On February 8, 2007, the Internal Revenue Service (the “IRS”) issued Announcement 2007-18, which describes a limited, voluntary, correction program for violations of Section 409A of the Internal Revenue Code of 1986, as amended, with respect to the exercise of certain discounted stock options and stock appreciation rights (“Stock Rights”).

Narrow Scope of the Correction Program

The scope of the correction program is very narrow - - it applies only to Stock Rights if all of the following conditions are satisfied:

• The Stock Rights were exercised by non-corporate insiders.

• The Stock Rights were exercised during calendar year 2006.

• The Stock Rights were subject to Section 409A because the exercise price was less than the fair market value of the underlying stock on the date of grant.

Relief and Non-Relief

• Under the correction program, the employer, rather than the employee, must pay the applicable 409A tax (generally, a 20% excise tax, with penalty interest) - - there is no forgiveness of the imposition of the 409A tax altogether.

• The employer does not report the violation on Form W-2 as a Code “Z”.

• The compensation attributable to the exercise of the Stock Right continues to be treated as taxable income to the employee.

• The amount of the 409A tax paid by the employer is treated as taxable income to the employee for the year in which the payment is made.

Act Quickly to Take Advantage of the Correction Program

Notification to the IRS

• Employers must notify the IRS of their intent to use the correction program by February 28, 2007.

• Within 15 days of the initial notice, the employer is required to report to the IRS the number of affected employees.

• Employers must submit to the IRS specific information regarding the violation and the correction, and pay the 409A taxes no later than June 30, 2007.

Notification to Employees

• Employers must notify affected employees within 15 days of providing notice to the IRS of their intent to use the correction program.

The employer is required to provide the employees with a follow-up notice on or before July 15, 2007, regarding whether it has made a submission to the IRS with respect to their Stock Rights subject to 409A.