exv10w18






Exhibit 10.18




DYNCORP INTERNATIONAL




2007 OMNIBUS INCENTIVE PLAN




     DynCorp International Inc. (the “Company”), a Delaware corporation, hereby establishes and
adopts the following DynCorp International 2007 Omnibus Incentive Plan (the “Plan”).



1. PURPOSE OF THE PLAN




     The purpose of the Plan is to assist the Company and its Subsidiaries in attracting and
retaining selected individuals to serve as employees, directors and consultants of the Company and
its Subsidiaries who are expected to contribute to the Company’s success and to achieve long-term
objectives which will inure to the benefit of all stockholders of the Company through the
additional incentives inherent in the Awards hereunder.



2. DEFINITIONS




     2.1. “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock Award, Other
Share-Based Award, Performance Award or any other right, interest or option relating to Shares or
other property (including cash) granted pursuant to the provisions of the Plan.



     2.2. “Award Agreement” shall mean any written agreement, contract or other instrument or
document evidencing any Award hereunder, including through an electronic medium.



     2.3. “Board” shall mean the board of directors of the Company.



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



     2.5. “Committee” shall mean the Compensation Committee of the Board or a subcommittee thereof
formed by the Compensation Committee to act as the Committee hereunder. The Committee shall
consist of no fewer than two Directors, each of whom is (i) a “Non-Employee Director” within the
meaning of Rule 16b-3 of the Exchange Act, (ii) an “outside director” within the meaning of Section
162(m) of the Code, and (iii) an “independent director” for purpose of the rules and regulations of
the New York Stock Exchange (or such other principal securities exchange on which the Shares are
traded).



     2.6. “Covered Employee” shall mean an employee of the Company or its subsidiaries who is a
“covered employee” within the meaning of Section 162(m) of the Code.



     2.7. “Director” shall mean a non-employee member of the Board.



     2.8. “Dividend Equivalents” shall have the meaning set forth in Section 12.5.



     2.9. “Employee” shall mean any employee of the Company or any Subsidiary and any prospective
employee conditioned upon, and effective not earlier than, such person becoming an employee of the
Company or any Subsidiary. Solely for purposes of the Plan, an Employee shall



 









 




also mean any consultant who is a natural person and who provides services to the Company or any
Subsidiary, so long as such person (i) renders bona fide services that are not in connection with
the offer and sale of the Company’s securities in a capital-raising transaction and (ii) does not
directly or indirectly promote or maintain a market for the Company’s securities.




     2.10. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.



     2.11. “Fair Market Value” shall mean, with respect to any property other than Shares, the
market value of such property determined by such methods or procedures as shall be established from
time to time by the Committee. The Fair Market Value of Shares as of any date shall be the per
Share closing price of the Shares as reported on the New York Stock Exchange on that date (or if
there were no reported prices on such date, on the last preceding date on which the prices were
reported) or, if the Company is not then listed on the New York Stock Exchange, on such other
principal securities exchange on which the Shares are traded, and if the Company is not listed on
the New York Stock Exchange or any other securities exchange, the Fair Market Value of Shares shall
be determined by the Committee in its sole discretion.



     2.12. “Limitations” shall have the meaning set forth in Section 10.5.



     2.13. “Option” shall mean any right granted to a Participant under the Plan allowing such
Participant to purchase Shares at such price or prices and during such period or periods as the
Committee shall determine.



     2.14. “Other Share-Based Award” shall have the meaning set forth in Section 8.1.



     2.15. “Participant” shall mean an Employee or Director who is selected by the Committee to
receive an Award under the Plan.



     2.16. “Payee” shall have the meaning set forth in Section 13.1.



     2.17. “Performance Award” shall mean any Award of Performance Cash, Performance Shares or
Performance Units granted pursuant to Article 9.



     2.18 “Performance Cash” shall mean any cash incentives granted pursuant to Article 9 which
will be paid to the Participant upon the achievement of such performance goals as the Committee
shall establish.



     2.19. “Performance Period” shall mean the period established by the Committee of not less than
6 months during which any performance goals specified by the Committee with respect to such Award
are to be measured.



     2.20. “Performance Share” shall mean any grant pursuant to Article 9 of a unit valued by
reference to a designated number of Shares, which value will be paid to the Participant upon
achievement of such performance goals as the Committee shall establish.



     2.21. “Performance Unit” shall mean any grant pursuant to Section 9 of a unit valued by
reference to a designated amount of cash or property other than Shares, which value will be paid to
the Participant upon achievement of such performance goals during the Performance Period as the
Committee shall establish.



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     2.22. “Permitted Assignee” shall have the meaning set forth in Section 12.3.



     2.23. “Restricted Stock” shall mean any Share issued with the restriction that the holder may
not sell, transfer, pledge or assign such Share and with such other restrictions as the Committee,
in its sole discretion, may impose (including any restriction on the right to vote such Share and
the right to receive any dividends), which restrictions may lapse separately or in combination at
such time or times, in installments or otherwise, as the Committee may deem appropriate.



     2.24. “Restricted Stock Award” shall have the meaning set forth in Section 7.1.



     2.25 “Restricted Stock Unit” means an Award that is valued by reference to a Share, which
value may be paid to the Participant by delivery of such property as the Committee shall determine,
including without limitation, cash or Shares, or any combination thereof, and that has such
restrictions as the Committee, in its sole discretion, may impose, including without limitation,
any restriction on the right to retain such Awards, to sell, transfer, pledge or assign such
Awards, and/or to receive any cash Dividend Equivalents with respect to such Awards, which
restrictions may lapse separately or in combination at such time or times, in installments or
otherwise, as the Committee may deem appropriate.



     2.26 “Restricted Stock Unit Award” shall have the meaning set forth in Section 7.1



     2.27. “Shares” shall mean the shares of the Class A common stock of the Company, par value
$0.01 per share.



     2.28. “Stock Appreciation Right” shall mean the right granted to a Participant pursuant to
Section 6.



     2.29. “Subsidiary” shall mean any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if, at the relevant time 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.



     2.30. “Substitute Awards” shall mean Awards granted or Shares issued by the Company in
assumption of, or in substitution or exchange for, awards previously granted, or the right or
obligation to make future awards, in each case by a company acquired by the Company or any
Subsidiary or with which the Company or any Subsidiary combines.



3. SHARES SUBJECT TO THE PLAN




     3.1 Number of Shares. (a) Subject to adjustment as provided in Section 12.2, a total of
2,250,000 Shares shall be authorized for issuance under the Plan.



          (b) If any Shares subject to an Award are forfeited, expire or otherwise terminate without
issuance of such Shares, or any Award is settled for cash or otherwise does not result in the
issuance of all or a portion of the Shares subject to such Award (including on payment in Shares on
exercise of a Stock Appreciation Right), such Shares shall, to the extent of




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such forfeiture, expiration, termination, cash settlement or non-issuance, again be available for
issuance under the Plan.




          (c) In the event that (i) any Option or other Award granted hereunder is exercised through the
tendering of Shares (either actually or by attestation) or by the withholding of Shares by the
Company, or (ii) withholding tax liabilities arising from such Option or other Award are satisfied
by the tendering of Shares (either actually or by attestation) or by the withholding of Shares by
the Company, then the Shares so tendered or withheld shall be available for issuance under the
Plan.




          (d) Substitute Awards shall not reduce the Shares authorized for grant under the Plan or
authorized for grant to a Participant in any calendar year. Additionally, in the event that a
company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary
combines has shares available under a pre-existing plan approved by stockholders and not adopted in
contemplation of such acquisition or combination, the shares available for grant pursuant to the
terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio
or other adjustment or valuation ratio or formula used in such acquisition or combination to
determine the consideration payable to the holders of common stock of the entities party to such
acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares
authorized for grant under the Plan; provided that Awards using such available shares shall not be
made after the date awards or grants could have been made under the terms of the pre-existing plan,
absent the acquisition or combination, and shall only be made to individuals who were not Employees
or Directors prior to such acquisition or combination.




     3.2. Character of Shares. Any Shares issued hereunder may consist, in whole or in part, of
authorized and unissued shares, treasury shares or shares purchased in the open market or
otherwise.



4. ELIGIBILITY AND ADMINISTRATION




     4.1. Eligibility. Any Employee or Director shall be eligible to be selected as a Participant.



     4.2. Administration. (a) The Plan shall be administered by the Committee. The Committee
shall have full power and authority, subject to the provisions of the Plan and subject to such
orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be
adopted by the Board, to: (i) select the Employees and Directors to whom Awards may from time to
time be granted hereunder; (ii) determine the type or types of Awards, not inconsistent with the
provisions of the Plan, to be granted to each Participant hereunder; (iii) determine the number of
Shares to be covered by each Award granted hereunder; (iv) determine the terms and conditions, not
inconsistent with the provisions of the Plan, of any Award granted hereunder; (v) determine
whether, to what extent and under what circumstances Awards may be settled in cash, Shares or other
property; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other
property and other amounts payable with respect to an Award made under the Plan shall be deferred
either automatically or at the election of the Participant; (vii) determine whether, to what extent
and under what circumstances any Award shall be canceled or suspended; (viii) interpret and
administer the Plan and any instrument or agreement entered into under or in connection with the
Plan, including any Award



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Agreement; (ix) correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the
manner and to the extent that the Committee shall deem desirable to carry it into effect; (x)
establish such rules and regulations and appoint such agents as it shall deem appropriate for the
proper administration of the Plan; (xi) determine whether any Award will have Dividend Equivalents;
and (xii) make any other determination and take any other action that the Committee deems necessary
or desirable for administration of the Plan.




          (b) Decisions of the Committee shall be final, conclusive and binding on all persons or
entities, including the Company, any Participant, and any Subsidiary. A majority of the members of
the Committee may determine its actions, including fixing the time and place of its meetings.
Notwithstanding the foregoing, any action or determination by the Committee specifically affecting
or relating to an Award to a Director shall require the approval of the Board.




          (c) To the extent not inconsistent with applicable law, including Section 162(m) of the Code,
or the rules and regulations of the New York Stock Exchange (or such other principal securities
exchange on which the Shares are traded), the Committee may delegate to (i) committee of one or
more directors of the Company any of the authority of the Committee under the Plan, including the
right to grant, cancel or suspend Awards and (ii) to the extent permitted by law, to one or more
executive officers or a committee of executive officers the right to grant Awards to Employees who
are not Directors or executive officers of the Company.




5. OPTIONS




     5.1. Grant of Options. Options may be granted hereunder to Participants either alone or in
addition to other Awards granted under the Plan. Any Option shall be subject to the terms and
conditions of this Article and to such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall deem desirable.



     5.2. Award Agreements. All Options granted pursuant to this Article shall be evidenced by a
written Award Agreement in such form and containing such terms and conditions as the Committee
shall determine which are not inconsistent with the provisions of the Plan. The terms of Options
need not be the same with respect to each Participant. Granting an Option pursuant to the Plan
shall impose no obligation on the recipient to exercise such Option. Any individual who is granted
an Option pursuant to this Article may hold more than one Option granted pursuant to the Plan at
the same time.



     5.3. Option Price. Other than in connection with Substitute Awards, the option price per each
Share purchasable under any Option granted pursuant to this Article shall not be less than 100% of
the Fair Market Value of one Share on the date of grant of such Option. Other than pursuant to
Section 12.2, the Committee shall not without the approval of the Company’s stockholders (a) lower
the option price per Share of an Option after it is granted, (b) cancel an Option in exchange for
cash or another Award (other than in connection with Substitute Awards), and (c) take any other
action with respect to an Option that would be treated as a repricing under the rules and
regulations of the principal securities exchange on which the Shares are traded.



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     5.4. Option Term. The term of each Option shall be fixed by the Committee in its sole
discretion; provided that no Option shall be exercisable after the expiration of ten (10) years
from the date the Option is granted, except in the event of death or disability.



     5.5. Exercise of Options. (a) Options shall be subject to such vesting conditions as may be
imposed by the Committee. Vested Options granted under the Plan shall be exercised by the
Participant or by a Permitted Assignee thereof (or by the Participant’s executors, administrators,
guardian or legal representative, as may be provided in an Award Agreement) as to all or part of
the Shares covered thereby, by giving notice of exercise to the Company or its designated agent,
specifying the number of Shares to be purchased. The notice of exercise shall be in such form,
made in such manner, and in compliance with such other requirements consistent with the provisions
of the Plan as the Committee may prescribe from time to time.



          (b) Unless otherwise provided in an Award Agreement, full payment of such purchase price shall
be made at the time of exercise and shall be made (i) in cash or cash equivalents (including
certified check or bank check or wire transfer of immediately available funds), (ii) by tendering
previously acquired Shares (either actually or by attestation, valued at their then Fair Market
Value), (iii) with the consent of the Committee, by delivery of other consideration (including,
where permitted by law and the Committee, other Awards) having a Fair Market Value on the exercise
date equal to the total purchase price, (iv) with the consent of the Committee, by withholding
Shares otherwise issuable in connection with the exercise of the Option, (v) through any other
method specified in an Award Agreement, or (vi) any combination of any of the foregoing. The
notice of exercise, accompanied by such payment, shall be delivered to the Company at its principal
business office or such other office as the Committee may from time to time direct, and shall be in
such form, containing such further provisions consistent with the provisions of the Plan, as the
Committee may from time to time prescribe. In no event may any Option granted hereunder be
exercised for a fraction of a Share. No adjustment shall be made for cash dividends or other
rights for which the record date is prior to the date of such issuance.




          (c) The Award Agreement for an Option shall set forth the extent to which it may be exercised
following termination of the Participant’s employment with or provision of services to the Company
(including service as a director of the Company) and its Subsidiaries.




     5.6. Form of Settlement. In its sole discretion, the Committee may provide that the Shares to
be issued upon an Option’s exercise shall be in the form of Restricted Stock or other similar
securities.



     5.7. Incentive Stock Options. The Committee may grant Options intended to qualify as
“incentive stock options” as defined in Section 422 of the Code, to any employee of the Company or
any Subsidiary, subject to the requirements of Section 422 of the Code. Solely for purposes of
determining whether Shares are available for the grant of “incentive stock options” under the Plan,
the maximum aggregate number of Shares that may be issued pursuant to “incentive stock options”
granted under the Plan shall be 2,000,000 shares, subject to adjustments provided in Section 12.2.



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6. STOCK APPRECIATION RIGHTS




     6.1. Grant and Exercise. The Committee may provide Stock Appreciation Rights (a) in
conjunction with all or part of any Option granted under the Plan or at any subsequent time during
the term of such Option, (b) in conjunction with all or part of any Award (other than an Option)
granted under the Plan or at any subsequent time during the term of such Award, or (c) without
regard to any Option or other Award in each case upon such terms and conditions as the Committee
may establish in its sole discretion.



     6.2. Terms and Conditions. Stock Appreciation Rights shall be subject to such terms and
conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to
time by the Committee, including the following:



          (a) Upon the exercise of a Stock Appreciation Right, the holder shall have the right to
receive the excess of (i) the Fair Market Value of one Share on the date of exercise (or such
amount less than such Fair Market Value as the Committee shall so determine at any time during a
specified period before the date of exercise) over (ii) the grant price of the right on the date of
grant, which, except in the case of Substitute Awards or in connection with an adjustment provided
in Section 12.2, shall not be less than the Fair Market Value of one Share on such date of grant of
the right.




          (b) Upon the exercise of a Stock Appreciation Right, the Committee shall determine in its sole
discretion whether payment shall be made in cash, in whole Shares or other property, or any
combination thereof.




          (c) The provisions of Stock Appreciation Rights need not be the same with respect to each
recipient.




          (d) Stock Appreciation Rights shall be subject to such vesting conditions as may be imposed by
the Committee. The Committee may impose such other conditions or restrictions on the terms of
exercise and the grant price of any Stock Appreciation Right, as it shall deem appropriate. The
Award Agreement for the Stock Appreciation Right shall set forth the extent to which it may be
exercised following termination of the Participant’s employment with or provision of services to
the Company (including service as a director of the Company) and its Subsidiaries.




          (e) A Stock Appreciation Right shall have (i) a grant price not less than Fair Market Value on
the date of grant (subject to the requirements of Section 409A of the Code with respect to a Stock
Appreciation Right granted in conjunction with, but subsequent to, an Option), and (ii) a term not
greater than ten (10) years.




          (f) Without the approval of the Company’s stockholders, other than pursuant to Section 12.2,
the Committee shall not (i) reduce the grant price of any Stock Appreciation Right after the date
of grant (ii) cancel any Stock Appreciation Right in exchange for cash or another Award (other than
in connection with Substitute Awards), and (iii) take any other action with respect to a Stock
Appreciation Right that would be treated as a repricing under the rules and regulations of the
principal securities market on which the Shares are traded.









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          (g) The Committee may impose such terms and conditions on Stock Appreciation Rights granted in
conjunction with any Award (other than an Option) as the Committee shall determine in its sole
discretion.




7. RESTRICTED STOCK AND RESTRICTED STOCK UNITS




     7.1. Grants. Awards of Restricted Stock and of Restricted Stock Units may be issued hereunder
to Participants either alone or in addition to other Awards granted under the Plan (a “Restricted
Stock Award” or “Restricted Stock Unit Award” respectively), and such Restricted Stock Awards and
Restricted Stock Unit Awards shall also be available as a form of payment of Performance Awards and
other earned cash-based incentive compensation. A Restricted Stock Award or Restricted Stock Unit
Award shall be subject to vesting restrictions imposed by the Committee covering a period of time
specified by the Committee, unless the Committee applies Article 10 to the Award as provided in
Section 10.1. The Committee has absolute discretion to determine whether any consideration (other
than services) is to be received by the Company or any Subsidiary as a condition precedent to the
issuance of Restricted Stock or Restricted Stock Units.



     7.2. Award Agreements. The terms of any Restricted Stock Award or Restricted Stock Unit Award
granted under the Plan shall be set forth in a written Award Agreement which shall contain
provisions determined by the Committee and not inconsistent with the Plan. The terms of Restricted
Stock Awards and Restricted Stock Unit Awards need not be the same with respect to each
Participant.



     7.3. Rights of Holders of Restricted Stock and Restricted Stock Units. Unless otherwise
provided in the Award Agreement, beginning on the date of grant of the Restricted Stock Award and
subject to execution of the Award Agreement, the Participant shall become a stockholder of the
Company with respect to all Shares subject to the Award Agreement and shall have all of the rights
of a stockholder, including the right to vote such Shares and the right to receive distributions
made with respect to such Shares. A Participant receiving a Restricted Stock Unit Award shall not
possess voting rights with respect to such Award. Except as otherwise provided in an Award
Agreement any Shares or any other property (other than cash) distributed as a dividend or otherwise
with respect to any Restricted Stock Award as to which the restrictions have not yet lapsed shall
be subject to the same restrictions as such Restricted Stock Award.



     7.4. Effect of Termination of Employment. The Award Agreement for Restricted Stock Award or
Restricted Stock Unit Award shall set forth the extent to which the Participant shall have the
right to retain Restricted Stock or Restricted Stock Units following termination of the
Participant’s employment with or provision of services to the Company (including service as a
director of the Company) and its Subsidiaries.



     7.5 Issuance of Shares. Any Restricted Stock granted under the Plan may be evidenced in such
manner as the Board may deem appropriate, including book-entry registration or issuance of a stock
certificate or certificates, which certificate or certificates 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 restrictions applicable to such Restricted Stock.



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8. OTHER SHARE-BASED AWARDS




     8.1. Grants. Other Awards of Shares and other Awards that are valued in whole or in part by
reference to, or are otherwise based on, Shares or other property (“Other Share-Based Awards”) may
be granted hereunder to Participants either alone or in addition to other Awards granted under the
Plan. Other Share-Based Awards shall also be available as a form of payment of other Awards
granted under the Plan and other earned cash-based compensation. Other Share-Based Awards shall be
subject to vesting restrictions imposed by the Committee covering a period of time specified by the
Committee, unless the Committee applies Article 10 to the Award as provided in Section 10.1.



     8.2. Award Agreements. The terms of Other Share-Based Award granted under the Plan shall be
set forth in a written Award Agreement which shall contain provisions determined by the Committee
and not inconsistent with the Plan. The terms of such Awards need not be the same with respect to
each Participant.



     8.3. Effect of Termination of Employment. The Award Agreement for an Other Share-Based Award
shall set forth the extent to the Award will be retained following termination of the Participant’s
employment with or provision of services to the Company (including service as a director of the
Company) and its Subsidiaries.



     8.4. Payment. Except as may be provided in an Award Agreement, Other Share-Based Awards may
be paid in cash, Shares, other property, or any combination thereof, in the sole discretion of the
Committee. Other Share-Based Awards may be paid in a lump sum or in installments or, in accordance
with procedures established by the Committee, on a deferred basis subject to the requirements of
Section 409A of the Code.



9. PERFORMANCE AWARDS




     9.1. Grants. Performance Awards in the form of Performance Cash, Performance Shares or
Performance Units, as determined by the Committee in its sole discretion, may be granted hereunder
to Participants, for no consideration or for such minimum consideration as may be required by
applicable law, either alone or in addition to other Awards granted under the Plan. The performance
goals to be achieved for each Performance Period shall be conclusively determined by the Committee
and may be based upon the criteria set forth in Section 10.2.



     9.2. Award Agreements. The terms of any Performance Award granted under the Plan shall be set
forth in a written Award Agreement which shall contain provisions determined by the Committee and
not inconsistent with the Plan, including whether such Awards shall have Dividend Equivalents. The
terms of Performance Awards need not be the same with respect to each Participant.



     9.3. Terms and Conditions. The performance criteria to be achieved during any Performance
Period and the length of the Performance Period shall be determined by the Committee upon the grant
of each Performance Award. The amount of the Award to be distributed shall be conclusively
determined by the Committee.



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     9.4. Payment. Except as provided in Article 11 or as may be provided in an Award Agreement,
Performance Awards will be distributed only after the end of the relevant Performance Period.
Performance Awards may be paid in cash, Shares, other property, or any combination thereof, in the
sole discretion of the Committee. Performance Awards may be paid in a lump sum or in installments
following the close of the Performance Period or, in accordance with procedures established by the
Committee, on a deferred basis subject to the requirements of Section 409A of the Code.



10. CODE SECTION 162(m) PROVISIONS




     10.1. Covered Employees. Notwithstanding any other provision of the Plan, if the Committee
determines at the time a Restricted Stock Award, a Restricted Stock Unit Award, a Performance Award
or an Other Share-Based Award is granted to a Participant who is, or is likely to be, as of the end
of the tax year in which the Company would claim a tax deduction in connection with such Award, a
Covered Employee, then the Committee may provide that this Article 10 is applicable to such Award.



     10.2. Performance Criteria. If the Committee determines that a Restricted Stock Award, a
Restricted Stock Unit, a Performance Award or an Other Share-Based Award is intended to be subject
to this Article 10, the lapsing of restrictions thereon and the distribution of cash, Shares or
other property pursuant thereto, as applicable, shall be subject to the achievement of one or more
objective performance goals established by the Committee, which shall be based on the attainment of
specified levels of one or any combination of the following: net sales; booking value of contract
awards; year-end backlog; days sales outstanding; revenue; revenue growth or product revenue
growth; operating income (before or after taxes); pre- or after-tax income (before or after
allocation of corporate overhead and bonus); earnings per share; net income (before or after
taxes); return on equity; total shareholder return; return on assets or net assets; appreciation in
and/or maintenance of the price of the Shares or any other publicly-traded securities of the
Company; market share; gross profits; earnings (including earnings before taxes, earnings before
interest and taxes or earnings before interest, taxes, depreciation and amortization); economic
value-added models or equivalent metrics; comparisons with various stock market indices; reductions
in costs; cash flow or cash flow per share (before or after dividends); return on capital
(including return on total capital or return on invested capital); cash flow return on investment;
improvement in or attainment of expense levels or working capital levels; operating margins, gross
margins or cash margin; year-end cash; debt reductions; stockholder equity; market share;
regulatory achievements; and implementation, completion or attainment of measurable objectives with
respect to research, development, products or projects, production volume levels, acquisitions and
divestitures and recruiting and maintaining personnel. Such performance goals also may be based
solely by reference to the Company’s performance or the performance of a Subsidiary, division,
business segment or business unit of the Company, or based upon the relative performance of other
companies or upon comparisons of any of the indicators of performance relative to other companies.
The Committee may also exclude charges related to an event or occurrence which the Committee
determines should appropriately be excluded, including (a) restructurings, discontinued operations,
extraordinary items, and other unusual or non-recurring charges, (b) an event either not directly
related to the operations of the Company or not within the reasonable control of the Company’s
management, or (c) the cumulative effects of tax or accounting changes in accordance with U.S.
generally accepted accounting principles. Such performance goals shall be set by the Committee
within the time



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period prescribed by, and shall otherwise comply with the requirements of, Section 162(m) of the
Code, and the regulations thereunder.




     10.3. Adjustments. Notwithstanding any provision of the Plan (other than Article 11), with
respect to any Restricted Stock Award, Restricted Stock Unit Award, Performance Award or Other
Share-Based Award that is subject to this Section 10, the Committee may adjust downwards, but not
upwards, the amount payable pursuant to such Award, and the Committee may not waive the achievement
of the applicable performance goals, except in the case of the death or disability of the
Participant or as otherwise determined by the Committee in special circumstances.



     10.4. Restrictions. The Committee shall have the power to impose such other restrictions on
Awards subject to this Article as it may deem necessary or appropriate to ensure that such Awards
satisfy all requirements for “performance-based compensation” within the meaning of Section 162(m)
of the Code.



     10.5. Limitations on Grants to Individual Participants. Subject to adjustment as provided in
Section 12.2, no Participant may be granted (i) Options or Stock Appreciation Rights during any
12-month period with respect to more than 1,000,000 Shares or (ii) Restricted Stock Awards,
Restricted Stock Unit Awards, Performance Awards and/or Other Share-Based Awards in any 12-month
period that are intended to comply with the performance-based exception under Code Section 162(m)
and are denominated in Shares with respect to more than 300,000 Shares (the “Limitations”). In
addition to the foregoing, the maximum dollar value that may be earned by any Participant in any
12-month period with respect to Performance Awards that are intended to comply with the
performance-based exception under Code Section 162(m) and are denominated in cash is $4,000,000.
If an Award is cancelled, the cancelled Award shall continue to be counted toward the applicable
Limitations.



11. CHANGE IN CONTROL PROVISIONS




     11.1. Impact on Certain Awards. Award Agreements may provide that in the event of a Change in
Control of the Company (as defined in Section 11.3): (i) Options and Stock Appreciation Rights
outstanding as of the date of the Change in Control shall be cancelled and terminated without
payment therefore if the Fair Market Value of one Share as of the date of the Change in Control is
less than the per Share Option exercise price or Stock Appreciation Right grant price, and (ii) all
Performance Awards shall be considered to be earned and payable (either in full or pro rata based
on the portion of Performance Period completed as of the date of the Change in Control), and any
other restriction shall lapse and such Performance Awards shall be immediately settled or
distributed.



     11.2. Assumption or Substitution of Certain Awards. (a) Except as provided in paragraph (b)
of this Section and unless otherwise provided in an Award Agreement, in the event of a Change in
Control of the Company in which the successor company assumes or replaces an Option, Stock
Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other Share-Based Award,
if a Participant’s employment with such successor company (or a subsidiary thereof) terminates
within 24 months following such Change in Control (or such other period set forth in the Award
Agreement, including prior thereto if applicable) and under the circumstances specified in the
Award Agreement: (i) Options and Stock Appreciation Rights



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outstanding as of the date of such termination of employment will immediately vest, become fully
exercisable, and may thereafter be exercised for 24 months (or the period of time set forth in the
Award Agreement), (ii) restrictions, limitations and other conditions on Restricted Stock and
Restricted Stock Units shall lapse and the Restricted Stock and Restricted Stock Units shall become
free of all restrictions, limitations and conditions and become fully vested, and (iii) the
restrictions, limitations and other conditions applicable to any Other Share-Based Awards or any
other Awards shall lapse, and such Other Share-Based Awards or such other Awards shall become free
of all restrictions, limitations and conditions and become fully vested and transferable to the
full extent of the original grant. For the purposes of this Section 11.1, an Option, Stock
Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other Share-Based Award
shall be considered assumed or replaced if following the Change in Control the assumed or
replacement award confers the right to purchase or receive, for each Share subject to the Option,
Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other Share-Based
Award immediately prior to the Change in Control, the consideration (whether stock, cash or other
securities or property) received in the transaction constituting a Change in Control by holders of
Shares for each Share held on the effective date of such transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a majority of the
outstanding shares).



     (b) In the event of a Change in Control of the Company pursuant to an event listed in clause
(ii) or (iii) of Section 11.3(a) in which cash is the sole consideration for the Shares, (i) the
Committee shall determine whether all Performance Awards shall be considered to be earned and
payable in full or pro rata based on the portion of Performance Period completed as of the date of
the Change in Control, and any other restriction shall lapse and such Performance Awards shall be
immediately settled or distributed, (ii) all Options and Stock Appreciation Rights outstanding as
of the date of the Change in Control shall immediately vest and become fully exercisable, (iii)
restrictions, limitations and other conditions applicable to Restricted Stock and Restricted Stock
Units shall lapse and the Restricted Stock and Restricted Stock Units shall become free of all
restrictions, limitations and conditions and become fully vested, and (iv) the restrictions,
limitations and other conditions applicable to any Other Share-Based Awards or any other Awards
shall lapse, and such Other Share-Based Awards or such other Awards shall become free of all
restrictions, limitations and conditions and become fully vested and transferable to the full
extent of the original grant. Unless otherwise provided in an Award Agreement in the event of any
Change in Control of the Company that is not described in the first sentence of this paragraph, to
the extent the successor company does not assume or replace an Option, Stock Appreciation Right,
Restricted Stock Award, Restricted Stock Unit Award or Other Share-Based Award: (i) those Options
and Stock Appreciation Rights outstanding as of the date of the Change in Control that are not
assumed or replaced shall immediately vest and become fully exercisable, (ii) restrictions,
limitations and other conditions applicable to Restricted Stock and Restricted Stock Units that are
not assumed or replaced shall lapse and the Restricted Stock and Restricted Stock Units shall
become free of all restrictions, limitations and conditions and become fully vested, and (iii) the
restrictions, limitations and other conditions applicable to any Other Share-Based Awards or any
other Awards that are not assumed or replaced shall lapse, and such Other Share-Based Awards or
such other Awards shall become free of all restrictions, limitations and conditions and become
fully vested and transferable to the full extent of the original grant.



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     (c) The Committee, in its discretion, may determine that, upon the occurrence of a Change in
Control of the Company, each Option and Stock Appreciation Right outstanding shall terminate within
a specified number of days after notice to the Participant, and/or that each Participant shall
receive, with respect to each Share subject to such Option or Stock Appreciation Right, an amount
equal to the excess of the Fair Market Value of such Share immediately prior to the occurrence of
such Change in Control over the exercise price per share of such Option and/or Stock Appreciation
Right; such amount to be payable in cash, in one or more kinds of stock or property (including the
stock or property, if any, payable in the transaction) or in a combination thereof, as the
Committee, in its discretion, shall determine.



     11.3. Change in Control. For purposes of the Plan, , Change in Control means the occurrence
of any of the following events:



              (a) (i) sale of all or substantially all of the assets of the Company to a Person or Group
which is not an Affiliate of Veritas Capital Management, L.P. (“Veritas”); (ii) a sale by the
Company, Veritas, or any corporation, partnership, limited liability company or other entity which
is affiliated through equity ownership or otherwise (“Affiliate”) with the Company or Veritas
resulting in more than 50% of the voting stock of the Company being held by a Person or Group that
does not include Veritas or any of its Affiliates or (iii) a merger or consolidation of the Company
into another Person which is not an Affiliate of Veritas; if and only if any such event listed in
clauses (i) through (iii) of this paragraph results in the inability of Veritas to elect a majority
of the Board of Directors of the Company or of the resulting entity; or




              (b) Approval by the shareholders of the Company of a complete liquidation or dissolution of
the Company.




12. GENERALLY APPLICABLE PROVISIONS




     12.1. Amendment and Termination of the Plan. The Board may, from time to time, alter, amend,
suspend or terminate the Plan as it shall deem advisable, subject to any requirement for
stockholder approval imposed by applicable law, including the rules and regulations of the
principal securities market on which the Shares are traded; provided that the Board may not amend
the Plan in any manner that would result in noncompliance with Rule 16b-3 of the Exchange Act; and
further provided that the Board may not, without the approval of the Company’s stockholders, amend
the Plan to (a) increase the number of Shares that may be the subject of Awards under the Plan
(except for adjustments pursuant to Section 12.2), (b) expand the types of awards available under
the Plan, (c) materially expand the class of persons eligible to participate in the Plan, (d) amend
any provision of Section 5.3, (e) increase the maximum permissible term of any Option specified by
Section 5.4 or the maximum permissible term of a Stock Appreciation Right specified by Section
6.2(d), or (f) amend any provision of Section 10.5. The Board may not, without the approval of the
Company’s stockholders, take any other action with respect to an Option or Stock Appreciation Right
that would be treated as a repricing under the rules and regulations of the principal securities
market on which the Shares are traded, including a reduction of the exercise price of an Option or
the grant price of a Stock Appreciation Right or the exchange of an Option or Stock Appreciation
Right for cash or another Award. In addition, no amendments to, or suspension or termination of,
the Plan shall in any way impair the rights of a Participant under any Award previously granted
without such Participant’s written consent.



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     12.2. Adjustments. In the event of any merger, reorganization, consolidation,
recapitalization, dividend or distribution (whether in cash, shares or other property, other than a
regular cash dividend), stock split, reverse stock split, spin-off or similar transaction or other
change in corporate structure affecting the Shares or the value thereof, such adjustments and other
substitutions shall be made to the Plan and to Awards as the Committee deems equitable or
appropriate to prevent dilution or enlargement of the rights of Participants under the Plan, taking
into consideration the accounting and tax consequences, including such adjustments in the aggregate
number, class and kind of securities that may be delivered under the Plan, the Limitations, the
maximum number of Shares that may be issued as incentive stock options and, in the aggregate or to
any one Participant, in the number, class, kind and option or exercise price of securities subject
to outstanding Awards granted under the Plan (including, if the Committee deems appropriate, the
substitution of similar options to purchase the shares of, or other awards denominated in the
shares of, another company) as the Committee may determine to be appropriate provided, however,
that the number of Shares subject to any Award shall always be a whole number.



     12.3. Transferability of Awards. Except as provided below, no Award and no Shares subject to
Awards described in Article 8 that have not been issued or as to which any applicable restriction,
performance or deferral period has not lapsed, may be sold, assigned, transferred, pledged or
otherwise encumbered, other than by will or the laws of descent and distribution, and such Award
may be exercised during the life of the Participant only by the Participant or the Participant’s
guardian or legal representative. To the extent and under such terms and conditions as determined
by the Committee, a Participant may assign or transfer an Award (each transferee thereof, a
“Permitted Assignee”) to (i) the Participant’s spouse, children or grandchildren (including any
adopted and step children or grandchildren), parents, grandparents or siblings, (ii) to a trust for
the benefit of one or more of the Participant or the Persons referred to in clause (i), (iii) to a
partnership, limited liability company or corporation in which the participant or the Persons
referred to in clause (i) are the only partners, members or shareholders or (iv) for charitable
donations; provided that such Permitted Assignee shall be bound by and subject to all of the terms
and conditions of the Plan and the Award Agreement relating to the transferred Award and shall
execute an agreement satisfactory to the Company evidencing such obligations; and provided further
that such Participant shall remain bound by the terms and conditions of the Plan. The Company
shall cooperate with any Permitted Assignee and the Company’s transfer agent in effectuating any
transfer permitted under this Section.



     12.4. Termination of Employment. The Committee shall determine and set forth in each Award
Agreement whether any Awards granted in such Award Agreement will continue to be exercisable, and
the terms of such exercise, on and after the date that a Participant ceases to be employed by or to
provide services to the Company or any Subsidiary (including as a Director), whether by reason of
death, disability, voluntary or involuntary termination of employment or services, or otherwise.
The date of termination of a Participant’s employment or services will be determined by the
Committee, which determination will be final.



     12.5. Deferral; Dividend Equivalents. The Committee shall be authorized to establish
procedures pursuant to which the payment of any Award may be deferred. Subject to the provisions
of the Plan and any Award Agreement, the recipient of an Award (including any deferred Award) may,
if so determined by the Committee, be entitled to receive, currently or on a deferred basis, cash,
stock or other property dividends, or cash payments in amounts equivalent



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to cash, stock or other property dividends on Shares (“Dividend Equivalents”) with respect to the
number of Shares covered by the Award, as determined by the Committee, in its sole discretion. The
Committee may provide that such amounts and Dividend Equivalents (if any) shall be deemed to have
been reinvested in additional Shares or otherwise reinvested and may provide that such amounts and
Dividend Equivalents are subject to the same vesting or performance conditions as the underlying
Award.




13. MISCELLANEOUS




     13.1. Tax Withholding. The Company shall have the right to make all payments or distributions
pursuant to the Plan to a Participant (or a Permitted Assignee thereof) (any such person, a
“Payee”) net of any applicable federal, state and local taxes required to be paid or withheld as a
result of (a) the grant of any Award, (b) the exercise of an Option or Stock Appreciation Right,
(c) the delivery of Shares or cash, (d) the lapse of any restrictions in connection with any Award
or (e) any other event occurring pursuant to the Plan. The Company or any Subsidiary shall have
the right to withhold from wages or other amounts otherwise payable to such Payee such withholding
taxes as may be required by law, or to otherwise require the Payee to pay such withholding taxes.
If the Payee shall fail to make such tax payments as are required, the Company or its Subsidiaries
shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise due to such Payee or to take such other action as may be necessary to satisfy
such withholding obligations. The Committee shall be authorized to establish procedures for
election by Participants to satisfy such obligation for the payment of such taxes by tendering
previously acquired Shares (either actually or by attestation, valued at their then Fair Market
Value), or by directing the Company to retain Shares (up to the Participant’s minimum required tax
withholding rate or such other rate that will not trigger a negative accounting impact) otherwise
deliverable in connection with the Award.



     13.2. Right of Discharge Reserved; Claims to Awards. Nothing in the Plan nor the grant of an
Award hereunder shall confer upon any Employee or Director the right to continue in the employment
or service of the Company or any Subsidiary or affect any right that the Company or any Subsidiary
may have to terminate the employment or service of (or to demote or to exclude from future Awards
under the Plan) any such Employee or Director at any time for any reason. Except as specifically
provided by the Committee, the Company shall not be liable for the loss of existing or potential
profit from an Award granted in the event of termination of an employment or other relationship.
No Employee or Participant shall have any claim to be granted any Award under the Plan, and there
is no obligation for uniformity of treatment of Employees or Participants under the Plan.



     13.3. Substitute Awards. Notwithstanding any other provision of the Plan, the terms of
Substitute Awards may vary from the terms set forth in the Plan to the extent the Committee deems
appropriate to conform, in whole or in part, to the provisions of the awards in substitution for
which they are granted.



     13.4. Forfeiture Events. (a) The Committee may specify in an Award Agreement that the
Participant’s rights, payments, and benefits with respect to an Award shall be subject to
reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events,
in addition to any otherwise applicable vesting or performance conditions of an Award. Such events
may include, but shall not be limited to, termination of employment for cause,



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termination of the Participant’s provision of services to the Company and/or a Subsidiary,
violation of material Company, and/or Subsidiary policies, breach of noncompetition,
non-solicitation, confidentiality, or other restrictive covenants that may apply to the
Participant, or other conduct by the Participant that is detrimental to the business or reputation
of the Company, and/or its Subsidiaries.




          (b) If the Company is required to file an accounting restatement due to the material
noncompliance of the Company, as a result of misconduct, with any financial reporting requirement
under the securities laws, if the Participant knowingly or recklessly engaged in the misconduct, or
knowingly or recklessly failed to prevent or report the misconduct, or if the Participant is one of
the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of
2002, the Participant shall reimburse the Company the amount of any payment in settlement of an
Award earned or accrued for such period as determined by the Committee following the first public
issuance or filing with the United States Securities and Exchange Commission (whichever just
occurred) of the financial document reflecting such material noncompliance.




     13.5. Stop Transfer Orders. All certificates for Shares delivered under the Plan pursuant to
any Award shall be subject to such stop-transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Shares are then listed, and any applicable federal or
state securities law, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.



     13.6. Nature of Payments. All Awards made pursuant to the Plan are in consideration of
services performed or to be performed for the Company or any Subsidiary, division or business unit
of the Company. Any income or gain realized pursuant to Awards under the Plan constitute a special
incentive payment to the Participant and shall not be taken into account, to the extent permissible
under applicable law, as compensation for purposes of any of the employee benefit plans of the
Company or any Subsidiary except as may be determined by the Committee or by the Board or board of
directors of the applicable Subsidiary.



     13.7. Other Plans. Nothing contained in the Plan shall prevent the Board from adopting other
or additional compensation arrangements, subject to stockholder approval if such approval is
required; and such arrangements may be either generally applicable or applicable only in specific
cases.



     13.8. Severability. If any provision of the Plan shall be held unlawful or otherwise invalid
or unenforceable in whole or in part by a court of competent jurisdiction, such provision shall (a)
be deemed limited to the extent that such court of competent jurisdiction deems it lawful, valid
and/or enforceable and as so limited shall remain in full force and effect, and (b) not affect any
other provision of the Plan or part thereof, each of which shall remain in full force and effect.
If the making of any payment or the provision of any other benefit required under the Plan shall be
held unlawful or otherwise invalid or unenforceable by a court of competent jurisdiction, such
unlawfulness, invalidity or unenforceability shall not prevent any other payment or benefit from
being made or provided under the Plan, and if the making of any payment in full or the provision of
any other benefit required under the Plan in full would be unlawful or otherwise invalid or
unenforceable, then such unlawfulness, invalidity or



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unenforceability shall not prevent such payment or benefit from being made or provided in part, to
the extent that it would not be unlawful, invalid or unenforceable, and the maximum payment or
benefit that would not be unlawful, invalid or unenforceable shall be made or provided under the
Plan.




     13.9. Construction. As used in the Plan, the words “include” and “including,” and variations
thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed
by the words “without limitation.”



     13.10. Unfunded Status of the Plan. The Plan is intended to constitute an “unfunded” plan for
incentive compensation. With respect to any payments not yet made to a Participant by the Company,
nothing contained herein shall give any such Participant any rights that are greater than those of
a general creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under the Plan to deliver
the Shares or payments in lieu of or with respect to Awards hereunder; provided, however, that the
existence of such trusts or other arrangements is consistent with the unfunded status of the Plan.



     13.11. Governing Law. The Plan and all determinations made and actions taken thereunder, to
the extent not otherwise governed by the Code or the laws of the United States, shall be governed
by the laws of the State of Delaware, without reference to principles of conflict of laws, and
construed accordingly.



     13.12. Effective Date of Plan; Termination of Plan. The Plan shall be effective on the date
of the approval of the Plan by the holders of the shares entitled to vote at a duly constituted
meeting of the stockholders of the Company. The Plan shall be null and void and of no effect if
the foregoing condition is not fulfilled and in such event each Award shall, notwithstanding any of
the preceding provisions of the Plan, be null and void and of no effect. Awards may be granted
under the Plan at any time and from time to time on or prior to the tenth anniversary of the
effective date of the Plan, on which date the Plan will expire except as to Awards then outstanding
under the Plan. Such outstanding Awards shall remain in effect until they have been exercised or
terminated, or have expired.



     13.13. Foreign Employees. Awards may be granted to Participants who are foreign nationals or
employed outside the United States, or both, on such terms and conditions different from those
applicable to Awards to Employees employed in the United States as may, in the judgment of the
Committee, be necessary or desirable in order to recognize differences in local law or tax policy.
The Committee also may impose conditions on the exercise or vesting of Awards in order to minimize
the Company’s obligation with respect to tax equalization for Employees on assignments outside
their home country.



     13.14. Compliance with Section 409A of the Code. This Plan is intended to comply and shall be
administered in a manner that is intended to comply with Section 409A of the Code and shall be
construed and interpreted in accordance with such intent. To the extent that an Award or the
payment, settlement or deferral thereof is subject to Section 409A of the Code, the Award shall be
granted, paid, settled or deferred in a manner that will comply with Section 409A of the Code,
including regulations or other guidance issued with respect thereto, except as otherwise determined
by the Committee. Any provision of this Plan that would cause the grant of an



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Award or the payment, settlement or deferral thereof to fail to satisfy Section 409A of the Code
shall be amended to comply with Section 409A of the Code on a timely basis, which may be made on a
retroactive basis, in accordance with regulations and other guidance issued under Section 409A of
the Code.




     13.15. Captions. The captions in the Plan are for convenience of reference only, and are not
intended to narrow, limit or affect the substance or interpretation of the provisions contained
herein.




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