Exhibit 10.1
 
 
CENTENE CORPORATION

Amended and Restated
2003 Stock Incentive Plan
(as of April 22, 2008)
 

1.      Purpose
 
The purpose of this Amended and Restated 2003 Stock Incentive Plan (the “Plan”)
of Centene Corporation, a Delaware corporation (the “Company”), is to advance
the interests of the Company’s stockholders by enhancing the Company’s ability
to attract, retain and motivate persons who make (or are expected to make)
important contributions to the Company by providing such persons with equity
ownership opportunities and performance-based incentives and thereby better
aligning the interests of such persons with those of the Company’s stockholders.
Except where the context otherwise requires, the term “Company” shall include
any of the Company’s present or future parent or subsidiary corporations as
defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as
amended, and any regulations promulgated thereunder (the “Code”) and any other
business venture (including joint venture or limited liability company) in which
the Company has a controlling interest, as determined by the Board of Directors
of the Company (the “Board”).
 
2.      Eligibility
 
All of the Company’s employees, officers, directors, consultants and advisors
are eligible to be granted options, restricted stock, restricted stock units and
stock appreciation rights (each, an “Award”) under the Plan. Each person who has
been granted an Award under the Plan shall be deemed a “Participant.”
 
3.      Administration and Delegation
 
(a)
Administration by Board of Directors. The Plan will be administered by the
Board. The Board shall have authority to grant Awards and to adopt, amend and
repeal such administrative rules, guidelines and practices relating to the Plan
as it shall deem advisable, provided that awards to a director may only be
recommended by a committee comprised solely of independent directors and
approved only by all independent directors of the board. The Board may correct
any defect, supply any omission or reconcile any inconsistency in the Plan or
any Award in the manner and to the extent it shall deem expedient to carry the
Plan into effect and it shall be the sole and final judge of such expediency.
All decisions by the Board shall be made in the Board’s sole discretion and
shall be final and binding on all persons having or claiming any interest in the
Plan or in any Award. No director or person acting pursuant to the authority
delegated by the Board shall be liable for any action or determination relating
to or under the Plan made in good faith.

 
(b)
Appointment of Committees. To the extent permitted by applicable law, the Board
may delegate any or all of its powers under the Plan to one or more committees
or subcommittees of the Board (a “Committee”). All references in the Plan to the
“Board” shall mean the Board or a Committee of the Board or the executive
officers referred to in Section 3(c) to the extent that the Board’s powers or
authority under the Plan have been delegated to such Committee or executive
officers.

 
(c)
Delegation to Executive Officers. To the extent permitted by applicable law, the
Board may delegate to one or more executive officers of the Company the power to
grant Awards to employees or officers of the Company or any of its present or
future subsidiary corporations and to exercise such other powers under the Plan
as the Board may determine, provided that the Board shall fix the terms of the
Awards to be granted by such executive officers (including the exercise price of
such Awards, which may include a formula by which the exercise price will be
determined) and the maximum number of shares subject to Awards that the
executive officers may grant; provided further, however, that no executive
officer shall be authorized to grant Awards to any “executive officer” of the
Company, as

 

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defined by Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), or to any “officer” of the Company (as defined by Rule 16a-1
under the Exchange Act).

 
4.      Stock Available for Awards
 
(a)
Number of Shares. Subject to adjustment under Section 7, Awards may be made
under the Plan for up to 6,900,000 shares of common stock, $.001 par value per
share, of the Company (“Common Stock”). For purposes of counting the number of
shares available for the grant of Awards under the Plan,

 
 
(1)
shares of Common Stock covered by independent SARs (as hereinafter defined)
shall be counted against the number of shares available for the grant of Awards
under the Plan; provided that independent SARs that may be settled in cash only
shall not be so counted;

 
 
(2)
if any Award (A) expires or is terminated, surrendered or canceled without
having been fully exercised or is forfeited in whole or in part (including as
the result of shares of Common Stock subject to such Award being repurchased by
the Company at the original issuance price pursuant to a contractual repurchase
right) or (B) results in any Common Stock not being issued (including as a
result of an independent SAR that was settleable either in cash or in stock
actually being settled in cash), the unused Common Stock covered by such Award
shall again be available for the grant of Awards under the Plan; provided,
however, in the case of Incentive Stock Options (as hereinafter defined), the
foregoing shall be subject to any limitations under the Code; and

 
 
(3)
shares of Common Stock tendered to the Company by a Participant to (A) purchase
shares of Common Stock upon the exercise of an Award or (B) satisfy tax
withholding obligations (including shares retained from the Award creating the
tax obligation) shall not be added back to the number of shares available for
the future grant of Awards under the Plan. Shares issued under the Plan may
consist in whole or in part of authorized but unissued shares or treasury
shares.

 
(b)
Sub-limits. Subject to adjustment under Section 8, the following sub-limits on
the number of shares subject to Awards shall apply:

 
 
(1)
Per-Participant Limit. The maximum number of shares of Common Stock with respect
to which Awards may be granted to any Participant under the Plan shall be
1,500,000 per calendar year. For purposes of the foregoing limit, the
combination of an Option in tandem with a SAR shall be treated as a single
Award. The per-Participant limit described in this Section 4(b)(1) shall be
construed and applied consistently with Section 162(m) of the Code or any
successor provision thereto (“Section 162(m)”).

 
5.      Stock Options
 
(a)
General. The Board may grant options to purchase Common Stock (each, an
“Option”) and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option that is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a “Nonstatutory Stock
Option.”

 
(b)
Incentive Stock Options. An Option that the Board intends to be an “incentive
stock option” as defined in Section 422 of the Code (an “Incentive Stock
Option”) shall only be granted to employees of Centene Corporation, any of
Centene Corporation’s present or future parent or subsidiary corporations as
defined in Sections 424(e) or (f) of the Code, and any other entities the
employees of which are eligible to receive Incentive Stock Options under the
Code, and shall be subject to and shall be construed consistently with the
requirements of Section 422 of the Code. The Company shall have no liability to
a Participant, or any other party, if an Option (or any part thereof) that is
intended to be an Incentive Stock Option is not an Incentive Stock Option.

 

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(c)
Exercise Price. The Board shall establish the exercise price at the time each
Option is granted and specify it in the applicable option agreement, provided,
however, that the exercise price shall be not less than 100% of the fair market
value of the Common Stock, as determined by the Board, at the time the Option is
granted.

 
(d)
Duration of Options. Each Option shall be exercisable at such times and subject
to such terms and conditions as the Board may specify in the applicable option
agreement, provided, however, that no Option will be granted for a term in
excess of 10 years.

 
(e)
Exercise of Option. Options may be exercised by delivery to the Company of a
written notice of exercise signed by the proper person or by any other form of
notice (including electronic notice) approved by the Board together with payment
in full as specified in Section 5(f) for the number of shares for which the
Option is exercised.

 
(f)
Payment Upon Exercise. Common Stock purchased upon the exercise of an Option
granted under the Plan shall be paid for as follows:

 
 
(1)
in cash or by check, payable to the order of the Company;

 
 
(2)
except as the Board may, in its sole discretion, otherwise provide in an option
agreement, by (i) delivery of an irrevocable and unconditional undertaking by a
creditworthy broker to deliver promptly to the Company sufficient funds to pay
the exercise price and any required tax withholding or (ii) delivery by the
Participant to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to deliver promptly to the Company cash or
a check sufficient to pay the exercise price and any required tax withholding;

 
 
(3)
when the Common Stock is registered under the Exchange Act, by delivery of
shares of Common Stock owned by the Participant valued at their fair market
value as determined by (or in a manner approved by) the Board in good faith
(“Fair Market Value”), provided (i) such method of payment is then permitted
under applicable law and (ii) such Common Stock, if acquired directly from the
Company was owned by the Participant at least six months prior to such delivery;

 
 
(4)
such other lawful consideration as the Board may determine in its sole
discretion, provided that (i) at least an amount equal to the par value of the
Common Stock being purchased shall be paid in cash and (ii) no such
consideration shall consist in whole or in part of a promissory note or other
evidence of indebtedness; or

 
 
(5)
by any combination of the above permitted forms of payment.

 
(g)
Substitute Options. In connection with a merger or consolidation of an entity
with the Company or the acquisition by the Company of property or stock of an
entity, the Board may grant Options in substitution for any options or other
stock or stock-based Awards granted by such entity or an affiliate thereof.
Substitute Options may be granted on such terms as the Board deems appropriate
in the circumstances, notwithstanding any limitations on Options contained in
the other sections of this Section 5 or in Section 2.

 
6.      Restricted Stock; Restricted Stock Units
 
(a)
Grants. The Board may grant Awards entitling recipients to acquire shares of
Common Stock (“Restricted Stock”), subject to the right of the Company to
repurchase all or part of such shares at their issue price or other stated or
formula price (or to require forfeiture of such shares if issued at no cost)
from the recipient in the event that conditions specified by the Board in the
applicable Award are not satisfied prior to the end of the applicable
restriction period or periods established by the Board for such Award. Instead
of granting Awards for Restricted Stock, the Board may grant Awards entitling
the recipient to receive shares of Common Stock to be delivered in the future
(“Restricted Stock Units”) subject to such terms and conditions on the delivery
of the shares of Common Stock as the Board shall determine (each Award for
Restricted Stock or Restricted Stock Units, a “Restricted Stock Award”). The
Board may also permit an exchange of unvested shares of Common Stock that

 

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have already been delivered to a Participant for an instrument evidencing the
right to future delivery of Common Stock at such time or times, and on such
conditions, as the Board shall specify.

 
 
(b)
Terms and Conditions.

 
 
(1)
The Board shall determine the terms and conditions of any such Restricted Stock
Award, including the conditions for repurchase (or forfeiture) and the issue
price, if any.

 
 
(2)
If the Board determines to grant any Restricted Stock Awards designed to satisfy
the requirements of Section 162(m)(4)(C) of the Code with respect to
remuneration payable to a covered employee as defined in Section 162(m)(3) of
the Code (“Covered Employee”) solely on account of one or more performance goals
(“Performance Goals”) to be achieved during a performance period (“Performance
Period”), the following requirements shall apply:

 
 
(A)
A Committee consisting of two or more outside directors:

 
 
(i)
who are not current employees of the Company or any subsidiary or affiliate of
the Company,

 
 
(ii)
who are not former employees of the Company or any subsidiary or affiliate of
the Company who receive compensation for prior services (other than benefits
under a tax-qualified retirement plan) from the Company or any subsidiary or
affiliate of the Company during the taxable year,

 
 
(iii)
who have not been officers of the Company or a subsidiary or affiliate of the
Company, and

 
 
(iv)
who do not receive direct or indirect compensation from the Company or any
subsidiary or affiliate of the Company in any capacity other than as a director,

 
 
shall determine and administer the grants provided for under this Section
6(b)(2).

 
 
(B)
(i)
The Performance Goals upon which the payment or vesting of an Award to a Covered
Employee pursuant to this Section 6(b)(2) shall be limited to the following
performance measures (“Performance Measures”):

 
 
(a)
net earnings or net income (before or after taxes),

 
 
(b)
earnings per share,

 
 
(c)
net sales or revenue growth,

 
 
(d)
net operating profit,

 
 
(e)
return measures (including, but not limited to, return on assets, capital,
invested capital, equity, sales, or revenue),

 
 
(f)
cash flow (including, but not limited to, operating cash flow, free cash flow,
cash flow return on equity, and cash flow return on investment),

 
 
(g)
earnings before or after taxes, interest, depreciation, and/or amortization,

 
 
(h)
gross or operating margins,

 
 
(i)
productivity ratios,

 
 
(j)
share price (including, but not limited to, growth measures and total
shareholder return),

 
 
(k)
expense targets,

 
 
(l)
margins,

 
 
(m)
operating efficiency,

 

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(n)
market share,

 
 
(o)
customer satisfaction,

 
 
(p)
working capital targets, and

 
 
(q)
economic value added or EVA® (net operating profit after tax minus the sum of
capital multiplied by the cost of capital).

 
 
(ii)
As the Committee may deem appropriate:

 
 
(a)
any of the foregoing Performance Measure(s) may be used to measure the
performance of the Company, a subsidiary, and/or affiliate of the Company as a
whole or any business unit of the Company, subsidiary, and/or affiliate or any
combination thereof during the Performance Period;

 
 
(b)
any of the foregoing Performance Measures may be used to compare the performance
of the Company, a subsidiary and/or affiliate of the Company as a whole or any
business unit of the Company, subsidiary and/or affiliate to the performance of
a group of comparator companies, or published or special index that the
Committee, in its sole discretion, deems appropriate;

 
 
(c)
the Committee may select Performance Measure (j) above as compared to various
stock market indices; and

 
 
(d)
the Committee shall have authority to provide for accelerated vesting of any
Award based on the achievement of Performance Goals pursuant to the foregoing
Performance Measures.

 
 
(iii)
The Committee may provide in any such Award that any evaluation of performance
may include or exclude any of the following events that occurs during a
Performance Period:

 
 
(a)
asset write-downs,

 
 
(b)
litigation or claim judgments or settlements,

 
 
(c)
the effect of changes in tax laws, accounting principles, or other laws or
provisions affecting reported results,

 
 
(d)
any reorganization and restructuring programs,

 
 
(e)
extraordinary nonrecurring items as described in Accounting Principles Board
Opinion No. 30 and/or in management’s discussion and analysis of financial
condition and results of operations appearing in the Company’s annual report to
shareholders for the applicable year,

 
 
(f)
acquisitions or divestitures, and

 
 
(g)
foreign exchange gains and losses.

 
Such inclusions or exclusions shall be prescribed in a form that meets the
requirements of Code Section 162(m) for deductibility.
 

 
 
 
(C)
The Performance Period for any Award pursuant to this Section 6(b)(2) shall not
be less than one taxable year of the Company.

 
 
(D)
The maximum number of shares the Committee may grant to a Covered Employee
during a taxable year of the Company pursuant to this Section 6(b)(2) shall be
1,000,000 shares.

 
 
(E)
The Performance Goals for any Award pursuant to this Section 6(b)(2) shall be
memorialized in writing and furnished to affected Covered Employees not later
than 90 days after the beginning of the Performance Period to which they apply.

 

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(F)
The Committee shall certify in writing the accomplishment of the Performance
Goals related to an Award before the Award can become unconditional.

 
 
(G)
Awards that are intended to qualify as Performance-Based Compensation may not be
adjusted upward. The Committee shall retain the discretion to adjust such Awards
downward, either on a formula or discretionary basis or any combination, as the
Committee determines.

 
 
(H)
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing Performance Measures without
obtaining shareholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining shareholder approval, provided
the exercise of such discretion does not violate Code Section 409A. In addition,
in the event that the Committee determines that it is advisable to grant Awards
that shall not qualify as Performance-Based Compensation, the Committee may make
such grants without satisfying the requirements of Code Section 162(m) and base
vesting on Performance Measures other than those set forth in this Section
6(b)(2).

 
 
(I)
This Section 6(b)(2) is designed to comply with the requirements of Section
162(m)(4)(C) of the Code and regulations issued thereunder and all provisions of
this Section 6(b)(2) shall be applied consistent therewith.

 
(c)
Stock Certificates. Any stock certificates issued in respect of a Restricted
Stock Award, if applicable, shall be registered in the name of the Participant
and, unless otherwise determined by the Board, deposited by the Participant,
together with a stock power endorsed in blank, with the Company (or its
designee). At the expiration of the applicable restriction periods, the Company
(or such designee) shall deliver the certificates no longer subject to such
restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant’s death (the “Designated Beneficiary”). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant’s estate.

 
7.      Stock Appreciation Rights
 
(a)
General. A Stock Appreciation Right (“SAR”) is an Award entitling the holder,
upon exercise, to receive an amount in Common Stock determined by reference to
appreciation, from and after the date of grant, in the fair market value of a
share of Common Stock. The date as of which such appreciation or other measure
is determined shall be the exercise date.

 
(b)
Grants. SARs may be granted in tandem with, or independently of, Options granted
under the Plan. The Board shall establish the exercise price at the time each
SAR is granted and specify it in the applicable SAR agreement, provided,
however, that the exercise price shall be not less than 100% of the fair market
value of the Common Stock, as determined by the Board, at the time the SAR is
granted.

 
 
(1)
Tandem Awards. When SARs are expressly granted in tandem with Options, (i) the
SAR will be exercisable only at such time or times, and to the extent, that the
related Option is exercisable (except to the extent designated by the Board in
connection with a Reorganization Event) and will be exercisable in accordance
with the procedure required for exercise of the related Option; (ii) the SAR
will terminate and no longer be exercisable upon the termination or exercise of
the related Option, except to the extent designated by the Board in connection
with a Reorganization Event and except that a SAR granted with respect to less
than the full number of shares covered by an Option will not be reduced until
the number of shares as to which the related Option has been exercised or has
terminated exceeds the number of shares not covered by the SAR; (iii) the Option
will terminate and no longer be exercisable upon the exercise of the related
SAR; and (iv) the SAR will be transferable only with the related Option.

 

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(2)
Independent SARs. A SAR not expressly granted in tandem with an Option will
become exercisable at such time or times, and on such conditions, as the Board
may specify in the SAR Award.

 
(c)
Exercise. SARs may be exercised by delivery to the Company of a written notice
of exercise signed by the proper person or by any other form of notice
(including electronic notice) approved by the Board, together with any other
documents required by the Board.

 
8.      Adjustments for Changes in Common Stock and Certain Other Events
 
(a)
Changes in Capitalization. In the event of any stock split, reverse stock split,
stock dividend, recapitalization, combination of shares, reclassification of
shares, spin-off or other similar change in capitalization or event, or any
distribution to holders of Common Stock other than a normal cash dividend, (i)
the number and class of securities available under the Plan, (ii) the
per-Participant limit set forth in Section 4(b), (iii) the number and class of
securities and exercise price per share subject to each outstanding Option, and
(iv) the repurchase price per share subject to each outstanding Restricted Stock
Award shall be appropriately adjusted by the Company (or substituted Awards may
be made, if applicable) to the extent the Board shall determine, in good faith,
that such an adjustment (or substitution) is necessary and appropriate. If this
Section 8(a) applies and Section 8(c) also applies to any event, Section 8(c)
shall be applicable to such event, and this Section 8(a) shall not be
applicable.

 
(b)
Liquidation or Dissolution. In the event of a proposed liquidation or
dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date. The Board may specify the effect of a liquidation or
dissolution on any Restricted Stock Award granted under the Plan at the time of
the grant.

 
(c)
Reorganization Events.

 
 
(1)
Definition. A “Reorganization Event” shall mean: (a) any merger or consolidation
of the Company with or into another entity as a result of which all of the
Common Stock of the Company is converted into or exchanged for the right to
receive cash, securities or other property or (b) any exchange of all of the
Common Stock of the Company for cash, securities or other property pursuant to a
share exchange transaction.

 
 
(2)
Consequences of a Reorganization Event on Options. Upon the occurrence of a
Reorganization Event, or the execution by the Company of any agreement with
respect to a Reorganization Event, the Board shall provide that all outstanding
Options shall be assumed, or equivalent options shall be substituted, by the
acquiring or succeeding corporation (or an affiliate thereof). For purposes
hereof, an Option shall be considered to be assumed if, following consummation
of the Reorganization Event, the Option confers the right to purchase, for each
share of Common Stock subject to the Option immediately prior to the
consummation of the Reorganization Event, the consideration (whether cash,
securities or other property) received as a result of the Reorganization Event
by holders of Common Stock for each share of Common Stock held immediately prior
to the consummation of the Reorganization Event (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares of Common Stock); provided, however, that if
the consideration received as a result of the Reorganization Event is not solely
common stock of the acquiring or succeeding corporation (or an affiliate
thereof), the Company may, with the consent of the acquiring or succeeding
corporation, provide for the consideration to be received upon the exercise of
Options to consist solely of common stock of the acquiring or succeeding
corporation (or an affiliate thereof) equivalent in fair market value to the per
share consideration received by holders of outstanding shares of Common Stock as
a result of the Reorganization Event.

 

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Notwithstanding the foregoing, if the acquiring or succeeding corporation (or an
affiliate thereof) does not agree to assume, or substitute for, such Options,
then the Board shall, upon written notice to the Participants, provide that all
then unexercised Options will become exercisable in full as of a specified time
prior to the Reorganization Event and will terminate immediately prior to the
consummation of such Reorganization Event, except to the extent exercised by the
Participants before the consummation of such Reorganization Event; provided,
however, that in the event of a Reorganization Event under the terms of which
holders of Common Stock will receive upon consummation thereof a cash payment
for each share of Common Stock surrendered pursuant to such Reorganization Event
(the “Acquisition Price”), then the Board may instead provide that all
outstanding Options shall terminate upon consummation of such Reorganization
Event and that each Participant shall receive, in exchange therefore, a cash
payment equal to the amount (if any) by which (A) the Acquisition Price
multiplied by the number of shares of Common Stock subject to such outstanding
Options (whether or not then exercisable), exceeds (B) the aggregate exercise
price of such Options. To the extent all or any portion of an Option becomes
exercisable solely as a result of the first sentence of this paragraph, upon
exercise of such Option the Participant shall receive shares subject to a right
of repurchase by the Company or its successor at the Option exercise price. Such
repurchase right (1) shall lapse at the same rate as the Option would have
become exercisable under its terms and (2) shall not apply to any shares subject
to the Option that were exercisable under its terms without regard to the first
sentence of this paragraph.
 
 
(3)
Consequences of a Reorganization Event on Restricted Stock Awards. Upon the
occurrence of a Reorganization Event, the repurchase and other rights of the
Company under each outstanding Restricted Stock Award shall inure to the benefit
of the Company’s successor and shall apply to the cash, securities or other
property that the Common Stock was converted into or exchanged for pursuant to
such Reorganization Event in the same manner and to the same extent as they
applied to the Common Stock subject to such Restricted Stock Award.

 
9.      General Provisions Applicable to Awards
 
(a)
Transferability of Awards. Awards shall not be sold, assigned, transferred,
pledged or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution or, other than in the case of an Incentive Stock Option, pursuant
to a qualified domestic relations order, and, during the life of the
Participant, shall be exercisable only by the Participant; provided that the
Board may permit or provide in an Award for the gratuitous transfer of the Award
by the Participant to or for the benefit of any immediate family member, family
trust or family partnership established solely for the benefit of the
Participant and/or an immediate family member thereof if, with respect to such
proposed transferee, the Company would be eligible to use a registration
statement on Form S-8 for the registration of the sale of the Common Stock
subject to such Award under the Securities Act of 1933, as amended and provided
further that the Company shall not be required to recognize any such transfer
until such time as the Participant and such permitted transferee shall, as a
condition to such transfer, deliver to the Company a written instrument in form
and substance satisfactory to the Company confirming that such transferee shall
be bound by all of the terms and conditions of the Award. References to a
Participant, to the extent relevant in the context, shall include references to
authorized transferees.

 
(b)
Documentation. Each Award shall be evidenced in such form (written, electronic
or otherwise) as the Board shall determine. Each Award may contain terms and
conditions in addition to those set forth in the Plan.

 
(c)
Board Discretion. Except as otherwise provided by the Plan, each Award may be
made alone or in addition or in relation to any other Award. The terms of each
Award need not be identical, and the Board need not treat Participants
uniformly.

 

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(d)
Termination of Status. The Board shall determine the effect on an Award of the
disability, death, retirement, authorized leave of absence or other change in
the employment or other status of a Participant and the extent to which, and the
period during which, the Participant, the Participant’s legal representative,
conservator, guardian or Designated Beneficiary may exercise rights under the
Award.

 
(e)
Withholding. Each Participant shall pay to the Company, or make provision
satisfactory to the Board for payment of, any taxes required by law to be
withheld in connection with Awards to such Participant no later than the date of
the event creating the tax liability. Except as the Board may otherwise provide
in an Award, when the Common Stock is registered under the Exchange Act,
Participants may satisfy such tax obligations in whole or in part by delivery of
shares of Common Stock, including shares retained from the Award creating the
tax obligation, valued at their Fair Market Value; provided, however, that the
total tax withholding where stock is being used to satisfy such tax obligations
cannot exceed the Company’s minimum statutory withholding obligations (based on
minimum statutory withholding rates for federal and state tax purposes,
including payroll taxes, that are applicable to such supplemental taxable
income). The Company may, to the extent permitted by law, deduct any such tax
obligations from any payment of any kind otherwise due to a Participant.

 
(f)
Amendment of Award. The Board may amend, modify or terminate any outstanding
Award, including but not limited to, substituting therefore another Award of the
same or a different type, changing the date of exercise or realization, and
converting an Incentive Stock Option to a Nonstatutory Stock Option, provided
that the Participant’s consent to such action shall be required unless the Board
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant, and would not cause adverse tax
consequences to the Participant under Section 409A of the Code.

 
(g)
Conditions on Delivery of Stock. The Company will not be obligated to deliver
any shares of Common Stock pursuant to the Plan or to remove restrictions from
shares previously delivered under the Plan until (i) all conditions of the Award
have been met or removed to the satisfaction of the Company, (ii) in the opinion
of the Company’s counsel, all other legal matters in connection with the
issuance and delivery of such shares have been satisfied, including any
applicable securities laws and any applicable stock exchange or stock market
rules and regulations, and (iii) the Participant has executed and delivered to
the Company such representations or agreements as the Company may consider
appropriate to satisfy the requirements of any applicable laws, rules or
regulations.

 
(h)
Vesting of Awards. No Award granted under the Plan after July 19, 2005 to any
employee of the Company may vest or become exercisable in increments greater
than one-third of the total Award in any period of twelve consecutive months
following the date of grant.

 
(i)
Repricing of Awards. Unless such action is approved by the Company’s
stockholders and does not cause an Award to become subject to Section 409A of
the Code: (1) no outstanding Award granted under the Plan may be amended to
provide for an exercise price per share that is less than the then-existing
exercise price per share of such outstanding Award (other than adjustments
pursuant to Section 8), (2) the Board may not cancel any outstanding Award
(whether or not granted under the Plan) and grant in substitution therefore new
Awards under the Plan covering the same or a different number of shares of
Common Stock and having an exercise price per share less than the then-existing
exercise price per share of the cancelled Award, and (3) the Board may not
repurchase any outstanding Award granted under the Plan at a price greater than
the current fair market value of the existing award.

 
10.           Miscellaneous
 
(a)
No Right To Employment or Other Status. No person shall have any claim or right
to be granted an Award, and the grant of an Award shall not be construed as
giving a Participant the right to continued employment or any other relationship
with the Company. The Company expressly reserves the right

 

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at any time to dismiss or otherwise terminate its relationship with a
Participant free from any liability or claim under the Plan, except as expressly
provided in the applicable Award.

 
(b)
No Rights As Stockholder. Subject to the provisions of the applicable Award, no
Participant or Designated Beneficiary shall have any rights as a stockholder
with respect to any shares of Common Stock to be distributed with respect to an
Award until becoming the record holder of such shares. Notwithstanding the
foregoing, in the event the Company effects a split of the Common Stock by means
of a stock dividend and the exercise price of and the number of shares subject
to such Option are adjusted as of the date of the distribution of the dividend
(rather than as of the record date for such dividend), then an optionee who
exercises an Option between the record date and the distribution date for such
stock dividend shall be entitled to receive, on the distribution date, the stock
dividend with respect to the shares of Common Stock acquired upon such Option
exercise, notwithstanding the fact that such shares were not outstanding as of
the close of business on the record date for such stock dividend.

 
(c)
Effective Date and Term of Plan. The Plan shall become effective on the date on
which it is adopted by the Board, but no Award granted to a Participant that is
intended to comply with Section 162(m) shall become exercisable, vested or
realizable, as applicable to such Award, unless and until the Plan has been
approved by the Company’s stockholders to the extent stockholder approval is
required by Section 162(m) in the manner required under Section 162(m),
including the vote required under Section 162(m). No Awards shall be granted
under the Plan after the completion of ten years from the earlier of (i) the
date on which the Plan was adopted by the Board or (ii) the date the Plan was
approved by the Company’s stockholders, but Awards previously granted may extend
beyond that date.

 
(d)
Amendment of Plan. The Board may amend, suspend or terminate the Plan or any
portion thereof at any time, provided that (i) any “material revision” to the
Plan (as defined in the New York Stock Exchange Listed Company Manual, as in
effect as of July 22, 2005) must be approved by the Company’s stockholders prior
to such revision becoming effective and (ii) to the extent required by Section
162(m), no Award granted to a Participant that is intended to comply with
Section 162(m) after the date of such amendment shall become exercisable,
realizable or vested, as applicable to such Award, unless and until such
amendment shall have been approved by the Company’s stockholders if required by
Section 162(m), including the vote required under Section 162(m).

 
(e)
Governing Law. The provisions of the Plan and all Awards made hereunder shall be
governed by and interpreted in accordance with the laws of the State of
Delaware, without regard to any applicable conflicts of law.