EXHIBIT 10.04

IDT CORPORATION

2005 STOCK OPTION AND INCENTIVE PLAN

(Amended and Restated on February 24, 2009)

 

1. Purpose; Types of Awards; Construction.

The purpose of the IDT Corporation 2005 Stock Option and Incentive Plan (the
“Plan”) is to provide incentives to executive officers, employees, directors and
consultants of IDT Corporation (the “Company”), or any subsidiary of the Company
which now exists or hereafter is organized or acquired by the Company, to
acquire a proprietary interest in the Company, to continue as officers,
employees, directors or consultants, to increase their efforts on behalf of the
Company and to promote the success of the Company’s business. The provisions of
the Plan are intended to satisfy the requirements of Section 16(b) of the
Securities Exchange Act of 1934, as amended, and of Section 162(m) of the
Internal Revenue Code of 1986, as amended, and shall be interpreted in a manner
consistent with the requirements thereof.

 

2. Definitions.

As used in this Plan, the following words and phrases shall have the meanings
indicated:

(a) “Agreement” shall mean a written agreement entered into between the Company
and a Grantee in connection with an award under the Plan.

(b) “Board” shall mean the Board of Directors of the Company.

(c) “Change in Control” means a change in ownership or control of the Company
effected through either of the following:

(i) any “person,” as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than (A) the Company, (B) any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, (C) any
corporation or other entity owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of
common stock, or (D) any person who, immediately prior to the Initial Public
Offering, owned more than 25% of the combined voting power of the Company’s then
outstanding voting securities), is or becomes the “beneficial owner” (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company (not including in the securities beneficially owned by such person
any securities acquired directly from the Company or any of its affiliates other
than in connection with the acquisition by the Company or its affiliates of a
business) representing 25% or more of the combined voting power of the Company’s
then outstanding voting securities; or

(ii) during any period of not more than two consecutive years, not including any
period prior to the initial adoption of this Plan by the Board, individuals who
at the beginning of such period constitute the Board, and any new director
(other than a director whose initial assumption of office is in connection with
an actual or threatened election contest, including, but not limited to a
consent solicitation, relating to the election of directors of the Company)
whose election by the Board or nomination for election by the Company’s
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof.

(d) “Class B Common Stock” shall mean shares of Class B Common Stock, par value
$.01 per share, of the Company.

(e) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.

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(f) “Committee” shall mean the Compensation Committee of the Board or such other
committee as the Board may designate from time to time to administer the Plan.

(g) “Common Stock” shall mean shares of Common Stock, par value $.01 per share,
of the Company.

(h) “Company” shall mean IDT Corporation, a corporation incorporated under the
laws of the State of Delaware, or any successor corporation.

(i) “Continuous Service” means that the provision of services to the Company or
a Related Entity in any capacity of officer, employee, director or consultant is
not interrupted or terminated. Continuous Service shall not be considered
interrupted in the case of (i) any approved leave of absence, (ii) transfers
between locations of the Company or among the Company, any Related Entity or any
successor in any capacity of officer, employee, director or consultant, or
(iii) any change in status as long as the individual remains in the service of
the Company or a Related Entity in any capacity of officer, employee, director
or consultant (except as otherwise provided in the applicable Agreement). An
approved leave of absence shall include sick leave, maternity leave, military
leave (including without limitation service in the National Guard or the Army
Reserves) or any other personal leave approved by the Committee. For purposes of
Incentive Stock Options, no such leave may exceed ninety (90) days unless
reemployment upon expiration of such leave is guaranteed by statute or contract.

(j) “Corporate Transaction” means any of the following transactions:

(i) a merger or consolidation of the Company with any other corporation or other
entity, other than (A) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving or parent entity) 80% or more of the
combined voting power of the voting securities of the Company or such surviving
or parent entity outstanding immediately after such merger or consolidation or
(B) a merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no “person” (as defined in the
Exchange Act) acquired 25% or more of the combined voting power of the Company’s
then outstanding securities; or

(ii) a plan of complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of its assets (or any
transaction having a similar effect).

(k) “Deferred Stock Units” mean a Grantee’s rights to receive shares of Class B
Common Stock or Common Stock, as applicable, on a deferred basis, subject to
such restrictions, forfeiture provisions and other terms and conditions as shall
be determined by the Committee.

(l) “Disability” shall mean a Grantee’s inability to perform his or her duties
with the Company or any of its affiliates by reason of any medically
determinable physical or mental impairment, as determined by a physician
selected by the Grantee and acceptable to the Company.

(m) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended
from time to time.

(n) “Fair Market Value” per share as of a particular date shall mean (i) the
closing sale price per share of Class B Common Stock or Common Stock, as
applicable, on the national securities exchange on which the Class B Common
Stock or Common Stock, as applicable, is principally traded for the last
preceding date on which there was a sale of such Class B Common Stock or Common
Stock, as applicable, on such exchange, or (ii) if the shares of Class B Common
Stock or Common Stock, as applicable, are then traded in an over-the-counter
market, the average of the closing bid and asked prices for the shares of Class
B Common Stock or Common Stock, as applicable, in such over-the-counter market
for the last preceding date on which there was a sale of such Class B Common
Stock or Common Stock, as applicable, in such market, or (iii) if the shares of
Class B Common Stock or Common Stock, as applicable, are not then listed on a
national securities exchange or traded in an over-the-counter market, such value
as the Committee, in its sole discretion, shall determine.

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(o) “Grantee” shall mean a person who receives a grant of Options, Stock
Appreciation Rights, Limited Rights, Deferred Stock Units or Restricted Stock
under the Plan.

(p) “Incentive Stock Option” shall mean any option intended to be, and
designated as, an incentive stock option within the meaning of Section 422 of
the Code.

(q) “Insider” shall mean a Grantee who is subject to the reporting requirements
of Section 16(a) of the Exchange Act.

(r) “Insider Trading Policy” shall mean the Insider Trading Policy of the
Company, as may be amended from time to time.

(s) “Limited Right” shall mean a limited stock appreciation right granted
pursuant to Section 10 of the Plan.

(t) “Non-Employee Director” means a member of the Board or the board of
directors of any Subsidiary (other than Net2Phone, Inc., Film Roman, Inc. or any
other Subsidiary that has either (A) a class of “equity securities” (as defined
in Rule 3a11-1 promulgated under the Exchange Act) registered under the Exchange
Act or a similar foreign statute or (B) adopted any stock option plan, equity
compensation plan or similar employee benefit plan in which non-employee
directors of such Subsidiary are eligible to participate) who is not an employee
of the Company or any Subsidiary.

(u) “Non-Employee Director Annual Grant” shall mean an award of 4,166 shares of
Restricted Stock.

(v) “Non-Employee Director Grant Date” shall mean January 5 of the applicable
year (or the following business day if January 5 is not a business day).

(w) “Nonqualified Stock Option” shall mean any option not designated as an
Incentive Stock Option.

(x) “Option” or “Options” shall mean a grant to a Grantee of an option or
options to purchase shares of Class B Common Stock or Common Stock, as
applicable.

(y) “Option Agreement” shall have the meaning set forth in Section 6 of the
Plan.

(z) “Option Price” shall mean the exercise price of the shares of Class B Common
Stock or Common Stock, as applicable, covered by an Option.

(aa) “Parent” shall mean any company (other than the Company) in an unbroken
chain of companies ending with the Company if, at the time of granting an award
under the Plan, each of the companies other than the Company owns stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other companies in such chain.

(bb) “Plan” means this IDT Corporation 2005 Stock Option and Incentive Plan, as
amended or restated from time to time.

(cc) “Related Entity” means any Parent, Subsidiary or any business, corporation,
partnership, limited liability company or other entity in which the Company, a
Parent or a Subsidiary holds a substantial ownership interest, directly or
indirectly.

(dd) “Related Entity Disposition” means the sale, distribution or other
disposition by the Company of all or substantially all of the Company’s interest
in any Related Entity effected by a sale, merger or consolidation or other
transaction involving such Related Entity or the sale of all or substantially
all of the assets of such Related Entity.

(ee) “Restricted Period” shall have the meaning set forth in Section 11(b) of
the Plan.

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(ff) “Restricted Stock” means shares of Class B Common Stock or Common Stock, as
applicable, issued under the Plan to a Grantee for such consideration, if any,
and subject to such restrictions on transfer, rights of refusal, repurchase
provisions, forfeiture provisions and other terms and conditions as shall be
determined by the Committee.

(gg) “Retirement” shall mean a Grantee’s retirement in accordance with the terms
of any tax-qualified retirement plan maintained by the Company or any of its
affiliates in which the Grantee participates.

(hh) “Rule 16b-3” shall mean Rule 16b-3, as from time to time in effect,
promulgated under the Exchange Act, including any successor to such Rule.

(ii) “Stock Appreciation Right” shall mean the right, granted to a Grantee under
Section 9 of the Plan, to be paid an amount measured by the appreciation in the
Fair Market Value of a share of Class B Common Stock or Common Stock, as
applicable, from the date of grant to the date of exercise of the right, with
payment to be made in cash or Class B Common Stock or Common Stock, as
applicable, as specified in the award or determined by the Committee.

(jj) “Subsidiary” shall mean any company (other than the Company) in an unbroken
chain of companies beginning with the Company if each of the companies other
than the last company in the unbroken chain owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one
of the other companies in such chain.

(kk) “Tax Event” shall have the meaning set forth in Section 17 of the Plan.

(ll) “Ten Percent Stockholder” shall mean a Grantee who at the time an Incentive
Stock Option is granted, owns stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or any
Parent or Subsidiary.

 

3. Administration.

(a) The Plan shall be administered by the Committee, the members of which may be
composed of (i) “non-employee directors” under Rule 16b-3 and “outside
directors” under Section 162(m) of the Code, or (ii) any other members of the
Board.

(b) The Committee shall have the authority in its discretion, subject to and not
inconsistent with the express provisions of the Plan, to administer the Plan and
to exercise all the powers and authorities either specifically granted to it
under the Plan or necessary or advisable in the administration of the Plan,
including, without limitation, the authority to grant Options, Stock
Appreciation Rights, Limited Rights, Deferred Stock Units and Restricted Stock;
to determine which options shall constitute Incentive Stock Options and which
Options shall constitute Nonqualified Stock Options; to determine which Options
(if any) shall be accompanied by Limited Rights; to determine the purchase price
of the shares of Class B Common Stock or Common Stock, as applicable, covered by
each Option; to determine the persons to whom, and the time or times at which
awards shall be granted; to determine the number of shares to be covered by each
award; to interpret the Plan and any award under the Plan; to reconcile any
inconsistent terms in the Plan or any award under the Plan; to prescribe, amend
and rescind rules and regulations relating to the Plan; to determine the terms
and provisions of the Agreements (which need not be identical) and to cancel or
suspend awards, as necessary; and to make all other determinations deemed
necessary or advisable for the administration of the Plan.

(c) All decisions, determination and interpretations of the Committee shall be
final and binding on all Grantees of any awards under this Plan. No member of
the Board or Committee shall be liable for any action taken or determination
made in good faith with respect to the Plan or any award granted hereunder.

(d) The Committee may delegate to one or more executive officers of the Company
the authority to (i) grant awards under the Plan to employees of the Company and
its Subsidiaries who are not officers or directors of the Company, (ii) execute
and deliver documents or take such other ministerial actions on behalf of the
Committee with respect to awards and (iii) to make interpretations of the Plan.
The grant of authority in

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this Section 3(d) shall be subject to such conditions and limitations as may be
determined by the Committee. If the Committee delegates authority to any such
executive officer or executive officers of the Company pursuant to this
Section 3(d), and such executive officer or executive officers grant awards
pursuant to such delegated authority, references in this Plan to the “Committee”
as they relate to such awards shall be deemed to refer to such executive officer
or executive officers, as applicable.

 

4. Eligibility.

Awards may be granted to executive officers, employees, directors and
consultants of the Company or of any Subsidiary. In addition to any other awards
granted to Non-Employee Directors hereunder, awards shall be granted to
Non-Employee Directors pursuant to Section 14 of the Plan. In determining the
persons to whom awards shall be granted and the number of shares to be covered
by each award, the Committee shall take into account the duties of the
respective persons, their present and potential contributions to the success of
the Company and such other factors as the Committee shall deem relevant in
connection with accomplishing the purposes of the Plan.

 

5. Stock.

(a) The maximum number of shares of Class B Common Stock reserved for the grant
of awards under the Plan shall be 3,166,666, subject to adjustment as provided
in Section 12 of the Plan. Such shares may, in whole or in part, be authorized
but unissued shares or shares that shall have been or may be reacquired by the
Company.

(b) The maximum number of shares of Common Stock reserved for the grant of
awards under the Plan shall be 1,000,000, subject to adjustment as provided in
Section 12 of the Plan. Such shares may, in whole or in part, be authorized but
unissued shares or shares that shall have been or may be reacquired by the
Company.

(c) If any outstanding award under the Plan should, for any reason expire, be
canceled or be forfeited (other than in connection with the exercise of a Stock
Appreciation Right or a Limited Right), without having been exercised in full,
the shares of Class B Common Stock or Common Stock allocable to the unexercised,
canceled or terminated portion of such award shall (unless the Plan shall have
been terminated) become available for subsequent grants of awards under the
Plan, unless otherwise determined by the Committee.

 

6. Terms and Conditions of Options.

(a) OPTION AGREEMENT. Each Option granted pursuant to the Plan shall be
evidenced by a written agreement between the Company and the Grantee (the
“Option Agreement”), in such form and containing such terms and conditions as
the Committee shall from time to time approve, which Option Agreement shall
comply with and be subject to the following terms and conditions, unless
otherwise specifically provided in such Option Agreement. For purposes of
interpreting this Section 6, a director’s service as a member of the Board or a
consultant’s service shall be deemed to be employment with the Company.

(b) NUMBER OF SHARES. Each Option Agreement shall state the number of shares of
Class B Common Stock or Common Stock, as applicable, to which the Option
relates.

(c) TYPE OF OPTION. Each Option Agreement shall specifically state that the
Option constitutes an Incentive Stock Option or a Nonqualified Stock Option. In
the absence of such designation, the Option will be deemed to be a Nonqualified
Stock Option.

(d) OPTION PRICE. Each Option Agreement shall state the Option Price, which, in
the case of an Incentive Stock Option, shall not be less than one hundred
percent (100%) of the Fair Market Value of the shares of Class B Common Stock or
Common Stock, as applicable, covered by the Option on the date of grant. The
Option Price shall be subject to adjustment as provided in Section 12 of the
Plan.

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(e) MEDIUM AND TIME OF PAYMENT. The Option Price shall be paid in full, at the
time of exercise, in cash or in shares of Class B Common Stock or Common Stock,
as applicable, having a Fair Market Value equal to such Option Price or in a
combination of cash and Class B Common Stock or Common Stock, as applicable,
including a cashless exercise procedure through a broker-dealer; provided,
however, that in the case of an Incentive Stock Option, the medium of payment
shall be determined at the time of grant and set forth in the applicable Option
Agreement.

(f) TERM AND EXERCISABILITY OF OPTIONS. Each Option Agreement shall provide the
exercise schedule for the Option as determined by the Committee, provided, that,
the Committee shall have the authority to accelerate the exercisability of any
outstanding option at such time and under such circumstances as it, in its sole
discretion, deems appropriate. The exercise period will be ten (10) years from
the date of the grant of the option unless otherwise determined by the
Committee; provided, however, that in the case of an Incentive Stock Option,
such exercise period shall not exceed ten (10) years from the date of grant of
such Option. The exercise period shall be subject to earlier termination as
provided in Sections 6(g) and 6(h) of the Plan. An Option may be exercised, as
to any or all full shares of Class B Common Stock or Common Stock, as
applicable, as to which the Option has become exercisable, by written notice
delivered in person or by mail to the Company’s transfer agent or other
administrator designated by the Company, specifying the number of shares of
Class B Common Stock or Common Stock, as applicable, with respect to which the
Option is being exercised.

(g) TERMINATION. Except as provided in this Section 6(g) and in Section 6(h) of
the Plan, an Option may not be exercised unless the Grantee is then in the
employ of or maintaining a director or consultant relationship with the Company
or a Subsidiary thereof (or a company or a Parent or Subsidiary of such company
issuing or assuming the Option in a transaction to which Section 424(a) of the
Code applies), and unless the Grantee has remained in Continuous Service with
the Company or any Subsidiary since the date of grant of the Option. In the
event that the employment or consultant relationship of a Grantee shall
terminate (other than by reason of death, Disability or Retirement), all Options
of such Grantee that are exercisable at the time of Grantee’s termination may,
unless earlier terminated in accordance with their terms, be exercised within
180 days after the date of termination (or such different period as the
Committee shall prescribe).

(h) DEATH, DISABILITY OR RETIREMENT OF GRANTEE. If a Grantee shall die while
employed by, or maintaining a director or consultant relationship with, the
Company or a Subsidiary thereof, or within thirty (30) days after the date of
termination of such Grantee’s employment, director or consultant relationship
(or within such different period as the Committee may have provided pursuant to
Section 6(g) of the Plan), or if the Grantee’s employment, director or
consultant relationship shall terminate by reason of Disability, all Options
theretofore granted to such Grantee (to the extent otherwise exercisable) may,
unless earlier terminated in accordance with their terms, be exercised by the
Grantee or by the Grantee’s estate or by a person who acquired the right to
exercise such Options by bequest or inheritance or otherwise by result of death
or Disability of the Grantee, at any time within 180 days after the death or
Disability of the Grantee (or such different period as the Committee shall
prescribe). In the event that an Option granted hereunder shall be exercised by
the legal representatives of a deceased or former Grantee, written notice of
such exercise shall be accompanied by a certified copy of letters testamentary
or equivalent proof of the right of such legal representative to exercise such
Option. In the event that the employment or consultant relationship of a Grantee
shall terminate on account of such Grantee’s Retirement, all Options of such
Grantee that are exercisable at the time of such Retirement may, unless earlier
terminated in accordance with their terms, be exercised at any time within one
hundred eighty (180) days after the date of such Retirement (or such different
period as the Committee shall prescribe).

(i) OTHER PROVISIONS. The Option Agreements evidencing awards under the Plan
shall contain such other terms and conditions not inconsistent with the Plan as
the Committee may determine.

 

7. Nonqualified Stock Options.

Options granted pursuant to this Section 7 are intended to constitute
Nonqualified Stock Options and shall be subject only to the general terms and
conditions specified in Section 6 of the Plan.

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8. Incentive Stock Options.

Options granted pursuant to this Section 8 are intended to constitute Incentive
Stock Options and shall be subject to the following special terms and
conditions, in addition to the general terms and conditions specified in
Section 6 of the Plan:

(a) LIMITATION ON VALUE OF SHARES. To the extent that the aggregate Fair Market
Value of shares of Class B Common Stock or Common Stock, as applicable, subject
to Options designated as Incentive Stock Options which become exercisable for
the first time by a Grantee during any calendar year (under all plans of the
Company or any Subsidiary) exceeds $100,000, such excess Options, to the extent
of the shares covered thereby in excess of the foregoing limitation, shall be
treated as Nonqualified Stock Options. For this purpose, Incentive Stock Options
shall be taken into account in the order in which they were granted, and the
Fair Market Value of the shares of Class B Common Stock or Common Stock, as
applicable, shall be determined as of the date that the Option with respect to
such shares was granted.

(b) TEN PERCENT STOCKHOLDER. In the case of an Incentive Stock Option granted to
a Ten Percent Stockholder, (i) the Option Price shall not be less than one
hundred ten percent (110%) of the Fair Market Value of the shares of Class B
Common Stock or Common Stock, as applicable, on the date of grant of such
Incentive Stock Option, and (ii) the exercise period shall not exceed five
(5) years from the date of grant of such Incentive Stock Option.

 

9. Stock Appreciation Rights.

The Committee shall have authority to grant a Stock Appreciation Right, either
alone or in tandem with any Option. A Stock Appreciation Right granted in tandem
with an Option shall, except as provided in this Section 9 or as may be
determined by the Committee, be subject to the same terms and conditions as the
related Option. Each Stock Appreciation Right granted pursuant to the Plan shall
be evidenced by a written Agreement between the Company and the Grantee in such
form as the Committee shall from time to time approve, which Agreement shall
comply with and be subject to the following terms and conditions, unless
otherwise specifically provided in such Agreement:

(a) TIME OF GRANT. A Stock Appreciation Right may be granted at such time or
times as may be determined by the Committee.

(b) PAYMENT. A Stock Appreciation Right shall entitle the holder thereof, upon
exercise of the Stock Appreciation Right or any portion thereof, to receive
payment of an amount computed pursuant to Section 9(d) of the Plan.

(c) EXERCISE. A Stock Appreciation Right shall be exercisable at such time or
times and only to the extent determined by the Committee, and will not be
transferable. A Stock Appreciation Right granted in connection with an Incentive
Stock Option shall be exercisable only if the Fair Market Value of a share of
Class B Common Stock or Common Stock, as applicable, on the date of exercise
exceeds the purchase price specified in the related Incentive Stock Option.
Unless otherwise approved by the Committee, no Grantee shall be permitted to
exercise any Stock Appreciation Right during the period beginning two weeks
prior to the end of each of the Company’s fiscal quarters and ending on the
second business day following the day on which the Company releases to the
public a summary of its fiscal results for such period.

(d) AMOUNT PAYABLE. Upon the exercise of a Stock Appreciation Right, the
Optionee shall be entitled to receive an amount determined by multiplying
(i) the excess of the Fair Market Value of a share of Class B Common Stock or
Common Stock, as applicable, on the date of exercise of such Stock Appreciation
Right over the exercise or other base price of the Stock Appreciation Right or,
if applicable, the Option Price of the related Option, by (ii) the number of
shares of Class B Common Stock or Common Stock, as applicable, as to which such
Stock Appreciation Right is being exercised.

(e) TREATMENT OF RELATED OPTIONS AND STOCK APPRECIATION RIGHTS UPON
EXERCISE. Upon the exercise of a Stock Appreciation Right, the related Option,
if any, shall be canceled to the extent of the number of shares of Class B
Common Stock or Common Stock, as applicable, as to which

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the Stock Appreciation Right is exercised. Upon the exercise or surrender of an
option granted in connection with a Stock Appreciation Right, the Stock
Appreciation Right shall be canceled to the extent of the number of shares of
Class B Common Stock or Common Stock, as applicable, as to which the Option is
exercised or surrendered.

(f) METHOD OF EXERCISE. Stock Appreciation Rights shall be exercised by a
Grantee only by a written notice delivered to the Company in accordance with
procedures specified by the Company from time to time. Such notice shall state
the number of shares of Class B Common Stock or Common Stock, as applicable,
with respect to which the Stock Appreciation Right is being exercised. A Grantee
may also be required to deliver to the Company the underlying Agreement
evidencing the Stock Appreciation Right being exercised and any related Option
Agreement so that a notation of such exercise may be made thereon, and such
Agreements shall then be returned to the Grantee.

(g) FORM OF PAYMENT. Payment of the amount determined under Section 9(d) of the
Plan may be made solely in whole shares of Class B Common Stock or Common Stock,
as applicable, in a number based upon their Fair Market Value on the date of
exercise of the Stock Appreciation Right or, alternatively, at the sole
discretion of the Committee, solely in cash, or in a combination of cash and
shares of Class B Common Stock or Common Stock, as applicable, as the Committee
deems advisable. If the Committee decides to make full payment in shares of
Class B Common Stock or Common Stock, as applicable, and the amount payable
results in a fractional share, payment for the fractional share will be made in
cash.

 

10. Limited Stock Appreciation Rights.

The Committee shall have authority to grant a Limited Right, either alone or in
tandem with any Option. Each Limited Right granted pursuant to the Plan shall be
evidenced by a written Agreement between the Company and the Grantee in such
form as the Committee shall from time to time approve, which Agreement shall
comply with and be subject to the following terms and conditions, unless
otherwise specifically provided in such Agreement:

(a) TIME OF GRANT. A Limited Right may be granted at such time or times as may
be determined by the Committee.

(b) EXERCISE. A Limited Right may be exercised only (i) during the ninety-day
period following the occurrence of a Change in Control or (ii) immediately prior
to the effective date of a Corporate Transaction. A Limited Right shall be
exercisable at such time or times and only to the extent determined by the
Committee, and will not be transferable except to the extent any related Option
is transferable or as otherwise determined by the Committee. A Limited Right
granted in connection with an Incentive Stock Option shall be exercisable only
if the Fair Market Value of a share of Class B Common Stock or Common Stock, as
applicable, on the date of exercise exceeds the purchase price specified in the
related Incentive Stock Option.

(c) AMOUNT PAYABLE. Upon the exercise of a Limited Right, the Grantee thereof
shall receive in cash whichever of the following amounts is applicable:

(i) in the case of the realization of Limited Rights by reason of an acquisition
of common stock described in clause (i) of the definition of “Change in Control”
(Section 2(c) above), an amount equal to the Acquisition Spread as defined in
Section 10(d)(ii) below; or

(ii) in the case of the realization of Limited Rights by reason of stockholder
approval of an agreement or plan described in clause (i) of the definition of
“Corporate Transaction” (Section 2(j) above), an amount equal to the Merger
Spread as defined in Section 10(d)(iv) below; or

(iii) in the case of the realization of Limited Rights by reason of the change
in composition of the Board described in clause (ii) of the definition of
“Change in Control” or stockholder approval of a plan or agreement described in
clause (ii) of the definition of Corporate Transaction, an amount equal to the
Spread as defined in Section 10(d)(v) below.

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Notwithstanding the foregoing provisions of this Section 10(c) (or unless
otherwise approved by the Committee), in the case of a Limited Right granted in
respect of an Incentive Stock Option, the Grantee may not receive an amount in
excess of the maximum amount that will enable such option to continue to qualify
under the Code as an Incentive Stock Option.

(d) DETERMINATION OF AMOUNTS PAYABLE. The amounts to be paid to a Grantee
pursuant to Section 10 (c) shall be determined as follows:

(i) The term “Acquisition Price per Share” as used herein shall mean, with
respect to the exercise of any Limited Right by reason of an acquisition of
common stock described in clause (i) of the definition of Change in Control, the
greatest of (A) the highest price per share shown on the Statement on Schedule
13D or amendment thereto filed by the holder of 25% or more of the voting power
of the Company that gives rise to the exercise of such Limited Right, (B) the
highest price paid in any tender or exchange offer which is in effect at any
time during the ninety-day period ending on the date of exercise of the Limited
Right, or (C) the highest Fair Market Value per share of common stock during the
ninety day period ending on the date the Limited Right is exercised.

(ii) The term “Acquisition Spread” as used herein shall mean an amount equal to
the product computed by multiplying (A) the excess of (1) the Acquisition Price
per Share over (2) the exercise or other base price of the Limited Right or, if
applicable, the Option Price per share of common stock at which the related
Option is exercisable, by (B) the number of shares of common stock with respect
to which such Limited Right is being exercised.

(iii) The term “Merger Price per Share” as used herein shall mean, with respect
to the exercise of any Limited Right by reason of stockholder approval of an
agreement described in clause (i) of the definition of Corporate Transaction,
the greatest of (A) the fixed or formula price for the acquisition of shares of
common stock specified in such agreement, if such fixed or formula price is
determinable on the date on which such Limited Right is exercised, (B) the
highest price paid in any tender or exchange offer which is in effect at any
time during the ninety-day period ending on the date of exercise of the Limited
Right, (C) the highest Fair Market Value per share of common stock during the
ninety-day period ending on the date on which such Limited Right is exercised.

(iv) The term “Merger Spread” as used herein shall mean an amount equal to the
product. computed by multiplying (A) the excess of (1) the Merger Price per
Share over (2) the exercise or other base price of the Limited Right or, if
applicable, the Option Price per share of common stock at which the related
Option is exercisable, by (B) the number of shares of common stock with respect
to which such Limited Right is being exercised.

(v) The term “Spread” as used herein shall mean, with respect to the exercise of
any Limited Right by reason of a change in the composition of the Board
described in clause (ii) of the definition of Change in Control or stockholder
approval of a plan or agreement described in clause (ii) of the definition of
Corporate Transaction, an amount equal to the product computed by multiplying
(i) the excess of (A) the greater of (1) the highest price paid in any tender or
exchange offer which is in effect at any time during the ninety-day period
ending on the date of exercise of the Limited Right or (2) the highest Fair
Market Value per share of common stock during the ninety day period ending on
the date the Limited Right is exercised over (B) the exercise or other base
price of the Limited Right or, if applicable, the Option Price per share of
common stock at which the related Option is exercisable, by (ii) the number of
shares of common stock with respect to which the Limited Right is being
exercised.

(e) TREATMENT OF RELATED OPTIONS AND LIMITED RIGHTS UPON EXERCISE. Upon the
exercise of a Limited Right, the related Option, if any, shall cease to be
exercisable to the extent of the shares of Class B Common Stock or Common Stock,
as applicable, with respect to which such Limited Right is exercised but shall
be considered to have been exercised to that extent for purposes of determining
the number of shares of Class B Common Stock or Common Stock, as applicable,
available for the grant of future awards pursuant to this Plan. Upon the
exercise or termination of a related Option, if any, the Limited Right with
respect to such related Option shall terminate to the extent of the shares of
Class B Common Stock or Common Stock, as applicable, with respect to which the
related Option was exercised or terminated.

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(f) METHOD OF EXERCISE. To exercise a Limited Right, the Grantee shall
(i) deliver written notice to the Company specifying the number of shares of
Class B Common Stock or Common Stock, as applicable, with respect to which the
Limited Right is being exercised, and (ii) if requested by the Committee,
deliver to the Company the Agreement evidencing the Limited Rights being
exercised and, if applicable, the Option Agreement evidencing the related
Option; the Company shall endorse thereon a notation of such exercise and return
such Agreements to the Grantee. The date of exercise of a Limited Right that is
validly exercised shall be deemed to be the date on which there shall have been
delivered the instruments referred to in the first sentence of this paragraph
(f).

 

11. Restricted Stock.

The Committee may award shares of Restricted Stock to any eligible employee,
director or consultant of the Company or of any Subsidiary. Each award of
Restricted Stock under the Plan shall be evidenced by a written Agreement
between the Company and the Grantee, in such form as the Committee shall from
time to time approve, which Agreement shall comply with and be subject to the
following terms and conditions, unless otherwise specifically provided in such
Agreement:

(a) NUMBER OF SHARES. Each Agreement shall state the number of shares of
Restricted Stock to be subject to an award.

(b) RESTRICTIONS. Shares of Restricted Stock may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of, except by will or
the laws of descent and distribution, for such period as the Committee shall
determine from the date on which the award is granted (the “Restricted Period”).
The Committee may also impose such additional or alternative restrictions and
conditions on the shares as it deems appropriate including, but not limited to,
the satisfaction of performance criteria. Such performance criteria may include
sales, earnings before interest and taxes, return on investment, earnings per
share, any combination of the foregoing or rate of growth of any of the
foregoing, as determined by the Committee. The Company may, at its option,
maintain issued shares in book entry form. Certificates, if any, for shares of
stock issued pursuant to Restricted Stock awards shall bear an appropriate
legend referring to such restrictions, and any attempt to dispose of any such
shares of stock in contravention of such restrictions shall be null and void and
without effect. During the Restricted Period, any such certificates shall be
held in escrow by an escrow agent appointed by the Committee. In determining the
Restricted Period of an award, the Committee may provide that the foregoing
restrictions shall lapse with respect to specified percentages of the awarded
shares on successive anniversaries of the date of such award.

(c) FORFEITURE. Subject to such exceptions as may be determined by the
Committee, if the Grantee’s Continuous Service with the Company or any
Subsidiary shall terminate for any reason prior to the expiration of the
Restricted Period of an award, any shares remaining subject to restrictions
(after taking into account the provisions of Subsection (e) of this Section 11)
shall thereupon be forfeited by the Grantee and transferred to, and retired by,
the Company without cost to the Company or such Subsidiary, and such shares
shall become available for subsequent grants of awards under the Plan, unless
otherwise determined by the Committee.

(d) OWNERSHIP. During the Restricted Period, the Grantee shall possess all
incidents of ownership of such shares, subject to Subsection (b) of this
Section 11, including the right to receive dividends with respect to such shares
and to vote such shares.

(e) ACCELERATED LAPSE OF RESTRICTIONS. Upon the occurrence of any of the events
specified in Section 13 of the Plan (and subject to the conditions set forth
therein), all restrictions then outstanding on any shares of Restricted Stock
awarded under the Plan shall lapse as of the applicable date set forth in
Section 13. The Committee shall have the authority (and the Agreement may so
provide) to cancel all or any portion of any outstanding restrictions prior to
the expiration of the Restricted Period with respect to any or all of the shares
of Restricted Stock awarded on such terms and conditions as the Committee shall
deem appropriate.

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11A. Deferred Stock Units.

The Committee may award Deferred Stock Units to any outside director, eligible
employee or consultant of the Company or of any Subsidiary. Each award of
Deferred Stock Units under the Plan shall be evidenced by a written Agreement
between the Company and the Grantee, in such form as the Committee shall from
time to time approve, which Agreement shall comply with and be subject to the
following terms and conditions, unless otherwise specifically provided in such
Agreement:

(a) NUMBER OF SHARES. Each Agreement for Deferred Stock Units shall state the
number of shares of Class B Common Stock or Common Stock, as applicable, to be
subject to an award.

(b) RESTRICTIONS. Deferred Stock Units may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of, except by will or the laws of
descent and distribution, until shares of Class B Common Stock or Common Stock,
as applicable, are payable with respect to an award. The Committee may impose
such vesting restrictions and conditions on the payment of shares as it deems
appropriate including the satisfaction of performance criteria. Such performance
criteria may include sales, earnings before interest and taxes, return on
investment, earnings per share, any combination of the foregoing or rate of
growth of any of the foregoing, as determined by the Committee.

(c) FORFEITURE. Subject to such exceptions as may be determined by the
Committee, if the Grantee’s Continuous Service with the Company or any
Subsidiary shall terminate for any reason prior to the Grantee becoming fully
vested in the award, then the Grantee’s rights under any unvested Deferred Stock
Units shall be forfeited without cost to the Company or such Subsidiary.

(d) OWNERSHIP. Until shares are delivered with respect to Deferred Stock Units,
the Grantee shall not possess any incidents of ownership of such shares,
including the right to receive dividends with respect to such shares and to vote
such shares.

(e) ACCELERATED LAPSE OF RESTRICTIONS. Upon the occurrence of any of the events
specified in Section 13 of the Plan (and subject to the conditions set forth
therein), all restrictions then outstanding on any Deferred Stock Units awarded
under the Plan shall lapse as of the applicable date set forth in Section 13.
The Committee shall have the authority (and the Agreement may so provide) to
cancel all or any portion of any outstanding restrictions prior to the
expiration of any restricted period with respect to any or all of the shares of
Deferred Stock Units awarded on such terms and conditions as the Committee shall
deem appropriate.

 

12. Effect of Certain Changes.

(a) ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any
extraordinary dividend, stock dividend, recapitalization, merger, consolidation,
stock split, warrant or rights issuance, or combination or exchange of such
shares, or other similar transactions, the Committee shall equitably adjust
(i) the number of shares of Class B Common Stock or Common Stock, as applicable,
available for awards under the Plan, (ii) the number and/or kind of shares
covered by outstanding awards and (iii) the price per share of Options or the
applicable market value of Stock Appreciation Rights or Limited Rights, in each
such case so as to reflect such event and preserve the value of such awards;
provided, however, that any fractional shares resulting from such adjustment
shall be eliminated.

(b) CHANGE IN CLASS B COMMON STOCK OR COMMON STOCK. In the event of a change in
the Class B Common Stock or Common Stock as presently constituted that is
limited to a change of all of its authorized shares of Class B Common Stock or
Common Stock, as applicable, into the same number of shares with a different par
value or without par value, the shares resulting from any such change shall be
deemed to be the Class B Common Stock or Common Stock, as applicable, within the
meaning of the Plan.

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13. Corporate Transaction; Change in Control; Related Entity Disposition.

(a) CORPORATE TRANSACTION. In the event of a Corporate Transaction, each award
which is at the time outstanding under the Plan shall automatically become fully
vested and exercisable and, in the case of an award of Restricted Stock or an
award of Deferred Stock Units, shall be released from any restrictions on
transfer (except with regard to the Insider Trading Policy and such other
agreements between the Grantee and the Company) and repurchase or forfeiture
rights, immediately prior to the specified effective date of such Corporate
Transaction. Effective upon the consummation of the Corporate Transaction, all
outstanding awards of Options, Stock Appreciation Rights and Limited Rights
under the Plan shall terminate, unless otherwise determined by the Committee.
However, all such awards shall not terminate if the awards are, in connection
with the Corporate Transaction, assumed by the successor corporation or Parent
thereof.

(b) CHANGE IN CONTROL. In the event of a Change in Control (other than a Change
in Control which is also a Corporate Transaction), each award which is at the
time outstanding under the Plan automatically shall become fully vested and
exercisable and, in the case of an award of Restricted Stock or an award of
Deferred Stock Units, shall be released from any restrictions on transfer and
repurchase or forfeiture rights, immediately prior to the specified effective
date of such Change in Control.

(c) RELATED ENTITY DISPOSITION. The Continuous Service of each Grantee (who is
primarily engaged in service to a Related Entity at the time it is involved in a
Related Entity Disposition) shall terminate effective upon the consummation of
such Related Entity Disposition, and each outstanding award of such Grantee
under the Plan shall become fully vested and exercisable and, in the case of an
award of Restricted Stock or an award of Deferred Stock Units, shall be released
from any restrictions on transfer (except with regard to the Insider Trading
Policy and such other agreements between the Grantee and the Company). Unless
otherwise determined by the Committee, the Continuous Service of a Grantee shall
not be deemed to terminate (and each outstanding award of such Grantee under the
Plan shall not become fully vested and exercisable and, in the case of an award
of Restricted Stock or an award of Deferred Stock Units, shall not be released
from any restrictions on transfer) if (i) a Related Entity Disposition involves
the spin-off of a Related Entity, for so long as such Grantee continues to
remain in the service of such entity that constituted the Related Entity
immediately prior to the consummation of such Related Entity Disposition
(“SpinCo”) in any capacity of officer, employee, director or consultant or
(ii) an outstanding award is assumed by the surviving corporation (whether
SpinCo or otherwise) or its parent entity in connection with a Related Entity
Disposition.

(d) SUBSTITUTE AWARDS. The Committee may grant awards under the Plan in
substitution of stock-based incentive awards held by employees, consultants or
directors of another entity who become employees, consultants or directors of
the Company or any Subsidiary by reason of a merger or consolidation of such
entity with the Company or any Subsidiary, or the acquisition by the Company or
a Subsidiary of property or equity of such entity, upon such terms and
conditions as the Committee may determine, and such awards shall not count
against the share limitation set forth in Section 5 of the Plan.

 

14. Non-Employee Director Restricted Stock.

The provisions of this Section 14 shall apply only to certain grants of
Restricted Stock to Non-Employee Directors, as provided below. Except as set
forth in this Section 14, the other provisions of the Plan shall apply to grants
of Restricted Stock to Non-Employee Directors to the extent not inconsistent
with this Section. For purposes of interpreting Section 6 of the Plan and this
Section 14, a Non-Employee Director’s service as a member of the Board or the
board of directors of any Subsidiary shall be deemed to be employment with the
Company.

(a) GENERAL. Non-Employee Directors shall receive Restricted Stock in accordance
with this Section 14. Restricted Stock granted pursuant to this Section 14 shall
be subject to the terms of such section and shall not be subject to
discretionary acceleration of vesting by the Committee. Unless determined
otherwise by the Committee, Non-Employee Directors shall not receive separate
and additional grants hereunder for being a Non-Employee Director of (i) the
Company and a Subsidiary or (ii) more than one Subsidiary.

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(b) INITIAL GRANTS OF RESTRICTED STOCK. A Non-Employee Director who first
becomes a Non-Employee Director shall receive a pro-rata amount (based on
projected quarters of service to the following Non-Employee Director Grant Date)
of a Non-Employee Director Annual Grant on his date of appointment as a
Non-Employee Director. Also, a Non-Employee Director who first becomes a member
of one or more committees of the Board shall receive a pro-rata amount (based on
projected quarters of service to the following Non-Employee Director Grant Date)
of a Non-Employee Director Annual Grant on his date of appointment to a
committee (without duplication).

(c) ANNUAL GRANTS OF RESTRICTED STOCK. On each Non-Employee Director Grant Date,
each Non-Employee Director shall receive a Non-Employee Director Annual Grant.
Also on each Non-Employee Director Grant Date, each Non-Employee Director who
serves as a member of one or more committees of the Board as of such date shall
receive an additional Non-Employee Director Annual Grant (without duplication).

(d) VESTING OF RESTRICTED STOCK. Restricted Stock granted under this Section 14
shall be fully vested on the date of grant.

 

15. Period During which Awards May Be Granted.

Awards may be granted pursuant to the Plan from time to time within a period of
ten (10) years from September 21, 2005, the date the Board initially adopted the
Plan. No awards shall be effective prior to the approval of the Plan by a
majority of the Company’s stockholders.

 

16. Transferability of Awards.

(a) Incentive Stock Options and Stock Appreciation Rights may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by the laws of descent and distribution and may be exercised, during the
lifetime of the Grantee, only by the Grantee or his or her guardian or legal
representative.

(b) Nonqualified Stock Options shall be transferable in the manner and to the
extent acceptable to the Committee, as evidenced by a writing signed by the
Company and the Grantee. Nonqualified Stock Options (together with any Stock
Appreciation Rights or Limited Rights related thereto) shall be transferable by
a Grantee as a gift to the Grantee’s “family members” (as defined in Form S-8)
under such terms and conditions as may be established by the Committee; provided
that the Grantee receives no consideration for the transfer. Notwithstanding the
transfer by a Grantee of a Nonqualified Stock Option, the transferred
Nonqualified Stock Option shall continue to be subject to the same terms and
conditions as were applicable to the Nonqualified Stock Option immediately
before the transfer (including, without limitation, the Insider Trading Policy)
and the Grantee will continue to remain subject to the withholding tax
requirements set forth in Section 17 hereof.

(c) The terms of any award granted under the Plan, including the transferability
of any such award, shall be binding upon the executors, administrators, heirs
and successors of the Grantee.

(d) Restricted Stock shall remain subject to the Insider Trading Policy after
the expiration of the Restricted Period. Deferred Stock Units shall remain
subject to the Insider Trading Policy after payment thereof.

 

17. Agreement by Grantee regarding Withholding Taxes.

If the Committee shall so require, as a condition of exercise of an Option,
Stock Appreciation Right or Limited Right, the expiration of a Restricted Period
or payment of a Deferred Stock Unit (each, a “Tax Event”), each Grantee shall
agree that no later than the date of the Tax Event, the Grantee will pay to the
Company or make arrangements satisfactory to the Committee regarding payment of
any federal, state or local taxes of any kind required by law to be withheld
upon the Tax Event. Unless determined otherwise by the Committee, a Grantee
shall permit, to the extent permitted or required by law, the Company to
withhold federal, state and local taxes of any kind required by law to be
withheld upon the Tax Event from any payment of any kind due to the Grantee.
Unless

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otherwise determined by the Committee, any such above-described withholding
obligation may, in the discretion of the Company, be satisfied by the
withholding by the Company or delivery to the Company of Class B Common Stock or
Common Stock, as applicable.

 

18. Rights as a Stockholder.

Except as provided in Section 11(d) of the Plan, a Grantee or a transferee of an
award shall have no rights as a stockholder with respect to any shares covered
by the award until the date of the issuance of such shares to him or her. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distribution of other rights for which
the record date is prior to the date such shares are issued, except as provided
in Section 12(a) of the Plan.

 

19. No Rights to Employment; Forfeiture of Gains.

Nothing in the Plan or in any award granted or Agreement entered into pursuant
hereto shall confer upon any Grantee the right to continue as a director of, in
the employ of, or in a consultant relationship with, the Company or any
Subsidiary or to be entitled to any remuneration or benefits not set forth in
the Plan or such Agreement or to interfere with or limit in any way the right of
the Company or any such Subsidiary to terminate such Grantee’s employment or
consulting relationship. Awards granted under the Plan shall not be affected by
any change in duties or position of a Grantee as long as such Grantee continues
to be employed by, or in a consultant relationship with, or a director of the
Company or any Subsidiary. The Agreement for any award under the Plan may
require the Grantee to pay to the Company any financial gain realized from the
prior exercise, vesting or payment of the award in the event that the Grantee
engages in conduct that violates any non-compete, non-solicitation or
non-disclosure obligation of the Grantee under any agreement with the Company or
any Subsidiary, including, without limitation, any such obligations provided in
the Agreement.

 

20. Beneficiary.

A Grantee may file with the Committee a written designation of a beneficiary on
such form as may be prescribed by the Committee and may, from time to time,
amend or revoke such designation. If no designated beneficiary survives the
Grantee, the executor or administrator of the Grantee’s estate shall be deemed
to be the Grantee’s beneficiary.

 

21. Authorized Share Approval; Amendment and Termination of the Plan.

(a) AUTHORIZED SHARE APPROVAL. The Plan initially became effective when adopted
by the Board on September 21, 2005 and shall terminate on the tenth anniversary
of such date. The Plan was ratified by the Company’s stockholders on
December 15, 2005, with 2,500,000 shares of Class B Common Stock authorized for
awards under the Plan. The Board amended the Plan on September 27, 2006 to,
among other things, increase the amount of shares authorized for award under the
Plan to 4,000,000 shares of Class B Common Stock. The Company’s stockholders
ratified such amendment to the Plan on December 14, 2006. The Board further
amended the Plan on October 29, 2007 to increase the amount of shares authorized
for award under the Plan to 5,500,000 shares of Class B Common Stock. The
Company’s stockholders ratified such amendment to the Plan on December 18, 2007.
The Board further amended the Plan on September 16, 2008 to, among other things,
(i) increase the number of shares of the Company’s Class B Common Stock
available for grant of awards under the Plan to 9,500,000 shares and
(ii) reserve 3,000,000 shares of the Company’s Common Stock available for the
grant of awards under the Plan. The Company’s stockholders ratified such
amendment to the Plan on December 17, 2008. The Committee adjusted the Plan to
reflect the one-for-three reverse stock split of the Company’s Common Stock and
Class B Common Stock on February 24, 2009 in accordance with Section 12(a) of
the Plan.

(b) AMENDMENT AND TERMINATION OF THE PLAN. The Board, or the Committee if so
delegated by the Board, at any time and from time to time may suspend,
terminate, modify or amend the Plan; however, unless otherwise determined by the
Board, or the Committee if applicable, an amendment that requires stockholder
approval in order for the Plan to continue to comply with any law, regulation or
stock exchange requirement shall not be effective unless approved by the
requisite vote of stockholders. Except as provided in Section 13(a) of the Plan,
no suspension, termination, modification or amendment of the Plan may adversely
affect any award previously granted, unless the written consent of the Grantee
is obtained.

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22. Governing Law.

The Plan and all determinations made and actions taken pursuant hereto shall be
governed by the laws of the State of Delaware.