Exhibit 10.1

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED

MANAGEMENT COMPENSATION PLAN, AS AMENDED

1. PURPOSE; TYPES OF AWARDS; CONSTRUCTION.

The purposes of the Management Compensation Plan, As Amended, (the “Plan”) of
Primus Telecommunications Group, Incorporated (the “Company”) are to attract,
motivate and retain (a) employees of the Company, any Subsidiary or any
Affiliate, (b) independent contractors who provide significant services to the
Company, any Subsidiary or Affiliate and (c) non-employee directors of the
Company, any Subsidiary or any Affiliate. The Plan is also designed to encourage
stock ownership by such persons, thereby aligning their interest with those of
the Company’s stockholders and to permit the payment of compensation that
qualifies as performance-based compensation under Section 162(m) of the Code.
Pursuant to the Plan described herein, there may be granted stock options
(including “incentive stock options” and “non-qualified stock options”), and
other stock based awards, including but not limited to restricted stock,
restricted stock units, dividend equivalents, performance units, stock
appreciation rights and other long-term stock-based or cash-based Awards;
excluding, however, reload or other automatic Awards made upon exercise of
Options, which Awards shall not be granted under the Plan. Notwithstanding any
provision of the Plan, to the extent that any Award would be subject to
Section 409A of the Code, no such Award may be granted if it would fail to
comply with the requirements set forth in Section 409A of the Code and any
regulations or guidance promulgated thereunder.

2. DEFINITIONS. For purposes of the Plan, the following terms shall be defined
as set forth below:

(a) “Affiliate” means an affiliate of the Company, as defined in Rule 12b-2
promulgated under Section 12 of the Exchange Act.

(b) “Award” means, individually or collectively, a grant under the Plan of
Options, Restricted Stock or Other Stock-Based Awards or Other Cash-Based
Awards.

(c) “Award Agreement” means any written agreement, contract, or other instrument
or document evidencing an Award.

(d) “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the
Exchange Act.

(e) “Board” means the Board of Directors of the Company.

(f) “Cause” shall have the meaning set forth in the Grantee’s employment or
other agreement with the Company, any Subsidiary or any Affiliate, provided that
if the Grantee is not a party to any such employment or other agreement or such
employment or other agreement does not contain a definition of Cause, then Cause
shall mean (i) the willful and continued failure of the Grantee to perform
substantially the Grantee’s duties with the Company or any Subsidiary or
Affiliate (other than any such failure resulting from incapacity due to physical
or mental illness), after a written demand for substantial performance is
delivered to the Grantee by

 

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the employing Company, Subsidiary or Affiliate that specifically identifies the
alleged manner in which the Grantee has not substantially performed the
Grantee’s duties, (ii) the Grantee shall have been convicted by a court of
competent jurisdiction of, or pleaded guilty or nolo contendere to, any felony,
or (iii) the Grantee shall have committed an act of fraud, embezzlement,
misappropriation or breach of fiduciary duty against the Company or any
Subsidiary or Affiliate. For purposes of this provision, no act or failure to
act, on the part of the Grantee, shall be considered “willful” unless it is
done, or omitted to be done, by the Grantee in bad faith or without reasonable
belief that the Grantee’s action or omission was in the best interests of the
Company, any Subsidiary or any Affiliate.

(g) “Change of Control” shall have the meaning set forth in Section 7(b) hereof.

(h) “Code” means the Internal Revenue Code of 1986, as amended from time to
time.

(i) “Committee” means the committee established by the Board to administer the
Plan. The Committee shall consist of not less than two directors who shall be
appointed from time to time by, and shall serve at the pleasure of, the Board.
The Committee shall be comprised solely of directors who are (a) “non-employee
directors” under Rule 16b-3 of the Exchange Act and (b) “outside directors”
under Section 162(m) of the Code, provided, that any action taken by the
Committee shall be valid and effective whether or not members of the Committee
at the time of such action are later determined not to have satisfied the
requirements for membership set forth in this Section 2(i) or otherwise provided
in any charter of the Committee.

(j) “Company” means Primus Telecommunications Group, Incorporated, a corporation
organized under the laws of the State of Delaware, or any successor corporation.

(k) “Covered Employee” shall have the meaning set forth in Section 162(m)(3) of
the Code.

(l) “Disability” means that a Grantee (i) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, or (ii) is, by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, receiving income replacement benefits for a period of not less
than 3 months under an accident and health plan covering employees of the
Company or an Affiliate of the Company.

(m) “Effective Date” means the date on which the Joint Plan of Reorganization of
the Company and its Affiliate Debtors becomes effective.

(n) “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time, and as now or hereafter construed, interpreted and applied by
regulations, rulings and cases.

(o) “Fair Market Value” means, with respect to Stock or other property, the fair
market value of such Stock or other property determined by such methods or
procedures as shall be established from time to time by the Committee. Unless
otherwise set forth in an applicable Award Agreement or otherwise determined by
the Committee in good faith, the per share Fair Market Value of Stock as of a
particular date shall mean, (i) the closing sales price per share of Stock on
the national securities exchange on which the Stock is principally traded, on
such date, or (ii) if the shares of Stock are then traded in an over-the-counter
market, the average of the

 

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closing bid and asked prices for the shares of Stock in such over-the-counter
market on such date, or (iii) if the shares of Stock are not then listed on a
national securities exchange or traded in an over-the-counter market, such value
as the Committee, in its sole discretion, shall determine in good faith using a
reasonable method in accordance with Section 409A of the Code.

(p) “Good Reason” shall have the meaning set forth in the Grantee’s employment
or other agreement with the Company, any Subsidiary or any Affiliate, provided
that if the Grantee is not a party to any such employment or other agreement or
such employment or other agreement does not contain a definition of Good Reason,
then Good Reason shall mean, the occurrence, on or after the date of a Change of
Control and without the affected Grantee’s written consent, of (i) a material
diminution in the Grantee’s base compensation, (ii) the assignment to the
Grantee of duties in the aggregate that are materially inconsistent with the
Grantee’s level of responsibility immediately prior to the date of the Change of
Control or any material diminution in the Grantee’s authority, duties, or
responsibilities, or (iii) the relocation of the Grantee’s principal place of
employment to a location more than fifty (50) miles from the Grantee’s principal
place of employment immediately prior to the date of the Change of Control,
provided, however, that such relocation also requires a material adverse change
in the Grantee’s commute. Notwithstanding the foregoing, the Grantee shall not
have Good Reason unless (x) within a period not to exceed 90 days following the
initial existence of the condition or event giving rise to Good Reason, the
Grantee provides notice to the Company of such condition or event, and (y) upon
receipt of such notice by the Grantee, the Company is given at least 30 days to
remedy the condition.

(q) “Grantee” means a person who, as an employee of or independent contractor or
non-employee director with respect to the Company, a Subsidiary or an Affiliate,
has been granted an Award under the Plan.

(r) “ISO” means any Option intended to be and designated as an incentive stock
option within the meaning of Section 422 of the Code.

(s) “NQSO” means any Option that is designated as a nonqualified stock option.

(t) “Option” means a right, granted to a Grantee under Section 6(b)(i), to
purchase shares of Stock. An Option may be either an ISO or an NQSO.

(u) “Other Cash-Based Award” means an Award granted to a Grantee under
Section 6(b)(iii) hereof, including (i) cash awarded as a bonus or upon the
attainment of Performance Goals or otherwise as permitted under the Plan or
(ii) an Award that can be paid in cash or Stock and is paid in cash.

(v) “Other Stock-Based Award” means an Award granted to a Grantee pursuant to
Section 6(b)(iii) hereof, that may be denominated or payable in, valued in whole
or in part by reference to, or otherwise based on, or related to, Stock
including but not limited to performance units, stock appreciation rights
(payable in shares), restricted stock units or dividend equivalents, each of
which may be subject to the attainment of Performance Goals or a period of
continued employment or other terms and conditions as permitted under the Plan.

(w) “Performance Goals” means performance goals based on one or more of the
following criteria: (i) earnings including operating income, earnings before or
after taxes, earnings before or after interest, depreciation, amortization, or
extraordinary or special items or book value per share (which may exclude
nonrecurring items); (ii) pre-tax income or after-tax

 

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income; (iii) earnings per common share (basic or diluted); (iv) operating
profit; (v) revenue, revenue growth or rate of revenue growth; (vi) return on
assets (gross or net), return on investment, return on capital, or return on
equity; (vii) returns on sales or revenues; (viii) operating expenses;
(ix) stock price appreciation; (x) cash flow, free cash flow, cash flow return
on investment (discounted or otherwise), net cash provided by operations, or
cash flow in excess of cost of capital; (xi) implementation or completion of
critical projects or processes; (xii) economic value created; (xiii) cumulative
earnings per share growth; (xiv) operating margin or profit margin; (xv) common
stock price or total stockholder return; (xvi) cost targets, reductions and
savings, productivity and efficiencies; (xvii) strategic business criteria,
consisting of one or more objectives based on meeting specified market
penetration, geographic business expansion, customer satisfaction, employee
satisfaction, human resources management, supervision of litigation, information
technology, and goals relating to acquisitions, divestitures, joint ventures and
similar transactions, and budget comparisons; (xviii) personal professional
objectives, including any of the foregoing performance goals, the implementation
of policies and plans, the negotiation of transactions, the development of long
term business goals, formation of joint ventures, research or development
collaborations, and the completion of other corporate transactions; (xix) any
combination of, or a specified increase in, any of the foregoing; and
(xx) solely with respect to Awards that are granted to individuals other than
Covered Employees, such other criteria as may be determined by the Committee in
its sole discretion. Where applicable, the Performance Goals may be expressed in
terms of attaining a specified level of the particular criteria or the
attainment of a percentage increase or decrease in the particular criteria, and
may be applied to one or more of the Company, a Subsidiary or Affiliate, or a
division or strategic business unit of the Company, or may be applied to the
performance of the Company relative to a market index, a group of other
companies or a combination thereof, all as determined by the Committee. The
Performance Goals may include a threshold level of performance below which no
payment will be made (or no vesting will occur), levels of performance at which
specified payments will be made (or specified vesting will occur), and a maximum
level of performance above which no additional payment will be made (or at which
full vesting will occur). Each of the foregoing Performance Goals shall be
determined in accordance with generally accepted accounting principles and shall
be subject to certification by the Committee; provided that the Committee shall
make equitable adjustments to the Performance Goals in recognition of unusual or
non-recurring events affecting the Company or any Subsidiary or affiliate or the
financial statements of the Company or any Subsidiary or Affiliate, in response
to changes in applicable laws or regulations, or to account for items of gain,
loss or expense determined to be extraordinary or unusual in nature or
infrequent in occurrence or related to the disposal of a segment of a business
or related to a change in accounting principles.

(x) “Person” shall have the meaning set forth in Section 3(a)(9) of the Exchange
Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (1) the Company or any Subsidiary corporation, (2) a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any Subsidiary corporation, (3) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (4) a
corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company.

(y) “Plan” means this Primus Telecommunications Group, Incorporated Management
Compensation Plan, as amended from time to time.

 

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(z) “Plan Year” means a calendar year.

(aa) “Restricted Stock” means a share of Stock that is subject to restrictions
set forth in the Plan or any Award Agreement.

(bb) “Rule 16b-3” means Rule 16b-3, as from time to time in effect promulgated
by the Securities and Exchange Commission under Section 16 of the Exchange Act,
including any successor to such Rule.

(cc) “Stock” means shares of common stock, par value $0.001 per share, of the
Company.

(dd) “Subsidiary” means any corporation in an unbroken chain of corporations
beginning with the Company if, at the time of granting of an Award, each of the
corporations (other than the last corporation in the unbroken chain) owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.

3. ADMINISTRATION.

(a) At the discretion of the Board, the Plan shall be administered either (i) by
the Board or (ii) by the Committee. In the event the Board is the administrator
of the Plan, references herein to the Committee shall be deemed to include the
Board. The Board may from time to time appoint a member or members of the
Committee in substitution for or in addition to the member or members then in
office and may fill vacancies on the Committee however caused. The Committee
shall choose one of its members as chairman and shall hold meetings at such
times and places as it shall deem advisable. A majority of the members of the
Committee shall constitute a quorum and any action may be taken by a majority of
those present and voting at any meeting. The Board or the Committee may appoint
and delegate to another committee (“Management Committee”) any or all of the
authority of the Board or the Committee, as applicable, with respect to Awards
to Grantees other than Grantees who are subject to potential liability under
Section 16(b) of the Exchange Act with respect to transactions involving equity
securities of the Company at the time any such delegated authority is exercised.
With respect to Awards that are intended to meet the performance-based
compensation exception of Section 162(m) of the Code and that are made to a
Grantee who is or is reasonably expected to be a Covered Employee, such
delegation shall not include any authority, which if exercised by the Management
Committee rather than by the Committee, would cause the Grantee’s Award to fail
to meet such exception.

(b) Any action may also be taken without the necessity of a meeting by a written
instrument signed by a majority of the Committee. The decision of the Committee
as to all questions of interpretation and application of the Plan shall be
final, binding and conclusive on all persons. The Committee shall have the
authority in its discretion, subject to and not inconsistent with the express
provisions of the Plan, to administer the Plan and to exercise all the power and
authority either specifically granted to it under the Plan or necessary or
advisable in the administration of the Plan, including without limitation, the
authority to grant Awards, to determine the persons to whom and the time or
times at which Awards shall be granted, to determine the type and number of
Awards to be granted, the number of shares of Stock to which an Award may relate
and the terms, conditions, restrictions and Performance Goals relating to any
Award; to determine Performance Goals no later than such time as is required to
ensure that

 

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an underlying Award which is intended to comply with the requirements of
Section 162(m) of the Code so complies; to determine whether, to what extent,
and under what circumstances an Award may be settled, cancelled, forfeited,
accelerated, exchanged, or surrendered; to make adjustments in the terms and
conditions (including Performance Goals) applicable to Awards; to construe and
interpret the Plan and any Award; to prescribe, amend and rescind rules and
regulations relating to the Plan; to determine the terms and provisions of the
Award Agreements (which need not be identical for each Grantee); and to make all
other determinations deemed necessary or advisable for the administration of the
Plan. Except in connection with any extraordinary dividend or other distribution
(whether in the form of cash, Stock, or other property), recapitalization, Stock
split, reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase, or share exchange, or other similar corporate
transaction or event (each, a “Corporate Transaction”) subject to Section 5(d),
the Company may not, without obtaining stockholder approval: (a) amend the terms
of outstanding Options or stock appreciation rights to reduce the exercise price
of such outstanding Options or stock appreciation rights; (b) cancel outstanding
Options or stock appreciation rights in exchange for Options or stock
appreciation rights with an exercise price that is less than the exercise price
of the original Options or stock appreciation rights; or (c) cancel outstanding
Options or stock appreciation rights with an exercise price below the current
stock price in exchange for cash or other securities. The Committee may correct
any defect or supply any omission or reconcile any inconsistency in the Plan or
in any Award Agreement granted hereunder in the manner and to the extent it
shall deem expedient to carry the Plan into effect and shall be the sole and
final judge of such expediency. No Committee member shall be liable for any
action or determination made with respect to the Plan or any Award.

4. ELIGIBILITY.

(a) Awards may be granted to officers, independent contractors, employees and
non-employee directors of the Company or of any of its Subsidiaries and
Affiliates; provided, however, that Options shall be granted only to officers,
independent contractors, employees and non-employee directors of the Company or
any of its Subsidiaries; and provided, further, that ISOs shall be granted only
to employees (including officers and directors who are also employees) of the
Company or any of its Subsidiaries.

(b) No ISO shall be granted to any employee of the Company or any of its
Subsidiaries if such employee owns, immediately prior to the grant of the ISO,
stock representing more than 10% of the voting power or more than 10% of the
value of all classes of stock of the Company or a Subsidiary, unless the
purchase price for the stock under such ISO shall be at least 110% of its Fair
Market Value at the time such ISO is granted and the ISO, by its terms, shall
not be exercisable more than five years from the date it is granted. In
determining the stock ownership under this paragraph, the provisions of
Section 424(d) of the Code shall be controlling.

5. STOCK SUBJECT TO THE PLAN; AWARD LIMITS; SHARE COUNTING.

(a) The maximum number of shares of Stock reserved for the grant of Stock or
settlement in Stock of Awards under the Plan (the “Share Limit”) shall be
2,000,000 and shall be subject to adjustment as provided herein.

(b) The aggregate Awards granted during any fiscal year to any single individual
who is likely to be a Covered Employee shall not exceed (i) 600,000 shares
subject to Options or

 

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stock appreciation rights, (ii) 400,000 shares subject to Restricted Stock or
Other Stock-Based Awards (other than stock appreciation rights), (iii) $2
million for an Other Cash-Based Award with a single year payout feature, and
(iv) $5 million for an Other Cash-Based Award with a multi-year payout feature.
Determinations made in respect of the limitation set forth in the preceding
sentence shall be made in a manner consistent with Section 162(m) of the Code.
Shares paid pursuant to any Award may, in whole or in part, be authorized but
unissued shares or shares that shall have been or may be reacquired by the
Company in the open market, in private transactions or otherwise.

(c) If any shares subject to an Award are forfeited, cancelled, exchanged or
surrendered or if an Award otherwise terminates or expires without a
distribution of shares to the Grantee, the shares of Stock with respect to such
Award, to the extent of any such forfeiture, cancellation, exchange, surrender,
termination or expiration, shall not count against the Share Limit and shall
again be available for subsequent Awards under the Plan. In addition, shares of
Stock that are exchanged by a Grantee or withheld by the Company as full or
partial payment in connection with any Award under the Plan, as well as any
shares of Stock exchanged by a Grantee or withheld by the Company or any
Subsidiary to satisfy the tax withholding obligations related to any Award under
the Plan, shall not count against the Share Limit and shall again be available
for subsequent Awards under the Plan. Upon the exercise of any Award granted in
tandem with any other Awards (including an Other Cash-Based Award that is
granted with another Award) and the issuance of Stock upon exercise of such
Award, such related Awards shall be cancelled to the extent of the number of
shares of Stock as to which the Award is exercised and such number of shares so
issued shall count against the Share Limit and shall no longer be available for
subsequent Awards under the Plan; however, to the extent such a tandem award is
paid in cash, the cancellation of the Award upon payment of cash shall not count
against the Share Limit and the Stock that was the subject of such tandem award
shall be available for subsequent Awards under the Plan.

(d) Except as provided in an Award Agreement or as otherwise provided in the
Plan, in the event that the Committee shall determine that any Corporate
Transaction affects the Stock such that an adjustment is appropriate in order to
prevent dilution or enlargement of the rights of Grantees under the Plan, then
the Committee shall make such equitable changes or adjustments as it deems
necessary or appropriate to any or all of (i) the number and kind of shares of
Stock or other property (including cash) that may thereafter be issued in
connection with Awards or the total number of Awards issuable under the Plan,
(ii) the number and kind of shares of Stock or other property issued or issuable
in respect of outstanding Awards, (iii) the exercise price, grant price or
purchase price relating to any Award, (iv) the Performance Goals and (v) the
individual limitations applicable to Awards; provided that, with respect to
ISOs, any adjustment shall be made in accordance with the provisions of
Section 424(h) of the Code and any regulations or guidance promulgated
thereunder, and provided further that no such adjustment shall cause any Award
hereunder which is or becomes subject to Section 409A of the Code to fail to
comply with the requirements of such section.

6. SPECIFIC TERMS OF AWARDS.

(a) General. The term of each Award shall be for such period as may be
determined by the Committee. Subject to the terms of the Plan and any applicable
Award Agreement, payments to be made by the Company or a Subsidiary or Affiliate
upon the grant, maturation, or exercise of an Award may be made in such forms as
the Committee shall determine at the date of grant or thereafter, including,
without limitation, cash, Stock, or other property, and may be made in a single
payment or transfer, in installments, or on a deferred basis.

 

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(b) Awards. The Committee is authorized to grant to Grantees the following
Awards, as deemed by the Committee to be consistent with the purposes of the
Plan. The Committee shall determine the terms and conditions of such Awards at
the date of grant or thereafter.

(i) Options. The Committee is authorized to grant Options to Grantees on the
following terms and conditions:

(A) Type of Award. The Award Agreement evidencing the grant of an Option under
the Plan shall designate the Option as an ISO or an NQSO.

(B) Exercise Price. The exercise price per share of Stock purchasable under an
Option shall be determined by the Committee, but in no event shall the exercise
price of an Option per share of Stock be less than the Fair Market Value of a
share of Stock as of the date of grant of such Option. The purchase price of
Stock as to which an Option is exercised shall be paid in full at the time of
exercise; payment may be made in cash, which may be paid by check, or other
instrument acceptable to the Company, or, with the consent of the Committee, in
shares of Stock, valued at the Fair Market Value on the date of exercise
(including shares of Stock that otherwise would be distributed to the Grantee
upon exercise of the Option), or if there were no sales on such date, on the
next preceding day on which there were sales or (if permitted by the Committee
and subject to such terms and conditions as it may determine) by surrender of
outstanding Awards under the Plan, or the Committee may permit such payment of
exercise price by any other method it deems satisfactory in its discretion. In
addition, subject to applicable law and pursuant to procedures approved by the
Committee, payment of the exercise price may be made through the sale of Stock
acquired on exercise of the Option, valued at Fair Market Value on the date of
exercise, sufficient to pay for such Stock (together with, if requested by the
Company, the amount of federal, state or local withholding taxes payable by
Grantee by reason of such exercise). Any amount necessary to satisfy applicable
federal, state or local tax withholding requirements shall be paid promptly upon
notification of the amount due. The Committee may permit such amount of tax
withholding to be paid in shares of Stock previously owned by the employee, or a
portion of the shares of Stock that otherwise would be distributed to such
employee upon exercise of the Option, or a combination of cash and shares of
such Stock.

(C) Term and Exercisability of Options. Options shall be exercisable over the
exercise period (which shall not exceed ten years from the date of grant), at
such times and upon such conditions as the Committee may determine, as reflected
in the Award Agreement; provided that, the Committee shall have the authority to
accelerate the exercisability of any outstanding Option at such time and under
such circumstances as it, in its sole discretion, deems appropriate. An Option
may be exercised to the

 

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extent of any or all full shares of Stock as to which the Option has become
exercisable, by giving written notice of such exercise to the Committee or its
designated agent. No partial exercise may be made for less than one hundred
(100) full shares of Stock.

(D) Termination of Employment. Unless otherwise provided in the applicable Award
Agreement or employment or other agreement, or unless otherwise determined by
the Committee:

(I) Except as set forth herein or in subsections II, III, IV or V below, an
Option may not be exercised unless the Grantee is then in the employ of,
maintains an independent contractor relationship with, or is a director of, the
Company or a Subsidiary (or a company or a parent or subsidiary company of such
company issuing or assuming the Option in a transaction to which Section 424(a)
of the Code applies), and unless the Grantee has remained continuously so
employed, or continuously maintained such relationship, since the date of grant
of the Option.

(II) If the Grantee’s employment or service terminates because of the Grantee’s
death or Disability, the portions of outstanding Options granted to such Grantee
that are exercisable as of the date of such termination of employment or service
shall remain exercisable until the earlier of (i) one year following the date of
the Grantee’s death or Disability and (ii) the expiration of the term of the
Option and shall thereafter terminate. All additional portions of outstanding
Options granted to such Grantee which are not exercisable as of the date of such
termination of employment or service, shall terminate upon the date of such
termination of employment or service.

(III) If the Grantee’s employment or service terminates upon the Grantee’s
retirement on or after the Grantee’s normal retirement date under any Company or
Subsidiary qualified retirement plan, the portions of outstanding Options
granted to such Grantee that are exercisable as of the date of such termination
of employment or service shall remain exercisable until the earlier of
(i) eighteen (18) months following the date of such termination of employment or
service and (ii) expiration of the term of the Option and shall thereafter
terminate. All additional portions of outstanding Options granted to such
Grantee which are not exercisable as of the date of such termination of
employment or service, shall terminate upon the date of such termination of
employment or service.

(IV) If the Grantee’s employment or service is terminated for Cause, all vested
and unvested outstanding Options granted to such Grantee shall terminate on the
date of the Grantee’s termination of employment or service.

(V) If the Grantee’s employment or service with the Company and its Subsidiaries
terminates (including by reason of the Subsidiary which employs the Grantee
ceasing to be a Subsidiary of the Company) other than as described in
subsections (II), (III) and (IV) above, the

 

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portions of outstanding Options granted to such Grantee that are exercisable as
of the date of such termination of employment or service shall remain
exercisable until the earlier of (i) 90 days following the date of such
termination of employment or service and (ii) the expiration of the term of the
Option and shall thereafter terminate. All additional portions of outstanding
Options granted to such Grantee which are not exercisable as of the date of such
termination of employment or service, shall terminate upon the date of such
termination of employment or service.

(E) Non-Employee Director’s Grants. Unless otherwise provided by the Committee,
immediately following each annual meeting of Company stockholders during the
term of the Plan, each non-employee director serving as such shall be granted
(I) a NQSO to purchase 10,000 shares of Stock with an exercise price per share
equal to the Fair Market Value of a share of Stock on the date of grant and (II)
5,000 restricted stock units (collectively, the “Annual Director Award”). Each
such Option shall vest and become exercisable ratably in three installments
commencing on the date of grant such that 100% of the Option shall be vested and
exercisable on the second anniversary of the grant date (subject to continued
service as a director through each such vesting date). Each such restricted
stock unit shall vest in two equal installments on the first and second
anniversary of the grant date (subject to continued service as a director
through each such vesting date). In the event a non-employee director is first
elected to the Board by the Board, and not at an annual meeting of stockholders,
the Committee shall grant to such newly elected director, as of the date of
election, a pro rata Annual Director Award for the estimated service period
until the next annual meeting of stockholders. For example, the Committee would
grant 5,000 non-qualified stock options and 2,500 restricted stock units as a
pro rata Annual Director Award to a non-employee director who is first elected
six months in advance of the next annual meeting of stockholders. Other terms
and conditions of the grants shall be established by the Committee pursuant to
Section 3 of the Plan and set forth in such non-employee director’s Award
Agreement.

(F) Other Provisions. Options may be subject to such other conditions including,
but not limited to, restrictions on transferability of, or provisions for
recovery of, the shares acquired upon exercise of such Options (or proceeds of
sale thereof), as the Committee may prescribe in its discretion or as may be
required by applicable law.

(ii) Restricted Stock.

(A) The Committee may grant Awards of Restricted Stock, alone or in tandem with
other Awards under the Plan, subject to such restrictions, terms and conditions,
as the Committee shall determine in its sole discretion and as shall be
evidenced by the applicable Award Agreement (provided that any such Award is
subject to the vesting requirements described herein). The vesting of a
Restricted Stock Award granted under the Plan may be conditioned upon the
completion of a specified period of employment or service with the Company or
any Subsidiary or Affiliate, upon the attainment of specified Performance Goals,
and/or upon such other criteria as the Committee may determine in its sole
discretion. Notwithstanding the foregoing, Restricted Stock and restricted stock
units granted after stockholder approval of the Plan, as amended, that vest
solely by the passage of time shall not vest in full in less than three
(3) years from the grant date (but may vest pro-rata during such period on a
daily, monthly, annual or other basis), and Restricted Stock and restricted
stock units that vest upon achievement of performance goals shall not vest in
full in less than one (1) year from the

 

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grant date; provided, that (i) up to ten percent (10%) of the maximum number of
new shares of Stock available for issuance after stockholder approval of the
Plan, as amended, may be issued without being subject to the foregoing
restrictions, and (ii) any dividends or dividend equivalent rights, or other
distributions, issued in connection with any Award granted after stockholder
approval of the Plan, as amended, under the Plan shall not be subject to or
counted for either such restrictions or such ten percent (10%) share issuance
limit. The foregoing ten percent (10%) share issuance limit shall be subject to
adjustment consistent with the adjustment provisions of Section 5(d) and the
share usage rules of Section 5(c).

(B) The Committee shall determine the price, which, to the extent required by
law, shall not be less than par value of the Stock, to be paid by the Grantee
for each share of Restricted Stock or unrestricted stock or stock units subject
to the Award. Each Award Agreement with respect to such Award shall set forth
the amount (if any) to be paid by the Grantee with respect to such Award and
when and under what circumstances such payment is required to be made.

(C) The Committee may, upon such terms and conditions as the Committee
determines, provide that a certificate or certificates representing the shares
underlying a Restricted Stock Award shall be registered in the Grantee’s name
and bear an appropriate legend specifying that such shares are not transferable
and are subject to the provisions of the Plan and the restrictions, terms and
conditions set forth in the applicable Award Agreement, or that such certificate
or certificates shall be held in escrow by the Company on behalf of the Grantee
until such shares become vested or are forfeited. Except as provided in the
applicable Award Agreement, no shares of Stock underlying a Restricted Stock
Award may be assigned, transferred, or otherwise encumbered or disposed of by
the Grantee until such shares of Stock have vested in accordance with the terms
of such Award.

(D) If and to the extent that the applicable Award Agreement may so provide, a
Grantee shall have the right to vote and receive dividends on Restricted Stock
granted under the Plan. Unless otherwise provided in the applicable Award
Agreement, any Stock received as a dividend on or in connection with a stock
split of the shares of Stock underlying a Restricted Stock Award shall be
subject to the same restrictions as the shares of Stock underlying such
Restricted Stock Award.

(E) Upon termination of employment with or service to the Company or any
Affiliate or Subsidiary of the Company (including by reason of such Subsidiary
or Affiliate ceasing to be a Subsidiary or Affiliate of the Company), during the
applicable restriction period, unvested Restricted Stock shall be forfeited;
provided, that the Committee may provide, by rule or regulation or in any Award
Agreement, or may determine in any individual case, that restrictions or
forfeiture conditions relating to Restricted Stock will be waived in whole or in
part in the event of terminations resulting from specified causes, and the
Committee may in other cases waive in whole or in part the forfeiture of
Restricted Stock.

(iii) Other Stock-Based Awards or Other Cash-Based Awards.

(A) The Committee is authorized to grant Awards to Grantees in the form of Other
Stock-Based Awards or Other Cash-Based Awards, as deemed by the Committee to be
consistent with the purposes of the Plan. The Committee shall determine the
terms and conditions of such Awards, consistent with the terms of the Plan, at
the date of grant or thereafter, including the Performance Goals and performance
periods. Stock or other securities

 

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or property delivered pursuant to an Award in the nature of a purchase right
granted under Section 6(b)(iii) shall be purchased for such consideration, paid
for at such times, by such methods, and in such forms, including, without
limitation, Stock, other Awards, notes or other property, as the Committee shall
determine, subject to any required corporate action.

(B) Payments earned in respect of any Other Cash-Based Award may be decreased
or, with respect to any Grantee who is not a Covered Employee, increased in the
sole discretion of the Committee based on such factors as it deems appropriate.
Notwithstanding the foregoing, any Awards may be adjusted in accordance with
Section 5(d) hereof.

7. CHANGE OF CONTROL PROVISIONS.

(a) To the extent determined by the Committee in its sole discretion (either as
evidenced in an applicable Award Agreement, employment agreement or otherwise),
if a Grantee’s employment or service is terminated by the Company without Cause
or by the Grantee for Good Reason, in each case within twenty-four (24) months
following a Change of Control:

(i) any Award carrying a right to exercise that was not previously vested and
exercisable shall become fully vested and exercisable and all outstanding Awards
shall remain exercisable for one (1) year following such date of termination of
employment or service but in no event beyond the original term of the Award and
shall thereafter terminate; and

(ii) the restrictions, deferral limitations, payment conditions, and forfeiture
conditions applicable to any Award other than an Award described in (i) granted
under the Plan shall lapse and such Awards shall be deemed fully vested, and any
performance conditions imposed with respect to Awards shall be deemed to be
achieved at the higher of (x) the target level for the applicable performance
period or (y) the level of achievement of such performance conditions for the
most recently concluded performance period.

Notwithstanding the foregoing, the Committee shall have the discretion to:

(x) accelerate the vesting or payment of any Award effective immediately upon
the occurrence of a Change of Control, or

(y) convert the vesting of performance-based Awards to a time-based vesting
schedule as deemed appropriate by the Committee, in each case, only to the
extent that such action would not cause any Award to result in deferred
compensation that is subject to the additional 20% tax under Section 409A of the
Code.

(b) A “Change of Control” shall be deemed to have occurred if the event set
forth in any one of the following paragraphs shall have occurred:

(i) any Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company or its Affiliates)
representing more than fifty percent (50%) of the combined voting power of the
Company’s then outstanding voting securities, excluding any Person who becomes
such a Beneficial Owner in connection with a transaction described in clause
(A) of paragraph (iii) below; or

(ii) the following individuals cease for any reason to constitute a majority of
the number of directors then serving: individuals who, as of December 14, 2010,
constitute the Board and any new director (other than a director whose initial
assumption of office is in

 

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connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board or nomination for election
by the Company’s stockholders was approved or recommended by a vote of at least
a majority of the directors then still in office who either were directors as of
December 14, 2010 or whose appointment, election or nomination for election was
previously so approved or recommended by such directors; or

(iii) there is consummated a merger or consolidation of the Company with any
other corporation or other entity, other than (A) a merger or consolidation
which results in the voting securities of the Company outstanding immediately
prior to such merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity or any parent thereof), in combination with the ownership of
any trustee or other fiduciary holding securities under an employee benefit plan
of the Company or any subsidiary of the Company, more than fifty percent
(50%) of the combined voting power of the voting securities of the Company or
such surviving entity or any parent thereof outstanding immediately after such
merger or consolidation, or (B) a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in which no Person is
or becomes the Beneficial Owner, directly or indirectly, of securities of the
Company (not including in the securities Beneficially Owned by such Person any
securities acquired directly from the Company or its Affiliates) representing
more than fifty percent (50%) of the combined voting power of the Company’s then
outstanding securities; or

(iv) the stockholders of the Company approve a plan of liquidation or
dissolution of the Company or there is consummated an agreement for the sale or
other disposition, directly or indirectly, by the Company of all or
substantially all of the Company’s assets, other than such sale or other
disposition by the Company of all or substantially all of the Company’s assets
to an entity, more than fifty percent (50%) of the combined voting power of the
voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company immediately
prior to such sale.

Notwithstanding the foregoing, a “Change of Control” shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions. In addition,
for each Award subject to Section 409A of the Code, a “Change of Control” shall
be deemed to have occurred under this Plan with respect to such Award only if a
change in the ownership or effective control of the Company or a change in the
ownership of a substantial portion of the assets of the Company shall also be
deemed to have occurred under Section 409A of the Code.

8. GENERAL PROVISIONS.

(a) Nontransferability, Deferrals and Settlements. Unless otherwise determined
by the Committee or provided in an Award Agreement, Awards shall not be
transferable by a Grantee except by will or the laws of descent and distribution
and shall be exercisable during the lifetime of a Grantee only by such Grantee
or his guardian or legal representative.

(b) No Right to Continued Employment, etc. Nothing in the Plan or in any Award
granted or any Award Agreement, promissory note or other agreement entered into
pursuant

 

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hereto shall confer upon any Grantee the right to continue in the employ or
service of the Company, any Subsidiary or any Affiliate or to be entitled to any
remuneration or benefits not set forth in the Plan or such Award Agreement,
promissory note or other agreement or to interfere with or limit in any way the
right of the Company or any such Subsidiary or Affiliate to terminate such
Grantee’s employment or service.

(c) Taxes. The Company or any Subsidiary or Affiliate is authorized to withhold
from any Award granted, any payment relating to an Award under the Plan,
including from a distribution of Stock, or any other payment to a Grantee,
amounts of withholding and other taxes due in connection with any transaction
involving an Award, and to take such other action as the Committee may deem
advisable to enable the Company and Grantees to satisfy obligations for the
payment of withholding taxes and other tax obligations relating to any Award.
This authority shall include authority to withhold or receive Stock or other
property with a Fair Market Value not in excess of the minimum amount required
to be withheld and to make cash payments in respect thereof in satisfaction of a
Grantee’s tax obligations.

(d) Amendment and Termination. The Plan shall take effect on the Effective Date.
The Board may amend, alter or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made that would impair the rights of a
Grantee under any Award theretofore granted without such Grantee’s consent, or
that without the approval of the stockholders (as described below) would, except
as provided in Section 5, increase the total number of shares of Stock reserved
for the purpose of the Plan. In addition, stockholder approval shall be required
with respect to any amendment that materially increases benefits provided under
the Plan or materially alters the eligibility provisions of the Plan. Unless
earlier terminated by the Board pursuant to the provisions of the Plan, the Plan
shall terminate on the tenth anniversary of its Effective Date. No Awards shall
be granted under the Plan after such termination date.

(e) No Rights to Awards; No Stockholder Rights. No Grantee shall have any claim
to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Grantees. Except as provided specifically herein, a
Grantee or a transferee of an Award shall have no rights as a stockholder with
respect to any shares covered by the Award until the date of the issuance of a
stock certificate to him for such shares.

(f) Unfunded Status of Awards. The Plan is intended to constitute an “unfunded”
plan for incentive and deferred compensation. With respect to any payments not
yet made to a Grantee pursuant to an Award, nothing contained in the Plan or any
Award shall give any such Grantee any rights that are greater than those of a
general unsecured creditor of the Company.

(g) No Fractional Shares. No fractional shares of Stock shall be issued or
delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash, other Awards, or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.

(h) Regulations and Other Approvals.

(i) The obligation of the Company to sell or deliver Stock with respect to any
Award granted under the Plan shall be subject to all applicable laws, rules and
regulations, including all applicable federal and state securities laws, and the
obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Committee.

 

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(ii) Each Award is subject to the requirement that, if at any time the Committee
determines, in its absolute discretion, that the listing, registration or
qualification of Stock issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Award or the issuance of
Stock, no such Award shall be granted or payment made or Stock issued, in whole
or in part, unless listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions not acceptable to the
Committee.

(iii) In the event that the disposition of Stock acquired pursuant to the Plan
is not covered by a then current registration statement under the Securities Act
of 1933, as amended (the “Securities Act”), and is not otherwise exempt from
such registration, such Stock shall be restricted against transfer to the extent
required by the Securities Act or regulations thereunder, and the Committee may
require a Grantee receiving Stock pursuant to the Plan, as a condition precedent
to receipt of such Stock, to represent to the Company in writing that the Stock
acquired by such Grantee is acquired for investment only and not with a view to
distribution.

(i) Section 409A Compliance. The intent of the parties is that payments and
benefits under the Plan 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 be administered to be in compliance therewith.
Notwithstanding anything contained herein to the contrary, to the extent
required in order to avoid accelerated taxation and/or tax penalties under
Section 409A of the Code, the Grantee shall not be considered to have terminated
employment with the Company for purposes of the Plan and no payment shall be due
to the Grantee under the Plan or any Award Agreement until the Grantee would be
considered to have incurred a “separation from service” from the Company within
the meaning of Section 409A of the Code. 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 law
requires otherwise. Notwithstanding anything to the contrary in the Plan, to the
extent that any Awards are payable upon a separation from service and such
payment would result in the imposition of any individual excise tax and late
interest charges imposed under Section 409A of the Code, the settlement and
payment of such awards shall instead be made on the first business day after the
date that is six (6) months following such separation from service (or death, if
earlier).

(j) Governing Law. The Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of Delaware without
giving effect to the conflict of laws principles thereof.

 

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