EX-10.6



 





Exhibit
10.6



BOB EVANS FARMS, INC. 1998 STOCK OPTION AND INCENTIVE PLAN

SECOND AMENDED AND RESTATED

(Effective as of January 1, 2008)




          l. Purpose. The purpose of the Bob Evans Farms, Inc. Second Amended and Restated 1998 Stock
Option and Incentive Plan (the “Plan”) is to foster and promote the long-term success of Bob Evans
Farms, Inc. (the “Company”) and materially increase stockholder value by (a) motivating superior
performance by means of performance-related incentives, (b) encouraging and providing for the
acquisition of an ownership interest in the Company by the directors and officers and other key
employees of the Company and its Subsidiaries and (c) enabling the Company to attract and retain
the services of an outstanding
management team upon whose judgment, interest and special effort the successful conduct of the
operations of the Company is largely dependent.




          2. Administration. The Plan will be administered by a committee (the “Committee”) of at least
three persons who shall be either the Compensation Committee of the Board of Directors of the
Company or such other committee comprised entirely of “outside directors” within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations
and rulings thereunder, as the Committee may from time to time select. The Committee shall
interpret the Plan; prescribe, amend and rescind rules and regulations relating thereto; and make
all other determinations necessary or advisable for the administration of the Plan. Any
determination, decision or action of the Committee in connection with the construction,
interpretation, administration or application of the Plan shall be final, conclusive and binding
upon all persons participating in the Plan and any person validly claiming under or through persons
participating in the Plan. A majority of the members of the Committee shall constitute a quorum at
any meeting of the Committee, and all determinations of the Committee at a meeting shall be made by
a majority of its members. Any determination of the Committee under the Plan may be made without a
meeting of the Committee by a writing signed by all of its members. No member of the Board of
Directors of the Company or of the Committee shall be liable for any action or determination made
in good faith, with respect to the Plan or any Award granted under the Plan. The Company shall
effect the granting of Awards under the Plan in accordance with the determination of the Committee,
by execution of instruments in writing in such form as approved by the Committee.




          With respect to persons subject to Section 16 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), transactions under the Plan are intended to comply with all
applicable conditions of Rule l6b-3 under the Exchange Act, or any successor rule or regulation.
To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed advisable by the Committee.




          3. Participants. Participants in the Plan will consist of the directors and officers and other
key employees of the Company or any of its Subsidiaries, as the Committee in its sole discretion
may designate from time to time to receive Awards hereunder (the “Participants”). The Committee’s
designation of a Participant in any year shall not require the



 









 






Committee to designate such person
to receive an Award in any other year. The Committee shall consider such factors as it deems
pertinent in selecting Participants and in determining the type and amount of their respective
Awards, including, without limitation: (a) the financial condition of the Company and its
Subsidiaries; (b) anticipated profits for the current or future years; (c) contributions of
Participants to the profitability and development of the Company and its Subsidiaries; and (d)
other compensation provided to Participants. During any calendar year, no Participant shall be
granted Awards under this Plan covering, in the aggregate, more than Three Hundred Thousand
(300,000) Common Shares and no Participant shall be granted stock options covering, in the
aggregate, more than Two Hundred and Fifty Thousand (250,000) Common Shares.




          4. Types of Awards. Awards under the Plan may be granted in any one or a combination of: (a)
Incentive Stock Options; (b) Non-Qualified Stock Options; (c) Stock
Appreciation Rights; (d) Performance Share Awards; and (e) Restricted Stock, all as described below
in Sections 6, 7, 8, 9 and 10 hereof. Notwithstanding the foregoing, no Stock Appreciation Rights
or Performance Share Awards have been granted under the Plan through December 31, 2007, and no
further Awards may be granted under the Plan after September 11, 2006.




          5. Common Shares Reserved Under the Plan. There is hereby reserved for issuance under the
Plan an aggregate of Five Million (5,000,000) Common Shares, which may be newly issued or treasury
shares. If there is a lapse, expiration, termination or cancellation of any Award granted
hereunder without the issuance of Common Shares or payment of cash thereunder, or if Common Shares
are issued under any Award and thereafter are reacquired by the Company pursuant to rights reserved
upon the issuance thereof, the Common Shares subject to or reserved for such Award may again be
used for new Stock Options or other Awards under the Plan so long as the holder thereof has not
received any benefits of ownership of such Common Shares; provided, however, that in no event may
the number of Common Shares issued under the Plan exceed the total number of Common Shares reserved
for issuance hereunder.




          6. Incentive Stock Options. Incentive Stock Options will consist of Stock Options, qualifying
as “incentive stock options” under the requirements of Section 422 of the Code, to purchase Common
Shares at purchase prices of not less than One Hundred Percent (100%) of the Fair Market Value of
such Common Shares on the date of grant. Incentive Stock Options will only be eligible for grant
to employees of the Company. Incentive Stock Options will be exercisable over not more than ten
(10) years after the date of grant. In the event of the termination of a Participant’s employment
for any reason other than Disability, death, Retirement or for Cause, the right of the Participant
to exercise an Incentive Stock Option shall terminate upon the earlier to occur of the end of the
original term of the Incentive Stock Option or ninety (90) days after the date of such termination
of employment. In the event that a Participant is Terminated for Cause, the right of the
Participant to exercise an Incentive Stock Option shall terminate immediately upon the termination
of employment. In the event of the termination of a Participant’s employment due to Disability,
the right of the Participant (or, in the case of the death of the Participant after his or her
termination of employment due to Disability, his or her successor in interest) to exercise an
Incentive Stock Option shall terminate upon the earlier to occur of (i) the end of the original
term of the Incentive Stock Option or (ii) one (l) year after the



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date of termination of
employment. If a Participant should die while employed, the right of the Participant’s successor
in interest to exercise an Incentive Stock Option granted to the Participant shall terminate upon
the earlier to occur of (i) the end of the original term of the Incentive Stock Option or (ii) one
year after the Participant’s last date of employment. Upon Retirement of a Participant, the right
of the Participant (or, in the case of the death of the Participant after his or her termination of
employment due to Retirement, his or her successor in interest) to exercise an Incentive Stock
Option shall terminate upon the earlier of (i) ninety (90) days after the date of such Retirement
or (ii) the end of the original term of the Incentive Stock Option; provided, however, that if the
Participant or his or her successor in interest does not exercise the Incentive Stock Option within
ninety (90) days after the date of such Retirement, the Incentive Stock Option shall automatically
convert into a Non-Qualified Stock Option upon the end of such ninety (90) day period and the
Participant’s or his or her successor in interest’s right to exercise such converted Non-Qualified
Stock Option shall terminate at the end of the original term of the
option. For purposes of this Section 6, if a Participant terminates his or her employment
voluntarily, the date of termination of employment shall be deemed to be the date on which he or
she notifies the Company of his or her intention to terminate his or her employment; in all other
cases, the date of termination of employment shall be the last day of employment.




          The aggregate Fair Market Value (determined as of the time the Stock Option is granted) of the
Common Shares with respect to which incentive stock options are exercisable for the first time by
any Participant during any calendar year (under all option plans of the Company and all
Subsidiaries and Parents of the Company) shall not exceed $100,000. Anything contained herein to
the contrary notwithstanding, no Incentive Stock Option shall be granted to an employee who, at the
time the Incentive Stock Option is granted, owns (actually or constructively under the provisions
of Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company or of any Parent or Subsidiary of the Company, unless the
option exercise price is not less than 110% of the Fair Market Value of the Common Shares subject
to the Incentive Stock Option on the date of grant and the Incentive Stock Option by its terms is
not exercisable more than five (5) years from the date it is granted.




          7. Non-Qualified Stock Options. Non-Qualified Stock Options will consist of options to
purchase Common Shares at purchase prices of not less than One Hundred Percent (100%) of the Fair
Market Value of such Common Shares on the date of grant and with terms as determined by the
Committee in its discretion. In the event of the termination of a Participant’s employment or
service as a director for any reason other than Retirement, Disability, death or for Cause, the
right of the Participant to exercise a Non-Qualified Stock Option shall terminate upon the earlier
to occur of the end of the original term of the Non-Qualified Stock Option or ninety (90) days
after the date of such termination of employment or service. If a Participant is Terminated for
Cause, the right of the Participant to exercise a Non-Qualified Stock Option shall terminate
immediately upon the termination of employment or service. In the event of the termination of a
Participant’s employment or service due to Disability or death, the right of the Participant or his
or her successor in interest to exercise a Non-Qualified Stock Option shall terminate upon the
earlier to occur of (i) the end of the original term of the Non-Qualified Stock Option or (ii) one
(l) year after the date of termination of employment or service as a result of such Disability or
death. In the event of the termination of a Participant’s employment or service due to Retirement,
the right of the Participant (or, in the case of the death of the Participant after



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his or her
termination of employment or service due to Retirement, his or her successor in interest) to
exercise a Non-Qualified Stock Option shall terminate upon the end of the original term of the
Non-Qualified Stock Option. For purposes of this Section 7, if a Participant terminates his or her
employment or service voluntarily, the date of termination of employment or service shall be deemed
to be the date on which he or she notifies the Company of his or her intention to terminate his or
her employment or service; in all other cases, the date of termination of employment or service
shall be the last day of employment or service.




          8. Stock Appreciation Rights. The Committee may grant Stock Appreciation Rights to
Participants at the same time as such Participants are awarded Stock Options under the Plan. Such
Stock Appreciation Rights shall be evidenced by an agreement in such form as the Committee shall
from time to time approve. Such agreements shall comply with, and be subject to, the following
terms and conditions:




               (a) Grant. Each Stock Appreciation Right shall relate to a specific Stock Option under the
Plan and shall be awarded to a Participant concurrently with the grant of such Stock Option. The
number of Stock Appreciation Rights granted to a Participant shall be equal to a proportion of the
number of Common Shares that the Participant is entitled to receive pursuant to the Plan.



               (b) Grant of Parallel Award. Since each Stock Appreciation Right is parallel to a Stock
Option, the exercise of all or a portion of the Stock Options shall cause an equal exercise of the
same proportion of Stock Appreciation Rights granted under the Plan. A Stock Appreciation Right
can only be exercisable in conjunction with the exercise of the parallel Stock Option.



               (c) Calculation of Appreciation. Each Stock Appreciation Right shall entitle a
Participant to the excess of the Fair Market Value of a Common Share on the exercise date over the
Fair Market Value of a Common Share on the date the Stock Appreciation Right was granted.



               (d) Payment of Appreciation. The total appreciation available to a Participant from an
exercise of Stock Appreciation Rights shall be paid in a manner determined by the Committee.



               (e) Exercise Limitations. A Participant may exercise a Stock Appreciation Right only in
conjunction with the exercise of the Stock Option to which the Stock Appreciation Right is
attached. Stock Appreciation Rights may be exercised only at such times and by such persons as may
exercise Stock Options under the Plan.



          9. Performance Share Awards. The Committee may grant awards under which payment may be made
in Common Shares, cash or any combination of Common Shares and cash if the performance of the
Company or any Subsidiary selected by the Committee during the Performance Period meets certain
goals established by the Committee (“Performance Share Awards”). Such Performance Share Awards
shall be subject to the following terms and conditions and such other terms and conditions as the
Committee may prescribe:



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               (a) Performance Period and Performance Goals. The Committee shall determine and include in a
Performance Share Award grant the period of time for which a Performance Share Award is made
(“Performance Period”). The Committee shall also establish performance objectives (“Performance
Goals”) to be met by the Company or Subsidiary during the Performance Period as a condition to
payment of the Performance Share Award. The Performance Goals may include earnings per share,
return on stockholders’ equity, return on assets, net income or any other financial or other
measure established by the Committee. The Performance Goals may include minimum and optimum
objectives or a single set of objectives.



               (b) Payment of Performance Share Awards. The Committee shall establish the method of
calculating the amount of payment to be made under a Performance Share Award if the Performance
Goals are met, including the fixing of a maximum payment. The Performance Share Award shall be
expressed in terms of Common Shares and referred to as “Performance Shares.” After the completion
of a Performance Period, the performance of the
Company or Subsidiary shall be measured against the Performance Goals, and the Committee shall
determine whether all, none or any portion of a Performance Share Award shall be paid. Any such
payment shall be made as soon as administratively feasible after the Committee’s determination (but
no later than the 15th day of the third month following the last day of the Performance Period).
The Committee, in its discretion, may elect to make payment in Common Shares, cash or a combination
of Common Shares and cash. Any cash payment shall be based on the Fair Market Value of the
underlying Common Shares on, or as soon as practicable prior to, the date of payment.



               (c) Revision of Performance Goals. At any time prior to the end of a Performance Period, the
Committee may revise the Performance Goals and the computation of payment if unforeseen events
occur which have a substantial effect on the performance of the Company or Subsidiary and which in
the judgment of the Committee make the application of the Performance Goals unfair unless a
revision is made.



               (d) Requirement of Employment. A Participant who receives a Performance Share Award must
remain in the employment of the Company or Subsidiary or remain in the service of the Company or
Subsidiary as a director until the completion of the Performance Period in order to be entitled to
payment under the Performance Share Award; provided that the Committee may, in its sole discretion,
provide for a partial payment (in accordance with the requirements of Section 9(b) above) where
such an exception is deemed equitable.



               (e) Compliance With Code Section 162(m). Any Performance Share Awards granted under this Plan
shall satisfy the requirements of the applicable provisions of Section 162(m) of the Code as
“qualified performance-based compensation.”



          10. Restricted Stock Awards. To the extent not inconsistent with the terms of this Plan, the
Committee may grant Restricted Stock Awards to Participants. Restricted Stock Awards will consist
of Common Shares transferred to a Participant who is eligible to participate in the Plan without
other payment therefor (other than the payment of the par value of such Common Shares if required
by applicable law) as additional compensation for his or her services to the Company or one of its
Subsidiaries. Restricted Stock Awards shall be subject to such



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terms and conditions as the
Committee determines appropriate including, without limitation, restrictions on the sale or other
disposition of such Common Shares and rights of the Company to reacquire such Common Shares upon
termination of the Participant’s employment or service as a director with the Company within
specified periods. Subject to such other restrictions as are imposed by the Committee and federal
and state securities laws, the Common Shares covered by a Restricted Stock Award granted to a
Participant under the Plan may be sold or otherwise disposed of only after six (6) months from the
grant date of the Award.




          11. Nontransferability. Each Stock Option, Performance Share Award and Restricted Stock Award
granted under this Plan shall not be transferable other than by will or the laws of descent and
distribution, and Stock Options shall be exercisable, during the Participant’s lifetime, only by
the Participant or the Participant’s guardian or legal representative.




          12. Other Provisions. The grant of any Award under the Plan may also be subject to such other
provisions (whether or not applicable to any Award granted to any other Participant) as the
Committee determines appropriate including, without limitation, provisions for the purchase of
Common Shares under Stock Options in installments, provisions for the payment of the option
exercise price of Common Shares under a Stock Option by delivery of other Common Shares of the
Company having a then Fair Market Value equal to the option exercise price of such Common Shares,
restrictions on resale or other disposition, such provisions as may be appropriate to comply with
federal or state securities laws and stock exchange requirements and understandings or conditions
as to the Participant’s employment or service as a director in addition to those specifically
provided for under the Plan. If the Committee does not specify another exercise schedule at the
time of grant, the number of Common Shares under each Stock Option which may be purchased in any
one year ending on an anniversary date of the grant of the Stock Option shall be the total number
of Common Shares subject to the Stock Option divided by the number of years constituting the term
of the Stock Option; provided, however, that if a Participant does not purchase in any one option
year the full number of Common Shares to which he or she is then entitled, the Participant may
purchase those Common Shares in any subsequent year during the term of the Stock Option.




          The Committee may, in its discretion, permit payment of the option exercise price of Common
Shares under Stock Options by delivery of a properly executed exercise notice together with a copy
of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or
loan proceeds to pay the option exercise price. To facilitate the foregoing, the Company may enter
into agreements for coordinated procedures with one or more brokerage firms.




          The Committee may, in its discretion and subject to such rules as it may adopt, permit a
Participant to pay all or a portion of the federal, state and local taxes, including FICA
withholding tax, arising in connection with the following transactions: (a) the exercise of a
Non-Qualified Stock Option; or (b) the receipt or exercise of any other Award by electing (i) to
have the Company withhold Common Shares, (ii) to tender back Common Shares received in connection
with such Award or (iii) to deliver other previously acquired Common Shares of the Company having a
Fair Market Value approximately equal to the amount to be withheld.



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          13. Term of the Plan and Amendment, Modification, Cancellation or Acceleration of Awards. No
Award shall be granted under the Plan more than ten (10) years after the date of the adoption of
the Plan by the Company’s Board of Directors. The terms and conditions applicable to any Award
granted prior to such date may at any time be amended, modified or canceled, without stockholder
approval, by mutual agreement between the Committee and the Participant or such other persons as
may then have an interest therein, so long as stockholder approval of such amendment, modification
or cancellation is not required under Rule l6b-3 under the Exchange Act or any applicable
requirements of any securities exchange on which are listed any of the Company’s equity securities
or any applicable requirements for issuers whose securities are traded in the NASDAQ National
Market System or any applicable requirements of the Code. The Committee may, at any time and in
its sole discretion, declare any or all Stock Options then outstanding under this Plan to be
exercisable, whether or not such Stock Options are then otherwise exercisable.




          l4. Taxes. The Company shall be entitled to withhold the amount of any tax attributable to
any amount payable or Common Shares deliverable under the Plan after giving the person entitled to
receive such amount or Common Shares notice as far in advance as practicable.




          l5. Definitions.




               (a) Award. The term “Award” means an award or grant of a Stock Option, Stock Appreciation
Right, Performance Share or Restricted Stock made to a Participant under Section 6, 7, 8, 9 or 10
of the Plan.




(b) Change in Control. A “Change in Control” shall be deemed to have
occurred:




                    (i) With respect to a Participant who is a party to a change in control
agreement and to which the Company also is a party (“Change Agreement”), a
“change in control” occurs as defined in (and subject to the terms of) that
Participant’s Change Agreement; and




                    (ii) With respect to all Participants, approval by the Company’s
stockholders of a definitive agreement (A) to merge or consolidate the
Company with or into another corporation in which the Company is not the
continuing or surviving corporation or pursuant to which any Common Shares
would be converted into cash, securities or other property of another
corporation, other than a merger of the Company in which holders of Common
Shares immediately before the merger have the same proportionate ownership
of shares of the surviving corporation immediately after the merger as
immediately before or (B) within a 12-consecutive-calendar-month period, to
sell or otherwise dispose of 50 percent or more of the book value of the
combined assets of the Company and all Subsidiaries. For purposes of this
definition, (A) “book value” will be established on the basis of the latest
consolidated financial statement the Company filed with the Securities and
Exchange Commission before the



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date any 12-consecutive-calendar month
measurement period began and (B) “related entity” means (I) an entity
related to the Company by application of Sections 414(b) and (c) of the
Code, as modified by Section 414(h) of the Code or (II) an affiliated
service group [as defined in Section 414(m) of the Code] or other
organization described in Section 414(o) of the Code that includes the
Company.



               (c) Code. “Code” means the Internal Revenue Code of 1986, as amended, and the regulations and
rulings thereunder. References to a particular section of the Code shall include references to
successor provisions.



               (d) Committee. The “Committee” means the Committee of the Board of Directors of the Company
constituted as provided in Section 2 hereof.



               (e) Common Shares. “Common Shares” means the shares of Common Stock, par value $0.01 per
share, of the Company or any security of the Company issued in substitution, exchange or lieu
thereof.



               (f) Company. The “Company” means Bob Evans Farms, Inc., a Delaware corporation, or any
successor corporation.



               (g) Disability. The term “Disability” means, as it relates to the exercise of an Incentive
Stock Option after termination of employment, a disability within the meaning of Section 22(e)(3)
of the Code, and for all other purposes, a mental or physical condition which, in the opinion of
the Committee, renders a Participant unable or incompetent to carry out the job responsibilities
which such Participant held or the tasks to which such Participant was assigned at the time the
disability was incurred, and which is expected to be permanent or for an indefinite duration
exceeding one year.



               (h) Exchange Act. The term “Exchange Act” means the Securities Exchange Act of 1934, as
amended, or a successor statute.



               (i) Fair Market Value. The “Fair Market Value” of the Company’s Common Shares shall mean, on
any given date, the last reported sales price of the Common Shares, as reported on the NASDAQ
National Market System or on any securities exchange on which the Company’s Common Shares may be
listed on such date or, if there are no reported sales of Common Shares on such date, then the last
reported sales price on the next preceding day on which such a sale was transacted.



               (j) Incentive Stock Option. “Incentive Stock Option” means any Stock Option granted pursuant
to the provisions of Section 6 of the Plan that is intended to be and is specifically designated as
an “incentive stock option” within the meaning of Section 422 of the Code.



               (k) Non-Qualified Stock Option. A “Non-Qualified Stock Option” means any Stock Option granted
pursuant to the provisions of Section 7 of the Plan that is not an Incentive Stock Option.



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               (l) Parent. The term “Parent of the Company” shall have the meaning set forth in 424(e) of
the Code.



               (m) Participant. The term “Participant” shall have the meaning set forth in Section 3 of the
Plan.



               (n) Performance Goals. The term “Performance Goals” shall have the meaning set forth in
Section 9 of the Plan.



               (o) Performance Period. The term “Performance Period” shall have the meaning set forth in
Section 9 of the Plan.



               (p) Performance Share Award. The term “Performance Share Award” shall have the meaning set
forth in Section 9 of the Plan.



               (q) Plan. The “Plan” means the Bob Evans Farms, Inc. Second Amended and Restated 1998 Stock
Option and Incentive Plan, as set forth herein, and as it may be hereafter amended and from time to
time in effect.



               (r) Restricted Stock. The term Restricted Stock shall have the meaning described in Section
10 of this Plan.



               (s) Retirement. The term “Retirement” for all purposes of the Plan shall mean voluntary
separation from employment or termination of service as a director with the Company and each of its
Subsidiaries on or after the date the person both has attained age fifty-five (55) and is credited
with at least ten (10) years of service.



               (t) Stock Appreciation Right. The term Stock Appreciation Right or “SAR” shall mean a right
to receive cash in an amount equal to the excess of the Fair Market Value of a Common Share on the
exercise date of the SAR over the Fair Market Value of a Common Share on the date the SAR is
granted pursuant to the provisions of the Plan.



               (u) Stock Option. The term “Stock Option” means any Incentive Stock Option or Non-Qualified
Stock Option granted under the Plan.



               (v) Stock Option Awards. The term “Stock Option Awards” means any grant of a Stock Option to
a Participant under the Plan.



               (w) Subsidiary. The term “Subsidiary” for all purposes other than the Incentive Stock Option
plan described in Section 6, shall mean any corporation, partnership, joint venture or business
trust, fifty percent (50%) or more of the control of which is owned, directly or indirectly, by the
Company. For purposes of the Incentive Stock Option plan described in Section 6, the term
“Subsidiary” shall be defined as provided in Section 424(f) of the Code.



               (x) Terminated for Cause. The term “Terminated for Cause” for purposes of the Plan shall mean
termination on account of any act of fraud or intentional misrepresentation or embezzlement,
misappropriation or conversion of assets or opportunities of



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the Company or a Subsidiary, the
conviction of a felony or intentional and repeated violations of the written policies or procedures
of the Company or any Subsidiary.



          l6. Adjustment Provisions.




               (a) The existence of the Plan and the Awards granted hereunder shall not affect or restrict in
any way the right or power of the Board of Directors or the stockholders of the Company to make or
authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital
structure or its business, any merger or consolidation of the Company, any issue of bonds,
debentures, preferred or prior preference stocks ahead of or affecting the Company’s capital stock
or the rights thereof, 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.



               (b) In the event of any change in capitalization affecting the Common Shares, such as a stock
dividend, stock split, recapitalization, merger, consolidation, split-up, combination or exchange
of shares or other form of reorganization, or any other change affecting the Common Shares, the
Committee shall make proportionate adjustments to reflect such change with respect to the aggregate
number of Common Shares for which Awards in respect thereof may be granted under the Plan, the
maximum number of Common Shares which may be sold or awarded to any Participant, the number of
Common Shares covered by each outstanding Award and the price per share in respect of outstanding
Awards. Notwithstanding the foregoing, an adjustment to a Stock Option pursuant to this
Section 16(b) shall be made only to the extent such adjustment complies, to the extent applicable,
with Section 409A of the Code.



               (c) The Committee also shall make such adjustments in the number of shares covered by, and the
price or other value of, any outstanding Awards in the event of a spin-off or other distribution
(other than normal cash dividends) of assets of the Company to stockholders. Notwithstanding the
foregoing, an adjustment to a Stock Option pursuant to this Section 16(c) shall be made only to the
extent such adjustment complies, to the extent applicable, with Section 409A of the Code.



               (d) Subject to the terms of a Change Agreement (as defined in Section 15(b)), if, within 36
months after a Change in Control, (i) the Plan is terminated and not replaced with a similar
program providing comparable benefits and features or (ii) with respect to a Participant who is a
party to a Change Agreement, an event occurs that generates a change in control payment under that
Participant’s Change Agreement, then (iii) all Stock Options then outstanding under this Plan shall
become fully exercisable as of the date of the Change in Control, whether or not then otherwise
exercisable. In addition, upon Retirement of any Participant, all Stock Options held by such
retiring Participant shall immediately vest and become exercisable.



          17. Amendment and Termination of Plan. The Committee, with the approval of the Board of
Directors of the Company, may amend the Plan from time to time or terminate the Plan at any time
without the approval of the stockholders of the Company except as such stockholder approval may be
required (a) to satisfy the requirements of Rule l6b-3 under the Exchange Act, or any successor
rule or regulation, (b) to satisfy applicable requirements of the



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Code or (c) to satisfy applicable
requirements of any securities exchange on which are listed any of the Company’s equity securities
or any requirements applicable to issuers whose securities are traded in the NASDAQ National Market
System. No such action to amend or terminate the Plan shall reduce the then existing amount of any
Participant’s Award or adversely change the terms and conditions thereof without the Participant’s
consent. No amendment of the Plan shall result in any Committee member’s losing his or her status
as a “disinterested person” as defined in Rule l6b-3 under the Exchange Act, or any successor rule
or regulation, with respect to any employee benefit plan of the Company or result in the Plan
losing its status as a plan satisfying the requirements of said Rule l6b-3.




          18. No Right to Employment. Neither the adoption of the Plan nor the granting of any Awards
hereunder shall confer upon any employee or director of the Company or any Subsidiary any right to
continued employment or service with the Company or any Subsidiary, as the case may be, nor shall
it interfere in any way with the right of the Company or
a Subsidiary to terminate the employment or service of any of its employees or directors at any
time, with or without cause.




          19. Unfunded Plan. The Plan shall be unfunded and the Company shall not be required to
segregate any assets that may at any time be represented by Awards under the Plan. Any liability
of the Company to any person with respect to any Awards under the Plan shall be based solely upon
any contractual obligations that may be effected pursuant to the Plan. No such obligation of the
Company shall be deemed to be secured by any pledge of, or other encumbrance on, any property of
the Company or any Subsidiary.




          20. Other Company Award and Compensation Plans. Payments and other Awards received by a
Participant under the Plan shall not be deemed a part of a Participant’s regular, recurring
compensation for purposes of any termination indemnity or severance pay law and shall not be
included in, nor have any effect on, the determination of Awards under any other employee benefit
plan or similar arrangement provided by the Company or a Subsidiary unless expressly so provided by
such other plan or arrangement, or except where the Committee expressly determines that an Award or
portion of an Award should be included to accurately reflect competitive compensation practices or
to recognize that an Award has been made in lieu of a portion of competitive annual cash
compensation. Awards under the Plan may be made in combination or in tandem with, or as
alternatives to, grants, awards or payments under any other Company or Subsidiary plans. The Plan
notwithstanding, the Company or any Subsidiary may adopt such other compensation programs and
additional compensation arrangements as it deems necessary to attract, retain and reward employees
and directors for their service with the Company and its Subsidiaries.




          21. Securities Law Restrictions. No Common Shares shall be issued under the Plan unless
counsel for the Company shall be satisfied that such issuance will be in compliance with applicable
federal and state securities laws. Certificates for Common Shares delivered under the Plan may be
subject to such stock transfer orders and other restrictions as the Committee may deem advisable
under the rules, regulations and other requirements of the Securities and Exchange Commission, any
stock exchange upon which the Common Shares are then listed or traded, the NASDAQ National Market
System or any applicable federal or state



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securities law. The Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such restrictions.




          22. Award Agreement. Each Participant receiving an Award under the Plan shall enter into an
agreement with the Company in a form specified by the Committee agreeing to the terms and
conditions of the Award and such related matters as the Committee shall, in its sole discretion,
determine.




          23. Cost of the Plan. The costs and expenses of administering the Plan shall be borne by the
Company.




          24. Governing Law. The Plan and all actions taken thereunder shall be governed by and
construed in accordance with the laws of the State of Delaware.




          25. Stockholder Approval. The Plan was adopted by the Board of Directors of the Company on
May 1, 1998. The Plan and any Award granted thereunder shall be null and void if stockholder
approval is not obtained within twelve (12) months of the adoption of the Plan by the Board of
Directors.




          26. Effective Date. The first amendment and restatement was effective with respect to all
Awards issued on and after May 1, 2002. This second amendment and restatement is effective January
1, 2008.




          27. Compliance with Section 409A of the Code. It is intended that the Plan comply with
Section 409A of the Code and the Treasury Regulations promulgated thereunder (and any subsequent
notices or guidance issued by the Internal Revenue Service), and the Plan shall be interpreted,
administered and operated accordingly. Nothing herein shall be construed as an entitlement to or
guarantee of any particular tax treatment to a Participant.





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