Exhibit 10.4
CORVEL CORPORATION
RESTATED OMNIBUS INCENTIVE PLAN
(FORMERLY THE RESTATED 1988 EXECUTIVE STOCK OPTION PLAN)
AS AMENDED AND RESTATED THROUGH JUNE 8, 2010
ARTICLE I.
GENERAL
I. GENERAL PROVISIONS
A. The Plan is intended to promote the interests of the Company and its
stockholders by providing a method whereby (i) key employees (including officers
and directors) of the Company (or any Parent or Subsidiary) responsible for the
management, growth and financial success of the Company (or any Parent or
Subsidiary), (ii) the non-employee members of the Board or the board of
directors of any Parent or Subsidiary, and (iii) consultants and advisors who
provide valuable services to the Company (or any Parent or Subsidiary) may be
offered various types of equity incentives and rewards intended to encourage
such individuals to put forth maximum efforts for the success of the Company’s
business and to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Company, thereby aligning the interests of such
persons with the Company’s stockholders.
B. For purposes of the Plan, the following definitions shall be in effect:
     AFFILIATE: Any entity (i) that, directly or indirectly through one or more
intermediaries, is controlled by the Company or (ii) in which the Company has a
significant equity interest, in each case as determined by the Committee.
     AWARD: Any Option, Tandem Right, Limited Right, Stock Appreciation Right,
Restricted Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent,
or Other Stock-Based Award granted under the Plan.
     AWARD AGREEMENT: Any written agreement, contract or other instrument or
document evidencing any Award granted under the Plan. Each Award Agreement shall
be subject to the applicable terms and conditions of the Plan and any other
terms and conditions (not inconsistent with the Plan) determined by the
Committee.
     BOARD: The Board of Directors of the Company.
     CHANGE IN CONTROL: A Change in Control shall be deemed to occur in the
event that:
     (i) any person or related group of persons (other than the Company or a
person that directly or indirectly controls, is controlled by, or is under
common control with, the Company) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities
possessing more than fifty percent (50%) of the total combined

 

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voting power of the Company’s outstanding securities pursuant to a tender or
exchange offer which the Board does not recommend the Company’s stockholders to
accept; or
     (ii) there is a change in the composition of the Board over a period of
twenty-four (24) consecutive months or less for purposes of the terms set forth
in Article III, or over a period of twelve (12) consecutive months for all other
purposes under the Plan, such that a majority of the Board members (rounded up
to the next whole number) cease, by reason of one or more proxy contests for the
election of Board members, to be comprised of individuals who either (a) have
been Board members continuously since the beginning of such period or (b) have
been elected or nominated for election as Board members during such period by at
least two-thirds of the Board members described in clause (a) who were still in
office at the time such election or nomination was approved by the Board.
     CODE: The Internal Revenue Code of 1986, as amended.
     COMMON STOCK: The Common Stock issuable under the Plan shall be shares of
the Company’s common stock, $0.0001 par value.
     COMMITTEE: The Committee shall be a committee designated by the Board to
administer the Plan, which initially shall be the compensation committee of the
Board. The Committee shall be comprised of at least two Directors but not less
than such number of Directors as shall be required to permit Awards granted
under the Plan to qualify under Rule 16b-3 and Section 162(m) of the Code, and
each member of the Committee shall be a “Non-Employee Director” and an “Outside
Director.”
     COMPANY: The Company shall mean CorVel Corporation, a Delaware
corporation1, or any corporate successor which shall assume the Plan.
     CORPORATE TRANSACTION: A Corporate Transaction shall include any of the
following transactions for which the approval of the Company’s stockholders is
obtained:
     (i) a merger or acquisition in which the Company is not the surviving
entity, except for a transaction the principal purpose of which is to change the
state of the Company’s incorporation,
     (ii) the sale, transfer or other disposition of all or substantially all of
the assets of the Company to any entity other than a parent or subsidiary of the
Company, or
     (iii) any reverse merger in which the Company is the surviving entity but
in which fifty percent (50%) or more of the Company’s outstanding voting stock
is transferred to holders
 

1   The Company was previously known as FORTIS Corporation and assumed all of
the rights and responsibilities of FORTIS Corporation, a Minnesota corporation
(“FORTIS Minnesota”), with respect to the Plan pursuant to the Agreement and
Plan of Merger by and between the Company and FORTIS Minnesota, effective
May 16, 1991, under which FORTIS Minnesota changed its state of incorporation
from Minnesota to Delaware by merging with and into the Company which was a
wholly owned subsidiary of FORTIS Minnesota.

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different from those who held such fifty percent (50%) or greater interest
immediately prior to such merger.
     DIRECTOR: A member of the Board, including any Non-Employee Director.
     DIVIDEND EQUIVALENT: Any right granted under Section IV of Article IV of
the Plan.
     ELIGIBLE DIRECTOR: An Eligible Director is defined in Section I.A. of
Article III.
     ELIGIBLE PERSON: (i) Any Employee, officer, consultant, or advisor
providing services to the Company (or any Parent or Subsidiary), and (ii) any
Director or director of any Parent or Subsidiary who is not an employee of the
Company or any Parent or Subsidiary.
     EMPLOYEE: An individual shall be considered to be an Employee for so long
as the Company or one or more of its Parent or Subsidiaries reports his or her
earnings on a Form W-2.
     EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
     FAIR MARKET VALUE: The Fair Market Value per share of Common Stock on any
relevant date shall be determined in accordance with the following provisions:
     (i) If the Common Stock is at the time listed on the Nasdaq National Market
or the Nasdaq Capital Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question, as such price
is reported by the National Association of Securities Dealers on the Nasdaq
National Market or the Nasdaq Capital Market and published in The Wall Street
Journal.
     (ii) If the Common Stock is at the time listed on any stock exchange, then
the Fair Market Value shall be the closing selling price per share of Common
Stock on the date in question on the stock exchange determined by the Committee
to be the primary market for the Common Stock, as such price is officially
quoted in the composite tape of transactions on such exchange and published in
The Wall Street Journal.
     (iii) If the Common Stock is not listed on the Nasdaq National Market,
Nasdaq Capital Market or a national securities exchange, the Fair Market Value
shall be the average of the closing bid and ask prices of the Common Stock on
that day as reported by the Nasdaq bulletin board or any comparable system on
that day.
     (iv) If the Common Stock is not traded included in the Nasdaq bulletin
board or any comparable system, the Fair Market Value shall be the average of
the closing bid and ask prices on that day as furnished by any member of the
National Association of Securities Dealers, Inc. selected from time to time by
the Company for that purpose.
     (v) If the date in question is not a trading day, then the Fair Market
Value shall be determined based on prices for the trading day prior to the date
in question.

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     HOSTILE TAKE-OVER: A Hostile Take-Over shall be the acquisition, directly
or indirectly, by any person or related group of persons (other than the Company
or a person that directly or indirectly controls, is controlled by, or is under
common control with, the Company) of beneficial ownership (within the meaning of
Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent
(50%) of the total combined voting power of the Company’s outstanding securities
pursuant to a tender or exchange offer made directly to the Company’s
stockholders which the Board does not recommend such stockholders to accept.
     NON-EMPLOYEE DIRECTOR. Any Director who is not also an employee of the
Company or a Parent or Subsidiary within the meaning of Rule 16b-3 and is an
“outside director” within the meaning of Section 162(m) of the Code.
     NON-STATUTORY OPTION: A Non-Statutory Option shall mean an option not
intended to satisfy the requirements of Code Section 422.
     OPTION: A Non-Statutory Option.
     OTHER STOCK-BASED AWARD: Any right granted under Section V of Article IV of
the Plan.
     OPTIONEE: Any person to whom an option is granted under the Discretionary
Option Grant Program of Article II, the Automatic Option Grant Program of
Article III, or the Other Equity Based Awards Program of Article IV of this
Plan.
     PARENT: A corporation shall be deemed to be a Parent of the Company if it
is a corporation (other than the Company) in an unbroken chain of corporations
ending with the Company, provided each such corporation in the unbroken chain
(other than the Company) owns, at the time of the determination, stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
     PARTICIPANT: An Eligible Person granted an Award under the Plan.
     PERFORMANCE AWARD: Any right granted under Section III of Article IV of the
Plan.
     PERFORMANCE GOAL: Performance Goal shall have the meaning set forth in
Section III.A.(i) of Article IV of the Plan.
     PERMANENT DISABILITY: A permanent disability shall have the meaning
assigned to it in Code Section 22(e)(3).
     PERSON: Any individual or entity, including a corporation, partnership,
limited liability company, association, joint venture or trust.
     PLAN: The CorVel Corporation Restated Omnibus Incentive Plan, which was
formerly named the Restated 1988 Executive Stock Option Plan, as amended and
restated.

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     QUALIFIED PERFORMANCE BASED AWARD: A Qualified Performance Based Award
shall have the meaning set forth in Section III.A. of Article IV of the Plan.
     RESTRICTED STOCK: Any Share granted under Section II of Article IV of the
Plan.
     RESTRICTED STOCK UNIT: Any unit granted under Section II of Article IV of
the Plan.
     RULE 16b-3: Rule 16b-3 promulgated by the SEC under the Exchange Act or any
successor rule or regulation.
     SECURITIES ACT: Securities Act of 1933, as amended.
     SEC: The SEC shall mean the Securities and Exchange Commission.
     SECTION 16(b) INSIDER: An individual shall be considered to be a Section
16(b) Insider on any relevant date under the Plan if such individual is at the
time subject to the short-swing profit restrictions of Section 16(b) of the
Exchange Act by reason of his or her affiliation with the Company.
     SERVICE PROVIDER: An individual shall be deemed to be a Service Provider
for so long as such individual renders service on a periodic basis to the
Company, its Parent and/or any of its Subsidiaries as an Employee, a
non-Employee member of the board of directors or a consultant or independent
advisor.
     SHARE OR SHARES: A Share or Shares of Common Stock or such other securities
or property as may become subject to Awards pursuant to an adjustment made
pursuant to Section V.C. of Article I of the Plan.
     STOCK APPRECIATION RIGHT: Any right granted under Section I of Article IV
of the Plan.
     SUBSIDIARY: A corporation shall be deemed to be a Subsidiary of the Company
if it is one of the corporations (other than the Company) in an unbroken chain
of corporations beginning with the Company, provided each such corporation
(other than the last corporation in the unbroken chain) owns, at the time of
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain. For purposes of all Non-Statutory Option grants, all other Awards
granted under Article IV of the Plan, and all Corporate Transaction provisions
of the Plan, the term “Subsidiary” shall also include any partnership, joint
venture or other business entity of which the Company owns, directly or
indirectly through another entity, more than a fifty percent (50%) interest in
voting power, capital or profits.
     TANDEM RIGHT: Any tandem stock appreciation right granted under Section II
of Article II of the Plan.

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     10% STOCKHOLDER: A 10% Stockholder is the owner of stock possessing 10% or
more of the total combined voting power of all classes of stock of the Company
or any Parent or Subsidiary.
     (i) The individual is treated as owning any stock owned, directly or
indirectly, by:
          (a) His or her brothers and sisters (whether by whole or half-blood);
          (b) His or her spouse; and
          (c) His or her lineal descendants and/or ancestors.
     (ii) Stock owned, directly or indirectly, by a corporation, partnership,
estate, or trust is treated as owned proportionately by or for its stockholders,
partners, or beneficiaries.
C. Stock option grants made to any Participant under the Discretionary Option
Grant Program of Article II and Awards made to any Participant under the Other
Equity Based Awards Program of Article IV shall not in any way affect, limit or
restrict such individual’s eligibility to participate in any other stock plan or
other compensation or benefit plan, arrangement or practice now or hereafter
maintained by the Company or any Parent or Subsidiary.
D. Stock option grants or other Awards outstanding under the Plan shall in no
way affect the right of the Company to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
II. STRUCTURE OF THE PLAN
A. Stock Programs. The Plan shall be divided into three separate components: the
Discretionary Option Grant Program specified in Article II, the Automatic Option
Grant Program specified in Article III, and the Other Equity Based Awards
Program specified in Article IV. Under the Discretionary Option Grant Program,
Eligible Persons (except as otherwise limited by Section I.B.of Article III)
may, at the discretion of the Committee, be granted options to purchase shares
of Common Stock in accordance with the provisions of Article II. Under the
Automatic Option Grant Program, Eligible Directors will receive at periodic
intervals special option grants to purchase shares of Common Stock in accordance
with the provisions of Article III. Under the Other Equity Based Awards Program,
Eligible Persons (except as otherwise limited by Section I.B.of Article III) may
be granted, at the discretion of the Committee, Stock Appreciation Rights,
Restricted Stock, Restricted Stock Units, Performance Awards, Dividend
Equivalents or Other Stock-Based Awards in accordance with the provisions of
Article IV.
B. General Provisions. Unless the context clearly indicates otherwise, the
provisions of Articles I and V shall apply to the Discretionary Option Grant
Program, the Automatic Option Grant Program and the Other Equity Based Awards
Program, and shall accordingly govern the interests of all individuals under the
Plan.

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III. ADMINISTRATION OF THE PLAN
A. The Plan shall be administered by the Committee. The Committee may delegate
its responsibilities to others under such conditions and limitations as it may
determine, except that the Committee may not delegate its authority with regard
to the making of grants to Section 16(b) Insiders. However, if the grant to a
Section 16(b) Insider would not be exempt under SEC Rule 16b-3 if made by the
Committee, such grant may be made by the Board. On the other hand, if the grant
of an option is intended to be exempt from Code Section 162(m), it must be made
by a committee composed exclusively of outside directors, as that term is
defined in Code Section 162(m).
B. Subject to the express provisions of the Plan and applicable law, the
Committee shall have the sole and exclusive authority with respect to the
Discretionary Option Grant Program and the Other Equity Based Awards Program:
     (i) to designate Participants and make grants of Awards to any and all
Eligible Persons;
     (ii) to determine the type or types of Awards to be granted to each
Participant;
     (iii) to determine the number of Shares to be covered by, or the method by
which payment or other rights are to be determined in connection with, each
Award;
     (iv) to determine the terms and conditions of any Award or Award Agreement,
consistent with the terms of the Plan;
     (v) to determine whether, to what extent, and under what circumstances
Awards may be exercised in cash, Shares, promissory notes (provided, however,
that the par value of any Shares to be issued pursuant to such exercise shall be
paid in the form of cash, services rendered, personal property, real property or
a combination thereof, and the acceptance of such promissory notes does not
conflict with Section 402 of the Sarbanes-Oxley Act of 2002), other securities,
other awards or other property, or cancelled, forfeited or suspended;
     (vi) to interpret the Plan and any Award Agreement, to prescribe, amend and
rescind rules and regulations relating to it, and to make all other
determinations deemed necessary or advisable in administering the Discretionary
Option Grant Program and the Other Equity Based Awards Program;
     (vii) to change the terms and conditions or accelerate the vesting of any
outstanding Award or Award Agreement granted pursuant to Article II, and any
outstanding Award or Award Agreement granted pursuant to Article IV (except for
any Qualified Performance Based Award as defined in Article IV of the Plan to
the extent such authority would violate Code Section 162(m)), provided such
action does not, without the consent of the holder, adversely affect the rights
and obligations such individual may have under the outstanding grant; and
     (vii) to make any other determination or take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
C. Administration of the Automatic Option Grant Program shall be self-executing
in accordance with the express terms and conditions of Article III, and neither
the Committee nor

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the Board shall exercise discretionary functions with respect to option grants
made pursuant to that program.
D. Except as otherwise provided in Section III.C. of this Article I,
designations, determinations, interpretations and other decisions of the
Committee on all matters relating to the Plan and any option grants, stock
issuances or any other Awards made hereunder shall be within the sole discretion
of the Committee, may be made at any time, and shall be final, conclusive and
binding on all Persons having any interest in the Plan or any options or Awards
granted or shares issued under the Plan.
E. To the maximum extent permitted by law, the Company shall indemnify each
member of the Committee and any secondary committee formed pursuant to
Section III.A. of this Article I and every other member of the Board, as well as
any other employee with duties under the Plan, against all liabilities and
expenses (including any amount paid in settlement or in satisfaction of a
judgment) reasonably incurred by the individual in connection with any claims
against the individual by reason of the performance of the individual’s duties
under the Plan. This indemnity shall not apply, however, if: (i) it is
determined in the action, lawsuit, or proceeding that the individual is guilty
of gross negligence or intentional misconduct in the performance of those
duties; or (ii) the individual fails to assist the Company in defending against
any such claim. The Company shall have the right to select counsel and to
control the prosecution or defense of the suit. The Company shall not be
obligated to indemnify any individual for any amount incurred through any
settlement or compromise of any action unless the Company consents in writing to
the settlement or compromise.
F. Notwithstanding anything to the contrary contained herein (except as provided
in Section III.A. of this Article I), the Board may, at any time and from time
to time, without any further action of the Committee, exercise the powers and
duties of the Committee under the Plan.
IV. ELIGIBILITY
A. The persons eligible to receive option grants under the Discretionary Option
Grant Program of Article II and Awards under the Other Equity Based Awards
Program of Article IV are Eligible Persons selected by the Committee to receive
such options and Awards, except as otherwise limited by Section I.B.of
Article III of the Plan.
B. The persons entitled to receive option grants under the Automatic Option
Grant Program of Article III are the Eligible Directors, as defined in
Section I.A. of Article III of the Plan.
V. STOCK SUBJECT TO THE PLAN
A. The Common Stock issuable under the Plan shall be made available either from
authorized but unissued shares of Common Stock or from shares of Common Stock
reacquired by the Company on the open market. The aggregate number of shares of
Common Stock issuable over the term of this Plan shall not exceed 9,682,500
shares. Such share reserve is subject to adjustment from time to time in
accordance with Section V.C. of this Article I.
B. Should an option or other Award granted under this Plan expire or terminate
for any reason prior to exercise or surrender in full, the shares subject to the
portion of the option or

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other Award not so exercised or surrendered shall be available for subsequent
option or other Award grants under this Plan. Furthermore, in the event that a
portion of shares subject to a Performance Award (including a Qualified
Performance Based Award) does not vest as of the end of an applicable
performance period because the applicable performance goals become impossible to
meet, such portion of such Performance Award shall immediately be cancelled as
of the end of the applicable performance period and the shares subject to such
portion of such Performance Award shall be available for subsequent option or
other Award grants under this Plan. In addition, unvested shares issued under
the Plan and subsequently cancelled or repurchased by the Company, at the
original option or Award exercise price paid per share, pursuant to the
Company’s repurchase rights under the Plan shall be added back to the number of
shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent option or
other Award grants under the Plan. However, shares subject to Tandem Rights
exercised in accordance with the provisions of Section II of Article II shall
reduce on a share-for-share basis the number of shares of Common Stock available
for subsequent option or other Award grants under this Plan. Should the exercise
price of an outstanding option or other Award under the Plan be paid with shares
of Common Stock or should shares of Common Stock otherwise issuable under the
Plan be withheld by the Company in satisfaction of the withholding taxes
incurred in connection with the exercise of an outstanding option or other Award
or the vesting of a stock issuance or other Award under the Plan, then the
number of shares of Common Stock available for issuance under the Plan shall be
reduced by the gross number of shares for which the option or other Award is
exercised or which vest under the stock issuance or other Award, and not by the
net number of shares of Common Stock actually issued to the Participant.
C. In the event any change is made to the Common Stock issuable under the Plan
by reason of any stock dividend, recapitalization, stock split, reverse stock
split, combination of shares, exchange of shares, reorganization, merger,
consolidation, split-up, spin-off, or other change affecting the outstanding
Common Stock as a class without the Company’s receipt of consideration, then
appropriate adjustments shall be made by the Committee to (i) the aggregate
number and/or class of securities (or other property) issuable under the Plan,
(ii) the maximum number and/or class of securities (or other property) for which
any one Participant may be granted stock options, stock appreciation rights or
other Awards over the term of the Plan, (iii) the number and/or class of
securities for which automatic option grants are to be subsequently made to
Eligible Directors under the Automatic Option Grant Program, (iv) the number
and/or class of securities (or other property) subject to, and the purchase
and/or exercise price per share in effect under, each option, stock appreciation
right or other Award outstanding under the Plan, and (v) the limitations
contained in Section V.E. of this Article I, in order to preclude the dilution
or enlargement of benefits thereunder. All adjustments made by the Committee
pursuant to this Section V.C. shall be final and binding.
D. In the event that (i) the Company is the surviving entity in any Corporate
Transaction which does not result in the termination of outstanding options
pursuant to the Corporate Transaction provisions of the Plan or (ii) the
outstanding options under the Plan are to be assumed in connection with such
Corporate Transaction, then each such continuing or assumed option shall,
immediately after such Corporate Transaction, be appropriately adjusted to apply
and pertain to the number and class of securities which would have been
issuable, in consummation of such Corporate Transaction, to an actual holder of
the same number of shares

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of Common Stock as are subject to such option immediately prior to such
Corporate Transaction. Appropriate adjustments shall also be made to the
exercise price payable per share, provided the aggregate option price shall
remain the same. In addition, the number and class of securities which remain
issuable under this Plan following the consummation of the Corporate Transaction
shall be appropriately adjusted. Adjustments under this section will be made in
accordance with Code Section 424 and treasury regulations promulgated thereunder
to the extent required, and for purposes of compliance with the provisions of
Code Section 409A relating to modification of stock rights, adjustments will be
made in accordance with the requirements Code Section 424 and treasury
regulations promulgated thereunder as modified by applicable guidance under Code
Section 409A.
E. 162(m) Limitation on Awards. From and after January 1, 1994 until June 30,
2006, in no event may any one individual participating in the Plan be granted
stock options and/or separately exercisable stock appreciation rights, exceeding
1,600,000 shares of Common Stock in the aggregate over such period, subject to
adjustment from time to time in accordance with the provisions of Section V.C.
of this Article. From and after approval of the stockholders at the 2006 Annual
Meeting of Stockholders, notwithstanding any other provision of the Plan other
than Section V.C. of this Article I, no Participant shall be granted:
(i) Options or SARs, the value of which are derived solely from the appreciation
in the value of Shares after the date of grant, with respect to more than
500,000 Shares in the aggregate within any fiscal year of the Company; or
(ii) other Qualified Performance Based Awards under Article IV that do not meet
the definition contained in clause (i) above and that could result in such
Participant receiving more than $1,500,000 in cash or the equivalent Fair Market
Value of Shares determined at the date of grant for each full or partial fiscal
year of the Company contained in the performance period of a particular
Qualified Performance Based Award, provided, however, that, if any other
Qualified Performance Based Awards are outstanding for such Participant for a
given fiscal year, such dollar limitation shall be reduced for each such given
fiscal year by the amount that could be received by the Participant under all
such Qualified Performance Based Awards, divided, for each such Qualified
Performance Based Award, by the number of full or partial fiscal years of the
Company contained in the performance period of each such outstanding Qualified
Performance Based Award; provided, however, that the limitations set forth in
this Section V.E. shall be subject to adjustment under Section V.C. of Article I
only to the extent that such adjustment does not affect the status of any Award
intended under Article IV to qualify as “performance based compensation” under
Section 162(m) of the Code.
ARTICLE II.
DISCRETIONARY OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF OPTIONS
A. The Committee shall have sole and exclusive authority (subject to the express
provisions of the Plan) to determine which Eligible Persons are to be granted
options under the Discretionary Option Grant Program, the number of shares to be
covered by each such option, the status of the granted option as a Non-Statutory
Option, the time or times at which such option is to become exercisable and the
maximum term for which the option is to remain outstanding.

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B. The granted options shall be evidenced by Award Agreements in such form as
the Committee shall from time to time approve. Unless otherwise provided in a
particular Award Agreement, the granted options shall comply with the terms and
conditions specified below.
     1. Option Price.
          a. The option price per share shall be fixed by the Committee, but in
no event shall the option price per share be less than the Fair Market Value per
share of Common Stock on the date of the option grant.
          b. The option price shall become immediately due upon exercise of the
option and shall, subject to the loan provisions of Section I of Article V, be
payable in one or more of the alternative forms specified below:
               i. full payment in cash or check payable to the Company’s order;
or
               ii. full payment in shares of Common Stock held by the Optionee
for the requisite period necessary to avoid a charge to the Company’s reported
earnings and valued at Fair Market Value on the Exercise Date (as such term is
defined below); or
               iii. to the extent the option is exercised for vested shares,
full payment through a special sale and remittance procedure pursuant to which
the Optionee is to provide irrevocable written instructions (i) to a brokerage
firm to effect the immediate sale of the purchased shares and remit to the
Company, out of the sale proceeds available on the settlement date, an amount
sufficient to cover the aggregate option price payable for the purchased shares
plus all applicable Federal and state income and employment taxes required to be
withheld by the Company by reason of such purchase and (ii) to the Company to
deliver the certificates for the purchased shares directly to such brokerage
firm in order to complete the sale transaction; or
          c. If payment of the exercise price is made by means of the surrender
of shares of Common Stock which are subject to certain restrictions, the number
of shares of Common Stock issued upon the exercise of the option equal to the
number of shares of restricted stock surrendered shall be subject to the same
restrictions as the restricted stock that was surrendered.
          d. The Exercise Date shall be the date on which written or electronic
notice of the option exercise is delivered to the Company. Except to the extent
the sale and remittance procedure specified in clause (iii) of subparagraph b.
above is utilized in connection with the option exercise, payment of the option
price for the purchased shares must accompany such notice.
     2. Term and Exercise of Options.
          a. Each option granted under the Discretionary Option Grant Program
shall be exercisable in one or more installments as shall be determined by the
Committee and set forth in the Award Agreement evidencing such option; provided,
however, no such option shall have a maximum term in excess of ten (10) years
from the date it was granted to the Optionee.

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          b. During the lifetime of the Optionee, Non-Statutory Options shall be
exercisable only by the Optionee and shall not be assignable or transferable
other than by will, by the laws of descent and distribution following the
Optionee’s death, or to any “Family Member” (as such term is defined in the
General Instructions to Form S-8 (or any successor to such Instructions or such
Form) under the Securities Act), provided that the Participant may not receive
any consideration for such transfer, the Family Member may not make any
subsequent transfers other than by will or by the laws of descent and
distribution and the Company receives written notice of such transfer. This
assigned portion may only be exercised by the person or persons who acquire a
proprietary interest in the option pursuant to the assignment. The terms
applicable to the assigned portion shall be the same as those in effect for the
option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Committee may deem appropriate.
Notwithstanding the foregoing, the Optionee may also designate one or more
persons as the beneficiary or beneficiaries of his or her outstanding
Non-Statutory Options under the Plan, and those options shall, in accordance
with such designation, automatically be transferred to such beneficiary or
beneficiaries upon the Optionee’s death while holding those options. Such
beneficiary or beneficiaries shall take the transferred options subject to all
the terms and conditions of the applicable agreement evidencing each such
transferred option, including (without limitation) the limited time period
during which the option may be exercised following the Optionee’s death.
     3. Termination of Service.
          a. Should an Optionee cease to be a Service Provider for any reason
(including death or Permanent Disability) other than due to a termination for
the reasons set forth in subparagraph (c) below, then such options shall not be
exercisable at any time after the EARLIER of (i) the specified expiration date
of the option term or (ii) the expiration of the limited period of time
specified by the Committee in the option agreement. Each such option shall,
during such period following cessation of Service Provider status, be
exercisable only to the extent of the number of shares (if any) in which the
Optionee is vested on the date of such cessation of Service Provider status.
          b. Any option held by an Optionee under this Article II at the time of
his or her death and exercisable in whole or in part at that time may be
subsequently exercised, but only to the extent of the number of shares (if any)
in which the Optionee is vested on the date the Optionee ceases to be a Service
Provider (less any of those shares subsequently purchased by the Optionee prior
to death), by the personal representative of the Optionee’s estate, by the
person or persons to whom the option is transferred pursuant to the Optionee’s
will or the laws of inheritance or by the Optionee’s designated beneficiary or
beneficiaries of that option. Any such exercise must occur prior to the EARLIER
of (i) the expiration date of the option term or (ii) the first anniversary of
the date of the Optionee’s death.
          c. If an Optionee’s Service Provider status is terminated for any of
the following reasons, then all outstanding options granted the Optionee under
this Article II shall immediately terminate and cease to be exercisable
immediately upon such termination:

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               i. the Optionee’s intentional misconduct or continuing gross
neglect of duties which materially and adversely affects the business and
operations of the Company or any Parent or Subsidiary employing the Optionee;
               ii. the Optionee’s unauthorized use or disclosure (or attempt
thereat) of confidential information or trade secrets of the Company or any
Parent or Subsidiary; or
               iii. the Optionee’s commission of an act involving embezzlement,
theft, fraud, falsification of records, destruction of property or commission of
a crime or other offense involving money or other property of the Company or any
Parent or Subsidiary employing the Optionee.
     The reasons for termination of an Optionee as a Service Provider set forth
in this subparagraph (c) are not intended to be an exclusive list of all acts or
omissions which the Company may deem to constitute misconduct or other grounds
for terminating the Optionee (or any other individual).
          d. The Committee shall have complete discretion, exercisable either at
the time the option is granted or at any time while the option remains
outstanding, to permit one or more options held by the Optionee under this
Article II to be exercised, during the limited period of exercisability
following cessation of Service Provider status, not only with respect to the
number of shares in which the Optionee is vested at the time of such cessation
of Service Provider status but also with respect to one or more subsequent
installments of purchasable shares in which the Optionee would otherwise have
vested had the Optionee continued as a Service Provider.
          e. If the option is granted to an individual who is not an Employee of
the Company, then the option agreement evidencing the granted option shall
include provisions comparable to those set forth in subparagraphs (a), (b) and
(c) above, and may include provisions comparable to subparagraph (d) above, with
respect to the Optionee’s termination of service with the Company or any Parent
or Subsidiary.
     4. Stockholder Rights. An option holder shall have none of the rights of a
stockholder with respect to any shares covered by the option until such
individual shall have exercised the option, paid the option price and satisfied
all other conditions precedent to the issuance of certificates for the purchased
shares.
     5. Repurchase Rights. The shares of Common Stock acquired upon the exercise
of any Article II option grant may be subject to one or more repurchase rights
of the Company in accordance with the following provisions:
          a. The Committee shall have the discretion to authorize the issuance
of unvested shares of Common Stock under this Article II. Should the Optionee
cease Service Provider status while holding such unvested shares, the Company
shall have the right to repurchase any or all of those unvested shares at the
option price paid per share. The terms and conditions upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Committee and set forth in the instrument evidencing such repurchase
right.

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          b. All of the Company’s outstanding repurchase rights shall
automatically terminate, and all shares subject to such terminated rights shall
immediately vest in full, upon the occurrence of any Corporate Transaction,
except to the extent: (i) any such repurchase right is expressly assigned to the
successor corporation (or parent thereof) in connection with the Corporate
Transaction or (ii) such termination is precluded by other limitations imposed
by the Committee at the time the repurchase right is issued.
          c. The Committee shall have the discretionary authority, exercisable
either before or after the Optionee’s cessation of Service Provider status, to
cancel the Company’s outstanding repurchase rights with respect to one or more
shares purchased or purchasable by the Optionee under this Article II and
thereby accelerate the vesting of such shares in whole or in part at any time.
II. TANDEM RIGHTS AND LIMITED RIGHTS
A. The Committee shall have full power and authority, exercisable in its sole
discretion, to grant selected Optionees tandem stock appreciation rights
(“Tandem Rights”) pertaining to all or part of the shares of Common Stock
subject to one or more of their option grants under this Article II.
B. Tandem Rights may be granted at the same time the underlying option is
granted or any time thereafter while the option remains outstanding. The
Optionee may exercise such Tandem Right by surrendering the underlying option in
whole or in part to the Company, to the extent such option is at the time
exercisable for vested shares of Common Stock. In exchange for the surrendered
option, the Optionee shall receive a distribution from the Company in an amount
equal to the excess of (i) the Fair Market Value (on the option surrender date)
of the number of shares in which the Optionee is at the time vested under the
surrendered option (or surrendered portion) over (ii) the aggregate option price
payable for such vested shares. However, the exercise of the Tandem Right shall
be effective only if approved by the Committee. If so approved, the distribution
to which the Optionee shall accordingly become entitled with respect to the
surrendered option shall be made in shares of Common Stock valued at Fair Market
Value on the option surrender date.
C. If the surrender of an option is rejected by the Committee, then the Optionee
shall retain whatever rights the Optionee had under the surrendered option (or
surrendered portion) on the option surrender date and may exercise such rights
at any time prior to the last day on which the option is otherwise exercisable
in accordance with the terms of the instrument evidencing such option, but in no
event may such rights be exercised more than ten (10) years after the date of
the option grant.
D. Prior to July 1, 2006, one or more Section 16(b) Insiders may, in the
Committee’s sole discretion, be granted limited stock appreciation rights
(“Limited Rights”)2 in conjunction with
 

2   Options granted to Section 16(b) Insiders prior to the effective date of the
June 15, 1992 Restatement contain a different form of Limited Right. Such right
will provide each Section 16(b) Insider with a thirty (30)-day election period,
following the successful completion of a hostile tender offer for fifty percent
(50%) or more of the Company’s outstanding voting securities, to surrender the
underlying option for a cash distribution from the Company in an amount per
share of Common Stock in which the Section 16(b) Insider is at the time vested
under the surrendered option equal to the excess of the highest price per share
paid in effecting such tender offer over the exercise price payable per share
under the surrendered option.

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their outstanding options under this Article II. Such Limited Rights shall
provide that upon the occurrence of a Hostile Take-Over, each outstanding option
with such a Limited Right shall automatically be cancelled, to the extent such
option is at the time exercisable for fully-vested shares of Common Stock. The
Optionee shall in return be entitled to a cash distribution from the Company in
an amount equal to the excess of (i) the Take-Over Price of the vested shares of
Common Stock at the time subject to the cancelled option (or cancelled portion
of such option) over (ii) the aggregate exercise price payable for such shares.
The cash distribution payable upon such cancellation shall be made within five
(5) days following the consummation of the Hostile Take-Over. The Committee
shall pre-approve, at the time the limited right is granted, the subsequent
exercise of that right in accordance with the terms of this Section II.D.
Accordingly, no further approval of the Committee or the Board shall be required
at the time of the actual option cancellation and cash distribution. The balance
of the option (if any) shall continue to remain outstanding and exercisable in
accordance with the terms and conditions of the instrument evidencing such
option.
III. CORPORATE TRANSACTION
A. Upon the occurrence of a Corporate Transaction, the exercisability of each
option outstanding under this Article II shall be automatically accelerated so
that each such option shall, immediately prior to the specified effective date
for the Corporate Transaction, become fully exercisable with respect to the
total number of shares of Common Stock at the time subject to such option,
whether or not vested, and may be exercised for all or any portion of such
shares. However, an outstanding option under this Article II shall NOT be so
accelerated if and to the extent: (i) such option is, in connection with the
Corporate Transaction, either to be assumed by the successor corporation or
parent thereof or to be replaced with a comparable option to purchase shares of
the capital stock of the successor corporation or parent thereof, or (ii) such
option is to be replaced with a cash incentive program of the successor
corporation which preserves the spread existing at the time of the Corporate
Transaction on any shares for which the option is not otherwise at that time
exercisable and provides for subsequent payout in accordance with the same
exercise/vesting schedule applicable to those option shares, or (iii) the
acceleration of such option is subject to other applicable limitations imposed
by the Committee at the time of grant. The determination of comparability under
clause (i) above shall be made by the Committee, and its determination shall be
final and binding.
B. The Committee shall have the discretion, exercisable at any time, to provide
(upon such terms and conditions as it may deem appropriate) for either the
automatic acceleration of one or more assumed or replaced options which do not
accelerate in connection with the Corporate Transaction or for the automatic
vesting of any cash incentive programs implemented in replacement of such
options, in the event the Optionee’s employment should subsequently terminate
within a designated period following the effective date of such Corporate
Transaction.

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C. Upon the consummation of the Corporate Transaction, all outstanding options
under this Article II shall, to the extent not previously exercised or assumed
by the successor corporation or its parent company, terminate and cease to be
outstanding.
ARTICLE III.
AUTOMATIC OPTION GRANT PROGRAM
I. ELIGIBILITY
A. Eligible Directors. The individuals eligible to receive automatic option
grants pursuant to the provisions of this Article III program shall be limited
to those individuals who first become non-Employee Board members on or after
August 5, 1993, whether through appointment by the Board or election by the
Company’s stockholders. Any non-Employee Board member eligible to participate in
the Automatic Option Grant Program pursuant to the foregoing criteria shall be
designated an “Eligible Director” for purposes of this Plan.
B. Limitation. Except for the option grants to be made pursuant to the
provisions of this Automatic Option Grant Program, an Eligible Director serving
on the Committee or any secondary committee established pursuant to
Section III.A. of Article I shall NOT be eligible during such period of service
to receive any additional option grants or stock issuances under this Plan or
any other stock plan of the Company (or any Parent or Subsidiary).
II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. Grant Dates. Option grants shall be made under this Article III on the dates
specified below:
     (i) Each Eligible Director who has not at any time been in the prior employ
of the Company (or any Parent or Subsidiary) shall automatically be granted, at
the time of such initial election or appointment, a Non-Statutory Option to
purchase 7,500 shares of Common Stock upon the terms and conditions of this
Article III.
     (ii) On the date of each Annual Stockholders Meeting, commencing with the
1993 Annual Stockholders Meeting, each individual who is at the time serving as
an Eligible Director shall automatically be granted, whether or not such
individual is standing for re-election as a Board member at that particular
meeting and whether or not such individual has at any time been in the prior
employ of the Company (or any Parent or Subsidiary), a Non-Statutory Option to
purchase 3,000 shares of Common Stock upon the terms and conditions of this
Article III, provided he or she has served as a non-Employee Board member for at
least six (6) months prior to the date of such meeting. There shall be no limit
on the number of 3,000-share option grants any Eligible Director may receive
over his or her period of Board service.
     The number of shares for which the automatic grants are to be made to each
newly elected or continuing Eligible Director shall be subject to periodic
adjustment pursuant to the applicable provisions of Section V.C. of Article I.

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B. Exercise Price. The exercise price per share of Common Stock subject to each
automatic option grant made under this Article III shall be equal to one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the
automatic grant date.
C. Payment.
     (i) The exercise price shall be payable in one or more of the alternative
forms specified below:
          a. full payment in cash or check payable to the Company’s order; or
          b. full payment in shares of Common Stock held for the requisite
period necessary to avoid a charge to the Company’s reported earnings and valued
at Fair Market Value on the Exercise Date (as such term is defined below); or
          c. full payment through a sale and remittance procedure pursuant to
which the non-Employee Board member is to provide irrevocable written
instructions (1) to a brokerage firm to effect the immediate sale of the
purchased shares and remit to the Company, out of the sale proceeds available on
the settlement date, an amount sufficient to cover the aggregate option price
payable for the purchased shares and (2) to the Company to deliver the
certificates for the purchased shares directly to such brokerage firm in order
to complete the sale transaction; or
     (ii) If payment is made by means of the surrender of shares of Common Stock
which are subject to certain restrictions, the number of shares of Common Stock
issued upon the exercise of the option equal to the number of shares of
restricted stock surrendered shall be subject to the same restrictions as the
restricted stock that was surrendered.
     (iii) The Exercise Date shall be the date on which written notice of the
option exercise is delivered to the Company. Except to the extent the sale and
remittance or loan procedure specified in clause (i)(c) above is utilized in
connection with the option exercise, payment of the option price for the
purchased shares must accompany such notice.
D. Option Term. Each automatic grant under this Article III shall have a maximum
term of ten (10) years measured from the automatic grant date.
E. Exercisability. Each automatic grant shall become exercisable in a series of
four (4) equal and successive annual installments over the Optionee’s period of
service on the Board, with the first such installment to become exercisable
twelve (12) months after the automatic grant date. The exercisability of each
automatic grant shall be subject to acceleration in accordance with the
provisions of Section II.G and Section III of this Article III.
F. Limited Transferability. During the lifetime of the Optionee, each automatic
option grant shall be exercisable only by the Optionee and shall not be
assignable or transferable by Optionee other than by will or the laws of descent
and distribution following the Optionee’s death, or to any “Family Member” (as
such term is defined in the General Instructions to Form S-8 (or any successor
to such Instructions or such Form) under the Securities Act), provided that the
Optionee may not receive any consideration for such transfer, the Family Member
may not make any subsequent transfers other than by will or by the laws of
descent and distribution and the

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Company receives written notice of such transfer. The assigned portion may only
be exercised by the person or persons who acquire a proprietary interest in the
option pursuant to the assignment. The terms applicable to the assigned portion
shall be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Committee may deem appropriate. Notwithstanding the foregoing, the Optionee
may also designate one or more persons as the beneficiary or beneficiaries of
his or her outstanding options under the Plan, and those options shall, in
accordance with such designation, automatically be transferred to such
beneficiary or beneficiaries upon the Optionee’s death while holding those
options. Such beneficiary or beneficiaries shall take the transferred options
subject to all the terms and conditions of the applicable agreement evidencing
each such transferred option, including (without limitation) the limited time
period during which the option may be exercised following the Optionee’s death.
G. Termination of Board Service.
     1. Should the Optionee’s service as a Board member cease for any reason
(other than death or Permanent Disability) while holding one or more automatic
option grants under this Article III, then such individual shall have a six
(6)-month period following the date of such cessation of Board service in which
to exercise each such option for any or all of the shares of Common Stock for
which the option is exercisable at the time of such cessation of Board service.
However, each such option shall immediately terminate and cease to be
outstanding, at the time of such cessation of Board service, with respect to any
shares for which the option is not otherwise at that time exercisable.
     2. Should the Optionee die within six (6) months after cessation of Board
service, then each outstanding automatic option grant held by the Optionee at
the time of death may subsequently be exercised, for any or all of the shares of
Common Stock for which such option is exercisable at the time of the Optionee’s
cessation of Board service (less any option shares subsequently purchased by the
Optionee prior to death), by the personal representative of the Optionee’s
estate, by the person or persons to whom the option is transferred pursuant to
the Optionee’s will or the laws of inheritance or by the Optionee’s designated
beneficiary or beneficiaries of that option. Any such exercise must occur with
twelve (12) months after the date of the Optionee’s death.
     3. Should the Optionee die or become Permanently Disabled while serving as
a Board member, then each automatic option grant held at that time by such
Optionee under this Article III shall accelerate in full, and the Optionee (or
the personal representative of the Optionee’s estate, or the person or persons
to whom the option is transferred pursuant to the Optionee’s will or the laws of
inheritance or the Optionee’s designated beneficiary or beneficiaries of that
option) shall have a twelve (12) month period following the date of the
Optionee’s cessation of Board service in which to exercise each such option for
any or all of the shares of Common Stock subject to that option at the time of
such cessation of Board service.
     4. In no event shall any automatic grant under this Article III remain
exercisable after the specified expiration date of the ten (10)-year option
term. Upon the expiration of the applicable post-service exercise period under
subparagraph 1, 2 or 3 above or (if earlier) upon the expiration of the ten
(10)-year option term, the automatic grant shall terminate and cease to

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be outstanding for any unexercised shares for which the option was otherwise
exercisable at the time of the Optionee’s cessation of Board service.
H. Remaining Terms. The remaining terms and conditions of each automatic option
grant shall be substantially the same as the terms in effect for option grants
made under the Discretionary Option Grant Program and shall be set forth in an
Award Agreement.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction effected during the Optionee’s
period of Board service, each automatic option grant at the time held by such
Optionee under this Article III shall automatically accelerate so that each such
option shall, immediately prior to the specified effective date for the
Corporate Transaction, become exercisable for all of the shares of Common Stock
at the time subject to such option and may be exercised for all or any portion
of such shares. Upon the consummation of the Corporate Transaction, all
automatic option grants under this Article III shall terminate and cease to be
outstanding.
B. In the event of any Change in Control effected during the Optionee’s period
of Board service, each automatic option grant at the time held by such Optionee
under this Article III shall automatically accelerate so that each such option
shall, immediately prior to the specified effective date for the Change in
Control, become exercisable for all of the shares of Common Stock at the time
subject to such option and may be exercised for all or any portion of such
shares.
ARTICLE IV.
OTHER EQUITY BASED AWARDS PROGRAM
     Subject to any limitations contained in the Plan, the Committee shall have
sole and exclusive authority (subject to the express provisions of the Plan) to
determine which Eligible Persons are to be granted Awards under the Other Equity
Based Awards Program, and the terms and conditions of any such Awards. Such
Awards shall be evidenced by Award Agreements in such form as the Committee
shall from time to time approve.
I. STOCK APPRECIATION RIGHTS.
     The Committee is authorized to grant free-standing Stock Appreciation
Rights to Eligible Persons subject to the terms of the Plan and any applicable
Award Agreement. Each such Stock Appreciation Right granted under the Plan shall
confer on the holder upon exercise the right to receive a number of Shares equal
to the excess of (a) the Fair Market Value of one Share on the date of exercise
(or, if the Committee shall so determine, at any time during a specified period
before or after the date of exercise) over (b) the grant price of the Stock
Appreciation Right as determined by the Committee, which grant price shall not
be less than 100% of the Fair Market Value of one Share on the date of grant of
the Stock Appreciation Right. Subject to the terms of the Plan, the grant price,
term, methods of exercise, dates of exercise and any other terms and conditions
(including conditions or restrictions on the exercise thereof) of any Stock
Appreciation Right shall be as determined by the Committee.

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II. RESTRICTED STOCK AND RESTRICTED STOCK UNITS
A. The Committee is hereby authorized to grant Restricted Stock and Restricted
Stock Units to Eligible Persons with the following terms and conditions and with
such additional terms and conditions not inconsistent with the provisions of the
Plan as the Committee shall determine:
     (i) Restrictions. Shares of Restricted Stock and Restricted Stock Units
shall be subject to such restrictions as the Committee may impose (including,
without limitation, a restriction on or prohibition against the right to receive
any dividend or other right or property with respect thereto), which
restrictions may lapse separately or in combination at such time or times, in
such installments or otherwise as the Committee may deem appropriate.
     (ii) Stock Certificates. Any Restricted Stock granted under the Plan shall
be evidenced by the issuance of a stock certificate or certificates, which shall
be held by the Company. Such certificate or certificates shall be registered in
the name of the Participant and shall bear an appropriate legend referring to
the applicable Award Agreement and possible forfeiture of such shares of
Restricted Stock.
     (iii) Forfeiture. Except as otherwise determined by the Committee, upon a
Participant’s termination of employment (as determined under criteria
established by the Committee) during the applicable restriction period, all
applicable Shares of Restricted Stock and Restricted Stock Units at such time
subject to restriction shall be forfeited and reacquired by the Company;
provided, however, that the Committee may, when it finds that a waiver would be
in the best interest of the Company, waive in whole or in part any or all
remaining restrictions with respect to Shares of Restricted Stock or Restricted
Stock Units.
III. PERFORMANCE AWARDS
A. The Committee is hereby authorized to grant Performance Awards to Eligible
Persons subject to the terms of the Plan. A Performance Award granted under the
Plan (a) may be denominated or payable in cash, Shares (including, without
limitation, Restricted Stock and Restricted Stock Units), other securities,
other Awards or other property and (b) shall confer on the holder thereof the
right to receive payments, in whole or in part, upon the achievement of such
performance goals during such performance periods as the Committee shall
establish. Subject to the terms of the Plan, the performance goals to be
achieved during any performance period, the length of any performance period,
the amount of any Performance Award granted, the amount of any payment or
transfer to be made pursuant to any Performance Award and any other terms and
conditions of any Performance Award shall be determined by the Committee. From
time to time, the Committee may designate a Performance Award granted hereunder
as an award of “qualified performance-based compensation” within the meaning of
Section 162(m) of the Code (a “Qualified Performance Based Award”), and such
awards shall comply with the following requirements.
     (i) Performance Goals; Timing of Designations. Qualified Performance Based
Awards shall, to the extent required by Section 162(m), be conditioned solely on
the achievement of one or more objective performance goals, and such performance
goals shall be established by the Committee within the time period prescribed
by, and shall otherwise comply

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with the requirements of, Section 162(m) (“Performance Goals”). The Committee
shall, not later than 90 days after the beginning of each performance period,
(A) designate all Participants for such performance period, and (B) establish
the objective Performance Goals for each Participant for that performance period
on the basis of one or more of the business criteria set forth in (ii) below.
     (ii) Business Criteria. Unless and until the Committee proposes for
stockholder approval and the Company’s stockholders approve a change in the
general business criteria set forth in this section, the attainment of which may
determine the amount and/or vesting with respect to Qualified Performance Based
Awards, the business criteria to be used for purposes of establishing
Performance Goals for Qualified Performance Based Awards shall be selected from
the following alternatives. Performance goals may be based upon based upon one
or more of the following business criteria, either individually, alternatively
or in any combination, applied on a corporate, subsidiary or business unit
basis: revenue, cash flow, gross profit, earnings before interest and taxes,
earnings before interest, taxes, depreciation and amortization and net earnings,
earnings per share, margins (including one or more of gross, operating and net
income margins), returns (including one or more of return on assets, equity,
investment, capital and revenue and total stockholder return), stock price,
economic value added, working capital, market share, cost reductions, workforce
satisfaction and diversity goals, employee retention, customer satisfaction,
completion of key projects and strategic plan development and implementation.
Such Performance Goals may reflect absolute entity or business unit performance
or a relative comparison to the performance of a peer group of entities or other
external measure of the selected performance criteria. Pursuant to rules and
conditions adopted by the Committee on or before the 90th day of the applicable
performance period for which Performance Goals are established, the Committee
may appropriately adjust any evaluation of performance under such goals to
exclude the effect of certain events, including any of the following events:
asset write-downs; litigation or claim judgments or settlements; changes in tax
law, accounting principles or other such laws or provisions affecting reported
results; severance, contract termination and other costs related to exiting
certain business activities; and gains or losses from the disposition of
businesses or assets or from the early extinguishment of debt.
     (iii) Payment of Qualified Performance Based Awards. Unless another
specified payment date or schedule of payment dates is provided in the
applicable Award Agreement, Qualified Performance Based Awards shall be paid
within 2 1/2 months after the end of the calendar year in which the applicable
performance condition ends. The Committee shall certify in writing that
Performance Goals have been met prior to payment of the Qualified Performance
Based Awards to the extent required by Section 162(m). The Committee may, in its
discretion, reduce the amount of a payout otherwise to be made in connection
with a Qualified Performance Based Award, but may not exercise discretion to
increase such amount.
     (iv) Certain Events. If a Participant dies or becomes permanently and
totally disabled before the end of a performance period or after the performance
period and before a Qualified Performance Based Award is paid, the Committee
may, in its discretion, determine that the Participant shall be paid a pro rated
portion of the award that the Participant would have received but for such death
or disability.

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     (v) Stockholder Approval of Plan. Any Qualified Performance Based Award
shall be null and void and have no effect whatsoever unless the Plan shall have
been approved by the stockholders of the Company at the Company’s 2006 Annual
Stockholders Meeting. No Qualified Performance Based Award shall be granted more
than five years after the date of such 2006 Annual Stockholders Meeting unless
the stockholders have re-approved the Plan to the extent required by Section
162(m) of the Code.
     (vi) Interpretation. The provisions in this Section III of Article IV, and
all of the other terms and conditions of the Plan as it applies to any Qualified
Performance Based Award, shall be interpreted in such a fashion as to qualify
all compensation paid thereunder as “qualified performance-based compensation”
within the meaning of Section 162(m) of the Code.
IV. DIVIDEND EQUIVALENTS
     The Committee is authorized to grant Dividend Equivalents to Eligible
Persons under which the Participant shall be entitled to receive payments (in
cash, Shares, other securities, other Awards or other property as determined in
the discretion of the Committee) equivalent to the amount of cash dividends paid
by the Company to holders of Shares with respect to a number of Shares
determined by the Committee. Subject to the terms of the Plan, such Dividend
Equivalents may have such terms and conditions as the Committee shall determine.
V. OTHER STOCK-BASED AWARDS
     The Committee is authorized to grant to Eligible Persons, subject to the
terms of the Plan, such other Awards that are denominated or payable in, valued
in whole or in part by reference to, or otherwise based on or related to, Shares
(including, without limitation, securities convertible into Shares), as are
deemed by the Committee to be consistent with the purpose of the Plan. Shares or
other securities delivered pursuant to a purchase right granted under this
Section V shall be purchased for such consideration, which may be paid by such
method or methods and in such form or forms (including, without limitation,
cash, Shares, promissory notes, promissory notes (provided, however, that the
par value of any Shares to be issued pursuant to such exercise shall be paid in
the form of cash, services rendered, personal property, real property or a
combination thereof and the acceptance such promissory notes does not conflict
with Section 402 of the Sarbanes-Oxley Act of 2002), other securities, other
Awards or other property or any combination thereof, as the Committee shall
determine, the value of which consideration, as established by the Committee,
shall not be less than 100% of the Fair Market Value of such Shares or other
securities as of the date such purchase right is granted.
ARTICLE V.
MISCELLANEOUS
I. LOANS OR GUARANTEE OF LOANS
     The Committee may assist a Participant (including any officer or director)
in the exercise of one or more outstanding options under the Discretionary
Option Grant Program or one or more outstanding Awards under the Other Equity
Based Awards Program by (a) authorizing the extension of a full-recourse
interest-bearing loan to such Optionee from the Company, (b) permitting the
Participant to pay the exercise price or other purchase price with respect to
such

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Award in installments over a period of years or (c) authorizing a guarantee by
the Company of a third-party loan to the Participant, but in each case only to
the extent any such action does not conflict with Section 402 of the
Sarbanes-Oxley Act of 2002. The terms of any loan, installment method of payment
or guarantee (including the interest rate and terms of repayment) shall be
established by the Committee in its sole discretion. The maximum credit
available to the Participant shall not exceed the sum of (i) the aggregate
exercise price of the option shares (less the par value) or the aggregate
purchase price for the Award plus (ii) any Federal and state income and
employment tax liability incurred by the Participant in connection with the
exercise of the option or Award.
II. TAX WITHHOLDING
A. The Company’s obligation to deliver shares or cash upon the exercise or
surrender of stock options or any Awards granted under the Plan shall be subject
to the satisfaction by the Participant of all applicable Federal, state and
local income and employment tax withholding requirements.
B. The Committee may, in its discretion and upon such terms and conditions as it
may deem appropriate (including the applicable safe-harbor provisions of SEC
Rule 16b-3 or any successor rule or regulation) provide any or all holders of
outstanding option grants under the Plan (other than grants made to
non-Employees) with the election to surrender previously acquired shares of
Common Stock or have shares withheld in satisfaction of the tax withholding
obligations. To the extent necessary to avoid adverse accounting treatment, the
number of shares that may be withheld for this purpose shall not exceed the
minimum number needed to satisfy the applicable income and employment tax
withholding rules. If Common Stock is used to satisfy the Company’s tax
withholding obligations, the stock shall be valued at its Fair Market Value when
the tax withholding is required to be made.
III. EXTENSION OF EXERCISE PERIOD
     The Committee shall have full power and authority to extend the period of
time for which any option granted under the Discretionary Option Grant Program
is to remain exercisable following the Optionee’s termination of service from
the period set forth in the option agreement to such greater period of time as
the Committee shall deem appropriate; provided, however, that in no event shall
such extension exceed the limitations set forth by applicable law and
regulations under Code Section 409A; and provided further, that in no event
shall such option be exercisable after the specified expiration date of the
option term.
IV. AMENDMENT OF THE PLAN
     The Board shall have the complete and exclusive authority to amend, modify,
suspend, discontinue or terminate the Plan; provided, however, that if and to
the extent required by Code Section 409A and applicable guidance thereunder,
such authority will not include the authority to terminate deferred compensation
arrangements in violation of Code Section 409A; and provided further, that no
amendment or modification shall, without the consent of the holders, adversely
affect rights and obligations with respect to any stock options, stock
appreciation rights, or other Awards at the time outstanding under the Plan. In
addition, certain amendments, including

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increasing the number of shares issuable under the Plan or modifying the
requirements for eligibility, will require stockholder approval pursuant to
applicable laws or regulations.
V. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan was initially adopted by the Board and approved by the Company’s
sole stockholder on August 1, 1988.
B. The Board and sole stockholder amended and restated the Plan effective
May 15, 1991 to (i) increase the number of shares issuable pursuant to the Plan,
(ii) conform the provisions of the Plan to the SEC rules under Section 16 of the
Exchange Act applicable to certain transactions effected under the Plan by
Section 16(b) Insiders and (iii) provide for the ability to grant incentive
stock options.
C. The Plan was further restated on June 15, 1992 (the “1992 Restatement”) to
(i) increase the number of shares of Common Stock authorized for issuance under
the Plan by an additional 400,000 shares, (ii) bring the Plan into compliance
with revisions to SEC Rule 16b-3 which became effective on September 1, 1993 and
would exempt certain officer and director transactions under the Plan from the
short-swing liability provisions of the federal securities laws and (iii) effect
certain technical revisions to the provisions of the Plan to facilitate plan
administration and interpretation. The 1992 Restatement was approved by the
Company’s stockholders at the 1992 Annual Meeting.
D. The Plan was further restated and amended by the Board in June 1993 (the
“1993 Restatement”) to add the Automatic Option Grant Program. The 1993
Restatement was approved by the Company’s stockholders at the 1993 Annual
Meeting.
E. On May 4, 1994, the Board approved an amendment and restatement of the Plan
(the “1994 Restatement”) to (i) increase the aggregate number of shares issuable
over the term thereof by 400,000 shares to a total of 2,670,000 shares and
(ii) impose a limitation of 1,600,000 shares on the maximum number of shares of
Common Stock for which any one participant may be granted stock options and
separately exercisable stock appreciation rights over the remaining term of the
Plan. The 1994 Restatement was approved by the Company’s stockholders at the
1994 Annual Meeting.
F. On June 21, 1996, the Board approved an amendment and restatement of the Plan
(the “1996 Restatement”) to (i) increase the aggregate number of shares issuable
over the term thereof by 400,000 shares to 3,070,000 shares, and (ii) extend the
expiration date of the Plan to June 30, 2006. The 1996 Restatement was approved
by the Company’s stockholders at the 1996 Annual Meeting.
G. In June 1997, the Board further amended and restated the Plan (the “1997
Restatement”) to effect the following revisions: (i) increase the number of
shares of Common Stock reserved for issuance over the term of the Plan by an
additional 400,000 shares to 3,470,000 shares, (ii) render the non-Employee
Board members eligible to receive option grants under the Discretionary Option
Grant Program, (iii) allow unvested shares issued under the Plan and
subsequently repurchased by the Company at the option exercise price paid per
share to be reissued under the Plan, (iv) remove certain restrictions on the
eligibility of non-Employee Board

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members to serve as members of the Committee and (v) effect a series of
additional changes to the provisions of the Plan in order to take advantage of
certain amendments to SEC Rule 16b-3. The 1997 Restatement was approved by the
Company’s stockholders at the 1997 Annual Meeting.
H. In February 1999, the Board further amended and restated the Plan to permit
optionees under the Discretionary Option Grant and Automatic Option Programs of
the Plan to designate a beneficiary or beneficiaries to whom their options may
be transferred upon their death.
I. On May 10, 2001, the Board further amended and restated the Plan (the “2001
Restatement”) to (i) effect certain technical revisions to the provisions of the
Plan in order to facilitate the administration and interpretation of the Plan,
(ii) clarify the group of employees who are eligible to participate in the Plan
and (iii) increase the number of shares of Common Stock reserved for issuance
over the term of the Plan by an additional 500,000 shares to 3,970,000 shares.
The 2001 Restatement was approved by the Company’s stockholders at the 2001
Annual Meeting.
J. On June 27, 2006, the Board further amended and restated the Plan (the “2006
Restatement”) to (i) address changes in applicable law and accounting
principles, (ii) permit the Committee to make awards of free-standing stock
appreciation rights, restricted stock, restricted stock units, performance
awards, dividend equivalents, and Other Stock-Based Awards under the Plan,
subject to such terms and conditions as determined by the Committee,
(iii) extend the term of the Plan until June 30, 2016, (iv) rename the Plan and
(v) increase the number of shares of Common Stock reserved for issuance over the
term of the Plan by an additional 500,000 shares to 6,455,000 shares. The 2006
Restatement was approved by the Company’s stockholders approval at the 2006
Annual Meeting.
K. All share numbers in the 2006 Restatement reflect (i) the two-for-one split
of the Common Stock effected on June 14, 1999 and (ii) the three-for-two split
of the Common Stock effected on August 31, 2001, and all share numbers in the
2008 Restatement (defined below) reflect the 3-for-2 split of the Common Stock
effected on December 8, 2006, all of which were effected in the form of a stock
dividend.
L. On May 6, 2008, the Board further amended and restated the Plan (the “2008
Restatement”) to reduce the number of shares of common stock underlying options
to be granted under the automatic option grant program from 11,250 to 7,500
shares for initial automatic option grants to be awarded to a director upon
first joining the Board and from 4,500 to 3,000 shares for annual automatic
option grants to be awarded to directors on the date of each annual meeting of
stockholders. The 2008 Restatement was approved by the Company’s stockholders at
the 2008 Annual Meeting.
M. On June 8, 2010, the Board further amended and restated the Plan to provide
that in the event that a portion of shares subject to a Performance Award
(including a Qualified Performance Based Award) does not vest as of the end of
an applicable performance period because the applicable performance goals become
impossible to meet, such portion of such Performance Award shall immediately be
cancelled as of the end of the applicable performance

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period and the shares subject to such portion of such Performance Award shall be
available for subsequent option or other Award grants under this Plan.
N. The provisions of the various restatements of the Plan apply only to stock
options, stock appreciation rights, and other Awards granted under the Plan from
and after the respective effective dates of such Restatements. All stock options
and stock appreciation rights issued and outstanding under the Plan immediately
prior to such effective dates of the restatements of the Plan shall continue to
be governed by the terms and conditions of the Plan (and the instrument
evidencing each such option or stock appreciation right) as in effect on the
date each such option or stock appreciation was previously granted, and nothing
in the restatements of the Plan shall be deemed to affect or otherwise modify
the rights or obligations of the holders of such options or stock appreciation
rights with respect to the acquisition of shares of Common Stock thereunder or
the exercise of their outstanding stock appreciation rights.
O. The sale and remittance procedure authorized for the exercise of outstanding
options shall be available for all options granted under the Plan from and after
November 6, 1991 and for all Non-Statutory Options outstanding on such date.
P. Subject to Section IV of Article V, the Plan shall in all events terminate
upon the EARLIEST of (i) June 30, 2016, (ii) the date on which all shares
available for issuance under the Plan shall have been issued or cancelled
pursuant to the exercise or surrender of stock options, stock appreciation
rights or other Awards under the Plan, (iii) the termination of all outstanding
Awards in connection with a Corporate Transaction or (iv) termination by the
Board. If the date of termination is determined under clause (i) above, then any
stock options, stock appreciation rights or other Awards at the time outstanding
under the Plan shall continue to have force and effect in accordance with the
provisions of the instruments evidencing such grants.
VI. MISCELLANEOUS MATTERS
A. Any cash proceeds received by the Company from the issuance of shares
hereunder shall be used for any corporate purpose.
B. The implementation of the Plan, the granting of any stock option or other
Award , and the issuance of Common Stock or other Award hereunder, shall be
subject to the Company’s procurement of all approvals and permits required by
regulatory authorities having jurisdiction over the Plan, and the stock options
and other Awards granted under it and the Common Stock issued pursuant to it.
The inability of the Company to obtain the requisite approvals shall relieve the
Company of any liability with respect to the non-issuance or sale of the Common
Stock as to which such approvals shall not have been obtained. The Company,
however, shall attempt to obtain all requisite approvals.
C. No shares of Common Stock or other property shall be issued or delivered
under the Plan unless and until there shall have been compliance with all
applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock

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is then listed for trading. No shares of Common Stock or other property shall be
issued or delivered under the Plan if doing so would violate any internal
policies of the Company.
D. Neither the action of the Company in establishing the Plan, nor any action
taken by the Board or the Committee hereunder, nor any provision of the Plan
itself shall be construed so as to grant any individual the right to remain in
the employ or service of the Company or any Parent or Subsidiary for any period
of specific duration, and the Company (or any Parent or Subsidiary retaining the
services of such individual) may terminate such individual’s employment or
service at any time and for any reason, with or without cause.
E. Nothing contained in the Plan shall be construed to limit the authority of
the Company to exercise its corporate rights and powers, including (without
limitation) the right of the Company (a) to grant options for corporate purposes
otherwise than under this Plan to any Eligible Person or other Person, firm or
company or association or (b) to grant options to, or assume the option of, any
Person in connection with the acquisition (by purchase, lease, merger,
consolidation or otherwise) of the business and assets (in whole or in part) of
any Person, firm, company or association.
F. No Participant will have rights under an Award granted to such Participant
unless and until an Award Agreement shall have been duly executed on behalf of
the Company and, if requested by the Company, signed by the Participant. In the
event that any provision of an Award Agreement conflicts with or is inconsistent
in any respect with the terms of the Plan as set forth herein or subsequently
amended, the terms of the Plan shall control.
G. Neither the Plan nor any Award shall create or be construed to create a trust
or separate fund of any kind or a fiduciary relationship between the Company or
any Parent or Subsidiary and an Eligible Person or any other Person. To the
extent that any Person acquires a right to receive payments from the Company or
any Parent or Subsidiary pursuant to an Award, such right shall be no greater
than the right of any unsecured general creditor of the Company or any
Affiliate.
H. The Plan is intended to comply in all respects with Rule 16b-3 or any
successor provision, as in effect from time to time, and in all events the Plan
shall be construed in accordance with the requirements of Rule 16b-3. If any
Plan provision does not comply with Rule 16b-3 as hereafter amended or
interpreted, the provision shall be deemed inoperative. The Board, in its
absolute discretion, may bifurcate the Plan so as to restrict, limit or
condition the use of any provision of the Plan with respect to persons who are
officers or directors subject to Section 16 of the Exchange Act without so
restricting, limiting or conditioning the Plan with respect to other Eligible
Persons. With respect to Options and Stock Appreciation Rights, the Company
intends to have the Plan administered in accordance with the requirements for
the award of “qualified performance-based compensation” within the meaning of
Section 162(m) of the Code.
I. No compensation or benefit awarded to or realized by any Participant under
the Plan shall be included for the purpose of computing such Participant’s
compensation under any compensation-based retirement, disability, or similar
plan of the Company unless required by law or otherwise provided by such other
plan.

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J. Except with respect to Shares of Restricted Stock as to which the Participant
has been granted the right to vote, neither a Participant nor the Participant’s
legal representative shall be, or have any of the rights and privileges of, a
stockholder of the Company with respect to any Shares issuable to such
Participant upon the exercise or payment of any Award, in whole or in part,
unless and until such Shares have been issued in the name of such Participant or
such Participant’s legal representative without restrictions thereto.
K. No Award and no right under any such Award shall be assignable or
transferable by a Participant other than by will or the laws of descent and
distribution following the Participant’s death; provided, however, that at any
time such Participant holds a Non-Statutory Option, such Participant may
transfer such Option to any “Family Member” (as such term is defined in the
General Instructions to Form S-8 (or any successor to such Instructions or such
Form) under the Securities Act), provided that the Participant may not receive
any consideration for such transfer, the Family Member may not make any
subsequent transfers other than by will or by the laws of descent and
distribution and the Company receives written notice of such transfer. The
assigned portion may only be exercised by the person or persons who acquire a
proprietary interest in the Award pursuant to the assignment. The terms
applicable to the assigned portion shall be the same as those in effect for the
Award immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Committee may deem appropriate.
Notwithstanding the foregoing, the Participant may also designate one or more
persons as the beneficiary or beneficiaries of his or her outstanding Awards
under the Plan, and those Awards shall, in accordance with such designation,
automatically be transferred to such beneficiary or beneficiaries upon the
Participant’s death while holding those Awards. Such beneficiary or
beneficiaries shall take the transferred Awards subject to all the terms and
conditions of the applicable agreement evidencing each such transferred Award.
L. The validity, construction and effect of the Plan or any Award, and any rules
and regulations relating to the Plan or any Award, shall be determined in
accordance with the internal laws, and not the law of conflicts, of the State of
Delaware.
M. If any provision of the Plan or any Award is or becomes or is deemed to be
invalid, illegal or unenforceable in any jurisdiction or would disqualify the
Plan or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable laws, or
if it cannot be so construed or deemed amended without, in the determination of
the Committee, materially altering the purpose or intent of the Plan or the
Award, such provision shall be stricken as to such jurisdiction or Award, and
the remainder of the Plan or any such Award shall remain in full force and
effect.
N. No fractional Shares shall be issued or delivered pursuant to the Plan or any
Award, and the Committee shall determine whether cash shall be paid in lieu of
any fractional Shares or whether such fractional Shares or any rights thereto
shall be canceled, terminated or otherwise eliminated.
O. Headings are given to the Sections and subsections of the Plan solely as a
convenience to facilitate reference. Such headings shall not be deemed in any
way material or relevant to the construction or interpretation of the Plan or
any provision thereof.

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