exv10w2






EXHIBIT 10.2




APOLLO GROUP, INC.




AMENDED AND RESTATED

2000 STOCK INCENTIVE PLAN




ARTICLE 1




PURPOSE




     1.1 GENERAL. The Apollo Group, Inc. 2000 Stock Incentive Plan (the “Plan”) was previously
approved by the Board and the Company’s shareholders. The Plan’s purpose is to promote the success
and enhance the value of Apollo Group, Inc. (the “Company”) by linking the personal interests of
its directors, employees, officers, and executives of, and consultants and advisors to, the Company
to those of Company shareholders and by providing such individuals with an incentive for
outstanding performance in order to generate superior returns to shareholders of the Company. The
Plan is further intended to provide flexibility to the Company in its ability to motivate, attract,
and retain the services of directors, employees, officers, and executives of, and consultants and
advisors to, the Company upon whose judgment, interest, and special effort the successful conduct
of the Company’s operation is largely dependent.



ARTICLE 2




EFFECTIVE DATE




     2.1 EFFECTIVE DATE. The Plan was originally effective as of August 29, 2000 (the “Effective
Date”). The Plan has been amended and restated on several occasions since the Effective Date. The
effective date of this amended and restated Plan is March 25, 2008.



ARTICLE 3




DEFINITIONS AND CONSTRUCTION




     3.1 DEFINITIONS. When a word or phrase appears in this Plan with the initial letter
capitalized, and the word or phrase does not commence a sentence, the word or phrase shall
generally be given the meaning ascribed to it in this Section or in Sections 1.1 or 2.1 unless a
clearly different meaning is required by the context. The following words and phrases shall have
the following meanings:



          (a) “Award” means any Option, Stock Appreciation Right, Restricted Stock Award, Restricted
Stock Unit Award, Performance Share Award, or Performance-Based Award granted to a Participant
under the Plan.




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




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




          (d) “Cause” means (except as otherwise provided in an Award Agreement) if the Committee, in
its reasonable and good faith discretion, determines that the employee, consultant, or advisor (i)
fails to substantially perform his duties (other than as a result of Disability), after the Board
or the executive to which the




 









 







Participant reports delivers to the Participant a written demand for substantial performance
that specifically identifies the manner in which the Participant has not substantially performed
his duties; (ii) engages in willful misconduct or gross negligence that is materially injurious to
the Company or a Subsidiary; (iii) breaches his duty of loyalty to the Company or a Subsidiary;
(iv) unauthorized removal from the premises of the Company or a Subsidiary of a document (of any
media or form) relating to the Company or a Subsidiary or the customers of the Company or a
Subsidiary; or (v) has committed a felony or a serious crime involving moral turpitude.




          (e) “Change of Control” means and includes each of the following (except as otherwise provided
in an Award Agreement):




               (1) there shall be consummated any consolidation or merger of the Company in which the Company
is not the continuing or surviving entity, or pursuant to which Stock would be converted into cash,
securities or other property, other than a merger of the Company in which the holders of the
Company’s Stock immediately prior to the merger have the same proportionate ownership of beneficial
interest of common stock or interests of the surviving entity immediately after the merger;



               (2) there shall be consummated any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of assets aggregating more than 80% of the assets of the
Company;



               (3) the shareholders of the Company shall approve any plan or proposal for liquidation or
dissolution of the Company;



               (4) any person (as such term is used in Section 13(d) and 14(d)(2) of the Exchange Act), other
than (A) an employee benefit plan of the Company or any Subsidiary or any entity holding shares of
capital stock of the Company for or pursuant to the terms of any such employee benefit plan in its
role as an agent or trustee for such plan, or (B) any affiliate of the Company as of the Effective
Date becomes the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 50%
or more of the Stock; or



               (5) during any two-year period, individuals who at the beginning of the period do not
constitute a majority of the Board at the end of such period, unless the appointment or the
nomination for election by the Company’s shareholders of each new director was approved by a vote
of at least two-thirds of the directors then still in office who were directors at the beginning of
the period.



          (f) “Code” means the Internal Revenue Code of 1986, as amended.




          (g) “Committee” means the committee of the Board described in Article 4.




          (h) “Covered Employee” means an Employee who is a “covered employee” within the meaning of
Section 162(m) of the Code.




          (i) “Disability” shall mean any illness or other physical or mental condition of a Participant
which renders the Participant incapable of performing his customary and usual duties for the
Company, or any medically determinable illness or other physical or mental condition resulting from
a bodily injury, disease, or mental disorder that in the judgment of the Committee is permanent and
continuous in nature. The Committee may require such medical or other evidence as it deems
necessary to judge the nature and permanency of the Participant’s condition.




          (j) “Exchange Act” means the Securities Exchange Act of 1934, as amended.




          (k) “Fair Market Value” means, as of any relevant date, the closing price of the Stock on that
date as reported on the Nasdaq Global Market (or on any other national securities exchange on which
the Stock is at the time listed for trading) or, if no closing price is reported for that date, the
closing price per share of Stock on the next preceding date for which a closing price was reported.




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          (l) “Incentive Stock Option” means an Option that is intended to meet the requirements of
Section 422 of the Code or any successor provision thereto.




          (m) “Non-Employee Director” means a member of the Board who qualifies as a “NonEmployee
Director” as defined in Rule 16b-3 (b)(3) of the Exchange Act, or any successor definition adopted
by the Board.




          (n) “Non-Qualified Stock Option” means an Option that is not intended to be an Incentive Stock
Option.




          (o) “Option” means a right granted to a Participant under Article 7 of the Plan to purchase
Stock at a specified price during specified time periods. An Option may be either an Incentive
Stock Option or a Non-Qualified Stock Option.




          (p) “Participant” means a person who, as a director, employee, officer, or executive of, or
consultant or advisor providing services to, the Company or any Subsidiary, has been granted an
Award under the Plan.




          (q) “Performance-Based Awards” means the Performance Share Awards, Restricted Stock Awards and
Restricted Stock Unit Awards granted to selected Covered Employees pursuant to Articles 9, 10 and
11, but which are subject to the terms and conditions set forth in Article 12. All
Performance-Based Awards are intended to qualify as “performance-based compensation” under Section
162(m) of the Code.




          (r) “Performance Criteria” means the criteria that the Committee selects for purposes of
establishing the Performance Goals for a Participant for a Performance Period. The Performance
Criteria that will be used to establish Performance Goals are limited to the following: pre-tax or
after-tax net earnings or net income, sales or revenue growth, operating earnings, operating cash
flows, return on net assets, return on stockholders’ equity, return on assets, return on capital,
Stock price growth, stockholder returns, gross or net profit margin, earnings per share, price per
share of Stock, market share, operating income, net operating income or net operating income after
tax, operating profit or net operating profit, operating margin, earnings before interest and
taxes, earnings before taxes, earnings before interest, taxes, depreciation, amortization and
charges for stock-based compensation, earnings before interest, taxes, depreciation and
amortization, economic value-added models, cash flow objectives, cost reductions or budget
objectives, any of which may be measured either in absolute terms or as compared to any incremental
increase or as compared to results of a peer group. The Committee shall, within the time
prescribed by Section 162(m) of the Code, define in an objective fashion the manner of calculating
the Performance Criteria it selects to use for such Performance Period for such Participant.




          (s) “Performance Goals” means, for a Performance Period, the goals established in writing by
the Committee for the Performance Period based upon the Performance Criteria. Depending on the
Performance Criteria used to establish such Performance Goals the Performance Goals may be
expressed in terms of overall Company performance or the performance of a division, business unit,
or an individual. The Committee, in its discretion, may, within the time prescribed by Section
162(m) of the Code, adjust or modify the calculation of Performance Goals for such Performance
Period in order to prevent the dilution or enlargement of the rights of Participants (i) in the
event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event or
development or (ii) in recognition of, or in anticipation of, any other unusual or nonrecurring
events affecting the Company or the financial statements of the Company, or in response to, or in
anticipation of, changes in applicable laws, regulations, accounting principles or business
conditions.




          (t) “Performance Period” means the one or more periods of time, which may be of varying and
overlapping durations, as the Committee may select, over which the attainment of one or more
Performance Goals will be measured for the purpose of determining a Participant’s right to, and the
payment of, a Performance-Based Award.




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          (u) “Performance Share” means a right granted to a Participant under Article 9, to receive
cash, Stock, or other Awards, the payment of which is contingent upon achieving certain Performance
Goals established by the Committee.




          (v) “Plan” means the Apollo Group, Inc. 2000 Stock Incentive Plan, as amended and restated.




          (w) “Restricted Stock Award” means Stock granted to a Participant under Article 10 that is
subject to certain restrictions and to risk of forfeiture.




          (x) “Restricted Stock Unit Award” means restricted stock units awarded to a Participant under
Article 11 which will entitle the Participant to receive the shares of Stock underlying such Award
upon the attainment of designated performance objectives (which may, but need not, include one or
more Performance Goals) or the satisfaction of specified employment or service requirements or upon
the expiration of a designated time period following the vesting of such Award.




          (y) “Stock” means Apollo Education Group Class A common stock and such other securities of the
Company that may be substituted for such stock, pursuant to Article 14.




          (z) “Stock Appreciation Right” or “SAR” means a right granted to a Participant under Article 8
to receive a payment equal to the difference between the Fair Market Value of a share of Stock as
of the date of exercise of the SAR over the grant price of the SAR, all as determined pursuant to
Article 8.




          (aa) “Subsidiary” means any corporation or other entity of which a majority of the outstanding
voting stock or voting power is beneficially owned directly or indirectly by the Company.




ARTICLE 4




ADMINISTRATION




     4.1 COMMITTEE. The Plan shall be administered solely and exclusively by a Committee appointed
by, and serving at the discretion of, the Board. The Committee shall consist of at least three (3)
members, each of whom shall qualify as (i) a Non-Employee Director) and (ii) an “outside director”
under Code Section 162(m) and the regulations issued thereunder.



     4.2 ACTION BY THE COMMITTEE. A majority of the Committee shall constitute a quorum. The acts
of a majority of the members present at any meeting at which a quorum is present, and acts approved
in writing by a majority of the Committee in lieu of a meeting, shall be deemed the acts of the
Committee. Each member of the Committee is entitled to, in good faith, rely or act upon any report
or other information furnished to that member by any officer or other employee of the Company or
any Subsidiary, the Company’s independent certified public accountants, or any executive
compensation consultant or other professional retained by the Company to assist in the
administration of the Plan.



     4.3 AUTHORITY OF COMMITTEE. Subject to any specific designation in the Plan, the Committee
has the exclusive power, authority and discretion to:



          (a) Designate Participants to receive Awards;




          (b) Determine the type or types of Awards to be granted to each Participant;




          (c) Determine the number of Awards to be granted and the number of shares of Stock to which an
Award will relate;




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          (d) Determine the terms and conditions of any Award granted under the Plan including but not
limited to, the exercise price, grant price, or purchase price, any restrictions or limitations on
the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability
of an Award, and accelerations or waivers thereof, based in each case on such considerations as the
Committee in its sole discretion determines; provided, however, that the Committee shall not have
the authority to accelerate the vesting or waive the forfeiture of any Performance-Based Awards;




          (e) Amend, modify, or terminate any outstanding Award, with the Participant’s consent unless
the Committee has the authority to amend, modify, or terminate an Award without the Participant’s
consent under any other provision of the Plan.




          (f) Determine whether, to what extent, and under what circumstances an Award may be settled
in, or the exercise price of an Award may be paid in, cash, Stock, other Awards, or other property,
or an Award may be canceled, forfeited, or surrendered;




          (g) Prescribe the form of each Award Agreement, which need not be identical for each
Participant;




          (h) Decide all other matters that must be determined in connection with an Award;




          (i) Establish, adopt, or revise any rules and regulations as it may deem necessary or
advisable to administer the Plan; and




          (j) Make all other decisions and determinations that may be required under the Plan or as the
Committee deems necessary or advisable to administer the Plan.




     4.4 DECISIONS BINDING. The Committee’s interpretation of the Plan, any Awards granted under
the Plan, any Award Agreement and all decisions and determinations by the Committee with respect to
the Plan are final, binding, and conclusive on all parties.



ARTICLE 5




SHARES SUBJECT TO THE PLAN




     5.1 NUMBER OF SHARES. Subject to adjustment as provided in Section 14.1, the aggregate number
of shares of Stock reserved and available for grant under the Plan shall be 24,079,228 (which
number takes into account all stock splits from the Effective Date through January 30, 2008 and
after the conversion of the University of Phoenix Online common stock into the Stock). Such
authorized share reserve includes an increase of 5,000,000 shares authorized by the Board on March
24, 2008 and approved by the holders of the Company’s Class B common stock, the Company’s only
outstanding voting stock, on March 25, 2008.



     5.2 LAPSED AWARDS. To the extent that an Award terminates, expires, or lapses for any reason,
any shares of Stock subject to the Award will again be available for the grant of an Award under
the Plan.



     5.3 STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may consist, in whole or in
part, of authorized and unissued Stock, treasury Stock or Stock purchased on the open market.



     5.4 LIMITATION ON NUMBER OF SHARES SUBJECT TO AWARDS. Notwithstanding any provision in the
Plan to the contrary, and subject to adjustment as provided in Section 14.1, the maximum aggregate
number of shares of Stock with respect to one or more Awards that may be granted to any one
Participant during the Company’s fiscal year shall be one million (1,000,000).



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ARTICLE 6




ELIGIBILITY AND PARTICIPATION




     6.1 ELIGIBILITY.



          (a) GENERAL. Persons eligible to participate in this Plan include all directors, employees,
officers, and executives of, and consultants and advisors to, the Company or a Subsidiary, as
determined by the Committee.




          (b) FOREIGN PARTICIPANTS. In order to assure the viability of Awards granted to Participants
employed in foreign countries, the Committee may provide for such special terms as it may consider
necessary or appropriate to accommodate differences in local law, tax policy, or custom. Moreover,
the Committee may approve such supplements to, or amendments, restatements, or alternative versions
of the Plan as it may consider necessary or appropriate for such purposes without thereby affecting
the terms of the Plan as in effect for any other purpose; provided, however, that no such
supplements, amendments, restatements, or alternative versions shall increase the share limitations
contained in Section 5.1 of the Plan.




     6.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the Committee may, from time
to time, select from among all eligible individuals, those to whom Awards shall be granted and
shall determine the nature and amount of each Award. No individual shall have any right to be
granted an Award under this Plan.



ARTICLE 7




STOCK OPTIONS




     7.1 GENERAL. The Committee is authorized to grant Options to Participants on the following
terms and conditions:



          (a) EXERCISE PRICE. The exercise price per share of Stock under an Option shall be determined
by the Committee and set forth in the Award Agreement; provided, however, that in no event shall
the exercise price per share for any Option be less than the Fair Market Value per share of Stock
on the actual grant date of that Option.




          (b) TIME AND CONDITIONS OF EXERCISE. The Committee shall determine the time or times at which
an Option may be exercised in whole or in part. The Committee shall also determine the performance
or other conditions, if any, that must be satisfied before all or part of an Option may be
exercised. Unless otherwise provided in an Award Agreement, an Option will lapse immediately if a
Participant’s employment or services are terminated for Cause.




          (c) PAYMENT. The Committee shall determine the methods by which the exercise price of an
Option may be paid, the form of payment, including, without limitation, cash, promissory note,
shares of Stock (through actual tender or by attestation), or other property (including
broker-assisted “cashless exercise” arrangements), and the methods by which shares of Stock shall
be delivered or deemed to be delivered to Participants.




          (d) EVIDENCE OF GRANT. All Options shall be evidenced by a written Award Agreement between
the Company and the Participant. The Award Agreement shall include such additional provisions as
may be specified by the Committee.




     7.2 INCENTIVE STOCK OPTIONS. Incentive Stock Options shall be granted only to employees and
the terms of any Incentive Stock Options granted under the Plan must comply with the following
additional rules:



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          (a) EXERCISE PRICE. The exercise price per share of Stock shall be set by the Committee,
provided that the exercise price for any Incentive Stock Option may not be less than the Fair
Market Value as of the date of the grant.




          (b) EXERCISE. In no event may any Incentive Stock Option be exercisable for more than ten
years from the date of its grant.




          (c) LAPSE OF OPTION. An Incentive Stock Option shall lapse under the following circumstances.




               (1) The Incentive Stock Option shall lapse ten years from the date it is granted, unless an
earlier time is set in the Award Agreement.



               (2) The Incentive Stock Option shall lapse upon termination of employment for Cause or for any
other reason, other than the Participant’s death or Disability, unless otherwise provided in the
Award Agreement.



               (3) If the Participant terminates employment on account of Disability or death before the
Option lapses pursuant to paragraph (1) or (2) above, the Incentive Stock Option shall lapse,
unless it is previously exercised, on the earlier of (i) the date on which the Option would have
lapsed had the Participant not become Disabled or lived and had his employment status (i.e.,
whether the Participant was employed by the Company on the date of his Disability or death or had
previously terminated employment) remained unchanged; or (ii) 12 months after the date of the
Participant’s termination of employment on account of Disability or death. Upon the Participant’s
Disability or death, any Incentive Stock Options exercisable at the Participant’s Disability or
death may be exercised by the Participant’s legal representative or representatives, by the person
or persons entitled to do so under the Participant’s last will and testament, or, if the
Participant fails to make testamentary disposition of such Incentive Stock Option or dies
intestate, by the person or persons entitled to receive the Incentive Stock Option under the
applicable laws of descent and distribution.



          (d) INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair Market Value (determined as of the time
an Award is made) of all shares of Stock with respect to which Incentive Stock Options are first
exercisable by a Participant in any calendar year may not exceed $100,000.00 or such other
limitation as imposed by Section 422(d) of the Code, or any successor provision. To the extent
that Incentive Stock Options are first exercisable by a Participant in excess of such limitation,
the excess shall be considered Non-Qualified Stock Options.




          (e) TEN PERCENT OWNERS. An Incentive Stock Option shall be granted to any individual who, at
the date of grant, owns stock possessing more than ten percent of the total combined voting power
of all classes of Stock of the Company only if such Option is granted at a price that is not less
than 110% of Fair Market Value on the date of grant and the Option is exercisable for no more than
five years from the date of grant.




          (f) EXPIRATION OF INCENTIVE STOCK OPTIONS. No Award of an Incentive Stock Option may be made
pursuant to this Plan after the tenth anniversary of the Effective Date.




          (g) RIGHT TO EXERCISE. During a Participant’s lifetime, an Incentive Stock Option may be
exercised only by the Participant.




ARTICLE 8




STOCK APPRECIATION RIGHTS




     8.1 GRANT OF SARS. The Committee is authorized to grant SARs to Participants on the following
terms and conditions:



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          (a) RIGHT TO PAYMENT. Upon the exercise of a Stock Appreciation Right, the Participant to
whom it is granted has the right to receive the excess, if any, of:




               (1) The Fair Market Value of a share of Stock on the date of exercise; over



               (2) The exercise price per share of the Stock Appreciation Right as determined by the
Committee, which shall in no event be less than the Fair Market Value per share of Stock on the
actual grant date of that Stock Appreciation Right.



          (b) OTHER TERMS. All awards of Stock Appreciation Rights shall be evidenced by an Award
Agreement. The terms, methods of exercise, methods of settlement, form of consideration payable in
settlement, and any other terms and conditions of any Stock Appreciation Right shall be determined
by the Committee at the time of the grant of the Award and shall be reflected in the Award
Agreement.




ARTICLE 9




PERFORMANCE SHARES




     9.1 GRANT OF PERFORMANCE SHARES. The Committee is authorized to grant Performance Shares to
Participants on such terms and conditions as may be selected by the Committee. The Committee shall
have the complete discretion to determine the number of Performance Shares granted to each
Participant. All Awards of Performance Shares shall be evidenced by an Award Agreement.



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     9.2 RIGHT TO PAYMENT. A grant of Performance Shares gives the Participant rights, valued as
determined by the Committee, and payable to, or exercisable by, the Participant to whom the
Performance Shares are granted, in whole or in part, as the Committee shall establish at grant or
thereafter. The Committee shall set performance goals and other terms or conditions to payment of
the Performance Shares in its discretion which, depending on the extent to which they are met, will
determine the number and value of Performance Shares that will be paid to the Participant.



     9.3 OTHER TERMS. Performance Shares may be payable in cash, Stock, or other property, and
have such other terms and conditions as determined by the Committee and reflected in the Award
Agreement.



ARTICLE 10




RESTRICTED STOCK AWARDS




     10.1 GRANT OF RESTRICTED STOCK. The Committee is authorized to make Awards of Restricted
Stock to Participants in such amounts and subject to such terms and conditions as determined by the
Committee. All Awards of Restricted Stock shall be evidenced by a Restricted Stock Award
Agreement.



     10.2 ISSUANCE AND RESTRICTIONS. Restricted Stock shall be subject to such restrictions on
transferability and other restrictions as the Committee may impose (including, without limitation,
limitations on the right to vote Restricted Stock or the right to receive dividends on the
Restricted Stock). These restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, or otherwise, as the Committee determines at the time of
the grant of the Award or thereafter.



     10.3 FORFEITURE. Except as otherwise determined by the Committee at the time of the grant of
the Award or thereafter, upon termination of employment during the applicable restriction period,
Restricted Stock that is at that time subject to restrictions shall be forfeited, provided,
however, that the Committee may provide in any Restricted Stock Award Agreement 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 restrictions or forfeiture conditions relating to Restricted Stock.



     10.4 CERTIFICATES FOR RESTRICTED STOCK. Restricted Stock granted under the Plan may be
evidenced in such manner as the Committee shall determine, if certificates representing shares of
Restricted Stock are registered in the name of the Participant, certificates must bear an
appropriate legend referring to the terms, conditions, and restrictions applicable to such
Restricted Stock, and the Company may, at its discretion, retain physical possession of the
certificate until such time as all applicable restrictions lapse.



ARTICLE 11




RESTRICTED STOCK UNIT AWARDS




     11.1 GRANT OF RESTRICTED STOCK UNIT AWARDS. The Committee is authorized to grant Restricted
Stock Unit Awards to Participants on such terms and conditions as may be selected by the Committee.
The Committee shall have the complete discretion to determine the number of restricted stock units
subject to each such Award. All Restricted Stock Unit Awards shall be evidenced by an Award
Agreement.



     11.2 VESTING AND ISSUANCE PROVISIONS.



          (a) Shares of Stock issued pursuant to Restricted Stock Unit Awards may, in the discretion of
the Committee, entitle the Participants to receive the shares of Stock underlying those Awards upon
the attainment of designated performance objectives (which may, but need not, include one or more
Performance Goals) or the satisfaction of specified employment or service requirements or upon the
expiration of a designated time period or the occurrence of a designated event following the
vesting of the Award , including (without limitation) a deferred




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distribution date following the termination of the Participant’s employment or service. The
vesting and issuance provisions applicable to each Restricted Stock Unit Award shall be set forth
in the Award Agreement.




          (b) The Committee shall also have the discretionary authority, consistent with Code Section
162(m), to structure one or more Restricted Stock Unit Awards so that the shares of Common Stock
subject to those Awards shall vest upon the achievement of pre-established corporate performance
objectives based on one or more Performance Goals and measured over the performance period
specified by the Committee at the time of the Award.




          (c) The Participant shall not have any stockholder rights with respect to the shares of Stock
subject to a Restricted Stock Unit Award until that Award vests and the shares of Stock are
actually issued thereunder. However, dividend-equivalent units may be paid or credited, either in
cash or in actual or phantom shares of Stock, on outstanding Restricted Stock Unit Awards, subject
to such terms and conditions as the Committee may deem appropriate.




          (d) Outstanding Restricted Stock Unit Awards shall automatically terminate, and no shares of
Stock shall actually be issued in satisfaction of those Awards, if the performance goals or
employment or service requirements established for those Awards are not attained or satisfied. The
Committee, however, shall have the discretionary authority to issue vested shares of Common Stock
under one or more outstanding Restricted Stock Unit Awards as to which the designated performance
goals or employment or service requirements have not been attained or satisfied. However, no
vesting requirements tied to the attainment of Performance Goals may be waived with respect to
Awards which were intended, at the time those Awards were made, to qualify as performance-based
compensation under Code Section 162(m), except as otherwise provided in Section 11.2(e) or Section
13.8.





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          (e) Each Restricted Stock Unit Award outstanding at the time of a Change in Control shall vest at
that time, and the shares of Stock subject to those restricted stock units shall be issued as soon
as administratively practicable following the closing of the Change in Control transaction, subject
to the Company’s collection of all applicable withholding taxes, or shall otherwise be converted
into the right to receive the same consideration per share of Stock payable to the actual holders
of the Stock in consummation of the Changer in Control and distributed at the same time as those
stockholder payments. Such automatic vesting of the Restricted Stock Unit Awards shall occur
pursuant to this Section 11.(e), even though such acceleration may result in their loss of
performance-based status under Code Section 162(m).




ARTICLE 12




PERFORMANCE-BASED AWARDS




     12.1 PURPOSE. The purpose of this Article 12 is to provide the Committee the ability to
qualify the Performance Share Awards under Article 9, the Restricted Stock Awards under Article 10
and the Restricted Stock Unit Awards under Article 11 as “performance-based compensation” under
Section 162(m) of the Code. If the Committee, in its discretion, decides to grant a
Performance-Based Award to a Covered Employee, the provisions of this Article 12 shall control over
any contrary provision contained in Articles 9, 10 or 11.



     12.2 APPLICABILITY. This Article 12 shall apply only to those Covered Employees selected by
the Committee to receive Performance-Based Awards. The Committee may, in its discretion, grant
Restricted Stock Awards, Performance Share Awards or Restricted Stock Unit Awards to Covered
Employees that do not satisfy the requirements of this Article 12. The designation of a Covered
Employee as a Participant for a Performance Period shall not in any manner entitle the Participant
to receive an Award for the period. Moreover, designation of a Covered Employee as a Participant
for a particular Performance Period shall not require designation of such Covered Employee as a
Participant in any subsequent Performance Period and designation of one Covered Employee as a
Participant shall not require designation of any other Covered Employees as a Participant in such
period or in any other period.



     12.3 DISCRETION OF COMMITTEE WITH RESPECT TO PERFORMANCE AWARDS. With regard to a particular
Performance Period, the Committee shall have full discretion to select the length of such
Performance Period, the type of Performance-Based Awards to be issued, the kind and/or level of the
Performance Goal, and whether the Performance Goal is to apply to the Company, a Subsidiary or any
division or business unit thereof.



     12.4 PAYMENT OF PERFORMANCE AWARDS. Unless otherwise provided in the relevant Award
Agreement, a Participant must be employed by the Company or a Subsidiary on the last day of the
Performance Period to be eligible for a Performance Award for such Performance Period.
Furthermore, a Participant shall be eligible to receive payment under a Performance-Based Award for
a Performance Period only if the Performance Goals for such



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period are achieved. In determining the actual size of an individual Performance-Based Award,
the Committee may reduce or eliminate the amount of the Performance-Based Award earned for the
Performance Period, if in its sole and absolute discretion, such reduction or elimination is
appropriate.




     12.5 MAXIMUM AWARD PAYABLE. The aggregate maximum Performance-Based Award payable to any one
Participant under the Plan for Performance Period is one million (1,000,000) shares of Stock,
subject to adjustment as provided in Section 14.1. In the event the Performance-Based Award is
paid in cash, such maximum Performance-Based Award shall be determined by multiplying one million
(1,000,000), subject to adjustment as provided in Section 14.1, by the Fair Market Value of one
share of the applicable Stock as of the date of grant of the Performance-Based Award.



ARTICLE 13




PROVISIONS APPLICABLE TO AWARDS




     13.1 STAND-ALONE AND TANDEM AWARDS. Awards granted under the Plan may, in the discretion of
the Committee, be granted either alone, in addition to, or in tandem with, any other Award granted
under the Plan. Awards granted in addition to or in tandem with other Awards may be granted either
at the same time as or at a different time from the grant of such other Awards.



     13.2 EXCHANGE PROVISIONS. The Committee may at any time offer to exchange or buy out any
previously granted Award for a payment in cash, Stock, or another Award, based on the terms and
conditions the Committee determines and communicates to the Participant at the time the offer is
made.



     13.3 TERM OF AWARD. The term of each Award shall be for the period as determined by the
Committee, provided that in no event shall the term of any Incentive Stock Option or a Stock
Appreciation Right granted in tandem with the Incentive Stock Option exceed a period of ten years
from the date of its grant.



     13.4 FORM OF PAYMENT FOR AWARDS. Subject to the terms of the Plan and any applicable law or
Award Agreement, payments or transfers to be made by the Company or a Subsidiary on the grant or
exercise of an Award may be made in such forms as the Committee determines at or after the time of
grant, including without limitation, cash, promissory note, Stock, other Awards, or other property,
or any combination, and may be made in a single payment or transfer, in installments, or on a
deferred basis, in each case determined in accordance with rules adopted by and at the discretion
of, the Committee.



     13.5 LIMITS ON TRANSFER. No right or interest of a Participant in any Award may be pledged,
encumbered, or hypothecated to or in favor of any party other than the Company or a Subsidiary, or
shall be subject to any lien, obligation, or liability of such Participant to any other party other
than the Company or a Subsidiary. Except as otherwise provided by the Committee, no Award shall be
assignable or transferable by a Participant other than by will or the laws of descent and
distribution.



     13.6 BENEFICIARIES. Notwithstanding Section 13.5, a Participant may, in the manner determined
by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive
any distribution with respect to any Award upon the Participant’s death. A beneficiary, legal
guardian, legal representative, or other person claiming any rights under the Plan is subject to
all terms and conditions of the Plan and any Award Agreement applicable to the Participant, except
to the extent the Plan and Award Agreement otherwise provide, and to any additional restrictions
deemed necessary or appropriate by the Committee. If the Participant is married, a designation of
a person other than the Participant’s spouse as his beneficiary with respect to more than 50% of
the Participant’s interest in the Award shall not be effective without the written consent of the
Participant’s spouse. If no beneficiary has been designated or survives the Participant, payment
shall be made to the person entitled thereto under the Participant’s will or the laws of descent
and distribution. Subject to the foregoing, a beneficiary designation may be changed or revoked by
a Participant at any time provided the change or revocation is filed with the Committee.



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     13.7 STOCK CERTIFICATES. All Stock certificates delivered under the Plan are subject to any
stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply
with Federal or state securities laws, rules and regulations and the rules of any national
securities exchange or automated quotation system on with the Stock is listed, quoted, or traded.
The Committee may place legends on any Stock certificate to reference restrictions applicable to
the Stock.



     13.8 ACCELERATION UPON A CHANGE OF CONTROL. If a Change of Control occurs, all outstanding
Options, Stock Appreciation Rights, and other Awards that relate to the grant of Stock shall become
fully exercisable and all restrictions on such outstanding Awards shall lapse. Shares subject to
outstanding Restricted Stock Unit Awards or Performance Share Awards shall vest and become
immediately issuable at the closing of such Change in Control (or shall otherwise be converted into
the right to receive the same consideration per share of Stock payable to the actual holders of
the Stock in consummation of the Changer in Control and distributed at the same time as those
stockholder payments). To the extent that this provision causes Incentive Stock Options to exceed
the dollar limitation set forth in Section 7.2(d), the excess Options shall be deemed to be
Non-Qualified Stock Options. Upon, or in anticipation of, such an event, the Committee may cause
every Award outstanding hereunder to terminate at a specific time in the future and shall give each
Participant the right to exercise such Awards during a period of time as the Committee, in its sole
and absolute discretion, shall determine.



ARTICLE 14




CHANGES IN CAPITAL STRUCTURE




     14.1 GENERAL. In the event stock dividend is declared upon the Stock, the number of shares of
Stock subject to the Plan and subject to each outstanding Award shall be increased proportionately,
and the exercise price or issue price per share (if any) in effect for that Award shall also be
equitably adjusted to reflect such stock dividend: provided, however, that that the aggregate
exercise price or issue price shall remain the same. Should any change be made to the outstanding
Stock by reason of any stock split or split-up, recapitalization, combination of shares, exchange
of shares, spin-off transaction, extraordinary dividend or distribution or other change affecting
the outstanding Stock as a class effected without the Company’s receipt of consideration, or should
the value of outstanding shares of Stock be substantially reduced as a result of a spin-off
transaction or an extraordinary dividend or distribution, or should there occur any merger,
consolidation or other reorganization, then equitable adjustments shall be made by the Committee to
the number and/or class of securities issuable under the Plan, the maximum number and/or class of
securities for which Awards may be made to any one Participant and the number and/or class of
securities subject to each outstanding Award and the exercise price or issue per share (if any) in
effect for that Award in such manner as the Committee deems appropriate to preclude the dilution or
enlargement of rights under such Award, and such adjustments shall be final, binding and
conclusive; provided, however, that in the event of a Change of Control, the adjustments (if any)
shall be made in accordance with the applicable provisions of Section 13.8 governing Change of
Control transactions. Notwithstanding the above, the conversion of any convertible securities of
the Company shall not be deemed to have been “effected without the Company’s receipt of
consideration.



ARTICLE 15




AMENDMENT, MODIFICATION, AND TERMINATION




     15.1 AMENDMENT, MODIFICATION, AND TERMINATION. With the approval of the Board, at any time
and from time to time, the Committee may terminate, amend or modify the Plan; provided, however,
that to the extent necessary and desirable to comply with any applicable law, regulation, or stock
exchange rule, the Company shall obtain shareholder approval of any Plan amendment in such a manner
and to such a degree as required.



     15.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or modification of the Plan shall
adversely affect in any material way any Award previously granted under the Plan, without the
written consent of the Participant.



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ARTICLE 16




GENERAL PROVISIONS




     16.1 NO RIGHTS TO AWARDS. No Participant, employee, or other person shall have any claim to
be granted any Award under the Plan, and neither the Company nor the Committee is obligated to
treat Participants, employees, and other persons uniformly.



     16.2 NO SHAREHOLDER RIGHTS. No Award gives the Participant any of the rights of a shareholder
of the Company unless and until shares of Stock are in fact issued to such person in connection
with such Award.



     16.3 WITHHOLDING. The Company or any Subsidiary shall have the authority and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to
satisfy Federal, state, and local taxes (including the Participant’s FICA obligation) required by
law to be withheld with respect to any taxable event arising as a result of this Plan. With the
Committee’s consent, a Participant may elect to have the Company withhold from the



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Stock that would otherwise be received upon the exercise of any Option or Stock Appreciation
Right or the issuance of Stock pursuant to any vested Restricted Stock Unit Award, a number of
shares of Stock having a Fair Market Value equal to the minimum statutory amount necessary to
satisfy the Participant’s applicable federal, state, local and foreign income and employment tax
withholding obligations with respect to such exercise or issuance.




     16.4 NO RIGHT TO EMPLOYMENT OR SERVICES. Nothing in the Plan or any Award Agreement shall
interfere with or limit in any way the right of the Company or any Subsidiary to terminate any
Participant’s employment or services at any time, nor confer upon any Participant any right to
continue in the employ of the Company or any Subsidiary.



     16.5 UNFUNDED STATUS OF AWARDS. The Plan is intended to be an “unfunded” plan for incentive
compensation. With respect to any payments not yet made to a Participant pursuant to an Award,
nothing contained in the Plan or any Award Agreement shall give the Participant any rights that are
greater than those of a general creditor of the Company or any Subsidiary.



     16.6 INDEMNIFICATION. To the extent allowable under applicable law, each member of the
Committee or of the Board shall be indemnified and held harmless by the Company from any loss,
cost, liability, or expense that may be imposed upon or reasonably incurred by such member in
connection with or resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action or failure to act under the
Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in
such action, suit, or proceeding against him or her provided he or she gives the Company an
opportunity, at its own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be entitled under the
Company’s Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that
the Company may have to indemnify them or hold them harmless.



     16.7 RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be taken into account in
determining any benefits under any pension, retirement, savings, profit sharing, group insurance,
welfare or other benefit plan of the Company or any Subsidiary.



     16.8 EXPENSES. The expenses of administering the Plan shall be borne by the Company and its
Subsidiaries.



     16.9 TITLES AND HEADINGS. The titles and headings of the Sections in the Plan are for
convenience of reference only, and in the event of any conflict, the text of the Plan, rather than
such titles or headings, shall control.



     16.10 FRACTIONAL SHARES. No fractional shares of stock shall be issued and the Committee
shall determine, in its discretion, whether cash shall be given in lieu of fractional shares or
whether such fractional shares shall be eliminated by rounding up or down as appropriate.



     16.11 SECURITIES LAW COMPLIANCE. With respect to any person who is, on the relevant date,
obligated to file reports under Section 16 of the Exchange Act, transactions under this Plan are
intended to comply with all applicable conditions of Rule 16b-3 or its successors under the
Exchange Act. To the extent any provision of the Plan or action by the Committee fails to so
comply, it shall be void to the extent permitted by law and voidable as deemed advisable by the
Committee.



     16.12 GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company to make payment of
awards in Stock or otherwise shall be subject to all applicable laws, rules, and regulations, and
to such approvals by government agencies as may be required. The Company shall be under no
obligation to register under the Securities Act of 1933, as amended, any of the shares of Stock
paid under the Plan. If the shares paid under the Plan may in certain circumstances be exempt from
registration under the Securities Act of 1933, as amended, the Company may restrict the transfer of
such shares in such manner as it deems advisable to ensure the availability of any such exemption.



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     16.13 GOVERNING LAW. The Plan and all Award Agreements shall be construed in accordance with
and governed by the laws of the State of Arizona.




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