Document:

Exhibit
10.1

__________________________________________________________________

ON ASSIGNMENT, INC.

RESTATED
1987 STOCK OPTION PLAN

(As
Amended and Restated April 7, 2006)

__________________________________________________________________

 

 

TABLE OF
CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
  1.

  	
  PURPOSE

  	
   

  	
  1

  
	
  2.

  	
  DEFINITIONS

  	
   

  	
  1

  
	
  3.

  	
  ADMINISTRATION OF THE PLAN

  	
   

  	
  5

  
	
   

  	
  3.1.

  	
  Board

  	
   

  	
  5

  
	
   

  	
  3.2.

  	
  Committee

  	
   

  	
  5

  
	
   

  	
  3.3.

  	
  Terms of Awards

  	
   

  	
  6

  
	
   

  	
  3.4.

  	
  Deferral Arrangement

  	
   

  	
  6

  
	
   

  	
  3.5.

  	
  No Liability

  	
   

  	
  7

  
	
  4.

  	
  STOCK SUBJECT TO THE PLAN

  	
   

  	
  7

  
	
  5.

  	
  EFFECTIVE DATE, DURATION AND AMENDMENTS

  	
   

  	
  7

  
	
   

  	
  5.1.

  	
  Effective Date

  	
   

  	
  7

  
	
   

  	
  5.2.

  	
  Term

  	
   

  	
  7

  
	
   

  	
  5.3.

  	
  Amendment and Termination of the Plan

  	
   

  	
  7

  
	
  6.

  	
  AWARD ELIGIBILITY AND LIMITATIONS

  	
   

  	
  8

  
	
   

  	
  6.1.

  	
  Company or Subsidiary Employees; Service Providers;
  Other Persons

  	
   

  	
  8

  
	
   

  	
  6.2.

  	
  Successive Awards

  	
   

  	
  8

  
	
   

  	
  6.3.

  	
  Limitation on Shares of Stock and Cash Subject to
  Awards

  	
   

  	
  8

  
	
   

  	
  6.4.

  	
  Limitations on Incentive Stock Options

  	
   

  	
  8

  
	
   

  	
  6.5.

  	
  Stand-Alone, Additional, Tandem, and Substitute
  Awards

  	
   

  	
  9

  
	
  7.

  	
  AWARD AGREEMENT

  	
   

  	
  9

  
	
  8.

  	
  TERMS AND CONDITIONS OF OPTIONS

  	
   

  	
  9

  
	
   

  	
  8.1.

  	
  Option Price

  	
   

  	
  9

  
	
   

  	
  8.2.

  	
  Vesting

  	
   

  	
  9

  
	
   

  	
  8.3.

  	
  Term

  	
   

  	
  10

  
	
   

  	
  8.4.

  	
  Termination of Service

  	
   

  	
  10

  
	
   

  	
  8.5.

  	
  Limitations on Exercise of Option

  	
   

  	
  10

  
	
   

  	
  8.6.

  	
  Method of Exercise

  	
   

  	
  10

  
	
   

  	
  8.7.

  	
  Rights of Holders of Options

  	
   

  	
  10

  
	
   

  	
  8.8.

  	
  Delivery of Stock Certificates

  	
   

  	
  11

  
	
   

  	
  8.9.

  	
  Book Entry

  	
   

  	
  11

  
	
  9.

  	
  TRANSFERABILITY OF OPTIONS

  	
   

  	
  11

  
	
   

  	
  9.1.

  	
  Transferability of Options

  	
   

  	
  11

  
	
   

  	
  9.2.

  	
  Family Transfers

  	
   

  	
  11

  
	
  10.

  	
  STOCK APPRECIATION RIGHTS

  	
   

  	
  11

  
	
   

  	
  10.1.

  	
  Right to Payment

  	
   

  	
  11

  
	
   

  	
  10.2.

  	
  Other Terms

  	
   

  	
  12

  
	
  11.

  	
  RESTRICTED STOCK AND STOCK UNITS

  	
   

  	
  12

  
	
   

  	
  11.1.

  	
  Grant of Restricted
  Stock or Stock Units

  	
   

  	
  12

  
	
   

  	
  11.2.

  	
  Restrictions

  	
   

  	
  12

  
	
   

  	
  11.3.

  	
  Restricted Stock
  Certificates

  	
   

  	
  12

  
	
   

  	
  11.4.

  	
  Rights of Holders of
  Restricted Stock

  	
   

  	
  13

  
	
   

  	
  11.5.

  	
  Rights of Holders of
  Stock Units

  	
   

  	
  13

  
	
   

  	
   

  	
  11.5.1.     Voting
  and Dividend Rights

  	
   

  	
  13

  

 i
 

 

	
  

  	
   

  	
  11.5.2.     Creditor’s Rights

  	
   

  	
  13

  
	
   

  	
  11.6.

  	
  Termination of Service

  	
   

  	
  13

  
	
   

  	
  11.7.

  	
  Purchase of Restricted
  Stock

  	
   

  	
  13

  
	
   

  	
  11.8.

  	
  Delivery of Stock

  	
   

  	
  14

  
	
  12.

  	
  UNRESTRICTED STOCK
  AWARDS

  	
   

  	
  14

  
	
  13.

  	
  FORM OF PAYMENT FOR
  OPTIONS AND RESTRICTED STOCK

  	
   

  	
  14

  
	
   

  	
  13.1.

  	
  General Rule

  	
   

  	
  14

  
	
   

  	
  13.2.

  	
  Surrender of Stock

  	
   

  	
  14

  
	
   

  	
  13.3.

  	
  Cashless Exercise

  	
   

  	
  14

  
	
   

  	
  13.4.

  	
  Other Forms of Payment

  	
   

  	
  15

  
	
  14.

  	
  DIVIDEND EQUIVALENT
  RIGHTS

  	
   

  	
  15

  
	
   

  	
  14.1.

  	
  Dividend Equivalent Rights

  	
   

  	
  15

  
	
   

  	
  14.2.

  	
  Termination of Service

  	
   

  	
  15

  
	
  15.

  	
  PERFORMANCE AND ANNUAL INCENTIVE AWARDS

  	
   

  	
  15

  
	
   

  	
  15.1.

  	
  Performance Conditions

  	
   

  	
  15

  
	
   

  	
  15.2.

  	
  Performance or Annual Incentive Awards Granted to
  Designated Covered Employees

  	
   

  	
  16

  
	
   

  	
   

  	
  15.2.1.     Performance
  Goals Generally

  	
   

  	
  16

  
	
   

  	
   

  	
  15.2.2.     Business
  Criteria

  	
   

  	
  16

  
	
   

  	
   

  	
  15.2.3.     Timing
  For Establishing Performance Goals

  	
   

  	
  16

  
	
   

  	
   

  	
  15.2.4.     Settlement
  of Performance or Annual Incentive Awards; Other Terms

  	
   

  	
  17

  
	
   

  	
  15.3.

  	
  Written Determinations

  	
   

  	
  17

  
	
   

  	
  15.4.

  	
  Status of Section 14.2 Awards Under Code Section
  162(m)

  	
   

  	
  17

  
	
  16.

  	
  PARACHUTE LIMITATIONS

  	
   

  	
  17

  
	
  17.

  	
  REQUIREMENTS OF LAW

  	
   

  	
  18

  
	
   

  	
  17.1.

  	
  General

  	
   

  	
  18

  
	
   

  	
  17.2.

  	
  Rule 16b-3

  	
   

  	
  19

  
	
  18.

  	
  EFFECT OF CHANGES IN CAPITALIZATION

  	
   

  	
  19

  
	
   

  	
  18.1.

  	
  Changes in Stock

  	
   

  	
  19

  
	
   

  	
  18.2.

  	
  Reorganization in Which the Company Is the Surviving
  Entity Which does not Constitute a Corporate Transaction

  	
   

  	
  19

  
	
   

  	
  18.3.

  	
  Corporate Transaction

  	
   

  	
  20

  
	
   

  	
  18.4.

  	
  Adjustments

  	
   

  	
  21

  
	
   

  	
  18.5.

  	
  No Limitations on Company

  	
   

  	
  21

  
	
  19.

  	
  GENERAL PROVISIONS

  	
   

  	
  21

  
	
   

  	
  19.1.

  	
  Disclaimer of Rights

  	
   

  	
  21

  
	
   

  	
  19.2.

  	
  Nonexclusivity of the Plan

  	
   

  	
  21

  
	
   

  	
  19.3.

  	
  Withholding Taxes

  	
   

  	
  22

  
	
   

  	
  19.4.

  	
  Captions

  	
   

  	
  22

  
	
   

  	
  19.5.

  	
  Other Provisions

  	
   

  	
  22

  
	
   

  	
  19.6.

  	
  Number And Gender

  	
   

  	
  22

  
	
   

  	
  19.7.

  	
  Severability

  	
   

  	
  22

  
	
   

  	
  19.8.

  	
  Governing Law

  	
   

  	
  23

  

 

 ii

 

ON ASSIGNMENT, INC.

RESTATED
1987 STOCK OPTION PLAN

(As Amended
and Restated April 7, 2006)

On
Assignment, Inc., a Delaware corporation (the “Company”), sets forth herein the
terms of its Restated 1987 Stock Option Plan, as amended and restated April 7,
2006 (the “Plan”), as follows:

1.                                      PURPOSE

The Plan is
intended to enhance the Company’s and its Affiliates’ (as defined herein)
ability to attract and retain highly qualified officers, directors, key
employees, and other persons, and to motivate such officers, directors, key
employees, and other persons to serve the Company and its Affiliates and to
expend maximum effort to improve the business results and earnings of the
Company, by providing to such officers, directors, key employees and other
persons an opportunity to acquire or increase a direct proprietary interest in
the operations and future success of the Company.  To this
end, the Plan provides for the grant of stock options, stock appreciation
rights, restricted stock, unrestricted stock, stock units, dividend equivalent
rights and cash awards.  Any of these
awards may, but need not, be made as performance incentives to reward
attainment of annual or long-term performance goals in accordance with the
terms hereof.  Options granted under the
Plan may be non-qualified stock options or incentive stock options, as provided
herein.

2.                                      DEFINITIONS

For purposes of interpreting the Plan and related documents (including
Award Agreements), the following definitions shall apply:

2.1    “Affiliate”
means, with respect to the Company, any company or other trade or business that
controls, is controlled by or is under common control with the Company within
the meaning of Rule 405 of Regulation C under the Securities Act, including,
without limitation, any Subsidiary.

2.2    “Annual Incentive Award”
means an Award made subject to attainment of performance goals (as described in
Section 15) over a performance period
of up to one year (the fiscal year, unless otherwise specified by the
Committee).

2.3    “Award”
means a grant of an Option, Stock Appreciation Right, Restricted Stock,
Unrestricted Stock Unit, Dividend Equivalent Right or cash award  under the Plan.

2.4    “Award
Agreement” means the written agreement between the Company and a
Grantee that evidences and sets out the terms and conditions of an Award.

2.5    “Benefit
Arrangement” shall have the meaning set forth in Section 16 hereof.

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

2.7    “Cause”  means, as determined by the Board and unless otherwise
provided in an applicable agreement with the Company or an Affiliate, (i) gross
negligence or willful misconduct in connection with the performance of duties;
(ii) conviction of a criminal offense (other than minor traffic offenses);
or (iii) material breach of any term of any employment, consulting or
other services, confidentiality, intellectual property or non-competition
agreements, if any, between the Service Provider and the Company or an
Affiliate.

2.8    “Code”
means the Internal Revenue Code of 1986, as now in effect or as hereafter
amended.

2.9    “Committee”
means a committee of, and designated from time to time by resolution of, the
Board, which shall be constituted as provided in Section 3.2.

2.10  “Company”
means On Assignment, Inc.

2.11  “Corporate
Transaction” means (i) the
dissolution or liquidation of the Company or a merger, consolidation, or
reorganization of the Company with one or more other entities in which the
Company is not the surviving entity, (ii) a sale of all or substantially all of
the assets of the Company to another person or entity, or (iii) any transaction
(including without limitation a merger, consolidation or reorganization in
which the Company is the surviving entity) which results in any person or
entity (other than persons who are shareholders or Affiliates immediately prior
to the transaction) owning 50% or more of the combined voting power of all
classes of stock of the Company.

2.12  “Covered Employee”
means a Grantee who is a Covered Employee within the meaning of Section
162(m)(3) of the Code.

2.13  “Director”
means a member of the Board.

2.14  “Disability”
means the Grantee is unable to perform each of the essential duties of such
Grantee’s position by reason of a medically determinable physical or mental
impairment which is potentially permanent in character or which can be expected
to last for a continuous period of not less than 12 months; provided, however,
that, with respect to rules regarding expiration of an Incentive Stock Option
following termination of the Grantee’s Service, Disability shall mean the
Grantee is unable to engage in any substantial gainful activity by reason of a
medically determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than 12 months.

2.15  “Dividend Equivalent Right”
means a right, granted to a Grantee under Section 14
hereof, to receive cash, Stock, other Awards or other property equal in value
to dividends paid with respect to a specified number of shares of Stock, or
other periodic payments.

2.16  “Effective Date”
the date the Plan is approved by the Company’s stockholders.

2.17  “Exchange Act”
means the Securities Exchange Act of 1934, as now in effect or as hereafter
amended.

2.18  “Executive
Officer” means an executive officer within the meaning of Rule 3b-7
under the Exchange Act.

 2
 

2.19  “Fair Market Value”  means the value of a share of Stock,
determined as follows:  if on the Grant
Date or other determination date the Stock is listed on an established national
or regional stock exchange, is admitted to quotation on The Nasdaq Stock
Market, Inc. or is publicly traded on an established securities market, the
Fair Market Value of a share of Stock shall be the closing price of the Stock
on such exchange or in such market (if there is more than one such exchange or
market, the Board shall determine the appropriate exchange or market) on the
last trading day preceding the Grant Date or such other determination date (or
if there is no such reported closing price, the Fair Market Value shall be the
mean between the highest bid and lowest asked prices or between the high and
low sale prices on such last preceding trading day) or, if no sale of Stock is
reported for such trading day, on the next preceding day on which any sale
shall have been reported.  If the Stock
is not listed on such an exchange, quoted on such system or traded on such a
market, Fair Market Value shall be the value of the Stock as determined by the
Board in good faith.

2.20  “Family Member”
means a person who is a spouse, former spouse, child, stepchild, grandchild,
parent, stepparent, grandparent, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law,
including adoptive relationships, of the Grantee, any person sharing the
Grantee’s household (other than a tenant or employee), a trust in which
any one or more of these persons have more than fifty percent of the beneficial
interest, a foundation in which any one or more of these persons (or the
Grantee) control the management of assets, and any other entity in which one or
more of these persons (or the Grantee) own
more than fifty percent of the voting interests.

2.21  “Grant Date”
means, as determined by the Board, the latest to occur of  (i) the date as of which the Board approves an Award, (ii)
the date on which the recipient of an Award first becomes eligible to receive
an Award under Section 6 hereof, or (iii) such other date as may be specified
by the Board.

2.22  “Grantee” means
a person who receives or holds an Award under the Plan.

2.23  “Incentive Stock Option”
means an “incentive stock option” within the meaning of Section 422 of the
Code, or the corresponding provision of any subsequently enacted tax statute,
as amended from time to time.

2.24  “Non-qualified Stock
Option” means an Option that is not an Incentive Stock Option.

2.25  “Option” means
an option to purchase one or more shares of Stock pursuant to the Plan.

2.26  “Option Price”
means the exercise price for each share of Stock subject to an Option.

2.27  “Other Agreement”
shall have the meaning set forth in Section 16
hereof.

2.28  “Outside Director”
means a member of the Board who is not an officer or employee of the Company.

2.29  “Performance Award” means an Award made subject to the
attainment of performance goals (as described in Section 15)
over a performance period of up to ten (10) years.

 3
 

2.30  “Plan” means
this On Assignment, Inc. Restated 1987 Stock Option Plan, as amended and
restated April 7, 2006.

2.31  “Purchase Price”
means the purchase price for each share of Stock pursuant to a grant of
Restricted or Unrestricted Stock.

2.32  “Reporting Person”
means a person who is required to file reports under Section 16(a) of the
Exchange Act.

2.33  “Restricted Stock”
means shares of Stock, awarded to a Grantee pursuant to Section 11
hereof.

2.34  “SAR
Exercise Price” means the per share exercise price of an SAR granted
to a Grantee under Section 10
hereof.

2.35  “Securities Act”
means the Securities Act of 1933, as now in effect or as hereafter amended.

2.36  “Service” means
service as a Service Provider to the Company or an Affiliate.  Unless otherwise stated in the applicable
Award Agreement, a Grantee’s change in position or duties shall not result in
interrupted or terminated Service, so long as such Grantee continues to be a
Service Provider to the Company or an Affiliate.  Subject to the preceding sentence, whether a
termination of Service shall have occurred for purposes of the Plan shall be
determined by the Board, which determination shall be final, binding and
conclusive.

2.37  “Service Provider”
means an employee, officer or director of the Company or an Affiliate, or a
consultant or adviser currently providing services to the Company or an
Affiliate.

2.38  “Stock” means the
common stock, par value $.01 per share, of the Company.

2.39  “Stock
Appreciation Right” or “SAR” means a
right granted to a Grantee under Section 10
hereof.

2.40  “Stock Unit”
means a bookkeeping entry representing the equivalent of shares of Stock, awarded
to a Grantee pursuant to Section 11
hereof.

2.41  “Subsidiary”
means any “subsidiary corporation” of the Company within the meaning of Section
424(f) of the Code.

2.42  “Ten Percent Stockholder”
means an individual who owns more than ten percent (10%) of the total combined
voting power of all classes of outstanding stock of the Company, its parent or
any of its Subsidiaries.  In determining
stock ownership, the attribution rules of Section 424(d) of the Code shall be
applied.

2.43  “Unrestricted
Stock” means shares of Stock awarded to a Grantee pursuant to Section 12 hereof.

 4
 

3.                                      ADMINISTRATION
OF THE PLAN

3.1.       Board

The Board shall have such powers and authorities related to the
administration of the Plan as are consistent with the Company’s certificate of incorporation and
by-laws and applicable law.  The Board
shall have full power and authority to take all actions and to make all
determinations required or provided for under the Plan, any Award or any Award
Agreement, and shall have full power and authority to take all such other
actions and make all such other determinations not inconsistent with the
specific terms and provisions of the Plan that the Board deems to be necessary
or appropriate to the administration of the Plan, any Award or any Award Agreement.  All such actions and determinations shall be
by the affirmative vote of a majority of the members of the Board present at a
meeting or by unanimous consent of the Board executed in writing in accordance
with the Company’s certificate
of incorporation and by-laws and applicable law.  The interpretation and construction by the
Board of any provision of the Plan, any Award or any Award Agreement shall be
final, binding and conclusive.

3.2.       Committee

The
Board from time to time may delegate to the Committee such powers and
authorities related to the administration and implementation of the Plan, as
set forth in Section 3.1 above and other
applicable provisions, as the Board shall determine, consistent with the certificate  of incorporation and by-laws of the Company and applicable
law.

(i)        Except as provided in Subsection (ii)
and except as the Board may otherwise determine, the Committee, if any,
appointed by the Board to administer the Plan shall consist of two or more
Outside Directors of the Company who: (a) qualify as “outside directors” within
the meaning of Section 162(m) of the Code and (b) meet such other requirements
as may be established from time to time by the Securities and Exchange
Commission for plans intended to qualify for exemption under Rule 16b-3 (or its
successor) under the Exchange Act.

(ii)       The Board or the Committee may also
appoint one or more separate committees of the Board, each composed of one or
more directors of the Company who need not be Outside Directors, who may
administer the Plan with respect to employees or other Service Providers who
are not officers or directors of the Company, may grant Awards under the Plan
to such employees or other Service Providers, and may determine all terms of
such Awards.

In the event that the Plan, any Award or any Award Agreement
entered into hereunder provides for any action to be taken by or determination
to be made by the Board, such action may be taken or such determination may be
made by the Committee if the power and authority to do so has been delegated to
the Committee by the Board as provided for in this Section.  All such actions and determinations shall be
by the affirmative vote of a majority of the members of the Committee present
at a meeting or by unanimous consent of the Committee executed in writing in
accordance with the Company’s certificate of incorporation and by-laws and
applicable law.  Unless otherwise
expressly determined by the Board, any such action or determination by the
Committee shall be final, binding and conclusive.

 5
 

3.3.       Terms of Awards

Subject to the other terms and conditions of the Plan, the Board shall
have full and final authority to:

(i)     designate Grantees,

(ii)    determine the type or types of Awards to be made to a Grantee,

(iii)   determine the number of shares of Stock to be subject to an Award,

(iv)   establish the terms and conditions of each Award (including, but
not limited to, the exercise price of any Option, the nature and duration of
any restriction or condition (or provision for lapse thereof) relating to the
vesting, exercise, transfer, or forfeiture of an Award or the shares of Stock
subject thereto, and any terms or conditions that may be necessary to qualify
Options as Incentive Stock Options),

(v)    prescribe the form of each Award Agreement evidencing an Award,
and

(vi)   amend, modify, or supplement the terms of any outstanding
Award.  Such authority specifically
includes the authority, in order to effectuate the purposes of the Plan but
without amending the Plan, to modify Awards to eligible individuals who are
foreign nationals or are individuals who are employed outside the
United States to recognize differences in local law, tax policy, or
custom; provided, however, such authority does not include the authority to
decrease the Option Price of any Option after the date of grant except for
adjustments pursuant to Section 18.

Subject to the terms and
conditions of the Plan, any such new Award shall be upon such terms and
conditions as are specified by the Board at the time the new Award is
made.  The Board shall have the
right, in its discretion, to make Awards in substitution or exchange for any
other award under the plan of any business entity to be acquired by the Company
or an Affiliate.  The Company may retain
the right in an Award Agreement to cause a forfeiture of the gain realized by a
Grantee on account of actions taken by the Grantee in violation or breach of or
in conflict with any employment agreement, non-competition agreement, any
agreement prohibiting solicitation of employees or clients of the Company or
any Affiliate  thereof or any confidentiality
obligation with respect to the Company or any Affiliate  thereof
or otherwise in competition with the Company or any Affiliate thereof, to the
extent specified in such Award Agreement applicable to the Grantee.  Furthermore, except to the extent otherwise
provided in an agreement or contract with a Grantee, the Company may annul an
Award if the Grantee is an employee of the Company or an Affiliate thereof and
is terminated for Cause as defined in the applicable Award Agreement or the
Plan, as applicable. The grant of any Award may be contingent upon the Grantee
executing the appropriate Award Agreement.

3.4.       Deferral Arrangement

The
Board may permit the deferral of any award payment into a deferred compensation
arrangement, subject to such rules and procedures as it may establish, which
may include 

 6
 

provisions
for the payment or crediting of interest or dividend equivalents, including
converting such credits into deferred Stock equivalents and restricting
deferrals to comply with hardship distribution rules affecting 401(k) plans.

3.5.       No Liability

No
member of the Board or of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Award or Award
Agreement.

4.                                      STOCK
SUBJECT TO THE PLAN

Subject
to adjustment as provided in Section 18
hereof, the number of shares of Stock available for issuance under the Plan
shall be 11,000,000.  Stock issued or to be issued under the Plan
shall be authorized but unissued shares or treasury shares.  If any
shares covered by an Award are not purchased or are forfeited, or if an Award
otherwise terminates without delivery of any Stock subject thereto, then the
number of shares of Stock counted against the aggregate number of shares
available under the Plan with respect to such Award shall, to the extent of any
such forfeiture or termination, again be available for making Awards under the
Plan.  If the Option Price of any Option
granted under the Plan, or if pursuant to Section 19.3 the
withholding obligation of any Grantee with respect to an Option, is satisfied
by tendering shares of Stock to the Company (by either actual delivery or by
attestation) or by withholding shares of Stock, only the number of shares of Stock
issued net of the shares of Stock tendered or withheld shall be deemed issued
for purposes of determining the maximum number of shares of Stock available for
issuance under the Plan.

5.                                      EFFECTIVE
DATE, DURATION AND AMENDMENTS

5.1.       Effective Date

The
Plan shall be effective as of the Effective Date.  If the stockholders fail to approve the Plan
within one year after the adoption of the Plan by the Board, the Plan shall be
null and void and of no effect.

Outstanding
options granted prior to the Effective Date of this amendment and restatement
will be subject to the Plan terms that were in effect as of the date such
options were granted.

5.2.       Term

The
Plan shall terminate automatically ten (10) years after the Effective Date and
may be terminated on any earlier date as provided in Section 5.3.

5.3.       Amendment and Termination
of the Plan

The
Board may, at any time and from time to time, amend, suspend, or terminate the
Plan as to any shares of Stock as to which Awards have not been made.  An amendment shall be contingent on approval
of the Company’s stockholders to the extent stated by the Board, required by
law or required by applicable stock exchange listing requirements.  No Awards shall be made after termination of
the Plan.  No amendment, suspension, or
termination of the Plan shall, without 

 7
 

the
consent of the Grantee, impair rights or obligations under any Award
theretofore awarded under the Plan.

6.                                      AWARD
eligibility AND LIMITATIONS

6.1.       Company or Subsidiary
Employees; Service Providers; Other Persons

Subject
to this Section 6, Awards may be made under the
Plan to: (i)  any Service Provider to,
the Company or of any Affiliate, including any such Service Provider who is an
officer or director of the Company, or of any Affiliate, as the Board shall
determine and designate from time to time, (ii) any Outside Director, and (iii)
any other individual whose participation in the Plan is determined to be in the
best interests of the Company by the Board.

6.2.       Successive Awards

An
eligible person as described in Section 6.1
may receive more than one Award, subject to such restrictions as are provided
herein.

6.3.       Limitation on Shares of
Stock and Cash Subject to Awards

During
any time when the Company has a class of equity security registered under
Section 12 of the Exchange Act:

(i)
the maximum number of shares of Stock subject to Options that can be awarded
under the Plan to any person eligible for an Award under Section 6
hereof is 500,000 per year;

(ii)
the maximum number of shares that can be awarded under the Plan, other than
pursuant to an Option to any person eligible for an Award under Section 6 hereof is 200,000 per year; and

(iii)
the maximum amount that may be earned as an Annual Incentive Award or
other cash Award in any fiscal year by any one Grantee shall be $1,000,000 and
the maximum amount that may be earned as a Performance Award or other cash
Award in respect of a performance period by any one Grantee shall be $3,000,000.

The preceding limitations
in this Section 6.3 are subject to adjustment as provided in Section 18 hereof.

6.4.       Limitations on Incentive
Stock Options

An
Option shall constitute an Incentive Stock Option only (i) if the Grantee of
such Option is an employee of the Company or any Subsidiary of the Company;
(ii) to the extent specifically provided in the related Award Agreement; and
(iii) to the extent that the aggregate Fair Market Value (determined at the
time the Option is granted) of the shares of Stock with respect to which all
Incentive Stock Options held by such Grantee become exercisable for the first
time during any calendar year (under the Plan and all other plans of the
Grantee’s employer and its Affiliates) does not exceed $100,000.  This limitation shall be applied by taking
Options into account in the order in which they were granted.

 8

6.5.    Stand-Alone, Additional,
Tandem, and Substitute Awards

Awards
granted under the Plan may, in the discretion of the Board, be granted either
alone or in addition to, in tandem with, or in substitution or exchange for,
any other Award or any award granted under the plan of any business entity to
be acquired by the Company or an Affiliate, or any other right of a Grantee to
receive payment from the Company or any Affiliate.  Such additional, tandem, and substitute or
exchange Awards may be granted at any time. 
If an Award is granted in substitution or exchange for another Award,
the Board shall require the surrender of such other Award in consideration for
the grant of the new Award. 
Notwithstanding the foregoing, an outstanding Option granted under the Plan
may not be surrendered to the Company as consideration for the grant of a new
Option with a lower exercise price.  In
addition, Awards may be granted in lieu of cash compensation, including in lieu
of cash amounts payable under other plans of the Company or any Affiliate, in
which the value of Stock subject to the Award is equivalent in value to the
cash compensation (for example, Stock Units or Restricted Stock), or in which
the Option Price, grant price or purchase price of the Award in the nature of a
right that may be exercised is equal to the Fair Market Value of the underlying
Stock minus the value of the cash compensation surrendered (for example,
Options granted with an Option Price “discounted” by the amount of the cash
compensation surrendered).

7.                                      AWARD
AGREEMENT

Each Award granted pursuant to
the Plan shall be evidenced by an Award Agreement, in such form or forms as the
Board shall from time to time determine. 
Award Agreements granted from time to time or at the same time need not
be uniform among all Awards issued pursuant to the Plan, and may reflect
distinctions among Awards but shall not be inconsistent with the terms of the
Plan.  Each Award Agreement evidencing an
Award of Options shall specify whether such Options are intended to be Non-qualified
Stock Options or Incentive Stock Options, and in the absence of such
specification such options shall be deemed Non-qualified Stock Options.

8.                                      TERMS
AND CONDITIONS OF OPTIONS

8.1.    Option Price

The Option Price of each Option shall be fixed by the Board and stated
in the Award Agreement evidencing such Option. 
The Option Price of each Option shall be at least the Fair Market Value
on the Grant Date of a share of Stock; provided, however, that in
the event that a Grantee is a Ten Percent Stockholder, the Option Price of an
Option granted to such Grantee that is intended to be an Incentive Stock Option
shall be not less than 110 percent of the Fair Market Value of a share of Stock
on the Grant Date.  In no case shall the
Option Price of any Option be less than the par value of a share of Stock.

8.2.    Vesting

Subject to Sections 8.3 and 18.3
hereof, each Option granted under the Plan shall become exercisable at
such times and under such conditions as shall be determined by the Board and
stated in the Award Agreement.  For
purposes of this Section 8.2, fractional
numbers of shares of Stock subject to an Option shall be rounded down to the
next nearest whole number. The Board may provide, for example, in the Award
Agreement for (i) accelerated exercisability of some or all of the Option
in the event the Grantee’s Service terminates on account of death, Disability
or another event, (ii) expiration of the Option prior to its term in the
event of the termination of the Grantee’s Service, or (iii) immediate
forfeiture of the Option in the event the Grantee’s Service is terminated for
Cause subject to the terms of any employment 

 9
 

agreement.  No Option shall be exercisable in whole or in
part prior to the date the Plan is approved by the Stockholders of the Company
as provided in Section 5.1 hereof.

8.3.    Term

Each Option granted under the
Plan shall terminate, and all rights to purchase shares of Stock thereunder
shall cease, upon the expiration of ten years from the date such Option is
granted, or under such circumstances and on such date prior thereto as is set
forth in the Plan or as may be fixed by the Board and stated in the Award
Agreement relating to such Option (the “Termination Date”); provided, however,
that in the event that the Grantee is a Ten Percent Stockholder, an Option
granted to such Grantee that is intended to be an Incentive Stock Option shall
not be exercisable after the expiration of five years from its Grant Date.

8.4.    Termination of Service

Each
Award Agreement shall set forth the extent to which the Grantee shall have the
right to exercise the Option following termination of the Grantee’s
Service.  Such provisions shall be
determined in the sole discretion of the Board.

8.5.    Limitations on Exercise of
Option

Notwithstanding any other provision
of the Plan, in no event may any Option be exercised, in whole or in part,
prior to the date the Plan is approved by the stockholders of the Company as
provided herein, or after ten years following the Grant Date, or after the
occurrence of an event referred to in Section 18
hereof which results in termination of the Option.

8.6.    Method of Exercise

An Option that is exercisable
shall be exercised by the Grantee’s delivery to the Company of written notice
of exercise on any business day, at the Company’s principal office, on the form
specified by the Company or as otherwise permitted.  Such notice shall specify the number of
shares of Stock with respect to which the Option is being exercised and shall
be accompanied by payment in full of the Option Price of the shares for which
the Option is being exercised.  The
minimum number of shares of Stock with respect to which an Option may be
exercised, in whole or in part, at any time shall be the lesser of (i) 100
shares or such lesser number set forth in the applicable Award Agreement and
(ii) the maximum number of shares available for purchase under the Option
at the time of exercise.

8.7.    Rights of Holders of Options

Unless otherwise stated in the
applicable Award Agreement, an individual holding or exercising an Option shall
have none of the rights of a stockholder (for example, the right to receive
cash or dividend payments or distributions attributable to the subject shares
of Stock or to direct the voting of the subject shares of Stock ) until the
shares of Stock covered thereby are fully paid and issued to him.  Except as provided in Section 18
hereof, no adjustment shall be made for dividends, distributions or other
rights for which the record date is prior to the date of such issuance.

 10
 

8.8.    Delivery of Stock Certificates

Promptly after the exercise of an
Option by a Grantee and the payment in full of the Option Price, such Grantee
shall be entitled to the issuance of a stock certificate or certificates
evidencing his or her ownership of the shares of Stock subject to the Option.

8.9.    Book Entry

Notwithstanding any other provision of the Plan to the
contrary, the Company may, in its discretion, use the book entry method for
recording stock issuances in lieu of issuing stock certificates.

9.                                      TRANSFERABILITY
OF OPTIONS

9.1.    Transferability of Options

Except
as provided in Section 9.2, during the lifetime
of a Grantee, only the Grantee (or, in the event of legal incapacity or
incompetency, the Grantee’s guardian or legal representative) may exercise an
Option.  Except as provided in Section 9.2, no Option shall be assignable or transferable
by the Grantee to whom it is granted, other than by will or the laws of descent
and distribution.

9.2.    Family Transfers

Unless
otherwise provided in the applicable Award Agreement, a Grantee may transfer,
not for value, all or part of an Option which is not an Incentive Stock Option
to any Family Member.  For the purpose of
this Section 9.2, a “not for value” transfer
is a transfer which is (i) a gift, (ii) a transfer under a domestic relations
order in settlement of marital property rights; or (iii) a transfer to an
entity in which more than fifty percent of the voting interests are owned by
Family Members (or the Grantee) in exchange for an interest in that entity.  Following a transfer under this Section 9.2, any such Option shall continue to be subject to
the same terms and conditions as were applicable immediately prior to
transfer.  Subsequent transfers of
transferred Options are prohibited except to Family Members of the original
Grantee in accordance with this Section  9.2 or by will or the laws of descent and distribution.  The events of termination of Service of Section 8.4 hereof shall continue to be applied with respect
to the original Grantee, following which the Option shall be exercisable by the
transferee only to the extent, and for the periods specified, in Section 8.4.

10.                               Stock
Appreciation Rights

10.1.                     Right to
Payment

A SAR shall confer on the Grantee to whom it is
granted a right to receive, upon exercise thereof, the excess of (A) the Fair
Market Value of one share of Stock on the date of exercise over (B) the grant
price of the SAR as determined by the Board. 
The Award Agreement for an SAR shall specify the grant price of the SAR,
which may be fixed at the Fair Market Value of a share of Stock on the date of
grant or may vary in accordance with a predetermined formula while the SAR is
outstanding.

 11
 

10.2.                     Other Terms

The Board shall determine at the date of grant or
thereafter, the time or times at which and the circumstances under which a SAR
may be exercised in whole or in part (including based on achievement of
performance goals and/or future service requirements), the time or times at
which SARs shall cease to be or become exercisable following termination of
Service or upon other conditions, the method of exercise, method of settlement,
form of consideration payable in settlement, method by or forms in which Stock
will be delivered or deemed to be delivered to Grantees, whether or not a SAR
shall be in tandem or in combination with any other Award, and any other terms
and conditions of any SAR.

11.                               RESTRICTED
STOCK AND STOCK UNITS

11.1.                     Grant of
Restricted Stock or Stock Units

The Board is authorized to grant
Restricted Stock or Stock Units to Grantees, subject to such restrictions,
conditions and other terms, if any, as the Board may determine.  Awards of Restricted Stock may be made for no
consideration (other than par value of the shares which is deemed paid by Services
already rendered).

11.2.                     Restrictions

At the time a grant of Restricted
Stock or Stock Units is made, the Board may, in its sole discretion, establish
a period of time (a “restricted period”) applicable to such Restricted Stock or
Stock Units.  Each Award of Restricted
Stock or Stock Units may be subject to a different restricted period.  The Board may, in its sole discretion, at the
time a grant of Restricted Stock or Stock Units is made, prescribe restrictions
in addition to or other than the expiration of the restricted period, including
the satisfaction of corporate or individual performance objectives, which may
be applicable to all or any portion of the Restricted Stock or Stock Units in
accordance with Section 15.1 and 15.2.  Neither
Restricted Stock nor Stock Units may be sold, transferred, assigned, pledged or
otherwise encumbered or disposed of during the restricted period or prior to
the satisfaction of any other restrictions prescribed by the Board with respect
to such Restricted Stock or Stock Units.

11.3.                     Restricted
Stock Certificates

The Company shall issue, in the
name of each Grantee to whom Restricted Stock has been granted, stock
certificates representing the total number of shares of Restricted Stock
granted to the Grantee, as soon as reasonably practicable after the Grant Date
or issue such Restricted Stock by the book entry method.  The Board may provide in an Award Agreement
that either (i)  the Secretary of the
Company shall hold such certificates for the Grantee’s benefit until such time
as the Restricted Stock is forfeited to the Company or the restrictions lapse,
or (ii)  such certificates shall be
delivered to the Grantee, provided, however, that such
certificates shall bear a legend or legends that comply with the applicable
securities laws and regulations and makes appropriate reference to the
restrictions imposed under the Plan and the Award Agreement.

 12
 

11.4.                     Rights of
Holders of Restricted Stock

Unless the Board otherwise
provides in an Award Agreement, holders of Restricted Stock shall have the
right to vote such Stock and the right to receive any dividends or other
distributions declared or paid with respect to such Stock.  The Board may provide that any dividends paid
on Restricted Stock must be reinvested in shares of Stock, which may or may not
be subject to the same vesting conditions and restrictions applicable to such
Restricted Stock.  All non-cash
distributions, if any, received by a Grantee with respect to Restricted Stock
as a result of any stock split, stock dividend, combination of shares, or other
similar transaction shall be subject to the restrictions applicable to the
original Grant.

11.5.                     Rights of
Holders of Stock Units

11.5.1.             Voting and Dividend Rights

Unless the Board otherwise
provides in an Award Agreement, holders of Stock Units shall have no rights as
stockholders of the Company.  The Board
may provide in an Award Agreement evidencing a grant of Stock Units that the
holder of such Stock Units shall be entitled to receive, upon the Company’s
payment of a cash dividend on its outstanding Stock, a cash payment for each
Stock Unit held equal to the per-share dividend paid on the Stock.  Such Award Agreement may also provide that
such cash payment will be deemed reinvested in additional Stock Units at a price
per unit equal to the Fair Market Value of a share of Stock on the date that
such dividend is paid.

11.5.2.             Creditor’s
Rights

A holder of Stock Units shall
have no rights other than those of a general creditor of the Company.  Stock Units represent an unfunded and
unsecured obligation of the Company, subject to the terms and conditions of the
applicable Award Agreement.

11.6.                     Termination
of Service

Unless the Board otherwise
provides in an Award Agreement or in writing after the Award Agreement
is issued, upon the termination of a Grantee’s
Service, any Restricted Stock or Stock Units held by such Grantee that have not
vested, or with respect to which all applicable restrictions and conditions
have not lapsed, shall immediately be deemed forfeited.  Upon forfeiture of Restricted Stock or Stock
Units, the Grantee shall have no further rights with respect to such Award,
including but not limited to any right to vote Restricted Stock or any right to
receive dividends or other distributions with respect to shares of Restricted
Stock or Stock Units.

11.7.                     Purchase of
Restricted Stock

The
Grantee shall be required, to the extent required by applicable law, to
purchase the Restricted Stock from the Company at a Purchase Price equal to the
greater of (i) the aggregate par value of the shares of Stock represented by
such Restricted Stock or (ii) the Purchase Price, if any, specified in the
Award Agreement relating to such Restricted Stock.  The Purchase Price shall be payable in a form
described in Section 13 or, in the discretion
of the Board, in consideration for past and future Services rendered to the
Company or an Affiliate.

 13
 

11.8.                     Delivery of
Stock

Upon the expiration or
termination of any restricted period and the satisfaction of any other
conditions prescribed by the Board, the restrictions applicable to shares of
Restricted Stock or Stock Units settled in Stock shall lapse, and, unless
otherwise provided in the Award Agreement, a stock certificate for such shares
shall be delivered, free of all such restrictions, to the Grantee or the
Grantee’s beneficiary or estate, as the case may be.  If the restricted period has not yet expired
or terminated as to all of the shares of Restricted Stock covered by a
certificate for the Restricted Stock that has previously been delivered to the
Grantee, as provided in Section 11.3,
a new certificate for the remaining shares of Restricted Stock shall be
delivered to the Grantee which certificate shall bear a legend or legends that
comply with the applicable securities laws and regulations and makes
appropriate reference to the restrictions imposed under the Plan and the Award
Agreement.

12.                               UNRESTRICTED
STOCK AWARDS

The
Board may, in its sole discretion, grant (or sell at par value or such other
higher purchase price determined by the Board) an Unrestricted Stock Award to
any Grantee pursuant to which such Grantee may receive shares of Stock free of
any restrictions (“Unrestricted Stock”) under the Plan.  Unrestricted Stock Awards may be granted or
sold as described in the preceding sentence in respect of past services or
other valid consideration, or in lieu of, or in addition to, any cash
compensation due to such Grantee.

13.                               FORM
OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK

13.1.                     General Rule

Payment
of the Option Price for the shares purchased pursuant to the exercise of an
Option or the Purchase Price for Restricted Stock shall be made in cash or in
cash equivalents acceptable to the Company.

13.2.                     Surrender of
Stock

To
the extent the Award Agreement so provides, payment of the Option Price for
shares purchased pursuant to the exercise of an Option or the Purchase Price
for Restricted Stock may be made all or in part through the tender to the
Company of shares of Stock (by either actual delivery or by attestation), which
shares, if acquired from the Company, shall have been held for at least six
months at the time of tender and which shall be valued, for purposes of
determining the extent to which the Option Price or Purchase Price has been
paid thereby, at their Fair Market Value.

13.3.                     Cashless
Exercise

With
respect to an Option only (and not with respect to Restricted Stock), to the
extent the Award Agreement so provides, and subject to other restrictions the
Company may impose on the sale of Stock, payment of the Option Price for shares
purchased pursuant to the exercise of an Option may be made all or in part by
delivery (on a form acceptable to the Board) of an irrevocable direction to a
licensed securities broker acceptable to the Company to sell shares of Stock
and to deliver all or part of the sales proceeds to the Company in payment of
the Option 

 14
 

Price and any
withholding taxes described in Section 19.3.  Executive Officers and Directors will not be
permitted to use the cashless method of exercise described in this paragraph
without the express prior consent of the Company and only to the extent
permitted by law.

13.4.                     Other Forms
of Payment

To the extent the Award Agreement so provides or as
otherwise agreed by the Board, payment of the Option Price for shares purchased
pursuant to exercise of an Option or the Purchase Price for Restricted Stock
may be made in any other form that is consistent with applicable laws,
regulations and rules.

14.                               DIVIDEND
EQUIVALENT RIGHTS

14.1.                     Dividend
Equivalent Rights

A
Dividend Equivalent Right is an Award entitling the recipient to receive
credits based on cash distributions that would have been paid on the shares of
Stock specified in the Dividend Equivalent Right (or other award to which it
relates) if such shares had been issued to and held by the recipient.  A Dividend Equivalent Right may be granted
hereunder to any Grantee as a component of another Award or as a freestanding
award.  The terms and conditions of
Dividend Equivalent Rights shall be specified in the grant.  Dividend equivalents credited to the holder
of a Dividend Equivalent Right may be paid currently or may be deemed to be
reinvested in additional shares of Stock, which may thereafter accrue
additional equivalents.  Any such
reinvestment shall be at Fair Market Value on the date of reinvestment.  Dividend Equivalent Rights may be settled in
cash or Stock or a combination thereof, in a single installment or
installments, all determined in the sole discretion of the Board.  A Dividend Equivalent Right granted as a
component of another Award may provide that such Dividend Equivalent Right
shall be settled upon exercise, settlement, or payment of, or lapse of
restrictions on, such other award, and that such Dividend Equivalent Right
shall expire or be forfeited or annulled under the same conditions as such other
award.  A Dividend Equivalent Right
granted as a component of another Award may also contain terms and conditions
different from such other award.

14.2.                     Termination
of Service

Except as may otherwise be provided by the Board
either in the Award Agreement or in writing after the Award Agreement is
issued, a Grantee’s rights in all Dividend Equivalent Rights or interest
equivalents shall automatically terminate upon the Grantee’s termination of
Service for any reason.

15.                               PERFORMANCE
AND ANNUAL INCENTIVE AWARDS

15.1.                     Performance
Conditions

The
right of a Grantee to exercise or receive a grant or settlement of any Award,
and the timing thereof, may be subject to such performance conditions as may be
specified by the Board.  The Board may
use such business criteria and other measures of performance as it may deem
appropriate in establishing any performance conditions, and may exercise its
discretion to reduce the amounts payable under any Award subject to performance
conditions, except as limited under Sections 15.2 hereof
in the case of a Performance Award or Annual Incentive Award intended to
qualify under Code Section 162(m).  If
and to the extent required under Code Section 162(m), any power or authority
relating to a Performance Award or Annual 

 15
 

Incentive
Award intended to qualify under Code Section 162(m), shall be exercised by the
Committee and not the Board.

15.2.                     Performance
or Annual Incentive Awards Granted to Designated Covered Employees

If
and to the extent that the Committee determines that a Performance or Annual
Incentive Award to be granted to a Grantee who is designated by the Committee
as likely to be a Covered Employee should qualify as “performance-based
compensation” for purposes of Code Section 162(m), the grant, exercise and/or
settlement of such Performance or Annual Incentive Award shall be contingent
upon achievement of pre-established performance goals and other terms set forth
in this Section 15.2.

15.2.1.           Performance Goals
Generally

The performance goals for such Performance or Annual Incentive
Awards shall consist of one or more business criteria and a targeted level or
levels of performance with respect to each of such criteria, as specified by
the Committee consistent with this Section 15.2.  Performance
goals shall be objective and shall otherwise meet the requirements of Code
Section 162(m) and regulations thereunder including the requirement that the
level or levels of performance targeted by the Committee result in the
achievement of performance goals being “substantially uncertain.”  The Committee may determine that such
Performance or Annual Incentive Awards shall be granted, exercised and/or
settled upon achievement of any one performance goal or that two or more of the
performance goals must be achieved as a condition to grant, exercise and/or
settlement of such Performance or Annual Incentive Awards.  Performance goals may differ for Performance
or Annual Incentive Awards granted to any one Grantee or to different Grantees.

15.2.2.           Business Criteria

One or more of the following business criteria for the
Company, on a consolidated basis, and/or specified subsidiaries or business
units of the Company (except with respect to the total stockholder return and
earnings per share criteria), shall be used exclusively by the Committee in establishing
performance goals for such Performance or Annual Incentive Awards: (1) total
stockholder return; (2) such total stockholder return as compared to total
return (on a comparable basis) of a publicly available index such as, but not
limited to, the Standard & Poor’s 500 Stock Index; (3) net income; (4)
pretax earnings; (5) earnings before interest expense, taxes, depreciation and
amortization; (6) pretax operating earnings after interest expense and before
bonuses and extraordinary or special items; (7) operating margin; (8) earnings
per share; (9) return on equity; (10) return on capital; (11) return on
investment; (12) operating earnings; (13) working capital; (14) ratio of debt
to stockholders’ equity and (15) revenue.

15.2.3.                       Timing For
Establishing Performance Goals

Performance goals shall be established not later than
90 days after the beginning of any performance period applicable to such
Performance or Annual Incentive Awards, or at such other date as may be
required or permitted for “performance-based compensation” under Code Section
162(m).

 16

15.2.4.                       Settlement
of Performance or Annual Incentive Awards; Other Terms

Settlement of such Performance or Annual Incentive
Awards shall be in Stock, other Awards or other property, in the discretion of
the Committee.  The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be made in
connection with such Performance or Annual Incentive Awards.  The Committee shall specify the circumstances
in which such Performance or Annual Incentive Awards shall be paid or forfeited
in the event of termination of Service by the Grantee prior to the end of a
performance period or settlement of Performance Awards.

15.3.                     Written
Determinations

All
determinations by the Committee as to the establishment of performance goals,
the amount of any Performance Award pool or potential individual Performance
Awards and as to the achievement of performance goals relating to Performance
Awards, and the amount of any or potential individual Annual Incentive Awards
and the amount of final Annual Incentive Awards, shall be made in writing in
the case of any Award intended to qualify under Code Section 162(m).  To the extent required to comply with Code
Section 162(m), the Committee may delegate any responsibility relating to such
Performance Awards or Annual Incentive Awards.

15.4.                     Status of
Section 14.2 Awards Under Code Section 162(m)

It
is the intent of the Company that Performance Awards and Annual Incentive
Awards under Section 15.2 hereof granted to
persons who are designated by the Committee as likely to be Covered Employees
within the meaning of Code Section 162(m) and regulations thereunder shall, if
so designated by the Committee, constitute “qualified performance-based
compensation” within the meaning of Code Section 162(m) and regulations
thereunder.  Accordingly, the terms of Section 15.2, including the definitions of Covered Employee
and other terms used therein, shall be interpreted in a manner consistent with
Code Section 162(m) and regulations thereunder. 
The foregoing notwithstanding, because the Committee cannot determine
with certainty whether a given Grantee will be a Covered Employee with respect
to a fiscal year that has not yet been completed, the term Covered Employee as
used herein shall mean only a person designated by the Committee, at the time
of grant of Performance Awards or an Annual Incentive Award, as likely to be a
Covered Employee with respect to that fiscal year.  If any provision of the Plan or any agreement
relating to such Performance Awards or Annual Incentive Awards does not comply
or is inconsistent with the requirements of Code Section 162(m) or regulations
thereunder, such provision shall be construed or deemed amended to the extent
necessary to conform to such requirements.

16.                               PARACHUTE
LIMITATIONS

Notwithstanding
any other provision of this Plan or of any other agreement, contract, or
understanding heretofore or hereafter entered into by a Grantee with the
Company or any Affiliate, except an agreement, contract, or understanding
hereafter entered into that expressly modifies or excludes application of this
paragraph (an “Other Agreement”), and notwithstanding any formal or informal
plan or other arrangement for the direct or indirect provision of compensation
to the Grantee (including groups or classes of Grantees or beneficiaries of
which the Grantee is a member), whether or not such compensation is deferred,
is in cash, or is in the form of a benefit to or for the Grantee (a “Benefit
Arrangement”), if the Grantee is a “disqualified individual,” as 

 17
 

defined in Section 280G(c)
of the Code, any Option, Restricted Stock or Stock Unit held by that Grantee
and any right to receive any payment or other benefit under this Plan shall not
become exercisable or vested (i) to the extent that such right to
exercise, vesting, payment, or benefit, taking into account all other rights,
payments, or benefits to or for the Grantee under this Plan, all Other
Agreements, and all Benefit Arrangements, would cause any payment or benefit to
the Grantee under this Plan to be considered a “parachute payment” within the
meaning of Section 280G(b)(2) of the Code as then in effect (a “Parachute
Payment”) and (ii) if, as a result of receiving a Parachute
Payment, the aggregate after-tax amounts received by the Grantee from the
Company under this Plan, all Other Agreements, and all Benefit Arrangements
would be less than the maximum after-tax amount that could be received by the
Grantee without causing any such payment or benefit to be considered a
Parachute Payment.  In the event that the
receipt of any such right to exercise, vesting, payment, or benefit under this
Plan, in conjunction with all other rights, payments, or benefits to or for the
Grantee under any Other Agreement or any Benefit Arrangement would cause the
Grantee to be considered to have received a Parachute Payment under this Plan
that would have the effect of decreasing the after-tax amount received by the
Grantee as described in clause (ii) of the preceding sentence, then the
Grantee shall have the right, in the Grantee’s sole discretion, to designate
those rights, payments, or benefits under this Plan, any Other Agreements, and
any Benefit Arrangements that should be reduced or eliminated so as to avoid
having the payment or benefit to the Grantee under this Plan be deemed to be a
Parachute Payment.

17.                               REQUIREMENTS
OF LAW

17.1.                     General

The
Company shall not be required to sell or issue any shares of Stock under any
Award if the sale or issuance of such shares would constitute a violation by
the Grantee, any other individual exercising an Option, or the Company of any
provision of any law or regulation of any governmental authority, including
without limitation any federal or state securities laws or regulations.  If at any time the Company shall determine,
in its discretion, that the listing, registration or qualification of any
shares  subject to an Award upon any
securities exchange or under any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the issuance or purchase of
shares hereunder, no shares of Stock may be issued or sold to the Grantee or
any other individual exercising an Option pursuant to such Award unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Company, and
any delay caused thereby shall in no way affect the date of termination of the
Award.  Specifically, in connection with
the Securities Act, upon the exercise of any Option or the delivery of any
shares of Stock underlying an Award, unless a registration statement under such
Act is in effect with respect to the shares of Stock covered by such Award, the
Company shall not be required to sell or issue such shares unless the Board has
received evidence satisfactory to it that the Grantee or any other individual
exercising an Option may acquire such shares pursuant to an exemption from
registration under the Securities Act. 
Any determination in this connection by the Board shall be final, binding,
and conclusive.  The Company may, but
shall in no event be obligated to, register any securities covered hereby
pursuant to the Securities Act.  The
Company shall not be obligated to take any affirmative action in order to cause
the exercise of an Option or the issuance of shares of Stock pursuant to the
Plan to comply with any law or regulation of any governmental authority.  As to any jurisdiction that expressly imposes
the requirement that an Option shall not be exercisable until the shares of Stock
covered by such Option are registered or are exempt from registration, the
exercise of such Option (under circumstances in which the laws of such
jurisdiction apply) 

 18
 

shall be deemed conditioned upon
the effectiveness of such registration or the availability of such an
exemption.

17.2.                     Rule 16b-3

During
any time when the Company has a class of equity security registered under
Section 12 of the Exchange Act, it is the intent of the Company that Awards
pursuant to the Plan and the exercise of Options granted hereunder will qualify
for the exemption provided by Rule 16b-3 under the Exchange Act.  To the extent that any provision of the Plan
or action by the Board does not comply with the requirements of Rule 16b-3, it
shall be deemed inoperative to the extent permitted by law and deemed advisable
by the Board, and shall not affect the validity of the Plan.  In the event that Rule 16b-3 is revised or
replaced, the Board may exercise its discretion to modify this Plan in any
respect necessary to satisfy the requirements of, or to take advantage of any
features of, the revised exemption or its replacement.

18.                               EFFECT
OF CHANGES IN CAPITALIZATION

18.1.                     Changes in
Stock

If the number of outstanding
shares of Stock is increased or decreased or the shares of Stock are changed
into or exchanged for a different number or kind of shares or other securities
of the Company on account of any recapitalization, reclassification, stock
split, reverse split, combination of shares, exchange of shares, stock dividend
or other distribution payable in capital stock, or other increase or decrease
in such shares, effected in all such cases, without receipt of consideration by
the Company occurring after the Effective Date, the number and kinds of shares
for which grants of Options and other Awards may be made under the Plan shall
be adjusted proportionately and accordingly by the Company.  In addition, the number and kind of shares
for which Awards are outstanding shall be adjusted proportionately and
accordingly so that the proportionate interest of the Grantee immediately
following such event shall, to the extent practicable, be the same as
immediately before such event.  Any such
adjustment in outstanding Options or SARs shall not change the aggregate Option
Price or SAR Exercise Price payable with respect to shares that are subject to
the unexercised portion of an outstanding Option or SAR, as applicable, but
shall include a corresponding proportionate adjustment in the Option Price or
SAR Exercise Price per share.  The
conversion of any convertible securities of the Company shall not be treated as
an increase in shares effected without receipt of consideration.   Notwithstanding the foregoing, in the event
of any distribution to the Company’s stockholders of securities of any other
entity or other assets (other than dividends payable in cash or stock of the
Company) without receipt of consideration by the Company, the Company may, in
such manner as the Company deems appropriate, adjust (i) the number and kind of
shares subject to outstanding Awards and/or (ii) the exercise price of
outstanding Options and Stock Appreciation Rights to reflect such distribution.

18.2.                     Reorganization
in Which the Company Is the Surviving Entity Which does not Constitute a
Corporate Transaction

Subject
to Section 18.3 hereof, if the
Company shall be the surviving entity in any reorganization, merger, or
consolidation of the Company with one or more other entities which does not
constitute a Corporate Transaction, any Option or SAR theretofore granted
pursuant to the Plan shall pertain to and apply to the securities to which a
holder of the number of shares of 

 19
 

Stock subject to such Option or
SAR would have been entitled immediately following such reorganization, merger,
or consolidation, with a corresponding proportionate adjustment of the Option
Price or SAR Exercise Price per share so that the aggregate Option Price or SAR
Exercise Price thereafter shall be the same as the aggregate Option Price or
SAR Exercise Price of the shares remaining subject to the Option or SAR
immediately prior to such reorganization, merger, or consolidation.  Subject to any contrary language in an Award
Agreement evidencing an Award, any restrictions applicable to such Award shall
apply as well to any replacement shares received by the Grantee as a result of
the reorganization, merger or consolidation.

18.3.                     Corporate
Transaction

Subject to the exceptions set
forth in the last sentence of this Section 18.3
and the last sentence of Section 18.4:

(i) upon the occurrence of a
Corporate Transaction, all outstanding shares of Restricted Stock shall be
deemed to have vested, and all restrictions and conditions applicable to such
shares of Restricted Stock shall be deemed to have lapsed, immediately prior to
the occurrence of such Corporate Transaction, and

(ii) either of the following two
actions shall be taken:

(A) prior to the scheduled consummation of a Corporate Transaction, all
Options and SARs outstanding hereunder shall become immediately exercisable and
shall remain exercisable for such reasonable period of time as the Board
determines, or

(B) the Board may elect, in its sole discretion, to cancel any
outstanding Awards of Options, Restricted Stock, and/or SARs and pay or
deliver, or cause to be paid or delivered, to the holder thereof an amount in
cash or securities having a value (as determined by the Board acting in good
faith), in the case of Restricted Stock, equal to the formula or fixed price
per share paid to holders of shares of Stock and, in the case of Options or
SARs, equal to the product of the number of shares of Stock subject to the
Option or SAR (the “Award Shares”) multiplied by the amount, if any, by which
(I) the formula or fixed price per share paid to holders of shares of Stock
pursuant to such transaction exceeds (II) the Option Price or SAR Exercise
Price applicable to such Award Shares.

With respect to the Company’s
establishment of an exercise window, (i) any exercise of an Option or SAR
during such period shall be conditioned upon the consummation of the event and
shall be effective only immediately before the consummation of the event, and
(ii) upon consummation of any Corporate Transaction the Plan, and all
outstanding but unexercised Options and SARs shall terminate.  The Board shall send written notice of an
event that will result in such a termination to all individuals who hold
Options and SARs not later than the time at which the Company gives notice
thereof to its stockholders.  This Section 18.3 shall not apply to any Corporate Transaction to
the extent that provision is made in writing in connection with such Corporate
Transaction for the assumption or continuation of the Options, SARs and
Restricted Stock theretofore granted, or for the substitution for such Options,
SARs and Restricted Stock for new common stock options and stock appreciation
rights and new common stock restricted stock relating to the stock of a
successor entity, or a parent or subsidiary thereof, with appropriate
adjustments as to the number of shares and option and stock appreciation right
exercise prices, in 

 20
 

which event the Plan, Options, SARs and Restricted Stock
theretofore granted shall continue in the manner and under the terms so
provided.

18.4.                     Adjustments

Adjustments under this Section 18 related to shares of Stock or securities of
the Company shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. 
No fractional shares or other securities shall be issued pursuant to any
such adjustment, and any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole share. The
Board shall determine the effect of a Corporate Transaction upon Awards other
than Options, SARs, and Restricted Stock, and such effect shall be set forth in
the appropriate Award Agreement.  The
Board may provide in the Award Agreements at the time of grant, or any time
thereafter with the consent of the Grantee, for different provisions to apply
to an Award in place of those described in Sections 18.1, 18.2
and 18.3.

18.5.                     No
Limitations on Company

The making of Awards pursuant to
the Plan shall not affect or limit in any way the right or power of the Company
to make adjustments, reclassifications, reorganizations, or changes of its
capital or business structure or to merge, consolidate, dissolve, or liquidate,
or to sell or transfer all or any part of its business or assets.

19.                               GENERAL
PROVISIONS

19.1.                     Disclaimer of
Rights

No provision in the Plan or in
any Award or Award Agreement shall be construed to confer upon any individual
the right to remain in the employ or service of the Company or any Affiliate,
or to interfere in any way with any contractual or other right or authority of
the Company either to increase or decrease the compensation or other payments
to any individual at any time, or to terminate any employment or other
relationship between any individual and the Company.  In addition, notwithstanding anything
contained in the Plan to the contrary, unless otherwise stated in the
applicable Award Agreement, no Award granted under the Plan shall be affected
by any change of duties or position of the Grantee, so long as such Grantee
continues to be a director, officer, consultant or employee of the Company or
an Affiliate.  The obligation of the Company
to pay any benefits pursuant to this Plan shall be interpreted as a contractual
obligation to pay only those amounts described herein, in the manner and under
the conditions prescribed herein.  The
Plan shall in no way be interpreted to require the Company to transfer any
amounts to a third party trustee or otherwise hold any amounts in trust or
escrow for payment to any Grantee or beneficiary under the terms of the Plan.

19.2.                     Nonexclusivity
of the Plan

Neither the adoption of the Plan
nor the submission of the Plan to the stockholders of the Company for approval
shall be construed as creating any limitations upon the right and authority of
the Board to adopt such other incentive compensation arrangements (which
arrangements may be applicable either generally to a class or classes of individuals
or specifically to a particular 

 21
 

individual or particular individuals) as the Board in its
discretion determines desirable, including, without limitation, the granting of
stock options otherwise than under the Plan.

19.3.                     Withholding
Taxes

The Company or an Affiliate, as
the case may be, shall have the right to deduct from payments of any kind
otherwise due to a Grantee any Federal, state, or local taxes of any kind
required by law to be withheld with respect to the vesting of or other lapse of
restrictions applicable to an Award or upon the issuance of any shares of Stock
upon the exercise of an Option or pursuant to an Award.  At the time of such vesting, lapse, or
exercise, the Grantee shall pay to the Company or the Affiliate, as the case
may be, any amount that the Company or the Affiliate may reasonably determine
to be necessary to satisfy such withholding obligation.  Subject to the prior approval of the Company
or the Affiliate, which may be withheld by the Company or the Affiliate, as the
case may be, in its sole discretion, the Grantee may elect to satisfy such
obligations, in whole or in part, (i) by causing the Company or the
Affiliate to withhold shares of Stock otherwise issuable to the Grantee or
(ii) by delivering to the Company or the Affiliate shares of Stock already
owned by the Grantee.  The shares of
Stock so delivered or withheld shall have an aggregate Fair Market Value equal
to such withholding obligations.  The
Fair Market Value of the shares of Stock used to satisfy such withholding
obligation shall be determined by the Company or the Affiliate as of the date
that the amount of tax to be withheld is to be determined.  A Grantee who has made an election pursuant
to this Section 19.3 may satisfy his or
her withholding obligation only with shares of Stock that are not subject to
any repurchase, forfeiture, unfulfilled vesting, or other similar requirements.

19.4.                     Captions

The use of captions in this Plan
or any Award Agreement is for the convenience of reference only and shall not
affect the meaning of any provision of the Plan or such Award Agreement.

19.5.                     Other
Provisions

Each Award granted under the Plan
may contain such other terms and conditions not inconsistent with the Plan as
may be determined by the Board, in its sole discretion.

19.6.                     Number And
Gender

With respect to words used in this Plan, the singular form shall include
the plural form, the masculine gender shall include the feminine gender, etc.,
as the context requires.

19.7.                     Severability

If any provision of the Plan or any Award Agreement shall be determined
to be illegal or unenforceable by any court of law in any jurisdiction, the
remaining provisions hereof and thereof shall be severable and enforceable in
accordance with their terms, and all provisions shall remain enforceable in any
other jurisdiction.

 22
 

19.8.                     Governing Law

The validity and construction of this Plan and the
instruments evidencing the Award hereunder shall be governed by the laws of the
State of California, other than any conflicts or choice of law rule or
principle that might otherwise refer construction or interpretation of this
Plan and the instruments evidencing the Awards granted hereunder to the
substantive laws of any other jurisdiction.

*    *    *

 23
 

To record amendment and restatement of the Plan by the
Board as of April 7, 2006, and approval of the Plan by the stockholders on May
22, 2006, the Company has caused its authorized officer to execute the Plan.

	
  

  	
  ON ASSIGNMENT, INC.

  
	
   

  	
  By:

  	
  /s/ Mike Holtzman

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
  and Chief Financial Officer

  

 

 24Exhibit
10.3

 

ON ASSIGNMENT, INC.

SECOND
AMENDMENT TO THE RESTATED 1987 STOCK OPTION PLAN

(As
Amended and Restated April 7, 2006)

(Second Amendment dated April 17,
2007)

 

SECOND
AMENDMENT TO THE ON ASSIGNMENT, INC. RESTATED 1987 STOCK OPTION PLAN,

AS
AMENDED AND RESTATED APRIL 7, 2006

Pursuant to the
authority reserved to the Board of Directors (the “Board”) of On Assignment, Inc., a Delaware corporation
(the “Company”) under
Section 5.3 of the Company’s Restated Stock Option Plan, as Amended and
Restated on April 7, 2006 (the “Stock
Plan”), the Board hereby amends the Stock Plan as follows (the “Amendment ”):

1.            Section 2.9
of the Stock Plan is deleted and replaced in its entirety with the following:

“2.9          ‘Committee’ means the Compensation
Committee of the Board of Directors, so long as such Compensation Committee
shall be comprised of two or more non-employee members of the Board, each of
whom is (i) an “outside director” within the meaning of
Section 162(m) of the Code, (ii) an “independent director” under
the rules of the Nasdaq Stock Exchange (or other principal securities
market on which shares of Stock are traded, if any) and (iii) an “independent
director” under Rule 16b-3 (or its successor) under the Exchange Act. If
the Compensation Committee of the Board ceases to meet the foregoing
requirements, then “Committee” shall instead mean a committee of the Board that
does meet such requirements.”

2.            New
Section 2.20A is hereby added to the Stock Plan immediately after
Section 2.20 of the Stock Plan:

“2.20A ‘Full Value
Award’ means any Award other than an Option, SAR or other Award for
which the Grantee pays the intrinsic value (whether directly or by forgoing a
right to receive a payment from the Company).”

3.            Sections
3.1 and 3.2 are deleted and replaced in their entirety with the following:

“3.1.                Board

Subject to Section 3.2 below, the Board shall
have such powers and authorities related to the administration of the Plan as
are consistent with the Company’s certificate of incorporation and by-laws and
applicable law, including full power and authority to take all actions and to
make all determinations required or provided for under the Plan, any Award or
any Award Agreement, full power and authority to take all such other actions
and make all such other determinations not inconsistent with the specific terms
and provisions of the Plan that the Board deems to be necessary or appropriate
to the administration of the Plan, any Award or any Award Agreement. All such
actions and determinations shall be by the affirmative vote of a majority of
the members of the Board present at a meeting or by unanimous consent of the
Board executed in writing in accordance with the Company’s certificate of
incorporation and by-laws and applicable law. The interpretation and construction
by the Board of any provision of the Plan, any Award or any Award Agreement
shall be final, binding and conclusive.

3.2.                      Committee

Notwithstanding Section 3.1 above, the Board, in
its discretion or as otherwise necessary to comply with the requirements of
Section 162(m) of the Code, Rule 16b-3 promulgated under the
Exchange Act or to the extent required by any other applicable rule or
regulation, shall delegate to the Committee its powers and authorities related
to the administration and implementation of the Plan, as set forth in
Section 3.1 above and other applicable provisions, to the extent
consistent with the Company’s certificate of incorporation and by-laws and
applicable law. The Board or the Committee may also appoint one or more
separate committees of the Board, each composed of one or more directors of the
Company who need not be Outside Directors, who may administer the Plan with
respect to employees or other Service Providers who are not officers or
directors of the Company, may grant Awards under the Plan to such employees or
other Service Providers, and may determine all terms of such Awards.
Notwithstanding the foregoing, the full Board, acting by a majority of its
members, shall conduct the general administration of the Plan with respect to
all Awards granted to Outside Directors and for purposes of such Awards the
term “Committee” as used in this Plan shall be deemed to refer to the Board. In
its sole discretion, the Board may at any time and from time to time exercise
any and all rights and duties of the Committee under the Plan except with
respect to matters which under Rule 16b-3 under the Exchange Act or

Section 162(m) of the Code, or any regulations or
rules issued thereunder, are required to be determined in the sole
discretion of the Committee.

In the event that the Plan, any Award or any Award
Agreement entered into hereunder provides for any action to be taken by or
determination to be made by the Board, such action may be taken or such
determination may be made by the Committee if the power and authority to do so
has been delegated to the Committee by the Board as provided for in this
Section. All such actions and determinations shall be by the affirmative vote
of a majority of the members of the Committee present at a meeting or by
unanimous consent of the Committee executed in writing in accordance with the
Company’s certificate of incorporation and by-laws and applicable law. Unless
otherwise expressly determined by the Board, any such action or determination
by the Committee shall be final, binding and conclusive.”

4.            The
first sentence of Section 4 of the Stock Plan is deleted and replaced in
its entirety with the following:

“4.                         STOCK
SUBJECT TO THE PLAN

“Subject to adjustment as provided in Section 18 hereof, the number of
shares of Stock available for issuance under the Plan shall be 13,900,000,  provided
, that such aggregate number of shares of Stock available for issuance under
the Plan shall be reduced by 1.53 shares for each share of Stock delivered in
settlement of any Full Value Award on or after April 17, 2007 and shall be
reduced by 1 share for each share of Stock granted pursuant to any Option, SAR
or other Award that does not constitute a Full Value Award.”

The remainder of
Section 4 shall not be affected by this Amendment.

Except as expressly provided in this Amendment, all
terms and conditions of the Stock Plan and any awards outstanding thereunder
shall remain in full force and effect.

IN
WITNESS WHEREOF, the Board has caused this Amendment to be
executed by a duly authorized officer of the Company as of the 17th day of April, 2007.

	
  

  	
   

  	
  ON ASSIGNMENT, INC.

  
	
   

  	
   

  	
  /s/ PETER T. DAMERIS

  	
   

  
	
   

  	
   

  	
  Peter T. Dameris

  
	
   

  	
   

  	
  President and CEO

  
	
  Attest:

  	
   

  	
   

  
	
  /s/ JAMES L.
  BRILL

  	
   

  	
   

  
	
  James L. Brill

  	
   

  	
   

  
	
  Sr.
  Vice President and Chief

  Financial Officer

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