Document:

Exhibit 10.1

 

 

ADOBE SYSTEMS INCORPORATED

2003 EQUITY INCENTIVE PLAN

 

Amended and Restated as of April 16, 2010

 

 

 

TABLE OF
CONTENTS

 

	
  1.

  	
   

  	
  Establishment, Purpose
  and Term of Plan

  	
   

  	
  1

  
	
   

  	
   

  	
  1.1
  Establishment

  	
   

  	
  1

  
	
   

  	
   

  	
  1.2
  Purpose

  	
   

  	
  1

  
	
   

  	
   

  	
  1.3
  Term of Plan

  	
   

  	
  1

  
	
  2.

  	
   

  	
  Definitions and
  Construction

  	
   

  	
  1

  
	
   

  	
   

  	
  2.1
  Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
  2.2
  Construction

  	
   

  	
  6

  
	
  3.

  	
   

  	
  Administration

  	
   

  	
  6

  
	
   

  	
   

  	
  3.1
  Administration by the Committee

  	
   

  	
  6

  
	
   

  	
   

  	
  3.2
  Authority of Officers

  	
   

  	
  6

  
	
   

  	
   

  	
  3.3
  Administration with Respect to Insiders

  	
   

  	
  6

  
	
   

  	
   

  	
  3.4
  Committee Complying with Section 162 (m)

  	
   

  	
  6

  
	
   

  	
   

  	
  3.5
  Powers of the Committee

  	
   

  	
  6

  
	
   

  	
   

  	
  3.6
  Repricing

  	
   

  	
  7

  
	
   

  	
   

  	
  3.7
  Indemnification

  	
   

  	
  8

  
	
  4.

  	
   

  	
  Shares Subject to Plan

  	
   

  	
  8

  
	
   

  	
   

  	
  4.1
  Maximum Number of Shares Issuable

  	
   

  	
  8

  
	
   

  	
   

  	
  4.2
  Adjustments for Changes in Capital Structure

  	
   

  	
  9

  
	
  5.

  	
   

  	
  Eligibility and Award
  Limitations

  	
   

  	
  9

  
	
   

  	
   

  	
  5.1
  Persons Eligible for Awards

  	
   

  	
  9

  
	
   

  	
   

  	
  5.2
  Participation

  	
   

  	
  9

  
	
   

  	
   

  	
  5.3
  Incentive Stock Option Limitations

  	
   

  	
  9

  
	
   

  	
   

  	
  5.4
  Award Limits

  	
   

  	
  10

  
	
  6.

  	
   

  	
  Terms and Conditions of
  Options

  	
   

  	
  11

  
	
   

  	
   

  	
  6.1
  Exercise Price

  	
   

  	
  11

  
	
   

  	
   

  	
  6.2
  Exercisability and Term of Options

  	
   

  	
  11

  
	
   

  	
   

  	
  6.3
  Payment of Exercise Price

  	
   

  	
  11

  
	
   

  	
   

  	
  6.4
  Effect of Termination of Service

  	
   

  	
  12

  
	
   

  	
   

  	
  6.5
  Transferability of Options

  	
   

  	
  12

  

 

i

 

	
  7.

  	
   

  	
  Terms and Conditions of
  Stock Appreciation Rights

  	
   

  	
  13

  
	
   

  	
   

  	
  7.1
  Types of SARs Authorized

  	
   

  	
  13

  
	
   

  	
   

  	
  7.2
  Exercise Price

  	
   

  	
  13

  
	
   

  	
   

  	
  7.3
  Exercisability and Term of SARs

  	
   

  	
  13

  
	
   

  	
   

  	
  7.4
  Exercise of SARs

  	
   

  	
  13

  
	
   

  	
   

  	
  7.5
  Deemed Exercise of SARs

  	
   

  	
  14

  
	
   

  	
   

  	
  7.6
  Effect of Termination of Service

  	
   

  	
  14

  
	
   

  	
   

  	
  7.7
  Nontransferability of SARs

  	
   

  	
  14

  
	
  8.

  	
   

  	
  Terms and Conditions of
  Stock Awards

  	
   

  	
  14

  
	
   

  	
   

  	
  8.1
  Types of Stock Awards Authorized

  	
   

  	
  14

  
	
   

  	
   

  	
  8.2
  Purchase Price

  	
   

  	
  14

  
	
   

  	
   

  	
  8.3
  Purchase Period

  	
   

  	
  15

  
	
   

  	
   

  	
  8.4
  Payment of Purchase Price

  	
   

  	
  15

  
	
   

  	
   

  	
  8.5
  Vesting: Restrictions on Transfer; Deferral

  	
   

  	
  15

  
	
   

  	
   

  	
  8.6
  Voting Rights; Dividends and Distributions

  	
   

  	
  15

  
	
   

  	
   

  	
  8.7
  Effect of Termination of Service

  	
   

  	
  16

  
	
   

  	
   

  	
  8.8
  Nontransferability of Stock Award Rights

  	
   

  	
  16

  
	
  9.

  	
   

  	
  Terms and Conditions of
  Performance Awards

  	
   

  	
  16

  
	
   

  	
   

  	
  9.1
  Types of Performance Awards Authorized

  	
   

  	
  16

  
	
   

  	
   

  	
  9.2 Initial
  Value of Performance Shares and Performance Units

  	
   

  	
  17

  
	
   

  	
   

  	
  9.3
  Establishment of Performance Period, Performance Goals and Performance Award
  Formula

  	
   

  	
  17

  
	
   

  	
   

  	
  9.4
  Measurement of Performance Goals

  	
   

  	
  17

  
	
   

  	
   

  	
  9.5
  Settlement of Performance Awards

  	
   

  	
  20

  
	
   

  	
   

  	
  9.6
  Dividend Equivalents

  	
   

  	
  21

  
	
   

  	
   

  	
  9.7
  Effect of Termination of Service

  	
   

  	
  21

  
	
   

  	
   

  	
  9.8
  Nontransferability of Performance Awards

  	
   

  	
  21

  
	
  10. 

  	
   

  	
  Standard Forms of Award
  Agreement

  	
   

  	
  21

  
	
   

  	
   

  	
  10.1
  Award Agreements

  	
   

  	
  21

  
	
   

  	
   

  	
  10.2
  Authority to Vary Terms

  	
   

  	
  21

  

 

ii

 

	
  11.

  	
   

  	
  Change of Control

  	
   

  	
  22

  
	
   

  	
   

  	
  11.1
  Awards Granted Prior to January 24, 2008

  	
   

  	
  22

  
	
   

  	
   

  	
  11.2
  Awards Granted On or After January 24, 2008

  	
   

  	
  23

  
	
  12.

  	
   

  	
  Compliance
  with Securities Law

  	
   

  	
  24

  
	
  13.

  	
   

  	
  Tax
  Withholding

  	
   

  	
  25

  
	
   

  	
   

  	
  13.1
  Tax Withholding in General

  	
   

  	
  25

  
	
   

  	
   

  	
  13.2
  Withholding in Shares

  	
   

  	
  25

  
	
  14.

  	
   

  	
  Termination of
  Amendment of Plan

  	
   

  	
  25

  
	
  15.

  	
   

  	
  Miscellaneous
  Provisions

  	
   

  	
  25

  
	
   

  	
   

  	
  15.1
  Repurchase Rights

  	
   

  	
  25

  
	
   

  	
   

  	
  15.2
  Provision of Information

  	
   

  	
  26

  
	
   

  	
   

  	
  15.3
  Rights as Employee, Consultant or Director

  	
   

  	
  26

  
	
   

  	
   

  	
  15.4
  Rights as a Stockholder

  	
   

  	
  26

  
	
   

  	
   

  	
  15.5
  Fractional Shares

  	
   

  	
  26

  
	
   

  	
   

  	
  15.6
  Beneficiary Designation

  	
   

  	
  26

  
	
   

  	
   

  	
  15.7
  Unfunded Obligation

  	
   

  	
  26

  
	
   

  	
   

  	
  15.8
  Section 409A

  	
   

  	
  27

  

 

iii

 

ADOBE SYSTEMS INCORPORATED

2003 EQUITY INCENTIVE PLAN

 

1.             ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

 

1.1           Establishment. 
Adobe Systems Incorporated, a Delaware corporation, hereby establishes
the Adobe Systems Incorporated 2003 Equity Incentive Plan (as amended and
restated, the “Plan”)
effective as of April 9, 2003, 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,
Stock Appreciation Rights, Stock Purchase Rights, Stock Bonuses, Restricted
Stock Units, Performance Shares and Performance Units.

 

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
earlier of the date the Plan is adopted, as amended, by the Board or the date
the Plan is duly approved, as amended, by the stockholders of the Company.

 

2.             DEFINITIONS AND CONSTRUCTION.

 

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

 

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

 

(b)           “Award” means any Option, SAR, Stock Purchase
Right, Stock Bonus, Restricted Stock Unit, Performance Share or Performance
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 “SAR 

 

 

Agreement,” a “Stock
Purchase Agreement,” a “Stock Bonus Agreement, “ a “Restricted Stock Unit
Agreement,” “ a “Performance Share Agreement” or a “Performance 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.

 

(f)            “Committee” means the Executive 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 Adobe Systems Incorporated, a Delaware
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 (i) registration on a Form S-8
Registration Statement under the Securities Act, or (ii) Rule 701 of
the Securities Act, or (iii) other means of compliance with the securities
laws of all relevant jurisdictions.

 

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

 

(j)            “Disability” means the permanent and total disability of the
Participant, within the meaning of Section 22(e)(3) and 409A(a)(2)(c)(i) of
the Code.

 

(k)           “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.

 

(l)            “Employee” means any person treated as an employee (including an
Officer or a member of the Board who is also treated as an employee) in the
records of a Participating Company and, with respect to any Incentive Stock
Option granted to such person, who is an employee for purposes of Section 422
of the Code; provided, however, that neither
service as a member of the Board nor payment of a director’s fee shall be
sufficient to constitute employment for purposes of the Plan.

 

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

 

(n)           “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,

 

2

 

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 Global Select 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 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.

 

(o)           “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.

 

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

 

(q)           “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.

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

(y)           “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.

 

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

 

(aa)         “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.

 

(bb)         “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 based on performance.

 

(cc)         “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 based upon performance.

 

(dd)         “Predecessor Plans” mean, collectively, the Adobe Systems
Incorporated 1994 Stock Option Plan and the Adobe Systems Incorporated 1999
Equity Incentive Plan.

 

(ee)         “Restricted Stock Unit”
means a bookkeeping entry representing a right granted to a Participant
pursuant to Section 8 of the Plan to receive one share of Stock, a cash
payment equal to the value of one share of Stock, or a combination thereof, as
determined in the sole discretion of the Committee.

 

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

 

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

 

(hh)         “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.

 

4

 

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

 

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

 

(kk)         “Service” means a Participant’s employment or service with the
Participating Company Group as an Employee, a Consultant or a Director,
whichever such capacity the Participant held on the date of grant of an
Award.  Unless otherwise determined by
the Board, a Participant’s Service shall be deemed to have terminated if the
Participant ceases to render service to the Participating Company Group in such
initial capacity.  However, a Participant’s
Service shall not be deemed to have terminated merely because of a change in
the Participating Company for which the Participant renders such Service in
such initial capacity, 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 bona fide leave of absence approved by the Company of
ninety (90) days or less.  In the event
of a leave in excess of ninety (90) days, the Participant’s Service shall be
deemed to terminate on the ninety-first (91st) day of the leave unless the
Participant’s right to return to Service is guaranteed by statute or
contract.  Notwithstanding the foregoing,
unless otherwise designated by the Company or required by law, a leave of
absence shall not be treated as Service for purposes of determining vesting
under the Participant’s Award Agreement. 
A Participant’s Service shall be deemed to have terminated either upon
an actual termination of Service or upon the corporation for which the
Participant performs Service ceasing to be a Participating Company.  Subject to the foregoing, the Company, in its
discretion, shall determine whether the Participant’s Service has terminated
and the effective date of such termination.

 

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

 

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

 

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

 

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

 

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

 

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

 

(rr)           “Vesting
Conditions” mean those conditions established in accordance with Section 8.5
of the Plan prior to the satisfaction of which shares subject to a Stock Award
remain subject to forfeiture or a repurchase option in favor of the Company.

 

5

 

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. 
To the extent consistent with applicable law (including but not limited
to Delaware General Corporation Law Section 157(c)), the Board may, in its
discretion, delegate to a committee comprised of one or more Officers (any such
committee, an “Officer Committee”) the
authority to designate Employees (other than themselves) to receive one or more
Options or rights to acquire shares of Stock and to determine the number of
shares of Stock subject to such Options and rights, without further approval of
the Board or the Committee. Any such grants will be subject to the terms of the
Board resolutions providing for such delegation of authority.

 

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).

 

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 or Nonstatutory Stock
Options;

 

6

 

(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 SARs, Restricted Stock Units, 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 of or to accommodate the laws, regulations, tax or accounting
effectiveness, accounting principles or custom of, foreign jurisdictions whose
citizens may be granted Awards; and

 

(j)            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           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 either (a) the cancellation of
outstanding Options or SARs and the grant in substitution therefor of new
Awards having a lower exercise or purchase price or (b) the amendment of
outstanding Options or SARs to reduce the exercise price thereof.  This paragraph shall not be construed to
apply to 

 

7

 

“issuing or
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 issued under the Plan shall be two hundred and
seventeen million two hundred and fifty-nine thousand six hundred and twenty
(217,259,620).  The number of shares of
stock available for issuance under the Plan shall be reduced (a) by one
share for each share issued pursuant to options or rights granted pursuant to
the Predecessor Plans or pursuant to Options or Stock Appreciation Rights, and (b) by
one and seventy seven-hundredths (1.77) shares for each share issued pursuant
to Awards other than those set forth in the preceding clause (a); provided, however, that (A) for Awards granted prior to
April 5, 2007, the reduction was one share of Stock for each share of
Stock issued pursuant to any Awards, (B) for Awards granted on April 5,
2007 through and including April 9, 2008, the reduction was two and
one-tenth (2.1) shares for each share issued pursuant to any Awards other than
options or rights granted pursuant to the Predecessor Plans or pursuant to
Options or Stock Appreciation Rights, and (C) for Awards granted on April 10,
2008 through and including March 31, 2009, the reduction was two and
four-tenths (2.4) shares for each share issued pursuant to any Awards other
than options or rights granted pursuant to the Predecessor Plans or pursuant to
Options or Stock Appreciation Rights. 
Such shares shall consist of authorized but unissued or reacquired
shares of Stock or any combination thereof. 
If an outstanding Award for any reason expires or is terminated or
canceled without having been exercised or settled in full, or if shares of
Stock acquired pursuant to an Award subject to forfeiture or repurchase are
forfeited or repurchased by the Company at the Participant’s purchase price to
effect a forfeiture of unvested shares upon termination of Service, the shares
of Stock allocable to the terminated portion of such Award or such forfeited or
repurchased shares of Stock shall be added back to the Plan share reserve in an
amount corresponding to the reduction in such share reserve previously made in
accordance with the rules described above in this Section 4.1 and
again be available for issuance under the Plan. 
Shares of Stock shall not be 

 

8

 

deemed to have
been issued pursuant to the Plan with respect to any portion of an Award (other
than a SAR that may be settled in shares of Stock and/or cash) that is settled
in cash. Shares withheld in satisfaction of tax withholding obligations
pursuant to Section 13.2 shall not again become available for issuance
under the Plan.  Upon exercise of a SAR,
whether in cash or shares of Stock, the number of shares available for issuance
under the Plan shall be reduced by the gross number of shares for which the SAR
is exercised.  If the exercise price of
an Option is paid by “net exercise” (as described in Section 6.3(a)(iv))
or tender to the Company, or attestation to the ownership, of shares of Stock
owned by the Participant, the number of shares available for issuance under the
Plan shall be reduced by the gross number of shares for which the Option is
exercised.

 

4.2           Adjustments
for Changes in Capital Structure.  In the event of any change in the Stock
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, in the ISO Share
Limit set forth in Section 5.3(b), the Award limits set forth in Section 5.4
and to any outstanding Awards, and in the exercise or purchase price per share
under any outstanding Award. 
Notwithstanding the foregoing, 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.

 

5.             ELIGIBILITY
AND AWARD LIMITATIONS.

 

5.1           Persons
Eligible for Awards.  Awards may be granted only to
Employees, Directors and Consultants.  No
Award shall be granted prior to the date on which such person commences
Service.

 

5.2           Participation.  Except
as otherwise provided in Section 3.2 above, 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, but who is otherwise an Employee
or a Director of, or 

 

9

 

Consultant to, the
Company or any of its Affiliates, may be granted only a Nonstatutory Stock
Option.

 

(b)           ISO Share Limit.  Subject to adjustment as provided in Section 4.2,
in no event shall more than 188,259,620 shares of Stock be available for
issuance pursuant to the exercise of Incentive Stock Options granted under the
Plan or the Predecessor Plans (the “ISO Share Limit”).

 

(c)           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, each
portion shall be separately identified.

 

5.4           Award Limits.

 

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

 

(i)            Options and SARs.  Subject to adjustment as provided in Section 4.2,
no Employee shall be granted within any fiscal year of the Company one or more
Options or Freestanding SARs which in the aggregate are for more than four
million (4,000,000) 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.

 

(ii)           Stock Awards. Subject to adjustment as
provided in Section 4.2, no Employee shall be granted within any fiscal
year of the Company one or more Stock Awards, subject to Vesting Conditions
based on the attainment of Performance Goals, for more than two hundred thousand (200,000) 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 two
hundred thousand (200,000) shares of Stock for each full 

 

10

 

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 dollars
($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 and (b) no Incentive Stock Option granted to a Ten
Percent Owner shall have an exercise price per share less than one hundred ten
percent (110%) of the Fair Market Value of a share of Stock on the effective
date of grant of the Option. 
Notwithstanding the foregoing, an Option (whether an Incentive Stock
Option or a Nonstatutory Stock Option) may be granted with an exercise price
lower than the minimum exercise price set forth above if such Option is granted
pursuant to an assumption or substitution for another option in a manner
qualifying under the provisions of Sections 409A and 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 
seven (7) years after the effective date of grant of such Option,
and (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.  Subject to
the foregoing, unless otherwise specified by the Committee in the grant of an
Option, any Option granted hereunder to an Employee, Consultant or Director
shall terminate seven (7) years after the effective date of grant of the
Option, unless earlier terminated in accordance with its provisions.

 

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 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 

 

11

 

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
a “net exercise” arrangement pursuant to which the Company will reduce the
number of shares of Stock issued upon exercise by the largest whole number of
shares with a Fair Market Value that does not exceed the aggregate exercise
price; provided, however, that the Company
shall accept a cash or other payment from the Participant to the extent of any
remaining balance of the aggregate exercise price not satisfied by such
reduction in the number of whole shares to be issued; provided
further, however, that shares of Stock will no longer be outstanding
under an Option and will not be exercisable thereafter to the extent that (A) shares
are used to pay the exercise price pursuant to the “net exercise,” (B) shares
are delivered to the Participant as a result of such exercise, and (C) shares
are withheld to satisfy tax withholding obligations; or (v) 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 (or
such longer or shorter period as necessary to avoid a charge to earnings for
financial accounting purposes) and not used for another Option exercise by
attestation during any 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.

 

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.  No Option shall be assignable or transferable
by the Participant, except 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, an Option shall be
assignable or transferable subject to the applicable limitations, if any,
described in the General Instructions to Form S-8 Registration Statement
under the Securities Act.

 

12

 

7.             TERMS AND
CONDITIONS OF STOCK APPRECIATION RIGHTS.

 

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

 

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

 

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

 

7.3           Exercisability and Term of SARs.

 

(a)           Tandem
SARs.  Tandem SARs shall
be exercisable only at the time and to the extent, and only to the extent, that
the related Option is exercisable, subject to such provisions as the Committee
may specify where the Tandem SAR is granted with respect to less than the full
number of shares of Stock subject to the related Option.  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 eight (8) 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 an 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 

 

13

 

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

 

7.6           Effect of
Termination of Service.  An
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.

 

7.7           Nontransferability
of SARs.  SARs may not be
assigned or transferred in any manner except by will or the laws of descent and
distribution, and, during the lifetime of the Participant, shall be exercisable
only by the Participant or the Participant’s guardian or legal representative.

 

8.             TERMS AND
CONDITIONS OF STOCK AWARDS.

 

Stock Awards shall
be evidenced by Award Agreements specifying whether the Award is a Stock Bonus,
a Stock Purchase Right or a Restricted Stock Unit, and the number of shares of
Stock subject to the Award, in such form as the Committee shall from time to
time establish.  No Stock Award or
purported Stock Award shall be a valid and binding obligation of the Company
unless evidenced by a fully executed Award Agreement.  Award Agreements evidencing 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
Stock Awards Authorized. 
Stock Awards may be in the form of a Stock Bonus, a Stock Purchase Right
or a Restricted Stock Unit.  Stock Awards
may be granted upon such conditions as the Committee shall determine,
including, without limitation, service to a Participating Company or upon the
attainment of one or more Performance Goals described in Section 9.4.  If either the grant of a 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 Stock Purchase Right shall be established by the Committee
in its discretion.  No monetary 

 

14

 

payment (other
than applicable tax withholding) shall be required as a condition of receiving
shares of Stock pursuant to a 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 Stock Award.

 

8.3           Purchase
Period.  A 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 Stock Purchase
Right; provided, however, that no Stock
Purchase Right granted to an Employee, a Consultant or a Director may become
exercisable prior to the date on which such person commences Service.

 

8.4           Payment of
Purchase Price.  Stock Bonuses
shall be issued in consideration for past services actually rendered to a
Participating Company or for its benefit. 
At the time of grant of Restricted Stock Units, the Committee will
determine the consideration, if any, to be paid by the Participant upon
delivery of each share of Stock acquired pursuant to Restricted Stock
Units.  Except as otherwise provided
below, payment of the purchase price for the number of shares of Stock being
purchased pursuant to any Stock Purchase Right or delivered pursuant to a
Restricted Stock Unit shall be made (i) in cash, by check, or cash
equivalent, (ii) 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
any combination thereof, in each case consistent with any requirements under
applicable law regarding payment in respect of the “par value” of the
Stock.  The Committee may at any time or
from time to time grant Stock Purchase Rights or Restricted Stock Units 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.

 

8.5           Vesting;
Restrictions on Transfer; Deferral.  Shares issued pursuant
to any Stock Award may or may not be made subject to vesting conditioned upon
the satisfaction of such Service requirements, conditions, restrictions or
performance criteria, including, without limitation, Performance Goals as
described in Section 9.4 (the “Vesting
Conditions”), as shall be established by the Committee
and set forth in the Award Agreement evidencing such Award.  During any period (the “Restriction Period”) in which shares acquired
pursuant to a 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 a Change of Control as provided in Section 11, 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. Restricted Stock
Units may be subject to such conditions that may delay the delivery of the
shares of Stock (or their cash equivalent) subject to Restricted Stock Units
after the vesting of such Award.

 

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
Stock Bonus or Restricted Stock Purchase Right, the Participant shall have all 

 

15

 

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.  With respect to
Restricted Stock Units, the Committee may, in its sole discretion, provide that
dividend equivalents shall not be paid or provide either for the current
payment of dividend equivalents or for the accumulation and payment of dividend
equivalents to the extent that the Restricted Stock Units become
nonforfeitable.  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 Stock Award shall be immediately subject to the
same Vesting Conditions and, if applicable, deferral elections as the shares
subject to the 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 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 (i) 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 Stock Purchase
Right which remain subject to Vesting Conditions as of the date of the
Participant’s termination of Service, (ii) the Participant shall forfeit
to the Company any shares acquired by the Participant pursuant to a Stock Bonus
which remain subject to Vesting Conditions as of the date of the Participant’s
termination of Service and (iii) the Participant shall forfeit all rights
in any portion of a Restricted Stock Unit award that has not vested 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 Stock Award Rights.  Rights to acquire shares of Stock pursuant to
a Stock Award may 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 by will
or the laws of descent and distribution, and, during the lifetime of the
Participant, shall be exercisable only by the Participant or the Participant’s
guardian or legal representative.

 

9.             TERMS AND
CONDITIONS OF PERFORMANCE AWARDS.

 

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

 

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

 

16

 

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
(or, as applicable for awards not granted in a manner intending to comply with Section 162(m),
a duly authorized Officer Committee in accordance with applicable law) 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.

 

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

 

(a)           Permitted
Performance Measures. 
Performance Measures may be one or more of the following, as determined
by the Committee:

 

(i)            growth in revenue;

 

(ii)           growth in the
market price of the Stock;

 

(iii)          operating margin;

 

(iv)          gross margin;

 

17

 

(v)           operating income;

 

(vi)          pre-tax profit;

 

(vii)         earnings before
interest, taxes and depreciation;

 

(viii)        earnings before
interest, taxes, depreciation and amortization;

 

(ix)           net income;

 

(x)            total return on
shares of Stock relative to the increase in an appropriate index as may be
selected by the Committee;

 

(xi)           earnings per share;

 

(xii)          return on
stockholder equity;

 

(xiii)         return on net
assets;

 

(xiv)        expenses;

 

(xv)         return on capital;

 

(xvi)        economic value added;

 

(xvii)       market share;

 

(xviii)      operating cash flow;

 

(xix)         cash flow, as
indicated by book earnings before interest, taxes, depreciation and
amortization;

 

(xx)          cash flow per share;

 

(xxi)         customer
satisfaction;

 

(xxii)        implementation or
completion of projects or processes;

 

(xxiii)       improvement in or
attainment of working capital levels;

 

(xxiv)       stockholders’ equity;
and

 

(xxv)        other measures of
performance selected by the Committee.

 

(b)           Structure
of Performance Measures and Performance Goals.  Performance Measures and Performance
Goals may differ from Participant to Participant and from Performance Award to
Performance Award.  Performance Goals may,
as the Committee specifies, either include or exclude the effect of payment of
Performance Awards under this Plan 

 

18

 

and any other
performance plans of the Company.  In
establishing a Performance Goal, the Committee may provide that performance
shall be appropriately adjusted as follows:

 

(i)            to
exclude restructuring and/or other nonrecurring charges;

 

(ii)           to
exclude exchange rate effects, as applicable, for non-U.S. dollar denominated
net sales and operating earnings;

 

(iii)          to
exclude the effects of changes to generally accepted accounting principles
required by the Financial Accounting Standards Board;

 

(iv)          to
exclude the effects of any statutory adjustments to corporate tax rates;

 

(v)           to
exclude the effects of any “extraordinary items” as determined under generally
accepted accounting principles;

 

(vi)          to
exclude any other unusual, non-recurring gain or loss or other extraordinary
item;

 

(vii)         to
respond to, or in anticipation of, any unusual or extraordinary corporate item,
transaction, event or development;

 

(viii)        to
respond to, or in anticipation of, changes in applicable laws, regulations,
accounting principles, or business conditions;

 

(ix)           to
exclude the dilutive effects of acquisitions or joint ventures;

 

(x)            to
assume that any business divested by the Company achieved performance
objectives at targeted levels during the balance of a Performance Period
following such divestiture;

 

(xi)           to
exclude the effect of any change in the outstanding shares of Stock by reason
of any stock dividend or split, stock repurchase, reorganization,
recapitalization, merger, consolidation, spin-off, combination or exchange of
shares or other similar corporate change, or any distributions to common
shareholders other than regular cash dividends;

 

(xii)          to
reflect a corporate transaction, such as a merger, consolidation, separation
(including a spinoff or other distribution of stock or property by a
corporation), or reorganization (whether or not such reorganization comes
within the definition of such term in Section 368 of the Code); and

 

(xiii)         to
reflect any partial or complete corporate liquidation.

 

(c)           Performance
Goals.  Performance Goals
may include a minimum, maximum, target level and intermediate levels of
performance, with the final value of a 

 

19

 

Performance Award
determined under the applicable Performance Award Formula by the level attained
during the applicable Performance Period. 
A Performance Goal 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 of 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 at the election of the Participant or otherwise.  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.

 

20

 

(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 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           Dividend
Equivalents.  In its
discretion, the Committee 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.  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.

 

9.7           Effect of
Termination of Service.  The
effect of a Participant’s termination of Service on the Participant’s
Performance Award shall be as 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 may 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 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.           STANDARD FORMS OF AWARD
AGREEMENT.

 

10.1         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.

 

10.2         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, 

 

21

 

revised or amended
standard form or forms of Award Agreement are not inconsistent with the terms
of the Plan.

 

11.           CHANGE OF CONTROL.

 

11.1        Awards
Granted Prior to January 24, 2008.  The following provisions shall control
for Awards granted prior to January 24, 2008:

 

(a)   Except as
otherwise provided in a Participant’s Award Agreement:

 

(i)            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 by the stockholders of the Company of all or substantially all
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.

 

(ii)           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, 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 11.1(a)(iii), the entity to
which the assets of the Company were transferred.

 

(b)   Effect of Change in Control on Options, SARs and Restricted Stock Units.  In the
event of a Change in Control, the surviving, continuing, successor, or
purchasing entity or parent thereof, as the case may be (the “Acquiror”), may, without the consent of any Participant, either
assume the Company’s rights and obligations under outstanding Options, SARs and
Restricted Stock Units or substitute for outstanding Options, SARs and
Restricted Stock Units substantially equivalent equity awards for the Acquiror’s
stock.  In the event the Acquiror elects
not to assume or substitute for outstanding Options, SARs or Restricted Stock
Units in connection with a Change in Control, the Committee shall provide that
any unexercised and/or unvested portions of such outstanding Awards shall be
immediately exercisable and vested in full as of the date thirty (30) days
prior to the date of the Change in Control. 
The exercise and/or vesting of any Option, SAR or Restricted Stock Unit
that was permissible solely by reason of this paragraph 10.2 shall be
conditioned upon the consummation of the Change in Control.  Any Options, SARs or Restricted Stock Units
which are not assumed or replaced by the Acquiror in connection with the Change
in Control nor exercised as of the time of consummation of the Change in
Control shall terminate and cease to be outstanding effective as of the time of
consummation of the Change in Control.

 

(c)   Effect of Change in Control on Stock Awards.  The Committee may, in its discretion, provide
in any Award Agreement evidencing a Stock Award that, in the event of a Change
in Control, the lapsing of the Restriction Period applicable to the shares
subject to the Stock Award held by a Participant whose Service has not
terminated prior to such 

 

22

 

date shall be accelerated effective as of the date 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 11.1(c) and
the provisions of such Award Agreement shall be conditioned upon the
consummation of the Change in Control.

 

(d)   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 such date shall become payable effective as of the
date of the Change in Control to such extent as specified in such Award
Agreement.

 

11.2         Awards
Granted On or After January 24, 2008.  The following provisions shall control for
Awards granted on or after January 24, 2008:

 

(a)   Except as
otherwise provided in a Participant’s Award Agreement, “Change
of Control” shall mean a change of control of the Company of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act, whether or
not the Company is then subject to such reporting requirement; provided, however, that anything in this Plan to the
contrary notwithstanding, a Change of Control shall be deemed to have occurred
if:

 

(i)            any
individual, partnership, firm, corporation, association, trust, unincorporated
organization or other entity or person, or any syndicate or group deemed to be
a person under Section 14(d)(2) of the Exchange Act, is or becomes
the “beneficial owner” (as defined in Rule 13d-3 of the General Rules and
Regulations under the Exchange Act), directly or indirectly, of securities of
the Company representing 30% or more of the combined voting power of the
Company’s then outstanding securities entitled to vote in the election of
directors of the Company;

 

(ii)           during
any period of two (2) consecutive years, individuals who at the beginning
of such period constituted the Board and any new directors, whose election by
the Board or nomination for election by the Company’s stockholders was approved
by a vote of at least three-fourths (3/4ths) of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved (the “Incumbent Directors”), cease for any
reason to constitute a majority thereof;

 

(iii)          there
occurs a reorganization, merger, consolidation or other corporate transaction
involving the Company (a “Transaction”),
in each case with respect to which the stockholders of the Company immediately
prior to such Transaction do not, immediately after the Transaction, own
securities representing more than 50% of the combined voting power of the
Company, a parent of the Company or other corporation resulting from such
Transaction (counting, for this purpose, only those securities held by the
Company’s stockholders immediately after the Transaction that were received in
exchange for, or represent their continuing ownership of, securities of the
Company held by them immediately prior to the Transaction);

 

23

 

(iv)          all
or substantially all of the assets of the Company are sold, liquidated or
distributed; or

 

(v)           there
is a “Change of Control” or a “change in the effective control” of the Company
within the meaning of Section 280G of the Code and the regulations
promulgated thereunder.

 

(b)   The Committee
or the Board may, in its discretion, provide in any Award Agreement, severance
plan or other individual agreement, that, in the event of a Change of Control
of the Company, the Award held by a Participant shall become vested,
exercisable and/or payable to such extent as specified in such document.

 

(c)   In the
event of a Change of Control, the surviving, continuing, successor, or
purchasing entity or parent thereof, as the case may be (the “Acquiror”), may, without the consent of any Participant, either
assume the Company’s rights and obligations under outstanding Awards or
substitute for outstanding Awards substantially equivalent equity awards for
the Acquiror’s stock.  In the event the
Acquiror elects not to assume or substitute for outstanding Awards in
connection with a Change of Control, any unexercised and/or unvested portions
of such outstanding Awards shall become immediately exercisable and vested in
full as of immediately prior to the effective date of the Change of Control.  The exercise and/or vesting of any Award that
was permissible solely by reason of this paragraph 11.2 shall be conditioned
upon the consummation of the Change in Control. 
Any Awards which are not assumed or replaced by the Acquiror in connection
with the Change of Control nor exercised as of the time of consummation of the
Change of Control shall terminate and cease to be outstanding effective as of
the time of consummation of the Change of Control.

 

12.           COMPLIANCE WITH SECURITIES
LAW.

 

12.1         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 (i) 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 (ii) 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.

 

12.2         If the exercise of an
Award, or the purchase or delivery of shares of Stock subject to an Award,
following the termination of the Participant’s Service would be prohibited 

 

24

 

at any time during
the applicable post-termination period solely because the issuance of shares of
Stock would violate the registration requirements under the Securities Act,
then the Award shall terminate on the earlier of (i) the expiration of a
period of three (3) months after the termination of the Participant’s
Service during which the exercise of the Award would not be in violation of
such registration requirements, or (ii) the expiration of the term of the
Award as set forth in the Award Agreement.

 

13.           TAX WITHHOLDING.

 

13.1         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.

 

13.2         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.

 

14.           TERMINATION OR AMENDMENT
OF PLAN.

 

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

 

15.           MISCELLANEOUS PROVISIONS.

 

15.1         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 

 

25

 

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.

 

15.2         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.

 

15.3         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, a Consultant or a 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 can 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.

 

15.4         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.

 

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

 

15.6         Beneficiary
Benefits.  Subject to local
laws and procedures, the Company may request appropriate written documentation
from a trustee or other legal representative, court, or similar legal body,
regarding any benefit under the Plan to which the Participant is entitled in
the event of such Participant’s death before such representative shall be
entitled to act on behalf of the Participant and before a beneficiary receives
any or all of such benefit.

 

15.7         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, the Officer
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 

 

26

 

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.

 

15.8         Section 409A.
To the extent that the Committee determines that any Award granted under the
Plan is, or may reasonably be, subject to Section 409A of the Code
(together, with any state law of similar effect, “Section 409A”), the Award Agreement
evidencing such Award shall incorporate the terms and conditions necessary to
avoid the consequences described in Section 409A(a)(1) of the Code
(or any similar provision).  To the
extent applicable and permitted by law, the Plan and Award Agreements shall be
interpreted in accordance with Section 409A and Department of Treasury
regulations and other interpretive guidance issued thereunder, including
without limitation any such regulations or other guidance that may be issued or
amended after the date of grant of any Award hereunder.

 

Notwithstanding any
provision of the Plan to the contrary, in the event that the Committee determines that any Award
is, or may reasonably be, subject to Section 409A and related Department
of Treasury guidance (including such Department of Treasury guidance issued
from time to time), the Committee
may, without the Participant’s consent, adopt such amendments to the
Plan and the applicable Award Agreement or adopt other policies and procedures
(including amendments, policies and procedures with retroactive effect), or
take any other actions, that the Committee determines are necessary or
appropriate to (A) exempt the Award from Section 409A and/or preserve
the intended tax treatment of the benefits provided with respect to the Award,
or (B) comply with the requirements of Section 409A and related
Department of Treasury guidance.

 

In addition, and except as
otherwise set forth in the applicable Award Agreement, if the Company
determines that any Award granted under this Plan constitutes, or may
reasonably constitute, “deferred compensation” under Section 409A and the
Participant is a “specified employee” of the Company at the relevant date, as
such term is defined in Section 409A(a)(2)(B)(i), then any payment or
benefit resulting from such Award will be delayed until the earliest date
following the Participant’s “separation from service” with the Participating
Company Group within the meaning of Section 409A on which the Company can
provide such payment or benefit to the Participant without the Participant’s
incurrence of any additional tax or interest pursuant to Section 409A,
with all payments or benefits due thereafter occurring in accordance with the
original schedule.  In addition, this
Plan and the benefits to be provided hereunder are intended to comply in all
respects with the applicable provisions of Section 409A.

 

Notwithstanding anything to the contrary contained
herein, neither the Company nor any of its Affiliates shall be responsible for,
or required to reimburse or otherwise make any Participant whole for, any tax
or penalty imposed on, or losses incurred by, any Participant that arises in
connection with the potential or actual application of Section 409A to any
Award granted hereunder.

 

27ex4a.htm

Exhibit 4(a)

 

This document constitutes part of a prospectus covering

securities that have been registered under the Securities Act of 1933.

SECOND AMENDED AND RESTATED

GENERAL EMPLOYMENT ENTERPRISES, INC.

1997 STOCK OPTION PLAN

PLAN INFORMATION

COMPANY INFORMATION

The date of this document is September 30, 2009

  

  

  

PLAN INFORMATION

General

The Board of Directors of General Employment Enterprises, Inc. ("the Company") has established the Second Amended and Restated General Employment Enterprises, Inc. 1997 Stock Option Plan (the "Stock Option Plan"), which became effective upon receipt of shareholder approval on September 30, 2009. The following is a summary of the Stock Option Plan, which is qualified in its entirety by reference to its full text. The General Employment Enterprises, Inc. 1997 Stock Option Plan (the "1997 Plan") was originally established effective February 24, 1997, and restated on February 26, 2007. The Board has amended and restated the Stock Option Plan as follows:

	
  

	
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to add additional shares to the plan

The Stock Option Plan is intended to promote stock ownership by officers and key employees of the Company and its subsidiaries to increase their proprietary interest in the Company and to encourage them to remain in the employ of the Company. In addition, the Stock Option Plan is intended as an additional incentive to members of the Board of Directors of the Company, who are not employees of the Company, to serve on the Board of Directors of the Company and to devote themselves to the future success of the Company. The Stock Option Plan provides for the grant of "incentive stock options" within the meaning of Section 422 of the Internal Revenue Code, and for options that do not constitute incentive stock options (referred to herein as "nonstatutory options"), as determined in each individual case by the Committee.

Term of Stock Option Plan

Options may be awarded under the Stock Option Plan at any time after September 30, 2009 (the "effective date") until the earlier of:

	
  

	
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September 30, 2019, and

	
  

	
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the date on which the Board of Directors or the Committee terminates the Stock Option Plan.

Shares Subject to the Stock Option Plan

Subject to adjustment as described below, the Stock Option Plan provides that the number of shares of Common Stock for which options may be granted under the Stock Option Plan shall be 592,000, which represents the number of available shares remaining for issuance under the 1997 Plan. In general, any shares of Common Stock subject to issuance upon exercise of options but which are not issued because of a surrender, forfeiture, expiration, termination or cancellation of any such option will once again be available for issuance pursuant to subsequent options. The maximum number of options that may be granted to any one person during a calendar year is 150,000.

Administration

The Stock Option Plan is to be administered by the Compensation Committee (the "Committee") of the Board of Directors of the Company. The Committee will be comprised of two or more members of the Board who are "non-employee directors" within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934 and "outside directors" within the meaning of Section 162(m) of the Internal Revenue Code. The Committee will have the authority, among other things, to select the key employees to whom options may be granted, to determine the terms of each option, to interpret the provisions of the Stock Option Plan and to make all other determinations that it may deem necessary or advisable for the administration of the Stock Option Plan. Each determination or other action made or taken pursuant to the Stock Option Plan by the Committee, including interpretation of the Stock Option Plan and the specific terms and conditions of the options granted thereunder, will be final and conclusive for all purposes and upon all persons.

  

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Eligibility

A member of the Board of Directors who is not an employee of the Company (referred to herein as a "non-employee director") is automatically eligible to participate on the date he or she becomes a non-employee director. The Committee will, from time to time, select those officers and other key employees of the Company or any of the Company's subsidiaries who are eligible to participate in the Stock Option Plan on the basis of the special importance of their services in the management, development and operations of the Company or its subsidiaries. As of the date of this document, five non-employee directors and approximately three to five additional employees were eligible to participate in the Stock Option Plan.

Grants of Options

Grants of options to non-employee directors will be automatic and non-discretionary. As was the case under the 1997 Plan and the subsequently amended plan, each individual who is a non-employee director on the effective date of the Stock Option Plan, will automatically be granted a nonstatutory option to purchase 15,000 shares of Common Stock on the effective date of the Stock Option Plan. In addition, each individual who becomes a non-employee director (other than a non-employee director who was previously an employee-director) after the effective date of the Stock Option Plan shall be granted automatically a nonstatutory option to purchase 15,000 shares of Common Stock on the date he or she becomes a non-employee director. The Committee may from time to time grant options, which may be incentive stock options or nonstatutory stock options, to key employees of the Company.

Terms and Conditions of Options

Each option will be evidenced by a written option award agreement specifying the type of option granted, the option exercise price (which may not be less than fair market value on the grant date), the terms for payment of the exercise price, the expiration date of the option, the number of shares of Common Stock to be subject to each option and such other terms and conditions established by the Committee, in its sole discretion, not inconsistent with the Stock Option Plan. The exercise price of nonstatutory options granted under the Stock Option Plan will be determined by the Committee and specified in each option grant, and will not be less than the fair market value of the Common Stock on the date the option is granted. "Fair market value" is the price at which one share of Common Stock is last sold in the principal United States market for such stock as of the grant date. The exercise price of incentive stock options granted under the Stock Option Plan shall be the fair market value of the Common Stock on the date the option is granted.

An incentive stock option granted under the Stock Option Plan to an employee owning more than 10% of the Company (i) must have an exercise price of at least 110% of the fair market value of the shares issuable (determined as of the date the options granted) and (ii) will expire no later than the fifth anniversary of the date the incentive stock option was granted. An incentive stock option is subject to the further restriction that the aggregate fair market value (determined as of the date of grant) of stock as to which any such incentive stock option first becomes exercisable in any calendar year shall not exceed $100,000. Options in excess of this limit would be nonstatutory options.

  

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Exercise of Options

In general, options granted under the Stock Option Plan will vest and become exercisable with respect to one-fifth of the total number of shares of Common Stock subject to the option as of each anniversary of the date of the option grant, provided, however, that the Committee has the authority, in its sole discretion, to shorten or lengthen the vesting and exercise schedule with respect to any or all options or portion thereof granted under the Stock Option Plan. Notwithstanding the foregoing, upon a change of control in the Company (as defined under the Stock Option Plan), all outstanding options shall become fully exercisable and all restrictions thereon will terminate in order that optionees may fully realize the benefits thereunder. Options granted under the Stock Option Plan may be exercisable for up to ten years.

The full exercise price for all shares purchased on exercise of options granted under the Stock Option Plan may be paid in cash, in cash received from a broker-dealer to whom the optionee has submitted an exercise notice, by delivering shares of Common Stock having an aggregate fair market value on the date of exercise equal to the option exercise price, by directing the Company to withhold such number of shares of Common Stock otherwise issuable upon exercise of such option having an aggregate fair market value on the date of exercise equal to the option exercise price, by such other medium of payment as the Committee, in its discretion, shall authorize at the time of grant, or by any combination of the above. Except in instances of retirement, disability or death as provided in the Stock Option Plan or in the Committee's sole discretion, any option will terminate on the date of the optionee's termination of employment with the Company and its subsidiaries.

Transferability of Options

Options are not transferable other than by the laws of descent and distribution, or pursuant to a qualified domestic relations order (as defined in Section 414(p) of the Internal Revenue Code). Notwithstanding the foregoing, an optionee, at any time prior to his or her death, may assign all or any portion of an option granted to him or her (other than an incentive stock option) to:

	
  

	
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the optionee's spouse or lineal descendant;

	
  

	
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the trustee of a trust for the primary benefit of the optionee's spouse or lineal descendant;

	
  

	
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a partnership of which the optionee's spouse and lineal descendants are the only partners; or

	
  

	
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a tax exempt organization as described in Section 501(c)(3) of the Internal Revenue Code.

Any such assignment will be permitted only if (i) the optionee does not receive any consideration therefore and (ii) the assignment is expressly permitted by the applicable option agreement as approved by the Committee.

Amendment, Suspension or Termination

The Board of Directors or the Committee has authority to terminate, suspend or amend the Stock Option Plan, in whole or in part, from time to time without the approval of the shareholders of the Company to the extent allowed by law, provided, however, that a modification of the maximum aggregate shares of

  

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Company Stock that may be issued under the Stock Option Plan or the class of employees eligible to receive them shall require shareholder approval. The Stock Option Plan provides for appropriate adjustment in the number and kind of shares subject to the Stock Option Plan, and the number, kind and per share exercise price of shares subject to unexercised options, in the event of any change in the outstanding Common Stock by reason of a stock split, stock dividend, combination or reclassification of shares, recapitalization, merger or similar event.

Change in Control

As was the case under the 1997 Plan and the subsequently amended plan, upon a change in control (as defined in the Stock Option Plan) of the Company, the Committee, as constituted before such change in control, is authorized, and has sole discretion, as to any option, either at the time such option is granted or any time thereafter, to take any one or more of the following actions: (i) provide for the purchase of any such option, upon the option holder's request, for an amount of cash equal to the difference between the exercise price and the then fair market value of the Common Stock covered thereby had such option been currently exercisable; (ii) make such adjustment to any such option then outstanding as the Committee deems appropriate to reflect such change in control; and (iii) cause any such option then outstanding to be assumed, by the acquiring or surviving corporation, after such change in control.

U.S. Federal Income Tax Consequences of Awards Granted under the Stock Option Plan

The following is a general description of the United States federal income tax consequences to optionees and the Company relating to options that may be granted under the Stock Option Plan. The plan is not qualified under the Internal Revenue Code Section 401(a). This discussion only applies to U.S. citizens and/or residents and does not purport to cover all tax consequences relating to options.

Incentive stock options granted under the Stock Option Plan have certain advantageous tax attributes under federal income tax laws. An option holder will generally not recognize income, and the Company will not be entitled to a deduction from income, at the time of grant of an incentive stock option. If the option is exercised during employment, or within three months thereafter (or one year in the case of a permanently and totally disabled employee), the option holder will generally not recognize any income and the Company will not be entitled to a deduction. However, the excess of the fair market value of the shares on the date of exercise over the option price generally is included in computing the option holder's alternative minimum taxable income. Generally, if the option holder disposes of shares acquired by exercise of an incentive stock option within either two years after the date of grant or one year after the date of exercise, the option holder will recognize ordinary income, and the Company will be entitled to a deduction, equal to the excess of the fair market value of the shares on the date of exercise over the option price (limited generally to the gain on the sale). The balance of any gain or loss will be treated as a capital gain or loss to the option holder. If shares are disposed of after the two year and one year periods described above expire, the Company will not be entitled to any deduction, and the entire gain or loss for the option holder will be treated as a long-term capital gain or loss.

As in the case of incentive stock options, the grant of a nonstatutory stock option will not result in taxable income to the option holder for federal income tax purposes nor will the Company be entitled to an income tax deduction. Upon exercise of a nonstatutory stock option, however, the option holder will generally recognize ordinary income for federal and state income tax purposes equal to the difference between the exercise price and the fair market value of the shares acquired on the date of exercise, and the Company or the subsidiary of the Company which is the employer of the option holder, will be entitled to federal and state income tax deductions in the amount of the ordinary income recognized by the option holder. In general, any further gain or loss realized by the option holder on the subsequent disposition of such shares will be long-term or short-term capital gain or loss, depending on the length of time the shares are held after the option is exercised.

  

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Compliance with Section 409A of the Internal Revenue Code

The American Jobs Creation Act of 2004, enacted on October 22, 2004, revised the federal income tax law applicable to certain types of awards that may be granted under the Stock Option Plan. To the extent applicable, it is intended that the Stock Option Plan and any grants made under the Stock Option Plan comply with the provisions of Section 409A of the Internal Revenue Code. The Committee intends to administer the Stock Option Plan and any grants made thereunder in a manner consistent with the requirements of Section 409A, and to make such amendments (including retroactive amendments) to the Stock Option Plan and any other grants made thereunder as required by Section 409A on a timely basis. Any reference to Section 409A will also include any proposed temporary or final regulations, or any other guidance, promulgated with respect to such Section by the U.S. Department of Treasury or the Internal Revenue Service.

Applicability of ERISA

The Stock Option Plan is not subject to the Employee Retirement Income Security Act of 1974.

Additional Information

If any material changes are made to the Stock Option Plan information contained in this document, the Company will deliver updated information to each optionee. This document should be read in connection with any applicable updates. The Company will provide without charge to each person to whom a copy of this document has been delivered, on the written or oral request of such person, a copy of any such documents.

Additional information about the Stock Option Plan is available upon request from: Secretary, General Employment Enterprises, Inc., One Tower Lane, Suite 2200, Oakbrook Terrace, Illinois   60181; Telephone (630) 954-0400.

Restrictions on Resales of Common Stock Acquired Under the Stock Option Plan

The Stock Option Plan does not impose any restrictions on the resale of Common Stock purchased under the Stock Option Plan. However, certain optionees, as "affiliates" of the Company, may not reoffer or resell shares of Common Stock acquired under the Stock Option Plan pursuant to this prospectus by use or delivery of this prospectus. Such optionees may reoffer or resell such Common Stock only (i) pursuant to a separate prospectus of the Company that is then effective under the Securities Act of 1933, (ii) in reliance upon and in compliance with applicable provisions of Rule 144 under the Securities Act of 1933, or (iii) to prepare and file such a separate prospectus to facilitate reoffers and resales by affiliates. "Affiliates" is defined in Rule 405 under the Securities Act of 1933 to include any person that directly or indirectly, through one or more intermediaries, controls, or is controlled by or is under common control with the Company by means of the direct or indirect possession of the power to direct or cause the direction of the Company's management and policies, whether through the ownership of voting securities, by contract, or otherwise.

  

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Section 16(b) of the Securities Exchange Act of 1934

Any purchase and sale, or sale and purchase, of Common Stock, including Common Stock acquired under the Stock Option Plan, within any period of less than six months by an optionee who is an officer or director of the Company may, depending upon the particular circumstances, be subject to the liabilities imposed by Section 16(b) of the Securities Exchange Act of 1934.

COMPANY INFORMATION

Documents Incorporated By Reference

The Company will provide without charge to each person to whom a copy of this document has been delivered, on the written or oral request of any such person, a copy of any of the documents incorporated by reference in the registration statement to which this document relates, other than exhibits to such documents which are not specifically incorporated by reference into the information that this document incorporates. The documents incorporated by reference in the registration statement are hereby incorporated by reference in this document. Requests for such copies should be directed to: Secretary, General Employment Enterprises, Inc., One Tower Lane, Suite 2200, Oakbrook Terrace, Illinois 60181; Telephone (630) 954-0400.

 

 

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