Exhibit 10.3


 


AMENDED AND RESTATED


IKARIA HOLDINGS, INC.


2010 LONG TERM INCENTIVE
PLAN


 


Adopted by the Board of Directors: May 4, 2010


Approved by the Stockholders:  May
6, 2010


 

















 


AMENDED AND RESTATED


IKARIA HOLDINGS, INC.


2010
LONG TERM INCENTIVE PLAN


Table of Contents


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Purpose

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Administration

  	
  5

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Stock Subject to the Plan; Grant Limitations

  	
  7

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Option Grants for Eligible Individuals

  	
  8

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Terms and Conditions Applicable to All Options

  	
  9

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Stock Appreciation Rights

  	
  11

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Dividend Equivalent Rights

  	
  12

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Restricted Stock; Restricted Stock Units

  	
  13

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Performance Awards

  	
  14

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Share Awards

  	
  19

  
	
   

  	
   

  	
   

  
	
  12.

  	
  Effect of a Termination of Employment or Service

  	
  19

  
	
   

  	
   

  	
   

  
	
  13.

  	
  Adjustment Upon Changes in Capitalization

  	
  19

  
	
   

  	
   

  	
   

  
	
  14.

  	
  Effect of Certain Transactions

  	
  20

  
	
   

  	
   

  	
   

  
	
  15.

  	
  Interpretation

  	
  21

  
	
   

  	
   

  	
   

  
	
  16.

  	
  Termination and Amendment of the Plan/Modification
  of Options and Awards

  	
  21

  
	
   

  	
   

  	
   

  
	
  17.

  	
  Non-Exclusivity of the Plan

  	
  22

  
	
   

  	
   

  	
   

  
	
  18.

  	
  Limitation of Liability

  	
  22

  
	
   

  	
   

  	
   

  
	
  19.

  	
  Regulations and Other Approvals; Governing Law

  	
  22

  
	
   

  	
   

  	
   

  
	
  20.

  	
  Miscellaneous

  	
  23

  



 

















 


AMENDED AND RESTATED


IKARIA HOLDINGS, INC.


2010 LONG TERM INCENTIVE
PLAN


 


1.                                       Purpose.


 


This Plan provides select
employees, officers, consultants and directors of the Company and its
Subsidiaries with an opportunity to receive long term incentive awards as set
forth by the terms and conditions of this Plan. 
These awards have been designed to motivate recipients to achieve short
term and longer term results for the Company, with an expectation that their
expertise will contribute to the attainment of key business goals that will
further benefit shareholders.  Awards
under this Plan include Incentive Stock Options, Nonqualified Stock Options,
Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Dividend
Equivalent Rights, Performance Units, Performance Share Units,
Performance-Based Restricted Stock, Share Awards and Cash Incentive Awards (as
each term is herein defined).


 


2.                                       Definitions.


 


For purposes of the Plan, the following terms shall
have the following meanings:


 


“Affiliate” means, with respect to any
Person, any other Person which, directly or indirectly, controls, is controlled
by or is under common control with, such Person.


 


“Agreement” means the written agreement
between the Company and an Optionee or Grantee evidencing the grant of an
Option or Award and setting forth the terms and conditions thereof.


 


“Award” means a Stock-Based Award or a Cash
Incentive Award.


 


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


 


“Cash Incentive Award” means the right
granted to an Eligible Individual to receive a payment of cash pursuant to Section 10.3.


 


“Change in Capitalization” means any increase
or reduction in the number of Shares, or any change (including, but not limited
to, in the case of a spin-off, extraordinary dividend or other extraordinary
distribution in respect of Shares, a change in value) in the Shares or exchange
of Shares for a different number or kind of shares or other securities of the
Company or another corporation, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, cash dividend, property dividend, combination or exchange
of shares, repurchase of shares, change in corporate structure or other,
similar transaction or event.


 


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


 


“Committee” means the Compensation Committee
of the Board, or a subcommittee thereof, which shall administer the Plan and
perform the functions set forth herein; 


 

















 


provided, that, if there is no Compensation Committee of the
Board, or if the Board determines that the Compensation Committee shall not be
the Committee, then the Committee shall be the Board or such Directors as are
appointed to the Committee by the Board.


 


“Company” means Ikaria Holdings, Inc., a
Delaware corporation, and shall include any successor thereto by merger,
consolidation, acquisition of substantially all the assets thereof, or
otherwise.


 


“Director” means a director of the Company.


 


“Dividend Equivalent Right” means a right to
receive all or some portion of the cash dividends that are or would be payable
with respect to Shares.


 


“Division” means any of the operating units
or divisions of the Company or any Subsidiary designated as a Division by the
Committee.


 


“Eligible Individual” means any of the
following individuals who is designated by the Committee as eligible to receive
Options or Awards subject to the conditions set forth herein:  (i) any director, officer or employee of
the Company or a Subsidiary, (ii) any individual to whom the Company or a
Subsidiary has extended a formal, written offer of employment or (iii) any
consultant or advisor of the Company or a Subsidiary.


 


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


 


“Fair Market Value” on any date means (i) the
closing price at the end of normal market hours of the Shares on such date as
quoted on the National Association of Securities Dealers Automated Quotation
System (the “Nasdaq”), (ii) if the Shares are not quoted on the
Nasdaq but are listed for trading on the New York Stock Exchange (the “NYSE”)
or other national securities exchange, the closing price at the close of the
primary trading session of the Shares on such date on the NYSE (or, if the
Shares are not listed for trading on the NYSE, on such other exchange) or (iii) if
the Shares are not listed on the Nasdaq, the NYSE or other national exchange,
or if there is no such closing price for such date on the Nasdaq, the NYSE or
other national exchange, the fair market value of the Shares as determined in
good faith by the Committee (and, if applicable, in accordance with Sections 409A
and 422 of the Code).


 


“Grantee” means a person to whom an Award has
been granted under the Plan.


 


“Incentive Stock Option” means an Option
satisfying the requirements of Section 422 of the Code and designated by
the Committee as an Incentive Stock Option.


 


“Initial Public Offering” shall have the
meaning ascribed to such term in the Company’s Amended and Restated Certificate
of Incorporation as may be amended from time to time.  An Initial Public Offering shall be deemed to
have been consummated if and when the registration statement in connection with
such public offering shall have been declared effective and the offering of
securities thereunder shall have closed in accordance with the terms of the
related underwriting agreement.


 


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“Listed Security” means any security of the
Company that is listed or approved for listing on a national securities
exchange.


 


“Non-Employee Director” means a director of
the Company who is a “non-employee director” within the meaning of Rule 16b-3
promulgated under the Exchange Act.


 


“Non-Voting Common Stock” means the
non-voting common stock of the Company, par value $0.01 per share.


 


“Nonqualified Stock Option” means an Option
which is not an Incentive Stock Option.


 


“Option” means a Nonqualified Stock Option or
an Incentive Stock Option.


 


“Optionee” means a person to whom an Option
has been granted under the Plan.


 


“Outside Director” means a director of the
Company who is an “outside director” within the meaning of Section 162(m) of
the Code and the regulations promulgated thereunder.


 


“Parent” means any corporation which is a
parent corporation (within the meaning of Section 424(e) of the Code)
with respect to the Company.


 


“Performance Awards” means Performance Units,
Performance Share Units, Performance-Based Restricted Stock, Cash Incentive
Awards or any or all of them.


 


“Performance-Based Compensation” means any
Option or Award that is intended to constitute “performance based compensation”
within the meaning of Section 162(m)(4)(C) of the Code and the
regulations promulgated thereunder.


 


“Performance-Based Restricted Stock” means
Shares of Restricted Stock issued or transferred to an Eligible Individual
under Section 10.2.


 


“Performance Cycle” means a time period of not
less than one year as specified by the Committee at the time Performance Awards
or Cash Incentive Awards are granted during which the performance of the
Company, a Subsidiary or a Division will be measured.


 


“Performance Objectives” has the meaning set forth
in Section 10.4.


 


“Performance Share Units” means Performance
Share Units granted to an Eligible Individual under Section 10.1.


 


“Performance Units” means Performance Units
granted to an Eligible Individual under Section 10.1.


 


“Person” means an individual, a corporation,
a partnership, a limited liability company, an association, a trust or any
other entity or organization, including a government or political subdivision
or an agency or instrumentality thereof.


 


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“Plan” means the Amended and Restated Ikaria
Holdings, Inc. 2010 Long Term Incentive Plan, as amended and restated from
time to time.


 


“Recaptured Shares” has the meaning set forth
in Section 4.2(b).


 


“Restricted Stock” means Shares issued or transferred
to an Eligible Individual pursuant to Section 9.1.


 


“Restricted Stock Units” means rights granted
to an Eligible Individual under Section 9.2 representing a number of
hypothetical Shares.


 


“Securities Act” means the Securities Act of
1933, as amended.


 


“Share Award” means an Award of Shares
granted pursuant to Section 11.


 


“Shareholder’s Agreement” means the
Shareholder’s Agreement governing the rights, duties and obligations of certain
present or former employees, officers, consultants and directors of the Company
with respect to Shares issued pursuant to Options or Awards granted or sold to
such persons, in such form as is in use by the Company from time to time.


 


“Shares” means (i) the Non-Voting Common
Stock, prior to the consummation of an Initial Public Offering, and (ii) the
Voting Common Stock, from and after the consummation of an Initial Public
Offering.


 


“Stock Appreciation Right” means a right to
receive all or some portion of the increase in the value of the Shares as
provided in Section 7 hereof.


 


“Stock-Based Award” means a grant of
Restricted Stock, Restricted Stock Units, a Stock Appreciation Right, a
Performance Award, a Dividend Equivalent Right, a Share Award or any or all of
them.


 


“Subsidiary” means (i) except as
provided in subsection (ii) below, any corporation which is a subsidiary
corporation within the meaning of Section 424(f) of the Code with
respect to the Company, and (ii) in relation to the eligibility to receive
Options or Awards other than Incentive Stock Options and continued employment
or service for purposes of Options and Awards (unless the Committee determines
otherwise), any entity, whether or not incorporated, in which the Company
directly or indirectly owns 50% or more of the outstanding equity or other ownership
interests.


 


“Taxable Event” has the meaning set forth in Section 20.2.


 


“Ten-Percent Stockholder” means an Eligible
Individual who, at the time an Incentive Stock Option is to be granted to him
or her, owns (within the meaning of Section 422(b)(6) of the Code)
stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company, or of a Parent or a Subsidiary.


 


“Transition Period” means the period
beginning with the consummation of an Initial Public Offering and ending as of
the earlier of (i) the date of the first annual meeting of 


 


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shareholders
of the Company at which directors are to be elected that occurs after the close
of the third calendar year following the calendar year in which the Initial
Public Offering occurs and (ii) the expiration of the “reliance period”
under Treasury Regulation Section 1.162-27(f)(2).


 


“Voting Common Stock” means the voting common
stock of the Company, par value $0.01 per share.


 


“Withholding Taxes” has the meaning set forth
in Section 20.2.


 


3.                                       Administration.


 


3.1.                              The Plan shall
be administered by the Committee, which shall hold meetings at such times as
may be necessary for the proper administration of the Plan.  Any decision or determination reduced to
writing and signed by a majority of all of the members of the Committee shall
be as fully effective as if made by a majority vote at a meeting duly called
and held.  The Committee shall consist of
at least two Directors and may consist of the entire Board; provided, however,
that from and after the consummation of an Initial Public Offering (a) if
the Committee consists of less than the entire Board, then, with respect to any
Option or Award granted to an Eligible Individual who is subject to Section 16
of the Exchange Act, the Committee shall consist of at least two Directors,
each of whom shall be a Non-Employee Director, and (b) following the
Transition Period, to the extent necessary for any Option or Award intended to
qualify as Performance-Based Compensation to so qualify, the Committee shall
consist of at least two Directors, each of whom shall be an Outside
Director.  For purposes of the preceding
sentence, if one or more members of the Committee is not a Non-Employee
Director and/or an Outside Director but recuses himself or herself or abstains
from voting with respect to a particular action taken by the Committee, then
the Committee, with respect to that action, shall be deemed to consist only of
the members of the Committee who have not recused themselves or abstained from
voting.  A quorum shall consist of not
fewer than two members of the Committee and a majority of a quorum may
authorize any action.  The Board may, in
its sole discretion, permit the Chief Executive Officer of the Company to
exercise the authority granted to the Committee pursuant to Sections 3.4(a) and
(b) with respect to other Eligible Individuals (other than Eligible
Individuals subject to Section 16 of the Exchange Act or receiving
compensation subject to Section 162(m) of the Code), subject to such
limitations as imposed by the Board in its discretion and subject to compliance
with Section 157(c) of the Delaware General Corporation Law, as
amended from time to time.


 


3.2.                              Board
Reservation and Delegation.  Except to the extent necessary for any Award
or Option intended to qualify as Performance-Based Compensation to so qualify,
the Board may, in its discretion, reserve to itself or exercise any or all of
the authority and responsibility of the Committee hereunder and may also
delegate to another committee of the Board any or all of the authority and
responsibility of the Committee with respect to Awards or Options to Eligible
Individuals who are not subject to Section 16(b) of the Exchange Act
at the time any such delegated authority or responsibility is exercised.  Such other committee may consist of one or
more Directors who may, but need not be, officers or employees of the Company
or any of its Subsidiaries.  To the
extent the Board has reserved to itself, or exercised, the authority and
responsibility of the Committee, or delegated the authority and responsibility
of 


 


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the Committee to such other committee, all
references to the Committee in the Plan shall be to the Board or to such other
committee.


 


3.3.                              No member of
the Committee shall be liable for any action, failure to act, determination or
interpretation made in good faith with respect to this Plan or any transaction
hereunder.  The Company hereby agrees to
indemnify each member of the Committee for all costs and expenses and, to the
extent permitted by applicable law, any liability incurred in connection with
defending against, responding to, negotiating for the settlement of or
otherwise dealing with any claim, cause of action or dispute of any kind
arising in connection with any actions in administering this Plan or in
authorizing or denying authorization to any transaction hereunder.


 


3.4.                              Subject to the
express terms and conditions set forth herein, the Committee shall have the
power from time to time to:


 


(a)                                  determine those Eligible
Individuals to whom Options shall be granted under the Plan and the number of
such Options to be granted and to prescribe the terms and conditions (which
need not be identical) of each such Option, including the exercise price per
Share, the vesting schedule and the duration of each Option, and make any
amendment or modification to any Option Agreement consistent with the terms of
the Plan;


 


(b)                                 select those Eligible Individuals
to whom Stock-Based Awards and/or Cash Incentive Awards shall be granted under
the Plan and to determine the number of Shares in respect of which each
Stock-Based Award is granted, and the terms and conditions (which need not be
identical) of each such Award, and make any amendment or modification to any
Agreement consistent with the terms of the Plan;


 


(c)                                  to construe and interpret
the Plan and the Options and Awards granted hereunder and to establish, amend
and revoke rules and regulations for the administration of the Plan,
including, but not limited to, correcting any defect or supplying any omission,
or reconciling any inconsistency in the Plan or in any Agreement, in the manner
and to the extent it shall deem necessary or advisable, including so that the
Plan and the operation of the Plan complies with Rule 16b-3 under the
Exchange Act, Sections 162(m) and 409A of the Code (to the extent
applicable) and other applicable law, and otherwise to make the Plan fully
effective;


 


(d)                                 to make such adjustments to
the Options and Awards as are required by Section 13;


 


(e)                                  to determine the duration
and purposes for leaves of absence which may be granted to an Optionee or
Grantee on an individual basis without constituting a termination of employment
or service for purposes of the Plan;


 


(f)                                    to exercise its discretion
with respect to the powers and rights granted to it as set forth in the Plan;
and


 


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(g)                                 generally, to exercise such
powers and to perform such acts as are deemed necessary or advisable to promote
the best interests of the Company with respect to the Plan.


 


All
decisions and determinations by the Committee in the exercise of the foregoing
powers shall be final, binding and conclusive upon the Company, each
Subsidiary, the Optionees and Grantees, and all other persons having or
claiming any interest under the Plan or any Option or Award granted hereunder.


 


3.5.                              Notwithstanding
anything herein to the contrary, the Committee may determine the terms and
conditions of Options and Awards and make such adjustments to the terms thereof
and to the Plan as are necessary or advisable to fulfill the purposes of the
Plan taking into account matters of local law or practice, including tax and
securities laws of the individual States and of jurisdictions outside the
United States.  Any such adjustments to
the Plan shall be evidenced by one or more written supplements to the Plan.


 


4.                                       Stock
Subject to the Plan; Grant Limitations.


 


4.1.                              Number of
Shares Authorized for Issuance; Limitations on Options and  Awards.  Subject to any adjustment as provided in the
Plan, the Shares to be issued under the Plan may be, in whole or in part,
authorized but unissued Shares or issued Shares which shall have been
reacquired by the Company and held by it as treasury shares.  The aggregate number of Shares that may be
made the subject of Awards or Options granted under the Plan shall initially be
2,793,062 (calculated as set forth in Section 4.2):
provided, that, prior to the termination of the Plan in accordance with Section 16.1,
that number shall be increased automatically on January 1st of each year
commencing on January 1, 2011, in an amount such that the aggregate
number of Shares that may be made the subject of Awards or Options granted
under the Plan as of such January 1
shall be equal to the sum of (i) 3% of the total number of shares of Voting Common Stock ,Non-Voting Common
Stock, Series A Preferred and Series B Preferred issued and
outstanding on December 31st of the immediately preceding calendar year
and (ii) the number of Recaptured Shares that have not previously been
made the  subject of Awards or Options
hereunder; provided, that the Board may in its sole discretion reduce
the amount of the increase in any particular year.  In no event may more than 20 million Shares
be made the subject of Incentive Stock Options under the Plan
(calculated as set forth in Section 4.2).


 


4.2.                              Calculating
Shares Available under the Plan.


 


(a)                                  Upon the granting of an
Option or an Award, the number of Shares available under Section 4.1 for
the granting of further Options and Awards shall be reduced as follows:


 


(i)                                     In connection with the
granting of an Option or an Award (other than the granting of (A) Performance
Units, (B) Cash Incentive Awards, (C) Dividend Equivalent Rights or (D) other
Awards payable in cash), the number of Shares shall be reduced by the number of
Shares in respect of which the Option or Award is granted or denominated, 


 


7

















 


with a corresponding adjustment if an Award is ultimately settled in
whole or in part in a greater or lesser number of Shares.


 


(ii)                                  In connection with the
granting of a Performance Unit, the number of Shares shall initially be reduced
by an amount equal to the quotient of (A) the dollar amount in which the
Performance Unit is denominated divided by (B) the Fair Market Value of a
Share on the date the Performance Unit is granted, with a corresponding
adjustment if the Performance Unit is ultimately settled in whole or in part in
a greater or lesser number of Shares.


 


(iii)                               In connection with the
granting of a Dividend Equivalent or a Cash Incentive Award, the number of
Shares available under Section 4.1 shall not be reduced; provided, however,
that if Shares are issued in settlement of such an Award, the number of Shares
available for the granting of further Options and Awards under Section 4.1
shall be reduced by the number of Shares so issued.


 


(iv)                              If any Option is exercised (A) by
tendering Shares, either actually or by attestation, to the Company as full or
partial payment of the exercise price or (B) by the Company reducing the
number of Shares to be issued upon exercise of such Option in full or partial
payment of the exercise price, the maximum number of Shares available under Section 4.1
shall be increased by the number of Shares so tendered or by the amount of such
reduction.


 


(v)                                 If Shares subject to any
Option or Award are retained by the Company in satisfaction of any Withholding
Taxes payable by an Optionee or Grantee, then the maximum number of Shares
available under Section 4.1 shall be increased by the number of Shares so
retained.


 


(b)                                 Notwithstanding Section 4.2(a),
in the event that an Award is granted that, pursuant to the terms of an Agreement,
cannot be settled in Shares, the aggregate number of Shares that may be the
subject of Options or Awards granted under the Plan shall not be reduced to
reflect such Award.  Whenever any
outstanding Option or Award or portion thereof expires, is cancelled or
forfeited, is settled in cash or is otherwise terminated for any reason without
having been exercised or payment having been made in respect of the entire
Option or Award, the Shares allocable to the expired, cancelled, forfeited,
settled or otherwise terminated portion of the Option or Award (“Recaptured
Shares”) may again be the subject of Options or Awards granted hereunder.
In addition, upon settlement of a Stock Appreciation Right in Shares, the
excess of the number of Shares subject to the Stock Appreciation Right over the
number of Shares issued in settlement of the Stock Appreciation Right may again
be the subject of Options or Awards granted hereunder.


 


5.                                       Option
Grants for Eligible Individuals.


 


5.1.                              Authority of
Committee.  Subject to
the provisions of the Plan, the Committee shall have full and final authority
to select those Eligible Individuals who will receive Options, and the terms
and conditions of the grant to such Eligible Individuals shall be set forth in
an Agreement.  Incentive Stock Options
may be granted only to Eligible Individuals who are employees of the Company or
a Subsidiary.


 


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5.2.                              Exercise Price.  The purchase price per Share under each
Option shall be determined by the Committee and set forth in the Agreement but
shall not be less than the Fair Market Value of a Share on the date of grant
(110% of Fair Market Value in the case of an Incentive Stock Option granted to
a Ten-Percent Stockholder).


 


5.3.                              Maximum
Duration.  Options
shall not be exercisable after the expiration of ten years from the date of
grant (five years in the case of an Incentive Stock Option granted to a Ten-Percent
Stockholder); provided, however, that an Option (other than
an Incentive Stock Option) may, upon the death of the Participant prior to the
expiration of the Option, be exercised for such period following the date of
the Participant’s death as the Committee determines which may extend for up to
one (1) year beyond ten (10) years from the date the Option is
granted.  The term of an Option shall be
set forth in the Agreement evidencing such Option.  To the extent permitted by applicable law,
the Committee may, subsequent to the granting of any Option, extend the term
thereof, but in no event shall the term as so extended exceed the maximum term
provided for in the first sentence of this Section 5.3.


 


5.4.                              Vesting.  Each Option shall become exercisable in such
installments (which need not be equal) and at such times as may be designated
by the Committee and set forth in the Agreement.  To the extent not exercised, installments
shall accumulate and be exercisable, in whole or in part, at any time after
becoming exercisable, but not later than the date the Option expires.  The Committee may accelerate the
exercisability of any Option or portion thereof at any time.


 


5.5.                              Limitations on
Incentive Stock Options.  To
the extent that the aggregate Fair Market Value (determined as of the date of
the grant) of Shares with respect to which Incentive Stock Options granted
under the Plan and “incentive stock options” (within the meaning of Section 422
of the Code) granted under all other plans of the Company or its Subsidiaries
(in either case determined without regard to this Section 5.5) are
exercisable by an Optionee for the first time during any calendar year exceeds
$100,000, such Incentive Stock Options shall be treated as Nonqualified Stock
Options.  In applying the limitation in
the preceding sentence in the case of multiple Option grants, Options which
were intended to be Incentive Stock Options shall be treated as Nonqualified
Stock Options according to the order in which they were granted such that the
most recently granted Options are first treated as Nonqualified Stock Options.


 


5.6.                              Options Granted
to California Residents. 
Options granted under the Plan on any date on which the Shares are not a
Listed Security to persons resident in the State of California shall be subject
to the provisions set forth in Attachment A hereto.  To the extent the provisions of the Plan
conflict with the provisions set forth on Attachment A, the provisions
on Attachment A shall govern the terms of such Options.


 


6.                                       Terms
and Conditions Applicable to All Options.


 


6.1.                              No Sale or
Transfer.  Except to
the extent permitted by the Committee with respect to Nonqualified Stock
Options, no Option shall be transferable by the Optionee other than by will or
by the laws of descent and distribution or, in the case of an Option other than
an Incentive Stock Option, pursuant to a domestic relations order (within the
meaning of 


 


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Rule 16a-12 promulgated under the
Exchange Act), and an Option shall be exercisable during the lifetime of an
Optionee only by the Optionee or his or her guardian or legal representative.


 


6.2.                              Manner of
Exercise and Payment.  The
exercise of an Option shall be made by a written notice delivered in person or
by mail to the Secretary of the Company at the Company’s principal executive
office, specifying the number of Shares to be exercised and, to the extent
applicable, accompanied by payment therefor and otherwise in accordance with
the Agreement pursuant to which the Option was granted, or in such other manner
as prescribed by the Committee; provided, however, that
Options may not be exercised by an Optionee for six months following a hardship
distribution to the Optionee, to the extent such exercise is prohibited under
Treasury Regulation Section 1.401(k)-1(d)(3)(iv)(E).  The exercise price for any Shares purchased
pursuant to the exercise of an Option shall be paid, in any of the following
forms (or any combination thereof):  (a) cash,
(b) the transfer, either actually or by attestation, to the Company of
Shares (if the Shares are then Listed Securities), such transfer to be upon
such terms and conditions as determined by the Committee, (c) a reduction
by the Company in the number of Shares (if the Shares are then Listed
Securities) to be issued upon such exercise having a Fair Market Value on the
date of exercise equal to the aggregate exercise price payable, (d) such
other cashless exercise procedures (including through the use of a cashless
exercise program with a registered broker-dealer approved by the Committee) or (e) a
combination of the foregoing;  provided, however,
that  (i) clauses (b) through (d) shall
only apply prior to an Initial Public Offering (as such term is defined in the
Company’s Amended and Restated Certificate of Incorporation as may be amended
from time to time) as determined by the Committee at the time of grant or with
respect to a Nonqualified Stock Option, at any time thereafter, and (ii) the
availability of any method of payment shall be subject to the terms and
conditions of the Company’s credit facilities as in effect from time to
time.  Any Shares transferred to the
Company as payment of the exercise price under an Option shall be valued at
their Fair Market Value on the day of exercise of such Option.  If requested by the Committee, the Optionee
shall deliver the Agreement evidencing the Option to the Secretary of the
Company who shall endorse thereon a notation of such exercise and return such
Agreement to the Optionee.  No fractional
Shares (or cash in lieu thereof) shall be issued upon exercise of an Option and
the number of Shares that may be purchased upon exercise shall be rounded down
to the nearest number of whole Shares. 
Notwithstanding anything in this Plan to the contrary, an Option may be
exercised in accordance with the arrangements and procedures provided in this Section 6.2
only to the extent such arrangements or procedures comply with Section 13(k) of
the Exchange Act and any other applicable laws, rules and regulations.


 


6.3.                              Rights of
Optionees.  No Optionee
shall be deemed for any purpose to be the owner of any Shares subject to any
Option unless and until (a) the Option shall have been exercised pursuant
to the terms thereof, (b) the Company shall have issued and delivered
Shares to the Optionee (such issuance and delivery to be subject to the
Shareholder’s Agreement, if applicable), (c) the Optionee’s name shall
have been entered as a stockholder of record on the books of the Company and (d) if
required by the Committee, the Optionee shall have delivered a fully executed
Shareholder’s Agreement and stock power to the Company.  Thereupon, the Optionee shall have full
dividend and other ownership rights with respect to such Shares, including
voting rights if and only if such Shares consist of Voting Common Stock,
subject to such terms and conditions as may be set forth in the Agreement and,
if applicable, the Shareholder’s Agreement.


 


10

















 


6.4.                              Buyout Provisions.  The Committee may at any time offer to buy
out for a payment in cash or Shares an Option previously granted under the Plan
based on such terms and conditions as the Committee shall establish and
communicate to the Optionee at the time that such offer is made.


 


7.                                       Stock
Appreciation Rights.


 


7.1.                              Grant of Stock
Appreciation Rights.  The
Committee may in its discretion, either alone or in connection with the grant
of an Option, grant Stock Appreciation Rights in accordance with the Plan, the
terms and conditions of which shall be set forth in an Agreement.  If granted in connection with an Option, a
Stock Appreciation Right shall cover the same Shares covered by the Option (or
such lesser number of Shares as the Committee may determine) and shall, except
as provided in this Section 7, be subject to the same terms and conditions
as the related Option.


 


7.2.                              Time of Grant.  A Stock Appreciation Right may be granted (a) at
any time if unrelated to an Option, or (b) if related to an Option, either
at the time of grant or at any time thereafter during the term of the Option.


 


7.3.                              Stock
Appreciation Right Granted in Connection With an Option.


 


(a)                                  Exercise.  A Stock Appreciation Right granted in
connection with an Option shall be exercisable at such time or times and only
to the extent that the related Options are exercisable and will not be
transferable except to the extent the related Option is transferable.  A Stock Appreciation Right granted in
connection with an Incentive Stock Option shall be exercisable only if the Fair
Market Value of a Share on the trading day immediately preceding the date of
exercise exceeds the exercise price specified in the related Incentive Stock
Option Agreement.


 


(b)                                 Amount Payable.  Upon the exercise of a Stock Appreciation
Right related to an Option, the Grantee shall be entitled to receive an amount
of cash or a number of Shares determined by multiplying (i) the excess of
the Fair Market Value of a Share on the trading day immediately preceding the
date of exercise of such Stock Appreciation Right over the per Share exercise
price under the related Option, by (ii) the number of Shares as to which
such Stock Appreciation Right is being exercised.  Notwithstanding the foregoing, the Committee
may limit in any manner the amount payable with respect to any Stock
Appreciation Right by including such a limit in the Agreement evidencing the
Stock Appreciation Right at the time it is granted.


 


(c)                                  Treatment of Related Options
and Stock Appreciation Rights Upon Exercise.  Upon the exercise of a Stock Appreciation
Right granted in connection with an Option, the Option shall be cancelled to
the extent of the number of Shares as to which the Stock Appreciation Right is
exercised, and upon the exercise of an Option granted in connection with a
Stock Appreciation Right, the Stock Appreciation Right shall be cancelled to
the extent of the number of Shares as to which the Option is exercised or
surrendered.


 


7.4.                              Stock
Appreciation Right Unrelated to an Option.  The Committee may grant to Eligible
Individuals Stock Appreciation Rights unrelated to Options.  Stock 


 


11

















 


Appreciation Rights unrelated to Options
shall contain such terms and conditions as to exercisability, vesting and
duration as the Committee shall determine, but in no event shall they have a
term of greater than ten years.  Upon
exercise of a Stock Appreciation Right unrelated to an Option, the Grantee
shall be entitled to receive an amount of cash or a number of Shares determined
by multiplying (a) the excess of the Fair Market Value of a Share on the
date of exercise of such Stock Appreciation Right over the Fair Market Value of
a Share on the date the Stock Appreciation Right was granted, by (b) the
number of Shares as to which the Stock Appreciation Right is being
exercised.  Notwithstanding the
foregoing, the Committee may limit in any manner the amount payable with
respect to any Stock Appreciation Right by including such a limit in the
Agreement evidencing the Stock Appreciation Right at the time it is granted.


 


7.5.                              No Sale or
Transfer.  The Grantee
shall not sell, transfer, assign, exchange, pledge, encumber or otherwise
dispose of a Stock Appreciation Right or any portion thereof.


 


7.6.                              Manner of
Exercise.  The
exercise of Stock Appreciation Rights shall be made only by delivery of written
notice to the Company.  Such notice shall
state that the Grantee is electing to exercise the Stock Appreciation Right,
shall set forth the number of Shares in respect of which the Stock Appreciation
Right is being exercised and shall be signed by the Grantee or, where
applicable, by the Grantee’s legal representative.


 


7.7.                              Form of
Payment.  Payment of the amount
determined under Section 7.3(b) or 7.4 may be made in whole Shares in
a number determined at their Fair Market Value on the trading day immediately
preceding the date of exercise of the Stock Appreciation Right, or solely in
cash, or in a combination of cash and Shares. 
Such form of payment shall be determined by the Committee and set forth
in the Agreement evidencing the Stock Appreciation Right.  If the Committee decides to make full payment
in Shares and the amount payable results in a fractional Share, payment for the
fractional Share will be made in cash.


 


8.                                       Dividend
Equivalent Rights.


 


Dividend Equivalent Rights may be granted to
Eligible Individuals in tandem with an Option or Award or as a separate
Award.  The terms and conditions
applicable to each Dividend Equivalent Right shall be specified in the
Agreement under which the Dividend Equivalent Right is granted.  Amounts payable in respect of Dividend
Equivalent Rights may be payable currently or deferred until the lapsing of
restrictions on such Dividend Equivalent Rights or until the vesting, exercise,
payment, settlement or other lapse of restrictions on the Option or Award to
which the Dividend Equivalent Rights relate. 
In the event that any portion of the amount payable in respect of
Dividend Equivalent Rights is to be deferred, the Committee shall determine
whether such amounts are to be held in cash or reinvested in Shares or deemed
(notionally) to be reinvested in Shares. 
If amounts payable in respect of Dividend Equivalent Rights are to be
held in cash, there may be credited at the end of each year (or portion
thereof) interest on the amount of the account at the beginning of the year at
a rate per annum as the Committee, in its discretion, may determine.  Dividend Equivalent Rights may be settled in
cash or Shares or a combination thereof, in a single installment or multiple
installments, in each case as determined by the Committee.


 


12

















 


9.                                       Restricted
Stock; Restricted Stock Units.


 


9.1.                              Restricted
Stock.  The Committee may grant Awards
of Restricted Stock to Eligible Individuals, which shall be evidenced by an
Agreement between the Company and the Grantee. 
Each Agreement shall contain such restrictions, terms and conditions as
the Committee may, in its discretion, determine and (without limiting the
generality of the foregoing) such Agreements may require that an appropriate
legend be placed on Share certificates during the period of restriction.  Awards of Restricted Stock shall be subject
to the terms and provisions set forth below in this Section 9.


 


(a)                                 Rights of
Grantee.  Shares of Restricted Stock
granted pursuant to an Award hereunder shall be issued in the name of the
Grantee as soon as reasonably practicable after the Award is granted provided
that the Grantee has executed an Agreement evidencing the Award, the
appropriate blank stock powers and, in the discretion of the Committee, a
Shareholder’s Agreement, an escrow agreement and any other documents which the
Committee may require as a condition to the issuance of such Shares.  If a Grantee shall fail to execute the
Agreement evidencing a Restricted Stock Award and any other documents which the
Committee may require, or otherwise indicate acceptance of the Restricted Stock
Award in a manner prescribed by the Committee within the time period prescribed
by the Committee at the time the Award is granted, the Award shall be null and
void.  At the discretion of the
Committee, Shares issued in connection with a Restricted Stock Award shall be
deposited together with the stock powers with the Company as escrow agent (or
other escrow agent designated by the Committee).  Except to the extent set forth in an
Agreement and subject to the provisions of any applicable Shareholder’s
Agreement, upon delivery of the Shares to the escrow agent, the Grantee shall
have all of the rights of a stockholder with respect to such Shares, including
the right to receive all dividends or other distributions paid or made with
respect to the Shares and the right to vote the Shares if and only if such
Shares consist of Voting Common Stock.


 


(b)                                No Sale or
Transfer.  Until all
restrictions upon the Shares of Restricted Stock awarded to a Grantee shall
have lapsed in the manner set forth in Section 9(c), the Grantee shall not
sell, transfer, assign, exchange, pledge, encumber or otherwise dispose of the
Shares of Restricted Stock.


 


(c)                                 Lapse of
Restrictions. 
Restrictions upon Shares of Restricted Stock awarded hereunder shall
lapse at such time or times and on such terms and conditions as the Committee
may determine.  The Agreement evidencing
the Award shall set forth any such restrictions.  Such restrictions may, in the discretion of
the Committee, be contingent on future employment or services, the satisfaction
of performance-related goals, or a combination of the foregoing.


 


(d)                                Treatment of
Dividends.  At the time
an Award of Shares of Restricted Stock is granted, the Committee may, in its
discretion, determine that the payment to the Grantee of dividends, or a
specified portion thereof, declared or paid on such Shares by the Company shall
be (a) deferred until the lapsing of the restrictions imposed upon such
Shares and (b) held by the Company for the account of the Grantee until
such time.  In the event that dividends
are to be deferred, the Committee shall determine whether such dividends are to
be reinvested in Shares (which shall be held as additional Shares of Restricted
Stock) or held in 


 


13

















 


cash. 
If deferred dividends are to be held in cash, there may be credited at
the end of each year (or portion thereof) interest on the amount of the account
at the beginning of the year at a rate per annum as the Committee, in its
discretion, may determine.  Payment of
deferred dividends in respect of Shares of Restricted Stock (whether held in
cash or as additional Shares of Restricted Stock), together with interest
accrued thereon, if any, shall be made upon the lapsing of restrictions imposed
on the Shares in respect of which the deferred dividends were paid, and any
dividends deferred (together with any interest accrued thereon) in respect of
any Shares of Restricted Stock shall be forfeited upon the forfeiture of such
Shares.


 


(e)                                 Delivery of
Shares.  Upon the lapse of the
restrictions on Shares of Restricted Stock, the Company may maintain the shares
in book-entry form; provided, however, that if the Grantee
so requests, the Committee shall cause a stock certificate to be delivered to
the Grantee with respect to such Shares, free of all restrictions hereunder;
and provided, further, that, if Shares of Restricted Stock
are subject to a Shareholder’s Agreement upon the lapse of the restrictions
hereunder, such Shares shall be maintained as provided in such Shareholder’s
Agreement.


 


9.2.                         Restricted Stock Units.  The Committee may grant to Eligible
Individuals Awards of Restricted Stock Units, which shall be evidenced by an
Agreement.  Each such Agreement shall
contain such restrictions, terms and conditions as the Committee may, in its
discretion, determine.  Awards of
Restricted Stock Units shall be subject to the terms and provisions set forth
in this Section 9.2.


 


(a)                                 Payment of
Awards.  Each Restricted Stock Unit
shall represent the right of the Grantee to receive a payment upon vesting of
the Restricted Stock Unit or on any later date specified by the Committee equal
to the Fair Market Value of a Share as of the date the Restricted Stock Unit
was granted, the vesting date or such other date as determined by the Committee
at the time the Restricted Stock Unit was granted.  The Committee may, at the time a Restricted
Stock Unit is granted, provide a limitation on the amount payable in respect of
each Restricted Stock Unit.  The
Committee may provide for the settlement of Restricted Stock Units in cash or
with Shares having a Fair Market Value on the trading day immediately preceding
the date of settlement equal to the payment to which the Participant has become
entitled.


 


(b)                                No Sale or
Transfer.  The Grantee
shall not sell, transfer, assign, exchange, pledge, encumber or otherwise
dispose of an Award of Restricted Stock Units or any portion thereof.


 


10.                                 Performance
Awards.


 


10.1.                        Performance
Units and Performance Share Units.  The Committee, in its discretion, may grant
Awards of Performance Units and/or Performance Share Units to Eligible
Individuals, the terms and conditions of which shall be set forth in an
Agreement.


 


(a)                                  Performance Units.  Performance Units shall be denominated in a
specified dollar amount and, contingent upon the attainment of specified
Performance Objectives within a specified Performance Cycle, represent the right
to receive payment as provided in Sections 10.1(c) and (d) of the
specified dollar amount or a percentage (which may be more than 


 


14

















 


100%)
of the specified dollar amount depending on the level of Performance Objective
attained; provided, however, that the
Committee may at the time a Performance Unit is granted specify a maximum
amount payable in respect of a vested Performance Unit.  Each Agreement shall specify the dollar
amount (or percentage thereof, if applicable) of Performance Units to which it
relates, the Performance Objectives which must be satisfied in order for the
Performance Units to vest and the Performance Cycle within which such
Performance Objectives must be satisfied.


 


(b)                                 Performance Share Units.  Performance Share Units shall be denominated
in Shares and, contingent upon the attainment of specified Performance
Objectives within the Performance Cycle, each Performance Share Unit represents
the right to receive payment as provided in Sections 10.1(c) and (d) of
the Fair Market Value of a Share on the date the Performance Share was granted,
the date the Performance Share Unit became vested or any other date specified
by the Committee or a percentage (which may be more than 100%) of such amount
depending on the level of Performance Objective attained; provided, however, that the Committee may at the time a
Performance Share Unit is granted specify a maximum amount payable in respect
of a vested Performance Share Unit.  Each
Agreement shall specify the number of Performance Share Units to which it
relates, the Performance Objectives which must be satisfied in order for the
Performance Share Units to vest and the Performance Cycle within which such
Performance Objectives must be satisfied.


 


(c)                                  Vesting and Forfeiture.  A Grantee shall become vested with respect to
the Performance Share Units and Performance Units to the extent that the
Performance Objectives set forth in the Agreement are satisfied for the
Performance Cycle.


 


(d)                                 Payment of Awards.  Subject to Section 10.4(c), payment to
Grantees in respect of vested Performance Share Units and Performance Units
shall be made as soon as practicable after the last day of the Performance
Cycle to which such Award relates or at such other time or times as the
Committee may determine.  Such payments
may be made entirely in Shares valued at their Fair Market Value on the trading
day immediately preceding the date of payment, entirely in cash or in such
combination of Shares and cash as the Committee in its discretion shall
determine at any time prior to such payment; provided, however,
that if the Committee in its discretion determines to make such payment
entirely or partially in Shares of Restricted Stock, the Committee shall
determine the extent to which such payment will be in Shares of Restricted
Stock and the terms of such Restricted Stock at the time the Award is granted.


 


10.2.                        Performance-Based
Restricted Stock.  The
Committee, in its discretion, may grant Awards of Performance-Based Restricted
Stock to Eligible Individuals, the terms and conditions of which shall be set
forth in an Agreement between the Company and the Grantee.  Each Agreement shall specify the number of
Shares of Performance-Based Restricted Stock to which it relates, the Performance
Objectives which must be satisfied in order for such Shares to vest and
restrictions thereon to lapse, and the Performance Cycle within which such
Performance Objectives must be satisfied, and may require that an appropriate
legend be placed on Share certificates. 
Awards of Performance-Based Restricted Stock shall be subject to the
following terms and provisions:


 


15

















 


(a)                                  Rights of
Grantee.  Shares of Performance-Based
Restricted Stock granted pursuant to an Award hereunder shall be issued in the
name of the Grantee as soon as reasonably practicable after the Award is
granted provided that the Grantee has executed an Agreement evidencing the
Award, the appropriate blank stock powers and, in the discretion of the
Committee, a Shareholder’s Agreement, an escrow agreement and any other
documents which the Committee may require as a condition to the issuance of
such Performance-Based Restricted Stock. 
If a Grantee shall fail to execute the Agreement evidencing an Award of
Performance-Based Restricted Stock and any other documents which the Committee
may require, or otherwise indicate acceptance of the Award of Performance-Based
Restricted Stock in a manner prescribed by the Committee within the time period
prescribed by the Committee at the time the Award is granted, the Award shall
be null and void.  At the discretion of
the Committee, Shares issued in connection with an Award of Performance-Based
Restricted Stock shall be deposited together with the stock powers with the
Company as escrow agent (or other escrow agent designated by the
Committee).  Except as restricted by the
terms of the Agreement and subject to the provisions of any applicable
Shareholder’s Agreement, upon delivery of the Shares to the escrow agent, the
Grantee shall have, in the discretion of the Committee, all of the rights of a
stockholder with respect to such Shares, including the right to receive all
dividends or other distributions paid or made with respect to the Shares and
the right to vote the Shares if and only if such Shares consist of Voting
Common Stock.


 


(b)                                 Lapse of
Restrictions.  To the
extent that the Performance Objectives set forth in the Agreement are satisfied
for the Performance Cycle, restrictions upon Performance-Based Restricted Stock
awarded hereunder shall lapse at such time or times and on such terms,
conditions and satisfaction of Performance Objectives as the Committee may, in
its discretion, determine.  In the event
that the Performance Objectives set forth in the Agreement are not fully
satisfied for the Performance Cycle, the Performance-Based Restricted Stock
shall be forfeited to the extent set forth in the Agreement.


 


(c)                                  Treatment of
Dividends.  At the time
the Award of Performance-Based Restricted Stock is granted, the Committee may,
in its discretion, determine that the payment to the Grantee of dividends, or a
specified portion thereof, declared or paid on Shares represented by such Award
which have been issued by the Company to the Grantee shall be (i) deferred
until the lapsing of the restrictions imposed upon such Performance-Based
Restricted Stock and (ii) held by the Company for the account of the
Grantee until such time.  In the event
that dividends are to be deferred, the Committee shall determine whether such
dividends are to be reinvested in shares of Stock (which shall be held as
additional Shares of Performance-Based Restricted Stock) or held in cash.  If deferred dividends are to be held in cash,
there may be credited at the end of each year (or portion thereof) interest on
the amount of the account at the beginning of the year at a rate per annum as
the Committee, in its discretion, may determine.  Payment of deferred dividends in respect of
Shares of Performance-Based Restricted Stock (whether held in cash or as
additional Shares of Performance-Based Restricted Stock), together with
interest accrued thereon, if any, shall be made upon the lapsing of
restrictions imposed on the Performance-Based Restricted Stock in respect of
which the deferred dividends were paid, and any dividends deferred (together
with any interest accrued thereon) in respect of any Shares of
Performance-Based Restricted Stock shall be forfeited upon the forfeiture of
such Shares.


 


16

















 


(d)                                 Delivery of
Shares.  Upon the lapse of restrictions
on Shares of Performance-Based Restricted Stock awarded hereunder, the Company
may maintain the Shares in book-entry form; provided, however,
that if the Grantee so requests, the Committee shall cause a stock certificate
to be delivered to the Grantee with respect to such Shares, free of all
restrictions hereunder; and provided, further, that, if
Shares of Performance-Based Restricted Stock are subject to a Shareholder’s
Agreement upon the lapse of the restrictions hereunder, such Shares shall be
maintained as provided in such Shareholder’s Agreement.


 


10.3.                        Cash Incentive
Awards.


 


(a)                                  Grants of Cash
Incentive Awards.  The
Committee may, in its discretion, grant Cash Incentive Awards to Eligible
Individuals, which shall represent the right, contingent upon the attainment of
specified Performance Objectives within a specified Performance Cycle, to
receive a payment of a specified dollar amount or a percentage (which may be
more than 100%) of the specified dollar amount depending on the level of
Performance Objective attained; provided, however, that the
Committee may at the time a Cash Incentive Award is granted specify a maximum
amount payable in respect of such Cash Incentive Award.  The terms and conditions of each Cash
Incentive Award shall be set forth in an Agreement between the Company and the
Grantee.  Each Agreement shall specify
the dollar amount subject to such Award, the Performance Objectives which must
be satisfied in order for the Award to be paid and the Performance Cycle within
which such Performance Objectives must be satisfied.  In the event that the Committee grants Cash
Incentive Awards expressed as percentage interests in a bonus pool payment
which is subject to the satisfaction of Performance Objectives, (i) the
aggregate of all such percentage interests may not exceed 100% and (ii) the
forfeiture or other reduction of the percentage interest of any Grantee in the
bonus pool may not increase the amount of an Award paid to any other
Grantee.  The Committee may determine
that different Performance Objectives are applicable to different Grantees with
respect to a specified Performance Cycle.


 


(b)                                 Payment of
Awards.  Each Cash Incentive Award to
the extent earned shall be paid in a single lump sum cash payment or, if
determined by the Committee at the time of grant, in a number of Shares with a
Fair Market Value on the trading day immediately preceding the date of payment
equal to all or a portion of such cash amount (with any portion not paid in
Shares to be paid in cash; provided, however, that if the
Committee in its discretion determines to make such payment entirely or
partially in Shares of Restricted Stock, the Committee shall determine the
extent to which such payment will be in Shares of Restricted Stock and the
terms of such Restricted Stock at the time the Award is granted) as soon as
practicable following the Committee’s certification described in Section 10.4(c) but
in any event not later than the end of the fiscal year in which such
certification is made.


 


10.4.                        Performance
Objectives.


 


(a)                                  Establishment.  Performance Objectives for Performance Awards
may be expressed in terms of (i) revenue, (ii) earnings per Share, (iii) net
income per Share, (iv) Share price, (v) pre-tax profits, (vi) net
earnings, (vii) net income, (viii) operating income, (ix) 


 


17

















 


cash
flow, (x) earnings before interest, taxes, depreciation and amortization
(EBITDA), (xi) sales, (xii) total stockholder return relative to assets, (xiii)
total stockholder return relative to peers, (xiv) financial returns (including,
without limitation, return on assets, return on equity and return on
investment), (xv) cost reduction targets, (xvi) customer satisfaction, (xvii)
customer growth, (xviii) employee satisfaction, (xviv) EBITDA margin, (xx)
operating margin, (xxi) net margin, (xxii) gross margin, (xxiii) revenue
growth, (xxiv) new contract win, (xxv) per-days sales outstanding, or (xxvi)
any combination of the foregoing, or (xxvii) prior to the end of the Transition
Period, such other criteria as the Committee may determine.  Performance Objectives may be in respect of
the performance of the Company, any of its Subsidiaries, any of its Divisions
or any combination thereof.  Performance
Objectives may be absolute or relative (to prior performance of the Company or
to the performance of one or more other entities or external indices) and may
be expressed in terms of a progression within a specified range.  The Performance Objectives with respect to a
Performance Cycle shall be established in writing by the Committee by the
earlier of (x) the date on which a quarter of the Performance Cycle has
elapsed and (y) the date which is ninety days after the commencement of
the Performance Cycle, and in any event while the performance relating to the
Performance Objectives remain substantially uncertain.


 


(b)                                 Effect of Certain Events.  Unless otherwise provided by the Committee at
the time the Performance Objectives in respect of a Performance Award are
established, performance shall be adjusted to omit the effects of extraordinary
items, gain or loss on the disposal of a business segment (other than
provisions for operating losses or income during the phase-out period), unusual
or infrequently occurring events and transactions that have been publicly
disclosed and the cumulative effects of changes in accounting principles, all
as determined in accordance with generally accepted accounting principles (to
the extent applicable).  In addition, at
the time of the granting of a Performance Award or at any time thereafter, the
Committee may provide for the manner in which performance will be measured
against the Performance Objectives (or may adjust the Performance Objectives)
to reflect the impact of specified corporate transactions (such as a stock
split or stock dividend), special charges, and tax law changes; provided,
that such provisions shall be permitted only to the extent permitted under Section 162(m) of
the Code and the regulations promulgated thereunder without adversely affecting
the treatment of any Performance Award as Performance-Based Compensation.


 


(c)                                  Determination of Performance.  Prior to the vesting, payment, settlement or
lapsing of any restrictions with respect to any Performance Award that is
intended to constitute Performance-Based Compensation made to a Grantee who is
subject to Section 162(m) of the Code, the Committee shall certify in
writing that the applicable Performance Objectives have been satisfied to the extent
necessary for such Award to qualify as Performance Based Compensation.  The Committee shall not be entitled to
exercise any discretion otherwise authorized hereunder with respect to Awards
intended to constitute Performance-Based Compensation made to a Grantee who is
subject to Section 162(m) of the Code if the ability to exercise such
discretion or the exercise of such discretion itself would cause the
compensation attributable to such Awards to fail to qualify as
Performance-Based Compensation.  A Performance
Award may be reduced in the discretion of the Committee at any time before
payment or lapsing of restrictions.


 


18














 


10.5.                        No Sale or
Transfer.  The Grantee
shall not sell, transfer, assign, exchange, pledge, encumber or otherwise
dispose of an Award of Performance Units, Performance Share Units or
Performance-Based Restricted Stock or Cash Incentive Awards or any portion
thereof.


 


11.                                 Share
Awards.


 


11.1.                        Share Awards.  The Committee may grant a Share Award to any
Eligible Individual on such terms and conditions as the Committee may determine
in its sole discretion.  Share Awards may
be made as additional compensation for services rendered by the Eligible
Individual or may be in lieu of cash or other compensation to which the
Eligible Individual is entitled from the Company.  The Grantee shall not sell, transfer, assign,
exchange, pledge, encumber or otherwise dispose of a Share Award or any portion
thereof.


 


12.                                 Effect
of a Termination of Employment or Service.


 


The Agreement evidencing the
grant of each Option and each Award shall set forth the terms and conditions
applicable to such Option or Award upon a termination of the employment or
service of the Optionee or Grantee by the Company, a Subsidiary or a Division
(including a termination or change by reason of the sale of a Subsidiary or a
Division).  Unless set forth otherwise in
an Agreement or as required by applicable law (including Section 409A of
the Code), (1) the transfer of employment of an Optionee from the Company
to a Subsidiary or from a Subsidiary to the Company (or among the Divisions of
the Company or a Subsidiary) shall not constitute a termination of employment,
and (2) if an individual is both an employee of the Company and/or a
Subsidiary and a Director, his or her cessation of services in fewer than all
such capacities shall not constitute a termination of his or her employment or
services.


 


13.                                 Adjustment
Upon Changes in Capitalization.


 


13.1.                        In the event of
a Change in Capitalization, the Committee shall make such adjustments, if any,
as it determines are equitable and appropriate to (a) the maximum number
and class of Shares or other stock or securities with respect to which Options
or Awards may be granted under the Plan, (b) the maximum number and class
of Shares or other stock or securities that may be issued upon exercise of
Incentive Stock Options, (c) the maximum number and class of Shares or
other stock or securities with respect to which Options or Awards may be
granted to any Eligible Individual in any calendar year, (d) the number
and class of Shares or other stock or securities which are subject to
outstanding Options or Awards granted under the Plan and the exercise price
therefor, if applicable, and (e) the Performance Objectives.


 


13.2.                        Any such
adjustment in the Shares or other stock or securities (a) subject to
outstanding Incentive Stock Options (including any adjustments in the exercise
price) shall be made in such manner as not to constitute a modification as
defined by Section 424(h)(3) of the Code and only to the extent
permitted by Sections 422 and 424 of the Code or (b) subject to
outstanding Awards that are subject to Section 409A of the Code shall be
made only to the extent permitted by Section 409A of the Code or (c) subject
to outstanding Options or Awards that are intended to qualify as
Performance-Based Compensation shall be made in such a manner as not to
adversely affect the treatment of the Options or Awards as Performance-Based
Compensation.


 


19

















 


13.3.                        If, by reason
of any such adjustment, a Grantee shall be entitled to, or an Optionee shall be
entitled to exercise an Option, with respect to, new, additional or different
shares of stock or securities of the Company or any other corporation, such
new, additional or different shares shall thereupon be subject to all of the
conditions, restrictions and performance criteria which were applicable to the
Shares subject to the Award or Option, as the case may be, prior to such
adjustment.


 


14.                                 Effect
of Certain Transactions.


 


14.1.                        Except as
otherwise provided in an Agreement, in the event of (a) the liquidation or
dissolution of the Company or (b) a merger or consolidation of the Company
(a “Transaction”), the Plan and the Options and Awards issued hereunder
shall continue in effect in accordance with their respective terms, except that
following a Transaction either (i) each outstanding Option or Award shall
be treated as provided for in the agreement entered into in connection with the
Transaction or (ii) if not so provided in such agreement, each Optionee
and Grantee shall be entitled to receive in respect of each Share subject to
any outstanding Options or Awards, as the case may be, upon exercise of any
Option or payment or transfer in respect of any Award, the same number and kind
of stock, securities, cash, property or other consideration that each holder of
a Share was entitled to receive in the Transaction in respect of a Share; provided, however,
that, unless otherwise determined by the Committee, such stock, securities,
cash, property or other consideration shall remain subject to all of the
conditions, restrictions and performance criteria which were applicable to the
Options and Awards prior to such Transaction. 
Without limiting the generality of the foregoing, the treatment of
outstanding Options and Stock Appreciation Rights pursuant to this Section 14.1
in connection with a Transaction in which the consideration paid or distributed
to the Company’s stockholders is not entirely shares of common stock of the
acquiring or resulting corporation may include the cancellation of outstanding
Options and Stock Appreciation Rights upon consummation of the Transaction as
long as, at the election of the Committee, (x) the holders of affected
Options and Stock Appreciation Rights have been given a period of at least
fifteen days prior to the date of the consummation of the Transaction to
exercise the Options or Stock Appreciation Rights (whether or not they were
otherwise exercisable) or (y) the holders of the affected Options and
Stock Appreciation Rights are paid (in cash or cash equivalents) in respect of
each Share covered by the Option or Stock Appreciation Right being cancelled an
amount equal to the excess, if any, of the per share price paid or distributed
to stockholders in the transaction (the value of any non-cash consideration to
be determined by the Committee in its sole discretion) over the exercise price
of the Option or Stock Appreciation Right. 
For avoidance of doubt, (1) the cancellation of Options and Stock
Appreciation Rights pursuant to clause (y) of the preceding sentence may
be effected notwithstanding anything to the contrary contained in this Plan or
any Agreement and (2) if the amount determined pursuant to clause (y) of
the preceding sentence is zero or less, the affected Option or Stock
Appreciation Right may be cancelled without any payment therefor.  The treatment of any Option or Award as
provided in this Section 14.1 shall be conclusively presumed to be
appropriate for purposes of Section 13.


 


14.2.                        Effective upon
the consummation of an Initial Public Offering or any other conversion of all
of the outstanding shares of the Company’s Non-Voting Common Stock into Voting
Common Stock, all outstanding Options shall automatically convert into Options
to 


 


20

















 


purchase an equivalent number of shares of
the Company’s Voting Common Stock without any further action on the part of the
Company or any Optionee.


 


14.3.                        The Committee
may provide, in an Agreement or at any time thereafter,  that Options or Awards may become vested
and/or exercisable and may become free of restrictions, to the extent of all or
any portion of such Option or Award, in the event of a change in ownership or
effective control of the Company.


 


15.                                 Interpretation.


 


15.1.                        Section 16 Compliance.  The Plan is intended to
comply with Rule 16b-3 promulgated under the Exchange Act and the
Committee shall interpret and administer the provisions of the Plan or any
Agreement in a manner consistent therewith. 
Any provisions inconsistent with such Rule shall be inoperative and
shall not affect the validity of the Plan.


 


15.2.                        Section 162(m).  Unless otherwise determined by the Committee
at the time of grant, each Option, Stock Appreciation Right and Performance
Award is intended to be Performance-Based Compensation.  To the extent any provision of the Plan or any
Agreement related to any Option, Stock Appreciation Right or Performance Award
is inconsistent with Section 162(m) of the Code or the regulations
promulgated thereunder, such provision shall be construed or deemed amended to
the extent necessary to conform to such requirements, and no provision shall be
deemed to confer upon the Committee discretion to increase the amount of
compensation otherwise payable to an Eligible Individual in connection with any
such Option or Award upon the attainment of the Performance Objectives.


 


15.3.                        Compliance With
Section 409A.  All Options
and Awards granted under the plan are intended either not to be subject to Section 409A
of the Code or, if subject to Section 409A of the Code, to be
administered, operated and construed in compliance with Section 409A of
the Code and any guidance issued thereunder. 
Notwithstanding this or any other provision of the Plan to the contrary,
the Committee may amend the Plan or any Option or Award granted hereunder in
any manner, or take any other action, that it determines, in its sole
discretion, is necessary, appropriate or advisable to cause the Plan or any
Option or Award granted hereunder to comply with Section 409A and any
guidance issued thereunder.  Any such
action, once taken, shall be deemed to be effective from the earliest date
necessary to avoid a violation of Section 409A and shall be final, binding
and conclusive on all Eligible Individuals and other individuals having or
claiming any right or interest under the Plan.


 


16.                                 Termination
and Amendment of the Plan/Modification of Options and Awards.


 


16.1.                        Plan Amendment
or Termination.  The Plan
shall terminate on the day preceding the tenth anniversary of the date of its
adoption by the Board, and no Option or Award may be granted thereafter.  The Board may sooner terminate the Plan and
the Board may at any time and from time to time amend, modify or suspend the
Plan; provided, however, that:


 


(a)                                  no such amendment,
modification, suspension or termination shall impair or adversely alter any
Options or Awards theretofore granted under the Plan, except with the consent
of the Optionee or Grantee, nor shall any amendment, modification, suspension
or 


 


21

















 


termination
deprive any Optionee or Grantee of any Shares which he or she may have acquired
through or as a result of the Plan; and


 


(b)                                 to the extent necessary
under any applicable law, regulation or exchange requirement, no amendment
shall be effective unless approved by the stockholders of the Company in
accordance with such applicable law, regulation or exchange requirement.


 


16.2.                        Repricing.  The Board may, without stockholder approval,
take any action under the Plan that constitutes a “repricing” within the
meaning of the rules of the NASDAQ Stock Market.


 


16.3.                        Modification of
Options and Awards.  No
modification of an Option or Award shall adversely alter or impair any rights
or obligations under the Option or Award without the consent of the Optionee or
Grantee, as the case may be; provided, however, that no
action taken with respect to an Option or Award pursuant to Section 13 or
14.1 shall be deemed a modification that requires such consent of an Optionee
or Grantee.


 


17.                                 Non-Exclusivity
of the Plan.


 


The adoption of the Plan by the
Board shall not be construed as amending, modifying or rescinding any
previously approved incentive arrangement or as creating any limitations on the
power of the Board to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of stock options
otherwise than under the Plan, and such arrangements may be either applicable
generally or only in specific cases.


 


18.                                 Limitation
of Liability.


 


As illustrative of the
limitations of liability of the Company, but not intended to be exhaustive
thereof, nothing in the Plan shall be construed to:


 


(a)                                  give any person any right to
be granted an Option or Award other than at the sole discretion of the
Committee;


 


(b)                                 give any person any rights
whatsoever with respect to Shares except as specifically provided in the Plan;


 


(c)                                  limit in any way the right
of the Company or any Subsidiary to terminate the employment or service of any
person at any time; or


 


(d)                                 be evidence of any agreement
or understanding, expressed or implied, that the Company will employ any person
at any particular rate of compensation or for any particular period of time.


 


19.                                 Regulations
and Other Approvals; Governing Law.


 


19.1.                        Except as to
matters of federal law, the Plan and the rights of all persons claiming
hereunder shall be construed and determined in accordance with the laws of the
State of Delaware without giving effect to conflicts of laws principles
thereof.


 


22

















 


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


 


19.3.                        The Board may
make such changes as may be necessary or appropriate to comply with the rules and
regulations of any government authority, or to obtain for Eligible Individuals
granted Incentive Stock Options the tax benefits under the applicable
provisions of the Code and regulations promulgated thereunder.


 


19.4.                        Each Option and
Award is subject to the requirement that, if at any time the Committee
determines, in its discretion, that the listing, registration or qualification
of Shares issuable pursuant to the Plan is required by any securities exchange
or under any state or federal law, or the consent or approval of any
governmental regulatory body is necessary or desirable as a condition of, or in
connection with, the grant of an Option or Award or the issuance of Shares, no
Options or Awards shall be granted or payment made or Shares issued, in whole
or in part, unless listing, registration, qualification, consent or approval
has been effected or obtained free of any conditions as acceptable to the
Committee.


 


19.5.                        Notwithstanding
anything contained in the Plan or any Agreement to the contrary, in the event
that the disposition of Shares acquired pursuant to the Plan is not covered by
a then current registration statement under the Securities Act and is not
otherwise exempt from such registration, such Shares shall be restricted
against transfer to the extent required by the Securities Act and Rule 144
or other regulations thereunder.  The
Committee may require any individual receiving Shares pursuant to an Option or
Award granted under the Plan, as a condition precedent to receipt of such
Shares, to represent and warrant to the Company in writing that the Shares acquired
by such individual are acquired without a view to any distribution thereof and
will not be sold or transferred other than pursuant to an effective
registration thereof under the Securities Act or pursuant to an exemption
applicable under the Securities Act or the rules and regulations
promulgated thereunder.  The certificates
evidencing any of such Shares shall be appropriately amended or have an
appropriate legend placed thereon to reflect their status as restricted
securities as aforesaid.


 


20.                                 Miscellaneous.


 


20.1.                        Multiple
Agreements.  The terms
of each Option or Award may differ from other Options or Awards granted under
the Plan at the same time, or at some other time.  The Committee may also grant more than one
Option or Award to a given Eligible Individual during the term of the Plan,
either in addition to, or in substitution for, one or more Options or Awards
previously granted to that Eligible Individual.


 


20.2.                        Withholding of
Taxes.


 


(a)                                  At such times as an Optionee
or Grantee recognizes taxable income in connection with the receipt of Shares
or cash hereunder (a “Taxable Event”), the Optionee or Grantee shall pay
to the Company an amount equal to the federal, state and local 


 


23

















 


income
taxes and other amounts as may be required by law to be withheld by the Company
in connection with the Taxable Event (the “Withholding Taxes”) prior to
the issuance, or release from escrow, of such Shares or the payment of such
cash.  The Company shall have the right
to deduct from any payment of cash or delivery of Shares to an Optionee or
Grantee an amount equal to the Withholding Taxes in satisfaction of the
obligation to pay Withholding Taxes.  The
Committee may provide in an Agreement at the time of grant, or at any time
thereafter, that the Optionee or Grantee, in satisfaction of the obligation to
pay Withholding Taxes to the Company, may elect to have withheld a portion of
the cash then payable to him or her or the Shares (if the Shares are then
Listed Securities) then issuable to him or her, in either case having an
aggregate Fair Market Value equal to the Withholding Taxes (but, in the case of
withholding of Shares, only to the extent such withholding complies with Section 13(k) of
the Exchange Act and other applicable laws, rules and regulations).


 


(b)                                 If an Optionee makes a
disposition, within the meaning of Section 424(c) of the Code and
regulations promulgated thereunder, of any Share or Shares issued to such
Optionee pursuant to the exercise of an Incentive Stock Option within the
two-year period commencing on the day after the date of the grant or within the
one-year period commencing on the day after the date of transfer of such Share
or Shares to the Optionee pursuant to such exercise, the Optionee shall, within
ten days of such disposition, notify the Company thereof, by delivery of
written notice to the Company at its principal executive office.


 


20.3.                        Effective Date.  The effective date of the Plan shall be the
date of Board approval as listed on the first page of the Plan, subject
only to the approval by the affirmative vote of the holders of a majority of
the securities of the Company present, or represented, and entitled to vote at
a meeting of stockholders duly held in accordance with the applicable laws of
the State of Delaware within twelve months after the adoption of the Plan by
the Board.


 


20.4.                        Post-Transition
Period.  Following the end of the
Transition Period, any Option, Stock Appreciation Right or Performance Award
granted under the Plan which is intended to be Performance-Based Compensation,
shall be subject to the approval of the material terms of the Plan by the
stockholders of the Company in accordance with Section 162(m) of the
Code and the regulations promulgated thereunder.


 


20.5.                        Shareholder’s
Agreement.  Unless the
Committee determines otherwise, prior to the consummation of an Initial Public
Offering, it shall be a condition to issuance of any Shares to any Grantee or
Optionee pursuant to any Award or the exercise of any Option that the Grantee
or Optionee, as applicable, shall have become a party to a Shareholder’s
Agreement which shall remain operative in accordance with its terms
notwithstanding the lapse of any other restrictions on such Shares pursuant to
the terms of the Plan or the relevant Agreement.


 


24

















 


Attachment
A


Provisions
Applicable to Optionees


Resident in
California


 


The
following additional terms shall apply if required by applicable law to (i) Options
or Awards that may result in the issuance of Shares granted on any date the
Shares are not a Listed Security and (ii) any Shares issued pursuant to
such Awards or upon exercise of such Options on any date the Shares are not a
Listed Security, which are granted or issued to persons resident in California
as of the date of grant or issuance, as applicable (each such person, a “California
Recipient”):


 


1.                                       Any Option granted to any California
Recipient that is exercised before security holder approval is obtained or any
Share that is issued pursuant to an Award to any California Recipient before
security holder approval is obtained must be rescinded if security holder
approval is not obtained in the manner described in Section 20.3 of the
Plan.  Such securities shall not be counted
in determining whether such approval is obtained.


 


2.                                       Notwithstanding anything in the Plan to
the contrary, in the case of an Option granted to any California Recipient, the
number of Shares covered by each outstanding Option, as well as the price per
Share covered by each outstanding Option, and in the case of Shares allocated
to a California Recipient pursuant to an Award, the number of Shares allocated,
shall be proportionately adjusted in the event of a stock split, reverse stock
split, stock dividend, combination, recapitalization, reclassification or other
distribution of the Company’s equity securities without receipt of
consideration by the Company, of or on the Shares; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to
have been “effected without receipt of consideration.”


 


3.                                       With respect to an Option granted to any
California Recipient who is not an Officer, Director or Consultant, such Option
shall become exercisable, or any repurchase option in favor of the Company
shall lapse, at the rate of at least 20% per year over five years from the date
of grant.


 


4.                                       Notwithstanding anything in the Plan to
the contrary, in the case of an Option granted to any California Recipient,
Options shall not be exercisable after the expiration of 120 months from the
date of grant (five years in the case of an Incentive Stock Option granted to a
Ten-Percent Stockholder).


 


5.                                       The following rules shall apply to
an Option granted to any California Recipient or to stock issued to a
California Recipient upon exercise of an Option, in the event of a termination
of the California Recipient’s employment or services with the Company other
than for Cause (as defined in the applicable Agreement):


 


(a)                                  If such termination was for reasons other
than death or disability, the California Recipient shall have at least thirty
days after the date of such termination (but in no event later than the
expiration of the term of such Option established by the Committee as of the
date of grant) to exercise such Option.


 


A1

















 


(b)                                 If such termination was on account of the
death or disability of the California Recipient, the holder of the Option may,
but only within six months from the date of such termination (but in no event
later than the expiration date of the term of such Option established by the
Committee as of the date of grant), exercise the Option to the extent the
California Recipient was otherwise entitled to exercise it at the date of such
termination.  To the extent that the
California Recipient was not entitled to exercise the Option at the date of
termination, or if the holder does not exercise such Option to the extent so
entitled within six months from the date of termination, the Option shall
terminate, and the Shares underlying the unexercised portion of the Option
shall revert to the Plan.


 


6.                                       To the extent required by applicable law,
the Company shall provide financial statements at least annually to each
California Recipient during the period such person has one or more Options or
Awards outstanding, and in the case of an individual who acquired Shares
pursuant to an Award or pursuant to the exercise of an Option under the Plan,
during the period such individual owns such Shares.  The Company shall not be required to provide
such information if the issuance of Options and Awards under the Plan is
limited to key employees whose duties in connection with the Company assure
their access to equivalent information.


 


7.                                       Unless defined below or otherwise in this
Attachment, capitalized terms shall have the meanings set forth in the
Plan.  For purposes of this Attachment, (a) “Officer”
means a person who is an officer of the Company within the meaning of Section 16(a) of
the Exchange Act and the rules and regulations promulgated thereunder, and
(b) “Consultant” means any person, including an advisor, who is
engaged by the Company or a Subsidiary to render services and is compensated
for such services, and any Director of the Company whether compensated for such
services or not.


 


A2