Exhibit 10.1

Computer Programs and Systems, Inc. 2014 Incentive Plan

COMPUTER PROGRAMS AND SYSTEMS, INC.
2014 INCENTIVE PLAN
1.Purpose; Eligibility.
1.1    General Purpose. The name of this plan is the Computer Programs and
Systems, Inc. 2014 Incentive Plan (the “Plan”). The purposes of the Plan are to
(a) enable Computer Programs and Systems, Inc., a Delaware corporation (the
“Company”), and any Affiliate to attract and retain the types of Employees who
will contribute to the Company’s long range success; (b) provide incentives that
align the interests of Employees with those of the shareholders of the Company;
and (c) promote the success of the Company’s business.
1.2    Eligible Award Recipients. The persons eligible to receive Awards are the
Employees of the Company and its Affiliates and such other individuals
designated by the Committee who are reasonably expected to become Employees
after the receipt of Awards.
1.3    Available Awards. Awards that may be granted under the Plan include: (a)
Incentive Stock Options, (b) Nonqualified Stock Options, (c) Stock Appreciation
Rights, (d) Restricted Awards, (e) Performance Share Awards and (f) Performance
Compensation Awards.
2.    Definitions.
“Affiliate” means a corporation or other entity that, directly or through one or
more intermediaries, controls, is controlled by or is under common control with,
the Company.
“Applicable Laws” means the requirements related to or implicated by the
administration of the Plan under applicable state corporate law, United States
federal and state securities laws, the Code, the rules of any stock exchange or
quotation system on which the shares of Common Stock are listed or quoted, and
the applicable laws of any other jurisdiction where Awards are granted under the
Plan.
“Award” means any right granted under the Plan, including an Incentive Stock
Option, a Nonqualified Stock Option, a Stock Appreciation Right, a Restricted
Award, a Performance Share Award or a Performance Compensation Award.
“Award Agreement” means a written agreement, contract, certificate or other
instrument or document evidencing the terms and conditions of an individual
Award granted under the Plan which may, in the discretion of the Company, be
transmitted electronically to any Participant. Each Award Agreement shall be
subject to the terms and conditions of the Plan.
“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule
13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular “person” (as that term is used in Section 13(d)(3)
of the Exchange Act), such “person” shall be deemed to have beneficial ownership
of all securities that such “person” has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only after the passage of time. The terms “Beneficially Owns” and
“Beneficially Owned” have a corresponding meaning.
“Board” means the Board of Directors of the Company, as constituted at any time.

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“Cause” means:
 With respect to any Employee: (a) if the Employee is a party to an employment
or service agreement with the Company or its Affiliates and such agreement
provides for a definition of Cause, the definition contained therein; or (b) if
no such agreement exists, or if such agreement does not define Cause: (i) the
commission of, or plea of guilty or no contest to, a felony or a crime involving
moral turpitude or the commission of any other act involving willful malfeasance
or material fiduciary breach with respect to the Company or an Affiliate; (ii)
conduct that results in or is reasonably likely to result in harm to the
reputation or business of the Company or any of its Affiliates; (iii) gross
negligence or willful misconduct with respect to the Company or an Affiliate; or
(iv) material violation of state or federal securities laws.
The Committee, in its absolute discretion, shall determine the effect of all
matters and questions relating to whether a Participant has been discharged for
Cause.
“Change in Control” means: (a) the direct or indirect sale, transfer, conveyance
or other disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the properties or
assets of the Company and its subsidiaries, taken as a whole, to any Person that
is not a subsidiary of the Company; (b) the incumbent Directors cease for any
reason to constitute at least a majority of the Board; (c) the date which is ten
(10) business days prior to the consummation of a complete liquidation or
dissolution of the Company; (d) the acquisition by any Person of Beneficial
Ownership of fifty percent (50%) or more (on a fully diluted basis) of either
(i) the then outstanding shares of Common Stock of the Company, taking into
account as outstanding for this purpose such Common Stock issuable upon the
exercise of options or warrants, the conversion of convertible stock or debt,
and the exercise of any similar right to acquire such Common Stock or (ii) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for purposes of this Plan,
the following acquisitions shall not constitute a Change in Control: (A) any
acquisition by the Company or any Affiliate, (B) any acquisition by any employee
benefit plan sponsored or maintained by the Company or any subsidiary, (C) any
acquisition which complies with clauses, (i), (ii) and (iii) of subsection (e)
of this definition or (D) in respect of an Award held by a particular
Participant, any acquisition by the Participant or any group of persons
including the Participant (or any entity controlled by the Participant or any
group of persons including the Participant); or (e) the consummation of a
reorganization, merger, consolidation, statutory share exchange or similar form
of corporate transaction involving the Company that requires the approval of the
Company’s shareholders, whether for such transaction or the issuance of
securities in the transaction (a “Business Combination”), unless immediately
following such Business Combination: (i) more than fifty percent (50%) of the
total voting power of (A) the entity resulting from such Business Combination
(the “Surviving Company”), or (B) if applicable, the ultimate parent entity that
directly or indirectly has beneficial ownership of sufficient voting securities
eligible to elect a majority of the members of the board of directors (or the
analogous governing body) of the Surviving Company (the “Parent Company”), is
represented by the Outstanding Company Voting Securities that were outstanding
immediately prior to such Business Combination (or, if applicable, is
represented by shares into which the Outstanding Company Voting Securities were
converted pursuant to such Business Combination), and such voting power among
the holders thereof is in substantially the same proportion as the voting power
of the Outstanding Company Voting Securities among the holders thereof
immediately prior to the Business Combination; (ii) no Person (other than any
employee benefit plan sponsored or maintained by the Surviving Company or the
Parent Company) is or becomes the Beneficial Owner, directly or indirectly, of
fifty percent (50%) or more of the total voting power of the outstanding voting
securities eligible to elect members of the board of directors of the Parent
Company (or the analogous governing body) (or, if there is no Parent Company,
the Surviving Company); and (iii) at least a majority of the members of the
board of directors (or the analogous governing body) of the Parent Company (or,
if there is no Parent Company, the Surviving Company) following the consummation
of the Business Combination were Board members at the time of the Board’s
approval of the execution of the initial agreement providing for such Business
Combination.
“Code” means the Internal Revenue Code of 1986, as it may be amended from time
to time. Any reference to a section of the Code shall be deemed to include a
reference to any regulations promulgated thereunder.
“Committee” means a committee of one or more members of the Board appointed by
the Board to administer the Plan in accordance with Section 3.1 and Section 3.2.
“Common Stock” means the common stock, $0.001 par value per share, of the
Company, or such other securities of the Company as may be designated by the
Committee from time to time in substitution thereof.
“Company” means Computer Programs and Systems, Inc., a Delaware corporation, and
any successor thereto.
“Continuous Service” means that the Participant’s service with the Company or an
Affiliate as an Employee is not interrupted or terminated. The Participant’s
Continuous Service shall not be deemed to have terminated merely because of a
change in the capacity in which the Participant renders service to the Company
or an Affiliate as an Employee or a change in the entity for which

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the Participant renders such service, provided that there is no interruption or
termination of the Participant’s Continuous Service; provided further that if
any Award is subject to Section 409A of the Code, this sentence shall only be
given effect to the extent consistent with a “Separation from Service” as
defined under Section 409A of the Code. The Committee or its delegate, in its
sole discretion, may determine whether Continuous Service shall be considered
interrupted in the case of any leave of absence approved by that party,
including sick leave, military leave or any other personal or family leave of
absence.
“Covered Employee” has the same meaning as set forth in Section 162(m)(3) of the
Code, as interpreted by Internal Revenue Service Notice 2007-49 and any
subsequent authority promulgated by the Internal Revenue Service thereafter.
“Director” means a member of the Board.
“Disability” means that the Participant is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment; provided, however, for purposes of determining the term of an
Incentive Stock Option pursuant to Section 6.10 hereof, the term Disability
shall have the meaning ascribed to it under Section 22(e)(3) of the Code. The
determination of whether an individual has a Disability shall be determined
under procedures established by the Committee. Except in situations where the
Committee is determining Disability for purposes of the term of an Incentive
Stock Option pursuant to Section 6.10 hereof within the meaning of Section
22(e)(3) of the Code, the Committee may rely on any determination that a
Participant is disabled for purposes of benefits under any long-term disability
plan maintained by the Company or any Affiliate in which a Participant
participates.
“Disqualifying Disposition” has the meaning set forth in Section 14.10.
“Effective Date” shall mean the date as of which this Plan is adopted by the
Board.
“Employee” means any person, including an Officer or Director, employed by the
Company or an Affiliate; provided that, for purposes of determining eligibility
to receive Incentive Stock Options, an Employee shall mean an employee of the
Company or a parent or subsidiary corporation within the meaning of Code Section
424. Mere service as a Director or payment of a director’s fee by the Company or
an Affiliate shall not be sufficient to constitute “employment” by the Company
or an Affiliate.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Fair Market Value” means, as of any date, the value of the Common Stock as
determined below. If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the NASDAQ
Stock Market, the Fair Market Value shall be the closing price of a share of
Common Stock (or if no sales were reported the closing price on the date
immediately preceding such date) as quoted on such exchange or system on the day
of determination, as reported in the Wall Street Journal or such other source as
the Committee deems reliable. In the absence of an established market for the
Common Stock, the Fair Market Value shall be determined in good faith by the
Committee in accordance with Section 409A of the Code and such determination
shall be conclusive and binding on all persons.
“Free Standing Rights” has the meaning set forth in Section 7.1(a).
“Grant Date” means the date on which the Committee adopts a resolution, or takes
other appropriate action, expressly granting an Award to a Participant that
specifies the key terms and conditions of the Award or, if a later date is set
forth in such resolution, then such date as is set forth in such resolution.
“Incentive Stock Option” means an Option intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code.
“Negative Discretion” means the discretion authorized by the Plan to be applied
by the Committee to eliminate or reduce the size of a Performance Compensation
Award in accordance with Section 7.4(d)(iv) of the Plan; provided that the
exercise of such discretion would not cause the Performance Compensation Award
to fail to qualify as “performance-based compensation” under Section 162(m) of
the Code.
“Non-Employee Director” means a Director who is a “non-employee director” within
the meaning of Rule 16b-3.
“Nonqualified Stock Option” means an Option that by its terms does not qualify
or is not intended to qualify as an Incentive Stock Option.
“Officer” means a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the

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rules and regulations promulgated thereunder.
“Option” means an Incentive Stock Option or a Nonqualified Stock Option granted
pursuant to the Plan.
“Option Exercise Price” means the price at which a share of Common Stock may be
purchased upon the exercise of an Option.
“Optionholder” means a person to whom an Option is granted pursuant to the Plan
or, if applicable, such other person who holds an outstanding Option.
“Outside Director” means a Director who is an “outside director” within the
meaning of Section 162(m) of the Code and Treasury Regulations Section
1.162-27(e)(3) or any successor to such statute and regulation.
“Participant” means an eligible person to whom an Award is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Award.
“Performance Compensation Award” means any Award designated by the Committee as
a Performance Compensation Award pursuant to Section 7.4 of the Plan.
“Performance Criteria” means the criterion or criteria that the Committee shall
select for purposes of establishing the Performance Goal(s) for a Performance
Period with respect to any Performance Compensation Award under the Plan. The
Performance Criteria that will be used to establish the Performance Goal(s)
shall be based on the attainment of specific levels of performance of the
Company (or Affiliate, division, business unit or operational unit of the
Company) and shall be limited to the following: (a) net earnings or net income
(before or after taxes); (b) basic or diluted earnings per share (before or
after taxes); (c) net revenue or net revenue growth; (d) gross revenue; (e)
gross profit or gross profit growth; (f) net operating profit (before or after
taxes); (g) return on assets, capital, invested capital, equity, or sales; (h)
cash flow (including, but not limited to, operating cash flow, free cash flow,
and cash flow return on capital); (i) earnings before or after taxes, interest,
depreciation and/or amortization; (j) gross or operating margins; (k)
improvements in capital structure; (l) budget and expense management; (m)
productivity ratios; (n) economic value added or other value added measurements;
(o) share price (including, but not limited to, growth measures and total
shareholder return); (p) expense targets; (q) margins; (r) operating efficiency;
(s) working capital targets; (t) enterprise value; and (u) completion of
acquisitions or business expansion.
Any one or more of the Performance Criteria may be used on an absolute or
relative basis to measure the performance of the Company and/or an Affiliate as
a whole or any division, business unit or operational unit of the Company and/or
an Affiliate or any combination thereof, as the Committee may deem appropriate,
or as compared to the performance of a group of comparable companies, or
published or special index that the Committee, in its sole discretion, deems
appropriate, or the Committee may select Performance Criterion (o) above as
compared to various stock market indices. The Committee also has the authority
to provide for accelerated vesting of any Award based on the achievement of
Performance Goals pursuant to the Performance Criteria specified in this
paragraph. To the extent required under Section 162(m) of the Code, the
Committee shall, within the first ninety (90) days of a Performance Period (or,
if longer or shorter, within the maximum period allowed under Section 162(m) of
the Code), define in an objective fashion the manner of calculating the
Performance Criteria it selects to use for such Performance Period. In the event
that applicable tax and/or securities laws change to permit the Committee
discretion to alter the governing Performance Criteria without obtaining
shareholder approval of such changes, the Committee shall have sole discretion
to make such changes without obtaining shareholder approval.
“Performance Formula” means, for a Performance Period, the one or more objective
formulas applied against the relevant Performance Goal to determine, with regard
to the Performance Compensation Award of a particular Participant, whether all,
some portion but less than all, or none of the Performance Compensation Award
has been earned for the Performance Period.
“Performance Goals” means, for a Performance Period, the one or more goals
established by the Committee for the Performance Period based upon the
Performance Criteria. The Committee is authorized at any time during the first
ninety (90) days of a Performance Period (or, if longer or shorter, within the
maximum period allowed under Section 162(m) of the Code), or at any time
thereafter (but only to the extent the exercise of such authority after such
period would not cause the Performance Compensation Awards granted to any
Participant for the Performance Period to fail to qualify as “performance-based
compensation” under Section 162(m) of the Code), in its sole and absolute
discretion, to adjust or modify the calculation of a Performance Goal for such
Performance Period to the extent permitted under Section 162(m) of the Code in
order to prevent the dilution or enlargement of the rights of Participants based
on the following events:  (a) asset write-downs; (b) litigation or claim
judgments or settlements; (c) the effect of changes in tax laws, accounting
principles, or other laws or regulatory rules affecting reported results; (d)
any reorganization and restructuring programs; (e) extraordinary nonrecurring
items as described in Accounting Principles Board

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Opinion No. 30 (or any successor or pronouncement thereto) and/or in
management’s discussion and analysis of financial condition and results of
operations appearing in the Company’s annual report to shareholders for the
applicable year; (f) acquisitions or divestitures; (g) any other specific
unusual or nonrecurring events, or objectively determinable category thereof;
and (h) a change in the Company’s fiscal year.
“Performance Period” means the one or more periods of time, not less than one
fiscal quarter, in duration, as the Committee may select, over which the
attainment of one or more Performance Goals will be measured for the purpose of
determining a Participant’s right to and the payment of a Performance
Compensation Award.
“Performance Share” means a right granted to a Participant to receive shares of
Common Stock (or the Fair Market Value thereof in cash or any combination of
cash and Common Stock, as determined by the Committee) based upon the
achievement, or level of achievement, of Performance Goals during a Performance
Period, as determined by the Committee at the time of grant of a Performance
Share Award.
“Performance Share Award” means any Award granted pursuant to Section 7.3
hereof.
“Permitted Transferee” means, unless otherwise authorized by the Committee (or
the Board, as the case may be) in an Award Agreement, a member of the
Optionholder’s immediate family (child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or
sister-in-law, including adoptive relationships), any person sharing the
Optionholder’s household (other than a tenant or employee), a trust in which
these persons have more than fifty percent (50%) of the beneficial interest, a
foundation in which these persons (or the Optionholder) control the management
of assets, and any other entity in which these persons (or the Optionholder) own
more than fifty percent (50%) of the voting interests.
“Plan” means this Computer Programs and Systems, Inc. 2014 Incentive Plan, as
amended and/or amended and restated from time to time.
“Related Rights” has the meaning set forth in Section 7.1(a).
“Restricted Award” means any Award granted pursuant to Section 7.2.
“Restricted Period” has the meaning set forth in Section 7.2(a).
“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any
successor to Rule 16b-3, as in effect from time to time.
“Securities Act” means the Securities Act of 1933, as amended.
“Stock Appreciation Right” means the right pursuant to an Award granted under
Section 7.1 to receive, upon exercise, an amount payable in cash or shares equal
to the number of shares subject to the Stock Appreciation Right that is being
exercised multiplied by the excess of (a) the Fair Market Value of a share of
Common Stock on the date the Award is exercised over (b) the exercise price
specified in the Stock Appreciation Right Award Agreement.
“Stock for Stock Exchange” has the meaning set forth in Section 6.4.
“Ten Percent Shareholder” means a person who owns (or is deemed to own pursuant
to Section 424(d) of the Code) stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or of any
of its Affiliates.
3.    Administration.
3.1    Authority of Committee. The Plan shall be administered by the Committee
or, in the Board’s sole discretion, by the Board. Subject to the terms of the
Plan, the Committee’s charter and Applicable Laws, and in addition to other
express powers and authorization conferred by the Plan, the Committee (or the
Board, as the case may be) shall have the authority:
(a)    to construe and interpret the Plan and apply its provisions;
(b)    to promulgate, amend, and rescind rules and regulations relating to the
administration of the Plan;

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(c)    to authorize any person to execute, on behalf of the Company, any
instrument required to carry out the purposes of the Plan;
(d)    to delegate its authority to one or more Officers of the Company with
respect to Awards that do not involve Covered Employees or “insiders” within the
meaning of Section 16 of the Exchange Act;
(e)    to determine when Awards are to be granted under the Plan and the
applicable Grant Date;
(f)    to select, subject to the limitations set forth in this Plan, those
Participants to whom Awards shall be granted;
(g)    to determine the number of shares of Common Stock, if any, to be made
subject to each Award;
(h)    to determine whether each Option is to be an Incentive Stock Option or a
Nonqualified Stock Option;
(i)    to prescribe the terms and conditions of each Award, including without
limitation the exercise price and medium of payment and vesting provisions, and
to specify the provisions of the Award Agreement relating to such grant;
(j)    to determine the target number of Performance Shares to be granted
pursuant to a Performance Share Award, the performance measures that will be
used to establish the Performance Goals, the Performance Period(s) and the
number of Performance Shares earned by a Participant;
(k)    to designate an Award (including a cash bonus) as a Performance
Compensation Award and to select the Performance Criteria that will be used to
establish the Performance Goals;
(l)    to amend any outstanding Awards, including for the purpose of modifying
the time or manner of vesting or the term of any outstanding Award or extending
the exercise period of any outstanding Award; provided, however, that if any
such amendment impairs a Participant’s rights or increases a Participant’s
obligations under his or her Award or creates or increases a Participant’s
federal income tax liability with respect to an Award, such amendment shall also
be subject to the Participant’s consent;
(m)    to determine the duration and purpose of leaves of absences which may be
granted to a Participant without constituting termination of their employment
for purposes of the Plan, which periods shall be no shorter than the periods
generally applicable to Employees under the Company’s employment policies;
(n)    to make decisions with respect to outstanding Awards that may become
necessary upon a change in corporate control or an event that triggers
anti-dilution adjustments;
(o)    to interpret, administer, reconcile any inconsistency in, correct any
defect in and/or supply any omission in the Plan and any instrument or agreement
relating to, or Award granted under, the Plan; and
(p)    to exercise discretion to make any and all other determinations which it
determines to be necessary or advisable for the administration of the Plan.
The Committee also may modify the purchase price or the exercise price of any
outstanding Award, including cash buyouts, cancellations, substitutions and
exchanges, provided that if the modification effects a repricing, shareholder
approval shall be required before the repricing is effective.
3.2    Committee Decisions Final. All decisions made by the Committee (or the
Board, as the case may be) pursuant to the provisions of the Plan shall be final
and binding on the Company and the Participants, unless such decisions are
determined by a court having jurisdiction to be arbitrary and capricious.
3.3    Delegation. The Committee, or if no Committee has been appointed, the
Board, may delegate administration of the Plan to a committee or committees of
one or more members of the Board, and the term “Committee” shall apply to any
person or persons to whom such authority has been delegated. The Committee shall
have the power to delegate to a subcommittee any of the administrative powers
the Committee is authorized to exercise (and references in this Plan to the
Board or the Committee shall thereafter be to the committee or subcommittee),
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the administration of
the Plan. The members of the Committee shall be appointed by and serve at the
pleasure of the Board. From time to time, the Board may increase or decrease the
size of the Committee, add additional members to, remove

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members (with or without cause) from, appoint new members in substitution
therefor, and fill vacancies, however caused, in the Committee. The Committee
shall act pursuant to a vote of the majority of its members or, in the case of a
Committee comprised of only two members, the unanimous consent of its members,
whether present or not, or by the written consent of the majority of its members
and minutes shall be kept of all of its meetings and copies thereof shall be
provided to the Board. Subject to the limitations prescribed by the Plan and the
Board, the Committee may establish and follow such rules and regulations for the
conduct of its business as it may determine to be advisable.
3.4    Committee Composition. Except as otherwise determined by the Board, the
Committee shall consist solely of two or more Non-Employee Directors who are
also Outside Directors. The Board shall have discretion to determine whether or
not it intends to comply with the exemption requirements of Rule 16b-3 and/or
Section 162(m) of the Code. However, (i) if the Board intends to satisfy the
exemption requirements of Rule 16b-3 with respect to Awards to any insider
subject to Section 16 of the Exchange Act that are to be approved by the
Committee rather than the Board, then the Committee shall be composed solely of
a compensation committee of the Board that consists solely of two or more
Non-Employee Directors, and (ii) if the Board intends to satisfy the exemption
requirements of Section 162(m) of the Code with respect to Awards to any Covered
Employee, then the Committee shall be a compensation committee of the Board that
consists solely of two or more Outside Directors. Within the scope of such
authority, the Board or the Committee may (a) delegate to a committee of one or
more members of the Board who are not Outside Directors the authority to grant
Awards to eligible persons who are either (i) not then Covered Employees and are
not expected to be Covered Employees at the time of recognition of income
resulting from such Award or (ii) not persons with respect to whom the Company
wishes to comply with Section 162(m) of the Code; or (b) delegate to a committee
of one or more members of the Board who are not Non-Employee Directors the
authority to grant Awards to eligible persons who are not then subject to
Section 16 of the Exchange Act. Nothing herein shall create an inference that an
Award is not validly granted under the Plan in the event Awards are granted
under the Plan by a compensation committee of the Board that does not at all
times consist solely of two or more Non-Employee Directors who are also Outside
Directors.
3.5    Indemnification. In addition to such other rights of indemnification as
they may have as Directors or members of the Committee, and to the extent
allowed by Applicable Laws, the Committee shall be indemnified by the Company
against the reasonable expenses, including attorney’s fees, actually incurred in
connection with any action, suit or proceeding or in connection with any appeal
therein, to which the Committee may be party by reason of any action taken or
failure to act under or in connection with the Plan or any Award granted under
the Plan, and against all amounts paid by the Committee in settlement thereof
(provided, however, that the settlement has been approved by the Company, which
approval shall not be unreasonably withheld) or paid by the Committee in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such Committee did not act in good faith and in a manner which
such person reasonably believed to be in the best interests of the Company, or
in the case of a criminal proceeding, had no reason to believe that the conduct
complained of was unlawful; provided, however, that within sixty (60) days after
institution of any such action, suit or proceeding, such Committee shall, in
writing, offer the Company the opportunity at its own expense to handle and
defend such action, suit or proceeding.
4.    Shares Subject to the Plan.
4.1    Subject to adjustment in accordance with Section 11, a total of 700,000
shares of Common Stock shall be available for the grant of Awards under the
Plan; provided that no more than 100,000 shares of Common Stock may be granted
as Incentive Stock Options. Any shares of Common Stock granted in connection
with Options and Stock Appreciation Rights shall be counted against this limit
as one (1) share for every one (1) Option or Stock Appreciation Right awarded.
Any shares of Common Stock granted in connection with Awards other than Options
and Stock Appreciation Rights shall be counted against this limit as two (2)
shares of Common Stock for every one (1) share of Common Stock granted in
connection with such Award. During the terms of the Awards, the Company shall
keep available at all times the number of shares of Common Stock required to
satisfy such Awards.
4.2    Shares of Common Stock available for issuance by the Company under the
Plan may consist, in whole or in part, of authorized and unissued shares,
treasury shares or shares reacquired by the Company in any manner.
4.3    Subject to adjustment in accordance with Section 11, no Participant shall
be granted, during any one-year period, Options to purchase Common Stock and
Stock Appreciation Rights with respect to more than 100,000 shares of Common
Stock in the aggregate or any other Awards with respect to more than 100,000
shares of Common Stock in the aggregate. If an Award is to be settled in cash,
the number of shares of Common Stock on which the Award is based shall not count
toward the individual share limit set forth in this Section 4.3.
4.4    Any shares of Common Stock subject to an Award that is cancelled,
forfeited or expires prior to exercise or realization, either in full or in
part, shall again become available for issuance under the Plan. Any shares of
Common Stock that again become

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available for future grants pursuant to this Section 4.4 shall be added back as
one (1) share if such shares were subject to Options or Stock Appreciation
Rights and as two (2) shares if such shares were subject to other Awards.
Notwithstanding anything to the contrary contained herein, (a) shares subject to
an Award under the Plan shall not again be made available for issuance or
delivery under the Plan if such shares are (i) shares tendered in payment of an
Option or a Stock Appreciation Right or (ii) shares delivered by a Participant
or withheld by the Company to satisfy any tax withholding obligation related to
the exercise or settlement of an Option or a Stock Appreciation Right; and
(b) shares repurchased on the open market with the proceeds of an Option
Exercise Price shall not again be made available for issuance under the Plan.
Furthermore, notwithstanding that a Stock Appreciation Right is settled by the
delivery of a net number of shares, the full number of shares underlying such
Stock Appreciation Right shall not be available for subsequent Awards under the
Plan. Shares subject to Awards that are settled in cash will be added back to
the Plan share reserve and again be available for issuance pursuant to Awards
granted under the Plan.
5.    Eligibility.
5.1    Eligibility for Specific Awards. Incentive Stock Options may be granted
only to Employees. Awards other than Incentive Stock Options may be granted to
Employees and those individuals whom the Committee determines are reasonably
expected to become Employees following the Grant Date.
5.2    Ten Percent Shareholders. A Ten Percent Shareholder shall not be granted
an Incentive Stock Option unless the Option Exercise Price is at least one
hundred ten percent (110%) of the Fair Market Value of the Common Stock at the
Grant Date and the Option is not exercisable after the expiration of five (5)
years from the Grant Date.
6.    Option Provisions. Each Option granted under the Plan shall be evidenced
by an Award Agreement. Each Option so granted shall be subject to the conditions
set forth in this Section 6, and to such other conditions not inconsistent with
the Plan as may be reflected in the applicable Award Agreement. All Options
shall be separately designated Incentive Stock Options or Nonqualified Stock
Options at the time of grant, and, if certificates are issued, a separate
certificate or certificates will be issued for shares of Common Stock purchased
on exercise of each type of Option. Notwithstanding the foregoing, the Company
shall have no liability to any Participant or any other person if an Option
designated as an Incentive Stock Option fails to qualify as such at any time or
if an Option is determined to constitute “nonqualified deferred compensation”
within the meaning of Section 409A of the Code and the terms of such Option do
not satisfy the requirements of Section 409A of the Code. The provisions of
separate Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
6.1    Term. Subject to the provisions of Section 5.2 regarding Ten Percent
Shareholders, no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years from the Grant Date. The term of a Nonqualified
Stock Option granted under the Plan shall be determined by the Committee;
provided, however, no Nonqualified Stock Option shall be exercisable after the
expiration of ten (10) years from the Grant Date.
6.2    Exercise Price of an Incentive Stock Option. Subject to the provisions of
Section 5.2 regarding Ten Percent Shareholders, the Option Exercise Price of
each Incentive Stock Option shall be not less than one hundred percent (100%) of
the Fair Market Value of the Common Stock subject to the Option on the Grant
Date. Notwithstanding the foregoing, an Incentive Stock Option may be granted
with an Option Exercise Price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the
Code.
6.3    Exercise Price of a Nonqualified Stock Option. The Option Exercise Price
of each Nonqualified Stock Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the Common Stock subject to the Option on the
Grant Date. Notwithstanding the foregoing, a Nonqualified Stock Option may be
granted with an Option Exercise Price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 409A of the
Code.
6.4    Consideration. The Option Exercise Price of Common Stock acquired
pursuant to an Option shall be paid, to the extent permitted by applicable
statutes and regulations, either (a) in cash or by certified or bank check at
the time the Option is exercised or (b) in the discretion of the Committee, upon
such terms as the Committee shall approve, the Option Exercise Price may be
paid: (i) by delivery to the Company of other Common Stock, duly endorsed for
transfer to the Company, with a Fair Market Value on the date of delivery equal
to the Option Exercise Price (or portion thereof) due for the number of shares
being acquired, or by means of attestation whereby the Participant identifies
for delivery specific shares of Common Stock that have an aggregate Fair Market
Value on the date of attestation equal to the Option Exercise Price (or portion
thereof) and receives a number of shares of Common Stock equal to the difference
between the number of shares thereby purchased and the number of identified
attestation shares of Common Stock (a “Stock for Stock Exchange”); (ii) through
a “cashless” exercise program established with a broker; (iii) by a reduction in
the number of shares of Common Stock otherwise deliverable upon exercise of such
Option with a Fair

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Market Value equal to the aggregate Option Exercise Price at the time of
exercise; (iv) by any combination of the foregoing methods; or (v) in any other
form of legal consideration that may be acceptable to the Committee. Unless
otherwise specifically provided in the Award Agreement, the exercise price of
Common Stock acquired pursuant to an Option that is paid by delivery (or
attestation) to the Company of other Common Stock acquired, directly or
indirectly from the Company, shall be paid only by shares of the Common Stock of
the Company that have been held for more than six (6) months (or such longer or
shorter period of time required to avoid a charge to earnings for financial
accounting purposes). Notwithstanding the foregoing, during any period for which
the Common Stock is publicly traded (i.e., the Common Stock is listed on any
established stock exchange or a national market system) an exercise by an
Officer that involves a direct or indirect extension of credit or arrangement of
an extension of credit by the Company, directly or indirectly, in violation of
Section 402(a) of the Sarbanes-Oxley Act of 2002 shall be prohibited with
respect to any Award under this Plan.
6.5    Transferability of an Incentive Stock Option. An Incentive Stock Option
shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.
6.6    Transferability of a Nonqualified Stock Option. A Nonqualified Stock
Option may, in the sole discretion of the Committee, be transferable to a
Permitted Transferee, upon written approval by the Committee, to the extent
provided in the Award Agreement. If the Nonqualified Stock Option does not
provide for transferability, then the Nonqualified Stock Option shall not be
transferable except by will or by the laws of descent and distribution and shall
be exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the Optionholder may, by delivering written
notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionholder, shall thereafter be
entitled to exercise the Option.
6.7    Vesting of Options. Each Option that vests solely based on the continued
service of the Participant shall vest and therefore become exercisable no
earlier than three (3) years after the Grant Date; provided that such Option may
include graduated vesting within such three-year period. Each Option that vests
based on the achievement of performance or other criteria shall vest and
therefore become exercisable no earlier than one (1) year after the Grant Date.
No Option may be exercised for a fraction of a share of Common Stock. The
Committee may, but shall not be required to, provide for an acceleration of
vesting and exercisability in the terms of any Award Agreement upon the
occurrence of a specified event.
6.8    Termination of Continuous Service. Unless otherwise provided in an Award
Agreement or in an employment agreement the terms of which have been approved by
the Committee, in the event an Optionholder’s Continuous Service terminates
(other than upon the Optionholder’s death or Disability), the Optionholder may
exercise his or her Option (to the extent that the Optionholder was entitled to
exercise such Option as of the date of termination) but only within such period
of time ending on the earlier of (a) the date three (3) months following the
termination of the Optionholder’s Continuous Service or (b) the expiration of
the term of the Option as set forth in the Award Agreement; provided that if the
termination of Continuous Service is by the Company for Cause, all outstanding
Options (whether or not vested) shall immediately terminate and cease to be
exercisable. If, after termination, the Optionholder does not exercise his or
her Option within the time specified in the Award Agreement, the Option shall
terminate.
6.9    Extension of Termination Date. An Optionholder’s Award Agreement may also
provide that if the exercise of the Option following the termination of the
Optionholder’s Continuous Service for any reason would be prohibited at any time
because the issuance of shares of Common Stock would violate the registration
requirements under the Securities Act or any other state or federal securities
law or the rules of any securities exchange or interdealer quotation system,
then the Option shall terminate on the earlier of (a) the expiration of the term
of the Option in accordance with Section 6.1 or (b) the expiration of a period
after termination of the Participant’s Continuous Service that is three (3)
months after the end of the period during which the exercise of the Option would
be in violation of such registration or other securities law requirements.
6.10    Disability of Optionholder. Unless otherwise provided in an Award
Agreement, in the event that an Optionholder’s Continuous Service terminates as
a result of the Optionholder’s Disability, the Optionholder may exercise his or
her Option (to the extent that the Optionholder was entitled to exercise such
Option as of the date of termination), but only within such period of time
ending on the earlier of (a) the date twelve (12) months following such
termination or (b) the expiration of the term of the Option as set forth in the
Award Agreement. If, after termination, the Optionholder does not exercise his
or her Option within the time specified herein or in the Award Agreement, the
Option shall terminate.
6.11    Death of Optionholder. Unless otherwise provided in an Award Agreement,
in the event an Optionholder’s Continuous Service terminates as a result of the
Optionholder’s death, then the Option may be exercised (to the extent the
Optionholder was

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entitled to exercise such Option as of the date of death) by the Optionholder’s
estate, by a person who acquired the right to exercise the Option by bequest or
inheritance or by a person designated to exercise the Option upon the
Optionholder’s death, but only within the period ending on the earlier of (a)
the date twelve (12) months following the date of death or (b) the expiration of
the term of such Option as set forth in the Award Agreement. If, after the
Optionholder’s death, the Option is not exercised within the time specified
herein or in the Award Agreement, the Option shall terminate.
6.12    Incentive Stock Option $100,000 Limitation. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds $100,000, the Options or portions thereof which exceed
such limit (according to the order in which they were granted) shall be treated
as Nonqualified Stock Options.
7.    Provisions of Awards Other Than Options.
7.1    Stock Appreciation Rights.  
(a)    General
Each Stock Appreciation Right granted under the Plan shall be evidenced by an
Award Agreement. Each Stock Appreciation Right so granted shall be subject to
the conditions set forth in this Section 7.1, and to such other conditions not
inconsistent with the Plan as may be reflected in the applicable Award
Agreement. Stock Appreciation Rights may be granted alone (“Free Standing
Rights”) or in tandem with an Option granted under the Plan (“Related Rights”).
(b)    Grant Requirements
Any Related Right that relates to a Nonqualified Stock Option may be granted at
the same time the Option is granted or at any time thereafter but before the
exercise or expiration of the Option. Any Related Right that relates to an
Incentive Stock Option must be granted at the same time the Incentive Stock
Option is granted.
(c)    Term of Stock Appreciation Rights
The term of a Stock Appreciation Right granted under the Plan shall be
determined by the Committee; provided, however, no Stock Appreciation Right
shall be exercisable later than the tenth (10th) anniversary of the Grant Date.
(d)    Vesting of Stock Appreciation Rights
Each Stock Appreciation Right shall vest and therefore become exercisable no
earlier than three (3) years after the Grant Date; provided that such Stock
Appreciation Right may include graduated vesting within such three-year period.
No Stock Appreciation Right may be exercised for a fraction of a share of Common
Stock. The Committee may, but shall not be required to, provide for an
acceleration of vesting and exercisability in the terms of any Award Agreement
upon the occurrence of a specified event.
(e)    Exercise and Payment
Upon exercise of a Stock Appreciation Right, the holder shall be entitled to
receive from the Company an amount equal to the number of shares of Common Stock
subject to the Stock Appreciation Right that is being exercised multiplied by
the excess of (i) the Fair Market Value of a share of Common Stock on the date
the Award is exercised, over (ii) the exercise price specified in the Stock
Appreciation Right or related Option. Payment with respect to the exercise of a
Stock Appreciation Right shall be made on the date of exercise. Payment shall be
made in the form of shares of Common Stock (with or without restrictions as to
substantial risk of forfeiture and transferability, as determined by the
Committee in its sole discretion), cash or a combination thereof, as determined
by the Committee.
(f)    Exercise Price
The exercise price of a Free Standing Right shall be determined by the
Committee, but shall not be less than one hundred percent (100%) of the Fair
Market Value of one (1) share of Common Stock on the Grant Date of such Stock
Appreciation Right. A Related Right granted simultaneously with or subsequent to
the grant of an Option and in conjunction therewith or in the alternative
thereto shall have the same exercise price as the related Option, shall be
transferable only upon the same terms and conditions as the related Option, and
shall be exercisable only to the same extent as the related Option; provided,
however, that a Stock Appreciation Right, by its terms, shall be exercisable
only when the Fair Market Value per share of Common

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Stock subject to the Stock Appreciation Right and related Option exceeds the
exercise price per share thereof and no Stock Appreciation Rights may be granted
in tandem with an Option unless the Committee determines that the requirements
of Section 7.1(b) are satisfied.
(g)    Reduction in the Underlying Option Shares
Upon any exercise of a Related Right, the number of shares of Common Stock for
which any related Option shall be exercisable shall be reduced by the number of
shares for which the Stock Appreciation Right has been exercised. The number of
shares of Common Stock for which a Related Right shall be exercisable shall be
reduced upon any exercise of any related Option by the number of shares of
Common Stock for which such Option has been exercised.
7.2    Restricted Awards.  
(a)    General
A Restricted Award is an Award of actual shares of Common Stock (“Restricted
Stock”) or hypothetical Common Stock units (“Restricted Stock Units”) having a
value equal to the Fair Market Value of an identical number of shares of Common
Stock, which may, but need not, provide that such Restricted Award may not be
sold, assigned, transferred or otherwise disposed of, pledged or hypothecated as
collateral for a loan or as security for the performance of any obligation or
for any other purpose for such period (the “Restricted Period”) as the Committee
shall determine. Each Restricted Award granted under the Plan shall be evidenced
by an Award Agreement. Each Restricted Award so granted shall be subject to the
conditions set forth in this Section 7.2, and to such other conditions not
inconsistent with the Plan as may be reflected in the applicable Award
Agreement.
(b)    Restricted Stock and Restricted Stock Units
(i)
Each Participant granted Restricted Stock shall execute and deliver to the
Company an Award Agreement with respect to the Restricted Stock setting forth
the restrictions and other terms and conditions applicable to such Restricted
Stock. If the Committee determines that the Restricted Stock shall be held by
the Company or in escrow rather than delivered to the Participant pending the
release of the applicable restrictions, the Committee may require the
Participant to additionally execute and deliver to the Company (A) an escrow
agreement satisfactory to the Committee, if applicable and (B) the appropriate
blank stock power with respect to the Restricted Stock covered by such
agreement. If a Participant fails to execute an agreement evidencing an Award of
Restricted Stock and, if applicable, an escrow agreement and stock power, the
Award shall be null and void. Subject to the restrictions set forth in the
Award, the Participant generally shall have the rights and privileges of a
shareholder as to such Restricted Stock, including the right to vote such
Restricted Stock and the right to receive dividends.

(ii)
The terms and conditions of a grant of Restricted Stock Units shall be reflected
in an Award Agreement. No shares of Common Stock shall be issued at the time a
Restricted Stock Unit is granted, and the Company will not be required to set
aside a fund for the payment of any such Award. A Participant shall have no
voting rights with respect to any Restricted Stock Units granted hereunder. At
the discretion of the Committee, each Restricted Stock Unit (representing one
(1) share of Common Stock) may be credited with cash and stock dividends paid by
the Company in respect of one (1) share of Common Stock (“Dividend
Equivalents”). Dividend Equivalents shall be withheld by the Company for the
Participant’s account, and interest may be credited on the amount of cash
Dividend Equivalents withheld at a rate and subject to such terms as determined
by the Committee. Dividend Equivalents credited to a Participant’s account and
attributable to any particular Restricted Stock Unit (and earnings thereon, if
applicable) shall be distributed in cash or, at the discretion of the Committee,
in shares of Common Stock having a Fair Market Value equal to the amount of such
Dividend Equivalents and earnings, if applicable, to the Participant upon
settlement of such Restricted Stock Unit (in any event, no later than two and
one-half (2 ½) months following the year in which such settlement occurs) and,
if such Restricted Stock Unit is forfeited, the Participant shall have no right
to such Dividend Equivalents.

(c)    Restrictions
(i)
Restricted Stock awarded to a Participant shall be subject to the following
restrictions until the expiration of the Restricted Period, and to such other
terms and conditions as may be set forth in the applicable Award Agreement: (A)
if an escrow arrangement is used, the Participant shall not be entitled to
delivery of the stock certificate; (B) the shares shall be subject to the
restrictions on transferability set forth in the Award

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Agreement; (C) the shares shall be subject to forfeiture to the extent provided
in the applicable Award Agreement; and (D) to the extent such shares are
forfeited, the stock certificates shall be returned to the Company, and all
rights of the Participant to such shares and as a shareholder with respect to
such shares shall terminate without further obligation on the part of the
Company.
(ii)
Restricted Stock Units awarded to any Participant shall be subject to (A)
forfeiture until the expiration of the Restricted Period, and satisfaction of
any applicable Performance Goals during such period, to the extent provided in
the applicable Award Agreement, and to the extent such Restricted Stock Units
are forfeited, all rights of the Participant to such Restricted Stock Units
shall terminate without further obligation on the part of the Company and (B)
such other terms and conditions as may be set forth in the applicable Award
Agreement.

(iii)
The Committee shall have the authority to remove any or all of the restrictions
on the Restricted Stock and Restricted Stock Units whenever it may determine
that, by reason of changes in Applicable Laws or other changes in circumstances
arising after the date the Restricted Stock or Restricted Stock Units are
granted, such action is appropriate.

(d)    Restricted Period
With respect to Restricted Awards, the Restricted Period shall commence on the
Grant Date and end no earlier than three (3) years after the Grant Date;
provided that a Restricted Award may include graduated vesting within such
three-year period. Any Restricted Award that vests based on the achievement of
performance or other criteria shall vest no earlier than one (1) year after the
Grant Date. The Committee may, but shall not be required to, provide for an
acceleration of vesting in the terms of any Award Agreement upon the occurrence
of a specified event.
(e)    Delivery of Restricted Stock and Settlement of Restricted Stock Units
Upon the expiration of the Restricted Period with respect to any shares of
Restricted Stock, the restrictions set forth in Section 7.2(c) and the
applicable Award Agreement shall be of no further force or effect with respect
to such shares, except as set forth in the applicable Award Agreement. If an
escrow arrangement is used, upon such expiration, the Company shall deliver to
the Participant, or his or her beneficiary, without charge, the stock
certificate evidencing the shares of Restricted Stock which have not then been
forfeited and with respect to which the Restricted Period has expired (to the
nearest full share). Upon the expiration of the Restricted Period (in any event,
no later than two and one-half (2 ½) months following the year in which such
expiration occurs) with respect to any outstanding Restricted Stock Units, the
Company shall deliver to the Participant, or his or her beneficiary, without
charge, one (1) share of Common Stock for each such outstanding Restricted Stock
Unit (“Vested Unit”) and cash equal to any Dividend Equivalents credited with
respect to each such Vested Unit in accordance with Section 7.2(b)(ii) hereof
and the interest thereon or, at the discretion of the Committee, in shares of
Common Stock having a Fair Market Value equal to such Dividend Equivalents and
the interest thereon, if any; provided, however, that, if explicitly provided in
the applicable Award Agreement, the Committee may, in its sole discretion, elect
to pay cash or part cash and part Common Stock in lieu of delivering only shares
of Common Stock for Vested Units. If a cash payment is made in lieu of
delivering shares of Common Stock, the amount of such payment shall be equal to
the Fair Market Value of the Common Stock as of the date on which the Restricted
Period lapsed with respect to each Vested Unit.
(f)    Stock Restrictions
Each certificate representing Restricted Stock awarded under the Plan shall bear
a legend in such form as the Company deems appropriate.

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7.3    Performance Share Awards.
a.
Grant of Performance Share Awards

Each Performance Share Award granted under the Plan shall be evidenced by an
Award Agreement. Each Performance Share Award so granted shall be subject to the
conditions set forth in this Section 7.3, and to such other conditions not
inconsistent with the Plan as may be reflected in the applicable Award
Agreement. The Committee shall have the discretion to determine: (i) the number
of shares of Common Stock subject to a Performance Share Award granted to any
Participant; (ii) the Performance Period applicable to any Award; (iii) the
conditions that must be satisfied for a Participant to earn an Award; and (iv)
the other terms, conditions and restrictions of the Award.
b.
Earning Performance Share Awards

The number of Performance Shares earned by a Participant will depend on the
extent to which the Performance Goals established by the Committee are attained
within the applicable Performance Period, as determined by the Committee. No
payout or issuance of shares of Common Stock shall be made with respect to any
Performance Share Award except upon written certification by the Committee that
the minimum threshold Performance Goal(s) have been achieved.
c.
Dividend Equivalents on Performance Share Awards

In no event shall any Dividend Equivalents be paid with respect to any
Performance Share Awards until such awards are earned, it being understood that
Dividend Equivalents may be credited with respect to such awards, with payment
subject to such awards actually vesting (if any).
7.4    Performance Compensation Awards.  
(a)    General
The Committee shall have the authority, at the time of grant of any Award
described in this Plan (other than Options and Stock Appreciation Rights granted
with an exercise price equal to or greater than the Fair Market Value per share
of Common Stock on the Grant Date), to designate such Award as a Performance
Compensation Award in order to qualify such Award as “performance-based
compensation” under Section 162(m) of the Code. In addition, the Committee shall
have the authority to make an Award of a cash bonus to any Participant and
designate such Award as a Performance Compensation Award in order to qualify
such Award as “performance-based compensation” under Section 162(m) of the Code.
(b)    Eligibility
The Committee will, in its sole discretion, designate within the first ninety
(90) days of a Performance Period (or, if longer or shorter, within the maximum
period allowed under Section 162(m) of the Code) which Participants will be
eligible to receive Performance Compensation Awards in respect of such
Performance Period. However, designation of a Participant eligible to receive an
Award hereunder for a Performance Period shall not in any manner entitle the
Participant to receive payment in respect of any Performance Compensation Award
for such Performance Period. The determination as to whether or not such
Participant becomes entitled to payment in respect of any Performance
Compensation Award shall be decided solely in accordance with the provisions of
this Section 7.4. Moreover, designation of a Participant eligible to receive an
Award hereunder for a particular Performance Period shall not require
designation of such Participant eligible to receive an Award hereunder in any
subsequent Performance Period and designation of one person as a Participant
eligible to receive an Award hereunder shall not require designation of any
other person as a Participant eligible to receive an Award hereunder in such
period or in any other period.
(c)    Discretion of Committee with Respect to Performance Compensation Awards
With regard to a particular Performance Period, the Committee shall have full
discretion to select the length of such Performance Period (provided any such
Performance Period shall be not less than one fiscal quarter in duration), the
type(s) of Performance Compensation Awards to be issued, the Performance
Criteria that will be used to establish the Performance Goal(s), the kind(s)
and/or level(s) of the Performance Goal(s) that is (are) to apply to the Company
and the Performance Formula. Within the first ninety (90) days of a Performance
Period (or, if longer or shorter, within the maximum period allowed under
Section 162(m) of the Code), the Committee shall, with regard to the Performance
Compensation Awards to be issued for such Performance Period, exercise its
discretion with respect to each of the matters enumerated in the immediately
preceding sentence of this Section 7.4(c) and record the same in writing.

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(d)    Payment of Performance Compensation Awards
(i)
Condition to Receipt of Payment

Unless otherwise provided in the applicable Award Agreement, a Participant must
be employed by the Company on the last day of a Performance Period to be
eligible for payment in respect of a Performance Compensation Award for such
Performance Period.
(ii)
Limitation

A Participant shall be eligible to receive payment in respect of a Performance
Compensation Award only to the extent that: (A) the Performance Goals for such
period are achieved; and (B) the Performance Formula as applied against such
Performance Goals determines that all or some portion of such Participant’s
Performance Compensation Award has been earned for the Performance Period. A
Participant shall not be entitled to receive dividends on any unearned
Performance Compensation Award.
(iii)
Certification

Following the completion of a Performance Period, the Committee shall review and
certify in writing whether, and to what extent, the Performance Goals for the
Performance Period have been achieved and, if so, calculate and certify in
writing the amount of the Performance Compensation Awards earned for the period
based upon the Performance Formula. The Committee shall then determine the
actual size of each Participant’s Performance Compensation Award for the
Performance Period and, in so doing, may apply Negative Discretion in accordance
with Section 7.4(d)(iv) hereof, if and when it deems appropriate.
(iv)
Use of Discretion

In determining the actual size of an individual Performance Compensation Award
for a Performance Period, the Committee may reduce or eliminate the amount of
the Performance Compensation Award earned under the Performance Formula in the
Performance Period through the use of Negative Discretion if, in its sole
judgment, such reduction or elimination is appropriate. The Committee shall not
have the discretion to (A) grant or provide payment in respect of Performance
Compensation Awards for a Performance Period if the Performance Goals for such
Performance Period have not been attained or (B) increase a Performance
Compensation Award above the maximum amount payable under Section 7.4(d)(vi) of
the Plan.
(v)
Timing of Award Payments

Performance Compensation Awards granted for a Performance Period, and any earned
Dividend Equivalents related thereto, shall be paid to Participants within two
and one-half (2 ½) months following the year in which completion of the
certifications occurs as required by this Section 7.4.
(vi)
Maximum Award Payable

Notwithstanding any provision contained in this Plan to the contrary, the
maximum Performance Compensation Award payable to any one Participant under the
Plan for a Performance Period (excluding any Options and Stock Appreciation
Rights) is 100,000 shares of Common Stock or, in the event such Performance
Compensation Award is paid in cash, the equivalent cash value thereof on the
first or last day of the Performance Period to which such Award relates, as
determined by the Committee. The maximum amount that can be paid in any calendar
year to any Participant pursuant to a cash bonus Award described in the last
sentence of Section 7.4(a) shall be $2,000,000.
8.    Securities Law Compliance. Each Award Agreement shall provide that no
shares of Common Stock shall be purchased or sold thereunder unless and until
(a) any then applicable requirements of state or federal laws and regulatory
agencies have been fully complied with to the satisfaction of the Company and
its counsel and (b) if required to do so by the Company, the Participant has
executed and delivered to the Company a letter of investment intent in such form
and containing such provisions as the Committee may require. The Company shall
use reasonable efforts to seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
grant Awards and to issue and sell shares of Common Stock upon exercise of the
Awards; provided, however, that this undertaking shall not require the Company
to register under the Securities Act the Plan, any Award or any Common Stock
issued or issuable pursuant to any such Award. If, after reasonable efforts, the

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Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance
and sale of Common Stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell Common Stock upon exercise of such
Awards unless and until such authority is obtained.
9.    Use of Proceeds from Stock. Proceeds from the sale of Common Stock
pursuant to Awards, or upon exercise thereof, shall constitute general funds of
the Company.
10.    Miscellaneous.
10.1    Acceleration of Exercisability and Vesting. The Committee shall have the
power to accelerate the time at which an Award may first be exercised or the
time during which an Award or any part thereof will vest in accordance with the
Plan, notwithstanding the provisions in the Award stating the time at which it
may first be exercised or the time during which it will vest.
10.2    Shareholder Rights. Except as provided in the Plan or an Award
Agreement, no Participant shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares of Common Stock subject to
such Award unless and until such Participant has satisfied all requirements for
exercise of the Award pursuant to its terms and no adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions of other rights for which the record date is prior to
the date such Common Stock certificate is issued, except as provided in Section
11 hereof.
10.3    No Employment or Other Service Rights. Nothing in the Plan or any
instrument executed or Award granted pursuant thereto shall confer upon any
Participant any right to continue to serve the Company or an Affiliate in the
capacity in effect at the time the Award was granted or shall affect the right
of the Company or an Affiliate to terminate the employment of an Employee with
or without notice and with or without Cause pursuant to the By-laws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.
10.4    Transfer; Approved Leave of Absence. For purposes of the Plan, no
termination of employment by an Employee shall be deemed to result from either
(a) a transfer to the employment of the Company from an Affiliate or from the
Company to an Affiliate, or from one Affiliate to another; or (b) an approved
leave of absence for military service or sickness, or for any other purpose
approved by the Company, if the Employee’s right to reemployment is guaranteed
either by a statute or by contract or under the policy pursuant to which the
leave of absence was granted or if the Committee otherwise so provides in
writing, in either case, except to the extent inconsistent with Section 409A of
the Code if the applicable Award is subject thereto.
10.5    Withholding Obligations. To the extent provided by the terms of an Award
Agreement and subject to the discretion of the Committee, the Participant may
satisfy any federal, state or local tax withholding obligation relating to the
exercise or acquisition of Common Stock under an Award by any of the following
means (in addition to the Company’s right to withhold from any compensation paid
to the Participant by the Company) or by a combination of such means: (a)
tendering a cash payment; (b) authorizing the Company to withhold shares of
Common Stock from the shares of Common Stock otherwise issuable to the
Participant as a result of the exercise or acquisition of Common Stock under the
Award, provided, however, that no shares of Common Stock are withheld with a
value exceeding the minimum amount of tax required to be withheld by law; or (c)
delivering to the Company previously owned and unencumbered shares of Common
Stock of the Company.
11.    Adjustments Upon Changes in Stock. In the event of changes in the
outstanding Common Stock or in the capital structure of the Company by reason of
any stock or extraordinary cash dividend, stock split, reverse stock split, an
extraordinary corporate transaction such as any recapitalization,
reorganization, merger, consolidation, combination, exchange, or other relevant
change in capitalization occurring after the Grant Date of any Award, Awards
granted under the Plan and any Award Agreements, the exercise price of Options
and Stock Appreciation Rights, the maximum number of shares of Common Stock
subject to all Awards stated in Section 4 and the maximum number of shares of
Common Stock with respect to which any one person may be granted Awards during
any period stated in Section 4 and Section 7.4(d)(vi) will be equitably adjusted
or substituted, as to the number, price or kind of a share of Common Stock or
other consideration subject to such Awards to the extent necessary to preserve
the economic intent of such Award. In the case of adjustments made pursuant to
this Section 11, unless the Committee specifically determines that such
adjustment is in the best interests of the Company or its Affiliates, the
Committee shall, in the case of Incentive Stock Options, ensure that any
adjustments under this Section 11 will not constitute a modification, extension
or renewal of the Incentive Stock Options within the meaning of Section
424(h)(3) of the Code and in the case of Nonqualified Stock Options, ensure that
any adjustments under this Section 11 will not constitute a modification of such
Nonqualified Stock Options within the meaning of Section 409A of the Code. Any
adjustments made under this Section 11 shall be made in a manner which does not
adversely affect the exemption provided pursuant to Rule 16b-3 under the
Exchange Act. Further, with respect to Awards intended to qualify as
“performance-based compensation” under Section 162(m) of the Code, any
adjustments or substitutions will not cause the Company to be denied a tax
deduction on account of Section 162(m) of the Code. The Company shall give each

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Participant notice of an adjustment hereunder and, upon notice, such adjustment
shall be conclusive and binding for all purposes.
12.    Effect of Change in Control.
12.1    Unless otherwise provided in an Award Agreement, notwithstanding any
provision of the Plan to the contrary:
(a)    In the event of a Change in Control, all Options and Stock Appreciation
Rights shall become immediately exercisable with respect to one hundred percent
(100%) of the shares subject to such Options or Stock Appreciation Rights,
and/or the Restricted Period shall expire immediately with respect to one
hundred percent (100%) of the shares of Restricted Stock or Restricted Stock
Units.
(b)    With respect to Performance Compensation Awards, in the event of a Change
in Control, all incomplete Performance Periods in respect of such Award in
effect on the date the Change in Control occurs shall end on the date of such
change and the Committee shall (i) determine the extent to which Performance
Goals with respect to each such Performance Period have been met based upon such
audited or unaudited financial information then available as it deems relevant
and (ii) cause to be paid to the applicable Participant partial or full Awards
with respect to Performance Goals for each such Performance Period based upon
the Committee’s determination of the degree of attainment of Performance Goals
or, if not determinable, assuming that the applicable “target” levels of
performance have been attained, or on such other basis determined by the
Committee. The payment of such partial or full Award shall take place no later
than two and one-half (2 ½) months following the year in which such Change in
Control occurs.
To the extent practicable, any actions taken by the Committee under the
immediately preceding clauses (a) and (b) shall occur in a manner and at a time
which allows affected Participants the ability to participate in the Change in
Control with respect to the shares of Common Stock subject to their Awards.
12.2    In addition, in the event of a Change in Control, the Committee may in
its discretion and upon at least ten (10) days’ advance notice to the affected
persons, cancel any outstanding Awards and pay to the holders thereof, in cash
or stock, or any combination thereof, the value of such Awards based upon the
price per share of Common Stock received or to be received by other shareholders
of the Company in the event. In the case of any Option or Stock Appreciation
Right with an exercise price that equals or exceeds the price paid for a share
of Common Stock in connection with the Change in Control, the Committee may
cancel the Option or Stock Appreciation Right without the payment of
consideration therefor.
12.3    The obligations of the Company under the Plan shall be binding upon any
successor corporation or organization resulting from the merger, consolidation
or other reorganization of the Company, or upon any successor corporation or
organization succeeding to all or substantially all of the assets and business
of the Company and its Affiliates, taken as a whole.
13.    Amendment of the Plan and Awards.
13.1    Amendment of Plan. The Board at any time, and from time to time, may
amend or terminate the Plan. However, except as provided in Section 11 relating
to adjustments upon changes in Common Stock and Section 13.3, no amendment shall
be effective unless approved by the shareholders of the Company to the extent
shareholder approval is necessary to satisfy any Applicable Laws. At the time of
such amendment, the Board shall determine, upon advice from counsel, whether
such amendment will be contingent on shareholder approval.
13.2    Shareholder Approval. The Board may, in its sole discretion, submit any
other amendment to the Plan for shareholder approval, including, but not limited
to, amendments to the Plan intended to satisfy the requirements of Section
162(m) of the Code and the regulations thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.
13.3    Contemplated Amendments. It is expressly contemplated that the Board may
amend the Plan in any respect the Board deems necessary or advisable to provide
eligible Employees with the maximum benefits provided or to be provided under
the provisions of the Code and the regulations promulgated thereunder relating
to Incentive Stock Options or to the nonqualified deferred compensation
provisions of Section 409A of the Code and/or to bring the Plan and/or Awards
granted under it into compliance therewith.
13.4    No Impairment of Rights. Rights under any Award granted before amendment
of the Plan shall not be impaired by any amendment of the Plan unless (a) the
Company requests the consent of the Participant and (b) the Participant consents
in writing.
13.5    Amendment of Awards. The Committee at any time, and from time to time,
may amend the terms of any one or more

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Awards; provided, however, that the Committee may not affect any amendment which
would otherwise constitute an impairment of the rights under any Award unless
(a) the Company requests the consent of the Participant and (b) the Participant
consents in writing.
14.    General Provisions.
14.1    Forfeiture Events. The Committee may specify in an Award Agreement that
the Participant’s rights, payments and benefits with respect to an Award shall
be subject to reduction, cancellation, forfeiture or recoupment upon the
occurrence of certain events, in addition to applicable vesting conditions of an
Award. Such events may include without limitation breach of non-competition,
non-solicitation, confidentiality or other restrictive covenants that are
contained in the Award Agreement or otherwise applicable to the Participant, a
termination of the Participant’s Continuous Service for Cause, or other conduct
by the Participant that is detrimental to the business or reputation of the
Company and/or its Affiliates.
14.2    Clawback. Notwithstanding any other provisions in this Plan, any Award
which is subject to recovery under any law, government regulation or stock
exchange listing requirement will be subject to such deductions and clawback as
may be required to be made pursuant to such law, government regulation or stock
exchange listing requirement (or any policy adopted by the Company pursuant to
any such law, government regulation or stock exchange listing requirement).
14.3    Other Compensation Arrangements. Nothing contained in this Plan shall
prevent the Board from adopting other or additional compensation arrangements,
subject to shareholder approval if such approval is required; and such
arrangements may be either generally applicable or applicable only in specific
cases.
14.4    Unfunded Plan. The Plan shall be unfunded. Neither the Company, the
Board nor the Committee shall be required to establish any special or separate
fund or to segregate any assets to assure the performance of its obligations
under the Plan.
14.5    Recapitalizations. Each Award Agreement shall contain provisions
required to reflect the provisions of Section 11.
14.6    Delivery. Upon exercise of a right granted under this Plan, the Company
shall issue Common Stock or pay any amounts due within a reasonable period of
time thereafter. Subject to any statutory or regulatory obligations the Company
may otherwise have, for purposes of this Plan, thirty (30) days shall be
considered a reasonable period of time.
14.7    No Fractional Shares. No fractional shares of Common Stock shall be
issued or delivered pursuant to the Plan. The Committee shall determine whether
cash, additional Awards or other securities or property shall be issued or paid
in lieu of fractional shares of Common Stock or whether any fractional shares
should be rounded, forfeited or otherwise eliminated.
14.8    Other Provisions. The Award Agreements authorized under the Plan may
contain such other provisions not inconsistent with this Plan, including without
limitation restrictions upon the exercise of the Awards, as the Committee may
deem advisable.
14.9    Section 409A. The Plan is intended to comply with Section 409A of the
Code to the extent subject thereto, and, accordingly, to the maximum extent
permitted, the Plan shall be interpreted and administered to be in compliance
therewith. Any payments described in the Plan that are due within the
“short-term deferral period” as defined in Section 409A of the Code shall not be
treated as deferred compensation unless Applicable Laws require otherwise.
Notwithstanding anything to the contrary in the Plan, to the extent required to
avoid accelerated taxation and tax penalties under Section 409A of the Code,
amounts that would otherwise be payable and benefits that would otherwise be
provided pursuant to the Plan during the six (6) month period immediately
following the Participant’s termination of Continuous Service shall instead be
paid on the first payroll date after the six-month anniversary of the
Participant’s separation from service (or the Participant’s death, if earlier).
Notwithstanding the foregoing, neither the Company nor the Committee shall have
any obligation to take any action to prevent the assessment of any excise tax or
penalty on any Participant under Section 409A of the Code and neither the
Company nor the Committee will have any liability to any Participant for such
tax or penalty.
14.10    Disqualifying Dispositions. Any Participant who shall make a
“disposition” (as defined in Section 424 of the Code) of all or any portion of
shares of Common Stock acquired upon exercise of an Incentive Stock Option
within two (2) years from the Grant Date of such Incentive Stock Option or
within one (1) year after the issuance of the shares of Common Stock acquired
upon exercise of such Incentive Stock Option (a “Disqualifying Disposition”)
shall be required to immediately advise the Company in writing as to the
occurrence of the sale and the price realized upon the sale of such shares of
Common Stock.
14.11    Section 16. It is the intent of the Company that the Plan satisfy, and
be interpreted in a manner that satisfies, the applicable requirements of Rule
16b-3 as promulgated under Section 16 of the Exchange Act so that Participants
will be entitled to the benefit of Rule 16b-3, or any other rule promulgated
under Section 16 of the Exchange Act, and will not be subject to short-

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swing liability under Section 16 of the Exchange Act. Accordingly, if the
operation of any provision of the Plan would conflict with the intent expressed
in this Section 14.11, such provision to the extent possible shall be
interpreted and/or deemed amended so as to avoid such conflict.
14.12    Section 162(m). To the extent the Committee issues any Award that is
intended to be exempt from the deduction limitation of Section 162(m) of the
Code, the Committee may, without shareholder or grantee approval, amend the Plan
or the relevant Award Agreement retroactively or prospectively to the extent it
determines necessary in order to comply with any subsequent clarification of
Section 162(m) of the Code required to preserve the Company’s federal income tax
deduction for compensation paid pursuant to any such Award.
14.13    Beneficiary Designation. Each Participant under the Plan may from time
to time name any beneficiary or beneficiaries by whom any right under the Plan
is to be exercised in case of such Participant’s death. Each designation will
revoke all prior designations by the same Participant, shall be in a form
reasonably prescribed by the Committee and shall be effective only when filed by
the Participant in writing with the Company during the Participant’s lifetime.
If no valid beneficiary designation form is on file with the Company at the time
of a Participant’s death, the default beneficiary of such Participant shall be
the Participant’s spouse, if any, then to any children equally, per stirpes.
14.14    Expenses. The costs of administering the Plan shall be paid by the
Company.
14.15    Severability. If any of the provisions of the Plan or any Award
Agreement is held to be invalid, illegal or unenforceable, whether in whole or
in part, such provision shall be deemed modified to the extent, but only to the
extent, of such invalidity, illegality or unenforceability and the remaining
provisions shall not be affected thereby.
14.16    Plan Headings. The headings in the Plan are for purposes of convenience
only and are not intended to define or limit the construction of the provisions
hereof.
14.17    Non-Uniform Treatment. The Committee’s determinations under the Plan
need not be uniform and may be made by it selectively among persons who are
eligible to receive, or actually receive, Awards. Without limiting the
generality of the foregoing, the Committee shall be entitled to make non-uniform
and selective determinations, amendments and adjustments, and to enter into
non-uniform and selective Award Agreements.
15.    Effective Date of Plan. The Plan shall become effective as of the
Effective Date, but no Award shall be exercised (or, in the case of a stock
Award, shall be granted) unless and until the Plan has been approved by the
shareholders of the Company, which approval shall be within twelve (12) months
before or after the date the Plan is adopted by the Board.
16.    Termination or Suspension of the Plan. The Plan shall terminate
automatically on May 15, 2019. No Award shall be granted pursuant to the Plan
after such date, but Awards theretofore granted may extend beyond that date. The
Board may suspend or terminate the Plan at any earlier date pursuant to Section
13.1 hereof. No Awards may be granted under the Plan while the Plan is suspended
or after it is terminated. Unless the Company determines to submit Section 7.4
of the Plan and the definition of “Performance Goal” and “Performance Criteria”
to the Company’s shareholders at the first shareholder meeting that occurs in
the fifth (5th) year following the year in which the Plan was last approved by
shareholders (or any earlier meeting designated by the Board), in accordance
with the requirements of Section 162(m) of the Code, and such shareholder
approval is obtained, then no further Performance Compensation Awards shall be
made to Covered Employees under Section 7.4 after the date of such annual
meeting, but the Plan may continue in effect for Awards to Participants not in
accordance with Section 162(m) of the Code.
17.    Choice of Law. The law of the State of Delaware shall govern all
questions concerning the construction, validity and interpretation of this Plan,
without regard to such state’s conflict of law rules.
As adopted by the Board of Directors of Computer Programs and Systems, Inc. on
January 27, 2014.
As approved by the shareholders of Computer Programs and Systems, Inc. on May
15, 2014.

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