8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 16, 2005

JDA Software Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware	0-27876	86-0787377
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
14400 North 87th Street
Scottsdale, Arizona		85260-3649
(Address of principal executive offices)		(Zip Code)

(480) 308-3000
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

2005 Performance Incentive Plan

     At the 2005 Annual Meeting of Stockholders of JDA Software Group, Inc. (the “Company”) held on May 16, 2005, the Company’s stockholders approved the 2005 Performance Incentive Plan (the “2005 Plan”). The 2005 Plan was adopted in its final form by the Company’s Board of Directors on May 14, 2005, subject to approval of its stockholders, and became effective with such stockholder approval on May 16, 2005.

     Under the 2005 Plan, the Company may grant stock purchase rights, stock bonuses, restricted stock units, performance shares, performance units and deferred compensation awards to employees, directors and consultants for incentive purposes. The approval of the 2005 Plan authorized 1,847,000 shares of the Company’s common stock for use, but limits the numbers of shares that may be issued and cash awarded under each type of award, subject to certain adjustments. A more detailed description of the terms of the 2005 Plan can be found in the Company’s definitive proxy statement for its 2005 annual meeting (the “Proxy Statement”), which was filed with the Securities and Exchange Commission on May 10, 2005, in the section of the Proxy Statement entitled “Proposal 2—Approve Adoption of 2005 Performance Incentive Plan” and is incorporated by reference herein. The foregoing summary and the summary incorporated by reference from the Proxy Statement are qualified in their entirety by the full text of the 2005 Plan filed herewith as Exhibit 99.1 and incorporated by reference herein.

Koziol Employment Agreement

     On June 13, 2005, the Compensation Committee (the “Committee”) of the Board of Directors of the Company approved a letter agreement (the “Offer Letter”) and an executive employment agreement (the “Employment Agreement”), each between the Company and Christopher Koziol and collectively defining the terms of his employment with the Company as its Chief Operating Officer. The Company and Mr. Koziol have agreed that his employment commencement date shall be June 21, 2005. Mr. Koziol’s annual base salary is $275,000.

     Mr. Koziol is eligible to receive a target bonus of 100% of his base salary pursuant to the Company’s Management Bonus Plan, based upon attainment of pre-established bonus plan target objectives by Mr. Koziol and the Company. During the first two quarters of Mr. Koziol’s employment, 70% of the bonus award shall be guaranteed subject to the Company’s profitability. Mr. Koziol’s actual bonus award may be higher or lower than the target bonus amount based upon achievement of the objectives by Mr. Koziol and the Company. Mr. Koziol is also entitled to participate in the benefit programs generally available to Company employees.

     As provided in the Offer Letter, Mr. Koziol shall receive 50,000 restricted stock units pursuant to the 2005 Plan upon commencement of his employment. The restricted stock units vest 33% on the first anniversary of Mr. Koziol’s employment and in equal portions monthly thereafter for 24 months subject to Mr. Koziol’s continued employment. Mr. Koziol is also eligible each year to receive additional restricted stock units pursuant to the 2005 Plan based

upon attainment of the Company’s target earnings per share. Upon a change of control of the Company while Mr. Koziol is still an employee, all restricted stock units held by him shall vest in full. A “change of control” shall be deemed to have occurred upon the happening of either (i) certain persons becoming the beneficial owner of more than 50% of the outstanding voting stock of the Company, (ii) an ownership change event or series of such related events in which the stockholders of the Company immediately before the event(s) do not retain immediately after such event(s) direct or indirect beneficial ownership of more than 50% of the total combined voting power of the outstanding voting securities of the Company, or (iii) a liquidation or dissolution of the Company.

     Under the Employment Agreement, the Company has the right to terminate Mr. Koziol’s employment at any time. If the Company terminates Mr. Koziol’s employment without cause or for good reason (each as defined in the Employment Agreement), then, subject to Mr. Koziol executing the Company’s then current form of separation agreement and general release, Mr. Koziol will be entitled to receive a severance payment equal to (i) his unpaid base salary to date, (ii) unpaid expenses and fringe benefits and (iii) (a) if after one year of service, 24 months of severance and one year’s expected bonus upon satisfaction of milestones or (b) if prior to one year of service, such amount pro rated by each full quarter of service fulfilled.

     A copy of the Employment Agreement and the Offer Letter is attached as Exhibit 10.1 and Exhibit 10.2, respectively, to this Form 8-K and each is incorporated herein by reference.

Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

     Effective as of June 21, 2005, Christopher Koziol will become the Company’s Chief Operating Officer. The material terms of Mr. Koziol’s employment agreement and other arrangements with the Company are disclosed in Item 1.01 of this Form 8-K.

     Prior to joining the Company, Mr. Koziol served as Managing Director of Mission Advisors LLC since 2001, providing early stage turnaround consulting, strategy, business development and operations management advisory services to small and medium enterprises. Prior to that, Mr. Koziol served as President and Chief Operating Officer during 2000 to 2001, and as President from 1998 to 2000, with MicroAge Technology Services, Inc. Mr. Koziol received a Bachelor of Science in Business Administration from the University of Arizona. Mr. Koziol is 44 years old.

     On June 20, 2005, the Company issued a press release disclosing the appointment of Christopher Koziol. A copy of the press release is furnished as Exhibit 99.2 hereto.

Item 9.01. Financial Statements and Exhibits.

     (c) Exhibits.

Exhibit No.	Description
10.01	Executive Employment Agreement between JDA Software Group, Inc. and Christopher Koziol dated June 13, 2005
10.02	Offer Letter between JDA Software Group, Inc. and Christopher Koziol dated June 13, 2005
99.1	JDA Software Group, Inc. 2005 Performance Incentive Plan
99.2	Press Release dated June 20, 2005.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	JDA Software Group, Inc.
Date: June 20, 2005	By:	/s/ Kristin L. Magnuson
		Kristin L. Magnuson
		Executive Vice President and
		Chief Financial Officer

Exhibit Index

Exhibit
Number	Description
10.01	Executive Employment Agreement between JDA Software Group, Inc. and Christopher Koziol dated June 13, 2005
10.02	Offer Letter between JDA Software Group, Inc. and Christopher Koziol dated June 13, 2005
99.1	JDA Software Group, Inc. 2005 Performance Incentive Plan
99.2	Press Release dated June 20, 2005.

EX-10.01

Exhibit 10.01

EXECUTIVE EMPLOYMENT AGREEMENT

     This Executive Employment Agreement, together with the related and signed offer letter of even date herewith (“Agreement”) is made effective as of June 13, 2005 (“Effective Date”), by and between JDA Software Group, Inc., a Delaware corporation (“Company”) and Christopher Koziol (“Executive”) (either party individually, a “Party”; collectively, the “Parties”).

     WHEREAS, Company desires to retain the services of Executive as Chief Operating Officer;

     WHEREAS, the Parties desire to enter into this Agreement to set forth the terms and conditions of Executive’s employment by Company and to address certain matters related to Executive’s employment with Company;

     NOW, THEREFORE, in consideration of the foregoing and the mutual provisions contained herein, and for other good and valuable consideration, the Parties hereto agree as follows:

     1. Employment. Company hereby employs Executive, and Executive hereby accepts such employment, upon the terms and conditions set forth herein.

     2. Duties.

          2.1 Position. Executive is employed as Chief Operating Officer and shall have the duties and responsibilities assigned by Company’s Chief Executive Officer (“CEO”) both upon initial hire and as may be reasonably assigned from time to time. Executive shall perform faithfully and diligently all duties assigned to Executive. Company reserves the right to modify Executive’s position and duties at any time in its sole and absolute discretion, provided that the duties assigned are consistent with the position of Chief Operating Officer and that Executive continues to report directly to the CEO.

          2.2 Standard of Conduct/Full-time. Executive will act loyally and in good faith to discharge the duties of Chief Operating Officer, and will abide by all policies and decisions made by Company, as well as all applicable federal, state and local laws, regulations or ordinances. Executive will act solely on behalf of Company at all times. Executive shall devote Executive’s full business time and efforts to the performance of Executive’s assigned duties for Company, unless Executive notifies the CEO in advance of Executive’s intent to engage in other paid work and receives the CEO’s express written consent to do so.

          2.3 Work Location. Executive’s principal place of work shall be located in Scottsdale, Arizona or such other location as the parties may agree upon from time to time.

     3. [Reserved.]

     4. Compensation.

          4.1 Base Salary. As compensation for Executive’s performance of Executive’s duties hereunder, Company shall pay to Executive a salary of $275,000 per year, payable in equal monthly installments and in accordance with the normal payroll practices of Company, less required deductions for state and federal withholding tax, social security and all other employment taxes and authorized payroll deductions.

          4.2 Equity Compensation. Subject to approval by Company’s Board of Directors (the “Board”), Company will from time to time grant to Executive equity compensation settled in the Company’s common stock (the “Equity Grant”) that, to the extent that such Equity Grant is subject to vesting, will vest in full upon a Change of Control (as defined below). The Equity Grant will be subject to the terms and conditions of the Company’s 2005 Performance Incentive Plan or any similar equity compensation plan adopted by the Company as designated by the Board (the “Plan”).

          4.3 Incentive Compensation. In addition, Executive will also be eligible to receive incentive compensation subject to the terms and conditions contained in the Executive Bonus Plan, which is approved by the Board and is subject to amendment from time to time by the Board in its sole and absolute discretion (a “Bonus”). Unless otherwise provided herein, the payment of any Bonus pursuant to this Section 4.3 shall be made in accordance with the normal payroll practices of Company, less required deductions for state and federal withholding tax, social security and all other employment taxes and authorized payroll deductions.

          4.4 Performance and Salary Review. The Board will periodically review Executive’s performance on no less than an annual basis. Adjustments to salary or other compensation, if any, will be made by the Board in its sole and absolute discretion.

     5. Customary Fringe Benefits and Facilities. Executive will be eligible for all customary and usual fringe benefits generally available to executives of Company subject to the terms and conditions of Company’s benefit plan documents. Company reserves the right to change or eliminate the fringe benefits on a prospective basis, at any time, effective upon notice to Executive; provided, however, that during the period of employment under this Agreement, Executive and his spouse and eligible dependents shall be entitled to receive all benefits of employment generally available to other members of Company’s management and those benefits for which key executives are or shall become eligible, when and as Executive becomes eligible therefore, including, without limitation, group health, life and disability insurance benefits and participation in Company’s 401(k) plan. Company further agrees to furnish Executive with such assistance and accommodations (i.e., an office in the size, type and quality as provided to Executive prior to the Effective Date) as shall be suitable to the character of Executive’s position with Company and adequate for the performance of Executive’s duties hereunder.

     6. Business Expenses. Executive will be reimbursed for all reasonable, out-of-pocket business expenses incurred in the performance of Executive’s duties on behalf of Company. To obtain reimbursement, expenses must be submitted promptly with appropriate supporting documentation in accordance with Company’s policies.

     7. Termination of Executive’s Employment.

          7.1 Termination for Cause by Company. Company may terminate Executive’s employment immediately at any time for Cause. For purposes of this Agreement, “Cause” is defined as: (a) theft, dishonesty, or intentional falsification of any employment or Company records; improper disclosure of Company’s confidential or proprietary information; (b) Executive’s conviction (including any plea of guilty or nolo contendere) for any criminal act that materially impairs his ability to perform his duties for Company; or (c) a material breach of this Agreement by Executive which is not cured within thirty (30) days of receipt by Executive of reasonably detailed written notice from Company. In the event Executive’s employment is terminated in accordance with this Section 7.1, Executive shall be entitled to receive only

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unpaid Base Salary then in effect, prorated to the date of termination, together with any amounts to which Executive is entitled pursuant to Sections 5 or 6 hereof. There shall be no additional vesting under Executive’s Equity Grant, if any. All other Company obligations to Executive pursuant to this Agreement will become automatically terminated and completely extinguished. Executive will not be entitled to receive the Severance Payments described in Section 7.2, below.

          7.2 Termination Without Cause by Company/Severance. Company may terminate Executive’s employment under this Agreement without Cause at any time on sixty (60) days’ advance written notice to Executive (the “Termination Date”). In the event of such termination, Executive will receive in one lump sum payment, (a) the unpaid Base Salary then in effect, prorated to the effective date of termination; (b) (i) if the Termination Date is on or after the one year anniversary of this Agreement or in connection with a Change of Control, his Base Salary for twenty-four (24) months from the Termination Date plus one year’s base Bonus pursuant to Section 4.3 of this Agreement for the calendar year during which the termination occurs ($550,000 for calendar year 2005), assuming satisfaction of all performance based milestones at the 100% level by both Company and the Executive (the “Additional Amount”) or (ii) if the Termination Date is prior to the one year anniversary of this Agreement, an amount equal to the product of (A) the Additional Amount times (B) 25% times (C) the number of annual quarters elapsed in full between the date of this Agreement and the Termination Date (such number not to exceed four (4)) ; and (c) any amounts to which Executive is entitled pursuant to Sections 5 or 6 hereof (the “Severance Payments”), provided that Executive: (y) complies with all surviving provisions of this Agreement, including without limitation those provisions specified in Section 14.8, below; and (z) executes a full general release, releasing all claims, known or unknown, that Executive may have against Company arising out of or any way related to Executive’s employment or termination of employment with Company, in substantially the form attached hereto as Exhibit A, or in another form that is acceptable to Company in its sole discretion (provided, however, that any such alternative form shall not modify, amend, waive, or delete any right or benefit of Executive hereunder). All other Company obligations to Executive will be automatically terminated and completely extinguished upon termination of employment.

          7.3 Termination for Good Reason by Executive/Severance. Executive may terminate Executive’s employment under this Agreement for Good Reason (defined below) at any time on five (5) days’ advance written notice to Company. Provided that Executive complies with the conditions to receiving the Severance Payments described in Sections 7.2(a) and 7.2(b), above, in the event of such termination, Executive will be entitled to receive the Severance Payments described in Section 7.2, above, and if such termination is in connection with a Change of Control, Executive will be entitled to receive the Severance Payments, including Subsection 7.2(b)(i). All other Company obligations to Executive will be automatically terminated and completely extinguished upon termination of employment.

     For purposes of this Agreement, “Good Reason” is defined as the occurrence of any of the following conditions:

               (a) a material, adverse change in Executive’s responsibilities or duties, causing Executive’s position to be of materially less stature or responsibility; provided, that for purposes of this Agreement and without limiting the generality of the foregoing, a material, adverse change shall be deemed to occur if Executive no longer serves as Chief Operating Officer (who shall be the most senior financial officer) of a publicly-traded company reporting directly to the CEO;

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               (b) the relocation of Executive’s work place for Company over Executive’s written objection, to a location more than thirty (30) miles from Scottsdale, Arizona;

               (c) a failure to pay, or any reduction of Executive’s Base Salary or Executive’s Bonus without Executive’s written consent (subject to applicable performance requirements with respect to the actual amount of Bonus earned by Executive); or

               (d) any material breach of this Agreement by Company that is not cured within thirty (30) days of Company’s receipt of written notice from Executive specifying the material breach of this Agreement.

          7.4 Voluntary Resignation by Executive. Executive may voluntarily resign Executive’s position with Company for any reason, at any time after the Effective Date, on five (5) days’ advance written notice. In the event of Executive’s resignation, Executive will be entitled to receive only the Base Salary for the five-day notice period and no other amount (other than amounts to which Executive is entitled pursuant to Section 5 or 6 hereof). All other Company obligations to Executive pursuant to this Agreement will become automatically terminated and completely extinguished upon termination of employment. In addition, Executive will not be entitled to receive any Severance Payments described in Section 7.2, above. The provisions of this Section 7.4 shall not apply to Executive’s resignation for Good Reason.

          7.5 Federal Excise Tax Under Section 4999 of the Code.

          (a) Additional Payment. In the event that any payment or benefit received or to be received by Executive pursuant to this Agreement or otherwise payable to Executive (collectively, the “Payments”) would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or any similar or successor provision (the “Excise Tax”), Company shall pay to Executive within ninety (90) days of the date Executive becomes subject to the Excise Tax, an additional amount (the “Gross-Up Payment”) such that the net amount retained by Executive from the Payments and the Gross-Up Payment, after deduction of (1) any Excise Tax on the Payments and (2) any federal, state and local income or employment tax and Excise Tax upon the payment provided for by this Section, shall be equal to the Payments.

          (b) Determination of Excise Tax. For purposes of determining whether any of the Payments will be subject to the Excise Tax and the amount of such Excise Tax:

               (i) Any payments or benefits received or to be received by Executive in connection with transactions contemplated by a Change of Control (as defined below) event or Executive’s termination of employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with Company), shall be treated as “parachute payments” within the meaning of Section 280G of the Code or any similar or successor provision, and all “excess parachute payments” within the meaning of Section 280G of the Code or any similar or successor provision shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel (“Tax Counsel”) selected by Company and reasonably acceptable to Executive such payments or benefits (in whole or in part) do not constitute parachute payments, or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered within the meaning of Section 280G of the Code (or any similar or successor provision of the Code) in excess of the base amount within the

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meaning of Section 280G of the Code (or any similar or successor provision of the Code), or are otherwise not subject to the Excise Tax.

               (ii) The amount of the Payments which shall be treated as subject to the Excise Tax shall be equal to the lesser of (i) the total amount of the Payments or (ii) the amount of the excess parachute payments within the meaning of Section 280G of the Code (after applying paragraph (b)(1) above).

               (iii) The value of any non-cash benefits or any deferred payment or benefit shall be determined by Tax Counsel in accordance with the principles of Section 280G of the Code.

               (iv) Change of Control. A “Change of Control” is defined as any one of the following occurrences:

                    a) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”)), other than a trustee or other fiduciary holding securities of Company under an employee benefit plan of Company, becomes the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of the securities of Company representing 50% or more of (A) the outstanding shares of common stock of Company or (B) the combined voting power of Company’s then-outstanding securities; or

                    b) the sale or disposition of all or substantially all of Company’s assets (or any transaction having similar effect is consummated); or

                    c) Company is party to a merger or consolidation that results in the holders of voting securities of Company outstanding immediately prior thereto failing to continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50% of the combined voting power of the voting securities of Company or such surviving entity outstanding immediately after such merger or consolidation; or

                    d) a liquidation or dissolution of Company.

          (c) Determination of Gross-Up Payment. For purposes of determining the amount of the Gross-Up Payment, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of Executive’s residence on the date the Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

          (d) Adjustments.

               (i) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder, Executive shall repay to Company at the time that the amount of such reduction in Excise Tax is finally determined the portion of the Gross-Up Payment attributable to such reduction (plus the portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment taxes imposed on the Gross-Up Payment being repaid by Executive if such repayment results in a

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reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code.

               (ii) In the event that the Excise Tax is determined to exceed the amount taken into account hereunder (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), Company shall make an additional gross-up payment in respect of such excess (plus any interest payable with respect to such excess) at the time that the amount of such excess is finally determined.

          7.6 Termination of Employment. In the event that Executive’s employment with Company is terminated for any reason, this Agreement shall terminate effective immediately. All Company obligations to Executive pursuant to this Agreement will become automatically terminated and completely extinguished; provided however, that subject to Executive’s compliance with the provisions of this Agreement, Company’s obligations pursuant to Sections 7.2, 7.3 and 7.5 herein shall survive the termination of this Agreement.

     8. No Conflict of Interest. During the term of Executive’s employment with Company, Executive must not engage in any work, paid or unpaid, that creates an actual or potential conflict of interest with Company. If the Board reasonably believes such a conflict exists during the term of this Agreement, the Board may ask Executive to choose to discontinue the other work or resign employment with Company.

     9. Post-Termination Non-Competition.

          9.1 Consideration For Promise To Refrain From Competing. Executive agrees that Executive’s services are special and unique, that Company’s disclosure of confidential, proprietary information and specialized training and knowledge to Executive, and that Executive’s level of compensation and benefits, including, without limitation, the severance payments provided for in this Agreement, are partly in consideration of and conditioned upon Executive not competing with Company. Executive acknowledges that such consideration is adequate for Executive’s promises contained within this Section 9.

          9.2 Promise To Refrain From Competing. Executive understands Company’s need for Executive’s promise not to compete with Company is based on the following: (a) Company has expended, and will continue to expend, substantial time, money and effort in developing its proprietary information; (b) Executive will in the course of Executive’s employment develop, be personally entrusted with and exposed to Company’s proprietary information; (c) both during and after the term of Executive’s employment, Company will be engaged in the highly competitive enterprise software industry; (d) Company provides products and services nationally and internationally; and (e) Company will suffer great loss and irreparable harm if Executive were to enter into competition with Company. Therefore, in exchange for the consideration described in Section 9.1 above, Executive agrees that for the period of two (2) years following the date Executive ceases to render services to Company (the “Covenant Period”), Executive will not either directly or indirectly, whether as an owner, director, officer, manager, consultant, agent or employee: (i) work for any of the following companies or any entity that succeeds to any part of the business of any of the following Companies that is in competition with Company: SAS, Inc., Micro Strategies Incorporated, Evant Inc., NSB Retail Systems PLC, Oracle Inc., SAP AG or SVI Holdings, Inc. (each a “Restricted Business”); or (ii) make or hold any investment in any Restricted Business, whether such investment be by way of loan, purchase of stock or otherwise, provided that there

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shall be excluded from the foregoing the ownership of not more than 1% of the listed or traded stock of any publicly held corporation. For purposes of this Section 9, the term “Company” shall mean and include Company, any subsidiary or affiliate of Company, any successor to the business of Company (by merger, consolidation, sale of assets or stock or otherwise) and any other corporation or entity of which Executive may serve as a director, officer or employee at the request of Company or any successor of Company.

          9.3 Reasonableness of Restrictions. Executive represents and agrees that the restrictions on competition, as to time, geographic area, and scope of activity, required by this Section 9 are reasonable, do not impose a greater restraint than is necessary to protect the goodwill and business interests of Company, and are not unduly burdensome to Executive. Executive expressly acknowledges that Company competes on an international basis and that the geographical scope of these limitations is reasonable and necessary for the protection of Company’s trade secrets and other confidential and proprietary information. Executive further agrees that these restrictions allow Executive an adequate number and variety of employment alternatives, based on Executive’s varied skills and abilities. Executive represents that Executive is willing and able to compete in other employment not prohibited by this Agreement.

          9.4 Reformation if Necessary. In the event a court of competent jurisdiction determines that the geographic area, duration, or scope of activity of any restriction under this Section 9 and its subsections is unenforceable, the restrictions under this section and its subsections shall not be terminated but shall be reformed and modified to the extent required to render them valid and enforceable. Executive further agrees that the court may reform this Agreement to extend the Covenant Period by an amount of time equal to any period in which Executive is in breach of this covenant.

     10. Confidentiality and Proprietary Rights. Executive agrees to read, sign and abide by Company’s Employee Innovations and Proprietary Rights Assignment Agreement, which was previously executed by Executive and incorporated herein by reference.

     11. Nonsolicitation.

          11.1 Nonsolicitation of Customers or Prospects. Executive acknowledges that information about Company’s customers is confidential and constitutes trade secrets. Accordingly, Executive agrees that during the period in which he is rendering services to Company and for a period of two (2) years after the termination of his employment with Company, Executive will not, either directly or indirectly, separately or in association with others, interfere with, impair, disrupt or damage Company’s relationship with any of its customers or customer prospects by soliciting or encouraging others to solicit any of them for the purpose of diverting or taking away business from Company.

          11.2 Nonsolicitation of Company’s Employees. Executive agrees that during the period in which he is rendering services to Company and for a period of two (2) years after the termination of his employment with Company, Executive will not, either directly or indirectly, separately or in association with others, interfere with, impair, disrupt or damage Company’s business by soliciting, encouraging, hiring or attempting to hire any of Company’s employees or causing others to solicit or encourage any of Company’s employees to discontinue their employment with Company. Notwithstanding the previous sentence, (a) the Executive may give references for employees and tell headhunters the names of employees of Company, in either event, where the Executive is aware that the employee has been identified by Company as not being part of its long-term plans after a Change of Control; and (b) the restrictions contained in

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this section shall not apply to former employees of the Company where at least a six-month period has elapsed between the final date of a former employee’s employment and the date Executive engages in the activities described in this section..

     12. Injunctive Relief. Executive acknowledges that Executive’s breach of the covenants contained in Sections 9-11 (collectively “Covenants”) would cause irreparable injury to Company and agrees that in the event of any such breach, Company shall be entitled to seek temporary, preliminary and permanent injunctive relief without the necessity of proving actual damages or posting any bond or other security.

     13. Agreement to Arbitrate. To the fullest extent permitted by law, Executive and Company agree to arbitrate any controversy, claim or dispute between them arising out of or in any way related to this Agreement, the employment relationship between Company and Executive and any disputes upon termination of employment, including but not limited to breach of contract, tort, discrimination, harassment, wrongful termination, demotion, discipline, failure to accommodate, family and medical leave, compensation or benefits claims, constitutional claims; and any claims for violation of any local, state or federal law, statute, regulation or ordinance or common law. Claims for breach of Company’s Employee Innovations and Proprietary Rights Agreement, workers’ compensation, unemployment insurance benefits and Company’s right to obtain injunctive relief pursuant to Section 12 above are excluded. For the purpose of this agreement to arbitrate, references to “Company” include all parent, subsidiary or related entities and their employees, supervisors, officers, directors, agents, pension or benefit plans, pension or benefit plan sponsors, fiduciaries, administrators, affiliates and all successors and assigns of any of them, and this Agreement shall apply to them to the extent Executive’s claims arise out of or relate to their actions on behalf of Company.

          13.1 Initiation of Arbitration. Either party may exercise the right to arbitrate by providing the other party with written notice of any and all claims forming the basis of such right in sufficient detail to inform the other party of the substance of such claims. In no event shall the request for arbitration be made after the date when institution of legal or equitable proceedings based on such claims would be barred by the applicable statute of limitations.

          13.2 Arbitration Procedure. The arbitration will be conducted in Maricopa county, Arizona, by a single neutral arbitrator and in accordance with the then current rules for resolution of employment disputes of the American Arbitration Association (“AAA”). The parties are entitled to representation by an attorney or other representative of their choosing. The arbitrator shall have the power to enter any award that could be entered by a judge of the trial court of the State of Arizona, and only such power, and shall follow the law. The parties agree to abide by and perform any award rendered by the arbitrator. Judgment on the award may be entered in any court having jurisdiction thereof.

          13.3 Costs of Arbitration. Each party shall bear one half the cost of the arbitration filing and hearing fees, and the cost of the arbitrator.

     14. General Provisions.

          14.1 Successors and Assigns. The rights and obligations of Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Company. Executive shall not be entitled to assign any of Executive’s rights or obligations under this Agreement.

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          14.2 Waiver. Either party’s failure to enforce any provision of this Agreement shall not in any way be construed as a waiver of any such provision, or prevent that party thereafter from enforcing each and every other provision of this Agreement.

          14.3 Attorneys’ Fees. In any dispute relating to this Agreement, the losing party shall pay the attorneys’ fees of the prevailing party in addition to its own attorneys’ fees.

          14.4 Severability. In the event any provision of this Agreement is found to be unenforceable by an arbitrator or court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to allow enforceability of the provision as so limited, it being intended that the parties shall receive the benefit contemplated herein to the fullest extent permitted by law. If a deemed modification is not satisfactory in the judgment of such arbitrator or court, the unenforceable provision shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not be affected thereby.

          14.5 Interpretation; Construction. The headings set forth in this Agreement are for convenience only and shall not be used in interpreting this Agreement. This Agreement has been drafted by legal counsel representing Company, but Executive has participated in the negotiation of its terms. Furthermore, Executive acknowledges that Executive has had an opportunity to review and revise the Agreement and have it reviewed by legal counsel, if desired, and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.

          14.6 Governing Law. This Agreement will be governed by and construed in accordance with the laws of the United States and the State of Arizona. Each party consents to the jurisdiction and venue of the state or federal courts in Maricopa county, Arizona, if applicable, in any action, suit, or proceeding arising out of or relating to this Agreement.

          14.7 Notices. Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated: (a) by personal delivery when delivered personally; (b) by overnight courier upon written verification of receipt; (c) by telecopy or facsimile transmission upon acknowledgment of receipt of electronic transmission; or (d) by certified or registered mail, return receipt requested, upon verification of receipt. Notice shall be sent to the addresses set forth below, or such other address as either party may specify in writing.

          14.8 Survival. Notwithstanding the provisions herein above, Sections 8 (“No Conflict of Interest”), 9 (“Post-Termination Non-Competition”), 10 (“Confidentiality and Proprietary Rights”), 11 (“Nonsolicitation”), 12 (“Injunctive Relief”), 13 (“Agreement to Arbitrate”), 14 (“General Provisions”) and 15 (“Entire Agreement”) of this Agreement shall survive Executive’s employment by Company.

     15. Entire Agreement. This Agreement, including Company Employee Innovations and Proprietary Rights Assignment Agreement incorporated herein by reference, constitutes the entire agreement between the parties relating to this subject matter and supersedes all prior or simultaneous representations, discussions, negotiations, and agreements, whether written or oral. This Agreement may be amended or modified only with the written consent of Executive and the Board of Company. No oral waiver, amendment or modification will be effective under any circumstances whatsoever.

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[The remainder of this page is intentionally left blank.]

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THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN BELOW.

			EXECUTIVE
Dated:	June 13, 2005		/s/ Christopher Koziol
			Christopher Koziol
			Address
			COMPANY
Dated:	June 13, 2005	By:	/s/ Hamish N. Brewer
			Hamish N. Brewer, CEO

[Signature Page to Koziol Employment Agreement]

EXHIBIT A

Form of Mutual Release

See attached.

EX-10.02

Exhibit 10.02

June 13, 2005

Christopher Koziol
6500 E. Caron Drive
Paradise Valley, AZ 85253

Dear Chris:

This letter will serve as notice of an offer to join JDA’s Executive Team as our Chief Operating Officer, on a mutually agreed date, on or before July 1, 2005. The salary for your position is $275,000 per annum. In addition, you will be eligible for a variable compensation plan equal to $275,000 at target. The $275,000 target will be calculated at 60% based on attainment of the Software/New Maintenance/Hardware margin target services and 40% based on attainment of the services margin.

During the first two quarters (full or partial) of your employment 70% of your variable compensation will be guaranteed. If greater than 70% of the target is achieved then you will be paid at the attainment percentage achieved. This guarantee is subject to company profitability, i.e. if payment of earned bonuses to senior executives at JDA is reduced by a certain percentage in order to preserve company profitability, then the guaranteed bonus will be reduced by the same percentage.

You will receive 50,000 Restricted Stock Units of JDA Software, Inc. stock upon commencement of employment. This restricted stock will be offered subject to the terms of JDA’s 2005 Performance Incentive Plan. It will be offered without any requirements beyond tenure within JDA and will have a delayed vesting period as follows:

• 1/3^rd will vest 12 months after the date of commencement of employment

• The remaining 2/3^rd will vest in equal portions monthly thereafter over the following 24 months

You will also participate in the company’s annual restricted stock program. This program, as approved by JDA shareholders during the latest annual meeting, will provide restricted stock based upon attainment of the company target GAAP EPS. You will be advised of the exact number of shares earned under this plan after the audit committee meeting in January 2006 based upon approved 2005 financial results, however, as a guide, you should expect to receive approximately 30,000 restricted share units if the company’s annual target EPS goals are met based on today’s stock price (about $360,000). Note that the target is based on attainment of the software target which is higher than the software budget and the calculation is going to be a dollar calculation, so the number of shares will increase or decrease depending on the stock price at the time.

All taxes payable with respect to restricted stock must be paid by you as it becomes due.

Medical/dental insurance benefits go into effect on your hire date. In addition to the health benefits, JDA offers a life insurance plan equal to two (2) times your annual salary. Vacation benefits are a minimum guarantee of at least four (4) weeks per year beginning on your hire date. We also offer enrollment in a 401K and 125 Flexible Benefits plan.

This offer is contingent upon receiving favorable results from a criminal, educational and driving record background check.

This offer is combined with and contingent upon simultaneous execution of an employment agreement (attached).

We are eager to receive confirmation of your acceptance of this offer. To do so, please sign below and return this letter and the Confidentiality Agreement to us. While we ask you to sign the acceptance letter, this does not constitute a contract, and employment remains at-will.

Chris, we look forward to having you share our future.

Sincerely,	Accepted:
/s/ Hamish Brewer
Hamish Brewer	/s/ Christopher Koziol
CEO, JDA Software, Inc.	Christopher Koziol

EX-99.1

Exhibit 99.1

JDA SOFTWARE GROUP, INC.

2005 PERFORMANCE INCENTIVE PLAN

TABLE OF CONTENTS

		Page
1.	Establishment, Purpose and Term of Plan		B-1
	1.1  Establishment		B-1
	1.2  Purpose		B-1
	1.3  Term of Plan		B-1
2.	Definitions and Construction		B-1
	2.1  Definitions		B-1
	2.2  Construction		B-5
3.	Administration		B-5
	3.1  Administration by the Committee		B-5
	3.2  Authority of Officers		B-5
	3.3  Administration with Respect to Insiders		B-5
	3.4  Committee Complying with Section 162(m)		B-5
	3.5  Powers of the Committee		B-5
	3.6  Indemnification		B-6
4.	Shares Subject to Plan		B-6
	4.1  Maximum Number of Shares Issuable		B-6
	4.2  Share Accounting		B-6
	4.3  Reserved		B-7
	4.4  Adjustments for Changes in Capital Structure		B-7
5.	Eligibility and Award Limitations		B-8
	5.1  Persons Eligible for Awards		B-8
	5.2  Participation		B-8
	5.3  Section 162(m) Award Limits		B-8
	5.4  Annual Award Limits		B-8
6.	Terms and Conditions of Stock Awards		B-8
	6.1  Types of Stock Awards Authorized		B-8
	6.2  Purchase Price		B-8
	6.3  Purchase Period		B-8
	6.4  Payment of Purchase Price		B-8
	6.5  Vesting and Restrictions on Transfer		B-9
	6.6  Voting Rights; Dividends and Distributions		B-9
	6.7  Effect of Termination of Service		B-9
	6.8  Nontransferability of Stock Award Rights		B-9
7.	Terms and Conditions of Restricted Stock Unit Awards		B-9
	7.1  Grant of Restricted Stock Unit Awards		B-10
	7.2  Purchase Price		B-10
	7.3  Vesting		B-10
	7.4  Voting Rights, Dividend Equivalent Rights and Distributions		B-10
	7.5  Effect of Termination of Service		B-10
	7.6  Settlement of Restricted Stock Unit Awards		B-10
	7.7  Nontransferability of Restricted Stock Unit Awards		B-11

i

		Page
8.	Terms and Conditions of Performance Awards		B-11
	8.1  Types of Performance Awards Authorized		B-11
	8.2  Initial Value of Performance Shares and Performance Units		B-11
	8.3  Establishment of Performance Period, Performance Goals and Performance Award Formula		B-11
	8.4  Measurement of Performance Goals		B-12
	8.5  Settlement of Performance Awards		B-13
	8.6  Voting Rights; Dividend Equivalent Rights and Distributions		B-14
	8.7  Effect of Termination of Service		B-14
	8.8  Nontransferability of Performance Awards		B-14
9.	Deferred Compensation Awards		B-15
	9.1  Establishment of Deferred Compensation Award Programs		B-15
	9.2  Terms and Conditions of Deferred Compensation Awards		B-15
	9.3  Terms and Conditions of Stock Units		B-15
10.	Standard Forms of Award Agreement		B-16
	10.1  Award Agreements		B-16
	10.2  Authority to Vary Terms		B-16
11.	Change in Control		B-16
12.	Compliance with Securities Law		B-16
13.	Tax Withholding		B-17
	13.1  Tax Withholding in General		B-17
	13.2  Withholding in Shares		B-17
14.	Amendment or Termination of Plan		B-17
15.	Compliance with Section 409A		B-17
	15.1  Awards Subject to Section 409A		B-17
	15.2  Deferral and/or Distribution Elections		B-17
	15.3  Subsequent Elections		B-18
	15.4  Distributions Pursuant to Deferral Elections		B-18
	15.5  Unforeseeable Emergency		B-18
	15.6  Disabled		B-19
	15.7  Death		B-19
	15.8  No Acceleration of Distributions		B-19
16.	Miscellaneous Provisions		B-19
	16.1  Repurchase Rights		B-19
	16.2  Provision of Information		B-19
	16.3  Rights as Employee, Consultant or Director		B-20
	16.4  Rights as a Stockholder		B-20
	16.5  Fractional Shares		B-20
	16.6  Severability		B-20
	16.7  Beneficiary Designation		B-20
	16.8  Unfunded Obligation		B-20
	16.9  Choice of Law		B-20

ii

JDA SOFTWARE GROUP, INC.

2005 PERFORMANCE INCENTIVE PLAN

      1.     Establishment, Purpose and Term of Plan.

      1.1 Establishment. The JDA Software Group, Inc. 2005 Performance Incentive Plan (the “Plan”) is hereby established effective as of May 16, 2005, the date of its approval by the stockholders of the Company (the “Effective Date”).

      1.2 Purpose. The purpose of the Plan is to advance the interests of the Participating Company Group and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Participating Company Group and by motivating such persons to contribute to the growth and profitability of the Participating Company Group. The Plan seeks to achieve this purpose by providing for Awards in the form of Stock Purchase Rights, Stock Bonuses, Restricted Stock Units, Performance Shares, Performance Units and Deferred Compensation Awards.

      1.3 Term of Plan. The Plan shall continue in effect until its termination by the Committee; provided however, that all Awards shall be granted, if at all, within ten (10) years from the Effective Date.

      2.     Definitions and Construction.

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

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

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

      (c) “Award Agreement” means a written agreement between the Company and a Participant setting forth the terms, conditions and restrictions of the Award granted to the Participant.

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

      (e) “Change in Control” means, unless such term or an equivalent term is otherwise defined with respect to an Award by the Participant’s Award Agreement or by a written contract of employment or service, the occurrence of any of the following:

      (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than (1) a trustee or other fiduciary holding stock of the Company under an employee benefit plan of a Participating Company or (2) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the stock of the Company, becomes the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of stock of the Company representing more than fifty percent (50%) of the total combined voting power of the Company’s then-outstanding voting stock; or

      (ii) an Ownership Change Event or series of related Ownership Change Events (collectively, a “Transaction”) in which the stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding voting securities of the

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Company or, in the case of an Ownership Change Event described in Section 2.1(t)(iii), the entity to which the assets of the Company were transferred (the “Transferee”), as the case may be; or

      (iii) a liquidation or dissolution of the Company.

For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company or the Transferee, as the case may be, either directly or through one or more subsidiary corporations or other business entities. The Committee shall have the right to determine whether multiple sales or exchanges of the voting securities of the Company or multiple Ownership Change Events are related, and its determination shall be final, binding and conclusive.

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

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

      (h) “Company” means JDA Software Group, Inc., a Delaware corporation, or any successor corporation thereto.

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

      (j) “Covered Employee” means any Employee who is or may become a “covered employee” as defined in Code Section 162(m), or any successor statute, and who is designated, either as an individual Employee or class of Employees, by the Committee no later than (i) the date ninety (90) days after the beginning of the Performance Period, or (ii) the date on which twenty-five percent (25%) of the Performance Period has elapsed, as a “Covered Employee” under this Plan for such applicable Performance Period.

      (k) “Deferred Compensation Award” means an award of Stock Units granted to a Participant pursuant to Section 9 of the Plan.

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

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

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

      (o) “Employee” means any person treated as an employee (including an Officer or a member of the Board who is also treated as an employee) in the records of a Participating Company; provided, however, that neither service as a member of the Board nor payment of a director’s fee shall be sufficient to constitute employment for purposes of the Plan. The Company shall determine in good faith and in the exercise of its discretion whether an individual has become or has ceased to be an Employee and the effective date of such individual’s employment or termination of employment, as the case may be. For purposes of an individual’s rights, if any, under the terms of the Plan as of the time of the Company’s determination of whether or not the individual is an Employee, all such determinations by the Company shall be final, binding and conclusive as to such rights, if any, notwithstanding that the Company or any

B-2

court of law or governmental agency subsequently makes a contrary determination as to such individual’s status as an Employee.

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

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

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

      (ii) Notwithstanding the foregoing, the Committee may, in its discretion, determine the Fair Market Value on the basis of the opening, closing, high, low or average sale price of a share of Stock or the actual sale price of a share of Stock received by a Participant, on such date, the preceding trading day, the next succeeding trading day or an average determined over a period of trading days. The Committee may vary its method of determination of the Fair Market Value as provided in this Section for different purposes under the Plan.

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

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

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

      (t) “Ownership Change Event” means the occurrence of any of the following with respect to the Company: (i) the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of more than fifty percent (50%) of the voting stock of the Company; (ii) a merger or consolidation in which the Company is a party; or (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company (other than a sale, exchange or transfer to one or more subsidiaries of the Company).

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

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

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

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

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

      (z) “Performance Award Formula” means, for any Performance Award, a formula or table established by the Committee pursuant to Section 8.3 of the Plan which provides the basis for computing

B-3

the value of a Performance Award at one or more threshold levels of attainment of the applicable Performance Goal(s) measured as of the end of the applicable Performance Period.

      (aa) “Performance-Based Compensation” means compensation under an Award that satisfies the requirements of Code Section 162(m) for certain performance-based compensation paid to Covered Employees.

      (bb) “Performance Goal” means a performance goal established by the Committee pursuant to Section 8.3 of the Plan.

      (cc) “Performance Period” means a period established by the Committee pursuant to Section 8.3 of the Plan at the end of which one or more Performance Goals are to be measured.

      (dd) “Performance Share” means a bookkeeping entry representing a right granted to a Participant pursuant to Section 8 of the Plan to receive a payment equal to the value of a Performance Share, as determined by the Committee, based on performance.

      (ee) “Performance Unit” means a bookkeeping entry representing a right granted to a Participant pursuant to Section 8 of the Plan to receive a payment equal to the value of a Performance Unit, as determined by the Committee, based upon performance.

      (ff) “Restricted Stock Unit” or “Stock Unit” means a bookkeeping entry representing a right granted to a Participant pursuant to Section 7 or Section 9 of the Plan, respectively, to receive a share of Stock on a date determined in accordance with the provisions of Section 7 or Section 9, as applicable, and the Participant’s Award Agreement.

      (gg) “Restriction Period” means the period established in accordance with Section 6.5 of the Plan during which shares subject to a Stock Award are subject to Vesting Conditions.

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

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

      (jj) “Section 409A” means Section 409A of the Code (including regulations or administrative guidelines thereunder).

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

      (ll) “Service” means a Participant’s employment or service with the Participating Company Group, whether in the capacity of an Employee, a Director or a Consultant. A Participant’s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders such Service or a change in the Participating Company for which the Participant renders such Service, provided that there is no interruption or termination of the Participant’s Service. Furthermore, a Participant’s Service shall not be deemed to have terminated if the Participant takes any military leave, sick leave, or other bona fide leave of absence approved by the Company. Notwithstanding the foregoing, unless otherwise designated by the Company or required by law, a leave of absence shall not be treated as Service for purposes of determining vesting under the Participant’s Award Agreement. A Participant’s Service shall be deemed to have terminated either upon an actual termination of Service or upon the entity for which the Participant performs Service ceasing to be a Participating Company. Subject to the foregoing, the Company, in its discretion, shall determine whether the Participant’s Service has terminated and the effective date of such termination.

      (mm) “Stock” means the common stock of the Company, as adjusted from time to time in accordance with Section 4.4 of the Plan.

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

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      (oo) “Stock Bonus” means Stock granted to a Participant pursuant to Section 6 of the Plan.

      (pp) “Stock Purchase Right” means a right to purchase Stock granted to a Participant pursuant to Section 6 of the Plan.

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

      (rr) “Vesting Conditions” mean those conditions established in accordance with Section 6.5 or Section 7.3 of the Plan prior to the satisfaction of which shares subject to a Stock Award or Restricted Stock Unit Award, respectively, remain subject to forfeiture or a repurchase option in favor of the Company upon the Participant’s termination of Service.

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

      3.     Administration.

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

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

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

      3.4     Committee Complying with Section 162(m). If the Company is a “publicly held corporation” within the meaning of Section 162(m), the Board may establish a Committee of “outside directors” within the meaning of Section 162(m) to approve the grant of any Award intended to result in the payment of Performance-Based Compensation.

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

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

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

      (c) to determine the terms, conditions and restrictions applicable to each Award (which need not be identical) and any shares acquired pursuant thereto, including, without limitation, (i) the purchase price of shares purchased pursuant to any Award, (ii) the method of payment for shares purchased pursuant to any Award, (iii) the method for satisfaction of any tax withholding obligation arising in connection with Award, including by the withholding or delivery of shares of Stock, (iv) the timing,

B-5

terms and conditions of the exercisability or vesting of any Award or any shares acquired pursuant thereto, (v) the Performance Award Formula and Performance Goals applicable to any Award and the extent to which such Performance Goals have been attained, (vi) the time of the expiration of any Award, (vii) the effect of the Participant’s termination of Service on any of the foregoing, and (viii) all other terms, conditions and restrictions applicable to any Award or shares acquired pursuant thereto not inconsistent with the terms of the Plan;

      (d) to determine whether an Award will be settled in shares of Stock, cash, or in any combination thereof;

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

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

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

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

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

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

      4.     Shares Subject to Plan.

      4.1 Maximum Number of Shares Issuable. Subject to adjustment as provided in Sections 4.2, and 4.4, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be One Million Eight Hundred Forty-Seven Thousand (1,847,000) and shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof.

      4.2 Share Accounting. If an outstanding Award for any reason expires or is terminated or canceled without having been exercised or settled in full, or if shares of Stock acquired pursuant to an Award subject to forfeiture or repurchase are forfeited or repurchased by the Company for an amount not greater than the Participant’s original purchase price, the shares of Stock allocable to the terminated portion of such Award or such forfeited or repurchased shares of Stock shall again be available for issuance under the Plan. Shares of Stock shall not be deemed to have been issued pursuant to the Plan (a) with respect to any portion of an

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Award that is settled in cash or (b) to the extent such shares are withheld or reacquired by the Company in satisfaction of tax withholding obligations pursuant to Section 13.2. Upon payment in shares of Stock pursuant to the settlement of an Award, the number of shares available for issuance under the Plan shall be reduced only by the number of shares actually issued in such payment.

      4.3 [Reserved.]

      4.4 Adjustments for Changes in Capital Structure. Subject to any required action by the stockholders of the Company, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (excepting normal cash dividends) that has a material effect on the Fair Market Value of shares of Stock, appropriate adjustments shall be made in the number and kind of shares subject to the Plan and to any outstanding Awards, in the Award limits set forth in Section 5.3 and in the purchase price per share under any outstanding Award in order to prevent dilution or enlargement of Participants’ rights under the Plan. For purposes of the foregoing, conversion of any convertible securities of the Company shall not be treated as “effected without receipt of consideration by the Company.” If a majority of the shares which are of the same class as the shares that are subject to outstanding Awards are exchanged for, converted into, or otherwise become (whether or not pursuant to an Ownership Change Event) shares of another corporation (the “New Shares”), the Committee may unilaterally amend the outstanding Awards to provide that such Awards are for New Shares. In the event of any such amendment, the number of shares subject to, and the purchase price per share of, the outstanding Awards shall be adjusted in a fair and equitable manner as determined by the Committee, in its discretion. Any fractional share resulting from an adjustment pursuant to this Section 4.4 shall be rounded down to the nearest whole number, and in no event may the purchase price under any Award be decreased to an amount less than the par value, if any, of the stock subject to such Award. The Committee in its sole discretion, may also make such adjustments in the terms of any Award to reflect, or related to, such changes in the capital structure of the Company or distributions as it deems appropriate, including modification of Performance Goals, Performance Award Formulas and Performance Periods. The adjustments determined by the Committee pursuant to this Section 4.4 shall be final, binding and conclusive.

      The Committee may, without affecting the number of Shares reserved or available hereunder, authorize the issuance or assumption of benefits under this Plan in connection with any merger, consolidation, acquisition of property or stock, or reorganization upon such terms and conditions as it may deem appropriate, subject to compliance with Code Sections 409A and any related guidance issued by the U.S. Treasury Department, where applicable.

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      5.     Eligibility and Award Limitations.

      5.1 Persons Eligible for Awards. Awards may be granted only to Employees, Consultants and Directors.

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

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

      (a) Stock Awards and Restricted Stock Unit Awards. Subject to adjustment as provided in Section 4.4, no Employee shall be granted within any fiscal year of the Company one or more Stock Awards or Restricted Stock Unit Awards, the grant or vesting of which is based on the attainment of Performance Goals, for more than Nine Hundred Thousand (900,000) shares.

      (b) Performance Awards. Subject to adjustment as provided in Section 4.4, no Employee shall be granted (1) Performance Shares which could result in such Employee receiving more than Nine Hundred Thousand (900,000) shares for each full fiscal year of the Company contained in the Performance Period for such Award, or (2) Performance Units which could result in such Employee receiving more than Four Million Five Hundred Thousand dollars ($4,500,000) for each full fiscal year of the Company contained in the Performance Period for such Award. No Participant may be granted more than one Performance Award for the same Performance Period.

      5.4 Annual Award Limit. The number of shares subject to Awards granted in any given year will not exceed one percent (1%) of the total number of shares of Stock outstanding as of the last day of the preceding fiscal year.

6.  Terms and Conditions of Stock Awards.

      Stock Awards shall be evidenced by Award Agreements specifying whether the Award is a Stock Bonus or a Stock Purchase Right and the number of shares of Stock subject to the Award, in such form as the Committee shall from time to time establish. No Stock Award or purported Stock Award shall be a valid and binding obligation of the Company unless evidenced by a fully executed Award Agreement. Award Agreements evidencing Stock Awards may incorporate all or any of the terms of the Plan by reference, including the provisions of Section 15 with respect to Section 409A, if applicable, and shall comply with and be subject to the following terms and conditions:

      6.1 Types of Stock Awards Authorized. Stock Awards may be in the form of either a Stock Bonus or a Stock Purchase Right. Stock Awards may be granted upon such conditions as the Committee shall determine, including, without limitation, upon the attainment of one or more Performance Goals described in Section 8.4. If either the grant of a Stock Award or the lapsing of the Restriction Period is to be contingent upon the attainment of one or more Performance Goals, the Committee shall follow procedures substantially equivalent to those set forth in Sections 8.3 through 8.5(a).

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

      6.3 Purchase Period. A Stock Purchase Right shall be exercisable within a period established by the Committee, which shall in no event exceed thirty (30) days from the effective date of the grant of the Stock Purchase Right.

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

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Committee may at any time or from time to time grant Stock Purchase Rights which do not permit all of the foregoing forms of consideration to be used in payment of the purchase price or which otherwise restrict one or more forms of consideration.

      6.5 Vesting and Restrictions on Transfer. Shares issued pursuant to any Stock Award may or may not be made subject to Vesting Conditions based upon the satisfaction of such Service requirements, conditions, restrictions or performance criteria, including, without limitation, Performance Goals as described in Section 8.4, as shall be established by the Committee and set forth in the Award Agreement evidencing such Award. During any Restriction Period in which shares acquired pursuant to a Stock Award remain subject to Vesting Conditions, such shares may not be sold, exchanged, transferred, pledged, assigned or otherwise disposed of other than pursuant to an Ownership Change Event, as defined in Section 2.1(t), or as provided in Section 6.8. Upon request by the Company, each Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions.

      6.6 Voting Rights; Dividends and Distributions. Except as provided in this Section, Section 6.5 and any Award Agreement, during any Restriction Period applicable to shares subject to a Stock Award, the Participant shall have all of the rights of a stockholder of the Company holding shares of Stock, including the right to vote such shares and to receive all dividends and other distributions paid with respect to such shares. However, in the event of a dividend or distribution paid in shares of Stock or other property or any other adjustment made upon a change in the capital structure of the Company as described in Section 4.4, any and all new, substituted or additional securities or other property (other than normal cash dividends) to which the Participant is entitled by reason of the Participant’s Stock Award shall be immediately subject to the same Vesting Conditions as the shares subject to the Stock Award with respect to which such dividends or distributions were paid or adjustments were made.

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

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

7.  Terms and Conditions of Restricted Stock Unit Awards.

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

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the provisions of Section 15 with respect to Section 409A, if applicable, and shall comply with and be subject to the following terms and conditions:

      7.1 Grant of Restricted Stock Unit Awards. Restricted Stock Unit Awards may be granted upon such conditions as the Committee shall determine, including, without limitation, upon the attainment of one or more Performance Goals described in Section 8.4. If either the grant of a Restricted Stock Unit Award or the Vesting Conditions with respect to such Award is to be contingent upon the attainment of one or more Performance Goals, the Committee shall follow procedures substantially equivalent to those set forth in Sections 8.3 through 8.5(a).

      7.2 Purchase Price. No monetary payment (other than applicable tax withholding, if any) shall be required as a condition of receiving a Restricted Stock Unit Award, the consideration for which shall be services actually rendered to a Participating Company or for its benefit. Notwithstanding the foregoing, if required by applicable state corporate law, the Participant shall furnish consideration in the form of cash or past services rendered to a Participating Company or for its benefit having a value not less than the par value of the shares of Stock issued upon settlement of the Restricted Stock Unit Award.

      7.3 Vesting. Restricted Stock Units may or may not be made subject to Vesting Conditions based upon the satisfaction of such Service requirements, conditions, restrictions or performance criteria, including, without limitation, Performance Goals as described in Section 8.4, as shall be established by the Committee and set forth in the Award Agreement evidencing such Award.

      7.4 Voting Rights, Dividend Equivalent Rights and Distributions. Participants shall have no voting rights with respect to shares of Stock represented by Restricted Stock Units until the date of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). However, the Committee, in its discretion, may provide in the Award Agreement evidencing any Restricted Stock Unit Award that the Participant shall be entitled to receive Dividend Equivalents with respect to the payment of cash dividends on Stock during the period beginning on the date such Award is granted and ending, with respect to the particular shares subject to the Award, on the earlier of the date the Award is settled or the date on which it is terminated. Such Dividend Equivalents, if any, shall be paid by crediting the Participant with additional whole Restricted Stock Units as of the date of payment of such cash dividends on Stock. The number of additional Restricted Stock Units (rounded to the nearest whole number) to be so credited shall be determined by dividing (a) the amount of cash dividends paid on such date with respect to the number of shares of Stock represented by the Restricted Stock Units previously credited to the Participant by (b) the Fair Market Value per share of Stock on such date. Such additional Restricted Stock Units shall be subject to the same terms and conditions and shall be settled in the same manner and at the same time (or as soon thereafter as practicable) as the Restricted Stock Units originally subject to the Restricted Stock Unit Award. In the event of a dividend or distribution paid in shares of Stock or other property or any other adjustment made upon a change in the capital structure of the Company as described in Section 4.4, appropriate adjustments shall be made in the Participant’s Restricted Stock Unit Award so that it represents the right to receive upon settlement any and all new, substituted or additional securities or other property (other than normal cash dividends) to which the Participant would entitled by reason of the shares of Stock issuable upon settlement of the Award, and all such new, substituted or additional securities or other property shall be immediately subject to the same Vesting Conditions as are applicable to the Award.

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

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

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adjustment described in Section 7.4) for each Restricted Stock Unit then becoming vested or otherwise to be settled on such date, subject to the withholding of applicable taxes. If permitted by the Committee, subject to the provisions of Section 15 with respect to Section 409A, and set forth in the Award Agreement, the Participant may elect in accordance with terms specified in the Award Agreement to defer receipt of all or any portion of the shares of Stock or other property otherwise issuable to the Participant pursuant to this Section. Notwithstanding the foregoing, the Committee, in its discretion, may provide for settlement of any Restricted Stock Unit Award by payment to the Participant in cash of an amount equal to the Fair Market Value on the payment date of the shares of Stock or other property otherwise issuable to the Participant pursuant to this Section.

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

8.  Terms and Conditions of Performance Awards.

      Performance Awards shall be evidenced by Award Agreements in such form as the Committee shall from time to time establish. No Performance Award or purported Performance Award shall be a valid and binding obligation of the Company unless evidenced by a fully executed Award Agreement. Award Agreements evidencing Performance Awards may incorporate all or any of the terms of the Plan by reference, including the provisions of Section 15 with respect to Section 409A, if applicable, and shall comply with and be subject to the following terms and conditions:

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

      8.2 Initial Value of Performance Shares and Performance Units. Unless otherwise provided by the Committee in granting a Performance Award, each Performance Share shall have an initial monetary value equal to the Fair Market Value of one (1) share of Stock, subject to adjustment as provided in Section 4.4, on the effective date of grant of the Performance Share, and each Performance Unit shall have an initial monetary value established by the Committee at the time of grant. The final value payable to the Participant in settlement of a Performance Award determined on the basis of the applicable Performance Award Formula will depend on the extent to which Performance Goals established by the Committee are attained within the applicable Performance Period established by the Committee.

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

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

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

      (i) revenue;

      (ii) sales;

      (iii) software revenue;

      (iv) expenses;

      (v) operating income;

      (vi) gross margin;

      (vii) operating margin;

      (viii) earnings before any one or more of: stock-based compensation expense, interest, taxes and depreciation, and amortization;

      (ix) pre-tax profit;

      (x) net operating income;

      (xi) net income;

      (xii) economic value added;

      (xiii) free cash flow;

      (xiv) operating cash flow;

      (xv) the market price of the Stock;

      (xvi) earnings per share;

      (xvii) return on stockholder equity;

      (xviii) return on capital;

      (xix) return on assets;

      (xx) return on investment;

      (xxi) balance of cash, cash equivalents and marketable securities;

      (xxii) market share;

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      (xxiii) number of customers;

      (xxiv) customer satisfaction;

      (xxv) product development; and

      (xxvi) completion of a joint venture or other corporate transaction.

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

8.5  Settlement of Performance Awards.

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

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

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

      (d) Notice to Participants. As soon as practicable following the Committee’s determination and certification in accordance with Sections 8.5(a) and (b), the Company shall notify each Participant of the determination of the Committee.

      (e) Payment in Settlement of Performance Awards. Subject to the provisions of Section 15 with respect to Section 409A, as soon as practicable following the Committee’s determination and certification in accordance with Sections 8.5(a) and (b), payment shall be made to each eligible Participant (or such Participant’s legal representative or other person who acquired the right to receive such payment by reason of the Participant’s death) of the final value of the Participant’s Performance Award. Payment of such amount shall be made in cash, shares of Stock, or a combination thereof as determined by the Committee. Unless otherwise provided in the Award Agreement evidencing a Performance Award, payment shall be made in a lump sum. If permitted by the Committee, and subject to the provisions of Section 15 with respect to Section 409A, the Participant may elect to defer receipt of all or any portion of the payment to be made to Participant pursuant to this Section, and such deferred payment date(s) elected by the Participant shall be set forth in the Award Agreement. If any payment is to be made on a deferred basis, the Committee may, but shall not be obligated to, provide for the payment during the deferral period of Dividend Equivalents or interest.

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      (f) Provisions Applicable to Payment in Shares. If payment is to be made in shares of Stock, the number of such shares shall be determined by dividing the final value of the Performance Award by the value of a share of Stock determined by the method specified in the Award Agreement. Such methods may include, without limitation, the closing market price on a specified date (such as the settlement date) or an average of market prices over a series of trading days. Shares of Stock issued in payment of any Performance Award may be fully vested and freely transferable shares or may be shares of Stock subject to Vesting Conditions as provided in Section 6.5. Any shares subject to Vesting Conditions shall be evidenced by an appropriate Award Agreement and shall be subject to the provisions of Sections 6.5 through 6.8 above.

      8.6  Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall have no voting rights with respect to shares of Stock represented by Performance Share Awards until the date of the issuance of such shares, if any (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). However, the Committee, in its discretion, may provide in the Award Agreement evidencing any Performance Share Award that the Participant shall be entitled to receive Dividend Equivalents with respect to the payment of cash dividends on Stock during the period beginning on the date the Award is granted and ending, with respect to the particular shares subject to the Award, on the earlier of the date on which the Performance Shares are settled or the date on which they are forfeited. Such Dividend Equivalents, if any, shall be credited to the Participant in the form of additional whole Performance Shares as of the date of payment of such cash dividends on Stock. The number of additional Performance Shares (rounded to the nearest whole number) to be so credited shall be determined by dividing (a) the amount of cash dividends paid on such date with respect to the number of shares of Stock represented by the Performance Shares previously credited to the Participant by (b) the Fair Market Value per share of Stock on such date. Dividend Equivalents may be paid currently or may be accumulated and paid to the extent that Performance Shares become nonforfeitable, as determined by the Committee. Settlement of Dividend Equivalents may be made in cash, shares of Stock, or a combination thereof as determined by the Committee, and may be paid on the same basis as settlement of the related Performance Share as provided in Section 8.5. Dividend Equivalents shall not be paid with respect to Performance Units. In the event of a dividend or distribution paid in shares of Stock or other property or any other adjustment made upon a change in the capital structure of the Company as described in Section 4.4, appropriate adjustments shall be made in the Participant’s Performance Share Award so that it represents the right to receive upon settlement any and all new, substituted or additional securities or other property (other than normal cash dividends) to which the Participant would entitled by reason of the shares of Stock issuable upon settlement of the Performance Share Award, and all such new, substituted or additional securities or other property shall be immediately subject to the same Performance Goals as are applicable to the Award.

      8.7 Effect of Termination of Service. Unless otherwise provided by the Committee and set forth in the Award Agreement evidencing a Performance Award, the effect of a Participant’s termination of Service on the Performance Award shall be as follows:

      (a) Death or Disability. If the Participant’s Service terminates because of the death or Disability of the Participant before the completion of the Performance Period applicable to the Performance Award, the final value of the Participant’s Performance Award shall be determined by the extent to which the applicable Performance Goals have been attained with respect to the entire Performance Period and shall be prorated based on the number of days of the Participant’s Service during the Performance Period. Payment shall be made following the end of the Performance Period in any manner permitted by Section 8.5.

      (b) Other Termination of Service. If the Participant’s Service terminates for any reason except death or Disability before the completion of the Performance Period applicable to the Performance Award, such Award shall be forfeited in its entirety.

      8.8 Nontransferability of Performance Awards. Prior to settlement in accordance with the provisions of the Plan, no Performance Award shall be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. All rights with respect to a

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Performance Award granted to a Participant hereunder shall be exercisable during his or her lifetime only by such Participant or the Participant’s guardian or legal representative.

9.  Deferred Compensation Awards.

      9.1 Establishment of Deferred Compensation Award Programs. This Section 9 shall not be effective unless and until the Committee determines to establish a program pursuant to this Section. The Committee, in its discretion and upon such terms and conditions as it may determine, subject to the provisions of Section 15 with respect to Section 409A, may establish one or more programs pursuant to the Plan under which:

      (a) Elective Cash Compensation Reduction Awards. Participants designated by the Committee who are Insiders or otherwise among a select group of highly compensated Employees may irrevocably elect, prior to a date specified by the Committee and complying with Section 409A, to reduce such Participant’s compensation otherwise payable in cash (subject to any minimum or maximum reductions imposed by the Committee) and to be granted automatically at such time or times as specified by the Committee one or more Awards of Stock Units with respect to such numbers of shares of Stock as determined in accordance with the rules of the program established by the Committee and having such other terms and conditions as established by the Committee.

      (b) Stock Issuance Deferral Awards. Participants designated by the Committee who are Insiders or otherwise among a select group of highly compensated Employees may irrevocably elect, prior to a date specified by the Committee and complying with Section 409A, to be granted automatically an Award of Stock Units with respect to such number of shares of Stock and upon such other terms and conditions as established by the Committee in lieu of cash or shares of Stock otherwise issuable to such Participant upon the settlement of a Performance Award.

      9.2 Terms and Conditions of Deferred Compensation Awards. Deferred Compensation Awards granted pursuant to this Section 9 shall be evidenced by Award Agreements in such form as the Committee shall from time to time establish. No such Deferred Compensation Award or purported Deferred Compensation Award shall be a valid and binding obligation of the Company unless evidenced by a fully executed Award Agreement. Award Agreements evidencing Deferred Compensation Awards may incorporate all or any of the terms of the Plan by reference, including the provisions of Section 15 with respect to Section 409A.

      9.3 Terms and Conditions of Stock Units. Except as provided below, Stock Units granted pursuant to Section 9 shall comply with and be subject to the terms and conditions of Section 7.

      (a) Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall have no voting rights with respect to shares of Stock represented by Stock Units until the date of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). However, a Participant shall be entitled to receive Dividend Equivalents with respect to the payment of cash dividends on Stock during the period beginning on the date the Stock Units are granted automatically to the Participant and ending on the earlier of the date on which such Stock Units are settled or the date on which they are forfeited. Such Dividend Equivalents shall be paid by crediting the Participant with additional whole Stock Units as of the date of payment of such cash dividends on Stock. The number of additional Stock Units (rounded to the nearest whole number) to be so credited shall be determined by dividing (A) the amount of cash dividends paid on such date with respect to the number of shares of Stock represented by the Stock Units previously credited to the Participant by (B) the Fair Market Value per share of Stock on such date. Such additional Stock Units shall be subject to the same terms and conditions and shall be settled in the same manner and at the same time (or as soon thereafter as practicable) as the Stock Units originally subject to the Stock Unit Award. In the event of a dividend or distribution paid in shares of Stock or other property or any other adjustment made upon a change in the capital structure of the Company as described in Section 4.4, appropriate adjustments shall be made in the Participant’s Stock Unit Award so that it represent the right to receive upon settlement any and all new, substituted or additional securities or other property (other than normal

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cash dividends) to which the Participant would entitled by reason of the shares of Stock issuable upon settlement of the Award.

      (b) Settlement of Stock Unit Awards. A Participant electing to receive an Award of Stock Units pursuant to this Section 9, shall specify at the time of such election a settlement date with respect to such Award which complies with Section 409A. The Company shall issue to the Participant on the settlement date elected by the Participant, or as soon thereafter as practicable, a number of whole shares of Stock equal to the number of vested Stock Units subject to the Stock Unit Award. Such shares of Stock shall be fully vested, and the Participant shall not be required to pay any additional consideration (other than applicable tax withholding) to acquire such shares.

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

10.  Standard Forms of Award Agreement.

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

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

11.  Change in Control.

      Subject to the provisions of Section 15 with respect to Section 409A, if applicable, the Committee may, in its discretion, provide in any Award Agreement evidencing an Award for, or in the event of a Change in Control may take such actions as it deems appropriate to provide for, the acceleration of vesting and/or settlement of such Award upon such conditions, including termination of the Participant’s Service prior to, upon or following such Change in Control, and to such extent as the Committee shall determine.

12.  Compliance with Securities Law.

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

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13.  Tax Withholding.

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

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

14.  Amendment or Termination of Plan.

      The Committee may amend, suspend or terminate the Plan at any time. However, without the approval of the Company’s stockholders, there shall be (a) no increase in the maximum aggregate number of shares of Stock that may be issued under the Plan (except by operation of the provisions of Section 4.4) and (b) no other amendment of the Plan that would require approval of the Company’s stockholders under any applicable law, regulation or rule, including the rules of any stock exchange or market system upon which the Stock may then be listed. No amendment, suspension or termination of the Plan shall affect any then outstanding Award unless expressly provided by the Committee. Except as provided by the next sentence, no amendment, suspension or termination of the Plan may adversely affect any then outstanding Award without the consent of the Participant. Notwithstanding any other provision of the Plan to the contrary, the Committee may, in its sole and absolute discretion and without the consent of any Participant, amend the Plan or any Award Agreement, to take effect retroactively or otherwise, as it deems necessary or advisable for the purpose of conforming the Plan or such Award Agreement to any present or future law, regulation or rule applicable to the Plan, including, but not limited to, Section 409A.

15.  Compliance with Section 409A.

      15.1 Awards Subject to Section 409A. The provisions of this Section 15 shall apply to any Award or portion thereof that is or becomes subject to Section 409A. Awards subject to Section 409A include, without limitation, each Deferred Compensation Award and any Restricted Stock Unit Award or Performance Award that either (i) provides by its terms for settlement of all or any portion of the Award on one or more dates following the Short-Term Deferral Period (as defined below) or (ii) permits or requires the Participant to elect one or more dates on which the Award will be settled.

      Subject to any applicable U.S. Treasury Regulations promulgated pursuant to Section 409A or other applicable guidance, the term “Short-Term Deferral Period” means the period ending on the later of (i) the date that is two and one-half months from the end of the Company’s fiscal year in which the applicable portion of the Award is no longer subject to a substantial risk of forfeiture or (ii) the date that is two and one-half months from the end of the Participant’s taxable year in which the applicable portion of the Award is no longer subject to a substantial risk of forfeiture. For this purpose, the term “substantial risk of forfeiture” shall have the meaning set forth in any applicable U.S. Treasury Regulations promulgated pursuant to Section 409A or other applicable guidance.

      15.2 Deferral and/or Distribution Elections. Except as otherwise permitted or required by Section 409A or any applicable U.S. Treasury Regulations promulgated pursuant to Section 409A or other applicable guidance, the following rules shall apply to any deferral and/or distribution elections (each, an

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“Election”) that may be permitted or required by the Committee pursuant to an Award subject to Section 409A:

      (a) All Elections must be in writing and specify the amount of the distribution in settlement of an Award being deferred, as well as the time and form of distribution as permitted by this Plan.

      (b) All Elections shall be made by the end of the Participant’s taxable year prior to the year in which services commence for which an Award may be granted to such Participant; provided, however, that if the Award qualifies as “performance-based compensation” for purposes of Section 409A and is based on services performed over a period of at least twelve (12) months, then the Election may be made no later than six (6) months prior to the end of such period.

      (c) Elections shall continue in effect until a written election to revoke or change such Election is received by the Company, except that a written election to revoke or change such Election must be made prior to the last day for making an Election determined in accordance with paragraph (b) above or as permitted by Section 15.3.

      15.3 Subsequent Elections. Any Award subject to Section 409A which permits a subsequent Election to delay the distribution or change the form of distribution in settlement of such Award shall comply with the following requirements:

      (a) No subsequent Election may take effect until at least twelve (12) months after the date on which the subsequent Election is made;

      (b) Each subsequent Election related to a distribution in settlement of an Award not described in Section 15.4(b), 15.4(c), or 15.4(f) must result in a delay of the distribution for a period of not less than five (5) years from the date such distribution would otherwise have been made; and

      (c) No subsequent Election related to a distribution pursuant to Section 15.4(d) shall be made less than twelve (12) months prior to the date of the first scheduled payment under such distribution.

      15.4 Distributions Pursuant to Deferral Elections. No distribution in settlement of an Award subject to Section 409A may commence earlier than:

      (a) Separation from service (as determined by the Secretary of the United States Treasury);

      (b) The date the Participant becomes Disabled (as defined below);

      (c) Death;

      (d) A specified time (or pursuant to a fixed schedule) that is either (i) specified by the Committee upon the grant of an Award and set forth in the Award Agreement evidencing such Award or (ii) specified by the Participant in an Election complying with the requirements of Section 15.2 and/or 15.3, as applicable;

      (e) To the extent provided by the Secretary of the U.S. Treasury, a change in the ownership or effective control or the Company or in the ownership of a substantial portion of the assets of the Company; or

      (f) The occurrence of an Unforeseeable Emergency (as defined below).

      Notwithstanding anything else herein to the contrary, to the extent that a Participant is a “Specified Employee” (as defined in Section 409A(a)(2)(B)(i)) of the Company, no distribution pursuant to Section 15.4(a) in settlement of an Award subject to Section 409A may be made before the date which is six (6) months after such Participant’s date of separation from service, or, if earlier, the date of the Participant’s death.

      15.5 Unforeseeable Emergency. The Committee shall have the authority to provide in the Award Agreement evidencing any Award subject to Section 409A for distribution in settlement of all or a portion of such Award in the event that a Participant establishes, to the satisfaction of the Committee, the occurrence of an Unforeseeable Emergency. In such event, the amount(s) distributed with respect to such Unforeseeable

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Emergency cannot exceed the amounts necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of such distribution(s), after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship). All distributions with respect to an Unforeseeable Emergency shall be made in a lump sum as soon as practicable following the Committee’s determination that an Unforeseeable Emergency has occurred.

      The occurrence of an Unforeseeable Emergency shall be judged and determined by the Committee. The Committee’s decision with respect to whether an Unforeseeable Emergency has occurred and the manner in which, if at all, the distribution in settlement of an Award shall be altered or modified, shall be final, conclusive, and not subject to approval or appeal.

      15.6 Disabled. The Committee shall have the authority to provide in any Award subject to Section 409A for distribution in settlement of such Award in the event that the Participant becomes Disabled. A Participant shall be considered “Disabled” if either:

      (a) the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or

      (b) the Participant is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Participant’s employer.

      All distributions payable by reason of a Participant becoming Disabled shall be paid in a lump sum or in periodic installments as established by the Participant’s Election, commencing as soon as practicable following the date the Participant becomes Disabled. If the Participant has made no Election with respect to distributions upon becoming Disabled, all such distributions shall be paid in a lump sum as soon as practicable following the date the Participant becomes Disabled.

      15.7 Death. If a Participant dies before complete distribution of amounts payable upon settlement of an Award subject to Section 409A, such undistributed amounts shall be distributed to his or her beneficiary under the distribution method for death established by the Participant’s Election as soon as administratively possible following receipt by the Committee of satisfactory notice and confirmation of the Participant’s death. If the Participant has made no Election with respect to distributions upon death, all such distributions shall be paid in a lump sum as soon as practicable following the date of the Participant’s death.

      15.8 No Acceleration of Distributions. Notwithstanding anything to the contrary herein, this Plan does not permit the acceleration of the time or schedule of any distribution under this Plan, except as provided by Section 409A and/or the Secretary of the U.S. Treasury.

      16. Miscellaneous Provisions.

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

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

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

      16.4 Rights as a Stockholder. A Participant shall have no rights as a stockholder with respect to any shares covered by an Award until the date of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date such shares are issued, except as provided in Section 4.4 or another provision of the Plan.

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

      16.6 Severability. If any one or more of the provisions (or any part thereof) of this Plan shall be held invalid, illegal or unenforceable in any respect, such provision shall be modified so as to make it valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions (or any part thereof) of the Plan shall not in any way be affected or impaired thereby.

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

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

      16.9 Choice of Law. Except to the extent governed by applicable federal law, the validity, interpretation, construction and performance of the Plan and each Award Agreement shall be governed by the laws of the State of Arizona, without regard to its conflict of law rules.

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     IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the foregoing sets forth the JDA Software Group, Inc. 2005 Performance Incentive Plan as duly adopted by the Board on May 14, 2005.

/s/ Kristen L. Magnuson

Secretary

EX-99.2

Exhibit 99.2

JDA Software Appoints Christopher J. Koziol to the position of Chief Operating Officer

JDA Software today announced the appointment of Christopher J. Koziol to the newly created position of Chief Operating Officer. In announcing the position, JDA CEO Hamish Brewer said:

“I am delighted to welcome Chris into this new role at JDA. We have busy times ahead of us with the launch of our ground breaking Portfolio Enabled solutions and the exciting opportunities to grow the company through organic growth as our competitors are gradually removed from the mainstream as well as through acquisition. With all of these opportunities it was time for us to strengthen the JDA senior executive team with a seasoned veteran who brings great new abilities and experience; Chris fits that bill perfectly.”

Chris is a seasoned Technology Industry veteran whose 23-year career has spanned a number of diverse operating roles from President & COO of a Fortune 500 Technology Systems Integrator and Wholesaler to leading sales and services organizations. Chris spent 16 years with MicroAge, Inc. and participated in its growth from a privately held organization to a $6 Billion NASDAQ company. As President of MicroAge Technology Services, Chris was responsible for a $1.8 Billion P&L including a $250 Million services and consulting organization. Chris also led the company’s $5 billion Pinacor distribution subsidiary and launched a sales and service agency business unit serving the Fortune 1000 marketplace that achieved over $1 Billion in sales within three years of operation.

Chris is a graduate of the Harvard Business School Program for Management Development and the University of Arizona.

“I am excited and honored to be joining the JDA Software Group. I believe that JDA is uniquely positioned in the market to capitalize on its industry leading customer base of over 4600 retailers and manufacturers and to gain momentum through its unique product offerings and value proposition. I look forward to working with the team and contributing to our growth and profitability objectives,” said Koziol.

We do not believe this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Nevertheless, if remarks in this press release are considered to be “forward-looking” or to have forward-looking implications, we would remind our investors and prospective investors that future events may involve risks and uncertainties. Risks and uncertainties that may affect our business are detailed from time to time in the “Risks Factors” section of our filings with the Securities and Exchange Commission. As a result of these and other risks, actual results may differ materially from those predicted. We undertake no obligation to update information in this release.