Document:

exh10-5_5.htm

    Exhibit 10.5.5

     

    

     

    AMENDMENT
NO.  8

     

    dated as
of March 15, 2008

     

    among

     

    PAGE FUNDING
LLC,

     as
Purchaser and Issuer,

    

    

    CONSUMER PORTFOLIO SERVICES,
INC.,

     as
Seller and Servicer,

    

    and

    

    WELLS FARGO  BANK,
NATIONAL ASSOCIATION,

    as Backup
Servicer and Trustee

    

    to
the

    

    Amended
and Restated Sale and Servicing Agreement

    dated as
of February 14, 2007

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    AMENDMENT
NO.  8 TO

     AMENDED
AND RESTATED SALE AND SERVICING AGREEMENT

    

    AMENDMENT
NO.  8, dated as of March 15, 2008 (the “Amendment”) by and
among PAGE FUNDING LLC, a Delaware limited liability company (in its capacities
as Purchaser, the “Purchaser” and as
Issuer, the “Issuer,”
respectively), CONSUMER PORTFOLIO SERVICES, INC., a California corporation (in
its capacities as Seller, the “Seller” and as
Servicer, the “Servicer,”
respectively), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association (in its capacities as Backup Servicer, the “Backup Servicer” and
as Trustee, the “Trustee,”
respectively).

     

    PRELIMINARY
STATEMENT

     

    Reference is made to the Amended and
Restated Sale and Servicing Agreement dated as of February 14, 2007, among PAGE
FUNDING LLC, CONSUMER PORTFOLIO SERVICES, INC., and WELLS FARGO BANK, NATIONAL
ASSOCIATION, as previously amended by Amendment No. 1 thereto, dated as of March
30, 2007, by Amendment No. 2 thereto, dated as of June 29, 2007, by Amendment
No. 3 thereto, dated as of September 30, 2007, by Amendment No. 4 thereto, dated
as of January 11, 2008, by Amendment No. 5 thereto, dated as of January 24,
2008,  by Amendment No.  6 thereto, dated as of January 31,
2008, and by Amendment No. 7 thereto dated as of February 15, 2008 (as so
amended, the “Sale and
Servicing Agreement”).

    

    Reference is also made to the Note
Purchase Agreement dated as of February 14, 2007, among the Issuer and
Purchaser, the Seller and Servicer, The Patriot Group LLC ("Patriot"), as a Class
B Note Purchaser and as a Class B Noteholder, and Waterfall Eden Fund, LP
("Waterfall"),
as a Class B Note Purchaser and as a Class B Noteholder (the “Note Purchase
Agreement”).

    

    RECITALS

     

    WHEREAS,
PAGE FUNDING LLC, CONSUMER PORTFOLIO SERVICES, INC., and WELLS FARGO BANK,
NATIONAL ASSOCIATION (collectively, the “Amending Parties”)
have executed the Sale and Servicing Agreement and the Amending Parties desire
to amend the Sale and Servicing Agreement in certain respects as provided below,
with the effect of  extending the Commitment referenced in Section
2.05 of the Note Purchase Agreement;

     

    WHEREAS,
Waterfall and Eden desire to consent to this Amendment, and as the Class B Note
Purchasers desire to consent to the resulting extension of their several
Commitments under the Note Purchase Agreement; and

     

    WHEREAS,
UBS REAL ESTATE SECURITIES INC., as Controlling Note Purchaser and Majority
Noteholder of the Highest Priority Class, desires to consent to this
Amendment.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     -
DEFINITIONS

     

    SECTION
1.1. Defined
Terms.  Unless otherwise defined in this Amendment, capitalized
terms used in this Amendment (including in the Preamble and the Recitals) shall
have the meaning given such terms in the Annex A to the Sale and Servicing
Agreement, as identifiable from the context in which such term is
used.

     

    ARTICLE II  -
AMENDMENT

     

    SECTION
2.1  Amendment to Annex A to the
Sale and Servicing Agreement.  In Annex A to the Sale and
Servicing Agreement, the definition of Class B Scheduled Maturity Date is hereby
amended and restated in its entirety to read as follows:

     

    “Class B Scheduled Maturity
Date” means the first to occur of (i) the closing of a Securitization
Transaction subsequent to the date of this Amendment or (ii) April 15, 2008; or
such later date as agreed upon pursuant to Section 2.05 of the Class B Note
Purchase Agreement.

     

    

     

    ARTICLE III -
EFFECTIVENESS

     

    Effective
Date.  This Amendment shall be effective as of the date first
written above upon execution and delivery of this Amendment by the Amending
Parties hereto, by Waterfall, by Patriot and by UBS Real Estate Securities
Inc.

     

    

     

    ARTICLE IV -
MISCELLANEOUS

     

    SECTION
4.1. Ratification;
Representations and Warranties, Etc.

     

    (a)  Except
as expressly amended hereby, all of the terms of the Basic Documents shall
remain in full force and effect and are hereby ratified and confirmed in all
respects.  This Amendment shall not constitute a
novation;

     

    (b)  The
Purchaser, Seller, Issuer and Servicer each hereby represents and warrants that
(i) it has the requisite power and authority, and legal right, to execute and
deliver this Amendment and to perform its obligations under this Amendment, the
Sale and Servicing Agreement, as amended hereby, and the Basic Documents,
(ii) it has taken all necessary corporate and legal action to duly
authorize the execution and delivery of this Amendment and the performance of
its obligations under this Amendment, (iii) this Amendment has been duly
executed and delivered by it, (iv) this Amendment constitutes its legal,
valid and binding obligation, enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general equitable principles (whether enforcement is
sought by proceedings in equity or at law), and (v) after giving effect to this
Amendment, no Default or Event of Default has occurred and is
continuing;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c)  Each
representation and warranty contained in the Basic Documents (as modified by
this Amendment, if applicable) is true and correct and is hereby restated and
affirmed;

     

    (d)  Each
covenant contained in the Basic Documents (as modified by this Amendment, if
applicable) is hereby restated and affirmed; and

     

    (e)                 The
parties hereto, including without limitation Wells Fargo Bank, National
Association, in its capacities as Bank and Lockbox Processor under the Lockbox
Agreement and as Deposit Account Bank under the Account Control Agreement,
hereby acknowledge and agree that each reference to the Sale and Servicing
Agreement (including, without limitation, Annex A thereto) in the Basic
Documents shall be deemed to refer to such documents or instruments as amended
by this Amendment.

     

    SECTION
4.2. Further
Assurances.  The parties hereto hereby agree to execute and
deliver such additional documents, instruments or agreements as may be
reasonably necessary and appropriate to effectuate the purposes of this
Amendment and the other Basic Documents.

     

    SECTION
4.3. Conflicts.  In
the event of a conflict of any provision hereof with any provision or definition
set forth in the Basic Documents, the provisions and definitions of this
Amendment shall control.

     

    SECTION
4.4. Severability.  Any
provision of this Amendment or any other Basic Document that is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition, unenforceability
or non-authorization without invalidating the remaining provisions hereof or
thereof or affecting the validity, enforceability or legality of such provisions
in any other jurisdiction.

     

    SECTION
4.5. Entire
Agreement.  This Amendment and the other Basic Documents
constitute the entire agreement among the parties relative to the subject matter
hereof.  Any previous agreement among the parties with respect to the
subject matter hereof is superseded by this Amendment and the other Basic
Documents.  Nothing in this Amendment or in the other Basic Documents,
expressed or implied, is intended to confer upon any party other than the
parties hereto and thereto any rights, remedies, obligations or liabilities
under or by reason of this Amendment or the other Basic Documents.

     

    SECTION
4.6. Binding
Effect.  This Amendment and the other Basic Documents shall be
binding upon and shall be enforceable by Purchaser, Seller, Issuer, Servicer,
Note Purchasers, the Backup Servicer and the Trustee and their respective
successors and permitted assigns.

     

    SECTION
4.7. Counterparts.  This
Amendment may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, but all of such counterparts shall
together constitute but one and the same instrument.

     

    SECTION
4.8. GOVERNING
LAW.   THIS AMENDMENT AND ALL MATTERS ARISING OUT OF OR
RELATING TO THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF
LAW PRINCIPLES.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Headings.  The
headings of Sections contained in this Amendment are provided for convenience
only.  They form no part of this Amendment, and shall not affect the
construction or interpretation of this Amendment or any provisions
hereof.

     

    [Remainder
of page intentionally left blank.]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the Amending Parties have caused this Amendment to be duly
executed by their respective duly authorized officers as of the day and year
first above written.

    PAGE FUNDING LLC, as Purchaser and as
Issuer

    

                        By:
________________________

           
       
Title:   Vice President

    

    CONSUMER
PORTFOLIO SERVICES, INC., as Seller and as Servicer

    

    

    By:
________________________

    Title:  Sr.
Vice President & CFO

    

    

    WELLS
FARGO BANK, NATIONAL ASSOCIATION, not in its individual capacity, but solely as
Trustee, Backup Servicer and Deposit Account Bank

     

    

     

    

     

    By:                                                                

     

    Name:                                                                           

     

    Title:                                                                           

     

    

     

    WELLS
FARGO BANK, NATIONAL ASSOCIATION, as Lockbox Processor and Bank

     

    

     

    By:                                                                

     

    Name:                                                                           

     

    Title:                                                                           

     

    

    

    

    CONSENTED
TO BY:

    UBS REAL
ESTATE SECURITIES INC.,

    as
Controlling Note Purchaser and Majority Noteholder of the Highest Priority
Class

    and as
the Class A Note Purchaser under the Note Purchase Agreement

    

    

    By:                                                                

    Name:                                                                           

    Title:                                                                           

    

    

    By:                                                                

    Name:                                                                           

    Title:                                                                           

    

    

    CONSENTED
TO BY:

     

    THE
PATRIOT GROUP, LLC, as a Class B Note Purchaser and as Holder of a 50%
Percentage Interest of the Class B Notes

     

    

    By:                                                                

    Name:                                                                           

    Title:                                                                           

    

    CONSENTED
TO BY:

    WATERFALL
EDEN FUND, LP, as a Class B Note Purchaser and as Holder of a 50% Percentage
Interest of the Class B Notes

    By:
WATERFALL MANAGEMENT, LLC, as general partner

     

    

    By:                                                                

    Name:                                                                           

    Title:exh10-14.htm

    CPS 2006 LONG-TERM EQUITY INCENTIVE
PLAN

     

    PART I - PURPOSE, ADMINISTRATION AND
RESERVATION OF SHARES

     

         
SECTION 1.        Purpose of the Plan. The
purposes of this Plan are (a) to attract and retain the most talented
Employees, officers and Directors available, and (b) to promote the growth
and success of the Company’s business, (i) by aligning the long-term
interests of Employees, officers and Directors with those of the shareholders by
providing an opportunity to acquire an interest in the Company and (ii) by
providing both rewards for exceptional performance and long term incentives for
future contributions to the success of the Company and its
Subsidiaries.

     

         
The Plan permits the grant of Incentive Stock Options, Nonqualified Stock
Options, Restricted Stock, Restricted Stock Units, or SARs, at the discretion of
the Committee and as reflected in the terms of the Award Agreement. Each Award
will be subject to conditions specified in the Plan, such as continued
employment or satisfaction of performance criteria.

     

         
This Plan will serve as a framework for the Committee to establish sub-plans or
procedures governing the grants to employees, officers, directors and
consultants. The awards granted under the Former Plan shall continue to be
administered under the Former Plan until such time as those options are
exercised, expire or become unexercisable for any reason.

     

         
SECTION 2. Definitions. As used herein,
the following definitions shall apply:

     

         
(a) “Active Status”
shall mean (i) for employees, the absence of any interruption or
termination of service as an employee, (ii) for Directors, that the
Director has not been removed from the Board for cause (as determined by the
Company’s shareholders), and (iii) for Consultants, the absence of any
interruption, expiration, or termination of such person’s consulting or advisory
relationship with the Company or any Subsidiary or the occurrence of any
termination event as set forth in such person’s Award Agreement. Active Status
shall not be considered interrupted (A) for an employee in the case of sick
leave, maternity leave, infant care leave, medical emergency leave, military
leave, or any other leave of absence properly taken in accordance with the
policies of the Company or any applicable Subsidiary as may be in effect from
time to time, and (B) for a Consultant, in the case of any temporary
interruption in such person’s availability to provide services to the Company or
any Subsidiary which has been granted in writing by an authorized officer of the
Company. Whenever a mandatory severance period applies under applicable law with
respect to a termination of service as an employee, Active Status shall be
considered terminated upon such Employee’s receipt of notice of termination in
whatever form prescribed by applicable law.

     

         
(b) “Award” shall
mean any award or benefits granted under the Plan, including Options, Restricted
Stock, Restricted Stock Units, and SARs.

     

         
(c) “Award Agreement”
shall mean a written or electronic agreement between the Company and the
Participant setting forth the terms of the Award.

     

         
(d) “Beneficial
Ownership” shall have the meaning set forth in Rule 13d-3
promulgated under the Exchange Act.

     

         
(e) “Board” shall
mean the Board of Directors of the Company.

     

         
(f) “Change of Control”
shall mean the first day that any one or more of the following conditions
shall have been satisfied:

     

    
      	 
      	
                   
      (i) the sale, liquidation or other disposition of all or
      substantially all of the Company’s assets in one or a series of related
      transactions;

            
	 
      	
                   
      (ii) an acquisition (other than directly from the Company) of any
      outstanding voting securities by any person, after which such person (as
      the term is used for purposes of Section 13(d) or 14(d) of the
      Exchange Act) has Beneficial Ownership of twenty-five percent (25%) or
      more of the then outstanding voting securities of the Company, other than
      a Board approved transaction;

            
	 
      	
                   
      (iii) during any 36-consecutive month period, the individuals who, at
      the beginning of such period, constitute the Board (“Incumbent Directors”)
      cease for any reason other than death to constitute at least a majority of
      the members of the Board; provided however that except as set forth in
      this Section 2(f)(iii), an individual who becomes a member of the
      Board subsequent to the beginning of the 36-month period, shall be deemed
      to have satisfied such 36-month requirement and shall be deemed an
      Incumbent Director if such Director was elected by or on the
      recommendation of or with the approval of at least two-thirds of the
      Directors who then qualified as Incumbent Directors either actually
      (because they were Directors at the beginning of such period) or by
      operation 

            
	 
      	
                   
      

            

    

         

    
      
        
        

      

      
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                of
      the provisions of this section; if any such individual initially assumes
      office as a result of or in connection with either an actual or threatened
      solicitation with respect to the election of Directors (as such terms are
      used in Rule 14a-12(c) of Regulation 14A promulgated under the
      Exchange Act) or other actual or threatened solicitations of proxies or
      consents by or on behalf of a person other than the Board, then such
      individual shall not be considered an Incumbent
      Director; or

              
	 
      	
                     
      (iv) a merger, consolidation or reorganization of the Company, as a
      result of which the shareholders of the Company immediately prior to such
      merger, consolidation or reorganization own directly or indirectly
      immediately following such merger, consolidation or reorganization less
      than fifty percent (50%) of the combined voting power of the outstanding
      voting securities of the entity resulting from such merger, consolidation
      or reorganization.

              

      

    

      (g) “Code” shall mean the
Internal Revenue Code of 1986, as amended.

     

         
(h) “Committee”
shall mean the Compensation Committee appointed by the
Board.

     

         
(i) “Common Stock”
shall mean the common stock of the Company, no par value per
share.

     

         
(j) “Company”
shall mean CPS, a California corporation, and any successor
thereto.

     

         
(k) “Consultant”
shall mean any person, except an employee, engaged by the Company or any
Subsidiary of the Company, to render personal services to such entity, including
as an advisor, pursuant to the terms of a written agreement.

     

         
(l) “Director”
shall mean a member of the Board.

     

         
(m) “Disability”
shall mean (i) in the case of a Participant whose employment with
the Company or a Subsidiary is subject to the terms of an employment or
consulting agreement that includes a definition of “Disability” as used in this
Plan shall have the meaning set forth in such employment or consulting agreement
during the period that such employment or consulting agreement remains in
effect; and (ii) in all other cases, the term “Disability” as used in this
Plan shall have the same meaning as set forth under the Company’s long-term
disability plan applicable to the Participant as may be amended from time to
time, and in the event the Company does not maintain any such plan with respect
to a Participant, a physical or mental condition resulting from bodily injury,
disease or mental disorder which renders the Participant incapable of continuing
his or her usual and customary employment with the Company or a Subsidiary, as
the case may be, for a period of not less than 120 days or such other
period as may be required by applicable law.

     

         
(n) “Effective
Date” shall mean the date on which the Company’s shareholders have
approved this Plan in accordance with applicable Nasdaq rules.

     

         
(o) “Employee”
shall mean any person, including an officer, who is a common law employee
of, receives remuneration for personal services to, is reflected on the official
human resources database as an employee of, and is on the payroll of the Company
or any Subsidiary of the Company. A person is on the payroll if he or she is
paid from or at the direction of the payroll department of the Company, or any
Subsidiary of the Company. Persons providing services to the Company, or to any
Subsidiary of the Company, pursuant to an agreement with a staff leasing
organization, temporary workers engaged through or employed by temporary or
leasing agencies, and workers who hold themselves out to the Company, or a
Subsidiary to which they are providing services as being independent
contractors, or as being employed by or engaged through another company while
providing the services, and persons covered by a collective bargaining agreement
(unless the collective bargaining agreement applicable to the person
specifically provides for participation in this Plan) are not employees for
purposes of this Plan and do not and cannot participate in this Plan, whether or
not such persons are, or may be reclassified by the courts, the Internal Revenue
Service, the U.S. Department of Labor, or other person or entity as, common
law employees of the Company, or any Subsidiary, either solely or jointly with
another person or entity.

     

      (p)
“Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended.

     

         
(q) “Executive
Officers” shall mean the officers of the Company as such term is defined
in Rule 16a-1 under the Exchange Act.

     

         
(r) “Fair Market
Value” shall mean the closing price per share of the Common Stock on
Nasdaq as to the date specified (or the previous trading day if the date
specified is a day on which no trading occurred), or if Nasdaq shall cease to be
the principal exchange or quotation system upon which the shares of Common Stock
are listed or quoted, 

     

    
      
        
        

      

      
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    then such
exchange or quotation system as the Company elects to list or quote its shares
of Common Stock and that the Committee designates as the Company’s principal
exchange or quotation system.

     

         
(s) “FAS 123”
shall mean Statements of Financial Accounting Standards No. 123,
“Accounting for Stock-Based Compensation”, as promulgated by the Financial
Accounting Standards Board.

     

         
(t) “FLSA” shall
mean the Fair Labor Standards Act of 1938, as amended.

     

         
(u) “Former Plan”
shall mean the CPS 1997 Long-Term Incentive Plan, as
amended.

     

         
(v) “Incentive Stock
Option” shall mean any Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code.

     

         
(w) “Independent
Director” shall mean a Director who: (1) meets the independence
requirements of Nasdaq, or if Nasdaq shall cease to be the principal exchange or
quotation system upon which the shares of Common Stock are listed or quoted,
then such exchange or quotation system as the Company elects to list or quote
its shares of Common Stock and that the Committee designates as the Company’s
principal exchange or quotation system; (2) qualifies as an “outside
director” under Section 162(m) of the Code; (3) qualifies as a
“non-employee director” under Rule 16b-3 promulgated under the Exchange
Act; and (4) satisfies independence criteria under any other applicable
laws or regulations relating to the issuance of Shares to
Employees.

     

         
(x) “Maximum Annual
Participant Award” shall have the meaning set forth in
Section 6(b).

     

         
(y) “Misconduct”
shall mean any of the following; provided, however, that with respect to
Non-Employee Directors “Misconduct” shall mean
subsection (viii) only:

     

    
      	 
      	
                   
      (i) any material breach of an agreement between the Participant and
      the Company or any Subsidiary which, if curable, has not been cured within
      twenty (20) days after the Participant has been given written notice
      of the need to cure such breach, or which breach, if previously cured,
      recurs;

            
	 
      	
                   
      (ii) willful unauthorized use or disclosure of confidential
      information or trade secrets of the Company or any Subsidiary by the
      Participant;

            
	 
      	
                   
      (iii) the Participant’s continued willful and intentional failure to
      satisfactorily perform Participant’s essential responsibilities, provided
      that the Participant has been given at least thirty (30) days’
      written notice of the need to cure the failure and cure has not been
      effected within that time period, or which failure, if previously cured,
      recurs;

            
	 
      	
                   
      (iv) material failure of the Participant to comply with rules,
      policies or procedures of the Company or any Subsidiary as they may be
      amended from time to time, provided that the Participant has been given at
      least thirty (30) days’ written notice of the need to cure the
      failure, if such failure is curable, and cure has not been effected within
      that time period, or which failure, if previously cured,
      recurs;

            
	 
      	
                   
      (v) Participant’s dishonesty, fraud or gross negligence related to
      the business or property of the Company or any
  Subsidiary;

            
	 
      	
                   
      (vi) personal conduct that is materially detrimental to the business
      of the Company or any Subsidiary;

            
	 
      	
                   
      (vii) conviction of or plea of nolo contendere to a
      felony; or

            
	 
      	
                   
      (viii) in the case of Non-Employee Directors, the removal from the
      Board for cause (as determined by the Company’s
    shareholders).

            

    

         
(z) “Nasdaq” shall
mean The Nasdaq Stock Market, Inc.

     

         
(aa) “Non-Employee
Director” shall mean a Director who is not an employee.

     

         
(bb) “Nonqualified Stock
Option” shall mean an Option that does not qualify or is not intended to
qualify as an Incentive Stock Option.

     

         
(cc) “Option”
shall mean a stock option granted pursuant to Section 10 of the
Plan.

     

         
(dd) “Optionee”
shall mean a Participant who has been granted an Option.

     

         
(ee) “Parent”
shall mean a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.

     

    
      
        
        

      

      
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(ff) “Participant”
shall mean an employee, Director or Consultant granted an
Award.

     

         (gg) “Performance Criteria” shall
have the meaning set forth in Section 11(b).

     

         
(hh) “Plan” shall
mean this CPS 2006 Long-Term Equity Incentive Plan, including any amendments
thereto.

     

         
(ii) “Reprice”
shall mean the adjustment or amendment of the exercise price of Options
or SARs previously awarded whether through amendment, cancellation, replacement
of grants or any other means.

     

         
(jj) “Resignation (or
Resign) for Good Reason” shall mean any voluntary termination by written
resignation of the Active Status of any employee after a Change of Control
because of: (1) a material reduction in the employee’s authority,
responsibilities or scope of employment; (2) an assignment of duties to the
Employee inconsistent with the employee’s role at the Company (including its
Subsidiaries) prior to the Change of Control, (3) a reduction in the
employee’s base salary or total incentive compensation; (4) a material
reduction in the Employee’s benefits unless such reduction applies to all
employees of comparable rank; or (5) the relocation of the employee’s
primary work location more than fifty (50) miles from the employee’s
primary work location prior to the Change of Control; provided that the
employee’s written notice of voluntary resignation must be tendered within one
(1) year after the Change of Control, and shall specify which of the events
described in (1) through (5) resulted in the resignation.

     

         
(kk) “Restricted Stock”
shall mean a grant of Shares pursuant to Section 11 of the
Plan.

     

         
(ll) “Restricted Stock
Units” shall mean a grant of the right to receive Shares in the future or
their cash equivalent (or both) pursuant to Section 11 of the
Plan.

     

         
(mm) “Retirement”
shall mean, (i) with respect to any employee, voluntary termination
of employment after age 55 and at least ten (10) years of credited
service with the Company or any Subsidiary (but only during the time the
Subsidiary was a Subsidiary), as determined by the Committee in its sole
discretion, and (ii) with respect to any Non-Employee Director, ceasing to
be a Director pursuant to election by the Company’s shareholders or by voluntary
resignation with the approval of the Board’s chair after having attained the age
of 55 years and served continuously on the Board for at least six
years.

     

         
(nn) “SAR” shall
mean a stock appreciation right awarded pursuant to Section 12 of the
Plan.

     

         
(oo) “SEC” shall
mean the Securities and Exchange Commission.

     

         
(pp) “Share” shall
mean one share of Common Stock, as adjusted in accordance with Section 5 of
the Plan.

     

         
(qq) “Stand-Alone
SARs” shall have the meaning set forth in Section 12(c) of the
Plan.

     

         
(rr) “Subcommittee” shall have the
meaning set forth in Section 3(d).

     

         
(ss) “Subsidiary”
shall mean (1) in the case of an Incentive Stock Option a
“subsidiary corporation,” whether now or hereafter existing, as defined in
Section 424(f) of the Code, and (2) in the case of a Nonqualified
Stock Option, Restricted Stock, a Restricted Stock Unit or a SAR, in addition to
a subsidiary corporation as defined in (1), (A) a limited liability
company, employeeship or other entity in which the Company controls fifty
percent (50%) or more of the voting power or equity interests, or (B) an
entity with respect to which the Company possesses the power, directly or
indirectly, to direct or cause the direction of the management and policies of
that entity, whether through the Company’s ownership of voting securities, by
contract or otherwise.

     

         
(tt) “Tandem SARs”
shall have the meaning set forth in Section 12(b) of the Plan.

     

         
SECTION 3.     Administration of the
Plan.

     

         
(a) Authority. The
Plan shall be administered by the Committee. The Committee shall have full and
exclusive power to administer the Plan on behalf of the Board, subject to such
terms and conditions as the Committee may prescribe. Notwithstanding anything
herein to the contrary, the Committee’s power to administer the Plan, and
actions the Committee takes under the Plan, shall be limited by the provisions
set forth in the Committee’s charter, as such charter may be amended from time
to time, and the further limitation that certain actions may be subject to
review and approval by either the full Board or a panel consisting of all of the
Independent Directors of the Company.

     

         
(b) Powers of the
Committee. Subject to the other provisions of this Plan, the Committee
shall have the authority, in its discretion:

     

    
      	 
      	
                   
      (i) to grant Incentive Stock Options, Nonqualified Stock Options,
      Restricted Stock, Restricted Stock Units, and

            

    

         

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    
      	 	SARs
      to Participants and to determine the terms and conditions of such Awards,
      including the determination of the Fair Market Value of the Shares and the
      exercise price, and to modify or amend each Award, with the consent of the
      Participant when required;
	 
      	
                   
      (ii) to determine the Participants, to whom Awards, if any, will be
      granted hereunder, the timing of such Awards, and the number of Shares to
      be represented by each Award;

            
	 
      	
                   
      (iii) to construe and interpret the Plan and the Awards granted
      hereunder;

            
	 
      	
                   
      (iv) to prescribe, amend, and rescind rules and regulations relating
      to the Plan, including the form of Award Agreement, and manner of
      acceptance of an Award, such as correcting a defect or supplying any
      omission, or reconciling any inconsistency so that the Plan or any Award
      Agreement complies with applicable law, regulations and listing
      requirements and to avoid unanticipated consequences deemed by the
      Committee to be inconsistent with the purposes of the Plan or any Award
      Agreement;

            
	 
      	
                   
      (v) to establish performance criteria for Awards made pursuant to the
      Plan in accordance with a methodology established by the Committee, and to
      determine whether performance goals have been attained;

            
	 
      	
                   
      (vi) to accelerate or defer (with the consent of the Participant) the
      exercise or vested date of any Award;

            
	 
      	
                   
      (vii) to authorize any person to execute on behalf of the Company any
      instrument required to effectuate the grant of an Award previously granted
      by the Committee;

            
	 
      	
                   
      (viii) to establish sub-plans, procedures or guidelines for the grant
      of Awards to Directors, Consultants and Employees working outside of the
      United States; and

            
	 
      	
                   
      (ix) to make all other determinations deemed necessary or advisable
      for the administration of the Plan;

            

    

    Provided
that, no consent
of a Participant is necessary under clauses (i) or (vi) if a
modification, amendment, acceleration, or deferral, in the reasonable judgment
of the Committee confers a benefit on the Participant or is made pursuant to an
adjustment in accordance with Section 5.

     

         
(c) Effect of Committee’s
Decision. All decisions, determinations, and interpretations of the
Committee shall be final and binding on all Participants, the Company (including
its Subsidiaries), any shareholder and all other persons.

     

         
(d) Delegation.
Consistent with the Committee’s charter, as such charter may be amended from
time to time, the Committee may delegate (i) to one or more separate
committees consisting of members of the Committee or other Directors who are
Independent Directors (any such committee a “Subcommittee”), or (ii) to an
Executive Officer of the Company, the ability to grant Awards and take the other
actions described in Section 3(b) with respect to Participants who are not
Executive Officers, and such actions shall be treated for all purposes as if
taken by the Committee; provided that the grant of Awards shall be made in
accordance with parameters established by the Committee. Any action by any such
Subcommittee or Executive Officer within the scope of such delegation shall be
deemed for all purposes to have been taken by the Committee.

     

         
(e) Administration. The Committee
may delegate the administration of the Plan to an officer or officers of the
Company, and such administrator(s) may have the authority to directly, or under
their supervision, execute and distribute agreements or other documents
evidencing or relating to Awards granted by the Committee under this Plan, to
maintain records relating to the grant, vesting, exercise, forfeiture or
expiration of Awards, to process or oversee the issuance of Shares upon the
exercise, vesting and/or settlement of an Award, to interpret the terms of
Awards and to take such other actions as the Committee may specify. Any action
by any such administrator within the scope of its delegation shall be deemed for
all purposes to have been taken by the Committee and references in this Plan to
the Committee shall include any such administrator, provided that the actions
and interpretations of any such administrator shall be subject to review and
approval, disapproval or modification by the Committee.

     

         
SECTION 4.     Shares Subject to the
Plan.

     

         
(a) Reservation of
Shares. The shares of Common Stock reserved under this Plan will include
reserved shares of Common Stock that are not subject to a grant or as to which
the option award granted has been forfeited under the Former Plan, and an
additional 5,000,000 shares of Common Stock. The aggregate number of Shares
available for issuance under the Plan will be reduced by one Share for each
Share delivered in settlement of any award of Restricted Stock, Restricted Stock
Unit, or SAR and one Share for each Share delivered in settlement of an Option.
If an Award expires, is forfeited or becomes unexercisable for any reason
without having been exercised in full, the undelivered Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    Awards
under the Plan. Without limiting the foregoing, unless the Plan shall have been
terminated, Shares underlying an Award that has been exercised, either in part
or in full, including any Shares that would otherwise be issued to a Participant
that are used to satisfy any withholding tax obligations that arise with respect
to any Award, shall become available for future Awards under the Plan except to
the extent Shares were issued in settlement of the Award. Shares available for
issuance under the Plan shall be increased by any shares of Common Stock subject
to outstanding awards under the Former Plans on the date of shareholder approval
of the Plan that later cease to be subject to such awards for any reason other
than such awards having been exercised, subject to adjustment from time to time
as provided in Section 5, which shares of Common Stock shall, as of the
date such shares cease to be subject to such awards, cease to be available for
grant and issuance under the Former Plans, but shall be available for issuance
under the Plan. The Shares may be authorized but unissued, or reacquired shares
of Common Stock. The Company, during the term of this Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.

     

         
(b) Time of Granting
Awards. The date of grant of an Award shall, for all purposes, be the
date on which the Company completes the corporate action relating to the grant
of such Award and all conditions to the grant have been satisfied, provided that
conditions to the exercise of an Award shall not defer the date of grant. Notice
of a grant shall be given to each Participant to whom an Award is so granted
within a reasonable time after the determination has been made.

     

         
(c) Securities Law
Compliance. Shares shall not be issued pursuant to the exercise of an
Award unless the exercise of such Award and the issuance and delivery of such
Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated under either such Act, and
the requirements of any stock exchange or quotation system upon which the Shares
may then be listed or quoted, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.

     

         
(d) Substitutions and
Assumptions. The Board or the Committee shall have the right to
substitute or assume Awards in connection with mergers, reorganizations,
separations, or other transactions to which Section 424(a) of the Code
applies, provided such substitutions and assumptions are permitted by
Section 424 of the Code and the regulations promulgated thereunder. The
number of Shares reserved pursuant to Section 4(a) may be increased by the
corresponding number of Awards assumed and, in the case of a substitution, by
the net increase in the number of Shares subject to Awards before and after the
substitution.

     

         
SECTION 5.        Adjustments to Shares Subject to the
Plan. If any change is made to the Shares by reason of any stock split,
stock dividend, recapitalization, combination of shares, exchange of shares or
other change affecting the outstanding Shares as a class without the Company’s
receipt of consideration, appropriate adjustments shall be made to (i) the
maximum number and/or class of securities issuable under the Plan, (ii) the
number and/or class of securities and/or the price per Share covered by
outstanding Awards under the Plan and (iii) the Maximum Annual Participant
Award. The Committee may also make adjustments described in (i)-(iii) of the
previous sentence in the event of any distribution of assets to shareholders
other than a normal cash dividend. In determining adjustments to be made under
this Section 5, the Committee may take into account such factors as it
deems appropriate, including the restrictions of applicable law and the
potential tax consequences of an adjustment, and in light of such factors may
make adjustments that are not uniform or proportionate among outstanding Awards.
Adjustments, if any, and any determinations or interpretations, including any
determination of whether a distribution is other than a normal cash dividend,
made by the Committee shall be final, binding and conclusive. For purposes of
this Section 5, conversion of any convertible securities of the Company
shall not be deemed to have been “effected without receipt of
consideration.”

     

         
Except as expressly provided herein, no issuance by the Company of shares of any
class, or securities convertible into shares of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of Shares subject to an Award.

     

    PART II - TERMS APPLICABLE TO ALL
AWARDS

     

         
SECTION 6.     General
Eligibility.

     

         
(a) Awards. Awards
may be granted to Participants who are Employees, Directors or Consultants;
provided however that Incentive Stock Options may only be granted to
Employees.

     

         
(b) Maximum Annual
Participant Award. The aggregate number of Shares with respect to which
an Award or Awards may be granted to any one Participant over the life of the
Plan (the “Maximum Participant Award”) shall not 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    exceed
1,000,000 shares of Common Stock (increased, proportionately, in the event
of any stock split or stock dividend with respect to the Shares). If an Option
is in tandem with a SAR, such that the exercise of the Option or SAR with
respect to a Share cancels the tandem SAR or Option right, respectively, with
respect to each Share, the tandem Option and SAR rights with respect to each
Share shall be counted as covering but one Share for purposes of the Maximum
Annual Participant Award.

     

         
(c) No Employment/
Service Rights. Nothing in the Plan shall confer upon any Participant the
right to an Award or to continue in service as an employee or Consultant for any
period of specific duration, or interfere with or otherwise restrict in any way
the rights of the Company (or any Subsidiary employing or retaining such
person), or of any Participant, which rights are hereby expressly reserved by
each, to terminate such person’s services at any time for any reason, with or
without cause.

     

         
SECTION 7.      Procedure for Exercise of Awards;
Rights as a Shareholder.

     

         
(a) Procedure. An
Award shall be exercised when written, electronic or verbal notice of exercise
has been given to the Company, or the brokerage firm or firms approved by the
Company to facilitate exercises and sales under this Plan, in accordance with
the terms of the Award by the person entitled to exercise the Award and full
payment for the Shares with respect to which the Award is exercised has been
received by the Company or the brokerage firm or firms, as applicable. The
notification to the brokerage firm shall be made in accordance with procedures
of such brokerage firm approved by the Company. Full payment may, as authorized
by the Committee, consist of any consideration and method of payment allowable
under Section 7(b) of the Plan. The Company shall issue (or cause to be
issued) such share certificate promptly upon exercise of the Award. In the event
that the exercise of an Award is treated in part as the exercise of an Incentive
Stock Option and in part as the exercise of a Nonqualified Stock Option pursuant
to Section 10(a), the Company shall issue a share certificate evidencing
the Shares treated as acquired upon the exercise of an Incentive Stock Option
and a separate share certificate evidencing the Shares treated as acquired upon
the exercise of a Nonqualified Stock Option, and shall identify each such
certificate accordingly in its share transfer records. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the share certificate is issued, except as provided in Section 5 of
the Plan.

     

         
(b) Method of
Payment. The consideration to be paid for any Shares to be issued upon
exercise or other required settlement of an Award, including the method of
payment, shall be determined by the Committee at the time of settlement and
which forms may include: (i) with respect to an Option, a request that the
Company or the designated brokerage firm conduct a cashless exercise of the
Option; (ii) cash; and (iii) tender of shares of Common Stock owned by
the Participant in accordance with rules established by the Committee from time
to time. Shares used to pay the exercise price shall be valued at their Fair
Market Value on the exercise date. Payment of the aggregate exercise price by
means of tendering previously-owned shares of Common Stock shall not be
permitted when the same may, in the reasonable opinion of the Company, cause the
Company to record a loss or expense as a result thereof.

     

         
(c) Withholding
Obligations. To the extent required by applicable federal, state, local
or foreign law, the Committee may and/or a Participant shall make arrangements
satisfactory to the Company for the satisfaction of any withholding tax
obligations that arise with respect to any Incentive Stock Option, Nonqualified
Stock Option, SAR, Restricted Stock or Restricted Stock Units, or any sale of
Shares. The Company shall not be required to issue Shares or to recognize the
disposition of such Shares until such obligations are satisfied. These
obligations may be satisfied by having the Company withhold a portion of the
Shares that otherwise would be issued to a Participant under such Award or by
tendering Shares previously acquired by the Participant in accordance with rules
established by the Committee from time to time.

     

         
(d) Shareholder
Rights. Except as otherwise provided in this Plan, until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the share certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Shares subject to the Award,
notwithstanding the exercise of the Award.

     

         
(e) Non-Transferability
of Awards. An Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in exchange for consideration, except that an Award
may be transferred by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Participant, only by the Participant;
unless the Committee permits further transferability, on a general or specific
basis, in which case the Committee may impose conditions and limitations on any
permitted transferability.

     

         
SECTION 8.     Expiration of
Awards.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

         
(a) Expiration,
Termination or Forfeiture of Awards. Unless otherwise provided in the
applicable Award Agreement or any severance agreement, vested Awards granted
under this Plan shall expire, terminate, or otherwise be forfeited as
follows:

     

    
      	 
      	
                   
      (i) three (3) months after the date the Company delivers a
      notice of termination of a Participant’s Active Status, other than in
      circumstances covered by (ii), (iii), (iv) or
      (v) below;

            
	 
      	
                   
      (ii) immediately upon termination of a Participant’s Active Status
      for Misconduct;

            
	 
      	
                   
      (iii) twelve (12) months after the date on which a Participant
      other than a Non-Employee Director ceased performing services as a result
      of his or her total and permanent Disability;

            
	 
      	
                   
      (iv) twelve (12) months months after the date on which the
      Participant ceased performing services as a result of Retirement, or after
      his death.

            

    

         
(b) Extension of
Term. Notwithstanding subsection (a) above, the Committee shall
have the authority to extend the expiration date of any outstanding Option,
other than an Incentive Stock Option, or SAR in circumstances in which it deems
such action to be appropriate (provided that no such extension shall extend the
term of an Option or SAR beyond the date on which the Option or SAR would have
expired if no termination of the Employee’s Active Status had
occurred).

     

         
SECTION 9.            Effect of Change of Control.
Notwithstanding any other provision in the Plan to the contrary, the following
provisions shall apply unless otherwise provided in the most recently executed
agreement between the Participant and the Company, or specifically prohibited
under applicable laws, or by the rules and regulations of any applicable
governmental agencies or national securities exchanges or quotation
systems.

     

         
(a) Acceleration.
Awards of a Participant shall be Accelerated (as defined in Section 9(b)
below) as follows:

     

    
      	 
      	
                   
      (i) With respect to Non-Employee Directors, upon the occurrence of a
      Change of Control;

            
	 
      	
                   
      (ii) With respect to any employee, upon the occurrence of a Change of
      Control described in Section 2(f)(i);

            
	 
      	
                   
      (iii) With respect to any employee who Resigns for Good Reason or
      whose Active Status is terminated within one year after a Change of
      Control described in Section 2(f)(ii) or (iii);

            
	 
      	
                   
      (iv) With respect to any employee, upon the occurrence of a Change of
      Control described in Section 2(f)(iv) in connection with which each
      Award is not assumed or an equivalent award substituted by such successor
      entity or a parent or subsidiary of such successor
      entity; and

            
	 
      	
                   
      (v) With respect to any employee who Resigns for Good Reason or whose
      Active Status is terminated within one year after a Change of Control
      described in Section 2(f)(iv) in connection with which each Award is
      assumed or an equivalent award substituted by the successor entity or a
      parent or subsidiary of such successor
entity.

            

    

         
(b) Definition.
For purposes of this Section 9, Awards of a Participant being “Accelerated”
means, with respect to such Participant:

     

    
      	 
      	
                   
      (i) any and all Options and SARs shall become fully vested and
      immediately exercisable, and shall remain exercisable throughout their
      entire term;

            
	 
      	
                   
      (ii) any restriction periods and restrictions imposed on Restricted
      Stock or Restricted Stock Units that are not performance-based shall
      lapse; and

            
	 
      	
                   
      (iii) the restrictions and deferral limitations and other conditions
      applicable to any other Awards shall lapse, and such other Awards shall
      become free of all restrictions, limitations or conditions and become
      fully vested and transferable to the full extent of the original
      grant.

            

    

    PART III  -
SPECIFIC TERMS APPLICABLE TO
OPTIONS, STOCK AWARDS AND SARS

     

         
SECTION 10. Grant, Terms
and Conditions of Options.

     

         
(a) Designation.
Each Option shall be designated in an Award Agreement as either an Incentive
Stock Option or a Nonqualified Stock Option. However, notwithstanding such
designations, to the extent that the aggregate Fair Market Value of the Shares
with respect to which Options designated as Incentive Stock Options are
exercisable for the first time by any employee during any calendar year (under
all plans of the Company) exceeds $100,000, such excess 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    Options
shall be treated as Nonqualified Stock Options. Options shall be taken into
account in the order in which they were granted.

     

         
(b) Terms of
Options. The term of each Incentive Stock Option shall be no more than
ten (10) years from the date of grant. However, in the case of an Incentive
Stock Option granted to a Participant who, at the time the Option is granted,
owns Shares representing more than ten percent (10%) of the voting power of all
classes of shares of the Company or any Parent or Subsidiary, the term of the
Option shall be no more than five (5) years from the date of grant. The
terms of all Nonqualified Stock Options shall be at the discretion of the
Committee.

     

         
(c) Option Exercise
Prices.

     

    
      	 
      	
                   
      (i) The per Share exercise price under an Incentive Stock Option
      shall be as follows:

            
	 
      	
                   (A) If
      granted to an employee who, at the time of the grant of such Incentive
      Stock Option, owns shares representing more than ten percent (10%) of the
      voting power of all classes of shares of the Company or any Parent or
      Subsidiary, the per Share exercise price shall be no less than 110% of the
      Fair Market Value per Share on the date of grant.

            
	 
      	
                   
      (B) If granted to any other Employee, the per Share exercise price
      shall be no less than 100% of the Fair Market Value per Share on the date
      of grant.

            
	 
      	
                   
      (ii) The per Share exercise price under a Nonqualified Stock Option
      or SAR shall be no less than
      one        hundred percent (100%)
      of the Fair Market Value per Share on the date of
grant.

            
	 
      	
                   
      (iii) In no event shall the Board or the Committee be permitted to
      Reprice an Option after the date
      of       grant without shareholder
      approval.

            

    

         
(d) Vesting. To
the extent Options vest and become exercisable in increments, such Options shall
cease vesting as of the date of the Optionee’s Disability or termination of such
Optionee’s Active Status for reasons other than Retirement or death, in each of
which cases such Options shall immediately vest in full.

     

         
(e) Substitution of Stock
SARs for Options. Notwithstanding anything in this Plan to the contrary,
if the Company is required to or elects to record as an expense in its
consolidated statements of earnings the cost of Options pursuant to FAS 123
or a similar accounting requirement, the Committee shall have the sole
discretion to substitute, without receiving Participants’ permission, SARs paid
only in stock for outstanding Options; provided, the terms of the substituted
stock SARs are the same as the terms of the Options, the number of shares
underlying the number of stock SARs equals the number of shares underlying the
Options and the difference between the Fair Market Value of the underlying
Shares and the grant price of the SARs is equivalent to the difference between
the Fair Market Value of the underlying shares and the exercise price of the
Options.

     

         
(f) Exercise. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Committee at the time of grant, and as are
permissible under the terms of the Plan. An Option may not be exercised for a
fraction of a Share.

     

         
SECTION 11. Grant, Terms
and Conditions of Stock Awards.

     

         
(a) Designation.
Restricted Stock or Restricted Stock Units may be granted either alone, in
addition to, or in tandem with other Awards granted under the Plan. Restricted
Stock or Restricted Stock Units may include a dividend equivalent right, as
permitted by Section 5. After the Committee determines that it will offer
Restricted Stock or Restricted Stock Units, it will advise the Participant in
writing or electronically, by means of an Award Agreement, of the terms,
conditions and restrictions, including vesting, if any, related to the offer,
including the number of Shares that the Participant shall be entitled to receive
or purchase, the price to be paid, if any, and, if applicable, the time within
which the Participant must accept the offer. The offer shall be accepted by
execution of an Award Agreement or as otherwise directed by the Committee.
Restricted Stock Units may be paid as permitted by Section 7(b). The term
of each award of Restricted Stock or Restricted Stock Units shall be at the
discretion of the Committee.

     

         
(b) Performance
Criteria. Restricted Stock and Restricted Stock Units granted pursuant to
the Plan that are intended to qualify as “performance based compensation” under
Section 162(m) of the Code shall be subject to the fulfillment of
performance goals relating to the Performance Criteria selected by the Committee
and specified at the time such Restricted Stock and Restricted Stock Units are
granted. For purposes of this Plan, “Performance Criteria” means one or more of
the following (as selected by the Committee): (i) earnings per
share, including earnings per share as adjusted (a) to exclude the effect
of any (1) significant acquisitions or dispositions of businesses by the
Company, 

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (2) one-time,
non-operating charges and (3) accounting changes (including but not limited
to any accounting changes that alter the recognition of stock option expense and
any accounting changes the Company adopts early); and (b) for any stock
split, stock dividend or other recapitalization; (ii) earnings per share
before taxes, subject to any of the adjustments described above;
(iii) earnings; (iv) earnings before interest, taxes and amortization;
(v) total shareholder return; (vi) share price performance;
(vii) return on equity; (viii) return on managed assets;
(ix) revenue; (x) operating expenses; (xi) operating income;
(xii) originations volume; (xiii) originations growth; (xiv) net
charge-offs; (xv) net charge-off percentage; (xvi) portfolio growth;
(xvii) net interest margin; or (xviii) cash flow.

     

         
(c) Vesting.
Unless the Committee determines otherwise, the Award Agreement shall provide for
the forfeiture of the non-vested Shares underlying Restricted Stock or
Restricted Stock Units upon the termination of a Participant’s Active Status. To
the extent that the Participant purchased the Shares granted under such
Restricted Stock or Restricted Stock Units and any such Shares remain non-vested
at the time the Participant’s Active Status terminates, the termination of
Active Status shall cause an immediate sale of such non-vested Shares to the
Company at the original price per Share paid by the Participant.

     

         
SECTION 12. Grant, Terms
and Conditions of SARs.

     

         
(a) Grants. The
Committee shall have the full power and authority, exercisable in its sole
discretion, to grant SARs to selected Participants. The Committee is authorized
to grant both tandem stock appreciation rights, consisting of SARs with
underlying Options (“Tandem SARs”), and stand-alone stock appreciation rights
(“Stand-Alone SARs”) as described below. The terms of SARs shall be at the
discretion of the Committee. In no event shall the Board or the Committee be
permitted to Reprice a SAR after the date of grant without shareholder
approval.

     

         
(b) Tandem
SARs.

     

         
(i) Participants may be granted a Tandem SAR, exercisable upon such terms
and conditions as the Committee shall establish, to elect between the exercise
of the underlying Option for Shares or the surrender of the Option in exchange
for a distribution from the Company in an amount equal to the excess of
(A) the Fair Market Value (on the Option surrender date) of the number of
Shares in which the Participant is at the time vested under the surrendered
Option (or surrendered portion thereof) over (B) the aggregate exercise
price payable for such vested Shares.

     

         
(ii) No such Option surrender shall be effective unless it is approved by
the Committee, either at the time of the actual Option surrender or at any
earlier time. If the surrender is so approved, then the distributions to which
the Participant shall become entitled under this Section 12(b) may be made
in Shares valued at Fair Market Value (on the Option surrender date), in cash,
or partly in Shares and partly in cash, as the Committee shall deem
appropriate.

     

         
(iii) If the surrender of an Option is not approved by the Committee, then
the Participant shall retain whatever rights he or she had under the surrendered
Option (or surrendered portion thereof) on the Option surrender date and may
exercise such rights at any time prior to the later of (A) five
(5) business days after the receipt of the rejection notice or (B) the
last day on which the Option is otherwise exercisable in accordance with the
terms of the instrument evidencing such Option, but in no event may such rights
be exercised more than ten (10) years after the date of the Option
grant.

     

         
(c) Stand-Alone
SARs.

     

         
(i) A Participant may be granted a Stand-Alone SAR not tied to any
underlying Option under Section 10 of the Plan. The Stand-Alone SAR shall
cover a specified number of Shares and shall be exercisable upon such terms and
conditions as the Committee shall establish. Upon exercise of the Stand-Alone
SAR, the holder shall be entitled to receive a distribution from the Company in
an amount equal to the excess of (A) the aggregate Fair Market Value (on
the exercise date) of the Shares underlying the exercised right over
(B) the aggregate base price in effect for those Shares.

     

         
(ii) The number of Shares underlying each Stand-Alone SAR and the base
price in effect for those Shares shall be determined by the Committee at the
time the Stand-Alone SAR is granted. In no event, however, may the base price
per Share be less than the Fair Market Value per underlying Share on the grant
date.

     

         
(iii) The distribution with respect to an exercised Stand-Alone SAR may be
made in Shares valued at Fair Market Value on the exercise date, in cash, or
partly in Shares and partly in cash, as the Committee shall deem
appropriate.

     

         
(d) Exercised
SARs. The Shares issued in settlement of any SARs exercised under this
Section 12 shall not be available for subsequent issuance under the Plan.
In accordance with Section 4, Shares underlying any exercised SARs that
were not issued in settlement of the SAR shall become available for future
issuance under the Plan.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    PART IV - TERM OF PLAN AND SHAREHOLDER
APPROVAL

     

         
SECTION 13.      Term of Plan. The Plan shall
become effective as of the Effective Date. It shall continue in effect until the
tenth anniversary of the Effective Date or until terminated under
Section 14 of the Plan or extended by an amendment approved by the
shareholders of the Company pursuant to Section 14(a).

     

         
SECTION 14.           Amendment and Termination of the
Plan.

     

         
(a) Amendment and
Termination. The Board or the Committee may amend or terminate the Plan
from time to time in such respects as the Board may deem advisable (including,
but not limited to amendments which the Board deems appropriate to enhance the
Company’s ability to claim deductions related to stock option exercises);
provided that to the extent required by the Code or the rules of Nasdaq, of any
national stock exchange on which the Company’s common shares are listed, or of
the SEC, shareholder approval shall be required for any amendment of the Plan.
Subject to the foregoing, it is specifically intended that the Board or
Committee may amend the Plan without shareholder approval to comply with legal,
regulatory and listing requirements and to avoid unanticipated consequences
deemed by the Committee to be inconsistent with the purpose of the Plan or any
Award Agreement.

     

         
(b) Participants in
Foreign Countries. The Committee shall have the authority to adopt such
modifications, procedures, and sub-plans as may be necessary or desirable to
comply with provisions of the laws of foreign countries in which the Company or
its Subsidiaries may operate to assure the viability of the benefits from Awards
granted to Participants performing services in such countries and to meet the
objectives of the Plan.

     

         
(c) Effect of Amendment
or Termination. Any amendment or termination of the Plan shall not affect
Awards already granted and such Awards shall remain in full force and effect as
if this Plan had not been amended or terminated, unless mutually agreed
otherwise between the Participant and the Committee, which agreement must be in
writing and signed by the Participant and the Company.

     

         
SECTION 15.     Shareholder Approval. The
effectiveness of the Plan is subject to approval by the shareholders of the
Company in accordance with applicable Nasdaq rules.

     

    

     

    
      
         

      

      
        11

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