SC TO-I

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE TO

TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934

Good Guys, Inc.

(Name of Subject Company (Issuer))

Good Guys, Inc.

(Names of Filing Persons)

Options to Purchase Common Stock, par value $.001 per share,
Granted to Employees and Non-Employee Directors Prior to November 8, 2000
(Title of Class of Securities)

382091106
(CUSIP Number of Class of Securities)

David A. Carter
1600 Harbor Bay Parkway
Suite 200
Alameda, California 94502
(510) 747-6000
(Name, address, and telephone numbers of person authorized
to receive notices and communications on behalf of filing persons)

with a copy to:
Joseph B. Hershenson, Esq.
Maurine M. Murtagh, Esq.
J. Alex Moore, Esq.
Howard, Rice, Nemerovski, Canady,
Falk & Rabkin
A Professional Corporation
Three Embarcadero Center, 7th Floor
San Francisco, California 94111
(415) 434-1600

CALCULATION OF FILING FEE

Transaction valuation*	Amount of filing fee
$90,000.20	$	7.28

*	Calculated solely for purposes of determining the filing fee. This amount assumes that options to purchase 450,001 shares of common stock of Good Guys, Inc., will be purchased pursuant to this offer at the offer price of $0.20 per option share. The amount of the filing fee, calculated in accordance with Rule 0-11(b) of the Securities Exchange Act of 1934, as amended, equals $80.90 per million dollars of the value of the transaction.
o	Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
	Amount Previously Paid: N/A	Form or Registration No.: N/A
	Filing Party: N/A	Date Filed: N/A
o	Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.
	Check the appropriate boxes below to designate any transactions to which the statement relates:
o	third-party tender offer subject to Rule 14d-1.
x	issuer tender offer subject to Rule 13e-4.
o	going-private transaction subject to Rule 13e-3.
o	amendment to Schedule 13D under Rule 13d-2.

Check the following box if the filing is a final amendment reporting the results of the tender offer: o

TABLE OF CONTENTS

	Item 1. Summary Term Sheet
	Item 2. Subject Company Information
	Item 3. Identity and Background of Filing Person
	Item 4. Terms of the Transaction
	Item 5. Past Contacts, Transactions, Negotiations and Agreements
	Item 6. Purposes of the Transaction and Plans or Proposals
	Item 7. Source and Amount of Funds or Other Consideration
	Item 8. Interest in Securities of the Subject Company
	Item 9. Persons/Assets, Retained, Employed, Compensated or Used
	Item 10. Financial Statements
	Item 11. Additional Information
	Item 12. Exhibits.
	Item 13. Information Required by Schedule 13E-3
Signature
Exhibit Index
Exhibit (a)(1)
Exhibit (a)(2)
Exhibit (a)(3)
Exhibit (a)(4)
Exhibit (d)(1)
Exhibit (d)(2)

Item 1. Summary Term Sheet.

     The information set forth under “Summary Term Sheet” in the Offer to Purchase is incorporated herein by reference.

Item 2. Subject Company Information.

     (a)  Name and address.

     The name of the issuer is Good Guys, Inc., a Delaware corporation (the “Company”), and the address and telephone number of its principal executive office is 1600 Harbor Bay Parkway, Suite 200, Alameda, California 94502, (510) 747-6000.

     (b)  Securities.

     This Tender Offer Statement on Schedule TO relates to an offer by the Company offering each option holder the opportunity to tender for purchase by the Company all of his or her currently outstanding options to purchase shares of Good Guys common stock, whether or not vested, granted to employees and non-employee directors prior to November 8, 2000 under Good Guys’ 1985 Stock Option Plan or 1994 Stock Incentive Plan, regardless of the exercise price of such options (each, an “eligible option”), at a price equal to $0.20 per option, net to the seller in cash, without interest.

     The information set forth in the Offer to Purchase under “Section 1. Eligible Options; Expiration of the Offer”, “Section 8. Source and Amount of Consideration” and “Section 10. Certain Information Concerning the Company” is incorporated herein by reference.

     (c)  Trading market and price.

     The information set forth in the Offer to Purchase under “Section 7. Price Range of Common Stock Underlying the Options” is incorporated herein by reference.

Item 3. Identity and Background of Filing Person.

     The Company is the filing person and the subject company. The information set forth under Item 2(a) above and the information set forth in the Offer to Purchase under “Schedule A. Information Concerning the Directors and Executive Officers of Good Guys” is incorporated herein by reference.

Item 4. Terms of the Transaction.

     (a)  Material Terms.

     The information set forth in the Offer to Purchase under “Section 1. Eligible Options; Expiration of the Offer”, “Section 3. Procedures for Tendering Eligible Options”, “Section 4. Withdrawal Rights”, “Section 5. Acceptance for Payment and Payment for Eligible Options”, “Section 6. Certain Conditions to the Offer”, “Section 8. Source and Amount of Consideration”,

“Section 9. Certain Federal Income Tax Consequences” and “Section 13. Extension of Offer; Termination; Amendment” is incorporated herein by reference.

     (b)  Purchases.

     The information set forth in the Offer to Purchase under “Section 11. Interests of Directors and Officers and Principal Stockholders” is incorporated herein by reference.

Item 5. Past Contacts, Transactions, Negotiations and Agreements.

     (e)  Agreements involving the subject company’s securities.

     The information set forth in the Offer to Purchase under “Section 11. Interests of Directors and Officers and Principal Stockholders” is incorporated herein by reference.

     The 1985 Stock Option Plan and the 1994 Stock Incentive Plan as in existence prior to November 8, 2000 are attached hereto as Exhibits (d)(1) and (d)(2), respectively, and contain information regarding the subject securities.

Item 6. Purposes of the Transaction and Plans or Proposals.

     (a)  Purposes

     The information set forth in the Offer to Purchase under “Section 2. Purpose of the Offer” is incorporated herein by reference.

     (b)  Use of securities acquired.

     The information set forth in the Offer to Purchase under “Section 3. Procedures for Tendering Eligible Options” is incorporated herein by reference.

     (c)  Plans.

     The information set forth in the Offer to Purchase under “Section 2. Purpose of the Offer” is incorporated herein by reference.

Item 7. Source and Amount of Funds or Other Consideration.

     (a)  Source of funds.

     The information set forth in the Offer to Purchase under “Section 8. Source and Amount of Consideration” is incorporated herein by reference.

     (b)  Conditions.

     The offer is not conditioned on any financing contingency.

     (d)  Borrowed funds.

     Not applicable.

Item 8. Interest in Securities of the Subject Company.

     (a)  Securities ownership.

     The information set forth in the Offer to Purchase under “Section 11. Interests of Directors and Officers and Principal Stockholders” is incorporated herein by reference.

     (b)  Securities transactions.

     The information set forth in the Offer to Purchase under “Section 11. Interests of Directors and Officers and Principal Stockholders” is incorporated herein by reference.

Item 9. Persons/Assets, Retained, Employed, Compensated or Used.

     Not applicable.

Item 10. Financial Statements.

     Not applicable.

Item 11. Additional Information.

     (a)  Agreements, regulatory requirements and legal proceedings.

     The information set forth in the Offer to Purchase under “Section 11. Interests of Directors and Officers and Principal Stockholders” and “Section 12. Certain Legal Matters; Regulatory Approval” is incorporated herein by reference.

     (b)  Other material information.

     Not applicable

Item 12.	Exhibits.
(a)(1)	Offer to Purchase, dated November 7, 2003
(a)(2)	Cover Letter to the Offer to Purchase, dated November 7, 2003
(a)(3)	Form of Acceptance Letter
(a)(4)	Form of Withdrawal Letter
(b)	None
(d)(1)	Good Guys, Inc. 1985 Stock Option Plan, as amended
(d)(2)	Good Guys, Inc. 1994 Stock Incentive Plan, as amended and in effect prior to November 8, 2000
(g)	None
(h)	None

Item 13. Information Required by Schedule 13E-3.

     Not applicable.

Signature

     After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Schedule TO is true, complete and correct.

	Good Guys, Inc.
	/s/ David A. Carter
	Name: David A. Carter
	Title: Chief Financial Officer and Secretary
Date: November 7, 2003

Exhibit Index

Exhibit No.	Description
(a)(1)	Offer to Purchase, dated November 7, 2003
(a)(2)	Cover Letter to the Offer to Purchase, dated November 7, 2003
(a)(3)	Form of Acceptance Letter
(a)(4)	Form of Withdrawal Letter
(d)(1)	Good Guys, Inc. 1985 Stock Option Plan, as amended
(d)(2)	Good Guys, Inc. 1994 Stock Incentive Plan, as amended and in effect prior to November 8, 2000

i EX-99.(A)(1) 3 f94276exv99wxayx1y.htm EXHIBIT (A)(1)

Exhibit (a)(1)

GOOD GUYS, INC.

Offer to Purchase for Cash All Outstanding Options to Purchase Shares of
Common Stock Granted to Employees and Non-Employee Directors Prior to November
8, 2000 Under Good Guys’ Stock Incentive Plans

     THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., PACIFIC TIME, ON DECEMBER 8, 2003, UNLESS THE OFFER IS EXTENDED BY GOOD GUYS

     We are offering each option holder the opportunity to tender for purchase by us all of his or her currently outstanding options to purchase shares of Good Guys common stock, whether or not vested, granted to employees and non-employee directors prior to November 8, 2000 under Good Guys’ 1985 Stock Option Plan or 1994 Stock Incentive Plan, regardless of the exercise price of such options (each, an “eligible option”), at a purchase price equal to $0.20 per option, net to the seller in cash, without interest.

     We are making this offer in connection with a transaction we have agreed to enter into with CompUSA Inc. Pursuant to the transaction, a subsidiary of CompUSA will merge with and into Good Guys, with Good Guys as the surviving corporation and wholly-owned subsidiary of CompUSA. If the merger is completed, each outstanding share of Good Guys common stock held immediately prior to the effective time of the merger will be converted into the right to receive $2.05 in cash, without interest.

     In connection with the merger, we have agreed with CompUSA to use our reasonable best efforts to provide that at the effective time of the merger, each of the eligible options, whether or not then exercisable or vested, will be canceled in accordance with applicable law and in a manner reasonably acceptable to CompUSA and to us. It is a condition to the consummation of the merger that not less than seventy-five percent (75%) of the eligible options shall have been terminated, without any further liability to us. The merger agreement also provides that in connection with the cancellation of the eligible options, we will not provide aggregate consideration to all holders of eligible options in excess of $100,000 in cash.

     The eligible options will fully vest immediately prior to the merger. However, all of the eligible options have exercise prices that are higher than $2.05 per share. As a result, holders of eligible options will not be able to realize any benefit from the merger. Further, pursuant to Good Guys’ 1985 Stock Option Plan and 1994 Stock Incentive Plan, the eligible options cannot be canceled. Therefore, because it is a condition to the consummation of the merger that not less than seventy-five percent (75%) of the eligible options are terminated prior to the merger, we are making this offer to purchase the eligible options at $0.20, net to the seller in cash, without interest. Options issued under such plans on or after November 8, 2000 are not eligible to be tendered into the offer.

     Our offer is being made upon the terms and subject to the conditions described in this Offer to Purchase and in the related cover letter and election to tender options, which together, as they may be amended from time to time, constitute the offer. This offer is not

conditioned on any minimum amount of eligible options being tendered. However, we are not required to complete the offer unless the merger is consummated. See “Section 6. Certain Conditions to the Offer.”

     Our common stock is listed on the Nasdaq National Market under the symbol “GGUY.” You should evaluate current market quotes for Good Guys common stock, among other factors, before deciding whether or not to tender your eligible options.

     The offer has not been approved or disapproved by the Securities and Exchange Commission or any state securities commission nor has the Securities and Exchange Commission or any state securities commission determined whether the information in this document is accurate or complete. Any representation to the contrary is a criminal offense.

     Any questions or requests for assistance or additional copies of any documents referred to in this Offer to Purchase may be directed to: Good Guys, Inc., Attention: David A. Carter. Telephone number: (510) 747-6000. Facsimile number: (510) 747-6064.

     We are not making the offer to, nor will we accept any tender of eligible options from or on behalf of, option holders in any jurisdiction in which the offer or the acceptance of any tender of eligible options would not be in compliance with the laws of such jurisdiction. However, we may, in our sole discretion, take any actions necessary to make the offer to option holders in any such jurisdiction.

     We have not authorized any person to make any recommendation or representation on our behalf as to whether you should accept or reject the offer. You should rely only on the information contained in this document or in documents to which we have referred you. If anyone makes any recommendation or representation to you or gives you any information, you must not rely upon that recommendation, representation or information as having been authorized by us.

     This Offer to Purchase is dated November 7, 2003. You should not assume that the information contained in this Offer to Purchase is accurate as of any date other than November 7, 2003, and the delivery of this Offer to Purchase shall not, under any circumstances, create an implication that there has been no change in the affairs of Good Guys, or any of its affiliates, since November 7, 2003 or that the information herein is correct as of any time subsequent to such date.

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TABLE OF CONTENTS

		Page
Summary Term Sheet			1
The Offer to Purchase			6
1.	Eligible Options; Expiration of the Offer		6
2.	Purpose of the Offer		7
3.	Procedures for Tendering Eligible Options		8
4.	Withdrawal Rights		9
5.	Acceptance for Payment and Payment for Eligible Options		10
6.	Certain Conditions to the Offer		10
7.	Price Range of Common Stock Underlying the Eligible Options		12
8.	Source and Amount of Consideration		12
9.	Certain Federal Income Tax Consequences		12
10.	Certain Information Concerning the Company		13
11.	Interests of Directors and Officers and Principal Stockholders		13
12.	Certain Legal Matters; Regulatory Approval		15
13.	Extension of Offer; Termination; Amendment		15
14.	Fees and Expenses		16
15.	Additional Information		16
16.	Miscellaneous		17

Schedule A	Information Concerning the Directors and Executive Officers of Good Guys
Schedule B	Form of Acceptance Letter
Schedule C	Form of Withdrawal Letter

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SUMMARY TERM SHEET

     This summary term sheet highlights selected information from this Offer to Purchase. This summary is not complete and we urge you to read carefully and in its entirety the remainder of this Offer to Purchase and the accompanying cover letter and election to tender options. We have included page references parenthetically to direct you to a more complete description of the topics in this summary.

     Q1. What securities is Good Guys offering to purchase? (Page 6)

     A.     We are offering each option holder the opportunity to tender for purchase by us all of his or her currently outstanding options to purchase shares of Good Guys common stock, whether or not vested, granted to employees and non-employee directors prior to November 8, 2000 under Good Guys’ 1985 Stock Option Plan or 1994 Stock Incentive Plan, regardless of the exercise price of such options (each, an “eligible option”).

     Our offer is being made upon the terms and subject to the conditions described in this Offer to Purchase and in the related cover letter and election to tender options, which together, as they may be amended from time to time, constitute the offer. This offer is not conditioned on any amount of eligible options being tendered. However, we are not required to complete the offer unless the merger is consummated.

     Throughout this document, we will generally refer to eligible options in the same numbers as the shares of Good Guys common stock underlying any particular Option grant. For example, we will refer to an Option to purchase 100 shares of Good Guys common stock as 100 eligible options.

     Q2. Why is Good Guys making the offer? (Page 7)

     A.     We have recently agreed to enter into a transaction with CompUSA Inc. whereby a subsidiary of CompUSA will merge with and into Good Guys, with Good Guys as the surviving corporation and wholly-owned subsidiary of CompUSA. As a result, Good Guys will no longer be a public company and our common stock will no longer trade on the Nasdaq National Market. If the merger is completed, each outstanding share of Good Guys common stock held immediately prior to the effective time of the merger will be converted into the right to receive $2.05 in cash, without interest.

     In connection with the merger, we have agreed with CompUSA to use our reasonable best efforts to provide that at the effective time of the merger, each of the eligible options, whether or not then exercisable or vested, will be canceled in accordance with applicable law and in a manner reasonably acceptable to CompUSA and to us. It is a condition to the consummation of the merger that not less than seventy-five percent (75%) of the eligible options shall have been terminated, without any further liability to Good Guys.

     The eligible options will fully vest immediately prior to the merger. However, all of the eligible options have exercise prices that are higher than $2.05 per share. As a result, holders of eligible options will not be able to realize any benefit from exercising their options prior to the merger. Further, pursuant to the 1985 Stock Option Plan and the 1994 Stock Incentive Plan, the

1

eligible options cannot be canceled. Therefore, because it is a condition to the consummation of the merger that not less than seventy-five percent (75%) of the eligible options are terminated prior to the merger, we are making this offer to purchase the eligible options at $0.20 per eligible option, net to the holder in cash, without interest.

     Q3. What happens to my eligible options if I choose not to tender them? (Page 7)

     A.     If you choose not to tender your eligible options, they will remain outstanding in accordance with their original terms and conditions. If the merger is consummated, however, Good Guys will no longer be a public company and its common stock will no longer be traded on Nasdaq. As a result, your eligible options will be options to purchase shares of common stock of a company for which there is no public trading market, and the company will cease making filings with the Securities and Exchange Commission and will cease being required to comply with the Securities and Exchange Commission’s rules relating to publicly-held companies.

     Q4. How much will Good Guys pay me for my eligible options, and what is the form of payment? (Page 6)

     A.     We are offering to pay $0.20 per eligible option, whether or not vested, net in cash, without interest, regardless of the exercise price of the option. Option holders whose eligible options are purchased in the offer will be paid promptly after the expiration of the offer. Under no circumstances will we pay interest on the purchase price, including but not limited to, by reason of any delay in making payment.

     Q5. Are all options to purchase Good Guys common stock eligible to be tendered into the offer? (Page _)

     A.     No. We are offering to purchase only those options issued prior to November 8, 2000 under our 1985 Stock Option Plan and 1994 Stock Incentive Plans. Options issued under such plans on or after November 8, 2000 are not eligible to be tendered into the offer. Pursuant to the 1985 Stock Option Plan and 1994 Stock Incentive Plan, prior to the merger, the Company will accelerate the vesting of all unvested eligible options, and they may be tendered for purchase by Good Guys, subject to the conditions of the offer discussed herein.

     Q6. If I elect to tender my options into the offer, must I tender all my options? (Page 6)

     A.     Yes. If you wish to accept the offer to tender your eligible options, you are required to tender all of your eligible options. No partial tenders will be accepted. However, a tender of the remaining portion of an eligible option that has been partially exercised will be accepted.

2

     Q7. When does the offer expire? Can Good Guys extend the offer and, if so, how will I be notified? (Pages 6 and 15)

     A.     The offer expires on December 8, 2003 at 5:00 p.m., Pacific Time, unless we decide to extend the offer. We may extend the offer at any time. We cannot assure you, however, that the offer will be extended or, if extended, for how long. If the offer is extended, we will make a public announcement of the extension no later than 5:00 p.m., Pacific Time, on the next business day following the previously scheduled expiration of the offer period.

     Q8. What are the most significant conditions to the offer? (Page 10)

     A.     Although the offer is not conditioned on any minimum amount of eligible options being tendered, we are not obligated to purchase the eligible options and complete the offer unless the merger is consummated. Therefore, if you choose to tender your eligible options, your tender will be “conditional” because option holders will be deemed to tender their eligible options only if, and to the extent that, the eligible options are accepted for payment and paid for by Good Guys pursuant to the offer. We will only accept for payment and pay for eligible options if the merger is completed. If the eligible options are accepted for payment and paid for by Good Guys, the eligible options in respect of the shares tendered will have been irrevocably tendered.

     Q9. How will Good Guys pay for the eligible options? (Page 10)

     A.     Pursuant to the merger agreement, we cannot provide consideration to option holders in connection with this offer to purchase eligible options in cash in excess of $100,000 in the aggregate. Because only 450,001 eligible options are currently outstanding and we are offering to purchase eligible options at $0.20 per option, we will be able to accept for payment all eligible options that are validly tendered to us. We anticipate that the source of the funds necessary to purchase the eligible options tendered in the offer, as well as to pay related fees and expenses, will be from cash on hand.

     Q10. How do I tender my eligible options? (Page 8)

     A.     If you elect to tender your eligible options, you must properly complete and sign the election to tender options and ensure that we receive the completed election to tender options (or facsimile thereof) at the address or facsimile number provided in the election to tender options, together with all other documents required thereby, before 5:00 p.m., Pacific Time, on December 8, 2003. If we extend the offer beyond that time, you must deliver these documents before the extended expiration of the offer. We reserve the right to reject any or all tenders of eligible options that we determine are not in appropriate form or that we determine are unlawful to accept.

     Q11. What happens to my eligible options if I tender them and the merger is not consummated? (Page 10)

     A.     If you choose to tender your eligible options, the tender is conditional because option holders will be deemed to tender their eligible options only if, and to the extent that, the eligible options are accepted for payment and paid for by Good Guys pursuant to the offer. We

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will accept for payment and pay for tendered eligible options only if the merger is completed. Therefore, if the merger is not consummated and we do not accept for payment and pay for tendered eligible options, your eligible options will remain outstanding in accordance with their original terms and conditions.

     Q12. Until what time can I withdraw previously tendered eligible options? (Page 9)

     A.     You may withdraw your tendered eligible options at any time before 5:00 p.m., Pacific Time, on December 8, 2003.

     Q13. How do I withdraw previously tendered eligible options? (Page 9)

     A.     To withdraw eligible options, you must deliver a written notice of withdrawal (using the form attached as Schedule C of this document), or a facsimile of one, with the required information to us at the address or facsimile number provided in the election to tender options, while you still have the right to withdraw the eligible options.

     Q.14. If I choose not to accept the offer, what do I have to do? (Page 8)

     A.     Nothing. You do not have to file or deliver any forms or letters if you choose to keep your eligible options and not participate in the offer.

     Q15. What do Good Guys and its Board of Directors think of the offer? (Page 8)

     A.     Our Board of Directors has approved the offer. However, neither we nor our Board of Directors make any recommendation to you as to whether to tender or refrain from tendering your eligible options. You must decide whether or not to tender your eligible options.

     Q16. How will I be taxed for U.S. federal income tax purposes if I tender eligible options? (Page 12)

     A.     Our purchase of eligible options from you pursuant to the offer will be a taxable transaction for U.S. federal income tax purposes. If you are an employee of Good Guys, the cash you receive for your tendered eligible options pursuant to the offer will be treated as ordinary compensation income, and the amount payable to you in the offer will be subject to U.S. federal, and possibly also state and local, withholding. See “Section 9. Certain U.S. Federal Income Tax Consequences” for a more detailed discussion of the U.S. federal income tax treatment of the offer. We urge you to consult with your own tax advisor as to the particular tax consequences to you of the offer.

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     Q17.   Who do I contact if I have questions about the offer? (Back Cover)

A.	For additional information or assistance, you may contact:
	Good Guys, Inc.
	1600 Harbor Bay Parkway, Suite 200
	Alameda, CA 94502
	Attn: David A. Carter
	Tel: (510) 747-6000

5

Good Guys, Inc.

The Offer to Purchase

1. Eligible Options; Expiration of the Offer

          We are offering option holders the opportunity to tender for purchase all of their eligible options (as described below) to purchase shares of common stock of Good Guys at a price equal to $0.20 per option, net to the seller in cash, without interest. We will purchase eligible options that are (i) properly tendered, and not validly withdrawn, by eligible option holders before the expiration of the offer (as described below) in accordance with Section 3 and (ii) accepted for payment in accordance with Section 3. We are making the offer upon the terms and subject to the conditions set forth in this Offer to Purchase and the related cover letter and election to tender options, which together, as they may be amended from time to time, constitute the offer.

          As of November 7, 2003, there were 450,001 eligible options outstanding.

          Eligible options are all currently outstanding options to purchase shares of common stock of Good Guys, whether or not vested and regardless of exercise price, that were granted to employees or non-employee directors prior to November 8, 2000 under Good Guys’ 1985 Stock Option Plan or its 1994 Stock Incentive Plan. Options issued on or after November 8, 2000 are not eligible to be tendered into the offer. In addition, the offer does not apply, in any way, to shares of Good Guys common stock, whether purchased upon the exercise of options or otherwise.

          If you wish to accept the offer to tender your eligible options, you are required to tender all of your eligible options. Each option grant under the 1985 and 1994 plans was made pursuant to a separate option agreement. Therefore, if you have been granted eligible options pursuant to multiple option agreements, you have multiple grants of eligible options. All of the eligible options granted with respect to each of these grants must be tendered in the offer. No partial tenders will be accepted. However, a tender of the remaining portion of an eligible option that has been partially exercised will be accepted.

          We will generally refer to options in the same numbers as the shares of Good Guys common stock underlying any particular option grant. For example, we will refer to an option to purchase 100 shares of Good Guys common stock as 100 options.

          The offer is currently scheduled to expire at 5:00 p.m., Pacific Time, on December 8, 2003, unless we, in our sole discretion, extend the period of time during which the offer will remain open, in which event the term expiration refers to the latest time and date at which the offer, as so extended, expires. See “Section 13. Extension of Offer; Termination; Amendment” for a description of our rights to extend, delay, terminate and amend the offer.

          For purposes of the offer, a business day means any day other than a Saturday, Sunday or United States federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, Pacific Time.

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2. Purpose of the Offer

          We are making this offer to purchase eligible options granted in connection with a transaction we have agreed to enter into with Comp USA Inc. Pursuant to the transaction, a subsidiary of CompUSA will merge with and into Good Guys, with Good Guys as the surviving corporation and wholly-owned subsidiary of CompUSA. As a result of the transaction:

• each outstanding share of our common stock held immediately prior to the effective time of the merger will be converted into the right to receive $2.05 in cash, without interest;

• all options granted on or after November 8, 2000 shall be accelerated and, to the extent not exercised, shall be canceled pursuant to the terms of the option plans at the effective time of the merger, without consideration to the holders of the cancelled options;

• our common stock will no longer be subject to the periodic reporting requirements of the Securities Exchange Act of 1934; and

• Good Guys common stock will no longer trade on the Nasdaq.

          In addition, in connection with the merger, we have agreed with CompUSA to use our reasonable best efforts to provide that at the effective time of the merger, each of the eligible options, whether or not then exercisable or vested, will be canceled in accordance with applicable law and in a manner reasonably acceptable to CompUSA and to us. It is a condition to the consummation of the merger that not less than seventy-five percent (75%) of the eligible options shall have been terminated, without any further liability to us. The merger agreement also provides that in connection with the cancellation of the eligible options, we will not provide consideration to the holders of eligible options in cash in excess of $100,000 in the aggregate.

          The eligible options will fully vest immediately prior to the merger. However, all of the eligible options have exercise prices that are higher than $2.05 per share. As a result, holders of eligible options will not be able to realize any benefit from exercising their options prior to the merger. Further, pursuant to our 1985 Stock Option Plan and our 1994 Stock Incentive Plan, the eligible options cannot be canceled automatically upon a change in control. Therefore, because it is a condition to the consummation of the merger that not less than seventy-five percent (75%) of the eligible options are terminated prior to the merger, we are making this offer to purchase the eligible options at $0.20, net to the seller in cash, without interest.

          If the merger is consummated, the offer allows option holders who tender their options an opportunity to realize $0.20 per option in cash for their eligible options, which would otherwise not be of value if exercised in connection with the merger.

          The eligible options of those option holders who determine not to accept the offer will remain outstanding in accordance with their terms. If the merger is consummated, however, we will no longer be a public company and Good Guys common stock will no longer be traded on Nasdaq. As a result, your eligible options will be options to purchase shares of common

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stock of a company for which there is no public trading market, and the company will cease making filings with the Securities and Exchange Commission and will cease being required to comply with the Securities and Exchange Commission’s rules relating to publicly-held companies.

          Although our Board of Directors has approved this offer to purchase eligible options, neither we nor our Board of Directors makes any recommendation as to whether you should tender or refrain from tendering your eligible options. You must make your own decision as to whether to tender your eligible options.

3. Procedures for Tendering Eligible Options

          Proper Election to Tender Eligible Options

          You should NOT send any option agreement relating to eligible options that you are tendering with your election to tender options.

          To validly accept the offer, you must, in accordance with the terms of the election to tender options, properly complete, sign and deliver to us the election to tender options (using the form attached as Schedule B of this document), or a facsimile thereof, prior to the expiration of the offer, which is currently scheduled for 5:00 p.m., Pacific Time, on December 8, 2003. If we extend the offer beyond that time, you may tender eligible options at any time until the extended expiration of the offer. The tendering of options pursuant to the offer by the procedure set forth above will constitute your acceptance of the terms and conditions of the offer.

          We will only accept delivery of your election to tender options by United States mail, hand delivery or facsimile. We will NOT accept delivery by email or interoffice mail. If delivery is by United States mail, we recommend that you use registered mail with return receipt requested. If you choose to deliver by facsimile, we recommend that you confirm our receipt of the facsimile transmission by calling us at the telephone number set forth in the election to tender options. In all cases, you should allow sufficient time to ensure timely delivery. No alternative, conditional or contingent tenders of eligible options will be accepted.

          All tendered eligible options that we accept for purchase in the offer will be deemed canceled, for purposes of the option agreements governing the options, as of the time we make payment for such options. If we do not accept eligible options for payment because the merger is not consummated or for any other reason, such eligible options shall remain outstanding in accordance with their terms.

          If you choose to keep your eligible options and not to accept the offer, you do not have to file or deliver any forms with us.

          Determination of Validity; Rejection of Eligible Options, Waiver of Defects; No Obligation to Give Notice of Defects

          We will determine, in our sole discretion, all questions as to eligibility, form and validity, including time of receipt, of acceptance of any election to tender options. Our determination of these matters will be final and binding on all parties. We may reject any or all

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elections to tender options and any tender of eligible options that we determine is not in appropriate form or that we determine is unlawful to accept. Otherwise, subject to the conditions of the offer, we expect to accept all properly and timely submitted elections to tender options prior to the expiration of the offer. We may also waive any of the conditions of the offer or any defect or irregularity with respect to any particular election to tender options. No election to tender options will be deemed to have been properly submitted and no eligible options will be deemed to have been properly tendered until all defects or irregularities have been cured by the submitting eligible option holder or waived by us. Neither we nor any other person is obligated to give notice of any defects or irregularities in any acceptance letter or its delivery, and no one will be liable for failing to give notice of any defects or irregularities.

          Our acceptance for payment of eligible options pursuant to any of the procedures described above will constitute a binding agreement between the tendering option holder and us upon the terms and subject to the conditions of the offer.

4. Withdrawal Rights

          You may only withdraw from the offer in accordance with the provisions of this Section 4.

          You may withdraw from the offer at any time before the expiration of the offer, which is currently scheduled for 5:00 p.m., Pacific Time, on December 8, 2003. If the offer is extended by us beyond that time, you may withdraw from the offer at any time until the extended expiration of the offer. A form of notice of withdrawal is attached as Schedule C to this document. If you choose to withdraw from the offer, you must withdraw with respect to all of your tendered eligible options; you may not withdraw from the offer with respect to only a portion of your tendered eligible options.

          To validly withdraw from the offer, a written or facsimile transmission notice of withdrawal must be timely received by us at the address or facsimile number provided in the election to tender options. The notice of withdrawal must be signed by the person who tendered the eligible options and have the following information to be considered completed: such person’s name and the grant date, exercise price and the number of eligible options subject to the grant to be withdrawn.

          You may not rescind any withdrawal, and you will not be deemed to have properly tendered your eligible options after any valid withdrawal, unless you properly re-tender your eligible options before the expiration of the offer by following the procedures described in Section 3.

          Neither we nor any other person is obligated to give notice of any defects or irregularities in any withdrawal letter, nor will anyone incur any liability for failure to give any such notice. We will determine, in our sole discretion, all questions as to the form and validity, including time of receipt, of withdrawal notices. Our determination of these matters will be final and binding on all parties.

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5. Acceptance for Payment and Payment for Eligible Options

          Upon the terms and subject to the conditions of the offer (including, if the offer is extended or amended, the terms and conditions of any such extension or amendment), we will accept for payment, and will pay for, promptly after the expiration date, all eligible options that are validly tendered and not properly withdrawn prior to the expiration date. Pursuant to the merger agreement, we cannot provide consideration to option holders in connection with this offer to purchase eligible options in cash in excess of $100,000 in the aggregate. Because only 450,001 eligible options are currently outstanding and we are offering to purchase eligible options at $0.20 per option, we will be able to accept for payment all eligible options that are validly tendered to us.

          Subject to the applicable rules of the Securities and Exchange Commission, we expressly reserve the right to delay acceptance for payment of, or payment for, eligible options in order to comply in whole or in part with any other applicable laws. Payment for properly tendered eligible options accepted in accordance with the offer will be made promptly after the expiration date.

          For purposes of the offer, we will be deemed to have accepted for payment, and thus purchased, eligible options validly tendered and not properly withdrawn, if and when we give you oral or written notice of our acceptance for payment of those eligible options pursuant to the offer. Upon the terms and subject to the conditions of the offer, payment for eligible options accepted for payment pursuant to the option will be paid by Good Guys to tendering option holders whose eligible options have been accepted for payment.

          Payment for eligible options may be delayed in the event of difficulty in determining the amount of options properly tendered. In addition, if certain events occur, we may not be obligated to purchase eligible options pursuant to the offer. See “Section 6. Certain Conditions to the Offer.” All eligible options not purchased pursuant to the offer will continue to be outstanding in accordance with their terms.

6. Certain Conditions to the Offer

          We are not required to purchase the eligible options and complete the offer unless the merger is consummated. Therefore, if you choose to tender your eligible options, your tender will be “conditional” because you will be deemed to tender your options only if, and to the extent that, the options are accepted for payment and paid for by us pursuant to the offer.

          We will not be required to accept for payment any eligible options, and we may terminate or amend the offer, or postpone our payment for and cancellation of any eligible options tendered for purchase, in each case, subject to Rule 13e-4(f)(5) under the Securities Exchange Act of 1934, as amended, if at any time on or after November 7, 2003 and before the expiration of the offer, we determine that any of the following events has occurred (or have been determined by us to have occurred):

• any suit, action or proceeding before any court, agency, authority or other tribunal by any government or governmental, regulatory or administrative

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	agency or authority or by any other person, domestic or foreign is threatened in writing or pending (a) challenging our acquisition of any eligible options, seeking to restrain or prohibit our making or consummating the offer or otherwise relating to the offer; or (b) which otherwise is reasonably likely to have a material adverse effect on us;
•	any statute, rule, regulation, legislation, judgment, order or injunction is threatened in writing, proposed, sought, enacted, entered, enforced, promulgated, amended or issued with respect to, or deemed applicable to, or any consent or approval is withheld with respect to, us or otherwise relates in any manner to the offer, in each case, by any government or governmental, regulatory or administrative agency or authority or by any other person, domestic or foreign that is reasonably likely to result, directly or indirectly, in any of the consequences referred to in the immediately preceding bullet above; or
•	the merger agreement terminates for any reason.

          The foregoing conditions to the offer are for our sole benefit and we may, in our exclusive judgment, assert or waive any of these conditions, other than those subject to applicable law, in whole or in part at any time and from time to time prior to the expiration of the offer. Our failure at any time prior to the expiration of the offer to exercise any of the foregoing rights will not be deemed a waiver of any of these rights. The waiver of any of these rights with respect to particular facts and circumstances will not be deemed a waiver with respect to any other facts and circumstances, and each of these rights, other than those subject to applicable law, will be deemed an ongoing right that may be asserted at any time and from time to time prior to the expiration of the offer.

          The offer is not conditioned on a minimum number of option holders accepting the offer or a minimum number of eligible options being tendered for exchange.

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7. Price Range of Common Stock Underlying the Eligible Options

          Good Guys common stock is traded on the Nasdaq National Market under the symbol “GGUY.” The following tables set forth the high and low daily closing prices of the Good Guys common stock as reported on Nasdaq for the fiscal quarters indicated. Good Guys’ fiscal year end is February 28.

Good Guys Common Stock

Fiscal Quarter		High		Low
Fiscal Year 2002
	Quarter ended May 31, 2001	$	5.50	$	3.94
	Quarter ended August 31, 2001	$	4.75	$	2.85
	Quarter ended November 30, 2001	$	3.86	$	2.28
	Quarter ended February 28, 2002	$	4.95	$	1.03
Fiscal Year 2003
	Quarter ended May 31, 2002	$	4.00	$	1.70
	Quarter ended August 31, 2002	$	4.36	$	1.31
	Quarter ended November 30, 2002	$	2.97	$	1.36
	Quarter ended February 28, 2003	$	2.95	$	1.50
Fiscal Year 2004
	Quarter ended May 31, 2003	$	1.81	$	1.35
	Quarter ended August 31, 2003	$	1.80	$	.97
	Quarter ending November 30, 2003 (through November 6, 2003)	$	1.49	$	2.00

We urge you to obtain current market quotations of Good Guys common stock.

          Good Guys has not declared any dividends in fiscal 2004, 2003, 2002 or 2001.

8. Source and Amount of Consideration

          We expect that the maximum aggregate cost of purchasing the eligible options, including all fees and expenses applicable to the offer, will be approximately $100,000. As of November 7, 2003, 450,001 eligible options were outstanding. All of these options are eligible for the offer. We anticipate that the source of funds necessary to purchase the eligible options tendered in the offer, as well as to pay related fees and expenses, will be from cash on hand. The offer is not conditioned on any financing contingencies.

          We do not believe that our financial condition is material to a decision by a holder of eligible options whether to tender such options because (i) cash is the only consideration that will be paid to the holders of eligible options in connection with the offer to purchase, (ii) our offer is not subject to any financing contingencies and (iii) we have sufficient cash on hand and cash equivalents to pay the amount of consideration necessary to holders of eligible options.

9. Certain Federal Income Tax Consequences

          Our purchase of eligible options from you pursuant to the offer will be a taxable transaction for U.S. federal income tax purposes. If you are an employee, the cash you receive for your tendered options pursuant to the offer will be treated as ordinary compensation income, and the amount payable to you in the offer will be subject to U.S. federal, and possibly also state and local, withholding.

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          If you do not tender your options in the offer, you will not have any U.S. federal income tax liability as a result of the consummation of the offer. If you intend to tender your eligible options, you should consult your own tax advisor.

          The discussion above is included for general information only. You are advised to consult your own tax advisor regarding the U.S. federal, state, local and foreign tax consequences of tendering your eligible options for cash pursuant to the offer in light of your own particular circumstances.

10. Certain Information Concerning the Company

          We were incorporated in California in 1976. On March 4, 1992, we changed our state of incorporation from California to Delaware by merging into a wholly owned Delaware subsidiary formed for that purpose. In September 1995, we transferred substantially all of our assets and liabilities to Good Guys California, Inc., our wholly owned operating subsidiary.

          We are a leading specialty retailer of higher-end consumer entertainment electronics products and operate 71 stores in California, Washington, Oregon and Nevada. In California, 19 stores are located in the San Francisco Bay area, 27 in the Greater Los Angeles/ Orange County Metropolitan Area, 3 in Sacramento, 7 in San Diego, and one each in Bakersfield, Fresno, Modesto and Stockton. In Washington, Oregon and Nevada, we operate 6 stores, 3 stores and 2 stores, respectively.

          As discussed above, we are party to that certain Agreement and Plan of Merger (the “merger agreement”), dated as of September 29, 2003, among Good Guys, Inc., CompUSA Inc. and Gladiator Acquisition Corp., a wholly-owned subsidiary of CompUSA (“Merger Sub”), pursuant to which Merger Sub will merger with and into Good Guys, with Good Guys being the surviving corporation and becoming a wholly-owned subsidiary of CompUSA (the “merger”). As a result of the merger, each share of Good Guys common stock outstanding immediately prior to the effective time of the merger will be converted into the right to receive $2.05 in cash, without interest, subject to reduction for withholding or stock transfer taxes.

          The name and business address and phone number of each of the directors and executive officers of Good Guys are listed on Schedule A to this Offer to Purchase.

          As of November 7, 2003, there were 450,001 options to purchase common stock granted to employees and non-employee directors prior to November 8, 2000, outstanding under the 1985 Stock Option Plan and the 1994 Stock Incentive Plan.

11. Interests of Directors and Officers and Principal Stockholders

          Eligible Options

          A list of our current directors and executive officers is attached to this document as Schedule A. As of November 7, 2003, such persons, as a group, beneficially owned a total of 115,500 eligible options under the 1985 Stock Option Plan and the 1994 Stock Incentive Plan, which represented approximately 25.7% of all eligible options outstanding as of that date. Each option held by our officers and directors was made pursuant to the terms of an option agreement

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and option grant document. Our executive officers and directors may participate in the offer with respect to their eligible options, in which event, we will purchase their tendered options on the same terms as any other tendered options.

          The following table sets forth information as of November 7, 2003, unless otherwise noted, regarding the number of eligible options held by the current executive officers and directors.

	Eligible Options Currently Held
			Percent of Total
Name	Number		Eligible Options
Kenneth R. Weller		0		*
Thomas F. Herman		0		*
John E. Martin		19,000		4.1	%
Russell M. Solomon		19,000		4.1	%
Cathy A. Stauffer		47,500		10.2	%
Jeff G. Linden		14,000		3.0	%
John J. DeLuca		0		*
David A. Carter		0		*
Mary Doan		0		*
Jason Dillon		6,000		1.3	%
Michael Mohan		10,000		2.1	%
All current executive officers and directors as a group (11 persons)		115,500		25.7	%

* Represents less than 1% of the outstanding eligible options.

          Neither Good Guys nor any of its directors or executive officers engaged in transactions involving the eligible options during the 60 days prior to the commencement of the offer.

          Employment and Severance Arrangements

          In August 2000, we entered into an employment agreement with Kenneth R. Weller, which was recently amended to extend the term of the agreement to August 15, 2006. We, however, may terminate Mr. Weller’s employment at any time, provided that if the termination is without cause, Mr. Weller will be entitled to receive one-year severance pay based upon Mr. Weller’s then current annual base salary. Also, in the employment agreement entered into in August 2000, Mr. Weller was granted an option to purchase 1,000,000 shares of Good Guys common stock at a price of $3.75 per share, exercisable over three years. Although the recent amendment to Mr. Weller’s employment agreement extended the option until August 15, 2006, it will be canceled at the effective time of the merger pursuant to the terms of both Mr. Weller’s employment agreement and the merger agreement.

          We also are party to severance agreements with the following other persons who are our executive officers: Thomas F. Herman, Cathy A. Stauffer, David A. Carter, Michael Mohan, John J. DeLuca, Jeff G. Linden, Jason Dillon and Mary F. Doan. Under these agreements, all of which are substantially identical, in the event of their terminations without cause within 12 months of a change in control of Good Guys, such individuals are entitled to severance payments

14

equal in the aggregate to 12 months salary (or in the case of each of Mr. Herman and Ms. Stauffer, severance payments equal in the aggregate to 18 months salary), payable on the same schedule such payments would have been made had they remained employed.

          We are also party to indemnification agreements with certain officers and directors, providing these individuals with the right to be indemnified against any expenses (including reasonable attorneys’ fees), judgments, fines and amounts paid in settlement in connection with any action, suit or proceeding arising out of matters relating to their affiliation with us.

12. Certain Legal Matters; Regulatory Approval

          To our knowledge, there is no license or regulatory permit that appears to be material to our business that might be adversely affected by our tender of the eligible options pursuant to the offer, or any other action by any governmental, administrative or regulatory agency or authority, domestic or foreign, that would be required for the tender of the eligible options pursuant to the offer. In addition, to our knowledge, there is no anti-trust law or margin requirements applicable to the tender of the eligible options pursuant to the offer. Should any such approval or other action be required, it is presently contemplated that such approval or action would be sought. While we do not currently intend to delay acceptance for payment of eligible options tendered pursuant to the offer pending the outcome of any matters, we cannot guarantee that any such approval or other action, if required, would be obtained without substantial conditions or that adverse consequences would not result to our business. Our obligation under the offer to accept for payment any tendered eligible options for purchase is subject to conditions, including the conditions described in Section 6.

          To our knowledge, there are no currently pending legal proceedings relating to the tender offer.

13. Extension of Offer; Termination; Amendment

          We expressly reserve the right, in our sole discretion and at any time or from time to time, to extend the period of time during which the offer is open by making a public announcement of the extension. We cannot guarantee, however, that we will exercise our right to extend the offering. During any extension, all eligible options previously tendered will remain subject to the offer, except to the extent that eligible options may be withdrawn as described in Section 4.

          We also expressly reserve the right, in our sole discretion, prior to the expiration of the offer, to terminate or amend the offer and to postpone its acceptance for payment of any eligible options tendered for purchase upon the occurrence of any of the conditions specified in Section 6, by giving email or written notice of such termination or postponement to option holders and making an announcement thereof. Our reservation of the right to delay our acceptance for payment of eligible options tendered for purchase is limited by Rule 13e-4(f)(5) promulgated under the Securities Exchange Act of 1934, as amended, which requires that we pay the consideration offered or return the eligible options tendered promptly after termination or withdrawal of a tender offer.

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          Amendments to the offer may be made at any time and from time to time by an announcement of the amendment. In the case of an extension, the amendment must be issued no later than 5:00 p.m., Pacific Time, on the next business day after the last previously scheduled or announced expiration of the offer. Any announcement made pursuant to the offer will be disseminated promptly to option holders in a manner reasonably designated to inform eligible option holders of such change. Without limiting the manner in which we may choose to make an announcement, except as required by applicable law, we have no obligation to publish, advertise or otherwise communicate any such announcement other than by issuing email and written notice through our normal channels.

          If we materially change the terms of the offer or the information concerning the offer, of if we waive a material condition of the offer, we will extend the offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(3) under the Securities Exchange Act of 1934, as amended. These rules require minimum periods during which an offer must remain open following material changes in the terms of an offer or information concerning an offer, including a change in price or a change in percentage of securities sought.

14. Fees and Expenses

          We will not pay any fees or commissions to any broker, dealer or other person for soliciting tenders of eligible options pursuant to the offer.

15. Additional Information

          We have filed with the Securities and Exchange Commission a Tender Offer Statement on Schedule TO, of which this Offer to Purchase is a part, with respect to the offer. This Offer to Purchase does not contain all of the information contained in the Schedule TO and the exhibits to the Schedule TO. We recommend that you review the Schedule TO, including its exhibits, before making a decision on whether to tender your eligible options.

          We also file periodic reports and other documents with the Securities and Exchange Commission, such as annual reports on Form 10-K, current reports on Form 8-K, as well as proxy statements. The Securities and Exchange Commission File Number for these filings is 033-59105. These filings and others of our Securities and Exchange Commission filings may be examined, and copies may be obtained, at the following Securities and Exchange Commission public reference room:

450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549

          You may obtain information on the operation of the public reference rooms by calling the Securities and Exchange Commission at 1-800-SEC-0330. Our Securities and Exchange Commission filings are also available to the public on the Securities and Exchange Commission’s Internet site at http://www.sec.gov.

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16. Miscellaneous

          The offer is being made to all holders of eligible options. We are not aware of any jurisdiction where the making of the offer is not in compliance with applicable law. If we become aware of any jurisdiction where the making of the offer is not in compliance with any valid applicable law, we will make a good faith effort to comply with such law. If, after such good faith effort, we cannot comply with such law, the offer will not be made to (nor will tenders be accepted from or on behalf of) option holders residing in such jurisdiction.

          We have not authorized any person to make any recommendation or representations on our behalf as to whether you should tender or refrain from tendering your eligible options pursuant to the offer. You should rely only on the information contained in this document or to documents to which we have referred you. If anyone makes any recommendation or representation to you or gives you any information, you must not rely upon the recommendation, representation or information as having been authorized by us.

Good Guys, Inc.

November 7, 2003

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Schedule A
Information Concerning the Directors and Executive Officers of Good Guys

          The name and business address of each of the directors and executive officers of Good Guys are set forth below. Except as indicated below, the business address and telephone number of each such director and executive officer is Good Guys, Inc., 1600 Harbor Bay Parkway, Suite 200, Alameda, California 94502, (510) 747-6000. All directors and executive officers listed below are citizens of the United States.

Name and Position	Position and Business Address
Kenneth R. Weller	Chairman and Chief Executive Officer
Thomas F. Herman	Director, President and Chief Operating Officer
John E. Martin	Director c/o Martin Group 567 Nicholas Drive, Suite 400 Newport Beach, CA 92660
Russell M. Solomon	Director c/o Tower Records 2500 Del Monte, Building C Sacramento, CA 95691
Cathy A. Stauffer	Director and Executive Vice President
Jeff G. Linden	Vice President, Logistics, Services and Operations
John J. DeLuca	Chief Information Officer
David A. Carter	Chief Financial Officer and Secretary
Mary Doan	Vice President, Advertising
Jason Dillon	Vice President, Stores
Rajendra Michael Mohan	Vice President, Merchandising

1 EX-99.(A)(2) 4 f94276exv99wxayx2y.htm EXHIBIT (A)(2)

Exhibit (a)(2)

[Letterhead of Good Guys, Inc.]

November 7, 2003          

     Ladies and Gentlemen:

     Good Guys, Inc. (the “Company”) is inviting option holders who hold options to purchase shares of Good Guys common stock, whether or not vested, granted to employees and non-employee directors prior to November 8, 2000 under Good Guys’ 1985 Stock Option Plan or its 1994 Stock Incentive Plan, regardless of the exercise price of such options (each, an “eligible option”), to tender their eligible options for purchase by the Company at a price of $0.20 per share, net to the seller in cash, without interest. On the terms and subject to the conditions set forth in the accompanying Offer to Purchase, dated November 7, 2003, the Company will purchase all eligible options tendered.

     The offer is explained in detail in the enclosed Offer to Purchase and the election to tender options. We encourage you to read these materials carefully before making any decision with respect to the offer. If you desire to tender your eligible options, the instructions on how to tender eligible options are also explained in detail in the accompanying materials.

     Neither the Company nor the Board of Directors makes any recommendation to any option holder as to whether to tender or refrain from tendering his or her eligible options. You must make the decision whether to tender your eligible options and, if so, what number of eligible options should be tendered.

     The offer is not conditioned on any minimum amount of eligible options being tendered. The offer, however, is subject to certain other conditions, including the closing of the merger of the Company with CompUSA Inc., described in the enclosed Offer to Purchase.

     Please note that the offer will expire at 5:00 p.m., Pacific Time, on December 8, 2003, unless it is extended. Questions with respect to the offer should be referred to Good Guys, Inc., Attention: David A. Carter. Telephone number: (510) 747-6000. Facsimile number: (510) 747-6064.

     On behalf of the Board of Directors, thank you for your continued interest and support.

Sincerely yours,

Kenneth R.Weller

Chairman and Chief Executive Officer

1 EX-99.(A)(3) 5 f94276exv99wxayx3y.htm EXHIBIT (A)(3)

Exhibit (a)(3)

Schedule B
Form of Acceptance Letter

Election to Tender Options to Purchase Shares of Common Stock

of

Good Guys, Inc.

Pursuant to the Offer to Purchase Dated November 7, 2003

THIS OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
PACIFIC TIME, ON DECEMBER 8, 2003, UNLESS THE OFFER IS EXTENDED

     All terms used in this election form (the “Election to Tender Options”) but not defined herein shall have the meanings ascribed to them in the Offer to Purchase. This Election to Tender Options is for use by option holders who are tendering their eligible options.

     The option holder completing this form has received and read the Offer to Purchase dated November 7, 2003 and this Election to Tender Options, and understands, acknowledges and agrees that:

• subject to the terms and conditions of the offer, the option holder may tender eligible options to Good Guys, Inc. (the “Company”) for the cash payment described in the Offer to Purchase prior to the expiration of the offer at 5:00 p.m., Pacific Time, December 8, 2003;

• if the option holder accepts the offer to tender eligible options, the option holder is required to tender all of his or her eligible options. No partial tenders will be accepted. However, a tender of the remaining portion of an eligible option that has been partially exercised will be accepted.

• the Company’s acceptance of the eligible options that the option holder has tendered pursuant to the offer will constitute a binding agreement between the Company and the option holder upon the terms and subject to the conditions of the offer;

• upon the Company’s acceptance of any eligible options that the option holder has tendered pursuant to the offer, such accepted options will be purchased, and the option holder hereby consents to the cancellation of such eligible options in accordance with the terms of the relevant option agreements, and the option holder shall have no right to purchase shares of the Company’s common stock under the terms and conditions of such accepted options after the Company’s acceptance;

• the option holder has certain rights pursuant to the terms and conditions of the offer to withdraw any eligible options that the option holder tenders;

• under the circumstances set forth in the offer, the Company may terminate or postpone its purchase and cancellation of tendered eligible options;

• cash payment will be made to the option holder for the option holder’s properly tendered eligible options that have not been properly withdrawn promptly following the acceptance by the Company upon the expiration of the offer and the satisfaction of all of the conditions to the offer;

• if the option holder is an employee, the cash payment will represent ordinary compensation income, and the amount of the cash payment actually delivered by the option holder will reflect required tax withholdings by the Company; and

• the Company has advised the option holder to consult with the option holder’s own advisors as to the consequences of participating or not participating in the offer.

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     Option holders who wish to tender their eligible options should fill in the information required on page 3, and sign and date page 4 of this Election to Tender Options, and then return all the pages of this Election to Tender Options to the following address or facsimile number no later than the expiration date:

Good Guys, Inc.
1600 Harbor Bay Parkway, Suite 200
Alameda, CA 94502
Attention: David A. Carter, Chief Financial Officer

(510) 747-6000 (telephone)
(510) 747-6064 (facsimile)

     Please direct any questions or requests for assistance, as well as requests for additional copies of the Offer to Purchase or this Election to Tender Options, to David A. Carter at the above address and telephone number. The method by which the option holder delivers any required document is at the option holder’s option and risk, and the delivery will be deemed made only when actually received by the Company. If the option holder elects to deliver the option holder’s documents by mail, the Company recommends using registered mail with return receipt requested. In all cases, the option holder should allow sufficient time to ensure timely delivery prior to the expiration date.

2

ELECTION TO TENDER OPTIONS

     Set forth below is information regarding eligible options the option holder wishes to tender (attach additional sheets, if necessary). Note that all eligible options held by the option holder must be tendered into the offer.

		Total Number of
	Exercise Price of Options	Outstanding Options	Number of Options to be
Date of Option Grant	Subject to Grant	Subject to Grant (1)	Tendered

(1)        Represents the total number of shares for which the option grant remains outstanding (i.e., the total number of shares for which the option grant has not been exercised).

Total Number of Options to be Tendered: ___________

     By signing and returning this Election to Tender Options, the option holder represents and warrants to, and agrees with the Company that:

• the option holder agrees to the terms set forth in this Election to Tender Options and understands that the eligible options will be canceled upon acceptance and purchase by the Company;

• the option holder has full power and authority to tender the foregoing for purchase and cancellation and that, when and to the extent such eligible options are accepted by the Company, such eligible options will be free and clear of all security interests, liens, restrictions, charges encumbrances, conditional sales agreements or other obligations relating to the sale or transfer thereof, other than pursuant to the applicable option agreements, and such eligible options will not be subject to any adverse claims; and

• upon request, the option holder will execute and deliver any additional documents, provide any additional information and enter into any additional arrangements (including, with limitation, with respect to withholding) deemed by the Company to be necessary or desirable to complete the purchase and cancellation of the eligible options that the option holder is tendering.

Name:	Date:	____________	, 2003
Spouse (if any):
Name:	Date:	____________	, 2003

This Election to Tender Options must be signed by the option holder. The Company will not accept any alternative, conditional or contingent elections.

3 EX-99.(A)(4) 6 f94276exv99wxayx4y.htm EXHIBIT (A)(4)

Exhibit (a)(4)

Schedule C
Form of Withdrawal Letter

Good Guys, Inc.

Withdrawal of Previously Tendered Options

Pursuant to the Offer to Purchase Dated November 7, 2003

THE WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M,
PACIFIC TIME, ON DECEMBER 8, 2003, UNLESS THE OFFER IS EXTENDED

     All terms used in this withdrawal letter (the “Withdrawal Letter”) but not defined herein shall have the meanings ascribed to them in the Offer to Purchase. This Withdrawal Letter is for use by option holders who previously tendered their eligible options.

     Pursuant to the terms and subject to the conditions of the Offer to Purchase dated November 7, 2003, the Election to Tender Options previously submitted to the Company and this Withdrawal Letter, the option holder completing this form hereby withdraws the tender of all eligible options that he or she previously tendered pursuant to the Offer to Purchase and the Election to Tender Options.

The option holder completing this form understands, acknowledges and agrees that:
	•	subject to the terms and conditions of the offer, the option holder may withdraw the tender of tendered eligible options prior to 5:00 p.m., Pacific Time, on December 8, 2003;
	•	he or she may not rescind any withdrawal, and will not be deemed to properly accept the offer after any valid withdrawal, unless he or she properly re-tenders his or her eligible options before the expiration of the offer by the following the procedures described in the Offer to Purchase;
	•	he or she must withdraw from the offer with respect to all his or her tendered eligible options, and may not withdraw from the offer with respect to only a portion of his or her tendered eligible options. All such withdrawn options will remain outstanding pursuant to their current terms and conditions, including their current exercise prices and vesting schedule;
	•	neither the Company nor any other person is obligated to give notice of any defects or irregularities in any Withdrawal Letter, nor will anyone incur any liability for failure to give any such notice. The Company will determine, in its sole discretion, all questions as to the form and validity, including time of receipt, of Withdrawal Letters. The Company’s determination of these matters will be final and binding on all parties;
	•	all authority herein conferred or agreed to be conferred shall not be affected by, and shall survive, the option holder’s death or incapacity, and all of such option holders’ obligations hereunder shall be binding upon his or her heirs, personal representatives, successors and assigns. As stated above, this Withdrawal Letter may not be rescinded; and
	•	he or she agrees to all of the terms and conditions of the offer and this Withdrawal Letter.

     This Withdrawal Letter must specify the name of the option holder who is withdrawing from the offer and must be signed by the option holder who submitted the Election To Tender Options.

1

     Important: To validly withdraw from the offer, the Company must receive, at the address set forth below, the signature page to this Withdrawal Letter, or a facsimile thereof to the number set forth below, properly completed and signed by the option holder, while he or she still has the right to withdraw from the offer.

Good Guys, Inc.
1600 Harbor Bay Parkway, Suite 200
Alameda, CA 94502
Attention: David A. Carter, Chief Financial Officer

(510) 747-6000 (telephone)
(510) 747-6064 (facsimile)

     The method by which the option holder delivers any required document is at the option holder’s option and risk, and the delivery will be deemed made only when actually received by the Company. If the option holder elects to deliver the option holder’s documents by mail, the Company recommends using registered mail with return receipt requested. In all cases, the option holder should allow sufficient time to ensure timely delivery prior to the expiration date.

2

ELECTION TO WITHDRAW TENDERED OPTIONS

     Set forth below is information regarding eligible options the option holder wishes to withdraw (attach additional sheets, if necessary). Note that all eligible options previously tendered by the option holder must be withdrawn from the offer.

		Total Number of
	Exercise Price of Options	Outstanding Options	Number of Options to be
Date of Option Grant	Subject to Grant	Subject to Grant (1)	Tendered

(1)        Represents the total number of shares for which the option grant remains outstanding (i.e., the total number of shares for which the option grant has not been exercised).

Total Number of Options to be Withdrawn: ___________

Name:	Date:	____________	, 2003
Spouse (if any):
Name:	Date:	____________	, 2003

This Withdrawal Letter must be signed by the option holder. The Company will not accept any alternative, conditional or contingent elections.

3 EX-99.(D)(1) 7 f94276exv99wxdyx1y.htm EXHIBIT (D)(1)

Exhibit (d)(1)

THE GOOD GUYS, INC.

1985 Stock Option Plan

(As Amended Through August 20, 1996)

     1.     PURPOSE.

          The purpose of the 1985 Stock Option Plan (the “Plan”) is to enable The Good Guys, Inc. (“Company”) and its subsidiaries, if any, to attract and retain directors, officers and other key employees and to provide such employees with additional incentive to advance the interests of the Company. Options qualifying as incentive stock options under Section 422A of the Internal Revenue Code of 1954, as amended, and nonqualified options may be granted under the Plan.

     2.     ADMINISTRATION.

          (a) The Plan shall be administered by the Board of Directors, or by a committee (the “Committee”) of three or more persons selected by the Board.

          (b) The Board of Directors or the Committee shall have the power, subject to the express provisions of the Plan:

               (1) To determine the recipients of options under the Plan, the time of grant of the options, and the number of shares covered by the grant.

               (2) To prescribe the terms and provisions of each option granted (which need not be identical).

               (3) To construe and interpret the Plan and options, to establish, amend, and revoke rules and regulations for the Plan’s administration, and to make all other determinations necessary or advisable for the administration of the Plan.

     3.     SHARES SUBJECT TO THE PLAN.

          Subject to the provisions of Paragraph 7 (relating to the adjustment upon changes in stock), the shares which may be sold pursuant to options granted under the Plan shall not exceed in the aggregate 857,500 shares of common stock of the Company and may be unissued shares or reacquired shares. If any options granted under the Plan shall for any reason terminate or expire without having been exercised in full, the shares not purchased under such options shall be available again for the purposes of the Plan.

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     4.     ELIGIBILITY.

          Options under this Plan may be granted only to directors, officers and other key employees of the Company and/or of its subsidiaries. Persons to whom options to purchase shares are granted are hereinafter referred to as “optionee(s).” Subject to the provisions of Paragraphs 3, 4A and 5 of this Plan, there is no limitation on the number of options that may be granted to an optionee.

     4A.   FORMULA AWARDS TO NONEMPLOYEE DIRECTORS.

          On the date on which the Board of Directors appoints, or the shareholders of the Company elect, a person who is not an employee of the Company as a member of the Board of Directors for the first time, such director shall be awarded a non-qualified option to purchase 5,000 shares of common stock of the Company. Immediately after the completion of each annual meeting of the shareholders of the Company, each nonemployee member of the Board of Directors shall be awarded a non-qualified option to purchase 1,000 shares of common stock of the Company. Such options shall have an exercise price per share equal to the fair market value of the shares of common the Company on the date of such award, determined in accordance with the provisions of Paragraph 5(a)(2) of this Plan. The amounts of such awards shall be adjusted as necessary in accordance with the provisions of Paragraph 7 of this Plan. Except as otherwise specifically provided in this Paragraph 4A, the terms of this Plan, including the vesting provisions of Paragraph 5(a)(1), shall apply to all options granted pursuant to this Paragraph 4A. This Paragraph 4A shall not be amended more than once every six months, other than to comport with changes in the Internal Revenue Code, the Employee Retirement Income Security Act, or the rules thereunder.

     5.     TERMS OF OPTION AGREEMENTS.

          (a) All Option Agreements. Options granted pursuant to the Plan shall be evidenced by agreements specifying the number of shares covered thereby, in such form as the Board or Committee shall from time to time establish, which agreements may incorporate all or any of the terms hereof by reference and shall comply with and be subject to the following terms and conditions:

               (1) The Board or Committee shall have the power to set the time or times within which each option shall be exercisable, and to accelerate the time or times of exercise. Unless the stock option agreement executed by the optionee expressly otherwise provides, the option shall become exercisable on a cumulative basis as to one-quarter of the total number of shares covered thereby on each of the first, second, third, and fourth anniversary dates of the date of grant of the option and shall not be exercisable after the expiration of ten years from the

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date it is granted (except in the case of an incentive stock option granted to a 10% shareholder in which event the option must be exercised within five years).

               (2) Except as provided in paragraph 5(b) below, the exercise price shall not be less than 100% of the fair market value of the shares of common stock of the Company on the date of the granting of the option. If the common stock of the Company is not publicly traded on the date of grant of an option, fair market value may be computed by any method the Board or Committee believes in good faith will reflect the fair market value of the stock on such day. During such time as such stock is publicly traded but not listed upon an established stock exchange, the fair market value per share shall be the last sale price on the day the option is granted as reported on the National Market System, or, if such stock is not then reported on the National Market System but quotations are reported on the National Association of Securities Dealers Automated Quotations System, the average of the bid and asked prices on the day the option is granted, in either event as such price quotes are listed in The Wall Street Journal, Western Edition (or if not so reported in The Wall Street Journal any other listing service or publication known to the Board). If the stock is listed upon an established stock exchange or exchanges, such fair market value shall be deemed to be the closing price of the common stock on the largest such stock exchange upon which such stock is listed on the day the option is granted.

               (3) To the extent that the right to purchase shares has accrued hereunder, options may be exercised from time to time by written notice to the Company, stating the number of shares being purchased and accompanied by the payment in full of the option price for such shares. Such payment shall be made in cash or in shares of the outstanding common stock of the Company or in a combination of cash and such stock. If shares of common stock are used in part or full payment for the shares to be acquired upon exercise of the option, such shares shall be valued for the purpose of such exchange as of the date of exercise of the option in accordance with the provisions of subparagraph (2) above. Any certificates for shares of outstanding common stock used to pay the option price shall be accompanied by stock powers duly endorsed in blank by the registered holder of the certificate (with the signature thereon guaranteed). In the event the certificates tendered by the optionee in such payment cover more shares than are required for such payment, the certificates shall also be accompanied by instructions from the optionee to the Company’s transfer agent with regard to disposition of the balance of the shares covered thereby.

               (4) The Company at all times shall keep available the number of shares of stock required to satisfy options granted under the Plan.

               (5) The Company may require any person to whom an option is granted, his or her legal representative, heir, legatee, or distributee, as a condition

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of exercising any other option granted hereunder to give written assurance satisfactory to the Company to the effect that such person is acquiring the shares subject to the option for his or her own account for investment and not with any present intention of selling or otherwise distributing the same. The Company reserves the right to place a legend on any share certificate issued pursuant to this Plan to assure compliance with this paragraph. No shares of common stock of the Company shall be required to be distributed until the Company shall have taken such action, if any, as is then required to comply with the provisions of the Securities Act of 1933 or any other applicable securities law.

               (6) Neither a person to whom an option is granted, nor such person’s legal representative, heir, legatee, or distributee, shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares subject to such option unless and until such person has exercised his or her option pursuant to the terms thereof.

               (7) No stock option shall be transferable by the grantee otherwise than by will, or if the grantee dies intestate, by the laws of descent and distribution of the state of domicile of the grantee at the time of death, provided that a non-qualified stock option may be transferred by a grantee to a trust or other entity established by the grantee for estate planning purposes. Except for exercises of non-qualified stock options by trusts or entities established by the grantee for estate tax purposes, all stock options shall be exercisable during the lifetime of the grantee only by the grantee.

               (8) An option shall terminate and may not be exercised if the person to whom it is granted ceases to be an employee or director of the Company or of a subsidiary of the Company, with the following exceptions:

                    (i) If the employment or directorship is terminated for any reason other than the person’s death or disability, such person may at any time within not more than three months after such termination exercise the option, but only to the extent that it was exercisable on the date of such termination;

                    (ii) If such person dies while he or she is an employee or director of the Company or of a subsidiary of the Company, his or her option may be exercised in full by his or her personal representatives, heirs or legatees at any time within not more than twelve (12) months following the date of death, regardless of any provision for vesting to the contrary; and

                    (iii) If such person suffers an injury or illness while he or she is an employee or director of the Company or of a subsidiary of the Company that renders such person unable to serve as an employee, or as a director, as the case may be, of the Company or of a subsidiary of the Company, such person or

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such person’s guardian may at any time within not more than twelve (12) months following the date of such disability exercise the option in full, regardless of any provision for vesting to the contrary.

               (9) In no event may an option be exercised by anyone after the expiration of the term of the option established pursuant to Subparagraph 5(a)(1) hereof.

               (10) Each option granted pursuant to this Plan shall specify whether it is a non-qualified or an incentive stock option.

               (11) As to individuals otherwise eligible under this Plan who own more than 10% of the total combined voting power of all classes of stock of the Company and its parent and subsidiary corporations, incentive stock options can be granted under this Plan to any such individual only if at the time such option is granted the option price is at least 110% of the fair market value of the stock subject to the option and such option by its terms is not exercisable after the expiration of five years from the date such option is granted.

          (b) Incentive Stock Options. In addition to the terms and conditions specified above, incentive stock options granted under this Plan shall be subject to the term and condition that the aggregate fair market value (determined as of the time the option is granted) of the stock with respect to which incentive stock options are exercisable for the first time by any optionee during any calendar year (under all option plans of the Company or its parent and subsidiary corporations) shall not exceed $100,000.

     6.     USE OF PROCEEDS FROM SHARES.

          Proceeds from the sale of shares pursuant to options granted under the Plan shall be used for general corporate purposes.

     7.     ADJUSTMENT UPON CHANGES IN SHARES.

          (a) If any change is made in the shares subject to the Plan, or subject to any option granted under the Plan (through merger, consolidation, reorganization, recapitalization, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or otherwise) appropriate adjustments shall be made by the Board of Directors or Committee in the maximum number of shares subject to the Plan and the number of shares and price per share of stock subject to the outstanding options.

          (b) In the event of (i) a dissolution or liquidation of the Company or (ii) a transaction in which more than 50% of the shares of the Company entitled to

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vote are exchanged, the Board shall have discretion and power to accelerate the time when an option may be exercised, notwithstanding the provisions of the option.

          (c) In the event of a merger or consolidation or other reorganization in which the Company is not the surviving corporation, or in which the Company becomes a subsidiary of another corporation, the successor corporation shall agree to assume the outstanding options or substitute comparable options therefor, or, if the successor corporation is unwilling to do so, the outstanding options shall become fully exercisable prior to such merger or consolidation or other reorganization.

     8.     RIGHTS AS AN EMPLOYEE.

          Nothing in this Plan or in any rights awarded hereunder shall confer upon any employee any right to continue in the employ of the Company or of any of its subsidiaries or interfere in any way with the right of the Company or any such subsidiary to terminate such employee’s employment at any time.

     9.     WITHHOLDING TAX.

          There shall be deducted from the compensation of any employee holding options under this Plan the amount of any tax required by any governmental authority to be withheld and paid over by the Company to such governmental authority for the account of the person with respect to such options.

     10.     TERMINATION AND AMENDMENT OF PLAN.

          The Board of Directors may at any time terminate this Plan, or make such modifications the Plan as it shall deem advisable. Any modification which materially increases the benefits accruing to participants or the number of rights or shares which may be issued under the Plan, or materially modifies the requirements as to eligibility for participation in the Plan shall become effective only upon approval of the holders of a majority of the securities of the Company present, or represented, and entitled to vote at a meeting duly held in accordance with the laws of the State of California.

     11.     EFFECTIVE DATE OF THE PLAN.

          The 1985 Stock Option Plan shall become effective on September 16, 1985. Any rights granted under this Plan must be granted within ten (10) years of such effective date.

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     12.     INDEMNIFICATION.

          In addition to such other rights of indemnification as they may have as directors, the members of the Board of Directors administering the Plan shall be indemnified by the Company against the 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 option granted thereunder, 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 that such member is liable for negligence or misconduct in the performance of his duties; provided that within 60 days after institution of any such action, suit or proceeding, the member shall in writing offer the Company the opportunity, at its own expense, to handle and defend the same.

- 7 - EX-99.(D)(2) 8 f94276exv99wxdyx2y.htm EXHIBIT (D)(2)

Exhibit (d)(2)

THE GOOD GUYS, INC.

AMENDED AND RESTATED

1994 STOCK INCENTIVE PLAN
(as amended through September 29, 1999)

1. PURPOSE.

          The purposes of the 1994 Stock Incentive Plan (the “Plan”) are to enable The Good Guys, Inc. (the “Corporation”) and its Subsidiaries, if any, to attract and retain directors and key employees and to provide them with additional incentive to advance the interests of the Corporation. For the purposes of the Plan, the term “Subsidiary” means any corporation or other entity in which the Corporation has, directly or indirectly, an equity interest representing 50% or more of the capital stock thereof or equity interests therein.

2. ADMINISTRATION.

          (a) The Plan shall be administered by a committee (the “Committee”) appointed by the Board of Directors of the Corporation (the “Board”) and consisting of not less than two non-employee directors (as defined under Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “1934 Act”), or any successor rule.

          (b) The Committee shall interpret the Plan and prescribe such rules, regulations and procedures in connection with the Plan as it shall deem to be necessary and advisable for the administration of the Plan.

3. ELIGIBILITY.

          Officers, other key employees and non-employee directors of the Corporation or any Subsidiary shall be eligible to be granted stock options and to receive restricted share, restricted share unit, performance unit or bonus share awards as described herein, with the exception that non-employee directors shall not be eligible to receive incentive stock options.

4. SHARES AVAILABLE.

          The aggregate number of shares of the Corporation’s Common Stock, $.001 par value (“Common Stock”), which may be issued and as to which grants or awards of stock options, restricted shares, restricted share units, performance units or bonus shares may be made under the Plan is 1,800,000 shares (of which no more than 350,000 shares shall be available for the grant of restricted shares or restricted share units), subject to adjustment and substitution as set forth in Section 8. If any stock option granted under the Plan is cancelled by mutual consent or terminates or expires for any reason without

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having been exercised in full, the number of shares subject thereto shall again be available for purposes of the Plan. If shares of Common Stock or the right to receive shares of Common Stock are forfeited to the Corporation pursuant to the restrictions applicable to restricted shares or restricted share units awarded under the Plan, the shares so forfeited or covered by such right shall not again be available for the purposes of the Plan. To the extent any award of performance units is not earned or is paid in cash rather than shares, the number of shares covered thereby shall again be available for purposes of the Plan. The shares which may be issued under the Plan may be either authorized but unissued shares or treasury shares or partly each, as shall be determined from time to time by the Board.

5. GRANTS AND AWARDS.

          (a) The Committee shall have authority, in its discretion, to grant incentive stock options pursuant to Section 422 of the Code to officers and other key employees and to grant non-qualified stock options and award restricted shares, restricted share units, performance units and bonus shares to officers, other key employees and non-employee directors.

          Notwithstanding any other provision contained in the Plan or in any stock option agreement, the aggregate fair market value, determined on the date of grant, of the shares with respect to which incentive stock options are exercisable for the first time by an employee during any calendar year under all plans of the corporation employing such employee, any parent or subsidiary corporation of such corporation and any predecessor corporation of any such corporation shall not exceed $100,000; provided, however, that all or any portion of a stock option which cannot be exercised because of such limitation shall be treated as a non-qualified option.

          The maximum number of shares covered by all grants or awards in any fiscal year of the Corporation to any participant shall not exceed 110,000 (subject to adjustment and substitution as set forth in Section 8).

          (b) On the date on which the Board appoints, or the shareholders of the Corporation elect, a person who is not an employee of the Corporation as a member of the Board for the first time, such director shall be awarded a non-qualified option under this Plan to purchase 20,000 shares of Common Stock. Each such option shall have an exercise price per share equal to the fair market value of the shares of the Corporation on the date of such award and shall vest as to the total number of shares covered thereby on the first anniversary date of the grant of the option (or, as to options awarded by reason of election at an annual meeting of shareholders, on the day immediately preceding the next annual meeting, if earlier). Except as otherwise specifically provided in this Section 5(b), the terms of this Plan shall apply to all options granted pursuant to this Section 5(b).

          (c) If a grantee of a stock option, restricted share or performance unit engages in the operation or management of a business (whether as owner, partner, officer, director, employee or otherwise and whether during or after termination of employment)

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which is in competition with the Corporation or any of its Subsidiaries, the Committee may immediately terminate all outstanding stock options held by the grantee, declare forfeited all restricted shares or restricted share units held by the grantee as to which the restrictions have not yet lapsed and terminate all outstanding performance unit awards held by the grantee for which the applicable Performance Period has not been completed; provided, however, that this sentence shall not apply if the exercise period of a stock option following termination of employment has been extended as provided in Section 9(c), if the lapse of the restrictions applicable to restricted shares or restricted share units has been accelerated as provided in Section 9(d), or if a performance unit has been deemed to have been earned as provided in Section 9(e). Whether a grantee has engaged in the operation or management of a business which is in competition with the Corporation or any of its Subsidiaries shall be determined by the Committee in its discretion, and any such determination shall be final and binding.

6. TERMS AND CONDITIONS OF STOCK OPTIONS.

          Stock options granted under the Plan shall be subject to the following terms and conditions:

     (a) The purchase price at which each stock option may be exercised (the “option price”) shall not be less than one hundred percent (100%) of the fair market value per share of the Common Stock covered by the stock option on the date of grant; provided, however, that in the case of an incentive stock option granted to an employee, who, immediately prior to such grant, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation or a Subsidiary (a “Ten Percent Employee”), the option price shall not be less than one hundred ten percent (110%) of such fair market value on the date of grant. For purposes of this Section 6(a), an individual (i) shall be considered as owning not only shares of stock owned individually but also all shares of stock that are at the time owned, directly or indirectly, by or for the spouse, ancestors, lineal descendants and brothers and sisters (whether by the whole or half blood) of such individual and (ii) shall be considered as owning proportionately any shares owned, directly or indirectly, by or for any corporation, partnership, estate or trust in which such individual is a shareholder, partner or beneficiary.

     (b) The option price for each stock option shall be paid in full upon exercise and shall be payable in cash in United States dollars (including check, bank draft or money order), which may include cash forwarded through a broker or other agent-sponsored exercise or financing program; provided, however, that in lieu of such cash the person exercising the stock option may pay the option price in whole or in part by delivering to the Corporation shares of Common Stock having a fair market value on the date of exercise of the stock option equal to the option price for the shares being purchased; except that (i) any portion of the option price representing a fraction of a share shall in any event be paid in cash and (ii) no shares of Common Stock which have been held for less than six months may be delivered in payment of the option price of a stock option. Notwithstanding any

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procedure of a broker or other agent-sponsored exercise or financing program, if the option price is paid in cash, the exercise of the stock option shall not be deemed to occur and no shares of the Common Stock will be issued until the Corporation has received full payment in cash (including check, bank draft or money order) for the option price from the broker or other agent. The date of exercise of a stock option shall be determined under procedures established by the Committee, and as of the date of exercise the person exercising the stock option shall be considered for all purposes to be the owner of the shares with respect to which the stock option has been exercised. Payment of the option price with shares shall not increase the number of shares of Common Stock available for issuance under the Plan.

     (c) No stock option shall be exercisable during the first six months of its term, except that this limitation on exercise shall not apply if Section 9(b) becomes applicable. No stock option shall be exercisable after the expiration of ten years (five years in the case of an incentive stock option granted to a Ten Percent Employee) from the date of grant. To the extent it is exercisable, a stock option may be exercised at any time in whole or in part.

     (d) The Committee shall have the power to set the time or times within which each option shall be exercisable, and to accelerate the time or times of exercise. Unless the stock option agreement otherwise provides, the option shall become exercisable on a cumulative basis as to one-third of the total number of shares covered thereby on each of the first, second, and third anniversary dates of the date of grant of the option.

     (e) No stock option shall be transferrable by the grantee otherwise than by will, or if the grantee dies intestate, by the laws of descent and distribution of the state of domicile of the grantee at the time of death, provided that a non-qualified stock option may be transferred by a grantee to a trust or other entity established by the grantee for estate planning purposes. Except for exercises of non-qualified stock options by trusts or entities established by the grantee for estate tax purposes, all stock options shall be exercisable during the lifetime of the grantee only by the grantee.

     (f) Unless the Committee, in its discretion, shall otherwise determine:

     (i) If the employment or directorship of a grantee terminates, other than by reason of the death of the grantee or the grantee becoming disabled within the meaning of Section 422(c)(6) of the Code (“Disabled Grantee”) any then outstanding stock option held by such grantee shall be exercisable by the grantee (but only to the extent exercisable by the grantee immediately prior to such termination) at any time prior to the expiration date of such stock option or within three months after the date of such termination, whichever is the shorter period;

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     (ii) If the employment or directorship of a grantee who is a Disabled Grantee is voluntarily terminated with the consent of the Corporation or a Subsidiary, any then outstanding stock option held by such grantee shall be exercisable by the grantee in full (whether or not so exercisable by the grantee immediately prior to such termination) by the grantee at any time prior to the expiration date of such stock option or within one year after the date of such termination, whichever is the shorter period;

     (iii) Following the death of a grantee during employment or while serving as a director, any outstanding stock option held by the grantee at the time of death shall be exercisable in full (whether or not so exercisable by the grantee immediately prior to the death of the grantee) by the person entitled to do so under the will of the grantee, or, if the grantee shall fail to make testamentary disposition of the stock option or shall die intestate, by the legal representative of the grantee at any time prior to the expiration date of such stock option or within one year after the date of death, whichever is the shorter period; and

     (iv) Following the death of a grantee after termination of employment or his or her directorship during a period within which a stock option is exercisable, any outstanding stock option held by the grantee at the time of death shall be exercisable by such person entitled to do so under the will of the grantee or by such legal representative (but only to the extent the stock option was exercisable by the grantee immediately prior to the death of the grantee) at any time prior to the expiration date of such stock option or within one year after the date of death, whichever is the shorter period.

          Whether termination of employment or directorship is a voluntary termination with the consent of the Corporation or a Subsidiary and whether a grantee is a Disabled Grantee shall be determined in each case by the Committee in its discretion and any such determination by the Committee shall be final and binding.

     (g) All stock options shall be confirmed by an agreement, which shall be executed on behalf of the Corporation by the Chief Executive Officer (if other than the President), the President or any Vice President of the Corporation and by the grantee.

     (h) The term “fair market value” for all purposes of the Plan shall mean the market price of the Common Stock, determined by the Committee as follows:

     (i) If the Common Stock is traded on a stock exchange, then the Fair Market Value shall be equal to the closing price reported by the applicable composite-transactions report for such date;

     (ii) If the Common Stock is traded in the Nasdaq Stock Market and is classified as a national market issue, then the Fair Market Value shall be

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equal to the last-transaction price quoted by the Nasdaq National Market system for such date;

     (iii) If the Common Stock is traded in the Nasdaq Stock Market, but is not classified as a national market issue, then the Fair Market Value shall be equal to the mean between the last reported representative bid and asked prices quoted by the Nasdaq system for such date; and

     (iv) If none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate.

     (i) The obligation of the Corporation to issue shares of Common Stock under the Plan shall be subject to (i) the effectiveness of a registration statement under the Securities Act of 1933, as amended, with respect to such shares, if deemed necessary or appropriate by counsel for the Corporation, (ii) the condition that the shares shall have been listed (or authorized for listing upon official notice of issuance) upon each stock exchange, if any, on which the Common Stock may then be listed and (iii) all other applicable laws, regulations, rules and orders which may then be in effect.

          Subject to the foregoing provisions of this Section and the other provisions of the Plan, any stock option granted under the Plan may be exercised at such times and in such amounts and be subject to such restrictions and other terms and conditions, if any, as shall be determined, in its discretion, by the Committee and set forth in the agreement referred to in Section 6(i), or an amendment thereto.

7. TERMS AND CONDITIONS OF RESTRICTED SHARE, RESTRICTED SHARE UNIT, PERFORMANCE UNIT AND BONUS SHARE AWARDS.

          (a) Restricted Shares and Units. Restricted share or restricted share unit awards shall be evidenced by a written agreement in the form prescribed by the Committee in its discretion, which shall set forth the number of restricted shares of Common Stock or restricted share units entitling the holder to receive shares of Common Stock awarded, the restrictions imposed thereon (including, without limitation, restrictions on the right of the grantee to sell, assign, transfer or encumber such shares or units while such shares or units are subject to other restrictions imposed under this Section 7), the duration of such restrictions, events (which may, in the discretion of the Committee, include performance-based events) the occurrence of which would cause a forfeiture of restricted shares or restricted share units and such other terms and conditions as the Committee in its discretion deems appropriate. Restricted share or restricted share unit awards shall be effective only upon execution of the applicable restricted share or restricted share unit agreement on behalf of the Corporation by the Chief Executive Officer (if other than the President), the President or any Vice President, and by the grantee.

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           Restricted shares or restricted share units may be issued for no consideration other than for services to be rendered or for such consideration as shall be determined at the time of award by the Committee.

          If prior to full vesting of the restricted shares or restricted share units the employment or directorship of the holder thereof is voluntarily terminated with the consent of the Corporation or Subsidiary or the holder retires under any retirement plan of the Corporation or a Subsidiary or dies while being an employee or director, the Committee may in its absolute discretion determine to vest all or any part of the restricted shares or restricted share units except as otherwise provided in Section 9(d). If the employment or directorship of the holder of restricted shares or restricted share units terminates for any reason other than voluntary termination with the consent of the Corporation or a Subsidiary, retirement under any retirement plan of the corporation or a Subsidiary or death, all unvested restricted shares or restricted share units shall be forfeited. Whether the termination is voluntary with the consent of the Corporation or a Subsidiary shall be determined by the Committee in its discretion, and a determination by the Committee on any matter with respect to restricted shares or restricted share units shall be final and binding on both the Corporation and the holder of restricted shares or restricted share units.

          Following a restricted share award and prior to the lapse or termination of the applicable restrictions, the Committee shall deposit share certificates for such restricted shares in escrow (which may be an escrow in the custody of an officer of the Corporation). Upon the lapse or termination of the applicable restrictions (and not before such time), the grantee shall be issued or transferred share certificates for such restricted shares. From the date a restricted share award is effective, the grantee shall be a shareholder with respect to all the shares represented by such certificates and shall have all the rights of a shareholder with respect to all such shares, including the right to vote such shares and to receive all dividends and other distributions paid with respect to such shares, subject only to the restrictions imposed by the Committee. The grantee of restricted share units shall not have any rights as a shareholder until the delivery to the grantee of shares on lapse of the restrictions imposed.

          (b) Performance Units. The Committee may award performance units which shall be earned by an awardee based on the level of performance over a specified period of time by the Corporation, a Subsidiary or Subsidiaries, any branch, department or other portion thereof or the awardee individually, as determined by the Committee. For the purposes of the grant of performance units, the following definitions shall apply:

     (i) “Performance unit” shall mean an award, expressed in dollars or shares of Common Stock, granted to an awardee with respect to a Performance Period. Awards expressed in dollars may be established as fixed dollar amounts, as a percentage of salary, as a percentage of a pool based on earnings of the Corporation, a Subsidiary or Subsidiaries or any branch, department or other portion thereof or in any other manner determined by the Committee in its

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discretion, provided that the amount thereof shall be capable of being determined as a fixed dollar amount as of the close of the Performance Period.

     (ii) “Performance Period” shall mean an accounting period of the Corporation or a Subsidiary of not less than one year, as determined by the Committee in its discretion.

     (iii) “Performance Target” shall mean that level of performance established by the Committee which must be met in order for the performance unit to be fully earned. The Performance Target may be expressed in terms of earnings per share, return on assets, asset growth, ratio of capital to assets or such other level or levels of accomplishment by the Corporation, a Subsidiary or Subsidiaries, any branch, department or other portion thereof or the awardee individually as may be established or revised from time to time by the Committee.

     (iv) “Minimum Target” shall mean a minimal level of performance established by the Committee which must be met before any part of the performance unit is earned. The Minimum Target may be the same as or less than the Performance Target in the discretion of the Committee.

          An awardee shall earn the performance unit in full by meeting the Performance Target for the Performance Period. If the Minimum Target has not been attained at the end of the Performance Period, no part of the performance unit shall have been earned by the awardee. If the Minimum Target is attained but the Performance Target is not attained, the portion of the performance unit earned by the awardee shall be determined on the basis of a formula established by the Committee.

          Payment of earned performance units shall be made to awardees following the close of the Performance Period as soon as practicable after the time the amount payable is determined by the Committee. Payment in respect of earned performance units, whether expressed in dollars or shares, may be made in cash, in shares of Common Stock, or partly in cash and partly in shares of Common Stock, as determined by the Committee at the time of payment. For this purpose, performance units expressed in dollars shall be converted to shares, and performance units expressed in shares shall be converted to dollars, based on the fair market value of the Common Stock, as of the date the amount payable is determined by the Committee.

          If prior to the close of the Performance Period the awardee of performance units is voluntarily terminated with the consent of the Corporation or a Subsidiary or the awardee retires under any retirement plan of the Corporation or a Subsidiary or the awardee dies while being an employee or director, the Committee may in its absolute discretion determine to pay all or any part of the performance unit based upon the extent to which the Committee determines the Performance Target or Minimum Target has been achieved as of the date of termination, retirement or death, the period of time remaining until the close of the Performance Period and/or such other factors as the Committee may deem relevant. If the Committee in its discretion determines that all or any part of the

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performance unit shall be paid, payment shall be made to the awardee or his or her estate as promptly as practicable following such determination and may be made in cash, in shares or Common Stock, or partly in cash and partly in shares of Common Stock, as determined by the Committee at the time of payment. For this purpose, performance units expressed in dollars shall be converted to shares, and performance units expressed in shares shall be converted to Dollars, based on the fair market value of the Common Stock as of the date the amount payable is determined by the Committee.

          Except as otherwise provided in Section 9(e), if the employment or directorship of an awardee of performance units terminates prior to the close of a Performance Period for any reason other than voluntary termination with the consent of the Corporation or a Subsidiary or retirement under any retirement plan of the Corporation or a Subsidiary or death, the performance units of the awardee shall be deemed not to have been earned, and no portion of such performance units may be paid. Whether termination is voluntary with the consent of the Corporation or a Subsidiary shall be determined, in its discretion, by the Committee. Any determination by the Committee on any matter with respect to performance units shall be final and binding on both the Corporation and the awardee.

          Performance unit awards shall be evidenced by a written agreement in the form prescribed by the Committee which shall set forth the amount or manner of determining the amount of the performance unit, the Performance Period, the Performance Target and any Minimum Target and such other terms and conditions as the Committee in its discretion deems appropriate. Performance unit awards shall be effective only upon execution of the applicable performance unit agreement on behalf of the Corporation by the Chief Executive Officer (if other than the President), the President or any Vice President, and by the awardee.

          (c) Bonus Shares. The Committee shall have the authority in its discretion to award bonus shares of Common Stock to eligible employees from time to time in recognition of the contribution of the awardee to the performance of the Corporation, a Subsidiary or Subsidiaries, or any branch, department or other portion thereof, in recognition of the awardee’s individual performance or on the basis of such other factors as the Committee may deem relevant.

8. ADJUSTMENT AND SUBSTITUTION OF SHARES.

          If a dividend or other distribution shall be declared upon the Common Stock payable in shares of the Common Stock, the number of shares of the Common Stock then subject to any outstanding stock options, restricted share units or performance unit awards and the number of shares of the Common Stock which may be issued under the Plan but are not then subject to outstanding stock options or awards shall be adjusted by adding thereto the number of shares of the Common Stock which would have been distributable thereon if such shares had been outstanding on the date fixed for determining the shareholders entitled to receive such stock dividend or distribution. Shares of Common Stock so distributed with respect to any restricted shares held in

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escrow shall be held by the Corporation in escrow and shall be subject to the same restrictions as are applicable to the restricted shares on which they were distributed.

          If the outstanding shares of the Common Stock shall be changed into or exchangeable for a different number or kind of shares of stock or other securities of the Corporation or another corporation, whether through reorganization, reclassification, recapitalization, stock split-up, combination of shares, merger or consolidation, then there shall be substituted for each share of the Common Stock subject to any then outstanding stock option, restricted share unit or performance unit award, and for each share of the Common Stock which may be issued under the Plan but which is not then subject to any outstanding stock option or award, the number and kind of shares of stock or other securities into which each outstanding share of the Common Stock shall be so changed or for which each such share shall be exchangeable. Unless otherwise determined by the Committee in its discretion, any such stock or securities, as well as any cash or other property, into or for which any restricted shares held in escrow shall be changed or exchangeable in any such transaction shall also be held by the Corporation in escrow and shall be subject to the same restrictions as are applicable to the restricted shares in respect of which such stock, securities, cash or other property was issued or distributed.

          In case of any adjustment or substitution as provided for in this Section 8, the aggregate option price for all shares subject to each then outstanding stock option prior to such adjustment or substitution shall be the aggregate option price for all shares of stock or other securities (including any fraction) to which such shares shall have been adjusted or which shall have been substituted for such shares. Any new option price per share shall be carried to at least three decimal places with the last decimal place rounded upwards to the nearest whole number.

          No adjustment or substitution provided for in this Section 8 shall require the Corporation to issue or sell a fraction of a share or other security. Accordingly, all fractional shares or other securities which result from any such adjustment or substitution shall be eliminated and not carried forward to any subsequent adjustment or substitution. Owners of restricted shares held in escrow shall be treated in the same manner as owners of Common Stock not held in escrow with respect to fractional shares created by an adjustment or substitution of shares, except that, unless otherwise determined by the Committee in its discretion, any cash or other property paid in lieu of a fractional share shall be subject to restrictions similar to those applicable to the restricted shares exchanged therefor.

          If any such adjustment or substitution provided for in this Section 8 requires the approval of shareholders in order to enable the Corporation to grant incentive stock options, then no such adjustment or substitution shall be made without the required shareholder approval. Notwithstanding the foregoing, in the case of incentive stock options, if the effect of any such adjustment or substitution would be to cause the stock option to fail to continue to qualify as an incentive stock option or to cause a modification, extension or renewal of such stock option within the meaning of Section 424 of the Code, the Committee may elect that such adjustment or substitution not be

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made but rather shall use reasonable efforts to effect such other adjustment of each then outstanding stock option as the Committee, in its discretion, shall deem equitable and which will not result in any disqualification, modification, extension or renewal (within the meaning of Section 424 of the Code) of such incentive stock option.

9. ADDITIONAL RIGHTS IN CERTAIN EVENTS.

          (a) Definitions. For purposes of this Section 9, the following terms shall have the following meanings:

               (i) The term “Person” shall be used as that term is used in Sections 13(d) and 14(d) of the 1934 Act.

               (ii) Beneficial ownership shall be determined as provided in Rule 13d-3 under the 1934 Act as in effect on the effective date of the Plan.

               (iii) “Voting Shares” shall mean all securities of a company entitling the holders thereof to vote in an annual election of Directors (without consideration of the rights of any class of stock other than the Common Stock to elect Directors by a separate class vote); and a specified percentage of “Voting Power” of a company shall mean such number of the Voting Shares as shall enable the holders thereof to cast such percentage of all the votes which could be cast in an annual election of directors (without consideration of the rights of any class of stock other than the Common Stock to elect Directors by a separate class vote).

               (iv) “Tender Offer” shall mean a tender offer or exchange offer to acquire securities of the Corporation (other than such an offer made by the Corporation or any Subsidiary), whether or not such offer is approved or opposed by the Board.

               (v) “Section 9 Event” shall mean the date upon which any of the following events occurs:

     (A) The Corporation acquires actual knowledge that any Person has acquired the Beneficial Ownership, directly or indirectly, of securities of the Corporation entitling such Person to 20% or more of the Voting Power of the Corporation, other than the Corporation, a Subsidiary or any employee benefit plan(s) sponsored by the Corporation, or a Person approved by the Board that has acquired 20% or more but less than 50% of the Voting Power of the Corporation;

     (B) A Tender Offer is made to acquire securities of the Corporation entitling the holders thereof to 20% or more of the Voting Power of the Corporation; or

     (C) A solicitation subject to Rule 14a-11 under the 1934 Act (or any successor Rule) relating to the election or removal of 50% or more of the

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members of any class of the Board shall be made by any person other than the Corporation; or

     (D) The shareholders of the Corporation shall approve a merger, consolidation, share exchange, division or sale or other disposition of assets of the Corporation as a result of which the shareholders of the Corporation immediately prior to such transaction shall not hold, directly or indirectly, immediately following such transaction a majority of the Voting Power of (i) in the case of a merger or consolidation, the surviving or resulting corporation, (ii) in the case of a share exchange, the acquiring corporation or (iii) in the case of a division or a sale or other disposition of assets, each surviving, resulting or acquiring corporation which, immediately following the transaction, holds more than 20% of the consolidated assets of the Corporation immediately prior to the transaction;

provided, however, that (i) if securities beneficially owned by a grantee are included in determining the Beneficial Ownership of a Person referred to in Section 9(a)(v)(A), (ii) a grantee is required to be named pursuant to Item 2 of the Schedule 14D-1 (or any similar successor filing requirement) required to be filed by the bidder making a Tender Offer referred to in Section 9(a)(v)(B), or (iii) if a grantee is a “participant” as defined in 14a-11 under the 1934 Act (or any successor Rule) in a solicitation (other than a solicitation by the Corporation) referred to in Section 9(a)(v)(C), then no Section 9 Event with respect to such grantee shall be deemed to have occurred by reason of such event.

          (a) Acceleration of the Exercise Date of Stock Options. Unless the agreement referred to in Section 6(g), or an amendment thereto, shall otherwise provide, notwithstanding any other provision contained in the Plan, in case any “Section 9 Event” occurs all outstanding stock options (other than those held by a person referred to in the proviso to Section 9(a)(v)) shall become immediately and fully exercisable whether or not otherwise exercisable by their terms.

          (b) Extension of the Expiration Date of Stock Options. Unless the agreement referred to in Section 6(g), or an amendment thereto, shall otherwise provide, notwithstanding any other provision contained in the Plan, all stock options held by a grantee (other than a grantee referred to in the proviso to Section 9(a)(v)) whose employment with the Corporation or a Subsidiary terminates within one year of any Section 9 Event for any reason other than voluntary termination with the consent of the Corporation or a Subsidiary, retirement under any retirement plan of the Corporation or a Subsidiary or death shall be exercisable for a period of three months from the date of such termination of employment, but in no event after the expiration date of the stock option.

          (c) Lapse of Restrictions on Restricted Share or Restricted Share Unit Awards. If any “Section 9 Event” occurs prior to the scheduled lapse of all restrictions applicable to restricted share or restricted share unit awards under the Plan (other than those held by a person referred to in the proviso to Section 9(a)(v)), all such restrictions

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shall lapse upon the occurrence of any such “Section 9 Event” regardless of the scheduled lapse of such restrictions.

          (d) Payment of Performance Units. If any “Section 9 Event” occurs prior to the end of any Performance Period, all performance units awarded with respect to such Performance Period (other than those held by a person referred to in the proviso to Section 9(a)(v)) shall be deemed to have been fully earned as of the date of such Section 9 Event, regardless of the attainment or nonattainment of the Performance Target or any Minimum Target, and shall be paid to the awardees thereof as promptly as practicable thereafter. If the performance unit is not expressed as a fixed amount in dollars or shares, the Committee may provide in the performance unit agreement for the amount to be paid in the case of a Section 9 Event.

10. EFFECT OF THE PLAN ON THE RIGHTS OF EMPLOYEES AND EMPLOYER.

          Neither the adoption of the Plan nor any action of the Board or the Committee pursuant to the Plan shall be deemed to give any employee any right to be granted a stock option or to be awarded restricted shares, restricted share units, performance units or bonus shares under the Plan. Nothing in the Plan, in any stock option, in any restricted share, restricted share unit, performance unit or bonus share award under the Plan or in any agreement providing for any of the foregoing shall confer any right to any employee to continue in the employ of the Corporation or any Subsidiary or interfere in any way with the rights of the Corporation or any Subsidiary to terminate the employment of any employee at any time.

11. AMENDMENT.

          The right to alter and amend the Plan at any time and from time to time and the right to revoke or terminate the Plan are hereby specifically reserved to the Board; provided that shareholder approval shall be required (a) to increase the total number of shares which may be issued under the Plan, or (b) if such approval is required to maintain the favorable tax treatment of incentive stock options granted under the Plan. No alteration, amendment, revocation or termination of the Plan shall, without the written consent of the holder of a stock option, restricted shares, restricted share units, performance units or bonus shares theretofore awarded under the Plan, adversely affect the rights of such holder with respect thereto.

12. EFFECTIVE DATE AND DURATION OF PLAN.

          The effective date and date of adoption of the Plan shall be November 14, 1994, the date of adoption of the Plan by the Board. No stock option may be granted, and no restricted shares, restricted share units, bonus shares or performance units payable in performance shares may be awarded under the Plan subsequent to November 13, 2004.

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13. INDEMNIFICATION.

          In addition to such other rights of indemnification as they may have as directors, the members of the Committee administering the Plan shall be indemnified by the Corporation against the 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 rights granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Corporation) or paid by them in satisfaction of a judgment in any such action, suit or proceeding that such member is liable for negligence or misconduct in the performance of such member’s duties; provided that within 60 days after institution of any such action, suit or proceeding, the member shall in writing offer the Corporation the opportunity, at its own expense, to handle and defend the same.

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EX-99.(A)(1)

Exhibit (a)(1)

EX-99.(A)(2)

Exhibit (a)(2)

EX-99.(A)(3)

Exhibit (a)(3)

EX-99.(A)(4)

Exhibit (a)(4)

EX-99.(D)(1)

Exhibit (d)(1)

EX-99.(D)(2)

Exhibit (d)(2)