exv4w5



 





Exhibit 4.5



2005 INCENTIVE PLAN

OF

OCEANEERING INTERNATIONAL, INC.




     1. Plan. 
 This 2005 Incentive Plan of Oceaneering International, Inc. (the “Plan”) was adopted by
Oceaneering International, Inc. (the “Company”) to reward certain corporate officers, directors and
key employees of the Company by enabling them to acquire shares of common stock of the Company
and/or through the provision of cash payments.



     2. Objectives. 
 This Plan is designed to attract and retain key employees of the Company and its
Subsidiaries, to attract and retain qualified directors of the Company, to encourage the sense of
proprietorship of such employees and directors and to stimulate the active interest of such persons
in the development and financial success of the Company and its Subsidiaries. These objectives are
to be accomplished by making Awards under this Plan and thereby providing Participants with a
proprietary interest in the growth and performance of the Company and its Subsidiaries.



     3. Definitions. 
 As used herein, the terms set forth below shall have the following respective
meanings:



     “Authorized Officer” means the Chairman of the Board or the Chief Executive Officer of the
Company (or any other senior officer of the Company to whom either of them shall delegate the
authority to execute any Award Agreement).



     “Award” means the grant of any Option, SAR, Stock Award, Performance Award or Cash Award,
whether granted singly, in combination or in tandem, to a Participant pursuant to such applicable
terms, conditions and limitations as the Committee (or the Board, in the case of Awards to
Nonemployee Directors) may establish in order to fulfill the objectives of the Plan.



     “Award Agreement” means any written agreement between the Company and a Participant setting
forth the terms, conditions and limitations applicable to an Award.



     “Board” means the Board of Directors of the Company.



     “Cash Award” means an award denominated in cash.



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



     “Committee” means the Compensation Committee of the Board or such other committee of the Board
as is designated by the Board to administer the Plan.



     “Common Stock” means the Common Stock, par value $0.25 per share, of the Company.



     “Company” means Oceaneering International, Inc., a Delaware corporation.



     “Director” means an individual serving as a member of the Board.



     “Dividend Equivalents” means, with respect to shares of Restricted Stock or Restricted Stock
Units with respect to which shares are to be issued at the end of the Restriction Period, an amount
equal to all dividends and other distributions (or the economic equivalent thereof) that are
payable to stockholders of record during the Restriction Period on a like number of shares of
Common Stock.



     “Employee” means an employee of the Company or any of its Subsidiaries and an individual who
has agreed to become an employee of the Company or any of its Subsidiaries and actually becomes
such an employee within the following six months.



     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.



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     “Fair Market Value” of a share of Common Stock means, as of a particular date, (i) if shares
of Common Stock are listed on a national securities exchange, the mean between the highest and
lowest sales price per share of Common Stock on the consolidated transaction reporting system for
the principal national securities exchange on which shares of Common Stock are listed on that date,
or, if there shall have been no such sale so reported on that date, on the last preceding date on
which such a sale was so reported, or, at the discretion of the Committee, the price prevailing on
the exchange at the time of exercise, (ii) if shares of Common Stock are not so listed but are
quoted on the NASDAQ Stock Market, Inc., the mean between the highest and lowest sales price per
share of Common Stock reported by the NASDAQ Stock Market, Inc. on that date, or, if there shall
have been no such sale so reported on that date, on the last preceding date on which such a sale
was so reported, (iii) if the Common Stock is not so listed or quoted, the mean between the
closing bid and asked price on that date, or, if there are no quotations available for such date,
on the last preceding date on which such quotations shall be available, as reported by the NASDAQ
Stock Market, Inc., or, if not reported by the NASDAQ Stock Market, Inc., by the National Quotation
Bureau Incorporated or (iv) if shares of Common Stock are not publicly traded, the most recent
value determined by an independent appraiser appointed by the Company for such purpose.



     “Incentive Option” means an Option that is intended to comply with the requirements set forth
in Section 422 of the Code.



     “Option” means a right to purchase a specified number of shares of Common Stock at a specified
price.



     “Nonqualified Option” means an Option that is not intended to comply with the requirements set
forth in Section 422 of the Code.



     “Participant” means an Employee or Director to whom an Award has been made under this Plan.



     “Performance Award” means an award made pursuant to this Plan to a Participant who is an
Employee which Award is subject to the attainment of one or more Performance Goals. Performance
Awards may be Stock Awards or Cash Awards.



     “Performance Goal” means a standard established by the Committee, to determine in whole or in
part whether a Performance Award shall be earned.



     “Restricted Stock” means any Common Stock that is restricted or subject to forfeiture
provisions.



     “Restricted Stock Unit” means a unit evidencing the right to receive one share of Common Stock
or equivalent value (as determined by the Committee) that is restricted or subject to forfeiture
provisions.



     “Restriction Period” means a period of time beginning as of the date upon which an Award of
Restricted Stock or Restricted Stock Units is made pursuant to this Plan and ending as of the date
upon which the Common Stock subject to such Award is issued (if not previously issued), no longer
restricted or subject to forfeiture provisions.



     “SAR” means a right to receive a payment, in cash or Common Stock, equal to the excess of the
Fair Market Value or other specified valuation of a specified number of shares of Common Stock on
the date the right is exercised over a specified strike price, in each case, as determined by the
Committee.



     “Stock Award” means an award in the form of shares of Common Stock or units denominated in
shares of Common Stock.



     “Subsidiary” means (i) in the case of a corporation, any corporation of which the Company directly
or indirectly owns shares representing 50% or more of the combined voting power of the shares of
all classes or series of capital stock of such corporation which have the right to vote generally
on matters submitted to a vote of the stockholders of such corporation and (ii) in the case of a
partnership or other business entity not organized as a corporation, any such business entity of
which the Company directly or indirectly owns 50% or more of the voting, capital or profits
interests (whether in the form of partnership interests, membership interests or otherwise).



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     4. Eligibility.




(a) Employees. Key Employees eligible for Awards under this Plan are those who hold
positions of responsibility and whose performance, in the judgment of the Committee, can
have a significant effect on the success of the Company and its Subsidiaries.




(b) Directors. Directors eligible for Awards under this Plan are those who are not
employees of the Company or any of its Subsidiaries (“Nonemployee Directors”).



     5. Common Stock Available for Awards. 


Subject to the provisions of paragraph 15 hereof, there
shall be available for Awards under this Plan granted wholly or partly in Common Stock (including
rights or options that may be exercised for or settled in Common Stock) an aggregate of 1,200,000
shares of Common Stock. No more than 600,000 shares of Common Stock shall be available under this
Plan for Incentive Options. No more than 600,000 shares of Common Stock shall be available under
this Plan for Awards other than Options or SARs. Shares of Common Stock awarded pursuant to the
2002 Incentive Plan or the 2002 Non-Executive Incentive Plan (the “Prior Plans”) which are
cancelled, terminated, forfeited, expire unexercised, and, except for Awards of Options or SARs,
are settled in cash in lieu of Common Stock, or are exchanged for a consideration that does not
involve Common Stock shall immediately become available for Awards under this Plan. Effective as
of March 14, 2005, no further awards shall be made under the Prior Plans. Additionally, the number
of shares of Common Stock that are the subject of Awards under this Plan, that are forfeited or
terminated, expire unexercised, and, except for Awards of Options or SARS are settled in cash in
lieu of Common Stock or in a manner such that all or some of the shares covered by an Award are not
issued to a Participant or are exchanged for Awards that do not involve Common Stock, shall again
immediately become available for Awards hereunder. The number of Shares reserved for issuance
under the Plan shall be reduced only to the extent that Shares of Common Stock are actually issued
in connection with the exercise or settlement of an Award; provided, however, that the number of
Shares reserved for issuance shall be reduced by the total number of Options or SARs exercised. The
Committee may from time to time adopt and observe such procedures concerning the counting of shares
against the Plan maximum as it may deem appropriate. The Board and the appropriate officers of the
Company shall from time to time take whatever actions are necessary to file any required documents
with governmental authorities, stock exchanges and transaction reporting systems to ensure that
shares of Common Stock are available for issuance pursuant to
Awards.



     6. Administration.




(a) Authority of the Committee. This Plan shall be administered by the Committee; provided,
however, that with respect to Nonemployee Directors, the Plan shall be administered by the
full Board. Subject to the provisions hereof, the Committee shall have full and exclusive
power and authority to administer this Plan and to take all actions that are specifically
contemplated hereby or are necessary or appropriate in connection with the administration
hereof. The Committee shall also have full and exclusive power to interpret this Plan and
to adopt such rules, regulations and guidelines for carrying out this Plan as it may deem
necessary or proper, all of which powers shall be exercised in the best interests of the
Company and in keeping with the objectives of this Plan. Subject to paragraph 6(c) hereof,
the Committee may, in its discretion, provide for the extension of the exercisability of an
Award, accelerate the vesting or exercisability of an Award, eliminate or make less
restrictive any restrictions contained in an Award, waive any restriction or other provision
of this Plan or an Award or otherwise amend or modify an Award in any manner that is (i)
not adverse to the Participant to whom such Award was granted, (ii) consented to by such
Participant or (iii) authorized by paragraph 15(c) hereof; provided, however, that no such
action shall permit the term of any Option to be greater than seven years from the
applicable grant date. The Committee may make an Award to an individual who it expects to
become an employee of the Company or any of its Subsidiaries within the next six months,
with such Award being subject to the individual’s actually becoming an employee within such
time period, and subject to such other terms and conditions as may be established by the
Committee. The Committee may correct any defect or supply any omission or reconcile any
inconsistency in this Plan or in any Award in the manner and to the extent the Committee
deems necessary or desirable to further the Plan purposes. Any decision of the Committee in
the interpretation and administration of this Plan shall lie within its sole and absolute
discretion and shall be final, conclusive and binding on all parties concerned.



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(b) Indemnity. No member of the Committee or officer of the Company to whom the Committee
has delegated authority in accordance with the provisions of paragraph 7 of this Plan shall
be liable for anything done or omitted to be done by him or her, by any member of the
Committee or by any officer of the Company in connection with the performance of any duties
under this Plan, except for his or her own willful misconduct or as expressly provided by
statute.




(c) Prohibition on Repricing of Awards. No Award may be repriced, replaced, regranted
through cancellation or modified without shareholder approval (except in connection with a
change in the Company’s capitalization), if the effect would be to reduce the exercise price
for the shares underlying such Award.



     7. Delegation of Authority.


The Committee may delegate to the Chief Executive Officer and to other
senior officers of the Company its duties under this Plan pursuant to such conditions or
limitations as the Committee may establish.



     8. Awards.




(a) Except as otherwise provided in paragraph 9 hereof pertaining to Awards to Directors,
the Committee shall determine the type or types of Awards to be made under this Plan and
shall designate from time to time the Participants who are to be the recipients of such
Awards. Each Award shall be embodied in an Award Agreement, which shall contain such terms,
conditions and limitations as shall be determined by the Committee in its sole discretion
and shall be signed by the Participant to whom the Award is made and by an Authorized
Officer for and on behalf of the Company. Awards may consist of those listed in this
paragraph 8(a) hereof and may be granted singly, in combination or in tandem. Awards may
also be made in combination or in tandem with, in replacement of, or as alternatives to,
grants or rights under this Plan or any other plan of the Company or any of its
Subsidiaries, including the plan of any acquired entity; provided that, except as
contemplated in paragraph 15 hereof, no Option may be issued in exchange for the
cancellation of an Option with a higher exercise price nor may the exercise price of any
Option be reduced. All or part of an Award may be subject to conditions established by the
Committee, which may include, but are not limited to, continuous service with the Company
and its Subsidiaries, achievement of specific business objectives, increases in specified
indices, attainment of specified growth rates and other comparable measurements of
performance. Upon the termination of employment by a Participant who is an Employee, any
unexercised, deferred, unvested or unpaid Awards shall be treated as set forth in the
applicable Award Agreement.




     (i) Option. An Award may be in the form of an Option. An Option awarded
pursuant to this Plan may consist of an Incentive Option or a Nonqualified Option.
The price at which shares of Common Stock may be purchased upon the exercise of an
Option shall be not less than the Fair Market Value of the Common Stock on the date
of grant. The term of an Option shall not exceed seven years from the date of grant.
Subject to the foregoing provisions, the terms, conditions and limitations
applicable to any Options awarded pursuant to this Plan, including the term of any
Options and the date or dates upon which they become exercisable, shall be determined
by the Committee.




     (ii) Stock Appreciation Right. An Award may be in the form of a SAR. The
strike price for a SAR shall not be less than the Fair Market Value of the Common
Stock on the date on which the SAR is granted. The term of a SAR shall not exceed
seven years from the date of grant. Subject to the foregoing limitations, the terms,
conditions and limitations applicable to any SARs awarded pursuant to this Plan,
including the term of any SARs and the date or dates upon which they become
exercisable, shall be determined by the Committee. As of the date of grant of a SAR,
the Committee may specifically designate that the Award will be paid (a) only in
cash, (b) only in Common Stock, or (c) in such other form or combination of forms as
the Committee may elect or permit at the time of exercise.



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     (iii) Stock Award. An Award may be in the form of a Stock Award. The terms,
conditions and limitations applicable to any Stock Awards granted pursuant to this
Plan shall be determined by the Committee, subject to the limitations specified
below. Any Stock Award which is not a Performance Award shall have a minimum
Restriction Period of one year from the date of grant, provided that (i) the
Committee may provide for earlier vesting following a change in control of the
Company or upon an Employee’s termination of employment by reason of death,
disability or retirement, (ii) such one-year minimum Restricted Period shall not
apply to a Stock Award that is granted in lieu of salary or bonus, and (iii) vesting
of a Stock Award may occur incrementally over the one-year minimum Restricted Period.




     (iv) Cash Award. An Award may be in the form of a Cash Award. The terms,
conditions and limitations applicable to any Cash Awards granted pursuant to this
Plan shall be determined by the Committee.




     (v) Performance Award. Without limiting the type or number of Awards that may
be made under the other provisions of this Plan, an Award may be in the form of a
Performance Award. The terms, conditions and limitations applicable to any
Performance Awards granted to Participants pursuant to this Plan shall be determined
by the Committee, subject to the limitations specified below. Any Stock Award which
is a Performance Award shall have a minimum Restriction Period of one year from the
date of grant, provided that the Committee may provide for earlier vesting following
a change of control of the Company, or upon a termination of employment by reason of
death, disability or retirement. The Committee shall set Performance Goals in its
discretion which, depending on the extent to which they are met, will determine the
value and/or amount of Performance Awards that will be paid out to the Participant
and/or the portion of an Award that may be exercised.




     (A) Nonqualified Performance Awards. Performance Awards granted to
Employees or Directors that are not intended to qualify as qualified
performance-based compensation under Section 162(m) of the Code shall be
based on achievement of such Performance Goals and be subject to such terms,
conditions and restrictions as the Committee or its delegate shall determine.




     (B) Qualified Performance Awards. Performance Awards granted to
Employees under the Plan that are intended to qualify as qualified
performance-based compensation under Section 162(m) of the Code shall be
paid, vested or otherwise deliverable solely on account of the attainment of
one or more pre-established, objective Performance Goals established by the
Committee prior to the earlier to occur of (x) 90 days after the commencement
of the period of service to which the Performance Goal relates and (y) the
lapse of 25% of the period of service (as scheduled in good faith at the time
the goal is established), and in any event while the outcome is substantially
uncertain. A Performance Goal is objective if a third party having knowledge
of the relevant facts could determine whether the goal is met. Such a
Performance Goal may be based on one or more business criteria that apply to
the Employee, one or more business units, divisions or sectors of the
Company, or the Company as a whole, and if so desired by the Committee, by
comparison with a peer group of companies. A Performance Goal may include
one or more of the following: revenue, cash flow, net income, stock price,
credit rating, market share, earnings per share, or return on equity;
controlling or reducing various costs of doing business; maintaining
appropriate levels of debt and interest expense. Unless otherwise stated,
such a Performance Goal need not be based upon an increase or positive result
under a particular business criterion and could include, for example,
maintaining the status quo or limiting economic losses (measured, in each
case, by reference to specific business criteria). In interpreting Plan
provisions applicable to Performance Goals and Qualified Performance Awards,
it is the intent of the Plan to conform with the standards of Section 162(m)
of the Code and Treasury Regulation §1.162-27(e)(2)(i), as to grants to those
Employees whose compensation is, or is likely to be, subject to Section
162(m) of the Code, and the Committee in establishing such goals and
interpreting the Plan shall be guided by such provisions. Prior to the
payment of any compensation based on the achievement of Performance Goals
applicable to Qualified Performance Awards, the Committee must certify in
writing that applicable Performance Goals and any of the material terms
thereof were, in fact, satisfied.



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Subject to the foregoing provisions, the terms, conditions and limitations
applicable to any Qualified Performance Awards made pursuant to this Plan
shall be determined by the Committee.



(b) Notwithstanding anything to the contrary contained in this Plan, the following
limitations shall apply to any Awards made hereunder:





     (i) no Participant may be granted, during any one-year period, Awards consisting
of Options or SARs that are exercisable for more than 500,000 shares of Common Stock;




     (ii) no Participant may be granted, during any one-year period, Stock Awards
covering or relating to more than 500,000 shares of Common Stock (the limitation set
forth in this clause (ii), together with the limitation set forth in clause (i)
above, being hereinafter collectively referred to as the “Stock Based Awards
Limitations”); and




     (iii) no Participant may be granted Awards consisting of cash or in any other
form permitted under this Plan (other than Awards consisting of Options or SARs or
otherwise consisting of shares of Common Stock or units denominated in such shares)
in respect of any one-year period having a value determined on the date of grant in
excess of $5,000,000.



9. Awards to Directors. The Board may grant a Nonemployee Director of the Company one or
more Awards and establish the terms thereof in accordance with paragraph 8 and consistent
with the provisions therein for the granting of Awards to Employees by the Committee. Any
such Award shall be subject to the applicable terms, conditions and limitations set forth in
this Plan and the applicable Award Agreement.




10. Award Payment; Dividends; Substitution.




(a) General. Payment of Awards may be made in the form of cash or Common Stock, or a
combination thereof, and may include such restrictions as the Committee shall determine,
including, in the case of Common Stock, restrictions on transfer and forfeiture provisions.
If payment of an Award is made in the form of Restricted Stock, the applicable Award
Agreement relating to such shares shall specify whether they are to be issued at the
beginning or end of the Restriction Period. In the event that shares of Restricted Stock
are to be issued at the beginning of the Restriction Period, the certificates evidencing
such shares (to the extent that such shares are so evidenced) shall contain appropriate
legends and restrictions that describe the terms and conditions of the restrictions
applicable thereto. In the event that shares of Restricted Stock are to be issued at the
end of the Restricted Period, the right to receive such shares shall be evidenced by book
entry registration or in such other manner as the Committee may determine.




(b) Deferral. With the approval of the Committee, amounts payable in respect of Awards may
be deferred and paid either in the form of installments or as a lump-sum payment; provided,
however, that if deferral is permitted, each provision of the Award shall be interpreted to
permit the deferral only as allowed in compliance with the requirements of Section 409A of
the Code and any provision that would conflict with such requirements shall not be valid or
enforceable. It is intended that any Awards under the Plan satisfy the requirements of
Section 409A of the Code to avoid imposition of additional taxes thereunder. The Committee
may permit selected Participants to elect to defer payments of some or all types of Awards
in accordance with procedures established by the Committee. Any deferred payment of an
Award, whether elected by the Participant or specified by the Award Agreement or by the
Committee, may be forfeited if and to the extent that the Award Agreement so provides.




(c) Dividends and Interest. Rights to dividends or Dividend Equivalents may be extended to
and made part of any Award consisting of shares of Common Stock or units denominated in shares of Common Stock, subject to such terms, conditions and restrictions as the Committee
may establish. The Committee may also establish rules and procedures for the crediting of
interest on deferred cash payments and Dividend Equivalents for Awards consisting of shares
of Common Stock or units denominated in shares of Common Stock.




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11. Stock Option
Exercise. 
     The price at which shares of Common Stock may be purchased under an
Option shall be paid in full at the time of exercise in cash or, if elected by the Participant, the
Participant may purchase such shares by means of tendering Common Stock or surrendering another
Award, including Restricted Stock, valued at Fair Market Value on the date of exercise, or any
combination thereof. The Committee shall determine acceptable methods for Participants to tender
Common Stock or other Awards. The Committee may provide for procedures to permit the exercise or
purchase of such Awards by use of the proceeds to be received from the sale of Common Stock
issuable pursuant to an Award. Unless otherwise provided in the applicable Award Agreement, in the
event shares of Restricted Stock are tendered as consideration for the exercise of an Option, a
number of the shares issued upon the exercise of the Option, equal to the number of shares of
Restricted Stock used as consideration therefor, shall be subject to the same restrictions as the
Restricted Stock so submitted as well as any additional restrictions that may be imposed by the
Committee.



12. Taxes. 
     The Company shall have the right to deduct applicable taxes from any Award payment and
withhold, at the time of delivery or vesting of cash or shares of Common Stock under this Plan, an
appropriate amount of cash or number of shares of Common Stock or a combination thereof for payment
of taxes required by law or to take such other action as may be necessary in the opinion of the
Company to satisfy all obligations for withholding of such taxes. The Committee may also permit
withholding to be satisfied by the transfer to the Company of shares of Common Stock theretofore
owned by the holder of the Award with respect to which withholding is required. If shares of
Common Stock are used to satisfy tax withholding, such shares shall be valued based on the Fair
Market Value when the tax withholding is required to be made.



13. Amendment, Modification, Suspension or Termination. 
     The Board may amend, modify, suspend or
terminate this Plan for the purpose of meeting or addressing any changes in legal requirements or
for any other purpose permitted by law, except that (i) no amendment or alteration that would
adversely affect the rights of any Participant under any Award previously granted to such
Participant shall be made without the consent of such Participant and (ii) no amendment or
alteration shall be effective prior to its approval by the stockholders of the Company to the
extent stockholder approval is otherwise required by applicable legal requirements.



14. Assignability. 
     Unless otherwise determined by the Committee and provided in the Award
Agreement, no Award or any other benefit under this Plan shall be assignable or otherwise
transferable. Any attempted assignment of an Award or any other benefit under this Plan in
violation of this paragraph 14 shall be null and void.



15. Adjustments.





(a) The existence of outstanding Awards shall not affect in any manner the right or power of
the Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the capital stock of the Company or
its business or any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stock (whether or not such issue is prior to, on a
parity with or junior to the Common Stock) or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any other corporate
act or proceeding of any kind, whether or not of a character similar to that of the acts or
proceedings enumerated above.




(b) In the event of any subdivision or consolidation of outstanding shares of Common Stock,
declaration of a dividend payable in shares of Common Stock or other stock split, then (i)
the number of shares of Common Stock reserved under this Plan, (ii) the number of shares of
Common Stock covered by outstanding Awards in the form of Common Stock or units denominated
in Common Stock, (iii) the exercise or other price in respect of such Awards, (iv) the Stock
Based Award Limitations described in paragraph 8(b) hereof, (v) the number of shares of
Common Stock covered by Awards to Directors granted pursuant to paragraph 9 hereof, and (vi)
the appropriate Fair Market Value and other price determinations for such Awards shall each
be proportionately adjusted by the Board to reflect such transaction. In the event of any
other recapitalization or capital reorganization of the Company, any consolidation or merger
of the Company with another corporation or entity, the adoption by the Company of any plan
of exchange affecting the Common Stock or any distribution to holders of Common Stock of
securities or property (other than normal cash dividends or dividends payable in Common
Stock), the Board shall make appropriate adjustments to (i) the number of shares of Common
Stock covered by Awards in the form of Common Stock or units denominated in Common Stock,
(ii) the exercise or other price in respect of such Awards, and (iii) the appropriate Fair
Market Value and



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other price determinations for such Awards, (iv) the number of shares of Common Stock
covered by Awards to Directors automatically granted pursuant to paragraph 9 hereof and (v)
the Stock Based Award Limitations described in paragraph 8(b) hereof, to give effect to such
transaction shall each be proportionately adjusted by the Board to reflect such transaction;
provided that such adjustments shall only be such as are necessary to maintain the
proportionate interest of the holders of the Awards and preserve, without exceeding, the
value of such Awards.





(c) In the event of a corporate merger, consolidation, acquisition of property or stock,
separation, reorganization or liquidation, the Board may make such adjustments to Awards or
other provisions for the disposition of Awards as it deems equitable, and shall be
authorized, in its discretion, (i) to provide for the substitution of a new Award or other
arrangement (which, if applicable, may be exercisable for such property or stock as the
Board determines) for an Award or the assumption of the Award, regardless of whether in a
transaction to which Section 424(a) of the Code applies, (ii) to provide, prior to the
transaction, for the acceleration of the vesting and exercisability of, or lapse of
restrictions with respect to, the Award and, if the transaction is a cash merger, provide
for the termination of any portion of the Award that remains unexercised at the time of such
transaction or (iii) to provide for the acceleration of the vesting and exercisability of an
Award and the cancellation thereof in exchange for such payment as shall be mutually
agreeable to the Participant and the Board.



16. Restrictions. 
     No Common Stock or other form of payment shall be issued with respect to any
Award unless the Company shall be satisfied based on the advice of its counsel that such issuance
will be in compliance with applicable federal and state securities laws. Certificates evidencing
shares of Common Stock delivered under this Plan (to the extent that such shares are so evidenced)
may be subject to such stop transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations and other requirements of the Securities and Exchange
Commission, any securities exchange or transaction reporting system upon which the Common Stock is
then listed or to which it is admitted for quotation and any applicable federal or state securities
law. The Committee may cause a legend or legends to be placed upon such certificates (if any) to
make appropriate reference to such restrictions.



17. Unfunded Plan. 
     Insofar as it provides for Awards of cash, Common Stock or rights thereto, this
Plan shall be unfunded. Although bookkeeping accounts may be established with respect to
Participants who are entitled to cash, Common Stock or rights thereto under this Plan, any such
accounts shall be used merely as a bookkeeping convenience. The Company shall not be required to
segregate any assets that may at any time be represented by cash, Common Stock or rights thereto,
nor shall this Plan be construed as providing for such segregation, nor shall the Company, the
Board or the Committee be deemed to be a trustee of any cash, Common Stock or rights thereto to be
granted under this Plan. Any liability or obligation of the Company to any Participant with
respect to an Award of cash, Common Stock or rights thereto under this Plan shall be based solely
upon any contractual obligations that may be created by this Plan and any Award Agreement, and no
such liability or obligation of the Company shall be deemed to be secured by any pledge or other
encumbrance on any property of the Company. Neither the Company nor the Board nor the Committee
shall be required to give any security or bond for the performance of any obligation that may be
created by this Plan.



18. Code
Section 409A. Notwithstanding anything in this Plan to the contrary, if any Plan
provision or Award under the Plan would result in the imposition of an additional tax under Code
Section 409A and related regulations and Treasury pronouncements (“Section 409A”), that Plan
provision or Award will be reformed to avoid imposition of the applicable tax and no action taken
to comply with Section 409A shall be deemed to adversely affect the Participant’s rights to an
Award.



19. Governing Law. 
     This Plan and all determinations made and actions taken pursuant hereto, to the
extent not otherwise governed by mandatory provisions of the Code or the securities laws of the
United States, shall be governed by and construed in accordance with the laws of the State of
Delaware.



20. Effectiveness. This Plan shall be effective as of March 14, 2005 (the “Effective Date”), as
approved by the Board. Notwithstanding the foregoing, the adoption of this Plan is expressly
conditioned upon the approval by the holders of a majority of shares of Common Stock present, or
represented, and entitled to vote at a meeting of the Company’s stockholders held on or before
December 31, 2005. If the stockholders of the Company should fail to so approve this Plan prior to
such date, this Plan shall terminate and cease to be of any further force or effect, and all grants
of Awards hereunder shall be null and void. Notwithstanding the foregoing, the Plan shall continue
in effect for a term of ten (10) years commencing on the date the Company’s stockholders approve
the Plan, unless sooner terminated by action of the Board.





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