Exhibit 10.17

 

UHS HOLDCO, INC.

STOCK OPTION PLAN

 

ARTICLE I

 

PURPOSE OF PLAN

 

The Stock Option Plan (the “Plan”) of UHS Holdco, Inc. (the “Company”), adopted
by the Board (as defined below) and shareholders of the Company effective May
31, 2007 is intended to advance the best interests of the Company by providing
executives and other employees of the Company or any Subsidiary (as defined
below) and certain directors and consultants of the Company, in each case, who
have substantial responsibility for the management and growth of the Company or
any Subsidiary with additional incentives by allowing such employees, directors
and/or consultants to acquire an ownership interest in the Company. The Plan is
a compensatory benefit plan within the meaning of Rule 701 under the Securities
Act of 1933, as amended (the “Securities Act”) and, unless and until the Common
Stock (as defined below) is publicly traded, the issuance of stock purchase
options (“Options”) for shares of Common Stock pursuant to the Plan and the
issuance of shares of Common Stock pursuant to such Options is intended to
qualify for the exemption from registration under the Securities Act provided by
Rule 701.

 

ARTICLE II

 

DEFINITIONS

 

For purposes of the Plan the following terms have the indicated meanings:

 

“Affiliate” means, when used with reference to a specified Person, any Person
that directly or indirectly controls or is controlled by or is under common
control with the specified Person. As used in this definition, “control”
(including, with its correlative meanings, “controlled by” and “under common
control with”) shall mean possession, directly or indirectly, of power to direct
or cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise). With respect to any Person who is an individual, “Affiliates” shall
also include, without limitation, any member of such individual’s Family Group.

 

“Aggregate Repurchase Price” shall have the meaning set forth in Section 5.7(c).

 

“Approved Sale” shall have the meaning set forth in Section 5.10(a).

 

“Board” means the Company’s Board of Directors.

 

“BSMB” means Bear Stearns Merchant Banking Partners III, L.P. or its Affiliates.

 

“Cause” means, with respect to any Participant, such Participant’s (i) continued
failure, whether willful, intentional or grossly negligent, after written
notice, to perform substantially such Participant’s duties to the Company and
its Subsidiaries (the “Duties”) as

 

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determined by such Participant’s immediate supervisor, the Chief Executive
Officer or a Senior Vice President of the Company, or the Board (other than as a
result of a disability); (ii) dishonesty or fraud in the performance of such
Participant’s Duties or a material breach of such Participant’s duty of loyalty
to the Company or its Subsidiaries; (iii) conviction or confession of an act or
acts on such Participant’s part constituting a felony under the laws of the
United States or any state thereof or a misdemeanor which materially impairs
such Participant’s ability to perform such Participant’s Duties; (iv) willful
act or omission on such Participant’s part which is materially injurious to the
financial condition or business reputation of the Company or any of its
Subsidiaries; or (v) breach of any non-competition, non-competition,
non-solicitation, non-disclosure or confidentiality agreement applicable to such
Participant; provided, that if any Participant is a party to an employment
agreement with the Company or its Subsidiaries, the definition of “cause” (or
term of like import) contained therein, if any, shall control.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Committee” means the Compensation Committee or such other committee of the
Board as the Board may designate to administer the Plan or, if for any reason
the Board has not designated such a committee, the Board. The Committee, if
other than the Board, shall be composed of two or more directors as appointed
from time to time by the Board.

 

“Common Stock” means the Company’s Common, Stock, par value $.01 per share.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

 

“Fair Market Value” of any Common Stock as of any given date shall be determined
in good faith by the Board based on such factors as the Board, in the exercise
of its reasonable business judgment, considers relevant; provided, that in
making such determination, the Board shall assume that the Company and its
Subsidiaries are sold as a going concern and then liquidated and shall not
provide for any discounts based on the fact that the Common Stock being valued
represent a minority interest in the Company; provided, further, that
notwithstanding anything herein to the contrary, any determination of Fair
Market Value shall be made in accordance with the requirements of Section 409A
of the Code.

 

“Family Group” means, when used with reference to a specified individual Person,
(i) such Person’s spouse, former spouse, ancestors and descendants (whether
natural or adopted), parents and their descendants and any spouse of the
foregoing persons (collectively, “relatives”), (ii) the trustee, fiduciary or
personal representative of such Person and any trust solely for the benefit of
such Person and/or such Person’s relatives (other than any remainder interests)
or (iii) any limited partnership or limited liability company the governing
instruments of which provide that such Person shall have the exclusive,
nontransferable power to direct the management and policies of such entity and
of which the sole owners of partnership interests, membership interests or any
other equity interests are, and will remain, limited to such Person and such
Person’s relatives.

 

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“Good Reason” means, with respect to any Participant, (i) the Company or its
Subsidiaries has reduced or reassigned a material portion of such Participant’s
duties (per such Participant’s job description); (ii) such Participant’s base
salary has been reduced other than in connection with an across-the-board
reduction (of approximately the same percentage) in executive compensation to
employees imposed by the Board in response to negative financial results or
other adverse circumstances affecting the Company or its Subsidiaries; or (iii)
the Company or its Subsidiaries has required such Participant to relocate in
excess of fifty (50) miles from the location where such Participant is currently
employed; provided, that if any Participant is a party to an employment
agreement with the Company or its Subsidiaries, the definition of “good reason”
(or term of like import) contained therein, if any, shall control.

 

“Independent Third Party” means any Person who, immediately prior to the
contemplated transaction, does not own in excess of 5% of the Common Stock on a
fully diluted basis, who is not controlling, controlled by or under common
control with any such 5% owner of the Common Stock and who is not the spouse or
descendant (by birth or adoption) of any such 5% owner of the Common Stock.

 

“IPO” means an initial Public Offering of Common Stock or the Company otherwise
becoming a “reporting company” under Section 13 of the Exchange Act with regard
to a registration of Common Stock under Section 12 of the Exchange Act.

 

“Issued Shares” means (i) all shares of Common Stock issued upon the proper
exercise of an Option and (ii) all equity securities issued with respect to the
Common Stock referred to in clause (i) above by way of stock dividend or stock
split or in connection with any conversion, merger, consolidation or
recapitalization or other reorganization affecting the Common Stock. Unless
otherwise provided herein or in a Participant’s Option Agreement (as defined
herein), Issued Shares will continue to be Issued Shares in the hands of any
holder other than the Participant (except for the Company), and each such
transferee thereof will succeed to the rights and obligations of a holder of
Issued Shares hereunder.

 

“Option Agreement” shall have the meaning set forth in Section 6.1.

 

“Options” shall have the meaning set forth in the preamble to this Plan.

 

“Option Shares” means (i) all shares of Common Stock issuable upon the exercise
of an Option and (ii) all shares of any other class of Common Stock issuable
upon the exercise of an Option as a result of an adjustment to such Option
pursuant to any provision hereof.

 

“Participant” means any (a) executive or other employee of the Company or any of
its Subsidiaries, (b) member of the Board (but excluding any employee or
Affiliate of (i) the Company or any Subsidiary or (ii) BSMB), or (c) consultant
to the Company, in each case, who has been selected to participate in the Plan
by the Committee.

 

“Permitted Transferee” shall have the meaning set forth in Section 5.8(a).

 

“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated

 

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organization, a governmental entity or any department, agency or political
subdivision thereof or any other entity or organization.

 

“Public Company” means any Person that is required to file periodic reports with
the Securities and Exchange Commission pursuant to the requirements of Sections
13 or 15 of the Securities and Exchange Act.

 

“Public Offering” means an underwritten public offering and sale of Common Stock
pursuant to an effective registration statement under the Securities Act;
provided, that a Public Offering shall not include an offering made in
connection with a business acquisition or combination pursuant to a registration
statement on Form S-4 or any form for similar registration purposes, or an
employee benefit plan pursuant to a registration statement on Form S-8 or any
form for similar registration purposes.

 

“Public Sale” means the sale of Issued Shares to the public pursuant to an
offering registered under the Securities Act or, after the consummation of an
initial Public Offering, to the public pursuant to the provisions of Rule 144
(or any similar rule or rules then in effect) under the Securities Act.

 

“Qualified Public Offering” means a Public Offering which results in proceeds
(net of underwriting discounts and selling commissions) of an aggregate
(together with proceeds from all previous Public Offerings) of at least
$100,000,000 and after which the Company’s equity securities are listed on a
national securities exchange or the NASDAQ Stock Market; provided, that a
Qualified Public Offering shall not include any issuance of equity securities in
any merger or other business combination.

 

“Repurchase Notice” shall have the meaning set forth in Section 5.7(b).

 

“Repurchase Option” shall have the meaning set forth in Section 5.7(a).

 

“Repurchase Window” shall have the meaning set forth in Section 5.7(d).

 

“Sale of the Company” means any transaction (other than pursuant to a Public
Offering) involving the Company or UHS and an Independent Third Party or
affiliated group of Independent Third Parties pursuant to which such party or
parties acquire (i) a majority of the outstanding shares of capital stock of the
Company or UHS (whether by merger, consolidation, sale of the capital stock or
otherwise) or (ii) all or substantially all of the assets of the Company or UHS,
as determined on a consolidated basis.

 

“Stockholders Agreement” means the Stockholders Agreement, dated as of May 31,
2007, by and among the Company and certain of the Company’s stockholders, as
amended or modified from time to time.

 

“Subsidiary” means, with respect to any Person, any corporation, partnership,
limited liability company, association or other business entity of which (i) if
a corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more of the other Subsidiaries of that Person or a

 

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combination thereof, or (ii) if a partnership, limited liability company,
association or other business entity, a majority of the partnership or other
similar ownership interest thereof is at the time owned or controlled, directly
or indirectly, by that Person or one or more Subsidiaries of that Person or a
combination thereof. For purposes hereof, a Person or Persons shall be deemed to
have a majority ownership interest in a partnership, limited liability company,
association or other business entity if such Person or Persons shall be
allocated a majority of partnership, limited liability company, association or
other business entity gains or losses or shall be or control the managing
director, managing member, manager or a general partner of such partnership,
limited liability company, association or other business entity. Where not
otherwise indicated, the term “Subsidiary” refers to a Subsidiary of the
Company.

 

“Termination Date” means, with respect to any Participant, the date that a
Termination Event has occurred.

 

“Termination Event” means (i) with respect to any Participant that is an
executive or other employee of the Company or any Subsidiary, that such
Participant has ceased to be employed by the Company or any of its Subsidiaries
for any reason (including as a result of such Participant’s disability, death
or, to the extent that such Participant entered into an employment agreement
with the Company, the non-renewal of such employment agreement), (ii) with
respect to any Participant that is a member of the Board, that such Participant
had ceased to be a member of the Board for any reason or (iii) with respect to
any Participant that is a consultant of the Company or any Subsidiary, that such
Participant had ceased to provide consulting services to the Company or any of
its Subsidiaries for any reason.

 

“Transfer” shall have the meaning set forth in Section 5.8(a).

 

“Transfer Notice” shall have the meaning set forth in Section 5.8(a).

 

“UHS” means Universal Hospital Services, Inc., a Delaware corporation and a
wholly-owned subsidiary of the Company.

 

“Valuation Date” means, with respect to any Repurchase Option, the date, if any,
that the Company delivers a Repurchase Notice to a holder of Issued Shares.

 

ARTICLE III

 

ADMINISTRATION

 

The Plan shall be administered by the Committee. Subject to the limitations of
the Plan, the Committee shall have the sole and complete authority to:  (i)
select Participants, (ii) grant Options to Participants in such forms and
amounts and with such exercise price as it shall determine, (iii) impose such
limitations, restrictions and conditions upon such Options as it shall deem
appropriate in accordance with the terms of the applicable Option Agreement (as
defined below), (iv) interpret the Plan and adopt, amend and rescind
administrative guidelines and other rules, procedures and regulations relating
to the Plan, (v) correct any defect or omission or reconcile any inconsistency
in the Plan or in any Options granted under the Plan in accordance with the
terms of the applicable Option Agreement and (vi) make all other determinations
and take all other actions necessary or advisable for the implementation and
administration of the

 

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Plan. The Committee’s determinations on matters within its authority shall be
conclusive and binding upon the Participants, the Company and all other Persons,
except, with respect to any Options held by any Participant, as otherwise
provided in the Option Agreement for such Options or in such Participant’s
employment agreement. All expenses associated with the administration of the
Plan shall be borne by the Company. The Committee may, as approved by the Board
and to the extent permissible by law, delegate any of its authority hereunder to
such Persons as it deems appropriate.

 

ARTICLE IV

 

LIMITATION ON AGGREGATE SHARES

 

The number of shares of Common Stock with respect to which Options may be
granted under the Plan shall not exceed, in the aggregate, 43,904,773 shares of
Common Stock, subject to adjustment in accordance with Section 6.4 and 6.5. To
the extent any Options expire unexercised or are canceled, terminated or
forfeited in any manner without the issuance of Common Stock thereunder, the
shares with respect to which such Options were granted shall again be available
under the Plan. Similarly, if any shares of Common Stock issued hereunder upon
exercise of the Options are repurchased hereunder, such shares shall again be
available under the Plan for reissuance as Options. The shares of Common Stock
available under the Plan may be either authorized and unissued shares, treasury
shares or a combination thereof, as the Committee shall determine.

 

ARTICLE V

 

AWARDS

 

5.1           GRANT OF OPTIONS. THE COMMITTEE MAY GRANT OPTIONS TO PARTICIPANTS
FROM TIME TO TIME IN ACCORDANCE WITH THIS ARTICLE V. OPTIONS GRANTED UNDER THE
PLAN SHALL BE NONQUALIFIED STOCK OPTIONS. THE EXERCISE PRICE PER SHARE OF COMMON
STOCK UNDER EACH OPTION SHALL BE DETERMINED BY THE COMMITTEE AT THE TIME OF
GRANT, BUT SHALL BE NO LESS THAN THE “FAIR MARKET VALUE” OF THE COMMON STOCK ON
THE DATE SUCH OPTIONS ARE GRANTED. FOR PURPOSES OF THIS SECTION 5.1 ONLY, “FAIR
MARKET VALUE” OF COMMON STOCK MEANS (A) IF THE STOCK IS NOT READILY TRADABLE ON
AN ESTABLISHED SECURITIES MARKET, THE AMOUNT DETERMINED BY THE BOARD BY THE
REASONABLE APPLICATION OF A REASONABLE VALUATION METHOD WITHIN THE MEANING OF
TREAS. REG. §1.409A-1(B)(5)(IV)(B) OR (B) IF THE STOCK IS READILY TRADABLE ON AN
ESTABLISHED SECURITIES MARKET, THE FAIR MARKET VALUE OF THE STOCK BASED UPON THE
LAST SALE BEFORE OR THE FIRST SALE AFTER THE GRANT OF SUCH STOCK. SUBJECT TO
SECTION 5.6, OPTIONS SHALL BE EXERCISABLE AT SUCH TIME OR TIMES AS THE COMMITTEE
SHALL DETERMINE. THE TERM OF EACH OPTION SHALL BE TEN YEARS FROM THE DATE OF
GRANT OF SUCH OPTION.

 

5.2           EXERCISE PROCEDURE.

 

(A)           OPTIONS SHALL BE EXERCISABLE, TO THE EXTENT THEY ARE VESTED, BY
WRITTEN NOTICE TO THE COMPANY (TO THE ATTENTION OF THE COMPANY’S SECRETARY OR
ANY OTHER DESIGNEE SET FORTH IN THE OPTION AGREEMENT) ACCOMPANIED BY PAYMENT IN
FULL OF THE APPLICABLE EXERCISE PRICE. PAYMENT OF SUCH EXERCISE PRICE SHALL BE
MADE, AT THE ELECTION OF THE PARTICIPANT, (I) IN CASH

 

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(INCLUDING CHECK, BANK DRAFT, MONEY ORDER OR WIRE TRANSFER OF IMMEDIATELY
AVAILABLE FUNDS), (II) BY DELIVERY OF OUTSTANDING SHARES OF COMMON STOCK WITH A
FAIR MARKET VALUE ON THE DATE OF EXERCISE EQUAL TO THE AGGREGATE EXERCISE PRICE
PAYABLE WITH RESPECT TO THE OPTION’S EXERCISE, (III) BY AUTHORIZING THE COMPANY
TO WITHHOLD FROM ISSUANCE A NUMBER OF ISSUED SHARES ISSUABLE UPON EXERCISE OF
THE OPTIONS WHICH, WHEN MULTIPLIED BY THE FAIR MARKET VALUE OF A SHARE OF COMMON
STOCK ON THE DATE OF EXERCISE, IS EQUAL TO THE AGGREGATE EXERCISE PRICE PAYABLE
WITH RESPECT TO THE OPTIONS SO EXERCISED OR (IV) BY ANY COMBINATION OF THE
FOREGOING.

 

(B)           IN THE EVENT A PARTICIPANT ELECTS TO PAY THE EXERCISE PRICE
PAYABLE WITH RESPECT TO AN OPTION PURSUANT TO SECTION 5.2(A)(II), (A) ONLY A
WHOLE NUMBER OF SHARE(S) OF COMMON STOCK (AND NOT FRACTIONAL SHARES OF COMMON
STOCK) MAY BE TENDERED IN PAYMENT, (B) SUCH PARTICIPANT MUST PRESENT EVIDENCE
ACCEPTABLE TO THE COMPANY THAT SUCH PARTICIPANT HAS OWNED ANY SUCH SHARES OF
COMMON STOCK TENDERED IN PAYMENT OF THE EXERCISE PRICE (AND THAT SUCH TENDERED
SHARES OF COMMON STOCK HAVE NOT BEEN SUBJECT TO ANY SUBSTANTIAL RISK OF
FORFEITURE) FOR AT LEAST SIX MONTHS PRIOR TO THE DATE OF EXERCISE, AND (C) SUCH
SHARES OF COMMON STOCK MUST BE DELIVERED TO THE COMPANY. DELIVERY FOR THIS
PURPOSE MAY, AT THE ELECTION OF SUCH PARTICIPANT, BE MADE EITHER BY (1) PHYSICAL
DELIVERY OF THE CERTIFICATE(S) FOR ALL SUCH SHARES OF COMMON STOCK TENDERED IN
PAYMENT OF THE PRICE, ACCOMPANIED BY DULY EXECUTED INSTRUMENTS OF TRANSFER IN A
FORM ACCEPTABLE TO THE COMPANY, OR (2) DIRECTION TO SUCH PARTICIPANT’S BROKER TO
TRANSFER, BY BOOK ENTRY, SUCH SHARES OF COMMON STOCK FROM A BROKERAGE ACCOUNT OF
SUCH PARTICIPANT TO A BROKERAGE ACCOUNT SPECIFIED BY THE COMPANY. WHEN PAYMENT
OF THE EXERCISE PRICE IS MADE BY DELIVERY OF COMMON STOCK, THE DIFFERENCE, IF
ANY, BETWEEN (X) THE AGGREGATE EXERCISE PRICE PAYABLE WITH RESPECT TO THE OPTION
BEING EXERCISED AND (Y) THE FAIR MARKET VALUE OF THE SHARES OF COMMON STOCK
TENDERED IN PAYMENT (PLUS ANY APPLICABLE TAXES) SHALL BE PAID IN CASH. NO
PARTICIPANT MAY TENDER SHARES OF COMMON STOCK HAVING A FAIR MARKET VALUE
EXCEEDING THE AGGREGATE EXERCISE PRICE PAYABLE WITH RESPECT TO THE OPTION BEING
EXERCISED (PLUS ANY APPLICABLE TAXES).

 

(C)           IN THE EVENT A PARTICIPANT ELECTS TO PAY THE EXERCISE PRICE
PAYABLE WITH RESPECT TO AN OPTION PURSUANT TO SECTION 5.2(A)(III), ONLY A WHOLE
NUMBER OF ISSUED SHARES (AND NOT FRACTIONAL ISSUED SHARES) MAY BE WITHHELD IN
PAYMENT. WHEN PAYMENT OF THE EXERCISE PRICE IS MADE BY WITHHOLDING OF ISSUED
SHARES, THE DIFFERENCE, IF ANY, BETWEEN (X) THE AGGREGATE EXERCISE PRICE PAYABLE
WITH RESPECT TO THE OPTION BEING EXERCISED AND (Y) THE FAIR MARKET VALUE OF THE
ISSUED SHARES WITHHELD IN PAYMENT SHALL BE PAID IN CASH. NO PARTICIPANT MAY
AUTHORIZE THE WITHHOLDING OF ISSUED SHARES HAVING A FAIR MARKET VALUE EXCEEDING
THE AGGREGATE EXERCISE PRICE PAYABLE WITH RESPECT TO THE OPTION BEING EXERCISED
(PLUS ANY APPLICABLE TAXES). ANY WITHHELD ISSUED SHARES SHALL NO LONGER BE
ISSUABLE UNDER SUCH OPTION.

 

(D)           IF, WITH RESPECT TO ANY PARTICIPANT A TERMINATION EVENT OCCURS,
THEN, SUBJECT TO SECTION  6.3, SUCH PARTICIPANT SHALL HAVE A PERIOD OF 90 DAYS
AFTER THE TERMINATION DATE TO EXERCISE ANY OPTIONS THAT WERE VESTED AS OF THE
TERMINATION DATE; PROVIDED, THAT IN THE EVENT OF PARTICIPANT’S DEATH OR
DISABILITY, SUCH PARTICIPANT (OR SUCH PARTICIPANT’S LEGAL REPRESENTATIVES) SHALL
HAVE A PERIOD OF 180 DAYS AFTER THE TERMINATION DATE TO EXERCISE ANY OPTIONS
THAT WERE VESTED AS OF THE TERMINATION DATE.

 

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5.3           WITHHOLDING TAX REQUIREMENTS.

 

(A)           AMOUNT OF WITHHOLDING. IT SHALL BE A CONDITION OF THE EXERCISE OF
ANY OPTION THAT THE PARTICIPANT EXERCISING THE OPTION MAKE APPROPRIATE PAYMENT
OR OTHER PROVISION ACCEPTABLE TO THE COMPANY WITH RESPECT TO ANY WITHHOLDING TAX
REQUIREMENT ARISING FROM SUCH EXERCISE, IN ACCORDANCE WITH THE PLAN OR THE
OPTION AGREEMENT, AS APPLICABLE. THE AMOUNT OF WITHHOLDING TAX REQUIRED, IF ANY,
WITH RESPECT TO ANY OPTION EXERCISE (THE “WITHHOLDING AMOUNT”) SHALL BE
DETERMINED BY THE COMPANY’S TREASURER OR OTHER APPROPRIATE OFFICER OF THE
COMPANY, AND THE PARTICIPANT SHALL FURNISH SUCH INFORMATION AND MAKE SUCH
REPRESENTATIONS AS SUCH OFFICER REQUIRES TO MAKE SUCH DETERMINATION.

 

(B)           WITHHOLDING PROCEDURE. IF THE COMPANY DETERMINES THAT WITHHOLDING
TAX IS REQUIRED WITH RESPECT TO ANY OPTION EXERCISE, THE COMPANY SHALL NOTIFY
THE PARTICIPANT OF THE WITHHOLDING AMOUNT, AND THE PARTICIPANT SHALL PAY TO THE
COMPANY AN AMOUNT EQUAL TO THE WITHHOLDING AMOUNT IN CASH (INCLUDING CHECK, BANK
DRAFT, MONEY ORDER OR WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS), EXCEPT TO
THE EXTENT OTHERWISE PROVIDED IN THE OPTION AGREEMENT.(1) ALL AMOUNTS PAID TO
THE COMPANY PURSUANT TO THIS SECTION 5.3 SHALL BE DEPOSITED IN ACCORDANCE WITH
APPLICABLE LAW BY THE COMPANY AS WITHHOLDING TAX FOR THE PARTICIPANT’S ACCOUNT.
IF THE TREASURER OR OTHER APPROPRIATE OFFICER OF THE COMPANY DETERMINES THAT NO
WITHHOLDING TAX IS REQUIRED WITH RESPECT TO THE EXERCISE OF ANY OPTION, BUT
SUBSEQUENTLY IT IS DETERMINED THAT THE EXERCISE RESULTED IN TAXABLE INCOME AS TO
WHICH WITHHOLDING IS REQUIRED (AS A RESULT OF A DISPOSITION OF SHARES OR
OTHERWISE), THE PARTICIPANT SHALL PROMPTLY, UPON BEING NOTIFIED OF THE
WITHHOLDING REQUIREMENT, PAY TO THE COMPANY, BY MEANS ACCEPTABLE TO THE COMPANY
OR AS PROVIDED IN AN OPTION AGREEMENT, THE AMOUNT REQUIRED TO BE WITHHELD.

 

5.4           NOTIFICATION OF INQUIRIES AND AGREEMENTS. EACH PARTICIPANT AND
EACH PERMITTED TRANSFEREE (AS DEFINED HEREIN) SHALL NOTIFY THE COMPANY IN
WRITING WITHIN TEN (10) DAYS AFTER THE DATE SUCH PARTICIPANT OR PERMITTED
TRANSFEREE (I) FIRST OBTAINS KNOWLEDGE OF ANY INTERNAL REVENUE SERVICE INQUIRY,
AUDIT, ASSERTION, DETERMINATION, INVESTIGATION, OR QUESTION RELATING IN ANY
MANNER TO THE VALUE OF OPTIONS GRANTED HEREUNDER; (II) INCLUDES OR AGREES
(INCLUDING, WITHOUT LIMITATION, IN ANY SETTLEMENT, CLOSING OR OTHER SIMILAR
AGREEMENT) TO INCLUDE IN GROSS INCOME WITH RESPECT TO ANY OPTION GRANTED UNDER
THIS PLAN (A) ANY AMOUNT IN EXCESS OF THE AMOUNT REPORTED ON FORM 1099 OR FORM
W-2 TO SUCH PARTICIPANT BY THE COMPANY, OR (B) IF NO SUCH FORM WAS RECEIVED, ANY
AMOUNT; AND/OR (III) EXERCISES, SELLS, DISPOSES OF, OR OTHERWISE TRANSFERS AN
OPTION ACQUIRED PURSUANT TO THIS PLAN. UPON REQUEST, A PARTICIPANT OR PERMITTED
TRANSFEREE SHALL PROVIDE TO THE COMPANY ANY INFORMATION OR DOCUMENT THAT IS
REASONABLY AVAILABLE TO THEM RELATING TO ANY EVENT DESCRIBED IN THE PRECEDING
SENTENCE WHICH THE COMPANY (IN ITS SOLE DISCRETION) REQUIRES IN ORDER TO
CALCULATE AND SUBSTANTIATE ANY CHANGE IN THE COMPANY’S TAX LIABILITY AS A RESULT
OF SUCH EVENT.

 

5.5           CONDITIONS AND LIMITATIONS ON EXERCISE. AT THE DISCRETION OF THE
COMMITTEE, EXERCISED AT THE TIME OF GRANT, OPTIONS MAY VEST, IN ONE OR MORE
INSTALLMENTS, UPON (I) THE FULFILLMENT OF CERTAIN CONDITIONS, (II) THE PASSAGE
OF A SPECIFIED PERIOD OF TIME, AND/OR (III) THE ACHIEVEMENT BY THE COMPANY OR
ANY SUBSIDIARY OF CERTAIN PERFORMANCE GOALS. IN THE EVENT OF

 

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(1)   Gary Blackford will have the right in his Option Agreement to net amounts
owed by him for any withholding taxes resulting from the exercise of any
Options.

 

 

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A PROPOSED SALE OF THE COMPANY, THE COMMITTEE MAY PROVIDE, IN ITS DISCRETION, BY
WRITTEN NOTICE TO EACH APPLICABLE PARTICIPANT, THAT ANY OR ALL OPTIONS SHALL
BECOME IMMEDIATELY VESTED, AND THAT ANY OR ALL OPTIONS SHALL TERMINATE IF NOT
EXERCISED AS OF THE DATE OF SUCH SALE OF THE COMPANY OR ANY OTHER DESIGNATED
DATE, OR THAT ANY SUCH OPTIONS SHALL THEREAFTER REPRESENT ONLY THE RIGHT TO
RECEIVE SUCH CONSIDERATION AS THE COMMITTEE SHALL REASONABLY DEEM EQUITABLE IN
GOOD FAITH IN THE CIRCUMSTANCES.

 

5.6           EXPIRATION OF OPTIONS. IN NO EVENT SHALL ANY PART OF ANY OPTION BE
EXERCISABLE AFTER THE STATED DATE OF EXPIRATION THEREOF.

 

5.7           RIGHT TO PURCHASE ISSUED SHARES UPON TERMINATION OF EMPLOYMENT.
EXCEPT TO THE EXTENT OTHERWISE PROVIDED IN THE OPTION AGREEMENT (AS DETERMINED
BY THE COMMITTEE IN ITS SOLE DISCRETION AT THE TIME OF GRANT), THE PROVISIONS OF
THIS SECTION 5.7 SHALL APPLY TO ALL OPTIONS.(2)

 

(A)           REPURCHASE RIGHT. IF, WITH RESPECT TO ANY PARTICIPANT, A
TERMINATION EVENT OCCURS, THEN SUCH PARTICIPANT’S ISSUED SHARES (WHETHER HELD BY
SUCH PARTICIPANT OR ONE OR MORE TRANSFEREES AND INCLUDING ANY ISSUED SHARES
ACQUIRED SUBSEQUENT TO THE TERMINATION DATE) WILL, AT THE COMPANY’S ELECTION, BE
SUBJECT TO REPURCHASE, IN WHOLE OR IN PART, BY THE COMPANY PURSUANT TO THE TERMS
AND CONDITIONS SET FORTH IN THIS SECTION 5.7 (THE “REPURCHASE OPTION”) AT A
PRICE PER ISSUED SHARE EQUAL TO THE FAIR MARKET VALUE PER ISSUED SHARE
DETERMINED AS OF THE VALUATION DATE, LESS THE AMOUNT OF ANY CASH OR PROPERTY
DISTRIBUTED BY THE COMPANY WITH RESPECT TO SUCH ISSUED SHARE BETWEEN THE
APPLICABLE VALUATION DATE AND THE CLOSING OF THE APPLICABLE REPURCHASE;
PROVIDED, THAT NOTWITHSTANDING THE FOREGOING, IF THE TERMINATION EVENT OCCURRED
DUE TO A TERMINATION BY THE COMPANY OF SUCH PARTICIPANT’S EMPLOYMENT FOR CAUSE,
THEN THE APPLICABLE ISSUED SHARES WILL BE SUBJECT TO THE REPURCHASE OPTION AT A
PRICE PER ISSUED SHARE EQUAL TO THE LESSER OF (X) A PRICE PER ISSUED SHARE EQUAL
TO THE FAIR MARKET VALUE PER ISSUED SHARE DETERMINED AS OF THE VALUATION DATE,
LESS THE AMOUNT OF ANY CASH DISTRIBUTED BY THE COMPANY WITH RESPECT TO SUCH
ISSUED SHARE BETWEEN THE APPLICABLE VALUATION DATE AND THE CLOSING OF THE
APPLICABLE REPURCHASE AND (Y) THE PRICE PAID TO THE COMPANY FOR SUCH ISSUED
SHARE BY SUCH PARTICIPANT. UPON THE OCCURRENCE OF A TERMINATION EVENT WITH
RESPECT TO ANY PARTICIPANT, SUCH PARTICIPANT’S UNVESTED OPTIONS AS OF THE
TERMINATION DATE SHALL TERMINATE.

 

(B)           REPURCHASE PROCEDURES. THE REPURCHASE OPTION IS EXERCISABLE BY THE
COMPANY DELIVERING WRITTEN NOTICE (THE “REPURCHASE NOTICE”) TO THE HOLDER OR
HOLDERS OF THE APPLICABLE ISSUED SHARES AT ANY TIME WITHIN 240 DAYS AFTER THE
LATER OF (X) THE APPLICABLE TERMINATION DATE OR (Y) THE DATE THAT SUCH ISSUED
SHARES WERE FIRST ISSUED. THE REPURCHASE NOTICE WILL SET FORTH THE NUMBER OF
ISSUED SHARES TO BE ACQUIRED FROM SUCH HOLDER(S), AN ESTIMATE OF THE AGGREGATE
CONSIDERATION TO BE PAID FOR SUCH HOLDER’S ISSUED SHARES AND THE TIME AND PLACE
FOR THE CLOSING OF THE TRANSACTION. IF ANY ISSUED SHARES ARE HELD BY ANY
TRANSFEREES OF THE APPLICABLE PARTICIPANT, THE COMPANY WILL PURCHASE SUCH ISSUED
SHARES ELECTED TO BE PURCHASED FROM SUCH HOLDER(S), PRO RATA ACCORDING TO THE
NUMBER OF ISSUED SHARES HELD BY SUCH HOLDER(S) AT THE TIME OF DELIVERY OF SUCH
REPURCHASE NOTICE (DETERMINED AS NEARLY AS PRACTICABLE TO THE NEAREST SHARE).

 

--------------------------------------------------------------------------------

(2)   Gary Blackford's Option Agreement will provide that his Issued Shares are
not subject to repurchase.

 

9

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(C)           CLOSING OF REPURCHASE. THE CLOSING OF THE TRANSACTIONS
CONTEMPLATED BY THIS SECTION 5.7 WILL TAKE PLACE ON THE DATE DESIGNATED BY THE
COMPANY IN THE REPURCHASE NOTICE, WHICH DATE WILL NOT BE MORE THAN 45 DAYS AFTER
THE DELIVERY OF SUCH NOTICE. THE AMOUNT OF THE REPURCHASE PRICE TO BE PAID FOR
ANY ISSUED SHARES TO BE PURCHASED BY THE COMPANY PURSUANT TO A REPURCHASE OPTION
SHALL BE DETERMINED PURSUANT TO SECTION 5.7(A) HEREOF AND THE AGGREGATE AMOUNT
OF SUCH REPURCHASE PRICE SHALL BE REFERRED TO HEREIN AS THE “AGGREGATE
REPURCHASE PRICE”. THE COMPANY WILL PAY THE APPLICABLE AGGREGATE REPURCHASE
PRICE FOR ANY ISSUED SHARES TO BE PURCHASED BY THE COMPANY PURSUANT TO A
REPURCHASE OPTION BY DELIVERY OF A CHECK PAYABLE TO OR BY WIRE TRANSFER TO AN
ACCOUNT OR ACCOUNT(S) DESIGNATED BY THE HOLDER(S) OF SUCH ISSUED SHARES IN AN
AGGREGATE AMOUNT EQUAL TO THE APPLICABLE AGGREGATE REPURCHASE PRICE FOR SUCH
ISSUED SHARES.

 

(D)           RESTRICTIONS ON REPURCHASE. NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED IN THIS PLAN, ALL REPURCHASES OF ISSUED SHARES BY THE COMPANY
PURSUANT TO A REPURCHASE OPTION WILL BE SUBJECT TO APPLICABLE RESTRICTIONS
CONTAINED UNDER APPLICABLE LAW (INCLUDING DELAWARE LAW) AND IN THE COMPANY’S AND
ITS SUBSIDIARIES’ DEBT AND EQUITY FINANCING AGREEMENTS THAT ARE IN EFFECT ON THE
DATE DESIGNATED BY THE COMPANY FOR THE CLOSING OF SUCH REPURCHASE IN ACCORDANCE
WITH SECTION 5.7(C). IF ANY SUCH RESTRICTIONS PROHIBIT THE REPURCHASE OF ISSUED
SHARES WHICH THE COMPANY IS OTHERWISE ENTITLED TO MAKE PURSUANT TO THIS SECTION
5.7 OR IF SUCH REPURCHASE WOULD CAUSE A DEFAULT UNDER ANY OF THE COMPANY’S
AND/OR ITS SUBSIDIARIES’ DEBT AND/OR EQUITY FINANCING AGREEMENTS AND, IN EITHER
CASE, A REPURCHASE NOTICE HAS BEEN TIMELY DELIVERED PURSUANT TO SECTION 5.7(B),
THE COMPANY MAY, SUBJECT TO PROVISIONS OF THIS SECTION 5.7(D), MAKE SUCH
REPURCHASES AS SOON AS (I) IT IS PERMITTED TO DO SO UNDER SUCH RESTRICTIONS AND
(II) SUCH REPURCHASE WOULD NOT CAUSE SUCH A DEFAULT. THE COMPANY WILL RECEIVE
FROM EACH SELLER CUSTOMARY REPRESENTATIONS AND WARRANTIES REGARDING THE
OWNERSHIP OF THE ISSUED SHARES, INCLUDING, BUT NOT LIMITED TO, THE
REPRESENTATION THAT SUCH SELLER HAS GOOD AND MARKETABLE TITLE TO SUCH ISSUED
SHARES TO BE TRANSFERRED FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES OR
OTHER RESTRICTIONS, BUT NO SELLER WILL BE REQUIRED TO PROVIDE ANY
REPRESENTATIONS AND WARRANTIES REGARDING THE STATUS OF THE COMPANY.

 

(E)           TERMINATION OF REPURCHASE OPTION. THE REPURCHASE OPTION SET FORTH
IN THIS SECTION 5.7 SHALL TERMINATE WITH RESPECT TO EACH PARTICIPANT UPON THE
CONSUMMATION OF AN IPO.

 

5.8           RESTRICTIONS ON TRANSFER OF ISSUED SHARES.

 

(A)           NEITHER ANY PARTICIPANT NOR ANY PERMITTED TRANSFEREE MAY DIRECTLY
OR INDIRECTLY, SELL, PLEDGE, ASSIGN, TRANSFER OR OTHERWISE DISPOSE OF (A
“TRANSFER”) ANY INTEREST IN ANY ISSUED SHARES, EXCEPT (I) PURSUANT TO THE
PROVISIONS OF SECTIONS 5.7 OR 5.10 HEREOF, (II) IN PUBLIC SALES, (III) PURSUANT
TO APPLICABLE LAWS OF DESCENT AND DISTRIBUTION, OR (IV) AMONG SUCH PARTICIPANT’S
FAMILY GROUP; PROVIDED, THAT THE RESTRICTIONS CONTAINED IN THIS SECTION 5.8 WILL
CONTINUE TO BE APPLICABLE TO ISSUED SHARES AFTER ANY TRANSFER OF THE TYPE
REFERRED TO IN CLAUSE (III) OR (IV) ABOVE AND, AS A CONDITION TO ANY SUCH
TRANSFER, THE TRANSFEREES OF SUCH ISSUED SHARES MUST AGREE IN WRITING (WHICH
WRITING MUST BE DELIVERED TO THE COMPANY) TO BE BOUND BY THE PROVISIONS OF THIS
PLAN (UNLESS SUCH TRANSFER IS PURSUANT TO APPLICABLE LAWS OF DESCENT AND
DISTRIBUTION, IN WHICH CASE, SUCH WRITING SHALL BE ENTERED INTO AND DELIVERED TO
THE COMPANY AS SOON AS REASONABLY POSSIBLE AFTER SUCH TRANSFER). ANY TRANSFEREE
OF ISSUED SHARES PURSUANT TO A TRANSFER IN ACCORDANCE WITH CLAUSE (III) OR (IV)
ABOVE IS HEREIN REFERRED TO AS A “PERMITTED TRANSFEREE.” 

 

10

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UPON THE PROPOSED TRANSFER OF ANY ISSUED SHARES PURSUANT TO CLAUSE (III) OR (IV)
ABOVE, SUCH PARTICIPANT OR SUCH PERMITTED TRANSFEREE TRANSFERRING SUCH ISSUED
SHARES WILL DELIVER A WRITTEN NOTICE (A “TRANSFER NOTICE”) TO THE COMPANY, WHICH
DISCLOSES IN REASONABLE DETAIL THE IDENTITY OF THE PERMITTED TRANSFEREE(S).

 

(B)           THE PROVISIONS OF THIS SECTION 5.8 SHALL TERMINATE UPON THE
CONSUMMATION OF A QUALIFIED PUBLIC OFFERING.

 

(C)           NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SECTION 5.8, ANY
HOLDER OF ISSUED SHARES WHO IS A PARTY TO THE STOCKHOLDERS AGREEMENT (INCLUDING
AS A RESULT OF HAVING EXECUTED A JOINDER TO THE STOCKHOLDERS AGREEMENT IN
ACCORDANCE WITH THE TERMS OF THE STOCKHOLDERS AGREEMENT) SHALL BE SUBJECT TO THE
RESTRICTIONS ON TRANSFERS WITH RESPECT TO THE ISSUED SHARES THAT ARE SET FORTH
IN THE STOCKHOLDERS AGREEMENT (RATHER THAN THE RESTRICTIONS ON TRANSFERS THAT
ARE SET FORTH IN THIS SECTION 5.8).

 

5.9           ADDITIONAL RESTRICTIONS ON TRANSFER.

 

(A)           THE CERTIFICATES REPRESENTING SHARES OF ISSUED SHARES WILL BEAR
THE FOLLOWING LEGEND:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN
REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN THE ISSUER’S STOCK
OPTION PLAN, A COPY OF WHICH MAY BE OBTAINED BY THE HOLDER HEREOF AT THE
ISSUER’S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE.”

 

The legend set forth above regarding the Plan shall be removed from the
certificates evidencing any securities which cease to be Issued Shares.

 

(B)           NO HOLDER OF ISSUED SHARES MAY TRANSFER ANY ISSUED SHARES (EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IN A
PUBLIC SALE) WITHOUT FIRST DELIVERING TO THE COMPANY AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE IN FORM AND SUBSTANCE TO THE COMPANY (WHICH COUNSEL WILL
BE REASONABLY ACCEPTABLE TO THE COMPANY) THAT REGISTRATION UNDER THE SECURITIES
ACT IS NOT REQUIRED IN CONNECTION WITH SUCH TRANSFER. IF SUCH OPINION OF
COUNSEL, REASONABLY ACCEPTABLE IN FORM AND SUBSTANCE TO THE COMPANY, FURTHER
STATES THAT NO SUBSEQUENT TRANSFER OF SUCH ISSUED SHARES WILL REQUIRE
REGISTRATION UNDER THE SECURITIES ACT, THE COMPANY WILL PROMPTLY UPON SUCH
TRANSFER, DELIVER NEW CERTIFICATES FOR SUCH SECURITIES WHICH DO NOT BEAR THE
SECURITIES ACT LEGEND SET FORTH IN THIS SECTION 5.9(A).

 

5.10         APPROVED SALE OF THE COMPANY.

 

(A)           IF THE BOARD OR THE HOLDERS OF A MAJORITY OF THE SHARES OF VOTING
COMMON STOCK THEN OUTSTANDING APPROVE A SALE OF ALL OR SUBSTANTIALLY ALL OF THE
ASSETS OF THE COMPANY OR

 

11

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UHS (AS DETERMINED ON A CONSOLIDATED BASIS) OR A SALE OF ALL (OR, FOR
ACCOUNTING, TAX OR OTHER REASONS, SUBSTANTIALLY ALL) OF (X) THE OUTSTANDING
SHARES OF COMMON STOCK OR (Y) THE SHARES OF VOTING CAPITAL STOCK OF UHS (IN
EITHER CASE, WHETHER BY MERGER, RECAPITALIZATION, CONSOLIDATION, REORGANIZATION,
COMBINATION OR OTHERWISE) TO AN INDEPENDENT THIRD PARTY OR GROUP OF INDEPENDENT
THIRD PARTIES (EACH SUCH SALE, AN “APPROVED SALE”), THEN EACH HOLDER OF ISSUED
SHARES WILL VOTE FOR, CONSENT TO AND RAISE NO OBJECTIONS AGAINST SUCH APPROVED
SALE. IF THE APPROVED SALE IS STRUCTURED AS (I) A MERGER OR CONSOLIDATION, EACH
HOLDER OF ISSUED SHARES WILL WAIVE ANY DISSENTERS’ RIGHTS, APPRAISAL RIGHTS OR
SIMILAR RIGHTS IN CONNECTION WITH SUCH MERGER OR CONSOLIDATION OR (II) A SALE OF
STOCK, EACH HOLDER OF ISSUED SHARES WILL AGREE TO SELL ALL OF HIS OR HER ISSUED
SHARES ON THE TERMS AND CONDITIONS APPROVED BY THE HOLDERS OF A MAJORITY OF THE
SHARES OF VOTING COMMON STOCK THEN OUTSTANDING. EACH HOLDER OF ISSUED SHARES OR
OPTIONS, AS APPLICABLE, WILL TAKE ALL NECESSARY OR DESIRABLE ACTIONS IN
CONNECTION WITH THE CONSUMMATION OF THE APPROVED SALE AS REASONABLY REQUESTED BY
THE COMPANY INCLUDING, WITHOUT LIMITATION, EXECUTING ANY APPLICABLE PURCHASE
AGREEMENT AND, IF NECESSARY, EXERCISING ANY OPTIONS. EACH HOLDER OF ISSUED
SHARES, UPON EXECUTION OF THE APPLICABLE OPTION AGREEMENT, IRREVOCABLY
CONSTITUTES AND APPOINTS THE COMPANY THE TRUE AND LAWFUL ATTORNEY OF SUCH
HOLDER, WITH FULL POWER OF SUBSTITUTION, IN THE NAME OF SUCH HOLDER OR THE
COMPANY TO GIVE EFFECT TO THIS SECTION 5.10, INCLUDING THE EXECUTION OF ANY
DOCUMENTATION NECESSARY TO TRANSFER OWNERSHIP OF ISSUED SHARES PURSUANT TO AN
APPROVED SALE. EACH HOLDER OF ISSUED SHARES, UPON EXECUTION OF THE APPLICABLE
OPTION AGREEMENT, AGREES THAT THE POWERS GRANTED TO THE COMPANY IN THE
IMMEDIATELY PRECEDING SENTENCE ARE COUPLED WITH AN INTEREST AND ARE IRREVOCABLE
BY ANY HOLDER OF ISSUED SHARES.

 

(B)           IF THE COMPANY OR THE HOLDERS OF THE COMPANY’S SECURITIES ENTER
INTO ANY NEGOTIATION OR TRANSACTION FOR WHICH RULE 506 (OR ANY SIMILAR RULE THEN
IN EFFECT) PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION MAY BE
AVAILABLE WITH RESPECT TO SUCH NEGOTIATION OR TRANSACTION (INCLUDING A MERGER,
CONSOLIDATION OR OTHER REORGANIZATION), THE HOLDERS OF ISSUED SHARES WILL, AT
THE REQUEST OF THE COMPANY, APPOINT A PURCHASER REPRESENTATIVE (AS SUCH TERM IS
DEFINED IN RULE 501) REASONABLY ACCEPTABLE TO THE COMPANY. IF ANY HOLDER OF
ISSUED SHARES APPOINTS A PURCHASER REPRESENTATIVE DESIGNATED BY THE COMPANY, THE
COMPANY WILL PAY THE FEES OF SUCH PURCHASER REPRESENTATIVE, BUT IF ANY HOLDER OF
ISSUED SHARES DECLINES TO APPOINT THE PURCHASER REPRESENTATIVE REASONABLY
DESIGNATED BY THE COMPANY, SUCH HOLDER WILL APPOINT ANOTHER PURCHASER
REPRESENTATIVE, AND SUCH HOLDER WILL BE RESPONSIBLE FOR THE FEES OF THE
PURCHASER REPRESENTATIVE SO APPOINTED.

 

(C)           EACH HOLDER OF ISSUED SHARES WILL BEAR THEIR PRO-RATA SHARE (BASED
UPON THE AMOUNT OF CONSIDERATION RECEIVED) OF THE COSTS OF ANY SALE OF ISSUED
SHARES PURSUANT TO AN APPROVED SALE TO THE EXTENT SUCH COSTS ARE INCURRED FOR
THE BENEFIT OF ALL HOLDERS OF COMMON STOCK AND ARE NOT OTHERWISE PAID BY THE
COMPANY OR THE ACQUIRING PARTY. COSTS INCURRED BY ANY HOLDER OF ISSUED SHARES ON
HIS OR HER OWN BEHALF WILL NOT BE CONSIDERED COSTS OF THE TRANSACTION HEREUNDER.

 

5.11         HOLDBACK AGREEMENT. NO HOLDER OF ISSUED SHARES WILL EFFECT ANY SALE
OR DISTRIBUTION OF COMMON STOCK DURING THE SEVEN DAYS PRIOR TO OR THE 180-DAY
PERIOD BEGINNING ON THE EFFECTIVE DATE OF ANY UNDERWRITTEN PUBLIC OFFERING
(EXCEPT AS PART OF SUCH UNDERWRITTEN REGISTRATION), UNLESS THE UNDERWRITERS
MANAGING SUCH UNDERWRITTEN PUBLIC OFFERING OTHERWISE AGREE.

 

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ARTICLE VI

 

GENERAL PROVISIONS

 

6.1           WRITTEN AGREEMENT. EACH OPTION GRANTED HEREUNDER SHALL BE EMBODIED
IN A WRITTEN  AGREEMENT (THE “OPTION AGREEMENT”) WHICH SHALL BE SIGNED BY THE
PARTICIPANT TO WHOM THE OPTION IS GRANTED AND SHALL BE SUBJECT TO THE TERMS AND
CONDITIONS SET FORTH HEREIN.

 

6.2           LISTING, REGISTRATION AND LEGAL COMPLIANCE. IF AT ANY TIME THE
COMMITTEE DETERMINES, IN ITS DISCRETION, THAT THE LISTING, REGISTRATION OR
QUALIFICATION OF THE SHARES SUBJECT TO OPTIONS UPON ANY SECURITIES EXCHANGE OR
UNDER ANY STATE OR FEDERAL SECURITIES OR OTHER LAW OR REGULATION, OR THE CONSENT
OR APPROVAL OF ANY GOVERNMENTAL REGULATORY BODY, IS NECESSARY AS A CONDITION TO
OR IN CONNECTION WITH THE GRANTING OF OPTIONS OR THE PURCHASE OR ISSUANCE OF
SHARES THEREUNDER, NO OPTIONS MAY BE GRANTED OR EXERCISED, IN WHOLE OR IN PART,
UNLESS SUCH LISTING, REGISTRATION, QUALIFICATION, CONSENT OR APPROVAL SHALL HAVE
BEEN EFFECTED OR OBTAINED FREE OF ANY CONDITIONS NOT ACCEPTABLE TO THE
COMMITTEE. THE HOLDERS OF SUCH OPTIONS WILL SUPPLY THE COMPANY WITH SUCH
CERTIFICATES, REPRESENTATIONS AND INFORMATION AS THE COMPANY SHALL REASONABLY
REQUEST AND SHALL OTHERWISE COOPERATE WITH THE COMPANY IN OBTAINING SUCH
LISTING, REGISTRATION, QUALIFICATION, CONSENT OR APPROVAL. IN THE CASE OF
OFFICERS AND OTHER PERSONS SUBJECT TO SECTION 16(B) OF THE SECURITIES EXCHANGE
ACT, THE COMMITTEE MAY AT ANY TIME IMPOSE ANY LIMITATIONS UPON THE EXERCISE OF
OPTIONS THAT, IN THE COMMITTEE’S DISCRETION, ARE NECESSARY IN ORDER TO COMPLY
WITH SUCH SECTION 16(B) AND THE RULES AND REGULATIONS THEREUNDER. IF THE
COMPANY, AS PART OF AN OFFERING OF SECURITIES OR OTHERWISE, FINDS IT NECESSARY
BECAUSE OF FEDERAL OR STATE REGULATORY REQUIREMENTS TO REDUCE THE PERIOD DURING
WHICH ANY OPTIONS MAY BE EXERCISED, THE COMMITTEE MAY, IN ITS DISCRETION AND
WITHOUT THE CONSENT OF THE HOLDER OF ANY SUCH OPTION, SO REDUCE SUCH PERIOD ON
NOT LESS THAN 15 DAYS’ WRITTEN NOTICE TO THE HOLDERS THEREOF.

 

6.3           OPTIONS NOT TRANSFERRABLE. OPTIONS (INCLUDING THE RIGHT TO RECEIVE
OPTION SHARES) MAY NOT BE TRANSFERRED OR ASSIGNED BY THE PARTICIPANT TO WHOM
THEY WERE GRANTED, OTHER THAN BY WILL OR THE LAWS OF DESCENT AND DISTRIBUTION
AND, DURING THE LIFETIME OF SUCH PARTICIPANT, OPTIONS MAY BE EXERCISED ONLY BY
SUCH PARTICIPANT (OR, IF SUCH PARTICIPANT IS INCAPACITATED, BY SUCH
PARTICIPANT’S LEGAL GUARDIAN OR LEGAL REPRESENTATIVE). IN THE EVENT OF THE DEATH
OF A PARTICIPANT, OPTIONS WHICH ARE NOT VESTED ON THE DATE OF DEATH SHALL
TERMINATE, AND THE EXERCISE OF OPTIONS GRANTED HEREUNDER TO SUCH PARTICIPANT
WHICH ARE VESTED AS OF THE DATE OF DEATH MAY BE MADE ONLY BY THE EXECUTOR OR
ADMINISTRATOR OF SUCH PARTICIPANT’S ESTATE OR THE PERSON OR PERSONS TO WHOM SUCH
PARTICIPANT’S RIGHTS UNDER THE OPTIONS PASS BY WILL OR THE LAWS OF DESCENT AND
DISTRIBUTION NO LATER THAN 180 DAYS AFTER THE DATE OF SUCH PARTICIPANT’S DEATH.

 

6.4           CORPORATE TRANSACTION. UPON THE OCCURRENCE OF ANY “CORPORATE
TRANSACTION” AS SUCH TERM IS DEFINED IN TREAS. REG. § 1.424-1(A)(3) (INCLUDING,
BUT NOT LIMITED TO A CORPORATE MERGER, CONSOLIDATION, ACQUISITION OF PROPERTY OR
STOCK, SEPARATION, REORGANIZATION, OR LIQUIDATION) IN WHICH HOLDERS OF COMMON
STOCK ARE ENTITLED TO RECEIVE (EITHER DIRECTLY OR UPON SUBSEQUENT LIQUIDATION)
STOCK WITH RESPECT TO THEIR COMMON STOCK, NEW STOCK RIGHTS MAY BE SUBSTITUTED
FOR THE OPTIONS, BUT ONLY TO THE EXTENT THAT THE REQUIREMENTS OF TREAS. REG.
§ 1.424-1 (WITHOUT REGARD TO THE REQUIREMENT DESCRIBED IN § 1.424-1(A)(2) THAT
AN ELIGIBLE CORPORATION BE THE EMPLOYER OF THE OPTIONEE) WOULD BE MET IF THE
OPTION WERE A STATUTORY OPTION, AND THAT THE REQUIREMENTS OF SECTION 409A OF THE
CODE ARE MET. NOTWITHSTANDING THE FOREGOING, IN THE EVENT

 

13

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OF ANY PROPOSED TRANSACTION WHICH WOULD REPRESENT A SALE OF THE COMPANY, THE
BOARD MAY, IN ITS DISCRETION, TERMINATE ANY OR ALL OF THE OPTIONS BY WRITTEN
NOTICE TO THE THEN HOLDERS OF THE OPTIONS (WHETHER VESTED OR UNVESTED), SUBJECT
TO THE PAYMENT, UPON THE CONSUMMATION OF SUCH SALE OF THE COMPANY, BY THE
COMPANY TO THE THEN HOLDERS OF OPTIONS OF THE DIFFERENCE, IF ANY, BETWEEN THE
CONSIDERATION WHICH THE HOLDERS OF SUCH OPTIONS WOULD RECEIVE IN SUCH
TRANSACTION FOR THE APPLICABLE ISSUED SHARES IF SUCH HOLDERS EXERCISED SUCH
OPTIONS (WHETHER VESTED OR UNVESTED) IMMEDIATELY PRIOR TO SUCH TRANSACTION AND
THE EXERCISE PRICE OF SUCH OPTIONS.

 

6.5           ADJUSTMENT FOR CHANGE IN COMMON STOCK. IN THE EVENT OF A
RECAPITALIZATION, REORGANIZATION, STOCK SPLIT, STOCK DIVIDEND, COMBINATION OF
SHARES, CONSOLIDATION, MERGER OR OTHER CHANGE IN ANY CLASS OF COMMON STOCK, THE
BOARD OR THE COMMITTEE SHALL, IN ORDER TO PREVENT THE DILUTION OR ENLARGEMENT OF
RIGHTS UNDER THE PLAN OR OUTSTANDING OPTIONS, ADJUST (1) THE NUMBER AND TYPE OF
SHARES OR OTHER CONSIDERATION AS TO WHICH OPTIONS MAY BE GRANTED UNDER THE PLAN,
(2) THE NUMBER AND TYPE OF SHARES COVERED BY OUTSTANDING OPTIONS, (3) THE
EXERCISE PRICES SPECIFIED THEREIN AND (4) OTHER PROVISIONS OF THIS PLAN WHICH
SPECIFY A NUMBER OF SHARES, ALL AS SUCH BOARD OR COMMITTEE DETERMINES TO BE
APPROPRIATE AND EQUITABLE; PROVIDED, THAT SUCH ADJUSTMENTS SHALL BE MADE IN A
MANNER THAT DOES NOT SUBJECT PARTICIPANTS TO ANY ADDITIONAL TAX, PENALTIES OR
INTEREST PURSUANT TO SECTION 409A OF THE CODE. IN THE EVENT THAT THE COMPANY
DECLARES AND PAYS AN EXTRAORDINARY DIVIDEND, THE BOARD OR COMMITTEE SHALL MAKE
APPROPRIATE PROVISIONS FOR SUPPLEMENTAL DISTRIBUTIONS OF CASH, SECURITIES AND/OR
OTHER PROPERTY TO HOLDERS OF ANY OPTIONS OUTSTANDING AT THE TIME OF SUCH
EXTRAORDINARY DIVIDEND IN ORDER TO PRESERVE THE VALUE REPRESENTED BY SUCH
OPTIONS; PROVIDED, THAT SUCH SUPPLEMENTAL DISTRIBUTIONS SHALL BE MADE IN A
MANNER THAT DOES NOT SUBJECT PARTICIPANTS TO ANY ADDITIONAL TAX, PENALTIES OR
INTEREST PURSUANT TO SECTION 409A OF THE CODE.

 

6.6           RIGHTS OF PARTICIPANTS. NOTHING IN THE PLAN SHALL INTERFERE WITH
OR LIMIT IN ANY WAY THE RIGHT OF THE COMPANY OR ANY SUBSIDIARY TO TERMINATE ANY
PARTICIPANT’S EMPLOYMENT AT ANY TIME (WITH OR WITHOUT CAUSE), OR CONFER UPON ANY
PARTICIPANT ANY RIGHT TO CONTINUE IN THE EMPLOY OF THE COMPANY OR ANY SUBSIDIARY
FOR ANY PERIOD OF TIME OR TO CONTINUE TO RECEIVE SUCH PARTICIPANT’S CURRENT (OR
OTHER) RATE OF COMPENSATION, THE TERMS OF WHICH SHALL BE GOVERNED BY SUCH
PARTICIPANT’S EMPLOYMENT AGREEMENT, IF ANY, WITH THE COMPANY OR ANY OF ITS
SUBSIDIARIES. NO EMPLOYEE OF THE COMPANY OR ANY OF ITS SUBSIDIARIES SHALL HAVE A
RIGHT TO BE SELECTED AS A PARTICIPANT OR, HAVING BEEN SO SELECTED, TO BE
SELECTED AGAIN AS A PARTICIPANT, EXCEPT AS EXPRESSLY PROVIDED IN SUCH EMPLOYEE’S
EMPLOYMENT AGREEMENT, IF ANY, WITH THE COMPANY OR ANY OF ITS SUBSIDIARIES.

 

6.7           AMENDMENT, SUSPENSION AND TERMINATION OF PLAN. THE BOARD OR THE
COMMITTEE MAY SUSPEND OR TERMINATE THE PLAN OR ANY PORTION THEREOF AT ANY TIME
AND MAY AMEND IT FROM TIME TO TIME IN SUCH RESPECTS AS THE BOARD OR THE
COMMITTEE MAY DEEM ADVISABLE; PROVIDED, HOWEVER, THAT NO SUCH AMENDMENT SHALL BE
MADE WITHOUT SHAREHOLDER APPROVAL TO THE EXTENT SUCH APPROVAL IS REQUIRED BY
LAW, AGREEMENT OR THE RULES OF ANY EXCHANGE UPON WHICH THE COMMON STOCK IS
LISTED, AND NO SUCH AMENDMENT, SUSPENSION OR TERMINATION SHALL IMPAIR THE RIGHTS
OF PARTICIPANTS UNDER OUTSTANDING OPTIONS WITHOUT THE CONSENT OF THE
PARTICIPANTS AFFECTED THEREBY, EXCEPT AS PROVIDED BELOW. NO OPTIONS SHALL BE
GRANTED HEREUNDER AFTER THE TENTH ANNIVERSARY OF THE ADOPTION OF THE PLAN.

 

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6.8           AMENDMENT OF OUTSTANDING OPTIONS. THE COMMITTEE MAY AMEND OR
MODIFY ANY OPTION IN ANY MANNER; PROVIDED, THAT NO AMENDMENT SHALL BE MADE WITH
RESPECT TO ANY OUTSTANDING OPTION TO EXTEND THE EXERCISE PERIOD BEYOND THE
STATED DATE OF EXPIRATION WITH RESPECT TO SUCH OPTION; PROVIDED, FURTHER, THAT,
EXCEPT AS EXPRESSLY CONTEMPLATED ELSEWHERE HEREIN OR IN ANY AGREEMENT EVIDENCING
SUCH OPTION, NO SUCH AMENDMENT OR MODIFICATION SHALL IMPAIR THE RIGHTS OF ANY
PARTICIPANT UNDER ANY OUTSTANDING OPTION WITHOUT THE CONSENT OF SUCH
PARTICIPANT.

 

6.9           INDEMNIFICATION. IN ADDITION TO SUCH OTHER RIGHTS OF
INDEMNIFICATION AS THEY MAY HAVE AS MEMBERS OF THE BOARD OR THE COMMITTEE, THE
MEMBERS OF THE BOARD AND COMMITTEE SHALL BE INDEMNIFIED BY THE COMPANY AGAINST
(I) ALL COSTS AND EXPENSES REASONABLY INCURRED BY THEM IN CONNECTION WITH ANY
ACTION, SUIT OR PROCEEDING TO WHICH THEY OR ANY OF THEM MAY BE PARTY BY REASON
OF ANY ACTION TAKEN OR FAILURE TO ACT UNDER OR IN CONNECTION WITH THE PLAN OR
ANY OPTION GRANTED UNDER THE PLAN, AND (II) 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; PROVIDED, HOWEVER, THAT ANY SUCH BOARD
OR COMMITTEE MEMBER SHALL BE ENTITLED TO THE INDEMNIFICATION RIGHTS SET FORTH IN
THIS SECTION 6.9 ONLY IF SUCH MEMBER (1) ACTED IN GOOD FAITH AND IN A MANNER
THAT SUCH MEMBER REASONABLY BELIEVED TO BE IN, AND NOT OPPOSED TO, THE BEST
INTERESTS OF THE COMPANY, AND (2) WITH RESPECT TO ANY CRIMINAL ACTION OR
PROCEEDING, (A) HAD NO REASONABLE CAUSE TO BELIEVE THAT SUCH CONDUCT WAS
UNLAWFUL, AND (B) UPON THE INSTITUTION OF ANY SUCH ACTION, SUIT OR PROCEEDING, A
BOARD OR COMMITTEE MEMBER SHALL GIVE THE COMPANY WRITTEN NOTICE THEREOF AND AN
OPPORTUNITY TO HANDLE AND DEFEND THE SAME BEFORE SUCH BOARD OR COMMITTEE MEMBER
UNDERTAKES TO HANDLE AND DEFEND IT ON HIS OWN BEHALF.

 

6.10         RESTRICTED SECURITIES. ALL COMMON STOCK ISSUED UPON THE EXERCISE OF
ANY OPTIONS ISSUED PURSUANT TO THE TERMS OF THIS PLAN SHALL CONSTITUTE
“RESTRICTED SECURITIES,” AS THAT TERM IS DEFINED IN RULE 144 PROMULGATED BY THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO THE SECURITIES ACT, AND MAY NOT
BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OR AN EXEMPTION THEREFROM.

 

6.11         AMENDMENT TO COMPLY WITH SECTION 409A OF THE CODE. TO THE EXTENT
THAT THIS PLAN OR ANY PART THEREOF IS DEEMED TO BE A NONQUALIFIED DEFERRED
COMPENSATION PLAN SUBJECT TO SECTION 409A OF THE CODE AND THE TREASURY
REGULATIONS (INCLUDING PROPOSED REGULATIONS) AND GUIDANCE PROMULGATED
THEREUNDER, (A) THE PROVISIONS OF THIS PLAN SHALL BE INTERPRETED IN A MANNER TO
THE MAXIMUM EXTENT POSSIBLE TO COMPLY WITH SECTION 409A OF THE CODE IN
ACCORDANCE WITH SECTION 409A OF THE CODE AND (B) THE PARTIES HERETO AGREE TO
AMEND THIS PLAN FOR PURPOSES OF COMPLYING WITH SECTION 409A OF THE CODE PROMPTLY
UPON ISSUANCE OF ANY TREASURY REGULATIONS OR GUIDANCE THEREUNDER; PROVIDED, THAT
ANY SUCH AMENDMENT SHALL NOT ENLARGE OR DIMINISH THE NUMBER OF SHARES OF COMMON
STOCK WITH RESPECT TO WHICH OPTIONS MAY BE GRANTED UNDER THE PLAN, OR OTHERWISE
MATERIALLY ADVERSELY AFFECT THE PARTICIPANT, THE COMPANY, OR ANY AFFILIATE OF
THE COMPANY, WITHOUT THE CONSENT OF SUCH PARTY.

 

6.12         Governing Law; Jurisdiction. All issues and questions concerning
the construction, validity, interpretation and enforceability of this Plan shall
be governed by, and construed in accordance with, the laws of the State of
Delaware, without giving effect to any choice of law or conflict of law rules or
provisions (whether of the State of Delaware or any

 

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 other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware. The parties hereto hereby
irrevocably and unconditionally submit to the exclusive jurisdiction of any
Federal court sitting in the State of Minnesota over any suit, action or
proceeding arising out of or relating to this Plan. The parties hereby agree
that service of any process, summons, notice or document by U.S. registered mail
addressed to any such party shall be effective service of process for any
action, suit or proceeding brought against a party in any such court. The
parties hereto hereby irrevocably and unconditionally waive any objection to the
laying of venue of any such suit, action or proceeding brought in any such court
and any claim that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum. The parties hereto agree that a final
judgment in any such suit, action or proceeding brought in any such court shall
be conclusive and binding upon any party and may be enforced in any other courts
to whose jurisdiction any party is or may be subject, by suit upon such
judgment.

 

*    *    *    *    *

 

16

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