Sample Business Contracts


1990 Long-Term Equity Incentive Plan - Sun Microsystems Inc.


                             SUN MICROSYSTEMS, INC.

                      1990 LONG-TERM EQUITY INCENTIVE PLAN

                 (Last amended effective as of August 15, 1996)


     1.  Purpose of the Plan.  The purpose of the Sun  Microsystems,  Inc.  1990
Long-Term Equity Incentive Plan is to enable Sun  Microsystems,  Inc. to provide
an incentive to eligible  employees,  consultants and Officers whose present and
potential  contributions  are important to the continued success of the Company,
to afford them an opportunity to acquire a proprietary  interest in the Company,
and to enable the Company to enlist and retain in its employ the best  available
talent for the  successful  conduct of its  business.  It is intended  that this
purpose will be effected  through the granting of (a) stock  options,  (b) stock
purchase rights,  (c) stock appreciation  rights, and (d) long-term  performance
awards.


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

         (a) "Board" means the Board of Directors of the Company.

         (b) "Code" means the Internal Revenue Code of 1986, as amended.

         (c)  "Committee"  means the  Committee  or  Committees  referred  to in
Section 5 of the Plan. If at any time no Committee shall be in office,  then the
functions  of the  Committee  specified  in the Plan shall be  exercised  by the
Board.

         (d)  "Common  Stock"  means the Common  Stock,  $0.00067  par value (as
adjusted from time to time), of the Company.

         (e) "Company"  means Sun  Microsystems,  Inc., a corporation  organized
under the laws of the state of Delaware, or any successor corporation.

         (f) "Director" means a member of the Board.

         (g) "Disability"  means a disability,  whether  temporary or permanent,
partial or total, as determined by the Committee.

         (h)  "Exchange  Act"  means the  Securities  Exchange  Act of 1934,  as
amended.

         (i) "Fair  Market  Value"  means,  as of any date,  the value of Common
Stock determined as follows:

               (i) the  last  reported  sale  price of the  Common  Stock of the
Company on the NASDAQ  National Market System or, if no such reported sale takes
place on any such day, the average of the closing bid and asked prices, or

               (ii) if such  Common  Stock  shall  then be listed on a  national
securities  exchange,  the last reported sale price or, if no such reported sale
takes place on any such day,  the average of the closing bid and asked prices on
the principal national  securities  exchange on which the Common Stock is listed
or admitted to trading, or

               (iii) if such Common  Stock shall not be quoted on such  National
Market  System nor  listed or  admitted  to  trading  on a  national  securities
exchange,  then the average of the closing bid and asked prices,  as reported by
The Wall Street Journal for the over-the-counter market, or

               (iv) if none of the foregoing is applicable, then the Fair Market
Value  of a share  of  Common  Stock  shall be  determined  by the  Board in its
discretion.

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         (j)  "Incentive  Stock  Option"  means  an  Option  intended  to be and
designated as an "Incentive  Stock Option"  within the meaning of Section 422 of
the Code.

         (k)  "Long-Term  Performance  Award"  means an award  under  Section 10
below.  A Long-Term  Performance  Award shall permit the  recipient to receive a
cash or stock bonus (as determined by the Committee)  upon  satisfaction of such
performance  factors  as  are  set  out  in the  recipient's  individual  grant.
Long-Term  Performance  Awards  will be based upon the  achievement  of Company,
Subsidiary and/or individual  performance factors or upon such other criteria as
the Committee may deem appropriate.

         (l)  "Nonstatutory  Stock  Option"  means  any  Option  that  is not an
Incentive Stock Option.

         (m)  "Officer"  means an officer of the  Company  within the meaning of
Section  16 of the  Exchange  Act  and the  rules  and  regulations  promulgated
thereunder.

         (n)  "Option"  means any  option  to  purchase  shares of Common  Stock
granted pursuant to Section 7 below.

         (o)  "Plan"  means  this  1990  Long-Term  Equity  Incentive  Plan,  as
hereinafter amended from time to time.

         (p) "Restricted  Stock" means shares of Common Stock acquired  pursuant
to a grant of Stock Purchase Rights under Section 9 below.

         (q) "Right"  means and  includes  Stock  Appreciation  Rights and Stock
Purchase Rights granted pursuant to the Plan.

         (r) "Stock  Appreciation Right" means an award made pursuant to Section
8 below,  which right permits the recipient to receive an amount of Common Stock
or cash equal in value to the difference between the Fair Market Value of Common
Stock on the date of grant of the  Option  and the Fair  Market  Value of Common
Stock on the date of exercise of the Stock Appreciation Right.

         (s) "Stock  Purchase  Right"  means the right to purchase  Common Stock
pursuant to a  restricted  stock  purchase  agreement  entered  into between the
Company and the purchaser under Section 9 below.

         (t) "Subsidiary" means a corporation, domestic or foreign, of which not
less than 50% of the voting  shares are held by the Company or by a  Subsidiary,
whether or not such corporation now exists or is hereafter organized or acquired
by the Company or by a Subsidiary.

     In addition,  the term "Rule 16b-3",  the term  "Performance  Period" shall
have the meanings set forth in Section 5(a) and Section 10 respectively.

     3. Eligible Participants. Any Officer, consultant, or other employee of the
Company or of a Subsidiary  whom the  Committee  deems to have the  potential to
contribute  to the future  success of the  Company  shall be eligible to receive
awards under the Plan; provided,  however,  that any Options intended to qualify
as Incentive  Stock Options shall be granted only to employees of the Company or
its Subsidiaries.

     4. Stock  Subject to the Plan.  Subject  to  Sections  11 and 12, the total
number of shares  of  Common  Stock  reserved  and  available  for  distribution
pursuant to the Plan shall be 13,250,000  shares.  The shares may be authorized,
but unissued,  or reacquired Common Stock.  Subject to Sections 11 and 12 below,
if any shares of Common Stock that have been  optioned  under an Option cease to
be subject to such Option (other than through exercise of the Option), or if any
Right, Option or

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<PAGE>

Long-Term  Performance  Award  granted  hereunder is forfeited or any such award
otherwise  terminates  prior to the issuance to the participant of Common Stock,
the shares (if any) that were  reserved  for  issuance  pursuant  to such Right,
Option or Long-Term  Performance Award shall again be available for distribution
in  connection  with future  awards or Option  grants under the Plan;  provided,
however,  that shares of Common Stock that have  actually  been issued under the
Plan,  whether  upon  exercise  of an  Option or Right or in  satisfaction  of a
Long-Term  Performance Award, shall not in any event be returned to the Plan and
shall not become available for future distribution under the Plan.

     5. Administration.

         (a) Procedure.

               (i) Multiple  Administrative Bodies. The Plan may be administered
by different Committees with respect to different groups of service providers.

               (ii) Section 162(m). To the extent that a Committee determines it
to be  desirable  to qualify  awards  granted  hereunder  as  "performance-based
compensation"  within the meaning of Section  162(m) of the Code, the Plan shall
be  administered  by a  committee  consisting  solely  of two or  more  "outside
directors" within the meaning of Section 162(m) of the Code.

               (iii) Rule 16b-3. To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3  promulgated  under the Exchange Act ("Rule
16b-3"), the transactions  contemplated hereunder shall be structured to satisfy
the requirements for exemption under Rule 16b-3.

               (iv) Other Administration. Other than as provided above, the Plan
shall be administered by (A) the Board or (B) a Committee, which committee shall
be constituted to satisfy Applicable Laws.

         (b) Authority.  A Committee,  if there be one, shall have full power to
implement and carry out the Plan,  subject to the general  purposes,  terms, and
conditions of the Plan and to the direction of the Board (including the specific
duties delegated by the Board to such Committee), which power shall include, but
not be limited to, the following:

               (i) to select the Officers,  consultants  and other  employees of
the Company and/or its  Subsidiaries  to whom Options,  Rights and/or  Long-Term
Performance Awards may from time to time be granted hereunder;

               (ii) to  determine  whether  and to what extent  Options,  Rights
and/or Long-Term  Performance  Awards, or any combination  thereof,  are granted
hereunder;

               (iii) to  determine  the  number of shares of Common  Stock to be
covered by each such award granted hereunder;

               (iv) to approve forms of agreement for use under the Plan;

               (v) to determine the terms and conditions,  not inconsistent with
the  terms of the Plan,  of any  award  granted  hereunder  (including,  but not
limited to, the share price and any  restriction or  limitation,  or any vesting
acceleration or waiver of forfeiture  restrictions regarding any Option or other
award and/or the shares of Common Stock relating thereto,  based in each case on
such factors as the Committee shall determine, in its sole discretion);

               (vi) to determine whether and under what  circumstances an Option
may be settled in cash or Restricted  Stock under Section 7(j) instead of Common
Stock;

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<PAGE>

               (vii) to determine  the form of payment  that will be  acceptable
consideration for exercise of an Option or Right granted under the Plan;

               (viii) to  determine  whether,  to what  extent  and  under  what
circumstances  Common Stock and other  amounts  payable with respect to an award
under this Plan shall be deferred either automatically or at the election of the
participant  (including providing for and determining the amount (if any) of any
deemed earnings on any deferred amount during any deferral period);

               (ix) to reduce the exercise price of any Option or Right;

               (x) to determine the terms and  restrictions  applicable to Stock
Purchase  Rights and the Restricted  Stock  purchased by exercising such Rights;
and

               (xi) to allow participants to satisfy withholding tax obligations
by electing to have the Company  withhold  from the shares of Common Stock to be
issued  upon  exercise  of an award that  number of shares  having a Fair Market
Value equal to the amount required to be withheld.  The Fair Market Value of the
Shares to be withheld  shall be determined on the date that the amount of tax to
be withheld is to be  determined.  All elections by a participant to have shares
withheld for this purpose  shall be made in such form and under such  conditions
as the  Committee  may deem  necessary of advisable  and shall be subject to the
consent or disapproval of the Committee.

         The  Committee  shall have the  authority to construe and interpret the
Plan, to  prescribe,  amend and rescind  rules and  regulations  relating to the
Plan,  and to make all  other  determinations  necessary  or  advisable  for the
administration of the Plan.

     6. Duration of the Plan.  The Plan shall remain in effect until  terminated
by the  Board  under  the  terms of the  Plan,  provided  that in no  event  may
Incentive  Stock  Options be granted under the Plan later than October 15, 2000,
10 years from the date the Plan was adopted by the Board.

     7. Stock Options.  The Committee,  in its discretion,  may grant Options to
eligible  participants  and  shall  determine  whether  such  Options  shall  be
Incentive  Stock Options or  Nonstatutory  Stock  Options.  Each Option shall be
evidenced  by a written  Option  agreement  which shall  expressly  identify the
Option as an Incentive Stock Option or as a Nonstatutory Stock Option, and be in
such form and contain such  provisions as the Committee  shall from time to time
deem  appropriate.  Without  limiting the  foregoing,  the Committee may, at any
time,  or from time to time,  authorize  the  Company,  with the  consent of the
respective  recipients,  to issue new Options  including Options in exchange for
the  surrender and  cancellation  of any or all  outstanding  Options or Rights.
Option agreements shall contain the following terms and conditions:

         (a) Exercise Price; Number of Shares. The exercise price of the Option,
which shall be approved by the Committee, may be less than the Fair Market Value
of the Common Stock at the time the Option is granted;  provided,  however, that
in the case of an Incentive  Stock Option,  the price shall be no less than 100%
of the Fair Market  Value of the Common Stock on the date the Option is granted,
subject to any additional  conditions set out in Section 7(g) below, and further
provided  that,  in the  case of an  individual  subject  to  Section  16 of the
Exchange  Act,  the price shall be no less than 50% of the Fair Market  Value of
the Common Stock on the date the Option is granted.

         The Option agreement shall specify the exercise price and the number of
shares of Common Stock to which it pertains.

         (b) Waiting  Period;  Exercise  Dates;  Term.  At the time an Option is
granted,  the Committee  will determine the terms and conditions to be satisfied
before shares may be purchased,  including the dates on which shares  subject to
the Option may first be purchased. The Committee may

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<PAGE>


specify that an Option may not be exercised  until the completion of the waiting
period specified at the time of grant. (Any such period is referred to herein as
the "waiting period.") At the time an Option is granted, the Committee shall fix
the period  within which such Option may be  exercised,  which shall not be less
than the waiting period,  if any, nor, in the case of an Incentive Stock Option,
more than 10 years from the date of grant.

         (c) Form of  Payment.  The  consideration  to be paid for the shares of
Common Stock to be issued upon  exercise of an Option,  including  the method of
payment,  shall be determined by the Committee (and, in the case of an Incentive
Stock Option, shall be determined at the time of grant) and may consist entirely
of (i) cash,  (ii) certified or cashier's  check,  (iii)  promissory  note, (iv)
other shares of Common Stock  (including,  in the  discretion of the  Committee,
Restricted Stock) which (x) either have been owned by the optionee for more than
six  months  on the  date  of  surrender  or  were  not  acquired,  directly  or
indirectly,  from the  Company,  and (y) have a Fair Market Value on the date of
surrender  equal to the aggregate  exercise price of the shares as to which said
Option shall be exercised,  (v) delivery of a properly  executed exercise notice
together with  irrevocable  instructions to a broker to promptly  deliver to the
Company the amount of sale or loan proceeds  required to pay the exercise price,
(vi)  delivery of an  irrevocable  subscription  agreement  for the shares which
obligates  the  option  holder to take and pay for the  shares  not more than 12
months  after the date of delivery of the  subscription  agreement  or (vii) any
combination of the foregoing methods of payment.

         (d)  Effect  of   Termination   of  Employment  or  Death  of  Employee
Participants. In the event that an optionee during his or her lifetime ceases to
be an  employee of the Company or of any  Subsidiary  for any reason,  including
retirement,  any Option,  including any unexercised  portion thereof,  which was
otherwise  exercisable on the date of  termination  of employment,  shall expire
within such time period as is determined by the  Committee;  provided,  however,
that in the case of an Incentive  Stock  Option the Option  shall expire  unless
exercised  within a period of 90 days from the date on which the optionee ceased
to be an  employee,  but in no event  after the  expiration  of the term of such
Option as set forth in the Option agreement.  If in any case the Committee shall
determine that an employee shall have been discharged for Just Cause (as defined
below) such employee shall not thereafter  have any rights under the Plan or any
Option that shall have been  granted to him or her under the Plan.  For purposes
of this Section, "Just Cause" means the termination of employment of an employee
shall have  taken  place as a result of (i)  willful  breach or neglect of duty;
(ii) failure or refusal to work or to comply with the Company's rules, policies,
and  practices;  (iii)  dishonesty;  (iv)  insubordination;  (v) being under the
influence of drugs (except to the extent medically  prescribed) or alcohol while
on duty or on Company premises; (vi) conduct endangering, or likely to endanger,
the health or safety of another  employee;  or (vii) conviction of a felony.  In
the event of the death of an employee optionee, that portion of the Option which
had become  exercisable  on the date of death shall be exercisable by his or her
personal  representatives,  heirs,  or  legatees  within six months or such time
period as is determined by the Committee (but in the case of an Incentive  Stock
Option, in no event after the expiration of the term of such Option as set forth
in the Option  agreement.)  In the event of the death of an optionee  within one
month after  termination  of employment  or service,  that portion of the Option
which had become  exercisable on the date of termination shall be exercisable by
his or her personal  representatives,  heirs,  or legatees  within six months or
such  time  period  as is  determined  by the  Committee  (but in the case of an
Incentive  Stock  Option,  in no event after the  expiration of the term of such
Option as set forth in the  Option  agreement.)  In the event  that an  optionee
ceases to be an employee of the Company or of any Subsidiary for any reason,

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including death or retirement, prior to the lapse of the waiting period, if any,
his or her Option shall terminate and be null and void to the extent unvested.

         (e)  Leave  of  Absence.  The  employment  relationship  shall  not  be
considered  interrupted  in the case of: (i) sick leave;  (ii)  military  leave;
(iii) any other leave of absence  approved by the Committee,  provided that such
leave is for a period  of not  more  than 90 days (or not more  than 30 days for
unpaid  leave),  unless  reemployment  upon  the  expiration  of such  leave  is
guaranteed  by contract or statute,  or unless  provided  otherwise  pursuant to
formal  policy  adopted  from  time  to  time  by the  Company  and  issued  and
promulgated  to  employees in writing;  or (iv) in the case of transfer  between
locations  of the  Company or  between  the  Company,  its  Subsidiaries  or its
successor.  In the case of any  employee  on an approved  leave of absence,  the
Committee  may make such  provisions  respecting  suspension  of  vesting of the
Option while on leave from the employ of the Company or a  Subsidiary  as it may
deem appropriate, except that in no event shall an Option be exercised after the
expiration of the term set forth in the Option agreement.

         (f) Acceleration of Exercisability or Waiting Period. The Committee may
accelerate the earliest date on which  outstanding  Options (or any installments
thereof) are exercisable.

         (g)  Special  Incentive  Stock  Option  Provisions.  In addition to the
foregoing,  Options  granted  under the Plan which are  intended to be Incentive
Stock  Options  under  Section 422 of the Code shall be subject to the following
terms and conditions:

               (i) Dollar  Limitation.  To the extent  that the  aggregate  Fair
Market  Value of the  shares of  Common  Stock  with  respect  to which  Options
designated as Incentive  Stock Options become  exercisable for the first time by
any individual during any calendar year (under all plans of the Company) exceeds
$100,000,  such Options  shall be treated as  Nonstatutory  Stock  Options.  For
purposes of the preceding  sentence,  (i) Options shall be taken into account in
the  order in which  they were  granted  and (ii) the Fair  Market  Value of the
shares shall be determined as of the time the Option with respect to such shares
is granted.

               (ii) Stockholder. If any person to whom an Incentive Stock Option
is to be  granted  pursuant  to the  provisions  of the Plan is,  on the date of
grant,  the owner of Common Stock (as  determined  under  Section  424(d) of the
Code) possessing more than 10% of the total combined voting power of all classes
of  stock of the  Company  or of any  Subsidiary,  then  the  following  special
provisions  shall be applicable to the  Incentive  Stock Option  granted to such
individual:

                    (A) The exercise price per share of the Common Stock subject
to such  Incentive  Stock  Option shall not be less than 110% of the Fair Market
Value of the Common Stock on the date of grant; and

                    (B) The Option shall not have a term in excess of five years
from the date of grant.

Except as modified  by the  preceding  provisions  of this  Subsection  7(g) and
except as otherwise  required by Section 422 of the Code,  all of the provisions
of  the  Plan  shall  be  applicable  to the  Incentive  Stock  Options  granted
hereunder.

         (h) Other  Provisions.  Each Option  granted under the Plan may contain
such other terms,  provisions,  and conditions not inconsistent with the Plan as
may be determined by the Committee.

         (i) Options to Consultants. Options granted to consultants shall not be
subject  to  Sections  7(b) and 7(d) of the Plan,  but shall have such terms and
conditions pertaining to waiting period

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<PAGE>

(if  any),   exercise   date,  and  effect  of  termination  of  the  consulting
relationship as the Committee shall determine in each case.

         (j) Buyout Provisions.  The Committee may at any time offer to buy out,
for a payment in cash or Common Stock (including  Restricted  Stock),  an Option
previously  granted,  based on such terms and conditions as the Committee  shall
establish and  communicate  to the optionee at the time that such offer is made.
Any such offer made to an Officer or Director  shall comply with the  applicable
provisions of Rule 16b-3.  This provision is intended only to clarify the powers
of the  Committee and shall not in any way be deemed to create any rights on the
part of optionees to receive buyout offers or payments.

         Limitations  on Grants to  Employees.  Notwithstanding  anything to the
contrary herein, the following limitations shall apply to grants of Options:

               (i) No eligible  participant shall be granted, in any fiscal year
of the Company, Options to purchase more than 150,000 shares.

               (ii)  In  connection  with  his or  her  initial  employment,  an
eligible  participant  may be granted  Options to purchase  up to an  additional
200,000  shares which shall not count  against the limit set forth in subsection
(i) above.

               (iii) The foregoing limitations shall be adjusted proportionately
in connection  with any change in the Company's  capitalization  as described in
Section 11.

               (iv) If an Option is cancelled  (other than in connection  with a
transaction  described  in Section  12),  the  cancelled  Option will be counted
against the limit set forth in this  paragraph  (k).  For this  purpose,  if the
exercise  price of an Option is reduced,  the  transaction  will be treated as a
cancellation of the Option and the grant of a new Option.

     8. Stock Appreciation Rights. Stock Appreciation Rights may be granted only
in connection with an Option,  either  concurrently with the grant of the Option
or at any  time  thereafter  during  the  term  of  the  Option.  The  following
provisions apply to such Stock Appreciation Rights.

         (a) Exercise of Right. The Stock  Appreciation  Right shall entitle the
optionee to exercise  the Right by  surrendering  to the Company  unexercised  a
portion of the  underlying  Option as to which Optionee has a right to exercise.
The  Optionee  shall  receive in exchange  from the Company an amount in cash or
Common  Stock equal in value to the excess of (x) the Fair  Market  Value on the
date of exercise  of the Right of the Common  Stock  covered by the  surrendered
portion of the underlying Option over (y) the exercise price of the Common Stock
covered by the surrendered  portion of the underlying  Option,  as determined in
accordance with Section 7(a) above. Notwithstanding the foregoing, the Committee
may  place  limits  on the  amount  that may be paid  upon  exercise  of a Stock
Appreciation Right;  provided,  however,  that such limit shall not restrict the
exercisability of the underlying Option.

         (b) Option Cancelled. When a Stock Appreciation Right is exercised, the
underlying Option, to the extent surrendered, shall no longer be exercisable.

         (c)  Exercisability  Requirement.  A Stock  Appreciation Right shall be
exercisable  only  when  and  to  the  extent  that  the  underlying  Option  is
exercisable  and  shall  expire no later  than the date on which the  underlying
Option expires.

         (d) In-the-Money  Requirement.  A Stock  Appreciation Right may only be
exercised at a time when the Fair Market  Value of the Common  Stock  covered by
the underlying  Option exceeds the exercise price of the Common Stock covered by
the underlying Option.

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         (e)  Incentive  Stock  Option  Requirements.  In the event that a Stock
Appreciation  Right is granted that relates to an Incentive  Stock Option,  such
Right shall contain such additional or different terms as may be necessary under
applicable  regulations to preserve  treatment of the Incentive  Stock Option as
such under Section 422 of the Code.

         (f) Form of Payment. The Company's obligation arising upon the exercise
of a Stock Appreciation Right may be paid currently or on a deferred basis (with
such interest or earnings equivalent as may be determined by the Committee), and
may be paid in Common Stock or in cash,  or in any  combination  of Common Stock
and cash,  as the  Committee in its sole  discretion  may  determine.  Shares of
Common  Stock issued upon the  exercise of a Stock  Appreciation  Right shall be
valued at the Fair Market Value of the Common Stock as of the date of exercise.

     9. Stock Purchase Rights.

         (a) Rights to  Purchase.  Stock  Purchase  Rights may be issued  either
alone,  in addition  to, or in tandem with other awards  granted  under the Plan
and/or cash awards made outside of the Plan. After the Committee determines that
it will offer Stock Purchase  Rights under the Plan, it shall advise the offeree
in writing  of the  terms,  conditions  and  restrictions  related to the offer,
including  the  number  of  shares of Common  Stock  that such  person  shall be
entitled  to  purchase,  the  price  to be  paid,  which  price  in the  case of
individuals  subject to Section  16 of the  Exchange  Act shall not be more than
$0.00067 per share (the par value of the  Company's  Common  Stock,  as adjusted
from time to time,  and the minimum  price  permitted  by the  Delaware  General
Corporation  Law), and the time within which such person must accept such offer,
which shall in no event  exceed 60 days from the date the Stock  Purchase  Right
was granted.  The offer shall be accepted by  execution  of a  Restricted  Stock
purchase  agreement in the form  determined by the Committee.  Shares  purchased
pursuant to the grant of a Stock  Purchase  Right shall be referred to herein as
"Restricted Stock."

         (b) Repurchase Option. Unless the Committee determines  otherwise,  the
Restricted Stock purchase  agreement shall grant the Company a repurchase option
exercisable  upon the voluntary or involuntary  termination  of the  purchaser's
employment with the Company for any reason (including death or Disability).  The
purchase price for shares repurchased  pursuant to the Restricted Stock purchase
agreement  shall be the original  price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The repurchase
option shall lapse at such rate as the Committee may determine.

         (c) Other  Provisions.  The Restricted  Stock purchase  agreement shall
contain such other terms,  provisions and conditions not  inconsistent  with the
Plan as may be determined by the Committee in its sole discretion.  In addition,
the provisions of Restricted Stock purchase agreements need not be the same with
respect to each purchaser.

     10. Long-Term Performance Awards.

         (a) Awards. Long-Term Performance Awards are cash or stock bonus awards
that may be granted either alone,  in addition to or in tandem with other awards
granted  under the Plan  and/or  awards  made  outside  of the  Plan.  Long-Term
Performance   Awards  shall  not  require   payment  by  the  recipient  of  any
consideration  for the Long-Term  Performance  Award or for the shares of Common
Stock covered by such award.  The Committee shall  determine the nature,  length
and starting date of any performance period (the "Performance  Period") for each
Long-Term   Performance  Award  and  shall  determine  the  performance   and/or
employment  factors to be used in the  determination  of the value of  Long-Term
Performance  Awards and the extent to which such  Long-Term  Performance  Awards
have been earned. Shares issued pursuant to a Long-Term Performance Award

                                       8
<PAGE>

may be made  subject  to various  conditions,  including  vesting or  forfeiture
provisions.   Long-Term   Performance   Awards  may  vary  from  participant  to
participant  and  between  groups of  participants  and shall be based  upon the
achievement of Company, Subsidiary and/or individual performance factors or upon
such other criteria as the Committee may deem appropriate.  Performance  Periods
may overlap and  participants  may  participate  simultaneously  with respect to
Long-Term  Perforance Awards that are subject to different  Performance  Periods
and different  performance  factors and criteria.  Long-Term  Performance Awards
shall be  confirmed  by,  and be  subject  to the terms of, a written  Long-Term
Performance Award agreement.

         (b) Value of Awards. At the beginning of each Performance  Period,  the
Committee  may determine for each  Long-Term  Performance  Award subject to such
Performance Period the range of dollar values and/or numbers of shares of Common
Stock to be issued to the  participant at the end of the  Performance  Period if
and to the extent that the relevant  measures of performance  for such Long-Term
Performance  Award are met.  Such  dollar  value or  numbers of shares of Common
Stock  may be fixed or may vary in  accordance  with such  performance  or other
criteria as may be determined by the Committee.

         (c) Adjustment of Awards.  Notwithstanding the provisions of Section 19
hereof,  the Committee  may,  after the grant of Long-Term  Performance  Awards,
adjust the performance  factors applicable to such Long-Term  Performance Awards
to take into  account  changes in the law or in  accounting  or tax rules and to
make such adjustments as the Committee deems necessary or appropriate to reflect
the  inclusion  or exclusion of the impact of  extraordinary  or unusual  items,
events or circumstances in order to avoid windfalls or hardships.

         (d) Termination.  Unless otherwise provided in the applicable Long-Term
Performance Award agreement,  if a participant  terminates his or her employment
or his or her  consultancy  during  a  Performance  Period  because  of death or
Disability,  the Committee may in its discretion  provide for an earlier payment
in settlement of such award,  which payment may be in such amount and under such
terms and conditions as the Committee deems appropriate.

               Unless otherwise provided in the applicable Long-Term Performance
Award  agreement,   if  a  participant  terminates  employment  or  his  or  her
consultancy  during a  Performance  Period  for any  reason  other than death or
Disability,  then such a  participant  shall not be entitled to any payment with
respect to the Long-Term  Performance Award subject to such Performance  Period,
unless the Committee shall otherwise determine in its discretion.

         (e) Form of  Payment.  The earned  portion of a  Long-Term  Performance
Award may be paid  currently  or on a  deferred  basis  (with such  interest  or
earnings  equivalent as may be determined  by the  Committee).  Payment shall be
made in the form of cash or whole shares of Common Stock,  including  Restricted
Stock,  or  a  combination  thereof,   either  in  a  lump  sum  payment  or  in
installments, all as the Committee shall determine.

         (f)  Reservation  of Shares.  In the event that the Committee  grants a
Long-Term  Performance  Award  that is  payable  in cash or  Common  Stock,  the
Committee may (but need not) reserve an  appropriate  number of shares of Common
Stock under the Plan at the time of grant of the Long-Term Performance Award. If
and to the extent that the full amount  reserved is not actually  paid in Common
Stock,  the shares of Common Stock  representing  the portion of the reserve for
that Long-Term  Performance Award that is not actually issued in satisfaction of
such Long-Term  Performance  Award shall again become  available for award under
the Plan.  If shares of Common  Stock are not  reserved by the  Committee at the
time of grant,  then (i) no shares  shall be deducted  from the number of shares
available  for grant under the Plan at that time and (ii) at the time of payment
of

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<PAGE>

the Long-Term  Performance  Award,  only the number of shares actually issued to
the participant  shall be so deducted.  If there are not a sufficient  number of
shares  available  under the Plan for issuance to a  participant  at the time of
payment of a Long-Term  Performance  Award,  any shortfall  shall be paid by the
Company in cash.

     11.  Recapitalization.  In the event that  dividends  are payable in Common
Stock or in the event there are splits, subdivisions,  or combinations of shares
of  Common  Stock,  the  number  of shares  available  under  the Plan  shall be
increased  or decreased  proportionately,  as the case may be, and the number of
shares of Common  Stock  deliverable  in  connection  with any Option,  Right or
Long-Term  Performance Award theretofore granted shall be increased or decreased
proportionately,  as the case may be, without  change in the aggregate  purchase
price (where applicable).

     12.  Reorganization.  In case the  Company is merged or  consolidated  with
another corporation and the Company is not the surviving corporation, or in case
the property or stock of the Company is acquired by another  corporation,  or in
case  of  separation,   reorganization,  or  liquidation  of  the  Company,  the
Committee, or the board of directors of any corporation assuming the obligations
of the Company hereunder,  shall, as to outstanding Options, Rights or Long-Term
Performance  Awards either (a) make appropriate  provision for the protection of
any such  outstanding  Options,  Rights or Long-Term  Performance  Awards by the
assumption or  substitution  on an equitable  basis of appropriate  stock of the
Company or of the merged,  consolidated,  or otherwise  reorganized  corporation
which will be issuable in respect to the shares of Common  Stock,  provided that
in the case of Incentive Stock Options,  such assumption or substitution  comply
with Section 424(a) of the Code, or (b) upon written notice to the  participant,
provide that the Option or Right must be exercised within 30 days of the date of
such notice or it will be  terminated.  In any such case,  the Committee may, in
its  discretion,  advance the lapse of vesting  periods,  waiting  periods,  and
exercise dates.

     13. Employment or Consulting Relationship. Nothing in the Plan or any award
made hereunder shall interfere with or limit in any way the right of the Company
or of any  Subsidiary  to terminate  any  recipient's  employment  or consulting
relationship at any time,  with or without cause,  nor confer upon any recipient
any right to continue in the employ or service of the Company or any Subsidiary.

     14.  General  Restriction.  Each award shall be subject to the  requirement
that, if, at any time, the Committee shall  determine,  in its discretion,  that
the listing, quotation,  registration, or qualification of the shares subject to
such award upon any securities  exchange or quotation  system or under any state
or federal law, or the consent or approval of any government regulatory body, is
necessary or desirable as a condition of, or in connection  with,  such award or
the issue or purchase of shares  thereunder,  such award may not be exercised in
whole or in part unless such listing,  quotation,  registration,  qualification,
consent, or approval shall have been effected or obtained free of any conditions
not acceptable to the Committee.

     15. Rights as a  Stockholder.  The holder of an Option,  Right or Long-Term
Performance  Award  shall have no rights as a  stockholder  with  respect to any
shares covered by such Option,  Right or Long-Term  Performance  Award until the
date of  exercise.  Once an  Option,  Right or  Long-Term  Performance  Award is
exercised  by  the  holder  thereof,  the  participant  shall  have  the  rights
equivalent to those of a stockholder, and shall be a stockholder when his or her
holding is entered upon the records of the duly authorized transfer agent of the
Company. Except as otherwise expressly provided in the Plan, no adjustment shall
be made for  dividends or other rights for which the record date is prior to the
date such stock certificate is issued.

                                       10
<PAGE>

     16.  Nonassignability  of  Awards.  No  awards  made  hereunder,  including
Options,  Rights  and  Long-Term  Performance  Awards,  shall be  assignable  or
transferable  by the recipient  other than by will or by the laws of descent and
distribution or pursuant to a qualified  domestic  relations order as defined by
the Code or Title I of the Employee Retirement Income Security Act, or the rules
thereunder,  and in no event shall such awards be assigned or  transferred  in a
manner that is inconsistent with the specific Plan provisions  relating thereto.
The  designation  of a  beneficiary  by a  participant  does  not  constitute  a
transfer.  During  the life of the  recipient,  an  Option,  Right or  Long-Term
Performance  Award shall be  exercisable  only by him or her or by a  transferee
permitted by this Section 16.

     17. Withholding Taxes. Whenever, under the Plan, shares are to be issued in
satisfaction  of  Options,   Rights  or  Long-Term  Performance  Awards  granted
hereunder, the Company shall have the right to require the recipient to remit to
the  Company  an  amount  sufficient  to  satisfy  federal,   state,  and  local
withholding  tax  requirements  prior  to the  delivery  of any  certificate  or
certificates for such shares.  Whenever, under the Plan, payments are to be made
to participants  in cash, such payments shall be net of an amount  sufficient to
satisfy federal, state, and local withholding tax requirements.

     18.  Nonexclusivity  of the Plan.  Neither the adoption or amendment of the
Plan by the Board,  the submission of the Plan or any amendments  thereto to the
stockholders of the Company for approval, nor any provision of the Plan shall be
construed as creating any limitations on the power of the Board or the Committee
to adopt and implement such additional compensation  arrangements as it may deem
desirable,  including,  without limitation, the awarding of cash or the granting
of stock options,  stock appreciation rights, stock purchase rights or Long-Term
performance  awards  outside of the Plan,  and such  arrangements  may be either
generally  applicable to a class of employees or consultants or applicable  only
in specified cases.

     19. Amendment, Suspension, or Termination of the Plan. The Board may at any
time amend, alter, suspend, or terminate the Plan, but no amendment, alteration,
suspension,  or  termination  shall be made which would impair the rights of any
grantee  under  any grant  theretofore  made,  without  his or her  consent.  In
addition,  to the extent necessary and desirable to comply with Rule 16b-3 under
the Exchange Act or under Section 422 of the Code (or any other Applicable Law),
the Company shall obtain  stockholder  approval of any Plan  amendment in such a
manner and to such a degree as is required by such Applicable Law.

     20.  Effective  Date of the Plan.  The Plan  shall  become  effective  upon
approval  of the Board and shall be subject to  stockholder  approval  within 12
months of  adoption  by the Board.  Options,  Rights and  Long-Term  Performance
Awards may be granted  and  exercised  under the Plan only after  there has been
compliance with all applicable federal and state securities laws.




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