Document:

Exhibit 10.27

 

AMNET MORTGAGE, INC.

 

2004 EQUITY INCENTIVE PLAN

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  Establishment, Purpose and Term of Plan

  	
   

  
	
   

  	
  1.1

  	
  Establishment

  	
   

  
	
   

  	
  1.2

  	
  Purpose

  	
   

  
	
   

  	
  1.3

  	
  Term
  of Plan

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Definitions and Construction

  	
   

  
	
   

  	
  2.1

  	
  Definitions

  	
   

  
	
   

  	
  2.2

  	
  Construction

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Administration

  	
   

  
	
   

  	
  3.1

  	
  Administration by the Committee

  	
   

  
	
   

  	
  3.2

  	
  Authority of Officers

  	
   

  
	
   

  	
  3.3

  	
  Administration with Respect to Insiders

  	
   

  
	
   

  	
  3.4

  	
  Committee Complying with
  Section 162(m)

  	
   

  
	
   

  	
  3.5

  	
  Powers of the Committee

  	
   

  
	
   

  	
  3.6

  	
  No
  Repricing

  	
   

  
	
   

  	
  3.7

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Shares Subject to Plan

  	
   

  
	
   

  	
  4.1

  	
  Maximum Number of Shares Issuable

  	
   

  
	
   

  	
  4.2

  	
  Adjustments for Changes in Capital
  Structure

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Eligibility and Award Limitations

  	
   

  
	
   

  	
  5.1

  	
  Persons Eligible for Awards

  	
   

  
	
   

  	
  5.2

  	
  Participation

  	
   

  
	
   

  	
  5.3

  	
  Incentive Stock Option Limitations

  	
   

  
	
   

  	
  5.4

  	
  Award
  Limits

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Terms and Conditions of Options

  	
   

  
	
   

  	
  6.1

  	
  Exercise
  Price

  	
   

  
	
   

  	
  6.2

  	
  Exercisability and Term of Options

  	
   

  
	
   

  	
  6.3

  	
  Payment of Exercise Price

  	
   

  
	
   

  	
  6.4

  	
  Effect of Termination of Service

  	
   

  
	
   

  	
  6.5

  	
  Transferability of Options

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Terms and Conditions of Stock Appreciation
  Rights

  	
   

  
	
   

  	
  7.1

  	
  Types of SARs Authorized

  	
   

  
	
   

  	
  7.2

  	
  Exercise
  Price

  	
   

  
	
   

  	
  7.3

  	
  Exercisability and Term of SARs

  	
   

  
	
   

  	
  7.4

  	
  Exercise
  of SARs

  	
   

  
	
   

  	
  7.5

  	
  Deemed Exercise of SARs

  	
   

  
	
   

  	
  7.6

  	
  Effect of Termination of Service

  	
   

  
	
   

  	
  7.7

  	
  Nontransferability of SARs

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Terms and Conditions of Restricted Stock
  Awards

  	
   

  
	
   

  	
  8.1

  	
  Types of Restricted Stock Awards Authorized

  	
   

  
	
   

  	
  8.2

  	
  Purchase
  Price

  	
   

  
	
   

  	
  8.3

  	
  Purchase
  Period

  	
   

  
	
   

  	
  8.4

  	
  Payment of Purchase Price

  	
   

  
	
   

  	
  8.5

  	
  Vesting and Restrictions on Transfer

  	
   

  
	
   

  	
  8.6

  	
  Voting Rights; Dividends and Distributions

  	
   

  

 

i

 

	
   

  	
  8.7

  	
  Effect of Termination of Service

  	
   

  
	
   

  	
  8.8

  	
  Nontransferability of Restricted Stock
  Award Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Terms and Conditions of Performance Awards

  	
   

  
	
   

  	
  9.1

  	
  Types of Performance Awards Authorized

  	
   

  
	
   

  	
  9.2

  	
  Initial Value of Performance Shares and
  Performance Units

  	
   

  
	
   

  	
  9.3

  	
  Establishment of Performance Period,
  Performance Goals and Performance Award Formula

  	
   

  
	
   

  	
  9.4

  	
  Measurement of Performance Goals

  	
   

  
	
   

  	
  9.5

  	
  Settlement of Performance Awards

  	
   

  
	
   

  	
  9.6

  	
  Voting Rights; Dividend Equivalent Rights
  and Distributions

  	
   

  
	
   

  	
  9.7

  	
  Effect of Termination of Service

  	
   

  
	
   

  	
  9.8

  	
  Nontransferability of Performance Awards

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  Terms and Conditions of Restricted Stock
  Unit Awards

  	
   

  
	
   

  	
  10.1

  	
  Grant of Restricted Stock Unit Awards

  	
   

  
	
   

  	
  10.2

  	
  Purchase
  Price

  	
   

  
	
   

  	
  10.3

  	
  Vesting

  	
   

  
	
   

  	
  10.4

  	
  Voting Rights, Dividend Equivalent Rights
  and Distributions

  	
   

  
	
   

  	
  10.5

  	
  Effect of Termination of Service

  	
   

  
	
   

  	
  10.6

  	
  Settlement of Restricted Stock Unit Awards

  	
   

  
	
   

  	
  10.7

  	
  Nontransferability of Restricted Stock Unit
  Awards

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  Deferred Stock Units

  	
   

  
	
   

  	
  11.1

  	
  Establishment of Deferred Stock Unit
  Program

  	
   

  
	
   

  	
  11.2

  	
  Terms and Conditions of Deferred Stock
  Units

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  Standard Forms of Award Agreement

  	
   

  
	
   

  	
  12.1

  	
  Award
  Agreements

  	
   

  
	
   

  	
  12.2

  	
  Authority to Vary Terms

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  Change in Control

  	
   

  
	
   

  	
  13.1

  	
  Definitions

  	
   

  
	
   

  	
  13.2

  	
  Effect of Change in Control on Options and
  SARs

  	
   

  
	
   

  	
  13.3

  	
  Effect of Change in Control on Restricted
  Stock Awards

  	
   

  
	
   

  	
  13.4

  	
  Effect of Change in Control on Performance
  Awards

  	
   

  
	
   

  	
  13.5

  	
  Effect of Change in Control on Restricted
  Stock Unit Awards

  	
   

  
	
   

  	
  13.6

  	
  Effect of Change in Control on Deferred
  Stock Units

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  Compliance with Securities Law

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  Tax Withholding

  	
   

  
	
   

  	
  15.1

  	
  Tax Withholding in General

  	
   

  
	
   

  	
  15.2

  	
  Withholding in Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  Amendment or Termination of Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  17.

  	
  Miscellaneous Provisions

  	
   

  
	
   

  	
  17.1

  	
  Repurchase
  Rights

  	
   

  
	
   

  	
  17.2

  	
  Provision of Information

  	
   

  
	
   

  	
  17.3

  	
  Rights as Employee, Consultant or Director

  	
   

  
	
   

  	
  17.4

  	
  Rights as a Stockholder

  	
   

  
	
   

  	
  17.5

  	
  Fractional
  Shares

  	
   

  
	
   

  	
  17.6

  	
  Severability

  	
   

  
	
   

  	
  17.7

  	
  Beneficiary Designation

  	
   

  
	
   

  	
  17.8

  	
  Unfunded Obligation

  	
   

  

 

ii

 

AMNET MORTGAGE, INC.

2004 EQUITY INCENTIVE PLAN

 

1.                                      Establishment, Purpose and Term of
Plan.

 

1.1                                 Establishment. 
The AmNet Mortgage, Inc. 2004 Equity Incentive Plan (the “Plan”)
is hereby established effective as
of                    ,
2004, the date of its approval by the stockholders of the Company (the “Effective Date”).

 

1.2                                 Purpose. 
The purpose of the Plan is to advance the interests of the Participating
Company Group and its stockholders by providing an incentive to attract, retain
and reward persons performing services for the Participating Company Group and
by motivating such persons to contribute to the growth and profitability of the
Participating Company Group. The Plan seeks to achieve this purpose by
providing for Awards in the form of Options, Indexed Options, Stock
Appreciation Rights, Restricted Stock Purchase Rights, Restricted Stock
Bonuses, Performance Shares, Performance Units, Restricted Stock Units and
Deferred Stock Units. After the Effective Date, the Company shall terminate,
and no longer issue any awards from under, the Company’s 1997 Stock Incentive
Plan, 1997 Stock Option Plan and 1997 Outside Director Stock Option Plan.

 

1.3                                 Term
of Plan.  The Plan shall continue in
effect until the earlier of its termination by the Board or the date on which
all of the shares of Stock available for issuance under the Plan have been
issued and all restrictions on such shares under the terms of the Plan and the
agreements evidencing Awards granted under the Plan have lapsed. However, all
Incentive Stock Options shall be granted, if at all, within ten (10) years
from the Effective Date.

 

2.                                      Definitions and Construction.

 

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

 

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

 

(b)                                 “Award” means any Option, Indexed
Option, SAR, Restricted Stock Purchase Right, Restricted Stock Bonus,
Performance Share, Performance Unit, Restricted Stock Unit or Deferred Stock
Unit granted under the Plan.

 

(c)                                  “Award Agreement” means a written
agreement between the Company and a Participant setting forth the terms,
conditions and restrictions of the Award granted to the Participant. An Award
Agreement may be an “Option Agreement,” an “Indexed Option Agreement,” a “SAR
Agreement,” a “Restricted Stock Purchase Agreement,” a “Restricted Stock Bonus
Agreement,” a “Performance Share Agreement,” a “Performance Unit Agreement,” a
“Restricted Stock Unit Agreement,” or a “Deferred Stock Unit Agreement.”

 

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

 

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

 

B-1

 

(f)                                    “Committee” means the Compensation
Committee or other committee of the Board duly appointed to administer the Plan
and having such powers as shall be specified by the Board. If no committee of
the Board has been appointed to administer the Plan, the Board shall exercise
all of the powers of the Committee granted herein, and, in any event, the Board
may in its discretion exercise any or all of such powers.

 

(g)                                 “Company” means AmNet
Mortgage, Inc., a Maryland corporation, or any successor corporation
thereto.

 

(h)                                 “Consultant” means a person engaged to
provide consulting or advisory services (other than as an Employee or a member
of the Board) to a Participating Company, provided that the identity of such
person, the nature of such services or the entity to which such services are
provided would not preclude the Company from offering or selling securities to
such person pursuant to the Plan in reliance on a Form S-8 Registration
Statement under the Securities Act.

 

(i)                                     “Deferred Stock Unit” means a
bookkeeping entry representing a right granted to a Participant pursuant to
Section 11 of the Plan to receive a share of Stock on a date determined in
accordance with the provisions of Section 11 and the Participant’s Award
Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

(i)                                     If, on such date,
the Stock is listed on a national or regional securities exchange or market
system, the Fair Market Value of a share of Stock shall be the closing price of
a share of Stock (or the mean of the closing bid and asked prices of a share of
Stock if the Stock is so quoted instead) as quoted on the Nasdaq National
Market, The Nasdaq SmallCap Market or such other national or regional securities
exchange or market system constituting the primary market for the Stock, as
reported in The Wall Street Journal
or such other source as the Company deems reliable. If the relevant date does
not fall on a day on which the Stock has traded on such securities exchange or
market system, the date on which the Fair Market Value shall be established
shall be the last day on which the Stock was so traded prior to the

 

B-2

 

relevant date, or such other appropriate day as shall be determined by
the Committee, in its discretion.

 

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

 

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

 

(q)                                 “Indexed Option” means an Option with an
exercise price which either increases by a fixed percentage over time or
changes by reference to a published index, as determined by the Committee and set
forth in the Option Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

B-3

 

(ff)                                “Prior Plan Options” means any option or other
award granted by the Company which is subject to vesting or repurchase by the
Company, including specifically, all such options and awards granted pursuant
to the Company’s 1997 Stock Incentive Plan, 1997 Stock Option Plan and 1997
Outside Director Stock Option Plan which is outstanding on or after the Effective
Date.

 

(gg)                          “Restricted Stock Award” means an Award of a
Restricted Stock Bonus or a Restricted Stock Purchase Right.

 

(hh)                          “Restricted Stock Bonus” means Stock granted
to a Participant pursuant to Section 8 of the Plan.

 

(ii)                                  “Restricted Stock Purchase Right” means
a right to purchase Stock granted to a Participant pursuant to Section 8
of the Plan.

 

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

 

(kk)                            “Restriction Period” means the period
established in accordance with Section 8.5 of the Plan during which shares
subject to a Restricted Stock Award are subject to Vesting Conditions.

 

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

 

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

 

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

 

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

 

(pp)                          “Service” means a Participant’s employment or
service with the Participating Company Group, whether in the capacity of an
Employee, a Director or a Consultant. A Participant’s Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders such Service or a change in the Participating Company
for which the Participant renders such Service, provided that there is no
interruption or termination of the Participant’s Service. Furthermore, a
Participant’s Service shall not be deemed to have terminated if the Participant
takes any military leave, sick leave, or other bona fide leave of absence
approved by the Company. However, if any such leave taken by a Participant
exceeds ninety (90) days, then on the one hundred eighty-first (181st) day
following the commencement of such leave any Incentive Stock Option held by the
Participant shall cease to be treated as an Incentive Stock Option and instead
shall be treated thereafter as a Nonstatutory Stock Option, unless the
Participant’s right to return to Service with the Participating Company Group
is guaranteed by statute or contract. Notwithstanding the foregoing, unless
otherwise designated by the Company or required by law, a leave of absence
shall not be treated as Service for purposes of determining vesting under the
Participant’s Award Agreement. A Participant’s Service shall be deemed to have
terminated either upon an actual termination of Service or upon the entity for
which the Participant performs Service ceasing to be a Participating Company.
In addition, a Participant’s Service shall be deemed to have terminated if, in
the Committee’s sole discretion, the Participant’s employment relationship is
transferred to an Affiliate or Subsidiary Corporation and the Participant is
offered a replacement equity award from the Affiliate or Subsidiary
Corporation. Subject to the foregoing, the Company, in its discretion, shall
determine whether the Participant’s Service has terminated and the effective
date of such termination.

 

B-4

 

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

 

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

 

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

 

(tt)                                “Vesting Conditions” mean those conditions
established in accordance with Section 8.5 or Section 10.3 of the
Plan prior to the satisfaction of which shares subject to a Restricted Stock
Award or Restricted Stock Unit Award, respectively, remain subject to
forfeiture or a repurchase option in favor of the Company upon the
Participant’s termination of Service.

 

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

 

3.                                      Administration.

 

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

 

3.2                                 Authority
of Officers.  Any Officer shall have
the authority to act on behalf of the Company with respect to any matter,
right, obligation, determination or election which is the responsibility of or
which is allocated to the Company herein, provided the Officer has apparent
authority with respect to such matter, right, obligation, determination or
election. The Board may, in its discretion, delegate to a committee comprised
of one or more Officers the authority to grant one or more Awards, without
further approval of the Board or the Committee, to any Employee, other than a
person who, at the time of such grant, is an Insider; provided, however, that
(a) such Awards shall not be granted for shares in excess of the maximum
aggregate number of shares of Stock authorized for issuance pursuant to
Section 4.1, (b) the exercise price per share of each Option shall be
not less than the Fair Market Value per share of the Stock on the effective
date of grant (or, if the Stock has not traded on such date, on the last day
preceding the effective date of grant on which the Stock was traded), and
(iii) each such Award shall be subject to the terms and conditions of the
appropriate standard form of Award Agreement approved by the Board or the
Committee and shall conform to the provisions of the Plan and such other
guidelines as shall be established from time to time by the Board or the
Committee.

 

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

 

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

 

B-5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(j)                                     to authorize, in
conjunction with any applicable Company deferred compensation plan, that the
receipt of cash or Stock subject to any Award under this Plan, may be deferred
under the terms and conditions of such Company deferred compensation plan; and

 

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

 

3.6                                 No
Repricing.  Without the affirmative
vote of holders of a majority of the shares of Stock cast in person or by proxy
at a meeting of the stockholders of the Company at which a quorum representing
a majority of all outstanding shares of Stock is present or represented by
proxy, the Board shall not approve a program providing for the amendment of
outstanding Options and/or SARs to reduce the exercise price thereof. This
paragraph shall not be construed to apply to “issuing or

 

B-6

 

assuming a stock option in a transaction to which section 424(a)
applies,” within the meaning of Section 424 of the Code.

 

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

 

4.                                      Shares Subject to Plan.

 

4.1                                 Maximum
Number of Shares Issuable.  Subject
to adjustment as provided in Section 4.2, the maximum aggregate number of
shares of Stock that may be granted under the Plan shall be 2,441,867, reduced
at any time by the number of shares subject to the Prior Plan Options (which as
of the Effective Date equaled approximately 1,827,217). Such shares shall
consist of authorized but unissued or reacquired shares of Stock or any
combination thereof. If any outstanding Award, including any Prior Plan
Options, for any reason expires or is terminated or canceled without having
been exercised or settled in full, or if shares of Stock acquired pursuant to
an Award subject to forfeiture or repurchase, including any Prior Plan Options,
are forfeited or repurchased by the Company, the shares of Stock allocable to
the terminated portion of such Award, including any Prior Plan Options, or such
forfeited or repurchased shares of Stock shall again be available for grant
under the Plan. Shares of Stock shall not be deemed to have been granted
pursuant to the Plan (a) with respect to any portion of an Award that is
settled in cash or (b) to the extent such shares are withheld in
satisfaction of tax withholding obligations pursuant to Section 15.2. Upon
payment in shares of Stock pursuant to the exercise of a SAR, the number of
shares available for grant under the Plan shall be reduced only by the number
of shares actually issued in such payment. If the exercise price of an Option
is paid by tender to the Company, or attestation to the ownership, of shares of
Stock owned by the Participant, the number of shares available for grant under
the Plan shall be reduced by the net number of shares for which the Option is
exercised.

 

4.2                                 Adjustments
for Changes in Capital Structure.  Subject to any required action by the
stockholders of the Company, in the event of any change in the Stock effected
without receipt of consideration by the Company, whether through merger,
consolidation, reorganization, reincorporation, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, split-up,
split-off, spin-off, combination of shares, exchange of shares, or similar
change in the capital structure of the Company, or in the event of payment of a
dividend or distribution to the stockholders of the Company in a form other
than Stock (excepting normal cash dividends) that has a material effect on the Fair
Market Value of shares of Stock, appropriate adjustments shall be made in the
number and class of shares subject to the Plan and to any outstanding Awards,
and in the exercise or purchase price per share under any outstanding Award in
order to prevent dilution or enlargement of Participants’ rights under the
Plan. For purposes of the foregoing, conversion of any convertible securities
of the Company shall not be treated as “effected without receipt of
consideration by the Company.” Any fractional share resulting from an
adjustment pursuant to this Section 4.2 shall be rounded down to the
nearest whole number, and in no event may the exercise or purchase price under
any Award be decreased to an amount less than the par value, if any, of the
stock subject to such Award. The adjustments determined by the Committee
pursuant to this Section 4.2 shall be final, binding and conclusive.

 

B-7

 

5.                                      Eligibility and Award Limitations.

 

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

 

5.2                                 Participation.  Awards are granted solely at the discretion
of the Committee. Eligible persons may be granted more than one (1) Award.
However, eligibility in accordance with this Section shall not entitle any
person to be granted an Award, or, having been granted an Award, to be granted
an additional Award.

 

5.3                                 Incentive
Stock Option Limitations.

 

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

 

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

 

5.4                                 Award
Limits.

 

(i)                                     Options
and SARs.  Subject to adjustment as
provided in Section 4.2, no Employee shall be granted within any fiscal
year of the Company one or more Options or Freestanding SARs which in the
aggregate are for more than Three Hundred Thousand (300,000) shares of Stock,
provided, however, that the Company may make an additional one-time grant to
any newly-hired Employee of an Option and/or SAR for the purchase of up to an
additional One Hundred and Fifty Thousand (150,000) shares of Stock. An Option
which is canceled (or a Freestanding SAR as to which the exercise price is
reduced to reflect a reduction in the Fair Market Value of the Stock) in the
same fiscal year of the Company in which it was granted shall continue to be
counted against such limit for such fiscal year.

 

B-8

 

(ii)                                  Restricted
Stock Awards and Restricted Stock Units. 
Subject to adjustment as provided in Section 4.2, no Employee shall
be granted within any fiscal year of the Company one or more Restricted Stock
Awards or Restricted Stock Units, subject to Vesting Conditions based on the
attainment of Performance Goals, for more than One Hundred and Fifty Thousand
(150,000) shares of Stock, provided, however, that the Company may make an
additional one-time grant to any newly-hired Employee of a Restricted Stock
Award or Restricted Stock Units of up to an additional Seventy-Five Thousand
(75,000) shares of Stock.

 

(iii)                               Performance
Awards.  Subject to adjustment as
provided in Section 4.2, no Employee shall be granted (A) Performance
Shares which could result in such Employee receiving more than One Hundred and
Fifty Thousand (150,000) shares of Stock for each full fiscal year of the
Company contained in the Performance Period for such Award, or
(B) Performance Units which could result in such Employee receiving more
than Two Million Five Hundred Thousand ($2,500,000) for each full fiscal year
of the Company contained in the Performance Period for such Award. No
Participant may be granted more than one Performance Award for the same
Performance Period.

 

6.                                      Terms and Conditions of Options.

 

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

 

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

 

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

 

B-9

 

6.3                                 Payment
of Exercise Price.

 

(a)                                  Forms
of Consideration Authorized. 
Except as otherwise provided below, payment of the exercise price for
the number of shares of Stock being purchased pursuant to any Option shall be
made (i) in cash, by check or in cash equivalent, (ii) by tender to
the Company, or attestation to the ownership, of shares of Stock owned by the
Participant having a Fair Market Value not less than the exercise price,
(iii) by delivery of a properly executed notice of exercise together with
irrevocable instructions to a broker providing for the assignment to the
Company of the proceeds of a sale or loan with respect to some or all of the
shares being acquired upon the exercise of the Option (including, without
limitation, through an exercise complying with the provisions of
Regulation T as promulgated from time to time by the Board of Governors of
the Federal Reserve System) (a “Cashless Exercise”), (iv) by
such other consideration as may be approved by the Committee from time to time
to the extent permitted by applicable law, or (v) by any combination
thereof. The Committee may at any time or from time to time grant Options which
do not permit all of the foregoing forms of consideration to be used in payment
of the exercise price or which otherwise restrict one or more forms of
consideration.

 

(b)                                 Limitations
on Forms of Consideration.

 

(i)                                     Tender
of Stock.  Notwithstanding the
foregoing, an Option may not be exercised by tender to the Company, or
attestation to the ownership, of shares of Stock to the extent such tender or
attestation would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company’s stock.
Unless otherwise provided by the Committee, an Option may not be exercised by
tender to the Company, or attestation to the ownership, of shares of Stock
unless such shares either have been owned by the Participant for more than six
(6) months (and not used for another Option exercise by attestation during
such period) or were not acquired, directly or indirectly, from the Company.

 

(ii)                                  Cashless
Exercise.  The Company reserves, at
any and all times, the right, in the Company’s sole and absolute discretion, to
establish, decline to approve or terminate any program or procedures for the
exercise of Options by means of a Cashless Exercise, including with respect to
one or more Participants specified by the Company notwithstanding that such
program or procedures may be available to other Participants.

 

6.4                                 Effect
of Termination of Service.  An
Option shall be exercisable after a Participant’s termination of Service to
such extent and during such period as determined by the Committee, in its
discretion, and set forth in the Award Agreement evidencing such Option.

 

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

 

7.                                      Terms and Conditions of Stock
Appreciation Rights.

 

Stock Appreciation Rights shall be evidenced by Award Agreements
specifying the number of shares of Stock subject to the Award, in such form as
the Committee shall from time to time establish. No SAR or purported SAR shall
be a valid and binding obligation of the Company unless evidenced by

 

B-10

 

a fully executed Award Agreement. Award Agreements evidencing SARs may
incorporate all or any of the terms of the Plan by reference and shall comply
with and be subject to the following terms and conditions:

 

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

 

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

 

7.3                                 Exercisability
and Term of SARs.

 

(a)                                  Tandem
SARs.  Tandem SARs shall be
exercisable only at the time and to the extent, and only to the extent, that
the related Option is exercisable, subject to such provisions as the Committee
may specify where the Tandem SAR is granted with respect to less than the full
number of shares of Stock subject to the related Option. The Committee may, in
its discretion, provide in any Award Agreement evidencing a Tandem SAR that
such SAR may not be exercised without the advance approval of the Company and,
if such approval is not given, then the Option shall nevertheless remain
exercisable in accordance with its terms. A Tandem SAR shall terminate and
cease to be exercisable no later than the date on which the related Option
expires or is terminated or canceled. Upon the exercise of a Tandem SAR with
respect to some or all of the shares subject to such SAR, the related Option
shall be canceled automatically as to the number of shares with respect to
which the Tandem SAR was exercised. Upon the exercise of an Option related to a
Tandem SAR as to some or all of the shares subject to such Option, the related
Tandem SAR shall be canceled automatically as to the number of shares with
respect to which the related Option was exercised.

 

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

 

7.4                                 Exercise
of SARs.  Upon the exercise (or
deemed exercise pursuant to Section 7.5) of a SAR, the Participant (or the
Participant’s legal representative or other person who acquired the right to
exercise the SAR by reason of the Participant’s death) shall be entitled to
receive payment of an amount for each share with respect to which the SAR is
exercised equal to the excess, if any, of the Fair Market Value of a share of
Stock on the date of exercise of the SAR over the exercise price. Payment of
such amount shall be made in cash, shares of Stock, or any combination thereof
as determined by the Committee. Unless otherwise provided in the Award
Agreement evidencing such SAR, payment shall be made in a lump sum as soon as
practicable following the date of exercise of the SAR. The Award Agreement
evidencing any SAR may provide for deferred payment in a lump sum or in
installments. When payment is to be made in shares of Stock, the number of
shares to be issued shall be determined on the basis of the Fair Market Value of
a share of Stock on the date of exercise of the SAR. For purposes of
Section 7, a SAR shall be deemed exercised on the date on which the
Company receives notice of exercise from the Participant.

 

7.5                                 Deemed
Exercise of SARs.  If, on the date
on which a SAR would otherwise terminate or expire, the SAR by its terms
remains exercisable immediately prior to such termination or expiration

 

B-11

 

and, if so exercised, would result in a payment to the holder of such
SAR, then any portion of such SAR which has not previously been exercised shall
automatically be deemed to be exercised as of such date with respect to such
portion.

 

7.6                                 Effect
of Termination of Service.  Subject
to earlier termination of the SAR as otherwise provided herein a SAR shall be
exercisable after a Participant’s termination of Service to such extent and
during such period as determined by the Committee, in its discretion, and set
forth in the Award Agreement evidencing such SAR and thereafter shall
terminate.

 

7.7                                 Nontransferability
of SARs.  During the lifetime of the
Participant, a SAR shall be exercisable only by the Participant or the
Participant’s guardian or legal representative. Prior to the exercise of a SAR,
the SAR shall not be subject in any manner to anticipation, alienation, sale,
exchange, transfer, assignment, pledge, encumbrance, or garnishment by
creditors of the Participant or the Participant’s beneficiary, except transfer
by will or by the laws of descent and distribution. Notwithstanding any of the
foregoing, the Board may permit further transferability of any SAR, on a
general or specific basis, and may impose conditions and limitations on any
permitted transferability.

 

8.                                      Terms and Conditions of Restricted
Stock Awards.

 

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

 

8.1                                 Types
of Restricted Stock Awards Authorized. 
Restricted Stock Awards may be in the form of either a Restricted Stock
Bonus or a Restricted Stock Purchase Right. Restricted Stock Awards may be
granted upon such conditions as the Committee shall determine, including,
without limitation, upon the attainment of one or more Performance Goals
described in Section 9.4. If either the grant of a Restricted Stock Award
or the lapsing of the Restriction Period is to be contingent upon the
attainment of one or more Performance Goals, the Committee shall follow
procedures substantially equivalent to those set forth in Sections 9.3 through
9.5(a).

 

8.2                                 Purchase
Price.  The purchase price for
shares of Stock issuable under each Restricted Stock Purchase Right shall be
established by the Committee in its discretion. No monetary payment (other than
applicable tax withholding) shall be required as a condition of receiving
shares of Stock pursuant to a Restricted Stock Bonus, the consideration for
which shall be services actually rendered to a Participating Company or for its
benefit. Notwithstanding the foregoing, the Participant shall furnish consideration
in the form of cash or past services rendered to a Participating Company or for
its benefit having a value not less than the par value of the shares of Stock
subject to such Restricted Stock Award.

 

8.3                                 Purchase
Period.  A Restricted Stock Purchase
Right shall be exercisable within a period established by the Committee, which
shall in no event exceed thirty (30) days from the effective date of the
grant of the Restricted Stock Purchase Right; provided, however, that no
Restricted Stock Purchase Right granted to a prospective Employee, prospective
Consultant or prospective Director may become exercisable prior to the date on
which such person commences Service.

 

8.4                                 Payment
of Purchase Price.  Except as
otherwise provided below, payment of the purchase price for the number of
shares of Stock being purchased pursuant to any Restricted Stock Purchase Right
shall be made (a) in cash, by check, or in cash equivalent, (b) by
such other consideration as may be approved by the Committee from time to time
to the extent permitted by applicable law, or (iii) by

 

B-12

 

any combination thereof. The Committee may at any time or from time to
time grant Restricted Stock Purchase Rights which do not permit all of the foregoing
forms of consideration to be used in payment of the purchase price or which
otherwise restrict one or more forms of consideration. Restricted Stock Bonuses
shall be issued in consideration for past services actually rendered to a
Participating Company or for its benefit.

 

8.5                                 Vesting
and Restrictions on Transfer. 
Shares issued pursuant to any Restricted Stock Award may or may not be
made subject to Vesting Conditions based upon the satisfaction of such Service
requirements, conditions, restrictions or performance criteria, including,
without limitation, Performance Goals as described in Section 9.4, as
shall be established by the Committee and set forth in the Award Agreement
evidencing such Award. During any Restriction Period in which shares acquired
pursuant to a Restricted Stock Award remain subject to Vesting Conditions, such
shares may not be sold, exchanged, transferred, pledged, assigned or otherwise
disposed of other than pursuant to an Ownership Change Event, as defined in
Section 13.1, or as provided in Section 8.8. Upon request by the
Company, each Participant shall execute any agreement evidencing such transfer
restrictions prior to the receipt of shares of Stock hereunder and shall
promptly present to the Company any and all certificates representing shares of
Stock acquired hereunder for the placement on such certificates of appropriate
legends evidencing any such transfer restrictions.

 

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

 

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

 

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

 

B-13

 

9.                                      Terms and Conditions of Performance
Awards.

 

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

 

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

 

9.2                                 Initial
Value of Performance Shares and Performance Units.  Unless otherwise provided by the Committee
in granting a Performance Award, each Performance Share shall have an initial
value equal to the Fair Market Value of one (1) share of Stock, subject to
adjustment as provided in Section 4.2, on the effective date of grant of
the Performance Share, and each Performance Unit shall have an initial value of
one hundred dollars ($100). The final value payable to the Participant in
settlement of a Performance Award determined on the basis of the applicable
Performance Award Formula will depend on the extent to which Performance Goals
established by the Committee are attained within the applicable Performance
Period established by the Committee.

 

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

 

B-14

 

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

 

(a)                                  Performance
Measures.  Performance Measures
shall have the same meanings as used in the Company’s financial statements, or,
if such terms are not used in the Company’s financial statements, they shall
have the meaning applied pursuant to generally accepted accounting principles,
or as used generally in the Company’s industry. Performance Measures shall be
calculated with respect to the Company and each Subsidiary Corporation
consolidated therewith for financial reporting purposes or such division or
other business unit as may be selected by the Committee. For purposes of the
Plan, the Performance Measures applicable to a Performance Award shall be
calculated in accordance with generally accepted accounting principles, but
prior to the accrual or payment of any Performance Award for the same
Performance Period and excluding the effect (whether positive or negative) of any
change in accounting standards or any extraordinary, unusual or nonrecurring
item, as determined by the Committee, occurring after the establishment of the
Performance Goals applicable to the Performance Award. Performance Measures may
be one or more of the following, or a combination of the any of the following,
as determined by the Committee:

 

(i)                                     revenue;

 

(ii)                                  gross
margin;

 

(iii)                               operating
margin;

 

(iv)                              operating
income;

 

(v)                                 pre-tax
profit;

 

(vi)                              earnings
before interest, taxes and depreciation;

 

(vii)                           net
income;

 

(viii)                        cash
flow;

 

(ix)                                expenses;

 

(x)                                   the
market price of the Stock;

 

(xi)                                earnings
per share;

 

(xii)                             return
on stockholder equity;

 

(xiii)                          return
on capital;

 

(xiv)                         return
on net assets;

 

(xv)                            economic
value added;

 

(xvi)                         number
of customers;

 

(xvii)                      market
share;

 

(xviii)                   return
on investment

 

(xix)                           profit
after tax

 

(xx)                              product
approval

 

(xxi)                           volume
and/or origination;

 

B-15

 

(xxii)                        strategic
benchmarks; and

 

(xxiii)                     customer
satisfaction.

 

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

 

9.5                                 Settlement
of Performance Awards.

 

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

 

(b)                                 Discretionary
Adjustment of Award Formula.  In
its discretion, the Committee may, either at the time it grants a Performance Award
or at any time thereafter, provide for the positive or negative adjustment of
the Performance Award Formula applicable to a Performance Award granted to any
Participant who is not a “covered employee” within the meaning of
Section 162(m) (a “Covered Employee”) to reflect
such Participant’s individual performance in his or her position with the
Company or such other factors as the Committee may determine. If permitted
under a Covered Employee’s Award Agreement, the Committee shall have the
discretion, on the basis of such criteria as may be established by the
Committee, to reduce some or all of the value of the Performance Award that
would otherwise be paid to the Covered Employee upon its settlement
notwithstanding the attainment of any Performance Goal and the resulting value
of the Performance Award determined in accordance with the Performance Award
Formula. No such reduction may result in an increase in the amount payable upon
settlement of another Participant’s Performance Award.

 

(c)                                  Effect
of Leaves of Absence.  Unless
otherwise required by law, payment of the final value, if any, of a Performance
Award held by a Participant who has taken in excess of thirty (30) days in
leaves of absence during a Performance Period shall be prorated on the basis of
the number of days of the Participant’s Service during the Performance Period
during which the Participant was not on a leave of absence.

 

(d)                                 Notice
to Participants.  As soon as
practicable following the Committee’s determination and certification in accordance
with Sections 9.5(a) and (b), the Company shall notify each Participant of the
determination of the Committee.

 

(e)                                  Payment
in Settlement of Performance Awards. 
As soon as practicable following the Committee’s determination and
certification in accordance with Sections 9.5(a) and (b), payment shall be made
to each eligible Participant (or such Participant’s legal representative or
other person who acquired the right to receive such payment by reason of the
Participant’s death) of the final value of the Participant’s Performance Award.
Payment of such amount shall be made in cash, shares of Stock, or a combination
thereof as determined by the Committee. Unless otherwise provided in the Award
Agreement evidencing a Performance Award, payment shall be made in a lump sum.
An Award Agreement may provide for deferred payment in a lump sum or in
installments. If any payment is to be made on a deferred basis, the Committee
may, but shall not be obligated to, provide for the payment during the deferral
period of Dividend Equivalents or interest.

 

(f)                                    Provisions
Applicable to Payment in Shares. 
If payment is to be made in shares of Stock, the number of such shares
shall be determined by dividing the final value of the Performance

 

B-16

 

Award by the value of a share of Stock determined by the method
specified in the Award Agreement. Such methods may include, without limitation,
the closing market price on a specified date (such as the settlement date) or
an average of market prices over a series of trading days. Shares of Stock
issued in payment of any Performance Award may be fully vested and freely
transferable shares or may be shares of Stock subject to Vesting Conditions as
provided in Section 8.5. Any shares subject to Vesting Conditions shall be
evidenced by an appropriate Award Agreement and shall be subject to the
provisions of Sections 8.5 through 8.8 above.

 

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

 

9.7                                 Effect
of Termination of Service.  The
effect of a Participant’s termination of Service on the Performance Award shall
be determined by the Committee, in its discretion, and set forth in the Award
Agreement evidencing such Performance Award.

 

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

 

10.                               Terms and Conditions of Restricted
Stock Unit Awards.

 

Restricted Stock Unit Awards shall be evidenced by Award Agreements
specifying the number of Restricted Stock Units subject to the Award, in such
form as the Committee shall from time to time establish. No Restricted Stock
Unit Award or purported Restricted Stock Unit Award shall be a valid and
binding obligation of the Company unless evidenced by a fully executed Award
Agreement. Award

 

B-17

 

Agreements evidencing Restricted Stock Units may incorporate all or any
of the terms of the Plan by reference and shall comply with and be subject to
the following terms and conditions:

 

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

 

10.2                           Purchase Price.  No monetary payment (other than applicable tax withholding, if
any) shall be required as a condition of receiving a Restricted Stock Unit
Award, the consideration for which shall be services actually rendered to a
Participating Company or for its benefit.

 

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

 

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

 

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

 

10.6                           Settlement of Restricted Stock Unit Awards.  The Company shall issue to a Participant on
the date on which Restricted Stock Units subject to the Participant’s
Restricted Stock Unit Award vest or on such other date determined by the
Committee, in its discretion, and set forth in the Award Agreement one
(1) share of Stock (and/or any other new, substituted or additional
securities or other

 

B-18

 

property pursuant to an adjustment described in Section 10.4) for
each Restricted Stock Unit then becoming vested or otherwise to be settled on
such date, subject to the withholding of applicable taxes. Notwithstanding the
foregoing, if permitted by the Committee and set forth in the Award Agreement,
the Participant may elect in accordance with terms specified in the Award
Agreement to defer receipt of all or any portion of the shares of Stock or
other property otherwise issuable to the Participant pursuant to this Section.

 

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

 

11.                               Deferred Stock Units.

 

11.1                           Establishment of Deferred Stock Unit Program.  The Committee, in its discretion and upon
such terms and conditions as it may determine, may establish one or more
programs pursuant to the Plan under which:

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)                                  Vesting
Conditions.  Deferred Stock
Units shall not be subject to any vesting conditions.

 

(b)                                 Terms
and Conditions of Deferred Stock Units.

 

B-19

 

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

 

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

 

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

 

12.                               Standard Forms of Award Agreement.

 

12.1                           Award Agreements.  Each Award shall comply with and be subject to the terms and
conditions set forth in the appropriate form of Award Agreement approved by the
Committee and as amended from time to time. Any Award Agreement may consist of
an appropriate form of Notice of Grant and a form of Agreement incorporated
therein by reference, or such other form or forms as the Committee may approve
from time to time.

 

12.2                           Authority to Vary Terms.  The Committee shall have the authority from
time to time to vary the terms of any standard form of Award Agreement either
in connection with the grant or amendment of an individual Award or in
connection with the authorization of a new standard form or forms; provided,
however, that the terms and conditions of any such new, revised or amended
standard form or forms of Award Agreement are not inconsistent with the terms
of the Plan.

 

B-20

 

13.                               Change in Control.

 

13.1                           Definitions.

 

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

 

(b)                                 A “Change in Control”
shall mean an Ownership Change Event or series of related Ownership Change
Events (collectively, a “Transaction”) in which the
stockholders of the Company immediately before the Transaction do not retain
immediately after the Transaction, in substantially the same proportions as
their ownership of shares of the Company’s voting stock immediately before the
Transaction, direct or indirect beneficial ownership of more than fifty percent
(50%) of the total combined voting power of the outstanding voting securities of
the Company or, in the case of an Ownership Change Event described in
Section 13.1(a)(iii), the entity to which the assets of the Company were
transferred (the “Transferee”), as the case may be. For purposes of
the preceding sentence, indirect beneficial ownership shall include, without
limitation, an interest resulting from ownership of the voting securities of
one or more corporations or other business entities which own the Company or
the Transferee, as the case may be, either directly or through one or more
subsidiary corporations or other business entities. The Committee shall have
the right to determine whether multiple sales or exchanges of the voting
securities of the Company or multiple Ownership Change Events are related, and
its determination shall be final, binding and conclusive.

 

13.2                           Effect of Change in Control on Options and SARs.

 

(a)                                  Accelerated
Vesting.  Notwithstanding any
other provision of the Plan to the contrary, the Committee, in its sole
discretion, may provide in any Award Agreement or, in the event of a Change in
Control, may take such actions as it deems appropriate to provide for the
acceleration of the exercisability and vesting in connection with such Change
in Control of any or all outstanding Options and SARs and shares acquired upon
the exercise of such Options and SARs upon such conditions and to such extent
as the Committee shall determine.

 

(b)                                 Assumption or Substitution.  In the event of a Change in Control, the
surviving, continuing, successor, or purchasing corporation or other business
entity or parent corporation thereof, as the case may be (the “Acquiring
Corporation”), may, without the consent of the
Participant, either assume the Company’s rights and obligations under
outstanding Options and SARs or substitute for outstanding Options and SARs
substantially equivalent options and stock appreciation rights for the
Acquiring Corporation’s stock. In the event that the Acquiring Corporation
elects not to assume or substitute for outstanding Options and SARs in connection
with a Change in Control, or if the Acquiring Corporation is not a “publicly
held corporation” within the meaning of Section 162(m), the exercisability
and vesting of each such outstanding Option, SAR and any shares acquired upon
the exercise thereof held by a Participant whose Service has not terminated
prior to such date shall be accelerated, effective as of the date ten
(10) days prior to the date of the Change in Control. The exercise or
vesting of any Option, SAR and any shares acquired upon the exercise thereof
that was permissible solely by reason of this Section 13.2 and the
provisions of such applicable Award Agreement shall be conditioned upon the
consummation of the Change in Control. Any Options and SARs which are neither
assumed or substituted for by the Acquiring Corporation in connection with the
Change in Control nor exercised as of the date of the Change in Control shall
terminate and cease to be outstanding

 

B-21

 

effective as of the date of the Change in Control. Notwithstanding the
foregoing, shares acquired upon exercise of an Option or SAR prior to the
Change in Control and any consideration received pursuant to the Change in
Control with respect to such shares shall continue to be subject to all
applicable provisions of the applicable Award Agreement evidencing such Option
or SAR except as otherwise provided in such applicable Award Agreement.
Furthermore, notwithstanding the foregoing, if the corporation the stock of
which is subject to the outstanding Options and SARs immediately prior to an
Ownership Change Event described in Section 13.1(a)(i) constituting a
Change in Control is the surviving or continuing corporation and immediately
after such Ownership Change Event less than fifty percent (50%) of the total
combined voting power of its voting stock is held by another corporation or by
other corporations that are members of an affiliated group within the meaning
of Section 1504(a) of the Code without regard to the provisions of Section 1504(b)
of the Code, the outstanding Options and SARs shall not terminate unless the
Committee otherwise provides in its discretion.

 

(c)                                  Cash-Out.  The Committee may, in its sole discretion
and without the consent of any Participant, determine that, upon the occurrence
of a Change in Control, each or any Option or SAR outstanding immediately prior
to the Change in Control shall be canceled in exchange for a payment with
respect to each vested share of Stock subject to such canceled Option or SAR in
(i) cash, (ii) stock of the Company or of a corporation or other
business entity a party to the Change in Control, or (iii) other property
which, in any such case, shall be in an amount having a Fair Market Value equal
to the excess of the Fair Market Value of the consideration to be paid per
share of Stock in the Change in Control over the exercise price per share under
such Option or SAR (the “Spread”). In the event such
determination is made by the Committee, the Spread (reduced by applicable
withholding taxes, if any) shall be paid to Participants in respect of their
canceled Options and SARs as soon as practicable following the date of the
Change in Control.

 

13.3                           Effect of Change in Control on Restricted Stock
Awards.  The Committee may,
in its discretion, provide in any Award Agreement evidencing a Restricted Stock
Award that, in the event of a Change in Control, the lapsing of the Restriction
Period applicable to the shares subject to the Restricted Stock Award held by a
Participant whose Service has not terminated prior to the Change in Control
shall be accelerated effective immediately prior to the consummation of the
Change in Control to such extent as specified in such Award Agreement. Any
acceleration of the lapsing of the Restriction Period that was permissible
solely by reason of this Section 13.3 and the provisions of such Award
Agreement shall be conditioned upon the consummation of the Change in Control.

 

13.4                           Effect of Change in Control on Performance Awards.  The Committee may, in its discretion, provide
in any Award Agreement evidencing a Performance Award that, in the event of a
Change in Control, the Performance Award held by a Participant whose Service
has not terminated prior to the Change in Control shall become payable
effective as of the date of the Change in Control to such extent as specified
in such Award Agreement.

 

13.5                           Effect of Change in Control on Restricted Stock Unit
Awards.  The Committee may,
in its discretion, provide in any Award Agreement evidencing a Restricted Stock
Unit Award that, in the event of a Change in Control, the Restricted Stock Unit
Award held by a Participant whose Service has not terminated prior to such date
shall be settled effective as of the date of the Change in Control to such
extent as specified in such Award Agreement.

 

13.6                           Effect of Change in Control on Deferred Stock Units.  The Committee may, in its discretion,
provide in any Award Agreement evidencing a Deferred Stock Unit Award that, in
the event of a Change in Control, the Deferred Stock Units pursuant to such
Award shall be settled effective as of the date of the Change in Control to
such extent as specified in such Award Agreement.

 

B-22

 

14.                               Compliance with Securities Law.

 

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

 

15.                               Tax Withholding.

 

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

 

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

 

16.                               Amendment or Termination of Plan.

 

The Committee may amend, suspend or terminate the Plan at any time.
However, without the approval of the Company’s stockholders, there shall be
(a) no increase in the maximum aggregate number of shares of Stock that
may be issued under the Plan (except by operation of the provisions of
Section 4.2), (b) no change in the class of persons eligible to
receive Incentive Stock Options, (c) no Option and/or SAR repricing as
described in Section 3.6, (d) no amendment to permit the granting of
Options (other than Indexed Options) with exercise prices less than Fair Market
Value on the date of grant, and (e) no other amendment of the Plan that
would require approval of the Company’s stockholders under any applicable law,
regulation or rule. No amendment, suspension or termination of the Plan shall
affect any then outstanding Award unless expressly provided by the Committee.
In any event, no amendment, suspension or termination of the Plan may adversely
affect any then outstanding Award without the consent of the Participant unless
necessary to comply with any applicable law, regulation or rule.

 

B-23

 

17.                               Miscellaneous Provisions.

 

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

 

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

 

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

 

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

 

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

 

17.6                           Severability.  If any one or more of the provisions (or any part thereof) of
this Plan or of any Award Agreement issued hereunder, shall be held to be
invalid, illegal or unenforceable in any respect, such provision shall be
modified so as to make it valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions (or any part thereof)
of the Plan or of any Award Agreement shall not in any way be affected or
impaired thereby. The Company may, without the consent of any Participant, and
in a manner determined necessary solely in the discretion of the Company, amend
the Plan and any outstanding Award Agreement as the Company deems necessary to
ensure the Plan and all Awards remain valid, legal or enforceable in all
respects.

 

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

 

B-24

 

17.8                           Unfunded Obligation.  Participants shall have the status of
general unsecured creditors of the Company. Any amounts payable to Participants
pursuant to the Plan shall be unfunded and unsecured obligations for all
purposes, including, without limitation, Title I of the Employee Retirement
Income Security Act of 1974. No Participating Company shall be required to
segregate any monies from its general funds, or to create any trusts, or
establish any special accounts with respect to such obligations. The Company
shall retain at all times beneficial ownership of any investments, including
trust investments, which the Company may make to fulfill its payment
obligations hereunder. Any investments or the creation or maintenance of any
trust or any Participant account shall not create or constitute a trust or
fiduciary relationship between the Committee or any Participating Company and a
Participant, or otherwise create any vested or beneficial interest in any
Participant or the Participant’s creditors in any assets of any Participating
Company. The Participants shall have no claim against any Participating Company
for any changes in the value of any assets which may be invested or reinvested
by the Company with respect to the Plan.

 

B-25Exhibit 10.28

 

HOME ASSET MANAGEMENT CORP.

11100 Santa Monica Blvd., Suite 2000

Los Angeles, CA 90025

 

STOCK REPURCHASE AGREEMENT

 

June 24, 2004

 

Mr. John M. Robbins

Chief Executive Officer

AmNet Mortgage, Inc.

10421 Wateridge Circle, Suite
250

San Diego, CA 92121

 

Re:  Repurchase of 500,000 shares of AmNet common
stock

 

Dear John:

 

This Stock Repurchase Agreement
(“Agreement”) is made and entered into as of the 24th day of June, 2004, by and
among AmNet Mortgage, Inc. (“Buyer” or the “Company”), a Maryland Corporation
and Home Asset Management Corp., a Delaware Corporation (“Seller”).

 

WHEREAS, Seller desires to sell
the Shares (as defined herein) on the terms and subject to the conditions
contained in this Agreement; and

 

WHEREAS, Buyer has been
authorized by its Board of Directors and desires to purchase the Shares (as
defined herein) on the terms and subject to the conditions contained in this
Agreement.

 

NOW, THEREFORE, in
consideration of the mutual promises hereinafter set forth and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereby agree as follows:

 

1.  Seller shall sell, transfer, convey, assign
and deliver to Buyer, and Buyer shall acquire from Seller, 500,000 shares of
common stock, $0.01 par value per share, of the Company owned by Seller (the
“Shares”).

 

2.  The purchase price to be paid by Buyer to
Seller shall be Four Million Four Hundred Thousand Dollars ($4,400,000) by wire
transfer of immediately available funds based upon the Company’s intra-day
stock trading price of $8.80 per share on June 22, 2004.

 

3.  Ownership of the Shares. (i)
Seller is and immediately prior to the Closing will be, the true, lawful owner
and record holder of the Shares, and will have the right to sell and transfer
to Buyer good and marketable title to such Shares, free and clear of any claim,
liability, lien, pledge, mortgage, security interest, restriction or
encumbrance (collectively, “Encumbrances”) of any kind; and (ii) the delivery
to Buyer of the instruments of transfer of ownership contemplated by this
Agreement will vest good and marketable title to the Shares in Buyer, free and
clear of all Encumbrances of any kind or nature whatsoever.  Seller, or its affiliates, acquired the
Shares from the Company in a non public offering more than three years before
the date of this Agreement.

 

The wire instructions are as
follows:

Bank of America

Private Bank - Los
Angeles,#4957

555 South Flower Street, 49th
Floor

Los Angeles, CA 90071

ABA #: 121000358

 

 

June 24, 2004

Stock Repurchase Agreement

 

 

Account Name: Home Asset
Management Co.

Account #: 49575-00809

 

Please indicate your
acknowledgement of and agreement to this Agreement by executing a copy of this
Agreement in the space indicated below.

 

Sincerely,

 

	
  Home Asset Management Corp.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ John C.
  Rocchio

  	
   

  
	
   

  	
  John C.
  Rocchio

  
	
   

  	
  President

  

 

 

ACCEPTED AND AGREED TO ON
                       ,
2004.

 

	
  Home Asset Management Corp.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ John C.
  Rocchio

  	
   

  
	
   

  	
  John C.
  Rocchio

  
	
   

  	
  President

  

 

	
  TCW/Crescent Mezzanine Partners, L.P.

  
	
  TCW/Crescent Mezzanine Trust

  
	
  TCW/Crescent Mezzanine Investment Partners, L.P.

  
	
  By:

  	
  TCW/Crescent
  Mezzanine, L.L.C.

  
	
  Its:

  	
  Investment
  Manager

  

 

 

	
  By:

  	
  /s/ John C.
  Rocchio

  	
   

  
	
   

  	
  John C.
  Rocchio

  
	
   

  	
  Managing
  Director

  

 

	
  AmNet Mortgage, Inc.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ John
  Robbins

  	
   

  
	
  Name:

  	
  John Robbins

  
	
  Its:

  	
  Chairman

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