exv10w1



 





Exhibit 10.1




New language added by the Plan Amendments is underlined.




THE CORPORATE EXECUTIVE BOARD COMPANY

2004 STOCK INCENTIVE PLAN

(as amended July 18, 2005)



1. Purpose




     The purpose of The Corporate Executive Board Company 2004 Stock Incentive Plan (the “Plan”) is
to advance the interests of The Corporate Executive Board Company (the “Company”) by stimulating
the efforts of employees, officers and, to the extent provided by Section 5(d) and Section 5(e),
non-employee directors and other service providers, in each case who are selected to be
participants, by heightening the desire of such persons to continue in working toward and
contributing to the success and progress of the Company. The Plan supersedes the Company’s 1999
Stock Option Plan, 2001 Stock Option Plan and 2002 Non-Executive Stock Incentive Plan with respect
to future awards, and provides for the grant of Incentive and Non-Qualified Stock Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units and Deferred Stock Units, any of
which may be performance-based, and for Incentive Bonuses, which may be paid in cash or stock or a
combination thereof, as determined by the Administrator.



2. Definitions




     As used in the Plan, the following terms shall have the meanings set forth below:




     (a) “Administrator” means the Administrator of the Plan in accordance with Section 18.




     (b) “Award” means an Incentive Stock Option, Non-Qualified Stock Option, Stock Appreciation Right,
Restricted Stock, Restricted Stock Unit, Deferred Stock Unit or Incentive Bonus granted to a Participant
pursuant to the provisions of the Plan, any of which the Administrator may structure to qualify in whole
or in part as a Performance Award.




     (c) “Award Agreement” means a written agreement or other instrument as may be approved from time to time
by the Administrator implementing the grant of each Award. An Agreement may be in the form of an
agreement to be executed by both the Participant and the Company (or an authorized representative of the
Company) or certificates, notices or similar instruments as approved by the Administrator.




     (d) “Board of Directors” or “Board” means the Board of Directors of the Company.




     (e) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rulings and
regulations issues thereunder.




     (f) “Common Stock” means the Company’s common stock, par value $.01, subject to adjustment as provided in
Section 12.




     (g) “Company” means The Corporate Executive Board Company, a Delaware corporation.




     (h) “Deferred Stock Unit” or “DSU” means an Award granted pursuant to Section 9 representing the unfunded
and unsecured right to receive Common Stock or cash or a combination thereof, as determined by the
Administrator, at the end of a specified deferral period.




     (i) “Incentive Bonus” means a bonus opportunity awarded under Section 10 pursuant to which a Participant
may become entitled to receive an amount based on satisfaction of such performance criteria as are
specified in the Award Agreement.




     (j) “Incentive Stock Option” or “ISO” means a stock option that is intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code.




     (k) “Nonemployee Director” means each person who is, or is elected to be, a member of the Board of
Directors and who is not an employee of the Company or any Subsidiary.




     (l) “Option” means an ISO and/or a NQSO granted pursuant to Section 6 of the Plan.




     (m) “Participant” means any individual described in Section 3 to whom Awards have been granted from time
to time by the Administrator and any authorized transferee of such individual.




     (n) “Performance Award” means an Award, the grant, issuance, retention, vesting or settlement of which is
subject to



 









 







satisfaction of one or more Qualifying Performance Criteria established pursuant to Section 13.




     (o) “Plan” means The Corporate Executive Board Company 2004 Stock Incentive Plan as set forth herein and
as amended from time to time.




     (p) “Prior Plans” mean The Corporate Executive Board Company 1999 Stock Option Plan, The Corporate
Executive Board Company 2001 Stock Option Plan and The Corporate Executive Board Company 2002
Non-Executive Stock Incentive Plan.




     (q) “Qualifying Performance Criteria” has the meaning set forth in Section 13(b).




     (r) “Restricted Stock” means shares of Common Stock granted pursuant to Section 8 of the Plan.




     (s) “Restricted Stock Unit” means an Award granted to a Participant pursuant to Section 8 pursuant to
which shares of Common Stock may be issued in the future.




     (t) “Retirement” has the meaning specified by the Administrator in the terms of an Award Agreement or, in
the absence of any such term, shall mean, with respect to Participants other than Nonemployee Directors,
retirement from active employment with the Company and its Subsidiaries (i) at or after age 55 and with
the approval of the Administrator or (ii) at or after age 65. The determination of the Administrator as
to an individual’s Retirement shall be conclusive on all parties.




     (u) “Stock Appreciation Right” means a right granted pursuant to Section 7 of the Plan that entitles the
Participant to receive, in cash or shares of Common Stock or a combination thereof, as determined by the
Administrator, value equal to or otherwise based on the excess of (i) the market price of a specified
number of shares of Common Stock at the time of exercise over (ii) the exercise price of the right, as
established by the Administrator on the date of grant.




     (v) “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company where each of the corporations in the unbroken chain other than the last
corporation owns stock possessing at least 50 percent or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain, and if specifically determined by the
Administrator in the context other than with respect to Incentive Stock Options, may include an entity in
which the Company has a significant ownership interest or that is directly or indirectly controlled by
the Company.




     (w) “Termination of employment” means ceasing to serve as a full-time employee of the Company and its
Subsidiaries or, with respect to a Nonemployee Director or service provider, ceasing to serve as such for
the Company, except that (i) subject to Section 6(c), an approved leave of absence or approved employment
on a less than full-time basis may constitute employment as determined by the Administrator, (ii) the
Administrator may determine that a transition of employment to service with a partnership, joint venture
or corporation not meeting the requirements of a Subsidiary in which the Company or a Subsidiary is a
party is not considered a “termination of employment,” (iii) service as a member of the Board of
Directors shall constitute continued employment with respect to Awards granted to a Participant while he
or she served as an employee and (iv) service as an employee of the Company or a Subsidiary shall
constitute continued employment with respect to Awards granted to a Participant while he or she served as
a member of the Board of Directors. The Administrator shall determine whether any corporate transaction,
such as a sale or spin-off of a division or subsidiary that employs a Participant, shall be deemed to
result in a termination of employment with the Company and its Subsidiaries for purposes of any affected
Participant’s Options, and the Administrator’s decision shall be final and binding.




     (x) “Total and Permanent Disablement” has the meaning specified by the Administrator in the terms of an
Award Agreement or, in the absence of any such term or in the case of an Option intending to qualify as
an ISO, the inability to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than 12 months. The determination of the
Administrator as to an individual’s Total and Permanent Disablement shall be conclusive on all parties.



3. Eligibility




     Any person who is a current or prospective officer or employee (including any director who is
also an employee, in his or her capacity as such) of the Company or of any Subsidiary shall be
eligible for selection by the Administrator for the grant of Awards hereunder. To the extent
provided by Section 5(e), any Nonemployee Director shall be eligible for selection by the
Administrator for the grant of Awards hereunder. In addition, to the extent provided by Section
5(d), any service provider who has been retained to provide consulting, advisory or other services
to the Company or to any Subsidiary shall be eligible for selection by the Administrator for the
grant of Awards hereunder. Options intending to qualify as ISOs may only be granted to employees of
the Company or any Subsidiary within the meaning of the Code, as selected by the Administrator. For
purposes of this Plan, the Chairman of the Board’s status as an employee shall be determined by the
Administrator.



 









 





4. Effective Date and Termination of Plan




     This Plan was adopted by the Board of Directors of the Company as of June 11, 2004, and
originally became effective (the “Effective Date”) when it was approved by the Company’s
stockholders on July 28, 2004. This amendment and restatement of the Plan was adopted by the Board
of Directors of the Company as of July 18, 2005, and will become effective when it is approved by
the Company’s stockholders. The Plan shall remain available for the grant of Awards until the tenth
(10th) anniversary of the Effective Date. Notwithstanding the foregoing, the Plan may be terminated
at such earlier time as the Board of Directors may determine. Termination of the Plan will not
affect the rights and obligations of the Participants and the Company arising under Awards
theretofore granted and then in effect.



5. Shares Subject to the Plan and to Awards




     (a) Aggregate Limits. The aggregate number of shares of Common Stock issuable pursuant to all
Awards shall not exceed 4,000,000, plus any shares subject to outstanding awards under the Prior
Plans as of June 11, 2004 that on or after such date cease for any reason to be subject to such
awards (other than by reason of exercise or settlement of the awards to the extent they are
exercised for or settled in vested and nonforfeitable shares), up to an aggregate maximum of
9,400,000 shares. Any shares of Common Stock granted as Options or Stock Appreciation Rights shall
be counted against this limit as one (1) share for every one (1) share granted. Any shares of
Common Stock granted as Awards other than Options or Stock Appreciation Rights shall be counted
against this limit as two and one-half (2.5) shares for every one (1) share granted. The aggregate
number of shares of Common Stock available for grant under this Plan and the number of shares of
Common Stock subject to outstanding Awards shall be subject to adjustment as provided in Section
12. The shares of Common Stock issued pursuant to Awards granted under this Plan may be shares that
are authorized and unissued or shares that were reacquired by the Company, including shares
purchased in the open market.



     (b) Issuance of Shares. For purposes of Section 5(a), the aggregate number of shares of Common
Stock issued under this Plan at any time shall equal only the number of shares actually issued upon
exercise or settlement of an Award and shall not include shares subject to Awards that have been
canceled, expired or forfeited. Notwithstanding the foregoing, Shares subject to an Award under the
Plan may not again be made available for issuance under Awards if such shares are: (i) shares that
were subject to a stock-settled Stock Appreciation Right or Stock Option and that were not issued
upon the net settlement or net exercise of such Stock Appreciation Right or Stock Option, or (ii)
shares delivered to or retained by the Company to pay the exercise price or withholding taxes
related to an Award.



     (c) Tax Code Limits. The aggregate number of shares of Common Stock subject to Options and
Stock Appreciation Rights granted under this Plan during any calendar year to any one Participant
shall not exceed 500,000, and the aggregate number of shares of Common Stock issued or issuable
under all Awards granted under this Plan other than Options or Stock Appreciation Rights during any
calendar year to any one Participant shall not exceed 200,000, which numbers shall be calculated
and adjusted pursuant to Section 12 only to the extent that such calculation or adjustment will not
affect the status of any Award intended to qualify as “performance based compensation” under Code
Section 162(m). The aggregate number of shares of Common Stock that may be issued pursuant to the
exercise of ISOs granted under this Plan shall not exceed 4,000,000, which number shall be
calculated and adjusted pursuant to Section 12 only to the extent that such calculation or
adjustment will not affect the status of any option intended to qualify as an ISO under Code
Section 422. The maximum amount payable pursuant to that portion of an Incentive Bonus granted
under this Plan for any calendar year to any Participant that is intended to satisfy the
requirements for “performance based compensation” under Code Section 162(m) shall not exceed four
million dollars ($4,000,000).



     (d) Awards to Service Providers. The aggregate number of shares of Common Stock issued under
this Plan pursuant to all Awards granted to service providers shall not exceed 100,000.



     (e) Director Awards. The aggregate number of shares of Common Stock subject to Options and
Stock Appreciation Rights granted under this Plan during any calendar year to any one Nonemployee
Director shall not exceed 30,000, and the aggregate number of shares of Common Stock issued or
issuable under all Awards granted under this Plan other than Options or Stock Appreciation Rights
during any calendar year to any one Nonemployee Director shall not exceed 12,000; provided,
however, that in the calendar year in which a Nonemployee Director first joins the Board of
Directors, the maximum number of shares subject to Awards granted to the Participant may be up to
two hundred percent (200%) of the number of shares set forth in the foregoing limits.



6. Options




     (a) Option Awards. Options may be granted at any time and from time to time prior to the
termination of the Plan, to Participants selected by the Administrator. No Participant shall have
any rights as a stockholder with respect to any shares of stock subject to Option hereunder until
said shares have been issued. Each Option shall be evidenced by an Award Agreement. Options granted
pursuant to the Plan need not be identical but each Option must contain and be subject to the terms
and conditions set forth below.



     (b) Price. The purchase price under each Option shall be established by the Administrator,
provided that in no event will the purchase price be less than the market price of the Common Stock
on the date of grant, except for Options that the Participant pays for or as to which the
Participant foregoes other compensation equal in value to the amount of such discount. The purchase
price of any Option may be paid in Common Stock, cash or a combination thereof, as determined by
the Administrator, including an irrevocable



 









 







commitment by a broker to pay over such amount from a sale of the shares issuable under an Option,
the delivery of previously owned Common Stock and withholding of Common Stock deliverable upon
exercise.



     (c) No Repricing. Other than in connection with a change in the Company’s capitalization (as
described in Section 12) the exercise price of an Option may not be reduced without stockholder
approval (including canceling previously awarded Options and regranting them with a lower exercise
price).



     (d) Duration and Exercise or Termination of Option. The Administrator shall have the right to
make the timing of the ability to exercise any Option subject to continued employment, the passage
of time and/or such performance requirements as deemed appropriate by the Administrator, provided
that in no event shall any Option become exercisable sooner than one (1) year after the date of
grant except in the event of the Participant’s death or Total and Permanent Disablement or a change
of control (as defined in the applicable Award Agreement). Unless the Administrator provides
otherwise Options shall become exercisable 25 percent per year beginning one (1) year after the
date of the grant. Unless provided otherwise in the applicable Award Agreement, the vesting period
and/or exercisability of an Option shall be adjusted by the Administrator during or to reflect the
effects of any period during which the Participant is on an approved leave of absence or is
employed on a less than full-time basis. Each Option shall expire within a period of not more than
seven (7) years from the date of grant.



     (e) Termination of Employment: Unless an Option earlier expires upon the expiration date
established pursuant to Section 6(d), upon the termination of the Participant’s employment, his or
her rights to exercise an Option then held shall be only as follows, unless the Administrator
specifies otherwise:




     (1) Death. Upon the death of a Participant while in the employ of
the Company or any Subsidiary or while serving as a member of the
Board of Directors, all of the Participant’s Options then held shall
be exercisable by his or her estate, heir or beneficiary at any time
during the twelve (12) months next succeeding the date of death. Any
and all of the deceased Participant’s Options that are not exercised
during the twelve (12) months next succeeding the date of death
shall terminate as of the end of such twelve (12) month period.




     If a Participant should die within thirty (30) days of his or her
termination of employment with the Company and its Subsidiaries, an
Option shall be exercisable by his or her estate, heir or
beneficiary at any time during the twelve (12) months succeeding the
date of termination, but only to the extent of the number of shares as to which such Option was exercisable as of the
date of such termination. Any and all of the deceased Participant’s
Options that are not exercised during the twelve (12) months
succeeding the date of termination shall terminate as of the end of
such twelve (12) month period. A Participant’s estate shall mean his
or her legal representative or other person who so acquires the
right to exercise the Option by bequest or inheritance or by reason
of the death of the Participant.




     (2) Total and Permanent Disablement. Upon termination of employment
as a result of the Total and Permanent Disablement of any
Participant, all of the Participant’s Options then held shall be
exercisable for a period of twelve (12) months after termination.
Any and all Options that are not exercised during the twelve (12)
months succeeding the date of termination shall terminate as of the
end of such twelve (12) month period.




     (3) Retirement. Upon Retirement of a Participant, the Participant’s
Options then held shall be exercisable for a period of twelve (12)
months after Retirement. The number of shares with respect to which
the Options shall be exercisable shall equal the total number of
shares that were exercisable under the Participant’s Option on the
date of his or her Retirement. Any and all Options that are
unexercised during the twelve (12) months succeeding the date of
termination shall terminate as of the end of such twelve (12) month
period.




     (4) Other Reasons. Upon the date of a termination of a Participant’s
employment for any reason other than those stated above in Sections
6(e)(1), (e)(2) and (e)(3) or as described in Section 15, (A) any
Option that is unexercisable as of such termination date shall
remain unexercisable and shall terminate as of such date, and (B)
any Option that is exercisable as of such termination date shall
expire the earlier of (i) ninety (90) days following such date or
(ii) the expiration date of such Option.



     (f) Incentive Stock Options. Notwithstanding anything to the contrary in this Section 6, in
the case of the grant of an Option intending to qualify as an ISO: (i) if the Participant owns
stock possessing more than 10 percent of the combined voting power of all classes of stock of the
Company (a “10% Shareholder”), the purchase price of such Option must be at least 110 percent of
the fair market value of the Common Stock on the date of grant and the Option must expire within a
period of not more than five (5) years from the date of grant, (ii) termination of employment will
occur when the person to whom an Award was granted ceases to be an employee (as determined in
accordance with Section 3401(c) of the Code and the regulations promulgated thereunder) of the
Company and its Subsidiaries. Notwithstanding anything in this Section 6 to the contrary, options
designated as ISOs shall not be eligible for treatment under the Code as ISOs to the extent that
either (iii) the aggregate fair market value of shares of Common Stock (determined as of the time
of grant) with respect to which such Options are exercisable for the first time by the Participant
during any calendar year (under all plans of the Company and any Subsidiary) exceeds $100,000,
taking Options into account in the order in which they were granted, and (iv) such Options
otherwise remain exercisable but are not exercised within three (3) months of Termination of
employment (or such other period of time provided in Section 422 of the Code).



 









 





     (g) Other Terms and Conditions: Options may also contain such other provisions, which shall
not be inconsistent with any of the terms of this Plan, as the Administrator shall deem
appropriate.



7. Stock Appreciation Rights




     Stock Appreciation Rights may be granted to Participants from time to time either in tandem
with or as a component of other Awards granted under the Plan (“tandem SARs”) or not in conjunction
with other Awards (“freestanding SARs”) and may, but need not, relate to a specific Option granted
under Section 6. The provisions of Stock Appreciation Rights need not be the same with respect to
each grant or each recipient. Any Stock Appreciation Right granted in tandem with an Option may be
granted at the same time such Option is granted or at any time thereafter before exercise or
expiration of such Option. All Stock Appreciation Rights under the Plan shall be granted subject to
the same terms and conditions applicable to Options as set forth in Section 6; provided, however,
that Stock Appreciation Rights granted in tandem with a previously granted Option shall have the
terms and conditions of such Option. Subject to the provisions of Section 6, the Administrator may
impose such other conditions or restrictions on any Stock Appreciation Right as it shall deem
appropriate. Stock Appreciation Rights may be settled in shares of Common Stock, cash or
combination thereof, as determined by the Administrator. Other than in connection with a change in
the Company’s capitalization (as described in Section 12) the exercise price of a Stock
Appreciation Rights may not be reduced without stockholder approval (including canceling previously
awarded Stock Appreciation Rights and regranting them with a lower exercise price).



8. Restricted Stock and Restricted Stock Units




     (a) Restricted Stock and Restricted Stock Unit Awards. Restricted Stock and Restricted Stock
Units may be granted at any time and from time to time prior to the termination of the Plan to
Participants selected by the Administrator. Restricted Stock is an award or issuance of shares of
Common Stock the grant, issuance, retention, vesting and/or transferability of which is subject
during specified periods of time to such conditions (including continued employment or performance
conditions) and terms as the Administrator deems appropriate. Restricted Stock Units are Awards
denominated in units of Common Stock under which the issuance of shares of Common Stock is subject
to such conditions (including continued employment or performance conditions) and terms as the
Administrator deems appropriate. Each grant of Restricted Stock and Restricted Stock Units shall be
evidenced by an Award Agreement. Unless determined otherwise by the Administrator, each Restricted
Stock Unit will be equal to one share of Common Stock and will entitle a Participant to either
shares of Common Stock or an amount of cash determined with reference to the value of shares of
Common Stock. To the extent determined by the Administrator, Restricted Stock and Restricted Stock
Units may be satisfied or settled in Common Stock, cash or a combination thereof. Restricted Stock
and Restricted Stock Units granted pursuant to the Plan need not be identical but each grant of
Restricted Stock and Restricted Stock Units must contain and be subject to the terms and conditions
set forth below.



     (b) Contents of Agreement. Each Award Agreement shall contain provisions regarding (i) the
number of shares of Common Stock or Restricted Stock Units subject to such Award or a formula for
determining such number, (ii) the purchase price of the shares, if any, and the means of payment,
(iii) the performance criteria, if any, and level of achievement versus these criteria that shall
determine the number of shares or units granted, issued, retainable and/or vested, (iv) such terms
and conditions on the grant, issuance, vesting and/or forfeiture of the shares or units as may be
determined from time to time by the Administrator, (v) restrictions on the transferability of the
shares or units and (vi) such further terms and conditions in each case not inconsistent with this
Plan as may be determined from time to time by the Administrator. Shares of Common Stock issued
under a Restricted Stock Award may be issued in the name of the Participant and held by the
Participant or held by the Company, in each case as the Administrator may provide.



     (c) Sales Price. Subject to the requirements of applicable law, the Administrator shall
determine the price, if any, at which Awards of Restricted Stock or Restricted Stock Units, or
shares of Common Stock issuable under Restricted Stock Unit Awards, shall be sold or awarded to a
Participant, which may vary from time to time and among Participants and which may be below the
market price of such shares at the date of grant.



     (d) Vesting. The grant, issuance, retention, vesting and/or settlement of shares of Restricted
Stock and Restricted Stock Units shall occur at such time and in such installments as determined by
the Administrator or under criteria established by the Administrator. The Administrator shall have
the right to make the timing of the grant and/or the issuance, ability to retain, vesting and/or
settlement of shares of Restricted Stock and under Restricted Stock Units subject to continued
employment, passage of time and/or such performance criteria as deemed appropriate by the
Administrator; provided that in no event shall the grant, issuance, retention, vesting and/or
settlement of shares under Restricted Stock or Restricted Stock Unit Awards that is based on
performance criteria and level of achievement versus such criteria be subject to a performance
period of less than one year and no condition that is based upon continued employment or the
passage of time shall provide for vesting or settlement in full of a Restricted Stock or Stock Unit
Award over a period of less than three years from the date the Award is made, other than as a
result of or upon the death, disability or retirement of the Participant, in each case as specified
in the agreement evidencing such Award. Notwithstanding anything to the contrary herein, the
performance criteria for any Restricted Stock or Restricted Stock Unit that is intended to satisfy
the requirements for “performance-based compensation” under Section 162(m) of the Code shall be a
measure based on one or more Qualifying Performance Criteria selected by the Administrator and
specified at the time the Restricted Stock or Restricted Stock Unit is granted.



     (e) Discretionary Adjustments and Limits. Subject to the limits imposed under Code Section
162(m) for Awards that are intended to qualify as “performance based compensation,” notwithstanding
the satisfaction of any performance goals, the number of shares of



 









 







Common Stock granted, issued, retainable and/or vested under an Award of Restricted Stock or
Restricted Stock Units on account of either financial performance or personal performance
evaluations may be reduced by the Administrator on the basis of such further considerations as the
Administrator shall determine.



     (f) Voting Rights. Unless otherwise determined by the Administrator, Participants holding
shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those
shares during the period of restriction. Participants shall have no voting rights with respect to
shares of Common Stock underlying Restricted Stock Units unless and until such shares are reflected
as issued and outstanding shares on the Company’s stock ledger.



     (g) Dividends and Distributions. Participants in whose name Restricted Stock is granted shall
be entitled to receive all dividends and other distributions paid with respect to those shares,
unless determined otherwise by the Administrator. Any such dividends or distributions will be
subject to the same restrictions on transferability as the Restricted Stock with respect to which
they were distributed. Shares underlying Restricted Stock Units shall be entitled to dividends or
dividend equivalents only to the extent provided by the Administrator.



9. Deferred Stock Units




     The Administrator may establish rules for the deferred delivery of Common Stock upon exercise
of an Option or Stock Appreciation Right and upon settlement, vesting or other events with respect
to Restricted Stock or Restricted Stock Units, or in payment or satisfaction of an Incentive Bonus
or of any other compensation arrangement maintained by the Company or a Subsidiary, in each case
with the deferral evidenced by use of “Stock Units” equal in number to the number of shares of
Common Stock whose delivery is so deferred or to the value of the amount being so deferred. A
“Stock Unit” is a bookkeeping entry representing an amount equivalent to the fair market value of
one share of Common Stock. Unless the Administrator specifies otherwise, Stock Units represent an
unfunded and unsecured obligation of the Company. Settlement of Stock Units upon expiration of the
deferral period shall be made in Common Stock, cash or a combination thereof, as determined by the
Administrator. The amount of Common Stock, or other settlement medium, to be so distributed may be
increased by dividend equivalents. Unless determined otherwise by the Administrator, during the
deferral period a Participant will not have any rights as a stockholder of the Company, including,
without limitation, voting rights and the right to receive dividends or distributions. Until a
Stock Unit is so settled, the number of shares of Common Stock represented by a Stock Unit shall be
subject to adjustment pursuant to Section 12. Any Stock Units that are settled after the holder’s
death shall be distributed to the holder’s designated beneficiary(ies) or, if none was designated,
the holder’s estate.



10. Incentive Bonuses




     (a) General. Each Incentive Bonus Award will confer upon the Participant the opportunity to
earn a future payment tied to the level of achievement with respect to one or more performance
criteria established for a performance period of not less than one year.



     (b) Incentive Bonus Document. Each Award Agreement evidencing an Incentive Bonus shall contain
provisions regarding (i) the target and maximum amount payable to the Participant as an Incentive
Bonus, (ii) the performance criteria and level of achievement versus these criteria that shall
determine the amount of such payment, (iii) the term of the performance period as to which
performance shall be measured for determining the amount of any payment, (iv) the timing of any
payment earned by virtue of performance, (v) restrictions on the alienation or transfer of the
Incentive Bonus prior to actual payment, (vi) forfeiture provisions and (vii) such further terms
and conditions, in each case not inconsistent with this Plan as may be determined from time to time
by the Administrator.



     (c) Performance Criteria. The Administrator shall establish the performance criteria and level
of achievement versus these criteria that shall determine the target and maximum amount payable
under an Incentive Bonus, which criteria may be based on financial performance and/or personal
performance evaluations. The Administrator may specify the percentage of the target Incentive Bonus
that is intended to satisfy the requirements for “performance-based compensation” under Code
Section 162(m). Notwithstanding anything to the contrary herein, the performance criteria for any
portion of an Incentive Bonus that is intended by the Administrator to satisfy the requirements for
“performance-based compensation” under Code Section 162(m) shall be a measure based on one or more
Qualifying Performance Criteria (as defined in Section 13(b)) selected by the Administrator and
specified at the time the Incentive Bonus is granted. The Administrator shall certify the extent to which any Qualifying Performance Criteria has been
satisfied, and the amount payable as a result thereof, prior to payment of any Incentive Bonus that
is intended to satisfy the requirements for “performance-based compensation” under Code Section
162(m).




     (d) Timing and Form of Payment. The Administrator shall determine the timing of payment of any
Incentive Bonus. Payment of the amount due under an Incentive Bonus may be made in cash or in
shares of Common Stock, as determined by the Administrator. The Administrator may provide for or,
subject to such terms and conditions as the Administrator may specify, may permit a Participant to
elect for the payment of any Incentive Bonus to be deferred to a specified date or event.



     (e) Discretionary Adjustments. Notwithstanding satisfaction of any performance goals, the
amount paid under an Incentive Bonus on account of either financial performance or personal
performance evaluations may be reduced by the Administrator on the basis of such further
considerations as the Administrator shall determine.



 









 





11. Conditions and Restrictions Upon Securities Subject to Awards



     The Administrator may provide that the shares of Common Stock issued upon exercise of an
Option or Stock Appreciation Right or otherwise subject to or issued under an Award shall be
subject to such further agreements, restrictions, conditions or limitations as the Administrator in
its discretion may specify prior to the exercise of such Option or Stock Appreciation Right or the
grant, vesting or settlement of such Award, including without limitation, conditions on vesting or
transferability, forfeiture or repurchase provisions and method of payment for the shares issued
upon exercise, vesting or settlement of such Award (including the actual or constructive surrender
of Common Stock already owned by the Participant) or payment of taxes arising in connection with an
Award. Without limiting the foregoing, such restrictions may address the timing and manner of any
resales by the Participant or other subsequent transfers by the Participant of any shares of Common
Stock issued under an Award, including without limitation (i) restrictions under an insider trading
policy or pursuant to applicable law, (ii) restrictions designed to delay and/or coordinate the
timing and manner of sales by Participant and holders of other Company equity compensation
arrangements, and (iii) restrictions as to the use of a specified brokerage firm for such resales
or other transfers.



12. Adjustment of and Changes in the Stock




     In the event that the number of shares of Common Stock of the Company shall be increased or
decreased through a reorganization, reclassification, combination of shares, stock split, reverse
stock split, spin-off, dividend (other than regular, quarterly cash dividends), or otherwise, then
each share of Common Stock of the Company which has been authorized for issuance under the Plan,
whether such share is then currently subject to or may become subject to an Award under the Plan,
as well as the per share limits set forth in Section 5 of this Plan, may be proportionately
adjusted by the Administrator to reflect such increase or decrease, unless the Company provides
otherwise under the terms of such transaction. The terms of any outstanding Award may also be
adjusted by the Administrator as to price, number of shares of Common Stock subject to such Award
and other terms to reflect the foregoing events.



     In the event there shall be any other change in the number or kind of outstanding shares of
Common Stock of the Company, or any stock or other securities into which such Common Stock shall
have been changed, or for which it shall have been exchanged, whether by reason of a change of
control, other merger, consolidation or otherwise, then the Administrator shall, in its sole
discretion, determine the appropriate adjustment, if any, to be effected. In addition, in the event
of such change described in this paragraph, the Administrator may accelerate the time or times at
which any Award may be exercised and may provide for cancellation of such accelerated Awards that
are not exercised within a time prescribed by the Administrator in its sole discretion.
Notwithstanding anything to the contrary herein, any adjustment to Options granted pursuant to this
Plan intended to qualify as ISOs shall comply with the requirements, provisions and restrictions of
the Code.



     No right to purchase fractional shares shall result from any adjustment in Awards pursuant to
this Section 12. In case of any such adjustment, the shares subject to the Award shall be rounded
down to the nearest whole share. Notice of any adjustment shall be given by the Company to each
Participant, which shall have been so adjusted and such adjustment (whether or not notice is given)
shall be effective and binding for all purposes of the Plan.



13. Qualifying Performance-Based Compensation




     (a) General. The Administrator may establish performance criteria and level of achievement
versus such criteria that shall determine the number of shares of Common Stock to be granted,
retained, vested, issued or issuable under or in settlement of or the amount payable pursuant to an
Award, which criteria may be based on Qualifying Performance Criteria or other standards of
financial performance and/or personal performance evaluations. In addition, the Administrator may
specify a percentage of an Award that is intended to satisfy the requirements for
“performance-based compensation” under Section 162(m) of the Code, provided that the performance
criteria for any portion of an Award that is intended by the Administrator to satisfy the
requirements for “performance-based compensation” under Section 162(m) of the Code shall be a
measure based on one or more Qualifying Performance Criteria selected by the Administrator and
specified at the time the Award is granted. The Administrator shall certify the extent to which any
Qualifying Performance Criteria has been satisfied, and the amount payable as a result thereof,
prior to payment, settlement or vesting of any Award that is intended to satisfy the requirements
for “performance-based compensation” under Section 162(m) of the Code. Notwithstanding satisfaction
of any performance goals, the number of shares issued under or the amount paid under an award may,
to the extent specified in the Award Agreement, be reduced by the Administrator on the basis of
such further considerations as the Administrator in its sole discretion shall determine.



     (b) Qualifying Performance Criteria. For purposes of this Plan, the term “Qualifying
Performance Criteria” shall mean any one or more of the following performance criteria, either
individually, alternatively or in any combination, applied to either the Company as a whole or to a
business unit or Subsidiary, either individually, alternatively or in any combination, and measured
either annually or cumulatively over a period of years, on an absolute basis or relative to a
pre-established target, to previous years’ results or to a designated comparison group, in each
case as specified by the Administrator: (i) cash flow (before or after dividends), (ii) earnings
per share (including earnings before interest, taxes, depreciation and amortization), (iii) stock
price, (iv) return on equity, (v) total stockholder return, (vi) return on capital (including
return on total capital or return on invested capital), (vii) return on assets or net assets,
(viii) market capitalization, (ix) economic value added, (x) debt leverage (debt to capital), (xi)
revenue, (xii) income or net income, (xiii) operating income, (xiv) operating profit or net
operating profit, (xv) operating margin or profit margin, (xvi) return on operating revenue, (xvii)
cash from operations, (xviii) operating ratio, (xix) operating revenue, or (xx) customer service.
To the extent consistent with Section 162(m) of the Code, the Administrator may appropriately
adjust any evaluation of performance under a



 









 







Qualifying Performance Criteria to exclude any of the following events that occurs during a
performance period: (i) asset write-downs, (ii) litigation, claims, judgments or settlements, (iii)
the effect of changes in tax law, accounting principles or other such laws or provisions affecting
reported results, (iv) accruals for reorganization and restructuring programs and (v) any
extraordinary, unusual or non-recurring items as described in Accounting Principles Board Opinion
No. 30 and/or in management’s discussion and analysis of financial condition and results of
operations appearing in the Company’s Forms 10-K or 10-Q for the applicable year.



14. Transferability




     Unless the Administrator specifies otherwise, each Award may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated by a Participant other than by will or
the laws of descent and distribution, and each Option or Stock Appreciation Right shall be
exercisable only by the Participant during his or her lifetime.



15. Suspension or Termination of Awards




     Except as otherwise provided by the Administrator, if at any time (including after a notice of
exercise has been delivered or an award has vested) the Chief Executive Officer or any other person
designated by the Administrator (each such person, an “Authorized Officer”) reasonably believes
that a Participant may have committed an Act of Misconduct as described in this Section 15, the
Authorized Officer, Administrator or Board of Directors may suspend the Participant’s rights to
exercise any Option, to vest in an Award, and/or to receive payment for or receive shares of Common
Stock in settlement of an Award pending a determination of whether an Act of Misconduct has been
committed.



     If the Administrator or an Authorized Officer determines a Participant has committed an act of
embezzlement, fraud, dishonesty, nonpayment of any obligation owed to the Company or any
Subsidiary, breach of fiduciary duty or deliberate disregard of the Company or Subsidiary rules
resulting in loss, damage or injury to the Company or any Subsidiary, or if a Participant makes an
unauthorized disclosure of any Company or Subsidiary trade secret or confidential information,
engages in any conduct constituting unfair competition, breaches any non-competition agreement,
induces any Company or Subsidiary customer to breach a contract with the Company or any Subsidiary,
or induces any principal for whom the Company or any Subsidiary acts as agent to terminate such
agency relationship (any of the foregoing acts, an “act of misconduct”), then except as otherwise
provided by the Administrator, (i) neither the Participant nor his or her estate nor transferee
shall be entitled to exercise any Option whatsoever, vest in or have the restrictions on an Award
lapse, or otherwise receive payment of an Award, (ii) the Participant will forfeit all outstanding
Awards and (iii) the Participant may be required, at the Administrator’s sole discretion, to return
and/or repay to the Company any then unvested shares of Common Stock previously issued under the
Plan. In making such determination, the Administrator or an Authorized Officer shall give the
Participant an opportunity to appear and present evidence on his or her behalf at a hearing before
the Administrator or an opportunity to submit written comments, documents, information and
arguments to be considered by the Administrator. Any dispute by a Participant or other person as to
the determination of the Administrator shall be resolved pursuant to Section 23 of the Plan.



16. Compliance with Laws and Regulations




     This Plan, the grant, issuance, vesting, exercise and settlement of Awards thereunder, and the
obligation of the Company to sell, issue or deliver shares under such Awards, shall be subject to
all applicable foreign, federal, state and local laws, rules and regulations and to such approvals
by any governmental or regulatory agency as may be required. The Company shall not be required to
register in a Participant’s name or deliver any shares prior to the completion of any registration
or qualification of such shares under any foreign, federal, state or local law or any ruling or
regulation of any government body which the Administrator shall determine to be necessary or
advisable. To the extent the Company is unable to or the Administrator deems it infeasible to
obtain authority from any regulatory body having jurisdiction, which authority is deemed by the
Company’s counsel to be necessary to the lawful issuance and sale of any shares hereunder, the
Company and its Subsidiaries shall be relieved of any liability with respect to the failure to
issue or sell such shares as to which such requisite authority shall not have been obtained. No
Stock Option shall be exercisable and no shares shall be issued and/or transferable under any other
Award unless a registration statement with respect to the shares underlying such Stock Option is
effective and current or the Company has determined that such registration is unnecessary.



     In the event an Award is granted to or held by a Participant who is employed or providing
services outside the United States, the Administrator may, in its sole discretion, modify the
provisions of the Plan or of such Award as they pertain to such individual to comply with
applicable foreign law or to recognize differences in local law, currency or tax policy. The
Administrator may also impose conditions on the grant, issuance, exercise, vesting, settlement or
retention of Awards in order to comply with such foreign law and/or to minimize the Company’s
obligations with respect to tax equalization for Participants employed outside their home country.



17. Withholding




     To the extent required by applicable federal, state, local or foreign law, a Participant shall
be required to satisfy, in a manner satisfactory to the Company, any withholding tax obligations
that arise by reason of an Option exercise, disposition of shares issued under an ISO, the vesting
of or settlement of deferred units under an Award, an election pursuant to Section 83(b) of the
Code or otherwise with respect to an Award. The Company and its Subsidiaries shall not be required
to issue shares of Common Stock, make



 









 







any payment or to recognize the transfer or disposition of shares until such obligations are
satisfied. The Administrator may permit these obligations to be satisfied by having the Company
withhold a portion of the shares of Common Stock that otherwise would be issued to him or her upon
exercise of the Option or the vesting or settlement of an Award, or by tendering shares previously
acquired.



18. Administration of the Plan




     (a) Administrator of the Plan. The Plan shall be administered by the Administrator who shall
be the Compensation Committee of the Board of Directors or, in the absence of a Compensation
Committee, the Board of Directors itself. Any power of the Administrator may also be exercised by
the Board of Directors, except to the extent that the grant or exercise of such authority would
cause any Award or transaction to become subject to (or lose an exemption under) the short-swing
profit recovery provisions of Section 16 of the Securities Exchange Act of 1934 or cause an Award
designated as a Performance Award not to qualify for treatment as performance-based compensation
under Code Section 162(m). To the extent that any permitted action taken by the Board conflicts
with action taken by the Administrator, the Board action shall control. The Compensation Committee
may by resolution authorize one or more officers of the Company to perform any or all things that
the Administrator is authorized and empowered to do or perform under the Plan, and for all purposes
under this Plan, such officer or officers shall be treated as the Administrator; provided, however,
that the resolution so authorizing such officer or officers shall specify the total number of
Awards (if any) such officer or officers may award pursuant to such delegated authority, and any
such Award shall be subject to the form of Option agreement theretofore approved by the
Compensation Committee. No such officer shall designate himself or herself or any Nonemployee
Director as a recipient of any Awards granted under authority delegated to such officer. In
addition, the Compensation Committee may delegate any or all aspects of the day-to-day
administration of the Plan to one or more officers or employees of the Company or any Subsidiary,
and/or to one or more agents.



     (b) Powers of Administrator. Subject to the express provisions of this Plan, the Administrator
shall be authorized and empowered to do all things that it determines to be necessary or
appropriate in connection with the administration of this Plan, including, without limitation: (i)
to prescribe, amend and rescind rules and regulations relating to this Plan and to define terms not
otherwise defined herein; (ii) to determine which persons are Participants, to which of such
Participants, if any, Awards shall be granted hereunder and the timing of any such Awards, and to
grant Awards; (iii) to grant Awards to Participants and determine the terms and conditions thereof,
including the number of shares subject to Awards and the exercise or purchase price of such shares
and the circumstances under which Awards become exercisable or vested or are forfeited or expire,
which terms may but need not be conditioned upon the passage of time, continued employment, the
satisfaction of performance criteria, the occurrence of certain events (including events which the
Board or the Administrator determine constitute a Change of Control), or other factors; (iv) to
establish and verify the extent of satisfaction of any performance goals or other conditions
applicable to the grant, issuance, exercisability, vesting and/or ability to retain any Award; (v)
to prescribe and amend the terms of the agreements or other documents evidencing Awards made under
this Plan (which need not be identical) and the terms of or form of any document or notice required
to be delivered to the Company by Participants under this Plan; (vi) to determine whether, and the
extent to which, adjustments are required pursuant to Section 12; (vii) to interpret and construe
this Plan, any rules and regulations under this Plan and the terms and conditions of any Award
granted hereunder, and to make exceptions to any such provisions in good faith and for the benefit
of the Company; and (viii) to make all other determinations deemed necessary or advisable for the
administration of this Plan.



     (c) Determinations by the Administrator. All decisions, determinations and interpretations by
the Administrator regarding the Plan, any rules and regulations under the Plan and the terms and
conditions of or operation of any Award granted hereunder, shall be final and binding on all
Participants, beneficiaries, heirs, assigns or other persons holding or claiming rights under the
Plan or any Award. The Administrator shall consider such factors as it deems relevant, in its sole
and absolute discretion, to making such decisions, determinations and interpretations including,
without limitation, the recommendations or advice of any officer or other employee of the Company
and such attorneys, consultants and accountants as it may select.



     (d) Subsidiary Awards. In the case of a grant of an Award to any Participant employed by a
Subsidiary, such grant may, if the Administrator so directs, be implemented by the Company issuing
any subject shares to the Subsidiary, for such lawful consideration as the Administrator may
determine, upon the condition or understanding that the Subsidiary will transfer the shares to the
Participant in accordance with the terms of the Award specified by the Administrator pursuant to
the provisions of the Plan. Notwithstanding any other provision hereof, such Award may be issued by
and in the name of the Subsidiary and shall be deemed granted on such date as the Administrator
shall determine.



19. Amendment of the Plan or Awards




     The Board may amend, alter or discontinue this Plan and the Administrator may amend, or alter
any agreement or other document evidencing an Award made under this Plan but, except as provided
pursuant to the provisions of Section 12, no such amendment shall, without the approval of the
stockholders of the Company:




	 	(a)	 	increase the maximum number of shares for which Awards may be granted under this Plan;
	 
	 	(b)	 	reduce the price at which Options may be granted below the price provided for in Section 6(a);




 









 






	 	(c)	 	reduce the exercise price of outstanding Options;
	 
	 	(d)	 	extend the term of this Plan;
	 
	 	(e)	 	change the class of persons eligible to be Participants;
	 
	 	(f)	 	otherwise amend the Plan in any manner requiring
stockholder approval by law or under the NASDAQ National
Market listing requirements; or
	 
	 	(g)	 	increase the individual maximum limits in Sections 5(c) and (d).





     No amendment or alteration to the Plan or an Award or Award Agreement shall be made which
would impair the rights of the holder of an Award, without such holder’s consent, provided that no
such consent shall be required if the Administrator determines in its sole discretion and prior to
the date of any change of control (as defined in the applicable Award Agreement) that such
amendment or alteration either is required or advisable in order for the Company, the Plan or the
Award to satisfy any law or regulation or to meet the requirements of or avoid adverse financial
accounting consequences under any accounting standard.



20. No Liability of Company




     The Company and any Subsidiary or affiliate which is in existence or hereafter comes into
existence shall not be liable to a Participant or any other person as to: (i) the non-issuance or
sale of shares of Common Stock as to which the Company has been unable to obtain from any
regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary
to the lawful issuance and sale of any shares hereunder; and (ii) any tax consequence expected, but
not realized, by any Participant or other person due to the receipt, exercise or settlement of any
Award granted hereunder.



21. Non-Exclusivity of Plan




     Neither the adoption of this Plan by the Board of Directors nor the submission of this Plan to
the stockholders of the Company for approval shall be construed as creating any limitations on the
power of the Board of Directors or the Administrator to adopt such other incentive arrangements as
either may deem desirable, including without limitation, the granting of restricted stock or stock
options otherwise than under this Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.



22. Governing Law




     This Plan and any agreements or other documents hereunder shall be interpreted and construed
in accordance with the laws of the Delaware and applicable federal law. Any reference in this Plan
or in the agreement or other document evidencing any Awards to a provision of law or to a rule or
regulation shall be deemed to include any successor law, rule or regulation of similar effect or
applicability.



23. Arbitration of Disputes




     In the event a Participant or other holder of an Award or person claiming a right under an
Award or the Plan believes that a decision by the Administrator with respect to such person or
Award was arbitrary or capricious, the person may request arbitration with respect to such
decision. The review by the arbitrator shall be limited to determining whether the Participant or
other Award holder has proven that the Administrator’s decision was arbitrary or capricious. This
arbitration shall be the sole and exclusive review permitted of the Administrator’s decision.
Participants, Award holders and persons claiming rights under an Award or the Plan explicitly waive
any right to judicial review.



     Notice of demand for arbitration shall be made in writing to the Administrator within thirty
(30) days after the applicable decision by the Administrator. The arbitrator shall be selected by
those members of the Board of Directors who are neither members of the Compensation Committee of
the Board of Directors nor employees of the Company or any Subsidiary. If there are no such members
of the Board of Directors, the arbitrator shall be selected by the Board of Directors. The
arbitrator shall be an individual who is an attorney licensed to practice law in the District of
Columbia, Commonwealth of Virginia or State of Delaware. Such arbitrator shall be neutral within
the meaning of the Commercial Rules of Dispute Resolution of the American Arbitration Association;
provided, however, that the arbitration shall not be administered by the American Arbitration
Association. Any challenge to the neutrality of the arbitrator shall be resolved by the arbitrator
whose decision shall be final and conclusive. The arbitration shall be administered and conducted
by the arbitrator pursuant to the Commercial Rules of Dispute Resolution of the American
Arbitration Association. Each side shall bear its own fees and expenses, including its own
attorney’s fees, and each side shall bear one half of the arbitrator’s fees and expenses. The
decision of the arbitrator on the issue(s) presented for arbitration shall be final and conclusive
and may be enforced in any court of competent jurisdiction.



24. No Right to Employment, Reelection or Continued Service




     Nothing in this Plan or an Award Agreement shall interfere with or limit in any way the right
of the Company, its Subsidiaries and/or its affiliates to terminate any Participant’s employment,
service on the Board or service for the Company at any time or for any reason not prohibited by
law, nor confer upon any Participant any right to continue his or her employment or service for any
specified period of time. Neither an Award nor any benefits arising under this Plan shall
constitute an employment contract with the Company, any Subsidiary and/or its affiliates,
accordingly, subject to Sections 4 and 19, this Plan and the benefits hereunder may be terminated
at any time in the sole and exclusive discretion of the Board of Directors without giving rise to
any liability on the part of the Company, its Subsidiaries and/or its affiliates.