Document:

SHENGKAI
INNOVATIONS, INC.

    No. 27,
Wang Gang Road,

    Jin Nan
(Shuang Gang) Economic and

    Technology
Development Area

    Tianjin,
People’s Republic of China 300350  

     

    Ms. Guo
Chuanye

    
      
        
          
            	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
                    November
      24, 2010

                  

          

        

      

    

     

    Re:        Shengkai Innovations, Inc.
Trade Secrets

    

    Dear Ms.
Guo Chuanye:

    

    As you
may be aware, Shengkai Innovations, Inc. (the “Company”) is conducting a stock
offering.  In connection with that stock offering, the Company is
documenting certain assets used by the Company, including the “recipe” to the
unique method for creating structural ceramic valves referred to in that certain
Preliminary Prospectus Supplement of the Company dated November 18, 2010 (the
“Company Product Recipe”).  This Company Product Recipe is of
strategic importance to the Company and is commercially sensitive information,
the disclosure or unauthorized use of which could materially impact the Company
in a negative manner.

     

    We know
that you have agreed to treat the Company Product Recipe as confidential and
proprietary information, and have not disclosed or discussed this information
with anyone, other than your son and his wife, both of whom are officers of the
Company.  We ask that you formalize that agreement to treat the
Company Product Recipe as confidential information in accordance with the
provisions of this letter agreement and to take or abstain from taking certain
other actions hereinafter set forth.

     

    You agree
that the Company Product Recipe will be kept confidential (and not disclosed in
any manner to any other person or entity) by you from the date hereof; provided,
however, that the Company Product Recipe may be disclosed by you to the extent
required by subpoena or by an order of a court, or a governmental or
administrative body.  In the event of any such subpoena or order, you
agree to use your best efforts to notify the Company of any such required
disclosure as early as practicable, and to cooperate with the efforts of the
Company (at the Company’s expense) to avoid the necessity of such disclosure or
to obtain a protective order.

     

    You also
agree to inform the Company upon becoming aware that Company Product Recipe has
been disclosed, and to use your best efforts at the Company’s request and
expense to limit the scope of any such disclosure.
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Upon the
request of the Company at any time, you agree to destroy any written or
electronic records, notes or other materials containing the Company Product
Recipe, and that you will not retain any copy thereof. Notwithstanding the
destruction of such materials, you will continue to be bound by your obligations
of confidentiality and other obligations hereunder.

    

    The
provisions of this letter agreement shall remain in full force and effect with
respect to the Company Product Recipe until the date such Company Product Recipe
ceases to be treated as confidential and proprietary information by the
Company.

     

    Please confirm that the foregoing is in
accordance with your understanding by signing and returning to the Company the
enclosed copy of this letter, which shall become a binding agreement upon our
receipt.

    

    
      
        
          
            
              	 
      	
                      Sincerely,

                    
	 
      	 
      
	 
      	
                      Shengkai
      Innovations, Inc.

                    
	 
      	 
      
	 
      	
                      By:  

                    	
                      /s/ Wang Chen

                    
	 
      	
                      Name:
      Wang Chen

                    
	 
      	
                      Title:  Chief
      Executive
Officer

                    

            

          

        

      

    

    

    
      	
              Accepted
      and agreed as of

            	 
      
	
              the
      date first written above:

            	 
      
	 
      	 
      	 
      
	
              By:  

            	
              /s/ Guo Chuanye

            	 
      
	
              Name:
      Guo ChuanyeUnassociated Document

    Chardan North China Acquisition
Corporation

     

    2006
Stock Plan

     

    1.         
 ESTABLISHMENT,
PURPOSE AND TERM OF PLAN.

     

    1.1           Establishment. The Chardan North China
Acquisition Corporation 2006 Stock Plan (the “Plan”) is
hereby adopted subject to approval by the stockholders of the Company (the date
of such approval, the “Effective
Date”).

     

    1.2           Purpose. The purpose of the Plan is
to advance the interests of the Participating Company Group and its stockholders
by providing an incentive to attract and retain the best qualified personnel to
perform services for the Participating Company Group, by motivating such persons
to contribute to the growth and profitability of the Participating Company
Group, by aligning their interests with interests of the Company’s stockholders,
and by rewarding such persons for their services by tying a significant portion
of their total compensation package to the success of the Company. The Plan
seeks to achieve this purpose by providing for Awards in the form of Options,
Stock Appreciation Rights, Restricted Stock Awards, Performance Shares,
Performance Units, Restricted Stock Units, Deferred Compensation Awards and
other Stock-Based Awards as described below.

     

    1.3           Term of Plan. The Plan shall
continue in effect until the earlier of its termination by the Board or the date
on which all of the shares of Stock available for issuance under the Plan have
been issued and all restrictions on such shares under the terms of the Plan and
the agreements evidencing Awards granted under the Plan have lapsed. However,
Awards shall not be granted later than ten (10) years from the Effective Date.
The Company intends that the Plan comply with Section 409A of the Code
(including any amendments to or replacements of such section), and the Plan
shall be so construed.

     

    2.           DEFINITIONS
AND CONSTRUCTION.

     

    2.1           Definitions. Whenever used
herein, the following terms shall have their respective meanings set forth
below:

     

    (a)           “Affiliate”
means (i) an entity, other than a Parent Corporation, that directly, or
indirectly through one or more intermediary entities, controls the Company or
(ii) an entity, other than a Subsidiary Corporation, that is controlled by
the Company directly, or indirectly through one or more intermediary entities.
For this purpose, the term “control” (including the term “controlled by”) means
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of the relevant entity, whether through
the ownership of voting securities, by contract or otherwise; or shall have such
other meaning assigned such term for the purposes of registration on
Form S-8 under the Securities Act.

     

    (b)           “Award”
means any Option, SAR, Restricted Stock Award, Performance Share, Performance
Unit, Restricted Stock Unit or Deferred Compensation Award or other Stock-Based
Award granted under the Plan.

     

    (c)           “Award
Agreement” means a written agreement between the Company and a
Participant setting forth the terms, conditions and restrictions of the Award
granted to the Participant.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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

     

    (e)           “Change in
Control” means, unless such term or an equivalent term is otherwise
defined with respect to an Award by the Participant’s Award Agreement or by a
written contract of employment or service, the occurrence of any of the
following:

     

    (i)           any
“person” (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act), other than (1) a trustee or other fiduciary holding securities of the
Company under an employee benefit plan of a Participating Company or (2) a
corporation owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of the stock of the
Company, becomes the “beneficial owner” (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of (i) the total Fair
Market Value of the stock of the Company or (ii) the total combined voting
power of the Company’s then-outstanding securities entitled to vote generally in
the election of directors; or

     

    (ii)          an
Ownership Change Event or series of related Ownership Change Events
(collectively, a “Transaction”)
in which the stockholders of the Company immediately before the Transaction do
not retain immediately after the Transaction direct or indirect beneficial
ownership of more than fifty percent (50%) of the total combined voting power of
the outstanding voting securities of the Company or, in the case of an Ownership
Change Event described in Section 2.1(y)(i), the entity to which the assets
of the Company were transferred (the “Transferee”),
as the case may be; or

     

    (iii)         a
liquidation or dissolution of the Company.

     

     For
purposes of the preceding sentence, indirect beneficial ownership shall include,
without limitation, an interest resulting from ownership of the voting
securities of one or more corporations or other business entities which own the
Company or the Transferee, as the case may be, either directly or through one or
more subsidiary corporations or other business entities. The Committee shall
have the right to determine whether multiple sales or exchanges of the voting
securities of the Company or multiple Ownership Change Events are related, and
its determination shall be final, binding and conclusive.

     

    (f)           “Code”
means the Internal Revenue Code of 1986, as amended, and any applicable
regulations promulgated thereunder.

     

    (g)           “Committee”
means the Compensation Committee or other committee of the Board duly appointed
to administer the Plan and having such powers as shall be specified by the
Board. If no committee of the Board has been appointed to administer the Plan,
the Board shall exercise all of the powers of the Committee granted herein, and,
in any event, the Board may in its discretion exercise any or all of such
powers. The Committee shall have the exclusive authority to administer the Plan
and shall have all of the powers granted herein, including, without limitation,
the power to amend or terminate the Plan at any time, subject to the terms of
the Plan and any applicable limitations imposed by law.

     

    (h)           “Company”
means Chardan North China Acquisition Corporation, a Delaware corporation, or
any Successor.

     

    (i)           “Consultant”
means a person engaged to provide consulting or advisory services (other than as
an Employee or a member of the Board) to a Participating Company.

     

    (j)           “Deferred
Compensation Award” means an award of Stock Units granted to a
Participant pursuant to Section 11 of the Plan.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (k)          “Director”
means a member of the Board or of the board of directors of any Participating
Company.

     

    (l)           “Disability”
means the permanent and total disability of the Participant, within the meaning
of Section 22(e)(3) of the Code.

     

    (m)         “Dividend
Equivalent” means a credit, made at the discretion of the Committee or as
otherwise provided by the Plan, to the account of a Participant in an amount
equal to the cash dividends paid on one share of Stock for each share of Stock
represented by an Award held by such Participant.

     

    (n)          “Employee”
means any person treated as an employee (including an Officer or a member of the
Board who is also treated as an employee) in the records of a Participating
Company and, with respect to any Incentive Stock Option granted to such person,
who is an employee for purposes of Section 422 of the Code; provided,
however, that neither service as a member of the Board nor payment of a
director’s fee shall be sufficient to constitute employment for purposes of the
Plan. The Company shall determine in good faith and in the exercise of its
discretion whether an individual has become or has ceased to be an Employee and
the effective date of such individual’s employment or termination of employment,
as the case may be. For purposes of an individual’s rights, if any, under the
Plan as of the time of the Company’s determination, all such determinations by
the Company shall be final, binding and conclusive, notwithstanding that the
Company or any court of law or governmental agency subsequently makes a contrary
determination.

     

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

     

    (p)          “Fair Market
Value” means, as of any date, the value of a share of Stock or other
property as determined by the Committee, in its discretion, or by the Company,
in its discretion, if such determination is expressly allocated to the Company
herein, subject to the following:

     

    (i)           Except
as otherwise determined by the Committee, if, on such date, the Stock is listed
on a national or regional securities exchange or market system, the Fair Market
Value of a share of Stock shall be the closing price of a share of Stock as
quoted on such national or regional securities exchange or market system
constituting the primary market for the Stock on the last trading day prior to
the day of determination, as reported in The Wall Street Journal or such other
source as the Company deems reliable.

     

    (ii)          Notwithstanding
the foregoing, the Committee may, in its discretion, determine the Fair Market
Value on the basis of the closing, high, low or average sale price of a share of
Stock or the actual sale price of a share of Stock received by a Participant, on
such date, the preceding trading day, the next succeeding trading day or an
average determined over a period of trading days. The Committee may vary its
method of determination of the Fair Market Value as provided in this Section for
different purposes under the Plan.

     

    (iii)         If,
on such date, the Stock is not listed on a national or regional securities
exchange or market system, the Fair Market Value of a share of Stock shall be as
determined by the Committee in good faith without regard to any restriction
other than a restriction which, by its terms, will never lapse.

     

    (q)          “Incentive Stock
Option” means an Option intended to be (as set forth in the Award
Agreement) and which qualifies as an incentive stock option within the meaning
of Section 422(b) of the Code.

     

    (r)           “Insider”
means an Officer, a Director or any other person whose transactions in Stock are
subject to Section 16 of the Exchange Act.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (s)           “Non-Control
Affiliate” means any entity in which any Participating Company has an
ownership interest and which the Committee shall designate as a Non-Control
Affiliate.

     

    (t)    
       “Nonemployee
Director” means a Director who is not an Employee.

     

    (u)          “Nonstatutory
Stock Option” means an Option not intended to be (as set forth in the
Award Agreement) an incentive stock option within the meaning of
Section 422(b) of the Code.

     

    (v)          “Officer”
means any person designated by the Board as an officer of the
Company.

     

    (w)          “Option”
means the right to purchase Stock at a stated price for a specified period of
time granted to a Participant pursuant to Section 6 of the Plan. An Option
may be either an Incentive Stock Option or a Nonstatutory Stock
Option.

     

    (x)           “Option
Expiration Date” means the date of expiration of the Option’s term as set
forth in the Award Agreement.

     

    (y)           An
“Ownership
Change Event” shall be deemed to have occurred if any of the following
occurs with respect to the Company: (i) the direct or indirect sale or exchange
in a single or series of related transactions by the stockholders of the Company
of more than fifty percent (50%) of the voting stock of the Company; (ii) a
merger or consolidation in which the Company is a party; (iii) the sale,
exchange, or transfer of all or substantially all, as determined by the Board in
its discretion, of the assets of the Company; or (iv) a liquidation or
dissolution of the Company.

     

    (z)           “Parent
Corporation” means any present or future “parent corporation” of the
Company, as defined in Section 424(e) of the Code.

     

    (aa)         “Participant”
means any eligible person who has been granted one or more Awards.

     

    (bb)        “Participating
Company” means the Company or any Parent Corporation, Subsidiary
Corporation or Affiliate.

     

    (cc)         “Participating
Company Group” means, at any point in time, all entities collectively
which are then Participating Companies.

     

    (dd)      
 “Performance
Award” means an Award of Performance Shares or Performance
Units.

     

    (ee)       
“Performance
Award Formula” means, for any Performance Award, a formula or table
established by the Committee pursuant to Section 9.3 of the Plan which
provides the basis for computing the value of a Performance Award at one or more
threshold levels of attainment of the applicable Performance Goal(s) measured as
of the end of the applicable Performance Period.

     

    (ff)        
 “Performance
Goal” means a performance goal established by the Committee pursuant to
Section 9.3 of the Plan.

     

    (gg)        “Performance
Period” means a period established by the Committee pursuant to Section
9.3 of the Plan at the end of which one or more Performance Goals are to be
measured.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (hh)      
 “Performance
Share” means a bookkeeping entry representing a right granted to a
Participant pursuant to Section 9 of the Plan to receive a payment equal to
the value of a Performance Share, as determined by the Committee, based on
performance.

     

    (ii)           “Performance
Unit” means a bookkeeping entry representing a right granted to a
Participant pursuant to Section 9 of the Plan to receive a payment equal to
the value of a Performance Unit, as determined by the Committee, based upon
performance.

     

    (jj)           “Restricted Stock
Award” means an Award of Restricted Stock.

     

    (kk)         “Restricted Stock
Unit” or “Stock
Unit” means a bookkeeping entry representing a right granted to a
Participant pursuant to Section 10 or Section 11 of the Plan,
respectively, to receive a share of Stock on a date determined in accordance
with the provisions of Section 10 or Section 11, as applicable, and the
Participant’s Award Agreement.

     

    (ll)          
“Restriction
Period” means the period established in accordance with Section 8.4
of the Plan during which shares subject to a Restricted Stock Award are subject
to Vesting Conditions.

     

    (mm)      
“Rule
16b-3” means Rule 16b-3 under the Exchange Act, as amended from time
to time, or any successor rule or regulation.

     

    (nn)       
“SAR” or
“Stock
Appreciation Right” means a bookkeeping entry representing, for each
share of Stock subject to such SAR, a right granted to a Participant pursuant to
Section 7 of the Plan to receive payment in any combination of shares of
Stock or cash of an amount equal to the excess, if any, of the Fair Market Value
of a share of Stock on the date of exercise of the SAR over the exercise
price.

     

    (oo)       
“Section 162(m)”
means Section 162(m) of the Code.

     

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

     

    (qq)       
“Service”
means a Participant’s employment or service with the Participating Company
Group, whether in the capacity of an Employee, a Director or a Consultant.
Unless otherwise provided by the Committee, a Participant’s Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders such Service or a change in the Participating Company
for which the Participant renders such Service, provided that there is no
interruption or termination of the Participant’s Service. Furthermore, a
Participant’s Service shall not be deemed to have terminated if the Participant
takes any military leave, sick leave, or other bona fide leave of absence
approved by the Company. However, if any such leave taken by a Participant
exceeds ninety (90) days, then on the ninety-first (91st) day following the
commencement of such leave the Participant’s Service shall be deemed to have
terminated, unless the Participant’s right to return to Service is guaranteed by
statute or contract. Notwithstanding the foregoing, unless otherwise designated
by the Company or required by law, a leave of absence shall not be treated as
Service for purposes of determining vesting under the Participant’s Award
Agreement. A Participant’s Service shall be deemed to have terminated either
upon an actual termination of Service or upon the entity for which the
Participant performs Service ceasing to be a Participating Company. Subject to
the foregoing, the Company, in its discretion, shall determine whether the
Participant’s Service has terminated and the effective date of such
termination.

     

    (rr)        
 “Stock”
means the common stock of the Company, as adjusted from time to time in
accordance with Section 4.2 of the Plan.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    (ss)      
 “Stock-Based
Awards” means any award that is valued in whole or in part by reference
to, or is otherwise based on, the Stock, including dividends on the Stock, but
not limited to those Awards described in Sections 6 through 11 of the
Plan.

     

    (tt)         
“Subsidiary
Corporation” means any present or future “subsidiary corporation” of the
Company, as defined in Section 424(f) of the Code.

     

    (uu)        “Successor”
means a corporation into or with which the Company is merged or consolidated or
which acquires all or substantially all of the assets of the Company and which
is designated by the Board as a Successor for purposes of the Plan.

     

    (vv)        “Ten Percent
Owner” means a Participant who, at the time an Option is granted to the
Participant, owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of a Participating Company (other
than an Affiliate) within the meaning of Section 422(b)(6) of the
Code.

     

    (ww)       “Vesting
Conditions” means those conditions established in accordance with
Section 8.4 or Section 10.2 of the Plan prior to the satisfaction of
which shares subject to a Restricted Stock Award or Restricted Stock Unit Award,
respectively, remain subject to forfeiture or a repurchase option in favor of
the Company upon the Participant’s termination of Service.

     

    2.2         
Construction. Captions
and titles contained herein are for convenience only and shall not affect the
meaning or interpretation of any provision of the Plan. Except when otherwise
indicated by the context, the singular shall include the plural and the plural
shall include the singular. Use of the term “or” is not intended to be
exclusive, unless the context clearly requires otherwise.

     

    3.         
 ADMINISTRATION.

     

    3.1          Administration by the
Committee. The Plan shall be administered by the Committee. All questions
of interpretation of the Plan or of any Award shall be determined by the
Committee, and such determinations shall be final and binding upon all persons
having an interest in the Plan or such Award.

     

    3.2          Authority of Officers. Any
Officer shall have the authority to act on behalf of the Company with respect to
any matter, right, obligation, determination or election which is the
responsibility of or which is allocated to the Company herein, provided the
Officer has apparent authority with respect to such matter, right, obligation,
determination or election.

     

    3.3          Administration with Respect to
Insiders. With respect to participation by Insiders in the Plan, at any
time that any class of equity security of the Company is registered pursuant to
Section 12 of the Exchange Act, the Plan shall be administered in
compliance with the requirements, if any, of Rule 16b-3.

     

    3.4          Committee Complying with
Section 162(m). While the Company is a “publicly held corporation”
within the meaning of Section 162(m), the Board may establish a Committee
of “outside directors” within the meaning of Section 162(m) to approve the
grant of any Award which might reasonably be anticipated to result in the
payment of employee remuneration that would otherwise exceed the limit on
employee remuneration deductible for income tax purposes pursuant to
Section 162(m).

     

    3.5          Powers of the Committee. In addition to any other
powers set forth in the Plan and subject to the provisions of the Plan, the
Committee shall have the full and final power and authority, in its
discretion:

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    (a)           to
determine the persons to whom, and the time or times at which, Awards shall be
granted and the number of shares of Stock or units to be subject to each
Award;

     

    (b)           to
determine the type of Award granted and to designate Options as Incentive Stock
Options or Nonstatutory Stock Options;

     

    (c)           to
determine the Fair Market Value of shares of Stock or other
property;

     

    (d)           to
determine the terms, conditions and restrictions applicable to each Award (which
need not be identical) and any shares acquired pursuant thereto, including,
without limitation, (i) the exercise or purchase price of shares purchased
pursuant to any Award, (ii) the method of payment for shares purchased
pursuant to any Award, (iii) the method for satisfaction of any tax
withholding obligation arising in connection with Award, including by the
withholding or delivery of shares of Stock, (iv) the timing, terms and
conditions of the exercisability or vesting of any Award or any shares acquired
pursuant thereto, (v) the Performance Award Formula and Performance Goals
applicable to any Award and the extent to which such Performance Goals have been
attained, (vi) the time of the expiration of any Award, (vii) the
effect of the Participant’s termination of Service on any of the foregoing, and
(viii) all other terms, conditions and restrictions applicable to any Award
or shares acquired pursuant thereto not inconsistent with the terms of the
Plan;

     

    (e)           to
determine whether an Award will be settled in shares of Stock, cash, or in any
combination thereof;

     

    (f)           to
approve one or more forms of Award Agreement;

     

    (g)           to
amend, modify, extend, cancel or renew any Award or to waive any restrictions or
conditions applicable to any Award or any shares acquired pursuant
thereto;

     

    (h)           to
accelerate, continue, extend or defer the exercisability or vesting of any Award
or any shares acquired pursuant thereto, including with respect to the period
following a Participant’s termination of Service;

     

    (i)          
 without the consent of the affected Participant and notwithstanding the
provisions of any Award Agreement to the contrary, to unilaterally substitute at
any time a Stock Appreciation Right providing for settlement solely in shares of
Stock in place of any outstanding Option, provided that such Stock Appreciation
Right covers the same number of shares of Stock and provides for the same
exercise price (subject in each case to adjustment in accordance with
Section 4.2) as the replaced Option and otherwise provides substantially
equivalent terms and conditions as the replaced Option, as determined by the
Committee;

     

    (j)          
 to prescribe, amend or rescind rules, guidelines and policies relating to
the Plan, or to adopt sub-plans or supplements to, or alternative versions of,
the Plan, including, without limitation, as the Committee deems necessary or
desirable to comply with the laws or regulations of or to accommodate the tax
policy, accounting principles or custom of, foreign jurisdictions whose citizens
may be granted Awards;

     

    k)           
to correct any defect, supply any omission or reconcile any inconsistency in the
Plan or any Award Agreement and to make all other determinations and take such
other actions with respect to the Plan or any Award as the Committee may deem
advisable to the extent not inconsistent with the provisions of the Plan or
applicable law; and

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (l)          
 to delegate to any proper Officer the authority to grant one or more
Awards, without further approval of the Committee, to any person eligible
pursuant to Section 5, other than a person who, at the time of such grant,
is an Insider; provided, however, that (i) the exercise price per share of
each such Option shall be equal to the Fair Market Value per share of the Stock
on the effective date of grant, and (ii) each such Award shall be subject
to the terms and conditions of the appropriate standard form of Award Agreement
approved by the Committee and shall conform to the provisions of the Plan and
such other guidelines as shall be established from time to time by the
Committee.

     

    3.6           Indemnification. In addition
to such other rights of indemnification as they may have as members of the Board
or the Committee or as officers or employees of the Participating Company Group,
members of the Board or the Committee and any officers or employees of the
Participating Company Group to whom authority to act for the Board, the
Committee or the Company is delegated shall be indemnified by the Company
against all reasonable expenses, including attorneys’ fees, actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan, or any right granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle
and defend the same.

     

    3.7           Arbitration. Any dispute or
claim concerning any Awards granted (or not granted) pursuant to this Plan and
any other disputes or claims relating to or arising out of the Plan shall be
fully, finally and exclusively resolved by binding arbitration conducted
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association. By accepting an Award, Participants and the Company waive their
respective rights to have any such disputes or claims tried by a judge or
jury.

     

    3.8           Repricing Prohibited. Without
the affirmative vote of holders of a majority of the shares of Stock cast in
person or by proxy at a meeting of the stockholders of the Company at which a
quorum representing a majority of all outstanding shares of Stock is present or
represented by proxy, the Committee shall not approve a program providing for
either (a) the cancellation of outstanding Options or SARs and the grant in
substitution therefore of new Options or SARs having a lower exercise price or
(b) the amendment of outstanding Options or SARs to reduce the exercise price
thereof. This paragraph shall not be construed to apply to the issuance or
assumption of an Award in a transaction to which Code section 424(a) applies,
within the meaning of Section 424 of the Code.

     

    4.           SHARES
SUBJECT TO PLAN.

     

    4.1           Maximum Number of Shares
Issuable. Subject to adjustment as provided in Section 4.2, the
maximum aggregate number of shares of Stock that may be issued under the Plan
shall be Three Million (3,000,000) and shall consist of
authorized but unissued or reacquired shares of Stock or any combination
thereof. If an outstanding Award for any reason expires or is terminated or
canceled without having been exercised or settled in full, or if shares of Stock
acquired pursuant to an Award subject to forfeiture or repurchase are forfeited
or repurchased by the Company, the shares of Stock allocable to the terminated
portion of such Award or such forfeited or repurchased shares of Stock shall
again be available for issuance under the Plan. Shares of Stock shall not be
deemed to have been issued pursuant to the Plan (a) with respect to any
portion of an Award that is settled in cash or (b) to the extent such
shares are withheld or reacquired by the Company in satisfaction of tax
withholding obligations pursuant to Section 15.2. Upon payment in shares of
Stock pursuant to the exercise of an SAR, the number of shares available for
issuance under the Plan shall be reduced only by the number of shares actually
issued in such payment. If the exercise price of an Option is paid by tender to
the Company, or attestation to the ownership, of shares of Stock owned by the
Participant, or by means of a Net-Exercise, the number of shares available for
issuance under the Plan shall be reduced only by the net number of shares for
which the Option is exercised.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    4.2           Adjustments for Changes in Capital
Structure.
Subject to any required action by the stockholders of the Company, in the event
of any change in the Stock effected without receipt of consideration by the
Company, whether through merger, consolidation, reorganization, reincorporation,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, split-up, split-off, spin-off, combination of shares, exchange of shares,
or similar change in the capital structure of the Company, or in the event of
payment of a dividend or distribution to the stockholders of the Company in a
form other than Stock (excepting normal cash dividends) that has a material
effect on the Fair Market Value of shares of Stock, appropriate adjustments
shall be made in the number and kind of shares subject to the Plan and to any
outstanding Awards, in the Award limits set forth in Section 5.4, and
in the exercise or purchase price per share under any outstanding Award in order
to prevent dilution or enlargement of Participants’ rights under the Plan. For
purposes of the foregoing, conversion of any convertible securities of the
Company shall not be treated as “effected without receipt of consideration by
the Company.” If a majority of the shares which are of the same class as the
shares that are subject to outstanding Awards are exchanged for, converted into,
or otherwise become (whether or not pursuant to an Ownership Change Event)
shares of another corporation (the “New
Shares”), the Committee may unilaterally amend the outstanding Options to
provide that such Options are exercisable for New Shares. In the event of any
such amendment, the number of shares subject to, and the exercise price per
share of, the outstanding Awards shall be adjusted in a fair and equitable
manner as determined by the Board, in its discretion. Any fractional share
resulting from an adjustment pursuant to this Section 4.2 shall be rounded
down to the nearest whole number. The Committee in its sole discretion, may also
make such adjustments in the terms of any Award to reflect, or related to, such
changes in the capital structure of the Company or distributions as it deems
appropriate, including modification of Performance Goals, Performance Award
Formulas and Performance Periods. The adjustments determined by the Committee
pursuant to this Section 4.2 shall be final, binding and
conclusive.

     

    5.           ELIGIBILITY
AND AWARD LIMITATIONS.

     

    5.1           Persons Eligible for Awards.
Awards may be granted only to Employees, Consultants and Directors. For purposes
of the foregoing sentence, “Employees,” “Consultants” and “Directors” shall
include prospective Employees, prospective Consultants and prospective Directors
to whom Awards are offered to be granted in connection with written offers of an
employment or other service relationship with the Participating Company Group;
provided, however, that no Stock subject to any such Award shall vest, become
exercisable or be issued prior to the date on which such person commences
Service.

     

    5.2           Participation. Awards other
than Nonemployee Director Awards are granted solely at the discretion of the
Committee. Eligible persons may be granted more than one Award. However,
eligibility in accordance with this Section shall not entitle any person to be
granted an Award, or, having been granted an Award, to be granted an additional
Award.

     

    5.3           Incentive Stock Option
Limitations.

     

    (a)           Persons
Eligible. An
Incentive Stock Option may be granted only to a person who, on the effective
date of grant, is an Employee of the Company, a Parent Corporation or a
Subsidiary Corporation (each being an “ISO-Qualifying
Corporation”). Any person who is not an Employee of an ISO-Qualifying
Corporation on the effective date of the grant of an Option to such person may
be granted only a Nonstatutory Stock Option. An Incentive Stock Option granted
to a prospective Employee upon the condition that such person become an Employee
of an ISO-Qualifying Corporation shall be deemed granted effective on the date
such person commences Service with an ISO-Qualifying Corporation, with an
exercise price determined as of such date in accordance with
Section 6.1.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    (b)           Fair Market Value
Limitation. To
the extent that options designated as Incentive Stock Options (granted under all
stock option plans of the Participating Company Group, including the Plan)
become exercisable by a Participant for the first time during any calendar year
for stock having a Fair Market Value greater than One Hundred Thousand Dollars
($100,000), the portion of such options which exceeds such amount shall be
treated as Nonstatutory Stock Options. For purposes of this Section, options
designated as Incentive Stock Options shall be taken into account in the order
in which they were granted, and the Fair Market Value of stock shall be
determined as of the time the option with respect to such stock is granted. If
the Code is amended to provide for a limitation different from that set forth in
this Section, such different limitation shall be deemed incorporated herein
effective as of the date and with respect to such Options as required or
permitted by such amendment to the Code. If an Option is treated as an Incentive
Stock Option in part and as a Nonstatutory Stock Option in part by reason of the
limitation set forth in this Section, the Participant may designate which
portion of such Option the Participant is exercising. In the absence of such
designation, the Participant shall be deemed to have exercised the Incentive
Stock Option portion of the Option first. Upon exercise, shares issued pursuant
to each such portion shall be separately identified.

     

    5.4           Award Limits.

     

    (a)           Maximum Number of
Shares Issuable Pursuant to Incentive Stock Options. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock
that may be issued under the Plan pursuant to the exercise of Incentive Stock
Options shall not exceed Three Million (3,000,000) shares. The maximum
aggregate number of shares of Stock that may be issued under the Plan pursuant
to all Awards other than Incentive Stock Options shall be the number of shares
determined in accordance with Section 4.1, subject to adjustment as
provided in Section 4.2 and further subject to the limitation set forth in
Section 5.4(b) below.

     

    (b)           Aggregate Limit
on Full Value Awards. Subject to adjustment as provided in
Section 4.2, in no event shall more than Three Million (3,000,000) shares in the
aggregate be issued under the Plan pursuant to the exercise or settlement of
Restricted Stock Awards, Restricted Stock Unit Awards and Performance Awards
(“Full Value Awards”). Except with respect to a maximum of Two Million (2,000,000) shares, any Full
Value Awards which vest on the basis of the Participant’s continued Service
shall not provide for vesting which is any more rapid than annual pro rata
vesting over a three (3) year period and any Full Value Awards which vest upon
the attainment of Performance Goals shall provide for a Performance Period of at
least twelve (12) months.

     

    (c)           Section 162(m)
Award Limits. The following limits shall apply to the grant of any Award
if, at the time of grant, the Company is a “publicly held corporation” within
the meaning of Section 162(m).

     

    (i)           Options and SARs. Subject to
adjustment as provided in Section 4.2, no Employee shall be granted within
any fiscal year of the Company one or more Options or Freestanding SARs which in
the aggregate are for more than Three Million (3,000,000) shares of Stock
reserved for issuance under the Plan.

     

    (ii)          Restricted Stock and Restricted Stock
Unit Awards. Subject to adjustment as provided in Section 4.2, no
Employee shall be granted within any fiscal year of the Company one or more
Restricted Stock Awards or Restricted Stock Unit Awards, subject to Vesting
Conditions based on the attainment of Performance Goals, for more than Five
Hundred Thousand (500,000) shares of Stock
reserved for issuance under the Plan.

     

    (iii)         Performance Awards. Subject to
adjustment as provided in Section 4.2, no Employee shall be granted
(1) Performance Shares which could result in such Employee receiving more
than than Five Hundred Thousand (500,000) shares of Stock
reserved for issuance under the Plan for each full fiscal year of the Company
contained in the Performance Period for such Award, or (2) Performance
Units which could result in such Employee receiving more than Ten Million
dollars ($10,000,000)
for each full fiscal year of the Company contained in the Performance Period for
such Award. No Participant may be granted more than one Performance Award for
the same Performance Period.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    6.           TERMS AND
CONDITIONS OF OPTIONS.

     

    Options
shall be evidenced by Award Agreements specifying the number of shares of Stock
covered thereby, in such form as the Committee shall from time to time
establish. No Option or purported Option shall be a valid and binding obligation
of the Company unless evidenced by a fully executed Award Agreement. Award
Agreements evidencing Options may incorporate all or any of the terms of the
Plan by reference and shall comply with and be subject to the following terms
and conditions:

     

    6.1           Exercise Price. The exercise price for each
Option shall be established in the discretion of the Committee; provided,
however, that (a) the exercise price per share shall be not less than the Fair
Market Value of a share of Stock on the effective date of grant of the Option
and (b) no Incentive Stock Option granted to a Ten Percent Owner shall have
an exercise price per share less than one hundred ten percent (110%) of the Fair
Market Value of a share of Stock on the effective date of grant of the Option.
Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a
Nonstatutory Stock Option) may be granted with an exercise price lower than the
minimum exercise price set forth above if such Option is granted pursuant to an
assumption or substitution for another option in a manner qualifying under the
provisions of Section 424(a) of the Code.

     

    6.2           Exercisability and Term of
Options. 

     

    (a)           Option Vesting
and Exercisability. Options shall be exercisable at such time or times,
or upon such event or events, and subject to such terms, conditions, performance
criteria and restrictions as shall be determined by the Committee and set forth
in the Award Agreement evidencing such Option; provided, however, that
(a) no Option shall be exercisable after the expiration of ten (10) years
after the effective date of grant of such Option, (b) no Incentive Stock
Option granted to a Ten Percent Owner shall be exercisable after the expiration
of five (5) years after the effective date of grant of such Option, (c) no
Option shall become fully vested in a period of less than three (3) years from
the date of grant, other than in connection with a termination of Service or a
Change in Control or in the case of an Option granted to a Nonemployee Director,
and (d) no Option offered or granted to a prospective Employee, prospective
Consultant or prospective Director may become exercisable prior to the date on
which such person commences Service. Subject to the foregoing, unless otherwise
specified by the Committee in the grant of an Option, any Option granted
hereunder shall terminate ten (10) years after the effective date of grant of
the Option, unless earlier terminated in accordance with its provisions, or the
terms of the Plan.

     

    (b)           Participant
Responsibility for Exercise of Option. Each Participant is responsible
for taking any and all actions as may be required to exercise any Option in a
timely manner, and for properly executing any documents as may be required for
the exercise of an Option in accordance with such rules and procedures as may be
established from time to time. By signing an Option Agreement each Participant
acknowledges that information regarding the procedures and requirements for the
exercise of any Option is available upon such Participant’s request. The Company
shall have no duty or obligation to notify any Participant of the expiration
date of any Option.

     

    6.3           Payment of Exercise
Price.

     

    (a)           Forms of
Consideration Authorized. Except as otherwise
provided below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i) in cash, by check
or in cash equivalent, (ii) by tender to the Company, or attestation to the
ownership, of shares of Stock owned by the Participant having a Fair Market
Value not less than the exercise price, (iii)   provided that the
Participant is an Employee, and not an Officer or Director (unless otherwise not
prohibited by law, including, without limitation, any regulation promulgated by
the Board of Governors of the Federal Reserve System) and in the Company’s sole
and absolute discretion at the time the Option is exercised, by delivery of the
Participant’s promissory note in a form approved by the Company for the
aggregate exercise price, provided that, if the Company is incorporated in the
State of Delaware, the Participant shall pay in cash that portion of the
aggregate exercise price not less than the par value of the shares being
acquired, (iv) by such other consideration as may be approved by the
Committee from time to time to the extent permitted by applicable law, or
(v) by any combination thereof. The Committee may at any time or from time
to time grant Options which do not permit all of the foregoing forms of
consideration to be used in payment of the exercise price or which otherwise
restrict one or more forms of consideration.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    (b)           Limitations on
Forms of Consideration.

     

    (i)           Tender of Stock.
Notwithstanding the foregoing, an Option may not be exercised by tender to the
Company, or attestation to the ownership, of shares of Stock to the extent such
tender or attestation would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company’s
stock.

     

    (ii)          Payment by Promissory Note. No
promissory note shall be permitted if the exercise of an Option using a
promissory note would be a violation of any law. Any permitted promissory note
shall be on such terms as the Committee shall determine. The Committee shall
have the authority to permit or require the Participant to secure any promissory
note used to exercise an Option with the shares of Stock acquired upon the
exercise of the Option or with other collateral acceptable to the Company.
Unless otherwise provided by the Committee, if the Company at any time is
subject to the regulations promulgated by the Board of Governors of the Federal
Reserve System or any other governmental entity affecting the extension of
credit in connection with the Company’s securities, any promissory note shall
comply with such applicable regulations, and the Participant shall pay the
unpaid principal and accrued interest, if any, to the extent necessary to comply
with such applicable regulations.

     

    6.4           Effect of Termination of
Service.

     

    (a)           Option
Exercisability. Subject to earlier termination of the Option as otherwise
provided herein and unless otherwise provided by the Committee, an Option shall
be exercisable after a Participant’s termination of Service only during the
applicable time periods provided in the Award Agreement.

     

    (b)           Extension if
Exercise Prevented by Law. Notwithstanding the foregoing, unless the
Committee provides otherwise in the Award Agreement, if the exercise of an
Option within the applicable time periods is prevented by the provisions of
Section 14 below, the Option shall remain exercisable until three (3)
months (or such longer period of time as determined by the Committee, in its
discretion) after the date the Participant is notified by the Company that the
Option is exercisable, but in any event no later than the Option Expiration
Date.

     

    (c)           Extension if
Participant Subject to Section 16(b). Notwithstanding the foregoing,
if a sale within the applicable time periods of shares acquired upon the
exercise of the Option would subject the Participant to suit under
Section 16(b) of the Exchange Act, the Option shall remain exercisable
until the earliest to occur of (i) the tenth (10th) day following the date
on which a sale of such shares by the Participant would no longer be subject to
such suit, (ii) the one hundred and ninetieth (190th) day after the
Participant’s termination of Service, or (iii) the Option Expiration
Date.

     

    6.5           Transferability of Options.
During the lifetime of the Participant, an Option shall be exercisable only by
the Participant or the Participant’s guardian or legal representative. Prior to
the issuance of shares of Stock upon the exercise of an Option, the Option shall
not be subject in any manner to anticipation, alienation, sale, exchange,
transfer, assignment, pledge, encumbrance, or garnishment by creditors of the
Participant or the Participant’s beneficiary, except transfer by will or by the
laws of descent and distribution. Notwithstanding the foregoing, to the extent
permitted by the Committee, in its discretion, and set forth in the Award
Agreement evidencing such Option, a Nonstatutory Stock Option shall be
assignable or transferable subject to the applicable limitations, if any,
described in the General Instructions to Form S-8 Registration Statement
under the Securities Act.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    7.           TERMS AND
CONDITIONS OF STOCK APPRECIATION RIGHTS.

     

    Stock
Appreciation Rights shall be evidenced by Award Agreements specifying the number
of shares of Stock subject to the Award, in such form as the Committee shall
from time to time establish. No SAR or purported SAR shall be a valid and
binding obligation of the Company unless evidenced by a fully executed Award
Agreement. Award Agreements evidencing SARs may incorporate all or any of the
terms of the Plan by reference and shall comply with and be subject to the
following terms and conditions:

     

    7.1           Types of SARs Authorized. SARs
may be granted in tandem with all or any portion of a related Option (a “Tandem
SAR”) or may be granted independently of any Option (a “Freestanding
SAR”). A Tandem SAR may be granted either concurrently with the grant of
the related Option or at any time thereafter prior to the complete exercise,
termination, expiration or cancellation of such related Option.

     

    7.2           Exercise Price. The exercise
price for each SAR shall be established in the discretion of the Committee;
provided, however, that (a) the exercise price per share subject to a
Tandem SAR shall be the exercise price per share under the related Option and
(b) the exercise price per share subject to a Freestanding SAR shall be not
less than the Fair Market Value of a share of Stock on the effective date of
grant of the SAR.

     

    7.3           Exercisability and Term of
SARs.

     

    (a)           Tandem
SARs. Tandem
SARs shall be exercisable only at the time and to the extent, and only to the
extent, that the related Option is exercisable, subject to such provisions as
the Committee may specify where the Tandem SAR is granted with respect to less
than the full number of shares of Stock subject to the related
Option.

     

    (b)           Freestanding
SARs.
Freestanding SARs shall be exercisable at such time or times, or upon such event
or events, and subject to such terms, conditions, performance criteria and
restrictions as shall be determined by the Committee and set forth in the Award
Agreement evidencing such SAR; provided, however, that no Freestanding SAR shall
be exercisable after the expiration of ten (10) years after the effective date
of grant of such SAR.

     

    No SAR
shall become fully vested in a period of less than three (3) years from the date
of grant, other than in connection with a termination of Service or a Change in
Control or the case of an SAR granted to a Nonemployee Director.

     

    7.4           Deemed Exercise of SARs. If,
on the date on which an SAR would otherwise terminate or expire, the SAR by its
terms remains exercisable immediately prior to such termination or expiration
and, if so exercised, would result in a payment to the holder of such SAR, then
any portion of such SAR which has not previously been exercised shall
automatically be deemed to be exercised as of such date with respect to such
portion.

     

    7.5           Effect of Termination of
Service. Subject to earlier termination of the SAR as otherwise provided
herein and unless otherwise provided by the Committee in the grant of an SAR and
set forth in the Award Agreement, an SAR shall be exercisable after a
Participant’s termination of Service only as provided in the Award
Agreement.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    7.6           Nontransferability of SARs.
During the lifetime of the Participant, an SAR shall be exercisable only by the
Participant or the Participant’s guardian or legal representative. Prior to the
exercise of an SAR, the SAR shall not be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or
garnishment by creditors of the Participant or the Participant’s beneficiary,
except transfer by will or by the laws of descent and distribution.

     

    8.           TERMS AND
CONDITIONS OF RESTRICTED STOCK AWARDS.

     

    Restricted
Stock Awards shall be evidenced by Award Agreements specifying the number of
shares of Stock subject to the Award, in such form as the Committee shall from
time to time establish. No Restricted Stock Award or purported Restricted Stock
Award shall be a valid and binding obligation of the Company unless evidenced by
a fully executed Award Agreement. Award Agreements evidencing Restricted Stock
Awards may incorporate all or any of the terms of the Plan by reference and
shall comply with and be subject to the following terms and
conditions:

     

    8.1           Types of Restricted Stock Awards
Authorized. Restricted Stock Awards may or may not require the payment of
cash compensation for the stock. Restricted Stock Awards may be granted upon
such conditions as the Committee shall determine, including, without limitation,
upon the attainment of one or more Performance Goals described in
Section 9.4. If either the grant of a Restricted Stock Award or the lapsing
of the Restriction Period is to be contingent upon the attainment of one or more
Performance Goals, the Committee shall follow procedures substantially
equivalent to those set forth in Sections 9.3 through 9.5(a).

     

    8.2           Purchase Price. The purchase
price, if any, for shares of Stock issuable under each Restricted Stock Award
and the means of payment shall be established by the Committee in its
discretion.

     

    8.3           Purchase Period. A Restricted
Stock Award requiring the payment of cash consideration shall be exercisable
within a period established by the Committee; provided, however, that no
Restricted Stock Award granted to a prospective Employee, prospective Consultant
or prospective Director may become exercisable prior to the date on which such
person commences Service.

     

    8.4           Vesting and Restrictions on
Transfer. Shares issued pursuant to any Restricted Stock Award may or may
not be made subject to Vesting Conditions based upon the satisfaction of such
Service requirements, conditions, restrictions or performance criteria,
including, without limitation, Performance Goals as described in
Section 9.4, as shall be established by the Committee and set forth in the
Award Agreement evidencing such Award. During any Restriction Period in which
shares acquired pursuant to a Restricted Stock Award remain subject to Vesting
Conditions, such shares may not be sold, exchanged, transferred, pledged,
assigned or otherwise disposed of other than as provided in the Award Agreement
or as provided in Section 8.7. Upon request by the Company, each
Participant shall execute any agreement evidencing such transfer restrictions
prior to the receipt of shares of Stock hereunder.

     

    8.5           Voting Rights; Dividends and
Distributions. Except as provided in this Section, Section 8.4 and
any Award Agreement, during the Restriction Period applicable to shares subject
to a Restricted Stock Award, the Participant shall have all of the rights of a
stockholder of the Company holding shares of Stock, including the right to vote
such shares and to receive all dividends and other distributions paid with
respect to such shares. However, in the event of a dividend or distribution paid
in shares of Stock or any other adjustment made upon a change in the capital
structure of the Company as described in Section 4.2, any and all new,
substituted or additional securities or other property (other than normal cash
dividends) to which the Participant is entitled by reason of the Participant’s
Restricted Stock Award shall be immediately subject to the same Vesting
Conditions as the shares subject to the Restricted Stock Award with respect to
which such dividends or distributions were paid or adjustments were
made.

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    8.6           Effect of Termination of
Service. Unless otherwise provided by the Committee in the grant of a
Restricted Stock Award and set forth in the Award Agreement, if a Participant’s
Service terminates for any reason, whether voluntary or involuntary (including
the Participant’s death or disability), then the Participant shall forfeit to
the Company any shares acquired by the Participant pursuant to a Restricted
Stock Award which remain subject to Vesting Conditions as of the date of the
Participant’s termination of Service in exchange for the payment of the purchase
price, if any, paid by the Participant. The Company shall have the right to
assign at any time any repurchase right it may have, whether or not such right
is then exercisable, to one or more persons as may be selected by the
Company.

     

    8.7           Nontransferability of Restricted
Stock Award Rights. Prior to the issuance of shares of Stock pursuant to
a Restricted Stock Award, rights to acquire such shares shall not be subject in
any manner to anticipation, alienation, sale, exchange, transfer, assignment,
pledge, encumbrance or garnishment by creditors of the Participant or the
Participant’s beneficiary, except transfer by will or the laws of descent and
distribution. All rights with respect to a Restricted Stock Award granted to a
Participant hereunder shall be exercisable during his or her lifetime only by
such Participant or the Participant’s guardian or legal
representative.

     

    9.           TERMS AND
CONDITIONS OF PERFORMANCE AWARDS.

     

    Performance
Awards shall be evidenced by Award Agreements in such form as the Committee
shall from time to time establish. No Performance Award or purported Performance
Award shall be a valid and binding obligation of the Company unless evidenced by
a fully executed Award Agreement. Award Agreements evidencing Performance Awards
may incorporate all or any of the terms of the Plan by reference and shall
comply with and be subject to the following terms and conditions:

     

    9.1           Types of Performance Awards
Authorized. Performance Awards may be in the form of either Performance
Shares or Performance Units. Each Award Agreement evidencing a Performance Award
shall specify the number of Performance Shares or Performance Units subject
thereto, the Performance Award Formula, the Performance Goal(s) and Performance
Period applicable to the Award, and the other terms, conditions and restrictions
of the Award.

     

    9.2           Initial Value of Performance Shares
and Performance Units. Unless otherwise provided by the Committee in
granting a Performance Award, each Performance Share shall have an initial value
equal to the Fair Market Value of one (1) share of Stock, subject to adjustment
as provided in Section 4.2, on the effective date of grant of the
Performance Share. Each Performance Unit shall have an initial value determined
by the Committee. The final value payable to the Participant in settlement of a
Performance Award determined on the basis of the applicable Performance Award
Formula will depend on the extent to which Performance Goals established by the
Committee are attained within the applicable Performance Period established by
the Committee.

     

    9.3           Establishment of Performance Period,
Performance Goals and Performance Award Formula. In granting each
Performance Award, the Committee shall establish in writing the applicable
Performance Period, Performance Award Formula and one or more Performance Goals
which, when measured at the end of the Performance Period, shall determine on
the basis of the Performance Award Formula the final value of the Performance
Award to be paid to the Participant. To the extent compliance with the
requirements under Section 162(m) with respect to “performance-based
compensation” is desired, the Committee shall establish the Performance Goal(s)
and Performance Award Formula applicable to each Performance Award no later than
the earlier of (a) the date ninety (90) days after the commencement of the
applicable Performance Period or (b) the date on which 25% of the Performance
Period has elapsed, and, in any event, at a time when the outcome of the
Performance Goals remains substantially uncertain. Once established, the
Performance Goals and Performance Award Formula shall not be changed during the
Performance Period. The Company shall notify each Participant granted a
Performance Award of the terms of such Award, including the Performance Period,
Performance Goal(s) and Performance Award Formula.

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    9.4           Measurement of Performance
Goals. Performance Goals shall be established by the Committee on the
basis of targets to be attained (“Performance
Targets”) with respect to one or more measures of business or financial
performance (each, a “Performance
Measure”), subject to the following:

     

    (a)           Performance
Measures.
Performance Measures shall have the same meanings as used in the Company’s
financial statements, or, if such terms are not used in the Company’s financial
statements, they shall have the meaning applied pursuant to generally accepted
accounting principles, or as used generally in the Company’s industry.
Performance Measures shall be calculated with respect to the Company and each
Subsidiary Corporation consolidated therewith for financial reporting purposes
or such division or other business unit as may be selected by the Committee. For
purposes of the Plan, the Performance Measures applicable to a Performance Award
shall be calculated in accordance with generally accepted accounting principles,
but prior to the accrual or payment of any Performance Award for the same
Performance Period and excluding the effect (whether positive or negative) of
any change in accounting standards or any extraordinary, unusual or nonrecurring
item, as determined by the Committee, occurring after the establishment of the
Performance Goals applicable to the Performance Award. Each such adjustment, if
any, shall be made solely for the purpose of providing a consistent basis from
period to period for the calculation of Performance Measures in order to prevent
the dilution or enlargement of the Participant’s rights with respect to a
Performance Award. Performance Measures may be one or more of the following, as
determined by the Committee: (i) sales revenue; (ii) gross margin;
(iii) operating margin; (iv) operating income; (v) pre-tax
profit; (vi) earnings before stock-based compensation expense, interest,
taxes and depreciation and amortization; (vii) earnings before interest, taxes
and depreciation and amortization; (viii) earnings before interest and taxes;
(ix) net income; (x) expenses; (xi) the market price of the
Stock; (xii) stock price; (xiii) earnings per share; (xiv) return on
stockholder equity; (xv) return on capital; (xvi) return on net
assets; (xvii) economic value added; (xviii) market share;
(xix) customer service; (xx) customer satisfaction; (xxi) safety;
(xxii) total stockholder return; (xxiii) free cash flow; (xxiv) net
operating income; (xxv) operating cash flow; (xxvi) return on investment;
(xxvii) employee satisfaction; (xxviii) employee retention; (xxix) balance of
cash, cash equivalents and marketable securities; (xxx) product development;
(xxxi) research and development expenses; (xxxii) completion of an identified
special project; (xxxiii) completion of a joint venture or other corporate
transaction; or (xxxiv) such other measures as determined by the Committee
consistent with this Section 9.4(a).

     

    (b)           Performance
Targets.
Performance Targets may include a minimum, maximum, target level and
intermediate levels of performance, with the final value of a Performance Award
determined under the applicable Performance Award Formula by the level attained
during the applicable Performance Period. A Performance Target may be stated as
an absolute value or as a value determined relative to a standard selected by
the Committee.

     

    9.5           Settlement of Performance
Awards.

     

    (a)           Determination of
Final Value. As
soon as practicable following the completion of the Performance Period
applicable to a Performance Award, the Committee shall certify in writing the
extent to which the applicable Performance Goals have been attained and the
resulting final value of the Award earned by the Participant and to be paid upon
its settlement in accordance with the applicable Performance Award
Formula.

     

    (b)           Discretionary
Adjustment of Award Formula. In its discretion, the
Committee may, either at the time it grants a Performance Award or at any time
thereafter, provide for the positive or negative adjustment of the Performance
Award Formula applicable to a Performance Award that is not intended to
constitute “qualified performance based compensation” to a “covered employee”
within the meaning of Section 162(m) (a “Covered
Employee”) to reflect such Participant’s individual performance in his or
her position with the Company or such other factors as the Committee may
determine. With respect to a Performance Award intended to constitute qualified
performance-based compensation to a Covered Employee, the Committee shall have
the discretion to reduce some or all of the value of the Performance Award that
would otherwise be paid to the Covered Employee upon its settlement
notwithstanding the attainment of any Performance Goal and the resulting value
of the Performance Award determined in accordance with the Performance Award
Formula.

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    (c)           Payment in
Settlement of Performance Awards. As soon as practicable
following the Committee’s determination and certification in accordance with
Sections 9.5(a) and (b), payment shall be made to each eligible Participant
(or such Participant’s legal representative or other person who acquired the
right to receive such payment by reason of the Participant’s death) of the final
value of the Participant’s Performance Award. Payment of such amount shall be
made in cash in a lump sum or in installments, shares of Stock (either fully
vested or subject to vesting), or a combination thereof, as determined by the
Committee.

     

    9.6           Voting Rights; Dividend Equivalent
Rights and Distributions. Participants shall have no voting rights with
respect to shares of Stock represented by Performance Share Awards until the
date of the issuance of such shares, if any (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company). However, the Committee, in its discretion, may provide in the Award
Agreement evidencing any Performance Share Award that the Participant shall be
entitled to receive Dividend Equivalents with respect to the payment of cash
dividends on Stock having a record date prior to the date on which the
Performance Shares are settled or forfeited. Such Dividend Equivalents, if any,
shall be credited to the Participant in the form of additional whole Performance
Shares as of the date of payment of such cash dividends on Stock. The number of
additional Performance Shares (rounded to the nearest whole number) to be so
credited shall be determined by dividing (a) the amount of cash dividends
paid on such date with respect to the number of shares of Stock represented by
the Performance Shares previously credited to the Participant by (b) the
Fair Market Value per share of Stock on such date. Dividend Equivalents may be
paid currently or may be accumulated and paid to the extent that Performance
Shares become nonforfeitable, as determined by the Committee. Settlement of
Dividend Equivalents may be made in cash, shares of Stock, or a combination
thereof as determined by the Committee, and may be paid on the same basis as
settlement of the related Performance Share as provided in Section 9.5.
Dividend Equivalents shall not be paid with respect to Performance Units. In the
event of a dividend or distribution paid in shares of Stock or any other
adjustment made upon a change in the capital structure of the Company as
described in Section 4.2, appropriate adjustments shall be made in the
Participant’s Performance Share Award so that it represents the right to receive
upon settlement any and all new, substituted or additional securities or other
property (other than normal cash dividends) to which the Participant would
entitled by reason of the shares of Stock issuable upon settlement of the
Performance Share Award, and all such new, substituted or additional securities
or other property shall be immediately subject to the same Performance Goals as
are applicable to the Award.

     

    9.7           Effect of Termination of
Service. Unless otherwise provided by the Committee in the grant of a
Performance Award and set forth in the Award Agreement, the effect of a
Participant’s termination of Service on the Performance Award shall be as
follows:

     

    (a)           Death or
Disability. If
the Participant’s Service terminates because of the death or Disability of the
Participant before the completion of the Performance Period applicable to the
Performance Award, the final value of the Participant’s Performance Award shall
be determined by the extent to which the applicable Performance Goals have been
attained with respect to the entire Performance Period and shall be prorated
based on the number of months of the Participant’s Service during the
Performance Period. Payment shall be made following the end of the Performance
Period in any manner permitted by Section 9.5.

     

    (b)           Other Termination
of Service. If
the Participant’s Service terminates for any reason except death or Disability
before the completion of the Performance Period applicable to the Performance
Award, such Award shall be forfeited in its entirety; provided, however, that in
the event of an involuntary termination of the Participant’s Service, the
Committee, in its sole discretion, may waive the automatic forfeiture of all or
any portion of any such Award.

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    9.8           Nontransferability of Performance
Awards. Prior to settlement in accordance with the provisions of the
Plan, no Performance Award shall be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or
garnishment by creditors of the Participant or the Participant’s beneficiary,
except transfer by will or by the laws of descent and distribution. All rights
with respect to a Performance Award granted to a Participant hereunder shall be
exercisable during his or her lifetime only by such Participant or the
Participant’s guardian or legal representative.

     

    10.         TERMS AND
CONDITIONS OF RESTRICTED STOCK UNIT AWARDS.

     

    Restricted
Stock Unit Awards shall be evidenced by Award Agreements specifying the number
of Restricted Stock Units subject to the Award, in such form as the Committee
shall from time to time establish. No Restricted Stock Unit Award or purported
Restricted Stock Unit Award shall be a valid and binding obligation of the
Company unless evidenced by a fully executed Award Agreement. Award Agreements
evidencing Restricted Stock Units may incorporate all or any of the terms of the
Plan by reference and shall comply with and be subject to the following terms
and conditions:

     

    10.1         Grant of Restricted Stock Unit
Awards. Restricted Stock Unit Awards may be granted upon such conditions
as the Committee shall determine, including, without limitation, upon the
attainment of one or more Performance Goals described in Section 9.4. If
either the grant of a Restricted Stock Unit Award or the Vesting Conditions with
respect to such Award is to be contingent upon the attainment of one or more
Performance Goals, the Committee shall follow procedures substantially
equivalent to those set forth in Sections 9.3
through 9.5(a).

     

    10.2        
Vesting. Restricted
Stock Units may or may not be made subject to Vesting Conditions based upon the
satisfaction of such Service requirements, conditions, restrictions or
performance criteria, including, without limitation, Performance Goals as
described in Section 9.4, as shall be established by the Committee and set
forth in the Award Agreement evidencing such Award.

     

    10.3         Voting Rights, Dividend Equivalent
Rights and Distributions. Participants shall have no voting rights with
respect to shares of Stock represented by Restricted Stock Units until the date
of the issuance of such shares (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company).
However, the Committee, in its discretion, may provide in the Award Agreement
evidencing any Restricted Stock Unit Award that the Participant shall be
entitled to receive Dividend Equivalents with respect to the payment of cash
dividends on Stock having a record date prior to the date on which Restricted
Stock Units held by such Participant are settled. Such Dividend Equivalents, if
any, shall be paid by crediting the Participant with additional whole Restricted
Stock Units as of the date of payment of such cash dividends on Stock. The
number of additional Restricted Stock Units (rounded to the nearest whole
number) to be so credited shall be determined by dividing (a) the amount of cash
dividends paid on such date with respect to the number of shares of Stock
represented by the Restricted Stock Units previously credited to the Participant
by (b) the Fair Market Value per share of Stock on such date. Such additional
Restricted Stock Units shall be subject to the same terms and conditions and
shall be settled in the same manner and at the same time (or as soon thereafter
as practicable) as the Restricted Stock Units originally subject to the
Restricted Stock Unit Award. In the event of a dividend or distribution paid in
shares of Stock or any other adjustment made upon a change in the capital
structure of the Company as described in Section 4.2, appropriate
adjustments shall be made in the Participant’s Restricted Stock Unit Award so
that it represents the right to receive upon settlement any and all new,
substituted or additional securities or other property (other than normal cash
dividends) to which the Participant would entitled by reason of the shares of
Stock issuable upon settlement of the Award, and all such new, substituted or
additional securities or other property shall be immediately subject to the same
Vesting Conditions as are applicable to the Award.

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

    10.4         Effect of Termination of
Service. Unless otherwise provided by the Committee in the grant of a
Restricted Stock Unit Award and set forth in the Award Agreement, if a
Participant’s Service terminates for any reason, whether voluntary or
involuntary (including the Participant’s death or disability), then the
Participant shall forfeit to the Company any Restricted Stock Units pursuant to
the Award which remain subject to Vesting Conditions as of the date of the
Participant’s termination of Service.

     

    10.5         Settlement of Restricted Stock Unit
Awards. The Company shall issue to a Participant on the date on which
Restricted Stock Units subject to the Participant’s Restricted Stock Unit Award
vest or on such other date determined by the Committee, in its discretion, and
set forth in the Award Agreement one (1) share of Stock (and/or any other new,
substituted or additional securities or other property pursuant to an adjustment
described in Section 10.3) for each Restricted Stock Unit then becoming
vested or otherwise to be settled on such date, subject to the withholding of
applicable taxes. Notwithstanding the foregoing, if permitted by the Committee
and set forth in the Award Agreement, the Participant may elect in accordance
with terms specified in the Award Agreement to defer receipt of all or any
portion of the shares of Stock or other property otherwise issuable to the
Participant pursuant to this Section.

     

    10.6         Nontransferability of Restricted
Stock Unit Awards. Prior to the issuance of shares of Stock in settlement
of a Restricted Stock Unit Award, the Award shall not be subject in any manner
to anticipation, alienation, sale, exchange, transfer, assignment, pledge,
encumbrance, or garnishment by creditors of the Participant or the Participant’s
beneficiary, except transfer by will or by the laws of descent and distribution.
All rights with respect to a Restricted Stock Unit Award granted to a
Participant hereunder shall be exercisable during his or her lifetime only by
such Participant or the Participant’s guardian or legal
representative.

     

    11.         DEFERRED
COMPENSATION AWARDS.

     

    11.1         Establishment of Deferred
Compensation Award Programs. This Section 11 shall not be effective
unless and until the Committee determines to establish a program pursuant to
this Section. The Committee, in its discretion and upon such terms and
conditions as it may determine, may establish one or more programs pursuant to
the Plan under which:

     

    (a)           Participants
designated by the Committee who are Insiders or otherwise among a select group
of highly compensated Employees may irrevocably elect, prior to a date specified
by the Committee, to reduce such Participant’s compensation otherwise payable in
cash (subject to any minimum or maximum reductions imposed by the Committee) and
to be granted automatically at such time or times as specified by the Committee
one or more Awards of Stock Units with respect to such numbers of shares of
Stock as determined in accordance with the rules of the program established by
the Committee and having such other terms and conditions as established by the
Committee.

     

    (b)           Participants
designated by the Committee who are Insiders or otherwise among a select group
of highly compensated Employees may irrevocably elect, prior to a date specified
by the Committee, to be granted automatically an Award of Stock Units with
respect to such number of shares of Stock and upon such other terms and
conditions as established by the Committee in lieu of:

     

    (i)           shares
of Stock otherwise issuable to such Participant upon the exercise of an
Option;

     

    (ii)          cash
or shares of Stock otherwise issuable to such Participant upon the exercise of
an SAR; or

     

    (iii)         cash
or shares of Stock otherwise issuable to such Participant upon the settlement of
a Performance Award or Performance Unit.

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

     

    11.2         Terms and Conditions of Deferred
Compensation Awards. Deferred Compensation Awards granted pursuant to
this Section 11 shall be evidenced by Award Agreements in such form as the
Committee shall from time to time establish. No such Deferred Compensation Award
or purported Deferred Compensation Award shall be a valid and binding obligation
of the Company unless evidenced by a fully executed Award Agreement. Award
Agreements evidencing Deferred Compensation Awards may incorporate all or any of
the terms of the Plan by reference and shall comply with and be subject to the
following terms and conditions:

     

    (a)           Vesting
Conditions. Deferred Compensation Awards shall not be subject to any
vesting conditions.

     

    (b)           Terms and
Conditions of Stock Units.

     

    (i)           Voting Rights; Dividend Equivalent
Rights and Distributions. Participants shall have no voting rights with
respect to shares of Stock represented by Stock Units until the date of the
issuance of such shares (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company). However, a
Participant shall be entitled to receive Dividend Equivalents with respect to
the payment of cash dividends on Stock having a record date prior to date on
which Stock Units held by such Participant are settled. Such Dividend
Equivalents shall be paid by crediting the Participant with additional whole
and/or fractional Stock Units as of the date of payment of such cash dividends
on Stock. The method of determining the number of additional Stock Units to be
so credited shall be specified by the Committee and set forth in the Award
Agreement. Such additional Stock Units shall be subject to the same terms and
conditions and shall be settled in the same manner and at the same time (or as
soon thereafter as practicable) as the Stock Units originally subject to the
Stock Unit Award. In the event of a dividend or distribution paid in shares of
Stock or any other adjustment made upon a change in the capital structure of the
Company as described in Section 4.2, appropriate adjustments shall be made
in the Participant’s Stock Unit Award so that it represent the right to receive
upon settlement any and all new, substituted or additional securities or other
property (other than normal cash dividends) to which the Participant would be
entitled by reason of the shares of Stock issuable upon settlement of the
Award.

     

    (ii)          Settlement of Stock Unit
Awards. A Participant electing to receive an Award of Stock Units
pursuant to this Section 11 shall specify at the time of such election a
settlement date with respect to such Award. The Company shall issue to the
Participant as soon as practicable following the earlier of the settlement date
elected by the Participant or the date of termination of the Participant’s
Service, a number of whole shares of Stock equal to the number of whole Stock
Units subject to the Stock Unit Award. Such shares of Stock shall be fully
vested, and the Participant shall not be required to pay any additional
consideration (other than applicable tax withholding) to acquire such shares.
Any fractional Stock Unit subject to the Stock Unit Award shall be settled by
the Company by payment in cash of an amount equal to the Fair Market Value as of
the payment date of such fractional share.

     

    (iii)         Nontransferability of Stock Unit
Awards. Prior to their settlement in accordance with the provision of the
Plan, no Stock Unit Award shall be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or
garnishment by creditors of the Participant or the Participant’s beneficiary,
except transfer by will or by the laws of descent and distribution. All rights
with respect to a Stock Unit Award granted to a Participant hereunder shall be
exercisable during his or her lifetime only by such Participant or the
Participant’s guardian or legal representative.

     

    12.         OTHER
STOCK-BASED AWARDS.

     

    In
addition to the Awards set forth in Sections 6 through 11 above, the Committee,
in its sole discretion, may carry out the purpose of this Plan by awarding
Stock-Based Awards as it determines to be in the best interests of the Company
and subject to such other terms and conditions as it deems necessary and
appropriate.

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

     

    13.         EFFECT OF
CHANGE IN CONTROL ON OPTIONS AND SARS.

     

    13.1         Accelerated Vesting. The
Committee, in its sole discretion, may provide in any Award Agreement or, in the
event of a Change in Control, may take such actions as it deems appropriate to
provide for the acceleration of the exercisability and vesting in connection
with such Change in Control of any or all outstanding Options and SARs and
shares acquired upon the exercise of such Options and SARs upon such conditions
and to such extent as the Committee shall determine. The previous sentence
notwithstanding such acceleration shall not occur to the extent an Option or SAR
is assumed or substituted with a substantially similar Award in connection with
a Change in Control.

     

    13.2         Assumption or Substitution. In
the event of a Change in Control, the surviving, continuing, successor, or
purchasing corporation or other business entity or parent thereof, as the case
may be (the “Acquiring
Corporation”), may, without the consent of the Participant, either assume
the Company’s rights and obligations under outstanding Options and SARs or
substitute for outstanding Options and SARs substantially equivalent options or
stock appreciation rights for the Acquiring Corporation’s stock. Any Options or
SARs which are neither assumed or substituted for by the Acquiring Corporation
in connection with the Change in Control nor exercised as of the date of the
Change in Control shall terminate and cease to be outstanding effective as of
the date of the Change in Control. Notwithstanding the foregoing, shares
acquired upon exercise of an Option or SAR prior to the Change in Control and
any consideration received pursuant to the Change in Control with respect to
such shares shall continue to be subject to all applicable provisions of the
Award Agreement evidencing such Award except as otherwise provided in such Award
Agreement. Furthermore, notwithstanding the foregoing, if the corporation the
stock of which is subject to the outstanding Options or SARs immediately prior
to an Ownership Change Event described in Section 2.1(y)(i) constituting a
Change in Control is the surviving or continuing corporation and immediately
after such Ownership Change Event less than fifty percent (50%) of the total
combined voting power of its voting stock is held by another corporation or by
other corporations that are members of an affiliated group within the meaning of
Section 1504(a) of the Code without regard to the provisions of
Section 1504(b) of the Code, the outstanding Options and SARs shall not
terminate unless the Board otherwise provides in its discretion.

     

    13.3         Effect of Change in Control on
Restricted Stock and Other Type of Awards. The Committee may, in its
discretion, provide in any Award Agreement evidencing a Restricted Stock or
Other Type of Award that, in the event of a Change in Control, the lapsing of
any applicable Vesting Condition, Restriction Period or Performance Goal
applicable to the shares subject to such Award held by a Participant whose
Service has not terminated prior to the Change in Control shall be accelerated
and/or waived effective immediately prior to the consummation of the Change in
Control to such extent as specified in such Award Agreement; provided, however,
that such acceleration or waiver shall not occur to the extent an Award is
assumed or substituted with a substantially equivalent Award in connection with
the Change in Control. Any acceleration, waiver or the lapsing of any
restriction that was permissible solely by reason of this Section 13.3 and
the provisions of such Award Agreement shall be conditioned upon the
consummation of the Change in Control. 

     

    14.         COMPLIANCE
WITH SECURITIES LAW.

     

    The grant
of Awards and the issuance of shares of Stock pursuant to any Award shall be
subject to compliance with all applicable requirements of federal, state and
foreign law with respect to such securities and the requirements of any stock
exchange or market system upon which the Stock may then be listed. In addition,
no Award may be exercised or shares issued pursuant to an Award unless
(a) a registration statement under the Securities Act shall at the time of
such exercise or issuance be in effect with respect to the shares issuable
pursuant to the Award or (b) in the opinion of legal counsel to the
Company, the shares issuable pursuant to the Award may be issued in accordance
with the terms of an applicable exemption from the registration requirements of
the Securities Act. The inability of the Company to obtain from any regulatory
body having jurisdiction the authority, if any, deemed by the Company’s legal
counsel to be necessary to the lawful issuance and sale of any shares hereunder
shall relieve the Company of any liability in respect of the failure to issue or
sell such shares as to which such requisite authority shall not have been
obtained. As a condition to issuance of any Stock, the Company may require the
Participant to satisfy any qualifications that may be necessary or appropriate,
to evidence compliance with any applicable law or regulation and to make any
representation or warranty with respect thereto as may be requested by the
Company.

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

     

    15.         TAX
WITHHOLDING.

     

    15.1          Tax Withholding in General.
The Company shall have the right to deduct from any and all payments made under
the Plan, or to require the Participant, through payroll withholding, cash
payment or otherwise, including by means of a Cashless Exercise or Net Exercise
of an Option, to make adequate provision for, the federal, state, local and
foreign taxes, if any, required by law to be withheld by the Participating
Company Group with respect to an Award or the shares acquired pursuant thereto.
The Company shall have no obligation to deliver shares of Stock, to release
shares of Stock from an escrow established pursuant to an Award Agreement, or to
make any payment in cash under the Plan until the Participating Company Group’s
tax withholding obligations have been satisfied by the Participant.

     

    15.2          Withholding in Shares. The
Company shall have the right, but not the obligation, to deduct from the shares
of Stock issuable to a Participant upon the exercise or settlement of an Award,
or to accept from the Participant the tender of, a number of whole shares of
Stock having a Fair Market Value, as determined by the Company, equal to all or
any part of the tax withholding obligations of the Participating Company Group.
The Fair Market Value of any shares of Stock withheld or tendered to satisfy any
such tax withholding obligations shall not exceed the amount determined by the
applicable minimum statutory withholding rates.

     

    16.         AMENDMENT
OR TERMINATION OF PLAN.

     

    The Board
or the Committee may amend, suspend or terminate the Plan at any time. However,
without the approval of the Company’s stockholders, there shall be (a) no
increase in the maximum aggregate number of shares of Stock that may be issued
under the Plan (except by operation of the provisions of Section 4.2),
(b) no change in the class of persons eligible to receive Incentive Stock
Options, and (c) no other amendment of the Plan that would require approval
of the Company’s stockholders under any applicable law, regulation or rule. No
amendment, suspension or termination of the Plan shall affect any then
outstanding Award unless expressly provided by the Board or the Committee. In
any event, no amendment, suspension or termination of the Plan may adversely
affect any then outstanding Award without the consent of the Participant unless
necessary to comply with any applicable law, regulation or rule.

     

    17.         MISCELLANEOUS
PROVISIONS.

     

    17.1         Repurchase Rights. Shares issued under the
Plan may be subject to one or more repurchase options, or other conditions and
restrictions as determined by the Committee in its discretion at the time the
Award is granted. The Company shall have the right to assign at any time any
repurchase right it may have, whether or not such right is then exercisable, to
one or more persons as may be selected by the Company. Upon request by the
Company, each Participant shall execute any agreement evidencing such transfer
restrictions prior to the receipt of shares of Stock hereunder and shall
promptly present to the Company any and all certificates representing shares of
Stock acquired hereunder for the placement on such certificates of appropriate
legends evidencing any such transfer restrictions.

     

    17.2         Provision of Information. Each
Participant shall be given access to information concerning the Company
equivalent to that information generally made available to the Company’s common
stockholders.

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

     

    17.3         Rights as Employee, Consultant or
Director. No person, even though eligible pursuant to Section 5,
shall have a right to be selected as a Participant, or, having been so selected,
to be selected again as a Participant. Nothing in the Plan or any Award granted
under the Plan shall confer on any Participant a right to remain an Employee,
Consultant or Director or interfere with or limit in any way any right of a
Participating Company to terminate the Participant’s Service at any time. To the
extent that an Employee of a Participating Company other than the Company
receives an Award under the Plan, that Award shall in no event be understood or
interpreted to mean that the Company is the Employee’s employer or that the
Employee has an employment relationship with the Company.

     

    17.4         Rights as a Stockholder. A
Participant shall have no rights as a stockholder with respect to any shares
covered by an Award until the date of the issuance of such shares (as evidenced
by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company). No adjustment shall be made for dividends,
distributions or other rights for which the record date is prior to the date
such shares are issued, except as provided in Section 4.2 or another
provision of the Plan.

     

    17.5         Fractional Shares. The Company
shall not be required to issue fractional shares upon the exercise or settlement
of any Award.

     

    17.6         Severability. If any one or
more of the provisions (or any part thereof) of this Plan shall be held invalid,
illegal or unenforceable in any respect, such provision shall be modified so as
to make it valid, legal and enforceable, and the validity, legality and
enforceability of the remaining provisions (or any part thereof) of the Plan
shall not in any way be affected or impaired thereby.

     

    17.7         Beneficiary Designation.
Subject to local laws and procedures, each Participant may file with the Company
a written designation of a beneficiary who is to receive any benefit under the
Plan to which the Participant is entitled in the event of such Participant’s
death before he or she receives any or all of such benefit. Each designation
will revoke all prior designations by the same Participant, shall be in a form
prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Company during the Participant’s lifetime. If a
married Participant designates a beneficiary other than the Participant’s
spouse, the effectiveness of such designation may be subject to the consent of
the Participant’s spouse. If a Participant dies without an effective designation
of a beneficiary who is living at the time of the Participant’s death, the
Company will pay any remaining unpaid benefits to the Participant’s legal
representative.

     

    17.8         Unfunded Obligation.
Participants shall have the status of general unsecured creditors of the
Company. Any amounts payable to Participants pursuant to the Plan shall be
unfunded and unsecured obligations for all purposes, including, without
limitation, Title I of the Employee Retirement Income Security Act of 1974.
No Participating Company shall be required to segregate any monies from its
general funds, or to create any trusts, or establish any special accounts with
respect to such obligations. The Company shall retain at all times beneficial
ownership of any investments, including trust investments, which the Company may
make to fulfill its payment obligations hereunder. Any investments or the
creation or maintenance of any trust or any Participant account shall not create
or constitute a trust or fiduciary relationship between the Committee or any
Participating Company and a Participant, or otherwise create any vested or
beneficial interest in any Participant or the Participant’s creditors in any
assets of any Participating Company. The Participants shall have no claim
against any Participating Company for any changes in the value of any assets
which may be invested or reinvested by the Company with respect to the Plan.
Each Participating Company shall be responsible for making benefit payments
pursuant to the Plan on behalf of its Participants or for reimbursing the
Company for the cost of such payments, as determined by the Company in its sole
discretion. In the event the respective Participating Company fails to make such
payment or reimbursement, a Participant’s (or other individual’s) sole recourse
shall be against the respective Participating Company, and not against the
Company. A Participant’s acceptance of an Award pursuant to the Plan shall
constitute agreement with this provision.

    
      
         

      

      
        23

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00181-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00181-of-00352.parquet"}]]