to the extent expressly provided in the Award. 
As a condition of any issuance of Shares, the Administrator may obtain
such agreements or undertakings, if any, as the Administrator may deem
necessary or advisable to assure compliance with any such law or regulation or Shareholder
agreement including, but not limited to, a representation, warranty or agreement
to be bound by any legends that are, in the opinion of the Administrator,
necessary or appropriate to comply with the provisions of any securities law
deemed by the Administrator to be applicable to the issuance of the Reserved
Shares and which are endorsed upon the Share certificates.

 

Share certificates issued to
the Holder receiving such Reserved Shares who is a party to any Shareholders
agreement, voting trust, or any similar agreement shall bear the legends
contained in such agreements.  Notwithstanding
any provision hereof to the contrary, no Reserved Shares shall be required to
be issued with respect to an Award unless counsel for the

 

11

 

Company shall be reasonably
satisfied that such issuance will be in compliance with applicable federal or
state securities laws.

 

In no event shall the
Company be required to sell or issue Reserved Shares under any Award if the
sale or issuance thereof would constitute a violation of applicable federal or
state securities law or regulation or a violation of any other law or
regulation of any governmental authority or any national securities exchange.  As a condition to any sale or issuance of
Reserved Shares, the Company may place legends on Reserved Shares, issue stop
transfer orders, and require such agreements or undertakings as the Company may
deem necessary or advisable to assure compliance with any such law or
regulation.

 

Without limitation, the
Company shall use its best efforts to register the Reserved Shares with the
Securities and Exchange Commission.

 

14.                               Exercise
of Discretion and Administration of the Plan.

 

(a)                                  The
Plan shall be administered by the Administrator and, except for the powers
expressly reserved to the Board and the Committee, the Administrator shall have
all of the administrative powers under Plan. 
Notwithstanding the forgoing, except as provided in Section 13,
the Administrator shall only exercise nondiscretionary and purely ministerial
authority hereunder.

 

(b)                                  The
Administrator, from time to time, may adopt rules and regulations for carrying
out the administrative purposes of the Plan. 
The determinations under, and the interpretations of, any provision of
the Plan or an Award by the Committee (or the Administrator in the exercise of
its administrative authority) shall, in all cases, be in its sole discretion,
and shall be final and conclusive.

 

(c)                                  Any
and all determinations and interpretations of the Committee (and the
Administrator solely in the exercise of administrative authority) shall be made
either (i) by a majority vote of the members at a meeting duly called, with at
least 2 days prior notice, or (ii) without a meeting, by the written approval
of all members.

 

(d)                                  No
member of the Committee, or the Administrator, shall be liable for any action
taken or omitted to be taken by such member or by any other member of the
Committee or by the Administrator with respect to the Plan, and to the extent
of liabilities not otherwise insured under a policy purchased by the Company,
the Company does hereby indemnify and agree to defend and save harmless any
member of the Committee, and the Administrator, with respect to any liabilities
asserted or incurred in connection with the exercise and performance of their
powers and duties hereunder, unless such liabilities are judicially determined
to have arisen out of such person’s gross negligence, fraud or bad faith.  Such indemnification shall include attorney’s
fees and all other costs and expenses reasonably incurred in defense of any
action arising from such act of commission or omission.  Nothing herein shall be deemed to limit the
Company’s ability to insure itself with respect to its obligations hereunder.

 

(e)                                  In
particular, and without limitation, except for the authority granted to the
Administrator under Section 13, the
Committee shall have the sole authority, consistent with the terms of the Plan:

 

12

 

(i)                                     to
determine whether and to what extent Awards are to be granted hereunder to one
or more Eligible Persons;

 

(ii)                                  to
determine the number of Reserved Shares to be covered by each such Award
granted hereunder;

 

(iii)                               to determine the terms
and conditions of any Award granted hereunder, and to amend or waive any such
terms and conditions except to the extent, if any, expressly prohibited by the
Plan;

 

(iv)                              to
determine whether and under what circumstances an Option may be settled in
Restricted Shares instead of Reserved Shares;

 

(v)                                 to
determine whether, to what extent, and under what circumstances Awards under
the Plan are to be made, and operate, on a tandem basis vis-a-vis other Awards
under the Plan; and

 

(vi)                              to
determine (or to delegate to the Administrator the authority to determine)
whether to permit payment of tax withholding requirements in Reserved Shares.

 

(f)                                    Without
limitation, Committee, and the Administrator solely with respect to its
ministerial duties, shall have the authority to adopt, alter, and repeal any or
all of its rules, guidelines, and practices with respect to the Plan, and all
questions of interpretation, with respect to the Plan or any Award shall be
decided by the Committee or, if purely ministerial, by the Administrator, as
the case maybe, whose decision shall be final, conclusive and binding upon the
Company and each other affected party.

 

(g)                                 Without
limitation, the Committee in its sole discretion may limit the ministerial
authority granted hereunder to the Administrator by notifying the Administrator
in writing of such limitation.

 

15.                               Tax
Withholding.  On or immediately prior
to the date on which a payment is made to a Holder hereunder or, if earlier,
the date on which an amount is required to be included in the income of the
Holder as a result of the lapse of a restriction on an Award, the Holder shall
be required to pay to the Company, in cash, or in Shares (but in Shares or
Reserved Shares only if expressly permitted in the Award, or by written
authorization of the Administrator, and then only in the minimum amount
required to satisfy the minimum withholding requirements with respect to such
Award), the amount (if any) which the Company reasonably determines to be
necessary in order for the Company to comply with applicable federal or state
tax withholding requirements, and the collection of employment taxes; provided,
further, without limitation, that the Committee may require that such payment
be made in cash.

 

16.                               Restricted
Share Awards.

 

(a)                                  The
Committee may grant Awards of Restricted Shares to any Eligible Person, for no
cash consideration, for such minimum consideration as may be required by
applicable law, or for such other consideration as may be specified in the
grant.  The terms and conditions of

 

13

 

Restricted Shares
shall be specified in the Award.  The Committee,
in its sole discretion, shall determine what rights, if any, the person to whom
an Award of Restricted Shares is made shall have in the Restricted Shares
during the Restriction Period and the Restrictions applicable to the particular
Award, including whether the holder of the Restricted Shares shall have the
right to vote the Restricted Shares and the extent, if any, of Holder’s right
to receive Restricted Share Distributions. 
Unless otherwise provided in the Restricted Share Award, upon the expiration
of Restrictions, the Restricted Shares shall cease to be Restricted Shares.

 

(b)                                  The
Restrictions on Restricted Shares shall lapse in whole, or in installments,
over whatever Restricted Period shall be selected by the Committee.

 

(c)                                  Without
limitations, the Committee may accelerate the date on which Restrictions lapse
with respect to any Restricted Shares.

 

(d)                                  During
the Restricted Period, the certificates representing the Restricted Shares, and
any Restricted Share Distributions, shall be registered in the Holder’s name
and bear a restrictive legend disclosing the Restrictions, the existence of the
Plan, and the existence of such Restricted Share Award.  Such certificates shall be deposited by the
Holder with the Company, together with stock powers or other instruments of
assignment, each endorsed in blank, which will permit the transfer to the
Company of all or any portion of the Restricted Shares, and any assets
constituting Restricted Share Distributions, which shall be forfeited in
accordance with the terms of such Restricted Share Award.  Restricted Shares shall constitute issued and
outstanding Common Stock for all corporate purposes and the Holder shall have
all rights, powers and privileges of a holder of unrestricted Shares except
those that are expressly excluded under the terms of the Restricted Share
Award, and Holder will not be entitled to delivery of the stock certificates
until all Restrictions shall have terminated and after such period, for any
additional period specified in the Award, and the Company will retain custody
of all related Restricted Share Distributions (which will be subject to the
same Restrictions, terms, and conditions as the related Restricted Shares)
until the conclusion of the Restricted Period with respect to the related
Restricted Shares or for such additional period as may be provided in the Award;
and provided, further, that any Restricted Share Distributions shall not bear
interest or be segregated into a separate account but shall remain a general
asset of the Company, subject to the claims of the Company’s creditors, until
the date of their distribution; and provided, finally, that any material breach
of any terms of the Restricted Share Award, as reasonably determined by the
Committee, will cause a forfeiture of both Restricted Shares and Restricted
Share Distributions.

 

17.                               Performance
Awards.

 

(a)                                  Performance
Awards during a Plan Year may be granted to any Eligible Persons.

 

(b)                                  Without
limitation, the Committee’s grant of Performance Awards may, in its sole
discretion, be made in Reserved Shares, or in cash, or in a combination of
Reserved Shares and cash, but the cash portion of each such Award granted to
each Eligible Person may not exceed $1,000,000 in a Plan Year.

 

(c)                                  The
Committee shall select the Performance Measures which will be required to be
satisfied during the Performance Period in order to earn the Performance Award.  Such

 

14

 

Performance
Measures, and the duration of any Performance Period, may differ with respect
to each Eligible Person, or with respect to separate Performance Awards issued
to the same Eligible Person.  The
selected Performance Measures, the Performance Period(s), and any other
conditions to the Company’s obligation to pay a Performance Award shall be set
forth in each Performance Award on or before the first to occur of (i) the 90th
day of the selected Performance Period, (ii) the first date on which more than
25% of the Performance Period has elapsed, and (iii) the first date, if any, on
which satisfaction of the Performance Measure(s) is no longer substantially
uncertain.

 

(d)                                  Performance
Awards may be payable in a single payment or in installments but may not be
paid in whole or in part prior to the date on which the Performance Measures
are attained, except that such payment may be accelerated upon the death or
Disability of the Eligible Person, or as a result of a Change in Control, it
being understood that if such acceleration events occur prior to the attainment
of the Performance Measures, the Performance Award will not be exempt from
Section 162(m) of the Code.

 

(e)                                  The
extent to which any applicable performance objective has been achieved shall be
conclusively determined by the Committee, but may be specifically delegated to
the Administrator.  Without limitation,
where an Eligible Person has satisfied the Performance Measures with respect to
a Performance Award, if permitted under the terms of such Performance Award,
the Committee, in its sole discretion, may reduce the maximum amount payable
under such Performance Award.

 

18.                               Stock
Appreciation Rights.

 

(a)                                  The
Committee shall have authority to grant (i) a SAR with respect to Reserved
Shares, including, without limitation, Reserved Shares covered by any Option (“Related Option”), or a Performance Award (“Related Performance Award”).  A SAR granted with respect to a Related
Option or Related Performance Award must be granted on the Date of Grant of
such Related Option or Related Performance Award.

 

(1)                                  For
the purposes of this Section 18, the
following definitions shall apply:

 

(i)                             The
term “SAR” shall mean a right granted under
this Plan, including, without limitation, a right granted in tandem with an
Award, that shall entitle the Holder thereof to the number of Reserved Shares
which have a Fair Market Value equal to the SAR Spread payable as described in Section 18(d).

 

(ii)                          The
term “SAR Spread” shall mean with respect to
each SAR an amount equal to the product of (1) the excess of (A) the Fair
Market Value per Share on the date of exercise, over (B) (x) if the SAR is
granted in tandem with an Option, then the Option Price per Reserved Share of
the Related Option, (y) if the SAR is granted in tandem with a Performance
Award, the Agreed Price under the Related Performance Award, or (z) if the SAR
is granted by itself with respect to a designated number of Reserved Shares,
the Agreed Price which, without limitation, is the Fair Market Value of the
Reserved Shares on the Date of Grant, in each case multiplied by (2) the number
of Reserved Shares with

 

15

 

respect to which
such SAR is being exercised; provided, however, without limitation, that with
respect to any SAR granted in tandem with an Incentive Stock Option, in no
event shall the SAR Spread exceed the amount permitted to be treated as the SAR
Spread under applicable Treasury Regulations or other legal authority without
disqualifying the Option as an Incentive Stock Option.

 

(b)                                  To
exercise the SAR the Holder shall:

 

(i)                                     Give
written notice thereof to the Company, specifying the SAR being exercised and
the number or Reserved Shares with respect to which such SAR is being
exercised, and

 

(ii)                                  If
requested by the Company, deliver within a reasonable time the agreement
evidencing the SAR being exercised and, if applicable, the Related Option
agreement, or Related Performance Award agreement, to the Secretary of the
Company who shall endorse or cause to be endorsed thereon a notation of such
exercise and return all agreements to the Holder.

 

(c)                                  As
soon as practicable after the exercise of a SAR, the Company shall transfer to
the Holder Reserved Shares having a Fair Market Value on the date the SAR is
exercised equal to either the SAR Spread; provided, however, without limiting
the generality of Section 15,
that the Company, in its sole discretion, may withhold from such transferred
Reserved Shares any amount necessary to satisfy the Company’s minimum
obligation for federal and state withholding taxes with respect to such
exercise.

 

(d)                                  A
SAR may be exercised only if and to the extent that it is permitted under the
terms of the Award which, in the case of a Related Option, shall be only when
such Related Option is eligible to be exercised.

 

(e)                                  Upon
the exercise or termination of a Related Option, or the payment or termination
of a Related Performance Award, the SAR with respect to such Related Option or
Related Performance Award likewise shall terminate.

 

(f)                                    A
SAR shall be transferable (i) only to the extent, if any, provided in the agreement
evidencing the SAR, or (ii) if granted with respect to a Related Option, or
Related Performance Award, only to the extent, if any, that such Related
Option, or Related Performance Award, is transferable, and under the same
conditions.

 

(g)                                 Each
SAR shall be on such terms and conditions not inconsistent with this Plan as
the Committee may determine.

 

(h)                                 The
Holder shall have no rights as a stockholder with respect to the related
Reserved Shares as a result of the grant of a SAR.

 

(i)                                    With
respect to a Holder who, on the date of a proposed exercise of a SAR, is an
officer (as that term is used in Rule 16a-1 promulgated under the 1934 Act or
any similar rule which may subsequently be in effect), such proposed exercise
may only occur as permitted by

 

16

 

Rule 16b-3,
including without limitation paragraph (e)(3)(iii) (or any similar rule which
may subsequently be in effect promulgated pursuant to Section 16(b) of the 1934
Act).

 

19.                               Section
83(b) Election.  If as a result of
receiving an Award, a Holder receives Restricted Shares, then such Holder may
elect under Section 83(b) of the Code to include in his or her gross income,
for his or her taxable year in which the Restricted Shares are transferred to
such Holder, the excess of the Fair Market Value (determined without regard to
any Restriction other than one which by its terms will never lapse), of such
Restricted Shares at the Date of Grant, over the amount (if any) paid for the
Restricted Shares.  If the Holder makes
the Section 83(b) election described above, the Holder shall (i) make such
election in a manner that is satisfactory to the Administrator, (ii) provide
the Administrator with a copy of such election, (iii) agree to promptly notify
the Company if any Internal Revenue Service or state tax agent, on audit or
otherwise, questions the validity or correctness of such election or of the
amount of income reportable on account of such election, and (iv) agree to pay
the withholding amounts described in Section 15.

 

20.                               Interpretation.

 

(a)                                  If
any provision of the Plan is held invalid for any reason, such holding shall
not affect the remaining provisions hereof, but instead the Plan shall be
construed and enforced as if such provision had never been included in the
Plan.

 

(b)                                  THIS
PLAN SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS.

 

(c)                                  Headings
contained in this Agreement are for convenience only and shall in no manner be
construed as part of this Plan.

 

(d)                                  Any
reference to the masculine, feminine, or neuter gender shall be a reference to
such other gender as is appropriate.

 

(e)                                  Nothing
contained in this Plan shall prevent the Board from adopting other or
additional compensation arrangements, subject to Shareholder approval if such
approval is required; and such arrangements may be either generally applicable
or applicable only in specific cases.

 

21.                               Amendment
and Discontinuation of the Plan.  The
Board, or the Committee (subject to the prior written authorization of the
Board), may from time to time amend the Plan or any Award; provided, however,
that (except to the extent provided in Section 9(b))
no such amendment may, without approval by the Shareholders, (a) increase the
number of Reserved Shares or change the class of Eligible Persons, (b) permit
the granting of Awards which expire beyond the maximum 10-year period described
in Section 9(a)(5), or (c) make any change
for which applicable law or regulatory authority (including the regulatory
authority of the NASDAQ or any other market or exchange on which the Common
Stock is traded) would require Shareholder approval or for which Shareholder
approval would be required under Section 162(m) of the Code to secure complete
deductibility of all compensation paid as a result of Awards; and provided, further,
that no amendment or suspension of the Plan or any Award issued hereunder
shall, except as specifically permitted in this Plan or under the terms of such

 

17

 

Award,
substantially impair any Award previously granted to any Holder without the
consent of such Holder.

 

22.                               Effective
Date and Termination Date.  The Plan
shall be effective as of its Effective Date, and shall terminate on the tenth
anniversary of such Effective Date; provided, further, without limitation, that
unless otherwise expressly provided in an Award, the termination of the Plan
shall not terminate an Award which is outstanding on such date.

 

18

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