Document:

Exhibit 10.4

 

EXECUTION VERSION

 

MANAGEMENT SERVICES AGREEMENT

 

MANAGEMENT
SERVICES AGREEMENT dated as of January 23, 2007 (this “Agreement”), by and among
Ripplewood Holdings L.L.C., a limited liability company organized under the
laws of the State of Delaware (“Ripplewood”),
GoldenTree Asset Management,
LP, a limited partnership organized under the laws of the State of Delaware (“GoldenTree”), J. Rothschild Group (Guernsey) Ltd., a
company organized under the laws of Guernsey, Channel Islands (“Rothschild” and, together with Ripplewood and
GoldenTree, the “Service
Providers”), RDA Holding
Co., a corporation organized under the laws of the State of Delaware (“Parent”).
Capitalized terms used herein but not otherwise defined shall have the meanings
ascribed to such terms in the Stockholders’ Agreement (as defined below).

 

WHEREAS,
the Parent desires the Service Providers to provide management advisory
services and other services and the Service Providers desire to render such
services to Parent and its subsidiaries (which shall include The Reader’s
Digest Association, Inc. (the “Company”)) in
consideration for a management fee and other compensation as hereinafter
specified; and

 

WHEREAS,
the Service Providers (or their respective Affiliates) and Parent are parties
to the Stockholders Agreement, dated as of January 23, 2007 (the “Stockholders Agreement”), in respect of Parent;

 

NOW,
THEREFORE, in consideration of the mutual agreements set forth herein, the
parties agree as follows:

 

1.   Management Services. Parent hereby engages the Service Providers
to provide management advisory services to Parent and its subsidiaries, as
requested by Parent, which services shall include, without limitation, (i) recommending,
structuring and identifying sources of capital, (ii) monitoring,
evaluating and making recommendations regarding potential acquisitions and (iii) analyzing
the Company’s operations, historical performance and future prospects, in
connection with financial and strategic corporate planning and other management
services as Parent and the Service Providers shall mutually agree
(collectively, the “Management
Services”). In consideration
of the Management Services, until the Termination Date (as defined below),
Parent agrees to pay (or cause the Company to pay) an aggregate quarterly
management fee of $7.5 million (the “Management Fee”)
each January 1, April 1, July 1 and October 1 following the
Closing Date to the Service Providers (or their respective designees) pro rata
in accordance with the percentage listed for each Service Provider on Annex A, as such percentage
shall be adjusted from time to time (including as of the Closing Date) to
reflect any subsequent changes to the relative percentages among the Service
Providers (and their respective Affiliates) of outstanding Stock (excluding
Stock Equivalents) held by the parties (and their Affiliates). The first
payment shall be payable on the Closing Date, and shall be a pro rata portion
of the Management Fee, calculated by taking the product of (A) the
Management Fee and (B) a fraction, the numerator of
which

 

 

shall
be the number of days from the Closing Date to the last day of the month prior
to the month beginning a new quarter, inclusive, and the denominator of which
shall be the total number of days in the applicable full quarter, inclusive
(and each Service Provider shall receive its pro rata portion of such payment
in accordance with the immediately preceding sentence). Thereafter, commencing
on each January 1, April 1, July 1 and October 1, Parent
shall pay (or cause the Company to pay) to each Service Provider its pro rata
portion of the Management Fee in respect of the quarterly period commencing on
such date; provided, however, that the final payment shall be paid promptly following the
Termination Date and shall be a pro rata portion of the Management Fee,
calculated by taking the product of (A) the Management Fee and (B) a
fraction, the numerator of which shall be the number of days from the first day
of the month beginning the quarter in which the Termination Date occurs to the
Termination Date, inclusive, and the denominator of which shall be the total
number of days in the applicable full quarter, inclusive (and each Service
Provider shall receive its pro rata portion of such payment in accordance with
the second sentence of this Section 1). The Management Fee shall be paid
in cash in immediately available funds to the account of each Service Provider
provided to Parent in writing by such Service Provider. Five days prior to any
such payment, Parent shall give each Service Provider notice of such impending
payment, together with a reasonably detailed calculation thereof.

 

2.     Expenses. In addition to the Management Fee, Parent shall pay (or cause the
Company to pay) directly or reimburse the Service Providers for their Out-of-Pocket
Expenses (as defined below). Promptly following Parent’s request, the Service
Providers shall provide reasonable written back-up relating to any
Out-of-Pocket Expenses to be paid or reimbursed by Parent pursuant to this
Agreement. For the purposes of this Agreement, the term “Out-of-Pocket
Expenses” shall mean the reasonable out-of-pocket costs and expenses
incurred by the Service Providers in connection with the services rendered
hereunder, including, without limitation, (i) reasonable fees and
disbursements of any independent professionals and organizations, including
independent accountants, outside legal counsel or consultants, (ii) costs
of any outside services or independent contractors such as financial printers,
couriers, business publications, on-line financial services or similar
services, (iii) research and research-related expenses and (iv) transportation,
hotel and other per diem costs, word processing expenses or any similar expense
not associated with its ordinary operations. All reimbursements for
Out-of-Pocket Expenses shall be made promptly upon or as soon as practicable
after presentation by the Service Providers to Parent of a written statement
thereof.

 

3.     Other Services; Fees. Subject to Section 8(b) of the Stockholders
Agreement, to the extent that Parent requests services other than Management
Services from a Service Provider, Parent and such Service Provider may
negotiate from time to time mutually agreed upon fees and expenses to be paid
by Parent for such other services, and such other services shall be deemed to
be provided under this Agreement.

 

4.     Indemnification. Parent shall (or shall cause the Company
to) indemnify and hold harmless the Service Providers and their respective
affiliates, shareholders and partners (both general and limited), members (both
managing and

 

 

otherwise),
officers, directors, employees, agents and representatives (each such person
being an “Indemnified Party”) from and against any and all losses, claims, damages and liabilities
(including, without limitation, losses, claims, damages and liabilities arising
from or in connection with legal actions brought by or on behalf of the holders
or future holders of the outstanding capital stock or securities of Parent or
any of its subsidiaries or creditors or future creditors of Parent or any of
its subsidiaries), whether joint, several or otherwise, expenses of any nature
(including reasonable attorneys’ fees and expenses), judgments, fines,
settlements and other amounts arising from any and all claims, demands,
actions, suits, investigations or proceedings, whether civil, criminal,
administrative, arbitral or investigative, in which an Indemnified Party was
involved or may be involved, or threatened to be involved, as a party or otherwise
(the “Liabilities”),
related to, arising out of or in connection with the services contemplated by
this Agreement or the engagement of the Service Providers pursuant to, and the
performance by the Service Providers of the services contemplated by, this
Agreement (and any other action taken by an Indemnified Party on behalf of
Parent), whether or not pending or threatened, and any other action taken by an
Indemnified Party on behalf of Parent, whether or not resulting in any
liability and whether or not such action, claim, suit, investigation or
proceeding is initiated or brought by Parent. Parent shall (or shall cause the
Company to) reimburse any Indemnified Party for all reasonable costs and
expenses (including reasonable attorneys’ fees and expenses) as they are
incurred in connection with investigating, preparing, pursuing, defending or
assisting in the defense of any action, claim, suit, investigation or
proceeding for which the Indemnified Party would be entitled to indemnification
under the terms of the previous sentence, or any action or proceeding arising
therefrom, whether or not such Indemnified Party is a party thereto. Parent
shall not be liable under the foregoing indemnification provision with respect
to any Indemnified Party, to the extent that any Liability is determined by a
court, in a final judgment from which no further appeal may be taken, to have
resulted primarily from the fraud, gross negligence or willful misconduct of
such Indemnified Party.

 

5.     Contribution. Parent agrees that if any indemnification
sought by any Indemnified Party pursuant to Section 4 is unavailable for
any reason or is insufficient to hold the Indemnified Party harmless against
any Liabilities, then Parent shall (or shall cause the Company to) contribute
to the Liabilities for which such indemnification is held unavailable or
insufficient in such proportion as is appropriate to reflect the relative
benefits received (or anticipated to be received) by Parent, on the one hand,
and the Service Providers, on the other hand, in connection with the
transactions which gave rise to such Liabilities or, if such allocation is not
permitted by applicable law, not only such relative benefits but also the
relative faults of Parent, on the one hand, and the Service Providers, on the
other hand, as well as any other equitable considerations, subject to the
limitation that in any event the aggregate contribution by the Indemnified
Parties to all Liabilities with respect to which contribution is available
hereunder shall not exceed the fees actually received by the Service Providers
in connection with the transaction which gave rise to such Liabilities
(excluding any amounts paid as reimbursement of expenses). The indemnity,
contribution and expense reimbursement obligations Parent has under Sections 4
and 5 shall be in addition to any other liability Parent may have and,
notwithstanding any other provision of this Agreement, shall survive the
termination of this Agreement.

 

 

6.     Binding Agreement.
All of the terms and provisions of this Agreement shall be binding upon, shall
inure to the benefit of, and shall be enforceable by the parties hereto.

 

7.     Amendments. This
Agreement may be amended only by a written instrument duly executed by all of
the parties hereto.

 

8.     Term; Termination. (a) This
Agreement shall terminate on the seventh anniversary of the date of this
Agreement (the “Termination Date”), at which point it may be renewed for
a further seven year term at the election of Ripplewood. This Agreement may be
earlier terminated by Ripplewood if Ripplewood determines in its sole
discretion that the Management Services are no longer required and shall
terminate with respect to any party on the date that such party and its
Affiliates cease to hold any Stock.

 

(b)   Upon the consummation of an Initial Public
Offering (as defined in the Stockholders’ Agreement), or any transaction
involving a change in control of the Company, this Agreement shall terminate
and Parent shall pay (or cause the Company to pay) each Service Provider (or
its designee) a termination fee equal to the net present value of the
Management Fee that would have been payable to such Service Provider during the
remainder of the term of this Agreement, calculated using the yield for ten
year U.S. treasury notes on the date of such termination as the discount rate.

 

9.     Governing Law. This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York applicable to agreements made and to be performed
entirely within such State, without regard to conflict of laws principles of
such State.

 

10.   Consent to Jurisdiction.
Each party hereto irrevocably submits to the exclusive jurisdiction of (i) the
Supreme Court of the State of New York and (ii) the United States District
Court for the Southern District of New York for purposes of any suit, action or
other proceeding arising out of this Agreement. Each party agrees to commence
any such action, suit or proceeding either in the Supreme Court of the State of
New York or the United States District Court for the Southern District of New
York. Each party hereto hereby irrevocably waives, and agrees not to assert, by
way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, any claim that it is not personally
subject to the jurisdiction of the above-named courts for any reason other than
the failure to serve process in accordance with this Section 10, that its
property is exempt or immune from jurisdiction of any such court or from any legal
process commenced in such courts (whether through service of notice, attachment
prior to judgment, attachment in aid of execution of judgment, execution of
judgment or otherwise), and to the fullest extent permitted by applicable law,
that the suit, action or proceeding in any such court is brought in an
inconvenient forum, or that this Agreement, or the subject matter hereof, may
not be enforced in or by such courts and further irrevocably waives, to the
fullest extent permitted by applicable law, the benefit of any defense that
would hinder, fetter or delay the levy, execution or collection of any amount
to which the party is entitled pursuant to the final judgment of any court

 

 

having
jurisdiction. Each party irrevocably consents to the service of process out of
any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered airmail, postage prepaid, to such party
at its address set forth in this Agreement, such service of process to be
effective upon acknowledgement of receipt of such registered mail. Nothing
herein shall affect the right of any party to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
the other party in any other jurisdiction in which the other party may be
subject to suit.

 

11.   Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties. Delivery of an executed
counterpart of a signature page by facsimile transmission shall be
effective as delivery of a manually executed counterpart of this Agreement.

 

12.   Effectiveness of
Agreement.
Notwithstanding anything in this Agreement to the contrary, this Agreement
shall become effective at the Closing and shall terminate and be of no further
effect if the Merger Agreement is terminated in accordance with its terms prior
to the consummation of the Merger.

 

5

 

IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed by their representatives thereunto duly
authorized as of the date first above written.

 

 

	
   

  	
   

  	
  RIPPLEWOOD HOLDINGS L.L.C.,

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  by

  	
  /s/ Christopher Minnetian

  
	
   

  	
   

  	
   

  	
   

  	
    Name:

  	
  Christopher Minnetian

  
	
   

  	
   

  	
   

  	
   

  	
    Title:

  	
  Authorized Signatory

  

 

6

 

	
   

  	
   

  	
  GOLDENTREE ASSET MANAGEMENT,
  LP.,

  
	
   

  	
   

  	
  not in its individual and principal
  capacity, but as

  
	
   

  	
   

  	
  investment advisor to one or
  more managed

  
	
   

  	
   

  	
  funds/clients,

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  by

  	
  /s/ Steven Shapiro

  
	
   

  	
   

  	
   

  	
   

  	
    Name:

  	
  Steven Shapiro

  
	
   

  	
   

  	
   

  	
   

  	
    Title:

  	
  Partner /Portfolio Manager

  

 

7

 

	
   

  	
   

  	
  J. ROTHSCHILD GROUP (GUERNSEY) LTD.,

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  by

  	
  /s/ Mark Le Ray

  
	
   

  	
   

  	
   

  	
   

  	
    Name:

  	
  Mark Le Ray

  
	
   

  	
   

  	
   

  	
   

  	
    Title:

  	
  Director

  

 

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  RDA
  HOLDING CO.,

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  by

  	
  /s/ Christopher Minnetian

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Christopher Minnetian

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  PresidentExhibit 10.14

 

RDA HOLDING CO.

2007 OMNIBUS INCENTIVE COMPENSATION PLAN

 

SECTION 1.  Purpose.  The purpose of this RDA Holding Co.
2007 Omnibus Incentive Compensation Plan is to promote the interests of
RDA Holding Co., a Delaware corporation (the “Company”), and its
stockholders by (a) attracting and retaining exceptional directors,
officers, employees and consultants (including prospective directors, officers,
employees and consultants) of the Company and its Affiliates (as defined below)
and (b) enabling such individuals to participate in the long-term growth
and financial success of the Company.

 

SECTION 2.  Definitions.  As used herein, the following terms shall
have the meanings set forth below:

 

“Affiliate” means, with
respect to any entity, (a) any other entity that, directly or indirectly,
is controlled by, controls or is under common control with, such entity and (b) any
other entity in which such entity has a significant equity interest, in either
case as determined by the Board.

 

“Award” means any award
that is permitted under Section 6 and granted under the Plan.

 

“Award Agreement” means
any written agreement, contract or other instrument or document evidencing any
Award, which may, but need not, require execution or acknowledgment by a
Participant.

 

“Board” means the Board
of Directors of the Company.

 

“Code” means the
Internal Revenue Code of 1986, as amended from time to time, and the
regulations promulgated thereunder.

 

“Exchange Act” means the
Securities Exchange Act of 1934, as amended, or any successor statute thereto.

 

“Exercise Price” means (a) in
the case of Options, the price specified in the applicable Award Agreement as
the price per Share at which Shares may be purchased pursuant to such Option or
(b) in the case of SARs, the price specified in the applicable Award
Agreement as the reference price per Share used to calculate the amount payable
to the Participant.

 

“Fair Market Value”
means, except as otherwise provided in an Award Agreement, (a) with
respect to any property other than Shares, the fair market value of such
property determined by such methods or procedures as shall be established from
time to time by the Board and (b) with respect to the Shares, as of any
date, (i) the closing per share sales price of the Shares as reported
on any national securities exchange on which the Shares are traded or
inter-dealer quotation system on which the Shares are quoted, as reported on
the stock exchange composite tape for Shares traded on such stock exchange or
inter-dealer quotation system for such date or, if there were no sales on such

 

 

date, on the
closest preceding date on which there were sales of Shares or (ii) in the
event that the Shares are not so traded or quoted on such date, the fair market
value of the Shares as determined in good faith by the Board.

 

“Incentive Stock Option”
means an option to purchase Shares from the Company that (a) is granted
under Section 6 and (b) is intended to qualify for special Federal
income tax treatment pursuant to Sections 421 and 422 of the Code, as now
constituted or subsequently amended, or pursuant to a successor provision of
the Code, and which is so designated in the applicable Award Agreement.

 

“IPO” means the initial
bona fide underwritten public offering and sale of Shares pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(other than a public offering pursuant to a registration statement on Form S-4
or S-8 or any similar or successor form) that results in the listing of the
Shares on a United States national securities exchange or the quotation of the
Shares on a United States inter-dealer quotation system.

 

“IRS” means the Internal
Revenue Service or any successor thereto and includes the staff thereof.

 

“Nonqualified Stock Option”
means an option to purchase Shares from the Company that (a) is granted
under Section 6 and (b) is not an Incentive Stock Option.

 

“Option” means an
Incentive Stock Option or a Nonqualified Stock Option or both, as the context
requires.

 

“Participant” means any
director, officer, employee or consultant (including any prospective director,
officer, employee or consultant) of the Company or one of its Affiliates who is
eligible for an Award under Section 5 and who is selected by the Board to
receive an Award under the Plan or who receives a Substitute Award pursuant to Section 4(c).

 

“Plan” means this RDA
Holding Co. 2007 Omnibus Incentive Compensation Plan, as in effect from time to
time.

 

“Restricted Share” means
a Share delivered under the Plan that is subject to certain transfer
restrictions, forfeiture provisions and/or other terms and conditions specified
herein and in the applicable Award Agreement.

 

“RSU” means a restricted
stock unit Award that is designated as such in the applicable Award Agreement
and that represents an unfunded and unsecured promise to deliver Shares, cash,
other securities, other Awards or other property in accordance with the terms
of the applicable Award Agreement.

 

“SAR” means a stock
appreciation right Award that represents an unfunded and unsecured promise to
deliver Shares, cash, other securities, other Awards or other property equal in
value to the excess, if any, of the Fair Market Value per Share 

 

2

 

over the
Exercise Price per Share of the SAR, subject to the terms of the applicable
Award Agreement.

 

“Shares” means shares of
common stock of the Company, par value $1.00 per share, or such other
securities of the Company (a) into which such shares shall be changed by
reason of a recapitalization, merger, consolidation, split-up, combination,
exchange of shares or other similar transaction or (b) as may be
determined by the Board pursuant to Section 4(b).

 

“Substitute Awards”
shall have the meaning specified in Section 4(c).

 

SECTION 3.  Administration.  (a)  Composition of Board.  The Plan shall be administered by the Board; provided
that after the date of the consummation of an initial public offering of
Shares, the Plan shall be administered by a committee, all of whom shall meet
the independence requirements of any national securities exchange or
inter-dealer quotation system on which the Shares may be traded or quoted, and
references herein (and in any Award Agreement) to the Board shall be deemed to
refer to such committee, as appropriate.

 

(b)  Authority of
Board.  Except as otherwise provided
in an applicable Award Agreement, subject to the terms of the Plan and
applicable law, and in addition to other express powers and authorizations
conferred on the Board by the Plan, the Board shall have sole and plenary
authority to administer the Plan, including, but not limited to, the authority
to (i) designate Participants, (ii) determine the type or types of
Awards to be granted to a Participant, (iii) determine the number of
Shares to be covered by, or with respect to which payments, rights or other
matters are to be calculated in connection with, Awards, (iv) determine
the terms and conditions of any Awards, (v) determine the vesting
schedules of Awards and, if certain performance criteria must be attained in
order for an Award to vest or be settled or paid, establish such performance
criteria and certify whether, and to what extent, such performance criteria
have been attained, (vi) determine whether, to what extent and under what
circumstances Awards may be settled or exercised in cash, Shares, other
securities, other Awards or other property, or canceled, forfeited or suspended
and the method or methods by which Awards may be settled, exercised, canceled,
forfeited or suspended, (vii) determine whether, to what extent and under
what circumstances cash, Shares, other securities, other Awards, other property
and other amounts payable with respect to an Award shall be deferred either
automatically or at the election of the holder thereof or of the Board, (viii) interpret,
administer, reconcile any inconsistency in, correct any default in and supply
any omission in, the Plan and any instrument or agreement relating to, or Award
made under, the Plan, (ix) establish, amend, suspend or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan, (x) accelerate the vesting or exercisability
of, payment for or lapse of restrictions on, Awards, (xi) amend an
outstanding Award or grant a replacement Award for an Award previously granted
under the Plan if, in its sole discretion, the Board determines that (A) the
tax consequences of such Award to the Company or the Participant differ from
those consequences that were expected to occur on the date the Award was
granted or (B) clarifications
or interpretations of, or changes to, tax law or regulations permit Awards to
be granted that 

 

3

 

have more favorable tax
consequences than initially anticipated and (xii) make any other
determination and take any other action that the Board deems necessary or
desirable for the administration of the Plan.

 

(c)  Board Decisions.  Unless otherwise expressly provided in the
Plan or applicable Award Agreement, all designations, determinations,
interpretations and other decisions under or with respect to the Plan or any
Award shall be within the sole and plenary discretion of the Board, may be made
at any time and shall be final, conclusive and binding upon all persons,
including the Company, any of its Affiliates, any Participant, any holder or
beneficiary of any Award and any stockholder.

 

(d)  Indemnification.  No member of the Board or the Board or any
employee of the Company (each such person, a “Covered Person”) shall be
liable for any action taken or omitted to be taken or any determination made in
good faith with respect to the Plan or any Award hereunder.  Each Covered Person shall be indemnified and
held harmless by the Company against and from (i) any loss, cost,
liability or expense (including attorneys’ fees) that may be imposed upon or
incurred by such Covered Person in connection with or resulting from any
action, suit or proceeding to which such Covered Person may be a party or in
which such Covered Person may be involved by reason of any action taken or
omitted to be taken under the Plan or any Award Agreement and (ii) any and
all amounts paid by such Covered Person, with the Company’s approval, in
settlement thereof, or paid by such Covered Person in satisfaction of any
judgment in any such action, suit or proceeding against such Covered Person; provided
that the Company shall have the right, at its own expense, to assume and defend
any such action, suit or proceeding, and, once the Company gives notice of its
intent to assume the defense, the Company shall have sole control over such
defense with counsel of the Company’s choice. 
The foregoing right of indemnification shall not be available to a
Covered Person to the extent that a court of competent jurisdiction in a final
judgment or other final adjudication, in either case not subject to further
appeal, determines that the acts or omissions of such Covered Person giving
rise to the indemnification claim resulted from such Covered Person’s bad
faith, fraud or willful criminal act or omission or that such right of
indemnification is otherwise prohibited by law or by the Company’s Certificate
of Incorporation or Bylaws.  The
foregoing right of indemnification shall not be exclusive of any other rights
of indemnification to which Covered Persons may be entitled under the Company’s
Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or
any other power that the Company may have to indemnify such persons or hold
them harmless.

 

(e)  Delegation of
Authority to Senior Officers.  The
Board may delegate, on such terms and conditions as it determines in its sole
and plenary discretion, to one or more senior officers of the Company the
authority to make grants of Awards to officers (other than executive officers),
employees and consultants of the Company and its Affiliates (including any
prospective officer, employee or consultant) and all necessary and appropriate
decisions and determinations with respect thereto.

 

SECTION 4.  Shares Available for Awards.  (a)  Shares Available.  Subject to adjustment as provided in Section 4(b),
the aggregate number of Shares that 

 

4

 

may be delivered pursuant to Awards granted
under the Plan shall be 4,988,047 of which the maximum number of Shares that
may be delivered pursuant to Incentive Stock Options granted under the Plan
shall be 1,192,812.  If, after the
effective date of the Plan, any Award granted under the Plan is forfeited, or
otherwise expires, terminates or is canceled without the delivery of Shares,
then the Shares covered by such forfeited, expired, terminated or canceled
Award shall again become available to be delivered pursuant to Awards under the
Plan.  If Shares issued upon exercise,
vesting or settlement of an Award, or Shares owned by a Participant (which are
not subject to any pledge or other security interest), are surrendered or
tendered to the Company in payment of the Exercise Price of an Award or any
taxes required to be withheld in respect of an Award, in each case, in
accordance with the terms and conditions of the Plan and any applicable Award
Agreement, such surrendered or tendered Shares shall again become available to
be delivered pursuant to Awards under the Plan; provided, however,
that in no event shall such Shares increase the number of Shares that may be
delivered pursuant to Incentive Stock Options granted under the Plan.

 

(b)  Adjustments for
Changes in Capitalization and Similar Events.  (i)  In the event of any extraordinary dividend
or other extraordinary distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, split-up or spin-off, the Board shall, in order to preserve the value of
the Award and in the manner determined by the Board, adjust any or all of (A) the
number of Shares or other securities of the Company (or number and kind of
other securities or property) with respect to which Awards may be granted,
including (1) the aggregate number of Shares that may be delivered
pursuant to Awards granted under the Plan, as provided in Section 4(a) and
(2) the maximum number of Shares or other securities of the Company (or
number and kind of other securities or property) with respect to which Awards may
be granted to any Participant in any fiscal year of the Company and (B) the
terms of any outstanding Award, including (1) the number of Shares or
other securities of the Company (or number and kind of other securities or
property) subject to outstanding Awards or to which outstanding Awards relate
and (2) the Exercise Price with respect to any Award.

 

(ii)  In the event that
the Board determines that any reorganization, merger, consolidation,
combination, repurchase or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Board in its
discretion to be appropriate or desirable, then the Board may (A) in such
manner as it may deem equitable or desirable, adjust any or all of (I) the
number of Shares or other securities of the Company (or number and kind of
other securities or property) with respect to which Awards may be granted,
including the aggregate number of Shares that may be delivered pursuant to
Awards granted under the Plan, as provided in Section 4(a), and (II) the
terms of any outstanding Award, including (x) the number of Shares or
other securities of the Company (or number and kind of other securities or
property) subject to outstanding Awards or to which outstanding Awards relate
and (y) the Exercise Price with respect to any Award, (B) if deemed
appropriate or desirable by the Board, make provision for a cash payment to the
holder of an outstanding Award in consideration for the cancelation 

 

5

 

of such Award, including, in the case of an
outstanding Option or SAR, a cash payment to the holder of such Option or SAR
in consideration for the cancelation of such Option or SAR in an amount equal
to the excess, if any, of the Fair Market Value (as of a date specified by the
Board) of the Shares subject to such Option or SAR over the aggregate Exercise
Price of such Option or SAR and (C) if deemed appropriate or desirable by
the Board, cancel and terminate any Option or SAR having a per Share Exercise
Price equal to, or in excess of, the Fair Market Value of a Share subject to
such Option or SAR without any payment or consideration therefor.

 

(c)  Substitute Awards.  Awards may, in the discretion of the Board,
be granted under the Plan in assumption of, or in substitution for, outstanding
awards previously granted by the Company or any of its Affiliates or a company
acquired by the Company or any of its Affiliates or with which the Company or
any of its Affiliates combines (“Substitute Awards”).  The number of Shares underlying any
Substitute Awards shall be counted against the aggregate number of Shares available
for Awards under the Plan; provided, however, that Substitute
Awards issued in connection with the assumption of, or in substitution for,
outstanding awards previously granted by an entity that is acquired by the
Company or any of its Affiliates or with which the Company or any of its
Affiliates combines shall not be counted against the aggregate number of Shares
available for Awards under the Plan; provided further, however,
that Substitute Awards issued in connection with the assumption of, or in substitution
for, outstanding stock options intended to qualify for special tax treatment
under Sections 421 and 422 of the Code that were previously granted by an
entity that is acquired by the Company or any of its Affiliates or with which
the Company or any of its Affiliates combines shall be counted against the
aggregate number of Shares available for Incentive Stock Options under the
Plan.

 

(d)  Sources of Shares
Deliverable Under Awards.  Any Shares
delivered pursuant to an Award may consist, in whole or in part, of authorized
and unissued Shares or of treasury Shares.

 

SECTION 5.  Eligibility.  Any director, officer, employee or consultant
(including any prospective director, officer, employee or consultant) of the
Company or any of its Affiliates shall be eligible to be designated a
Participant.

 

SECTION 6.  Awards.  (a)  Types of Awards.  Awards may be made under the Plan in the form
of (i) Options, (ii) SARs, (iii) Restricted Shares, (iv) RSUs
and  (v) other equity-based or
equity-related Awards that the Board determines are consistent with the purpose
of the Plan and the interests of the Company. 
Awards may be granted in tandem with other Awards.  No Incentive Stock Option (other than an
Incentive Stock Option that may be assumed or issued by the Company in
connection with a transaction to which Section 424(a) of the Code
applies) may be granted to a person who is ineligible to receive an Incentive
Stock Option under the Code.

 

(b)  Options.  (i)  Grant.  Subject to the provisions of the Plan, the Board
shall have sole and plenary authority to determine the Participants to whom
Options shall be granted, the number of Shares to be covered by each Option,
whether the Option will 

 

6

 

be an Incentive Stock Option or a
Nonqualified Stock Option and the conditions and limitations applicable to the
vesting and exercise of the Option.  In
the case of Incentive Stock Options, the terms and conditions of such grants
shall be subject to and comply with such rules as may be prescribed by Section 422
of the Code and any regulations related thereto, as may be amended from time to
time.  All Options granted under the Plan
shall be Nonqualified Stock Options unless the applicable Award Agreement
expressly states that the Option is intended to be an Incentive Stock
Option.  If an Option is intended to be
an Incentive Stock Option, and if for any reason such Option (or any portion
thereof) shall not qualify as an Incentive Stock Option, then, to the extent of
such nonqualification, such Option (or portion thereof) shall be regarded as a
Nonqualified Stock Option appropriately granted under the Plan; provided
that such Option (or portion thereof) otherwise complies with the Plan’s
requirements relating to Nonqualified Stock Options.

 

(ii)  Exercise Price.  Except as otherwise established by the Board
at the time an Option is granted and set forth in the applicable Award
Agreement, the Exercise Price of each Share covered by an Option shall be not
less than 100% of the Fair Market Value of such Share (determined as of the
date the Option is granted); provided, however, that (A) except
as otherwise established by the Board at the time an Option is granted and set
forth in the applicable Award Agreement, the Exercise Price of each Share
covered by an Option that is granted effective as of the Company’s IPO shall be
the  price per Share paid by the initial
purchasers in the IPO and (B) in the case of an Incentive Stock Option
granted to an employee who, at the time of the grant of such Option, owns stock
representing more than 10% of the voting power of all classes of stock of the
Company or any of its Affiliates, the per Share Exercise Price shall be no less
than 110% of the Fair Market Value per Share on the date of the grant.

 

(iii)  Vesting and
Exercise.  Each Option shall be
vested and exercisable at such times, in such manner and subject to such terms
and conditions as the Board may, in its sole and plenary discretion, specify in
the applicable Award Agreement or thereafter. 
Except as otherwise specified by the Board in the applicable Award
Agreement, an Option may only be exercised to the extent that it has already
vested at the time of exercise.  Except
as otherwise specified by the Board in the Award Agreement, Options shall
become vested and exercisable with respect to one-fourth of the Shares subject
to such Options on each of the first four anniversaries of the date of
grant.  An Option shall be deemed to be
exercised when written or electronic notice of such exercise has been given to
the Company in accordance with the terms of the Award by the person entitled to
exercise the Award and full payment pursuant to Section 6(b)(iv) for
the Shares with respect to which the Award is exercised has been received by
the Company.  Exercise of an Option in
any manner shall result in a decrease in the number of Shares that thereafter
may be available for sale under the Option and, except as expressly set forth
in Section 4(c), in the number of Shares that may be available for
purposes of the Plan, by the number of Shares as to which the Option is
exercised.  The Board may impose such
conditions with respect to the exercise of Options, including, without
limitation, any relating to the application of Federal or state securities
laws, as it may deem necessary or advisable.

 

7

 

(iv)  Payment.  (A)  No Shares shall be delivered
pursuant to any exercise of an Option until payment in full of the aggregate
Exercise Price therefor is received by the Company, and the Participant has
paid to the Company an amount equal to any Federal, state, local and foreign
income and employment taxes required to be withheld.  Except as otherwise provided in an applicable
Award Agreement, such payments may be made in cash (or its equivalent) or, in
the Board’s sole and plenary discretion, (1) by exchanging Shares owned by
the Participant (which are not the subject of any pledge or other security
interest) or (2) if there shall be a public market for the Shares at such
time, subject to such rules as may be established by the Board, through
delivery of irrevocable instructions to a broker to sell the Shares otherwise
deliverable upon the exercise of the Option and to deliver promptly to the
Company an amount equal to the aggregate Exercise Price, or by a combination of
the foregoing; provided that the combined value of all cash and cash
equivalents and the Fair Market Value of any such Shares so tendered to the
Company as of the date of such tender is at least equal to such aggregate
Exercise Price and the amount of any Federal, state, local or foreign income or
employment taxes required to be withheld.

 

(B)  Wherever in the Plan
or any Award Agreement a Participant is permitted to pay the Exercise Price of
an Option or taxes relating to the exercise of an Option by delivering Shares,
the Participant may, subject to procedures satisfactory to the Board, satisfy
such delivery requirement by presenting proof of beneficial ownership of such
Shares, in which case the Company shall treat the Option as exercised without
further payment and shall withhold such number of Shares from the Shares
acquired by the exercise of the Option.

 

(v)  Expiration.  Each Option shall expire immediately, without
any payment, upon the earlier of (A) the tenth anniversary of the date the
Option is granted and (B) the date set forth in the applicable Award
Agreement.  In no event may an Option be
exercisable after the tenth anniversary of the date the Option is granted.

 

(c)  SARs.  (i)  Grant.  Subject to the provisions of the Plan, the
Board shall have sole and plenary authority to determine the Participants to
whom SARs shall be granted, the number of Shares to be covered by each SAR, the
Exercise Price thereof and the conditions and limitations applicable to the
exercise thereof.  SARs may be granted in
tandem with another Award, in addition to another Award or freestanding and
unrelated to another Award.  SARs granted
in tandem with, or in addition to, an Award may be granted either at the same
time as the Award or at a later time.

 

(ii)  Exercise Price.  Except as otherwise established by the Board
at the time a SAR is granted and set forth in the applicable Award Agreement,
the Exercise Price of each Share covered by a SAR shall be not less than 100%
of the Fair Market Value of such Share (determined as of the date the SAR is
granted).

 

(iii)  Exercise.  A SAR shall entitle the Participant to
receive an amount equal to the excess, if any, of the Fair Market Value of a
Share on the date of exercise of the SAR over the Exercise Price thereof.  The Board shall determine, in its sole and 

 

8

 

plenary discretion, whether a SAR shall be
settled in cash, Shares, other securities, other Awards, other property or a
combination of any of the foregoing.

 

(iv)  Other Terms and
Conditions.  Subject to the terms of
the Plan and any applicable Award Agreement, the Board shall determine, at or
after the grant of a SAR, the vesting criteria, term, methods of exercise, methods
and form of settlement and any other terms and conditions of any SAR.  Any such determination by the Board may be
changed by the Board from time to time and may govern the exercise of SARs
granted or exercised thereafter.  The
Board may impose such conditions or restrictions on the exercise of any SAR as
it shall deem appropriate or desirable.

 

(d)  Restricted Shares
and RSUs.  (i)  Grant.  Subject to the provisions of the Plan, the
Board shall have sole and plenary authority to determine the Participants to
whom Restricted Shares and RSUs shall be granted, the number of Restricted
Shares and RSUs to be granted to each Participant, the duration of the period
during which, and the conditions, if any, under which, the Restricted Shares
and RSUs may vest or may be forfeited to the Company and the other terms and
conditions of such Awards.

 

(ii)  Transfer
Restrictions.  Restricted Shares and
RSUs may not be sold, assigned, transferred, pledged or otherwise encumbered
except as provided in the Plan or as may be provided in the applicable Award
Agreement; provided, however, that the Board may in its
discretion determine that Restricted Shares and RSUs may be transferred by the
Participant.  Certificates issued in
respect of Restricted Shares shall be registered in the name of the Participant
and deposited by such Participant, together with a stock power endorsed in
blank, with the Company or such other custodian as may be designated by the
Board or the Company, and shall be held by the Company or other custodian, as
applicable, until such time as the restrictions applicable to such Restricted
Shares lapse.  Upon the lapse of the
restrictions applicable to such Restricted Shares, the Company or other
custodian, as applicable, shall deliver such certificates to the Participant or
the Participant’s legal representative.

 

(iii)  Payment/Lapse of
Restrictions.  Each RSU shall be
granted with respect to one Share or shall have a value equal to the Fair
Market Value of one Share.  RSUs shall be
paid in cash, Shares, other securities, other Awards or other property, as
determined in the sole and plenary discretion of the Board, upon the lapse of
restrictions applicable thereto, or otherwise in accordance with the applicable
Award Agreement.

 

(e)  Other Stock-Based
Awards.  Subject to the provisions of
the Plan, the Board shall have the sole and plenary authority to grant to
Participants other equity-based or equity-related Awards (including, but not
limited to, fully-vested Shares) in such amounts and subject to such terms and
conditions as the Board shall determine.

 

(f)  Dividend
Equivalents.  In the sole and plenary
discretion of the Board, an Award, other than an Option or SAR, may provide the
Participant with dividends or dividend equivalents, payable in cash, Shares, other
securities, other Awards or other property, on a current or deferred basis, on
such terms and conditions as may be determined by the Board in its sole and
plenary discretion, including, without limitation, 

 

9

 

payment directly to the Participant,
withholding of such amounts by the Company subject to vesting of the Award or
reinvestment in additional Shares, Restricted Shares or other Awards.

 

SECTION 7.  Amendment and Termination.  (a)  Amendments to the Plan.  Subject to any applicable law or government
regulation and to the rules of any national securities exchange or
inter-dealer quotation system on which the Shares may be traded or quoted, the
Plan may be amended, modified or terminated by the Board without the approval
of the stockholders of the Company except that stockholder approval shall be
required for any amendment that would (i) increase the maximum number of
Shares for which Awards may be granted under the Plan or increase the maximum
number of Shares that may be delivered pursuant to Incentive Stock Options
granted under the Plan; provided, however, that any adjustment
under Section 4(b) shall not constitute an increase for purposes of
this Section 7(a) or (ii) change the class of employees or other
individuals eligible to participate in the Plan.  No modification, amendment or termination of
the Plan may, without the consent of the Participant to whom any Award shall
theretofor have been granted, materially and adversely affect the rights of such
Participant (or his or her transferee) under such Award, unless otherwise
provided by the Board in the applicable Award Agreement.

 

(b)  Amendments to
Awards.  The Board may waive any
conditions or rights under, amend any terms of, or alter, suspend, discontinue,
cancel or terminate any Award theretofor granted, prospectively or
retroactively; provided, however, that, except as set forth in
the Plan, unless otherwise provided by the Board in the applicable Award
Agreement, any such waiver, amendment, alteration, suspension, discontinuance,
cancelation or termination that would materially and adversely impair the
rights of any Participant or any holder or beneficiary of any Award theretofor
granted shall not to that extent be effective without the consent of the
impaired Participant, holder or beneficiary.

 

(c)  Adjustment of
Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events.  Except as otherwise provided in an applicable
Award Agreement, the Board is hereby authorized to make adjustments in the
terms and conditions of, and the criteria included in, Awards in recognition of
unusual or nonrecurring events (including, without limitation, the events
described in Section 4(b)) affecting the Company, any of its Affiliates,
or the financial statements of the Company or any of its Affiliates, or of
changes in applicable rules, rulings, regulations or other requirements of any
governmental body or securities exchange, accounting principles or law (i) whenever
the Board, in its sole and plenary discretion, determines that such adjustments
are appropriate or desirable, including, without limitation, providing for a
substitution or assumption of Awards, accelerating the exercisability of, lapse
of restrictions on, or termination of, Awards or providing for a period of time
for exercise prior to the occurrence of such event, (ii) if deemed
appropriate or desirable by the Board, in its sole and plenary discretion, by
providing for a cash payment to the holder of an Award in consideration for the
cancelation of such Award, including, in the case of an outstanding Option or
SAR, a cash payment to the holder of such Option or SAR in consideration for
the cancelation of such Option or SAR in an amount equal to the excess, if any,
of the Fair Market Value (as of a date specified by the Board) of the Shares
subject to such 

 

10

 

Option or SAR over the aggregate Exercise
Price of such Option or SAR and (iii) if deemed appropriate or desirable
by the Board, in its sole and plenary discretion, by canceling and terminating
any Option or SAR having a per Share Exercise Price equal to, or in excess of,
the Fair Market Value of a Share subject to such Option or SAR without any
payment or consideration therefor.

 

SECTION 8.  General Provisions.  (a)  Nontransferability.  Except as otherwise specified in the
applicable Award Agreement, during the Participant’s lifetime each Award (and
any rights and obligations thereunder) shall be exercisable only by the
Participant, or, if permissible under applicable law, by the Participant’s
legal guardian or representative, and no Award (or any rights and obligations
thereunder) may be assigned, alienated, pledged, attached, sold or otherwise
transferred or encumbered by a Participant otherwise than by will or by the
laws of descent and distribution, and any such purported assignment,
alienation, pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against the Company or any of its Affiliates; provided
that (i) the designation of a beneficiary shall not constitute an
assignment, alienation, pledge, attachment, sale, transfer or encumbrance and (ii) the
Board or the Board may permit further transferability, on a general or specific
basis, and may impose conditions and limitations on any permitted
transferability; provided, however, that Incentive Stock Options
granted under the Plan shall not be transferable in any way that would violate Section 1.422-2(a)(2) of
the Treasury Regulations.  All terms and
conditions of the Plan and all Award Agreements shall be binding upon any
permitted successors and assigns.

 

(b)  No Rights to
Awards.  No Participant or other
Person shall have any claim to be granted any Award, and there is no obligation
for uniformity of treatment of Participants or holders or beneficiaries of
Awards.  The terms and conditions of
Awards and the Board’s determinations and interpretations with respect thereto
need not be the same with respect to each Participant and may be made
selectively among Participants, whether or not such Participants are similarly
situated.

 

(c)  Share
Certificates.  All certificates for
Shares or other securities of the Company or any of its Affiliates delivered
under the Plan pursuant to any Award or the exercise thereof shall be subject
to such stop transfer orders and other restrictions as the Board may deem
advisable under the Plan, the applicable Award Agreement, any applicable
Federal or state laws or regulations and the rules, regulations and
requirements of any stock exchange or quotation system upon which such Shares
or other securities are then listed or reported, and the Board may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

 

(d)  Withholding.  A Participant may be required to pay to the
Company or any of its Affiliates, and the Company or any of its Affiliates
shall have the right and is hereby authorized to withhold from any Award, from
any payment due or transfer made under any Award or under the Plan or from any
compensation or other amount owing to a Participant, the amount (in cash,
Shares, other securities, other Awards or other property) of any applicable
withholding taxes in respect of an Award, its exercise or any payment or
transfer under an Award or under the Plan and to take such other action as may
be 

 

11

 

necessary in the opinion of the Board or the
Company to satisfy all obligations for the payment of such taxes.

 

(e)  Award Agreements.  Each Award hereunder shall be evidenced by an
Award Agreement, which shall be delivered to the Participant and shall specify
the terms and conditions of the Award and any rules applicable thereto,
including, but not limited to, the effect on such Award of the death,
disability or termination of employment or service of a Participant and the
effect, if any, of such other events as may be determined by the Board.

 

(f)  No Limit on Other
Compensation Arrangements.  Nothing
contained in the Plan shall prevent the Company or any of its Affiliates from
adopting or continuing in effect other compensation arrangements, which may,
but need not, provide for the grant of options, restricted stock, shares and
other types of equity-based awards (subject to stockholder approval if such
approval is required), and such arrangements may be either generally applicable
or applicable only in specific cases.

 

(g)  No Right to
Employment.  The grant of an Award
shall not be construed as giving a Participant the right to be retained as a
director, officer, employee or consultant of or to the Company or any of its
Affiliates, nor shall it be construed as giving a Participant any rights to
continued service on the Board.  Further,
the Company or an Affiliate thereof may at any time dismiss a Participant from
employment or discontinue any consulting relationship, free from any liability
or any claim under the Plan, unless otherwise expressly provided in the Plan or
in any Award Agreement.

 

(h)  No Rights as
Stockholder.  No Participant or
holder or beneficiary of any Award shall have any rights as a stockholder with
respect to any Shares to be distributed under the Plan until he or she has
become the holder of such Shares.  In
connection with each grant of Restricted Shares, except as provided in the
applicable Award Agreement, the Participant shall not be entitled to the rights
of a stockholder in respect of such Restricted Shares.  Except as otherwise provided in Section 4(b),
Section 7(c) or the applicable Award Agreement, no adjustments shall
be made for dividends or distributions on (whether ordinary or extraordinary,
and whether in cash, Shares, other securities or other property), or other
events relating to, Shares subject to an Award for which the record date is
prior to the date such Shares are delivered.

 

(i)  Governing Law.  The validity, construction and effect of the
Plan and any rules and regulations relating to the Plan and any Award
Agreement shall be determined in accordance with the laws of the State of
Delaware, without giving effect to the conflict of laws provisions thereof.

 

(j)  Severability.  If any provision of the Plan or any Award is
or becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan or any
Award under any law deemed applicable by the Board, such provision shall be
construed or deemed amended to conform to the applicable laws, or if it cannot
be construed or deemed amended without, in the determination of the Board,
materially altering the intent of the Plan or the Award, such 

 

12

 

provision shall be construed or deemed
stricken as to such jurisdiction, Person or Award and the remainder of the Plan
and any such Award shall remain in full force and effect.

 

(k)  Other Laws.  The Board may refuse to issue or transfer any
Shares or other consideration under an Award if, acting in its sole and plenary
discretion, it determines that the issuance or transfer of such Shares or such
other consideration might violate any applicable law or regulation or entitle
the Company to recover the same under Section 16(b) of the Exchange
Act, and any payment tendered to the Company by a Participant, other holder or
beneficiary in connection with the exercise of such Award shall be promptly
refunded to the relevant Participant, holder or beneficiary.  Without limiting the generality of the
foregoing, no Award granted hereunder shall be construed as an offer to sell
securities of the Company, and no such offer shall be outstanding, unless and
until the Board in its sole and plenary discretion has determined that any such
offer, if made, would be in compliance with all applicable requirements of the
Federal and any other applicable securities laws.  In no event shall the Company be obligated to
register Shares under the Federal or any other applicable securities laws, to
comply with the requirements of any exemption from registration or to take any
other action that may be required in order to remove any prohibition or
limitation on the Shares issued pursuant to an Award granted hereunder that may
be imposed by any applicable law, rule or regulation.

 

(l)  No Trust or Fund
Created.  Neither the Plan nor any
Award shall create or be construed to create a trust or separate fund of any
kind or a fiduciary relationship between the Company or any of its Affiliates,
on one hand, and a Participant or any other Person, on the other hand.  To the extent that any Person acquires a
right to receive payments from the Company or any of its Affiliates pursuant to
an Award, such right shall be no greater than the right of any unsecured
general creditor of the Company or such Affiliate.

 

(m) No Fractional Shares.  No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Board shall determine
whether cash, other securities or other property shall be paid or transferred
in lieu of any fractional Shares or whether such fractional Shares or any
rights thereto shall be canceled, terminated or otherwise eliminated.

 

(n)  Requirement of
Consent and Notification of Election Under Section 83(b) of the Code
or Similar Provision.  No election
under Section 83(b) of the Code (to include in gross income in the
year of transfer the amounts specified in Section 83(b) of the Code)
or under a similar provision of law may be made unless expressly permitted by
the terms of the applicable Award Agreement or by action of the Board in
writing prior to the making of such election. 
If an Award recipient, in connection with the acquisition of Shares
under the Plan or otherwise, is expressly permitted under the terms of the
applicable Award Agreement or by such Board action to make such an election and
the Participant makes the election, the Participant shall notify the Board of
such election within ten days of filing notice of the election with the IRS or
other governmental authority, in addition to any filing and notification
required pursuant to regulations issued under Section 83(b) of the
Code or other applicable provision.

 

13

 

(o)  Requirement of
Notification Upon Disqualifying Disposition Under Section 421(b) of
the Code.  If any Participant shall
make any disposition of Shares delivered pursuant to the exercise of an
Incentive Stock Option under the circumstances described in Section 421(b) of
the Code (relating to certain disqualifying dispositions) or any successor
provision of the Code, such Participant shall notify the Company of such
disposition within ten days of such disposition.

 

(p)  Headings.  Headings are given to the Sections and
subsections of the Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the
construction or interpretation of the Plan or any provision thereof.

 

SECTION 9.  Term of the Plan.  (a)  Effective Date.  The Plan shall be effective as of the date of
its adoption by the Board and approval by the Company’s stockholders; provided,
however, that no Incentive Stock Options may be granted under the Plan
unless it is approved by the Company’s stockholders within twelve (12) months
before or after the date the Plan is adopted by the Board.

 

(b)  Expiration Date.  No Award shall be granted under the Plan
after the tenth anniversary of the date the Plan is approved under Section 9(a).  Unless otherwise expressly provided in the
Plan or in an applicable Award Agreement, any Award granted hereunder may, and
the authority of the Board or the Board to amend, alter, adjust, suspend,
discontinue or terminate any such Award or to waive any conditions or rights
under any such Award shall, nevertheless continue thereafter.

 

14

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