Document:

exv10w45

    Exhibit
10.45

 

    AMENDMENT
    TO THE GEO GROUP, INC. 2006 STOCK INCENTIVE PLAN

    AMENDED AND RESTATED

 

    THE GEO
    GROUP, INC.

    2006 STOCK INCENTIVE PLAN

 

    July 12,
    2010

 

		
	
    1.  
	
    ESTABLISHMENT,
    EFFECTIVE DATE AND TERM

 

    The GEO Group, Inc., a Florida corporation originally
    established The GEO Group, Inc. 2006 Stock Incentive Plan,
    effective May 4, 2006, authorizing the issuance of
    300,000 shares of Common Stock. Since the adoption of the
    Plan, through amendments to the Plan and two stock splits
    effectuated by GEO, the Plan has been amended to authorize the
    issuance of 2,400,000 shares of Common Stock. Subject to
    the approval by the shareholders of GEO in accordance with the
    laws of the State of Florida on August 12, 2010, the Plan
    is hereby amended and restated to authorize an additional
    2,000,000 shares of Common Stock to be issued pursuant to
    the Plan and to make certain other amendments to the Plan.
    Unless earlier terminated pursuant to Section 15(k) hereof,
    the Plan shall terminate on the tenth anniversary of the
    Effective Date. Capitalized terms used herein are defined in
    Annex A attached hereto.

 

		
	
    2.  
	
    PURPOSE

 

    The purpose of the Plan is to enable GEO to attract, retain,
    reward and motivate Eligible Individuals by providing them with
    an opportunity to acquire or increase a proprietary interest in
    GEO and to incentivize them to expend maximum effort for the
    growth and success of the Company, so as to strengthen the
    mutuality of the interests between the Eligible Individuals and
    the shareholders of GEO.

 

		
	
    3.  
	
    ELIGIBILITY

 

    Awards may be granted under the Plan to any Eligible Individual,
    as determined by the Committee from time to time, on the basis
    of their importance to the business of the Company pursuant to
    the terms of the Plan.

 

		
	
    4.  
	
    ADMINISTRATION

 

    (a) Committee. The Plan shall be
    administered by the Committee, which shall have the full power
    and authority to take all actions, and to make all
    determinations not inconsistent with the specific terms and
    provisions of the Plan deemed by the Committee to be necessary
    or appropriate to the administration of the Plan, any Award
    granted or any Award Agreement entered into hereunder. The
    Committee may correct any defect or supply any omission or
    reconcile any inconsistency in the Plan or in any Award
    Agreement in the manner and to the extent it shall deem
    expedient to carry the Plan into effect as it may determine in
    its sole discretion. The decisions by the Committee shall be
    final, conclusive and binding with respect to the interpretation
    and administration of the Plan, any Award or any Award Agreement
    entered into under the Plan.

 

    (b) Delegation to Officers or
    Employees. The Committee may designate officers or
    employees of the Company to assist the Committee in the
    administration of the Plan. The Committee may delegate authority
    to officers or employees of the Company to grant Awards and
    execute Award Agreements or other documents on behalf of the
    Committee in connection with the administration of the Plan,
    subject to whatever limitations or restrictions the Committee
    may impose and in accordance with applicable law.

 

    (c) Designation of Advisors. The
    Committee may designate professional advisors to assist the
    Committee in the administration of the Plan. The Committee may
    employ such legal counsel, consultants, and agents as it may
    deem desirable for the administration of the Plan and may rely
    upon any advice and any computation received from any such
    counsel, consultant, or agent. The Company shall pay all
    expenses and costs incurred by the Committee for the engagement
    of any such counsel, consultant, or agent.

    

    1

 

    (d) Participants Outside the U.S. In
    order to conform with the provisions of local laws and
    regulations in foreign countries in which the Company operates,
    the Committee shall have the sole discretion to (i) modify
    the terms and conditions of the Awards granted under the Plan to
    Eligible Individuals located outside the United States;
    (ii) establish subplans with such modifications as may be
    necessary or advisable under the circumstances present by local
    laws and regulations; and (iii) take any action which it
    deems advisable to comply with or otherwise reflect any
    necessary governmental regulatory procedures, or to obtain any
    exemptions or approvals necessary with respect to the Plan or
    any subplan established hereunder.

 

    (e) Liability and Indemnification. No
    Covered Individual shall be liable for any action or
    determination made in good faith with respect to the Plan, any
    Award granted hereunder or any Award Agreement entered into
    hereunder. The Company shall, to the maximum extent permitted by
    applicable law and the Articles of Incorporation and Bylaws of
    GEO, indemnify and hold harmless each Covered Individual against
    any cost or expense (including reasonable attorney fees
    reasonably acceptable to the Company) or liability (including
    any amount paid in settlement of a claim with the approval of
    the Company), and amounts advanced to such Covered Individual
    necessary to pay the foregoing at the earliest time and to the
    fullest extent permitted, arising out of any act or omission to
    act in connection with the Plan, any Award granted hereunder or
    any Award Agreement entered into hereunder. Such indemnification
    shall be in addition to any rights of indemnification such
    individuals may have under applicable law or under the Articles
    of Incorporation or Bylaws of GEO. Notwithstanding anything else
    herein, this indemnification will not apply to the actions or
    determinations made by a Covered Individual with regard to
    Awards granted to such Covered Individual under the Plan or
    arising out of such Covered Individual’s own fraud or bad
    faith.

 

		
	
    5.  
	
    SHARES OF
    COMMON STOCK SUBJECT TO PLAN

 

    (a) Shares Available for Awards. The
    Common Stock that may be issued pursuant to Awards granted under
    the Plan shall be treasury shares or authorized but unissued
    shares of the Common Stock. The total number of shares of Common
    Stock that may be issued pursuant to Awards granted under the
    Plan shall be the sum of Four Million Four Hundred Thousand
    (4,400,000) shares.

 

    (b) Maximum Shares Issuable During a Fiscal
    Year. The maximum number of shares of Common Stock
    that may be issued under all Awards granted in a fiscal year
    shall not exceed three percent (3%) of GEO’s maximum
    authorized and outstanding shares of Common Stock at any time
    during said fiscal year; provided, however, that (i) such
    limitation shall not include any substitute grants made in
    settlement of any awards under any other plan sponsored by GEO
    or substitute grants or equity assumed in connection with a
    corporate transaction, and (ii) any shares of Common Stock
    repurchased or redeemed by GEO after any Awards have been made
    which have been authorized by the Board shall nevertheless be
    deemed to be outstanding for purposes of calculating whether
    there has been a violation of this Section 5(b).

 

    (c) Certain Limitations on Specific Types of
    Awards. The granting of Awards under this Plan shall
    be subject to the following limitations:

 

    (i) With respect to the shares of Common Stock reserved
    pursuant to this Section, a maximum of One Million Two Hundred
    Thousand (1,200,000) of such shares may be subject to grants of
    Incentive Stock Options;

 

    (ii) With respect to the shares of Common Stock reserved
    pursuant to this Section, a maximum of One Million Eighty Three
    Thousand (1,083,000) of such shares may be issued in connection
    with Awards, other than Stock Options and Stock Appreciation
    Rights, that are settled in Common Stock;

 

    (iii) With respect to the shares of Common Stock reserved
    pursuant to this Section, a maximum of Four Hundred Fifty
    Thousand (450,000) of such shares may be subject to grants of
    Options or Stock Appreciation Rights to any one Eligible
    Individual during any one fiscal year;

 

    (iv) With respect to the shares of Common Stock reserved
    pursuant to this Section, a maximum of Four Hundred Fifty
    Thousand (450,000) of such shares may be subject to grants of
    Performance Shares, Restricted Stock, and Awards of Common Stock
    to any one Eligible Individual during any one fiscal
    year; and

    

    2

 

    (v) The maximum value at Grant Date of grants of
    Performance Units which may be granted to any one Eligible
    Individual during any one fiscal year shall be $1,000,000.

 

    (d) Reduction of Shares Available for
    Awards. Upon the granting of an Award, the number of
    shares of Common Stock available under this Section hereof for
    the granting of further Awards shall be reduced as follows:

 

    (i) In connection with the granting of an Option or Stock
    Appreciation Right, the number of shares of Common Stock shall
    be reduced by the number of shares of Common Stock subject to
    the Option or Stock Appreciation Right;

 

    (ii) In connection with the granting of an Award that is
    settled in Common Stock, other than the granting of an Option or
    Stock Appreciation Right, the number of shares of Common Stock
    shall be reduced by the number of shares of Common Stock subject
    to the Award; and

 

    (iii) Awards settled in cash shall not count against the
    total number of shares of Common Stock available to be granted
    pursuant to the Plan.

 

    (e) Cancelled, Forfeited, or Surrendered
    Awards. Notwithstanding anything to the contrary in
    this Plan, if any Award is cancelled, forfeited or terminated
    for any reason prior to exercise or becoming vested in full, the
    shares of Common Stock that were subject to such Award shall, to
    the extent cancelled, forfeited or terminated, immediately
    become available for future Awards granted under the Plan as if
    said Award had never been granted; provided, however, that any
    shares of Common Stock subject to an Award which is cancelled,
    forfeited or terminated in order to pay the Exercise Price,
    purchase price or any taxes or tax withholdings on an Award
    shall not be available for future Awards granted under the Plan.

 

    (f) Recapitalization. If the
    outstanding shares of Common Stock are increased or decreased or
    changed into or exchanged for a different number or kind of
    shares or other securities of GEO by reason of any
    recapitalization, reclassification, reorganization, stock split,
    reverse split, combination of shares, exchange of shares, stock
    dividend or other distribution payable in capital stock of GEO
    or other increase or decrease in such shares effected without
    receipt of consideration by GEO occurring after the Effective
    Date, an appropriate and proportionate adjustment shall be made
    by the Committee to (i) the aggregate number and kind of
    shares of Common Stock available under the Plan (including, but
    not limited to, the aggregate limits of the number of shares of
    Common Stock described in Sections 5(c)(i) and (ii),
    (ii) the limits on the number of shares of Common Stock
    that may be granted to an Eligible Employee in any one fiscal
    year, (iii) the calculation of the reduction of shares of
    Common Stock available under the Plan, (iv) the number and
    kind of shares of Common Stock issuable upon exercise (or
    vesting) of outstanding Awards granted under the Plan;
    (v) the Exercise Price of outstanding Options granted under
    the Plan,
    and/or
    (vi) the number of shares of Common Stock subject to Awards
    granted to Non-Employee Directors under Section 10. No
    fractional shares of Common Stock or units of other securities
    shall be issued pursuant to any such adjustment under this
    Section 5(f), and any fractions resulting from any such
    adjustment shall be eliminated in each case by rounding downward
    to the nearest whole share or unit. Any adjustments made under
    this Section 5(f) with respect to any Incentive Stock
    Options must be made in accordance with Code Section 424.

 

		
	
    6.  
	
    OPTIONS

 

    (a) Grant of Options. Subject to the
    terms and conditions of the Plan, the Committee may grant to
    such Eligible Individuals as the Committee may determine,
    Options to purchase such number of shares of Common Stock and on
    such terms and conditions as the Committee shall determine in
    its sole and absolute discretion. Each grant of an Option shall
    satisfy the requirements set forth in this Section.

 

    (b) Type of Options. Each
    Option granted under the Plan may be designated by the
    Committee, in its sole discretion, as either (i) an
    Incentive Stock Option, or (ii) a Non-Qualified Stock
    Option. Options designated as Incentive Stock Options that fail
    to continue to meet the requirements of Code Section 422
    shall be re-designated as Non-Qualified Stock Options
    automatically on the date of such failure to continue to meet
    such requirements without further action by the Committee. In
    the absence of any designation, Options granted under the Plan
    will be deemed to be Non-Qualified Stock Options.

    

    3

 

    (c) Exercise Price. Subject to the
    limitations set forth in the Plan relating to Incentive Stock
    Options, the Exercise Price of an Option shall be fixed by the
    Committee and stated in the respective Award Agreement, provided
    that the Exercise Price of the shares of Common Stock subject to
    such Option may not be less than Fair Market Value of such
    Common Stock on the Grant Date, or if greater, the par value of
    the Common Stock.

 

    (d) Limitation on Repricing. Unless
    such action is approved by GEO’s shareholders in accordance
    with applicable law: (i) no outstanding Option granted
    under the Plan may be amended to provide an Exercise Price that
    is lower than the then-current Exercise Price of such
    outstanding Option (other than adjustments to the Exercise Price
    pursuant to Sections 5(d) and 12); (ii) the Committee
    may not cancel any outstanding Option and grant in substitution
    therefore new Awards under the Plan covering the same or a
    different number of shares of Common Stock and having an
    Exercise Price lower than the then-current Exercise Price of the
    cancelled Option (other than adjustments to the Exercise Price
    pursuant to Sections 5(f) and 12); and (iii) the
    Committee may not authorize the repurchase of an outstanding
    Option which has an Exercise Price that is higher than the
    then-current fair market value of the Common Stock (other than
    adjustments to the Exercise Price pursuant to Sections 5(f)
    and 12).

 

    (e) Limitation on Option Period.
    Subject to the limitations set forth in the Plan relating to
    Incentive Stock Options, Options granted under the Plan and all
    rights to purchase Common Stock thereunder shall terminate no
    later than the tenth anniversary of the Grant Date of such
    Options, or on such earlier date as may be stated in the Award
    Agreement relating to such Option. In the case of Options
    expiring prior to the tenth anniversary of the Grant Date, the
    Committee may in its discretion, at any time prior to the
    expiration or termination of said Options, extend the term of
    any such Options for such additional period as it may determine,
    but in no event beyond the tenth anniversary of the Grant Date
    thereof.

 

    (f) Limitations on Incentive Stock
    Options. Notwithstanding any other provisions of the
    Plan, the following provisions shall apply with respect to
    Incentive Stock Options granted pursuant to the Plan.

 

    (i) Limitation on Grants. Incentive
    Stock Options may only be granted to Section 424 Employees.
    The aggregate Fair Market Value (determined at the time such
    Incentive Stock Option is granted) of the shares of Common Stock
    for which any individual may have Incentive Stock Options which
    first become vested and exercisable in any calendar year (under
    all incentive stock option plans of the Company) shall not
    exceed $100,000. Options granted to such individual in excess of
    the $100,000 limitation, and any Options issued subsequently
    which first become vested and exercisable in the same calendar
    year, shall automatically be treated as Non-Qualified Stock
    Options.

 

    (ii) Minimum Exercise Price. In no
    event may the Exercise Price of a share of Common Stock subject
    an Incentive Stock Option be less than 100% of the Fair Market
    Value of such share of Common Stock on the Grant Date.

 

    (iii) Ten Percent Shareholder.
    Notwithstanding any other provision of the Plan to the contrary,
    in the case of Incentive Stock Options granted to a
    Section 424 Employee who, at the time the Option is
    granted, owns (after application of the rules set forth in Code
    Section 424(d)) stock possessing more than ten percent of the
    total combined voting power of all classes of stock of GEO, such
    Incentive Stock Options (i) must have an Exercise Price per
    share of Common Stock that is at least 110% of the Fair Market
    Value as of the Grant Date of a share of Common Stock, and
    (ii) must not be exercisable after the fifth anniversary of
    the Grant Date.

 

    (g) Vesting Schedule and Conditions.
    No Options may be exercised prior to the satisfaction of the
    conditions and vesting schedule provided for in the Award
    Agreement relating thereto. Except as otherwise provided by the
    Committee in an Award Agreement in its sole and absolute
    discretion, subject to Sections 10, 12 and 13 of the Plan,
    Options covered by any Award under this Plan that are subject
    solely to a future service requirement shall vest as follows:
    (i) 20% of the Options subject to an Award shall vest
    immediately upon the Grant Date; and (ii) the remaining 80%
    of the Options subject to an Award shall vest over the four-year
    period immediately following the Grant Date in equal annual
    increments of 20%, with one increment vesting on each
    anniversary date of the Grant Date.

 

    (h) Exercise. When the conditions to
    the exercise of an Option have been satisfied, the Participant
    may exercise the Option only in accordance with the following
    provisions. The Participant shall deliver to GEO a written
    notice stating that the Participant is exercising the Option and
    specifying the number of shares of Common Stock

    

    4

 

    which are to be purchased pursuant to the Option, and such
    notice shall be accompanied by payment in full of the Exercise
    Price of the shares for which the Option is being exercised, by
    one or more of the methods provided for in the Plan. Said notice
    must be delivered to GEO at its principal office and addressed
    to the attention of John J. Bulfin, General Counsel, The GEO
    Group Inc., 621 NW 53rd Street, Suite 700, Boca Raton,
    Florida 33487. An attempt to exercise any Option granted
    hereunder other than as set forth in the Plan shall be invalid
    and of no force and effect.

 

    (i) Payment. Payment of the
    Exercise Price for the shares of Common Stock purchased pursuant
    to the exercise of an Option shall be made by one of the
    following methods:

 

    (i) by cash, certified or cashier’s check, bank draft
    or money order;

 

    (ii) through the delivery to GEO of shares of Common Stock
    which have been previously owned by the Participant for the
    requisite period necessary to avoid a charge to GEO’s
    earnings for financial reporting purposes; such shares shall be
    valued, for purposes of determining the extent to which the
    Exercise Price has been paid thereby, at their Fair Market Value
    on the date of exercise; without limiting the foregoing, the
    Committee may require the Participant to furnish an opinion of
    counsel acceptable to the Committee to the effect that such
    delivery would not result in GEO incurring any liability under
    Section 16(b) of the Exchange Act; or

 

    (iii) by any other method which the Committee, in its sole
    and absolute discretion and to the extent permitted by
    applicable law, may permit, including, but not limited to, any
    of the following: (A) through a “cashless exercise
    sale and remittance procedure” pursuant to which the
    Participant shall concurrently provide irrevocable instructions
    (1) to a brokerage firm approved by the Committee to effect
    the immediate sale of the purchased shares and remit to GEO, out
    of the sale proceeds available on the settlement date,
    sufficient funds to cover the aggregate Exercise Price payable
    for the purchased shares plus all applicable federal, state and
    local income, employment, excise, foreign and other taxes
    required to be withheld by the Company by reason of such
    exercise and (2) to GEO to deliver the certificates for the
    purchased shares directly to such brokerage firm in order to
    complete the sale; or (B) by any other method as may be
    permitted by the Committee.

 

    (j) Termination of Employment, Disability or
    Death. Unless otherwise provided in an Award
    Agreement, upon the termination of the employment or other
    service of a Participant with Company for any reason, all of the
    Participant’s outstanding Options (whether vested or
    unvested) shall be subject to the rules of this paragraph. Upon
    such termination, the Participant’s unvested Options shall
    expire. Notwithstanding anything in this Plan to the contrary,
    the Committee may provide, in its sole and absolute discretion,
    that following the termination of employment or other service of
    a Participant with the Company for any reason (i) any
    unvested Options held by the Participant that vest solely upon a
    future service requirement shall vest in whole or in part, at
    any time subsequent to such termination of employment or other
    service, and or (ii) a Participant or the
    Participant’s estate, devisee or heir at law (whichever is
    applicable), may exercise an Option, in whole or in part, at any
    time subsequent to such termination of employment or other
    service and prior to the termination of the Option pursuant to
    its terms. Unless otherwise determined by the Committee,
    temporary absence from employment because of illness, vacation,
    approved leaves of absence or military service shall not
    constitute a termination of employment or other service.

 

    (i) Termination for Reason Other Than Cause,
    Disability or Death. If a Participant’s
    termination of employment or other service is for any reason
    other than death, Disability, Cause or a voluntary termination
    within ninety (90) days after occurrence of an event which
    would be grounds for termination of employment or other service
    by the Company for Cause, any Option held by such Participant,
    may be exercised, to the extent exercisable at termination, by
    the Participant at any time within a period not to exceed ninety
    (90) days from the date of such termination, but in no
    event after the termination of the Option pursuant to its terms.

 

    (ii) Disability. If a
    Participant’s termination of employment or other service
    with the Company is by reason of a Disability of such
    Participant, the Participant shall have the right at any time
    within a period not to exceed one (1) year after such
    termination, but in no event after the termination of the Option
    pursuant to its terms, to exercise, in whole or in part, any
    vested portion of the Option held by such Participant at the
    date of such termination; provided, however, that if the
    Participant dies within such period, any vested Option held by
    such Participant upon death shall be exercisable by the
    Participant’s estate, devisee or heir at law (whichever is

    

    5

 

    applicable) for a period not to exceed one (1) year after
    the Participant’s death, but in no event after the
    termination of the Option pursuant to its terms.

 

    (iii) Death. If a Participant dies
    while in the employment or other service of the Company, the
    Participant’s estate or the devisee named in the
    Participant’s valid last will and testament or the
    Participant’s heir at law who inherits the Option has the
    right, at any time within a period not to exceed one
    (1) year after the date of such Participant’s death,
    but in no event after the termination of the Option pursuant to
    its terms, to exercise, in whole or in part, any portion of the
    vested Option held by such Participant at the date of such
    Participant’s death.

 

    (iv) Termination for Cause. In the
    event the termination is for Cause or is a voluntary termination
    within ninety (90) days after occurrence of an event which
    would be grounds for termination of employment or other service
    by the Company for Cause (without regard to any notice or cure
    period requirement), any Option held by the Participant at the
    time of such termination shall be deemed to have terminated and
    expired upon the date of such termination.

 

		
	
    7.  
	
    STOCK
    APPRECIATION RIGHTS

 

    (a) Grant of Stock Appreciation
    Rights. Subject to the terms and conditions of the
    Plan, the Committee may grant to such Eligible Individuals as
    the Committee may determine, Stock Appreciation Rights, in such
    amounts and on such terms and conditions as the Committee shall
    determine in its sole and absolute discretion. Each grant of a
    Stock Appreciation Right shall satisfy the requirements as set
    forth in this Section.

 

    (b) Terms and Conditions of Stock Appreciation
    Rights. Unless otherwise provided in an Award
    Agreement, the terms and conditions (including, without
    limitation, the limitations on the Exercise Price, exercise
    period, repricing and termination) of the Stock Appreciation
    Right shall be substantially identical (to the extent possible
    taking into account the differences related to the character of
    the Stock Appreciation Right) to the terms and conditions that
    would have been applicable under Section 6 above were the
    grant of the Stock Appreciation Rights a grant of an Option.

 

    (c) Exercise of Stock Appreciation
    Rights. Stock Appreciation Rights shall be exercised
    by a Participant only by written notice delivered to the General
    Counsel of GEO, specifying the number of shares of Common Stock
    with respect to which the Stock Appreciation Right is being
    exercised.

 

    (d) Payment of Stock Appreciation
    Right. Unless otherwise provided in an Award
    Agreement, upon exercise of a Stock Appreciation Right, the
    Participant or Participant’s estate, devisee or heir at law
    (whichever is applicable) shall be entitled to receive payment,
    in cash, in shares of Common Stock, or in a combination thereof,
    as determined by the Committee in its sole and absolute
    discretion. The amount of such payment shall be determined by
    multiplying the excess, if any, of the Fair Market Value of a
    share of Common Stock on the date of exercise over the Fair
    Market Value of a share of Common Stock on the Grant Date, by
    the number of shares of Common Stock with respect to which the
    Stock Appreciation Rights are then being exercised.
    Notwithstanding the foregoing, the Committee may limit in any
    manner the amount payable with respect to a Stock Appreciation
    Right by including such limitation in the Award Agreement.

 

		
	
    8.  
	
    RESTRICTED
    STOCK

 

    (a) Grant of Restricted Stock. Subject
    to the terms and conditions of the Plan, the Committee may grant
    to such Eligible Individuals as the Committee may determine,
    Restricted Stock, in such amounts and on such terms and
    conditions as the Committee shall determine in its sole and
    absolute discretion. Each grant of Restricted Stock shall
    satisfy the requirements as set forth in this Section.

 

    (b) Restrictions. The Committee shall
    impose such restrictions on any Restricted Stock granted
    pursuant to the Plan as it may deem advisable including, without
    limitation; time based vesting restrictions, or the attainment
    of Performance Goals. Except as otherwise provided by the
    Committee in an Award Agreement in its sole and absolute
    discretion, subject to Sections 10, 12 and 13 of the Plan,
    Restricted Stock covered by any Award under this Plan that are
    subject solely to a future service requirement shall vest over
    the four-year period immediately following the Grant Date in
    equal annual increments of 25%, with one increment vesting on
    each anniversary date of the Grant

    

    6

 

    Date. Shares of Restricted Stock subject to the attainment of
    Performance Goals will be released from restrictions only after
    the attainment of such Performance Goals has been certified by
    the Committee in accordance with Section 9(c).

 

    (c) Certificates and Certificate
    Legend. With respect to a grant of Restricted Stock,
    the Company may issue a certificate evidencing such Restricted
    Stock to the Participant or issue and hold such shares of
    Restricted Stock for the benefit of the Participant until the
    applicable restrictions expire. The Company may legend the
    certificate representing Restricted Stock to give appropriate
    notice of such restrictions. In addition to any such legends,
    each certificate representing shares of Restricted Stock granted
    pursuant to the Plan shall bear the following legend:

 

    “The sale or other transfer of the shares of stock
    represented by this certificate, whether voluntary, involuntary,
    or by operation of law, are subject to certain terms,
    conditions, and restrictions on transfer as set forth in The GEO
    Group, Inc. 2006 Stock Incentive Plan (the “Plan”),
    and in an Agreement entered into by and between the registered
    owner of such shares and The GEO Group, Inc. (the
    “Company”),
    dated          ,
    20  (the “Award Agreement”). A copy of the
    Plan and the Award Agreement may be obtained from the Secretary
    of the Company.”

 

    (d) Removal of Restrictions. Except as
    otherwise provided in the Plan, shares of Restricted Stock shall
    become freely transferable by the Participant upon the lapse of
    the applicable restrictions. Once the shares of Restricted Stock
    are released from the restrictions, the Participant shall be
    entitled to have the legend required by paragraph (c) above
    removed from the share certificate evidencing such Restricted
    Stock and the Company shall pay or distribute to the Participant
    all dividends and distributions held in escrow by the Company
    with respect to such Restricted Stock.

 

    (e) Shareholder Rights. Unless
    otherwise provided in an Award Agreement, until the expiration
    of all applicable restrictions, (i) the Restricted Stock
    shall be treated as outstanding, (ii) the Participant
    holding shares of Restricted Stock may exercise full voting
    rights with respect to such shares, and (iii) the
    Participant holding shares of Restricted Stock shall be entitled
    to receive all dividends and other distributions paid with
    respect to such shares while they are so held. If any such
    dividends or distributions are paid in shares of Common Stock,
    such shares shall be subject to the same restrictions on
    transferability and forfeitability as the shares of Restricted
    Stock with respect to which they were paid. Notwithstanding
    anything to the contrary, at the discretion of the Committee,
    all such dividends and distributions may be held in escrow by
    the Company (subject to the same restrictions on forfeitability)
    until all restrictions on the respective Restricted Stock have
    lapsed.

 

    (f) Termination of Service. Unless
    otherwise provided in a Award Agreement, if a Participant’s
    employment or other service with the Company terminates for any
    reason, all unvested shares of Restricted Stock held by the
    Participant and any dividends or distributions held in escrow by
    GEO with respect to such Restricted Stock shall be forfeited
    immediately and returned to the Company. Notwithstanding this
    paragraph, all grants of Restricted Stock that vest solely upon
    the attainment of Performance Goals shall be treated pursuant to
    the terms and conditions that would have been applicable under
    Section 9(c) as if such grants of Restricted Stock were
    Awards of Performance Shares. Notwithstanding anything in this
    Plan to the contrary, the Committee may provide, in its sole and
    absolute discretion, that following the termination of
    employment or other service of a Participant with the Company
    for any reason, any unvested shares of Restricted Stock held by
    the Participant that vest solely upon a future service
    requirement shall vest in whole or in part, at any time
    subsequent to such termination of employment or other service.

 

		
	
    9.  
	
    PERFORMANCE
    SHARES AND PERFORMANCE UNITS

 

    (a) Grant of Performance Shares and Performance
    Units. Subject to the terms and conditions of the
    Plan, the Committee may grant to such Eligible Individuals as
    the Committee may determine, Performance Shares and Performance
    Units, in such amounts and on such terms and conditions as the
    Committee shall determine in its sole and absolute discretion.
    Each grant of a Performance Share or a Performance Unit shall
    satisfy the requirements as set forth in this Section.

 

    (b) Performance Goals. Performance
    Goals will be based on one or more of the following criteria, as
    determined by the Committee in its absolute and sole discretion:
    (i) the attainment of certain target levels of, or a

    

    7

 

    specified increase in, GEO’s enterprise value or value
    creation targets; (ii) the attainment of certain target
    levels of, or a percentage increase in, GEO’s after-tax or
    pre-tax profits including, without limitation, that attributable
    to GEO’s continuing
    and/or other
    operations; (iii) the attainment of certain target levels
    of, or a specified increase relating to, GEO’s operational
    cash flow or working capital, or a component thereof;
    (iv) the attainment of certain target levels of, or a
    specified decrease relating to, GEO’s operational costs, or
    a component thereof (v) the attainment of a certain level
    of reduction of, or other specified objectives with regard to
    limiting the level of increase in all or a portion of bank debt
    or other of GEO’s long-term or short-term public or private
    debt or other similar financial obligations of GEO, which may be
    calculated net of cash balances
    and/or other
    offsets and adjustments as may be established by the Committee;
    (vi) the attainment of a specified percentage increase in
    earnings per share or earnings per share from GEO’s
    continuing operations; (vii) the attainment of certain
    target levels of, or a specified percentage increase in,
    GEO’s net sales, revenues, net income or earnings before
    income tax or other exclusions; (viii) the attainment of
    certain target levels of, or a specified increase in, GEO’s
    return on capital employed or return on invested capital;
    (ix) the attainment of certain target levels of, or a
    percentage increase in, GEO’s after-tax or pre-tax return
    on shareholder equity; (x) the attainment of certain target
    levels in the fair market value of GEO’s Common Stock;
    (xi) the growth in the value of an investment in the Common
    Stock assuming the reinvestment of dividends;
    and/or
    (xii) the attainment of certain target levels of, or a
    specified increase in, EBITDA (earnings before income tax,
    depreciation and amortization). In addition, Performance Goals
    may be based upon the attainment by a subsidiary, division or
    other operational unit of GEO of specified levels of performance
    under one or more of the measures described above. Further, the
    Performance Goals may be based upon the attainment by GEO (or a
    subsidiary, division, facility or other operational unit of GEO)
    of specified levels of performance under one or more of the
    foregoing measures relative to the performance of other
    corporations. To the extent permitted under Code
    Section 162(m) of the Code (including, without limitation,
    compliance with any requirements for shareholder approval), the
    Committee may, in its sole and absolute discretion:
    (i) designate additional business criteria upon which the
    Performance Goals may be based; (ii) modify, amend or
    adjust the business criteria described herein; or
    (iii) incorporate in the Performance Goals provisions
    regarding changes in accounting methods, corporate transactions
    (including, without limitation, dispositions or acquisitions)
    and similar events or circumstances. Performance Goals may
    include a threshold level of performance below which no Award
    will be earned, levels of performance at which an Award will
    become partially earned and a level at which an Award will be
    fully earned.

 

    (c) Terms and Conditions of Performance Shares and
    Performance Units. The applicable Award Agreement
    shall set forth (i) the number of Performance Shares or the
    dollar value of Performance Units granted to the Participant;
    (ii) the Performance Period and Performance Goals with
    respect to each such Award; (iii) the threshold, target and
    maximum shares of Common Stock or dollar values of each
    Performance Share or Performance Unit and corresponding
    Performance Goals, and (iv) any other terms and conditions
    as the Committee determines in its sole and absolute discretion.
    The Committee shall establish, in its sole and absolute
    discretion, the Performance Goals for the applicable Performance
    Period for each Performance Share or Performance Unit granted
    hereunder. Performance Goals for different Participants and for
    different grants of Performance Shares and Performance Units
    need not be identical. Unless otherwise provided in an Award
    Agreement, the Participants’ rights as a shareholder in
    Performance Shares shall be substantially identical to the terms
    and conditions that would have been applicable under
    Section 8 above if the Performance Shares were Restricted
    Stock. Unless otherwise provided in an Award Agreement, a holder
    of Performance Units is not entitled to the rights of a holder
    of Common Stock.

 

    (d) Determination and Payment of Performance Units
    or Performance Shares Earned. As soon as practicable
    after the end of a Performance Period, the Committee shall
    determine the extent to which Performance Shares or Performance
    Units have been earned on the basis of the Company’s actual
    performance in relation to the established Performance Goals as
    set forth in the applicable Award Agreement and shall certify
    these results in writing. As soon as practicable after the
    Committee has determined that an amount is payable or should be
    distributed with respect to a Performance Share or a Performance
    Unit, the Committee shall cause the amount of such Award to be
    paid or distributed to the Participant or the Participant’s
    estate, devisee or heir at law (whichever is applicable). Unless
    otherwise provided in an Award Agreement, the Committee shall
    determine in its sole and absolute discretion whether payment
    with respect to the Performance Share or Performance Unit shall
    be made in cash, in shares of Common Stock, or in a combination
    thereof. For purposes of making payment or a distribution with
    respect to a Performance Share or Performance Unit, the cash
    equivalent of a share of Common Stock shall be

    

    8

 

    determined by the Fair Market Value of the Common Stock on the
    day the Committee designates the Performance Shares or
    Performance Units to be payable.

 

    (e) Termination of Employment. Unless
    otherwise provided in an Award Agreement, if a
    Participant’s employment or other service with the Company
    terminates for any reason, all of the Participant’s
    outstanding Performance Shares and Performance Units shall be
    subject to the rules of this Section.

 

    (i) Termination for Reason Other Than Death or
    Disability. If a Participant’s employment or
    other service with the Company terminates prior to the
    expiration of a Performance Period with respect to any
    Performance Units or Performance Shares held by such Participant
    for any reason other than death or Disability, the outstanding
    Performance Units or Performance Shares held by such Participant
    for which the Performance Period has not yet expired shall
    terminate upon such termination and the Participant shall have
    no further rights pursuant to such Performance Units or
    Performance Shares.

 

    (ii) Termination of Employment for Death or
    Disability. If a Participant’s employment or
    other service with the Company terminates by reason of the
    Participant’s death or Disability prior to the end of a
    Performance Period, the Participant, or the Participant’s
    estate, devisee or heir at law (whichever is applicable) shall
    be entitled to a payment of the Participant’s outstanding
    Performance Units and Performance Share at the end of the
    applicable Performance Period, pursuant to the terms of the Plan
    and the Participant’s Award Agreement; provided, however,
    that the Participant shall be deemed to have earned only that
    proportion (to the nearest whole unit or share) of the
    Performance Units or Performance Shares granted to the
    Participant under such Award as the number of full months of the
    Performance Period which have elapsed since the first day of the
    Performance Period for which the Award was granted to the end of
    the month in which the Participant’s termination of
    employment or other service, bears to the total number of months
    in the Performance Period, subject to the attainment of the
    Performance Goals associated with the Award as certified by the
    Committee. The right to receive any remaining Performance Units
    or Performance Shares shall be canceled and forfeited.

 

		
	
    10.  
	
    VESTING
    OF AWARD GRANTS TO NON-EMPLOYEE DIRECTORS

 

    Notwithstanding the minimum vesting provisions in
    Section 6(g) and 8(b) of the Plan, any Award granted to a
    Non-Employee Director in lieu of cash compensation shall not be
    subject to any minimum vesting requirements.

 

		
	
    11.  
	
    OTHER
    AWARDS

 

    Awards of shares of Common Stock, phantom stock, restricted
    stock units and other awards that are valued in whole or in part
    by reference to, or otherwise based on, Common Stock, may also
    be made, from time to time, to Eligible Individuals as may be
    selected by the Committee. Such Common Stock may be issued in
    satisfaction of awards granted under any other plan sponsored by
    the Company or compensation payable to an Eligible Individual.
    In addition, such awards may be made alone or in addition to or
    in connection with any other Award granted hereunder. The
    Committee may determine the terms and conditions of any such
    award. Each such award shall be evidenced by an Award Agreement
    between the Eligible Individual and the Company which shall
    specify the number of shares of Common Stock subject to the
    award, any consideration therefore, any vesting or performance
    requirements and such other terms and conditions as the
    Committee shall determine in its sole and absolute discretion.
    With respect to the Awards that may be issued solely pursuant to
    this Section 11 and not pursuant to any other provision of
    the Plan, a maximum number of shares of Common Stock with
    respect to which such Awards may be issued, shall not exceed
    five percent (5%) of the total number of shares of Common Stock
    that may be issued under the Plan, as described in
    Section 5(a).

 

		
	
    12.  
	
    CHANGE IN
    CONTROL

 

    Unless otherwise provided in an Award Agreement, upon the
    occurrence of a Change in Control of GEO, the Committee may in
    its sole and absolute discretion, provide on a case by case
    basis that (i) some or all outstanding Awards may become
    immediately exercisable or vested, without regard to any
    limitation imposed pursuant to this Plan, (ii) that all
    Awards shall terminate, provided that Participants shall have
    the right, immediately prior to the occurrence of such Change in
    Control and during such reasonable period as the Committee in
    its sole discretion shall determine and designate, to exercise
    any vested Award in whole or in part, (iii) that all Awards
    shall terminate,

    

    9

 

    provided that Participants shall be entitled to a cash payment
    equal to the Change in Control Price with respect to shares
    subject to the vested portion of the Award net of the Exercise
    Price thereof (if applicable), (iv) provide that, in
    connection with a liquidation or dissolution of GEO, Awards
    shall convert into the right to receive liquidation proceeds net
    of the Exercise Price (if applicable) and (v) any
    combination of the foregoing. In the event that the Committee
    does not terminate or convert an Award upon a Change in Control
    of GEO, then the Award shall be assumed, or substantially
    equivalent Awards shall be substituted, by the acquiring, or
    succeeding corporation (or an affiliate thereof).

 

		
	
    13.  
	
    CHANGE IN
    STATUS OF PARENT OR SUBSIDIARY

 

    Unless otherwise provided in an Award Agreement or otherwise
    determined by the Committee, in the event that an entity or
    business unit which was previously a part of the Company is no
    longer a part of the Company, as determined by the Committee in
    its sole discretion, the Committee may, in its sole and absolute
    discretion: (i) provide on a case by case basis that some
    or all outstanding Awards held by a Participant employed by or
    performing service for such entity or business unit may become
    immediately exercisable or vested, without regard to any
    limitation imposed pursuant to this Plan; (ii) provide on a
    case by case basis that some or all outstanding Awards held by a
    Participant employed by or performing service for such entity or
    business unit may remain outstanding, may continue to vest,
    and/or may
    remain exercisable for a period not exceeding one (1) year,
    subject to the terms of the Award Agreement and this Plan;
    and/or
    (ii) treat the employment or other services of a
    Participant employed by such entity or business unit as
    terminated if such Participant is not employed by GEO or any
    entity that is a part of the Company immediately after such
    event.

 

		
	
    14.  
	
    REQUIREMENTS
    OF LAW

 

    (a) Violations of Law. The Company
    shall not be required to sell or issue any shares of Common
    Stock under any Award if the sale or issuance of such shares
    would constitute a violation by the individual exercising the
    Award, the Participant or the Company of any provisions of any
    law or regulation of any governmental authority, including
    without limitation any provisions of the Sarbanes-Oxley Act, and
    any other federal or state securities laws or regulations. Any
    determination in this connection by the Committee shall be
    final, binding, and conclusive. The Company shall not be
    obligated to take any affirmative action in order to cause the
    exercise of an Award, the issuance of shares pursuant thereto or
    the grant of an Award to comply with any law or regulation of
    any governmental authority.

 

    (b) Registration. At the time of any
    exercise or receipt of any Award, the Company may, if it shall
    determine it necessary or desirable for any reason, require the
    Participant (or Participant’s heirs, legatees or legal
    representative, as the case may be), as a condition to the
    exercise or grant thereof, to deliver to the Company a written
    representation of present intention to hold the shares for their
    own account as an investment and not with a view to, or for sale
    in connection with, the distribution of such shares, except in
    compliance with applicable federal and state securities laws
    with respect thereto. In the event such representation is
    required to be delivered, an appropriate legend may be placed
    upon each certificate delivered to the Participant (or
    Participant’s heirs, legatees or legal representative, as
    the case may be) upon the Participant’s exercise of part or
    all of the Award or receipt of an Award and a stop transfer
    order may be placed with the transfer agent. Each Award shall
    also be subject to the requirement that, if at any time the
    Company determines, in its discretion, that the listing,
    registration or qualification of the shares subject to the Award
    upon 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 issuance or purchase of the shares thereunder, the
    Award may not be exercised in whole or in part and the
    restrictions on an Award may not be removed unless such listing,
    registration, qualification, consent or approval shall have been
    effected or obtained free of any conditions not acceptable to
    the Company in its sole discretion. The Participant shall
    provide the Company with any certificates, representations and
    information that the Company requests and shall otherwise
    cooperate with the Company in obtaining any listing,
    registration, qualification, consent or approval that the
    Company deems necessary or appropriate. The Company shall not be
    obligated to take any affirmative action in order to cause the
    exercisability or vesting of an Award, to cause the exercise of
    an Award or the issuance of shares pursuant thereto, or to cause
    the grant of Award to comply with any law or regulation of any
    governmental authority.

    

    10

 

    (c) Withholding. The Committee may
    make such provisions and take such steps as it may deem
    necessary or appropriate for the withholding of any taxes that
    the Company is required by any law or regulation of any
    governmental authority, whether federal, state or local,
    domestic or foreign, to withhold in connection with the grant or
    exercise of an Award, or the removal of restrictions on an Award
    including, but not limited to: (i) the withholding of
    delivery of shares of Common Stock until the holder reimburses
    the Company for the amount the Company is required to withhold
    with respect to such taxes; (ii) the canceling of any
    number of shares of Common Stock issuable in an amount
    sufficient to reimburse the Company for the amount it is
    required to so withhold; (iii) withholding the amount due
    from any such person’s wages or compensation due to such
    person; or (iv) requiring the Participant to pay the
    Company cash in the amount the Company is required to withhold
    with respect to such taxes.

 

    (d) Governing Law. The Plan shall be
    governed by, and construed and enforced in accordance with, the
    laws of the State of Florida.

 

		
	
    15.  
	
    GENERAL
    PROVISIONS

 

    (a) Award Agreements. All Awards
    granted pursuant to the Plan shall be evidenced by an Award
    Agreement. Each Award Agreement shall specify the terms and
    conditions of the Award granted and shall contain any additional
    provisions as the Committee shall deem appropriate, in its sole
    and absolute discretion (including, to the extent that the
    Committee deems appropriate, provisions relating to
    confidentiality, non-competition, non-solicitation and similar
    matters). The terms of each Award Agreement need not be
    identical for Eligible Individuals provided that all Award
    Agreements comply with the terms of the Plan.

 

    (b) Purchase Price. To the extent the
    purchase price of any Award granted hereunder is less than par
    value of a share of Common Stock and such purchase price is not
    permitted by applicable law, the per share purchase price shall
    be deemed to be equal to the par value of a share of Common
    Stock.

 

    (c) Dividends and Dividend
    Equivalents. Except as provided by the Committee in
    its sole and absolute discretion or as otherwise provided in
    Section 5(d) and subject to Section 8(e) of the Plan,
    a Participant shall not be entitled to receive, currently or on
    a deferred basis, cash or stock dividends, Dividend Equivalents,
    or cash payments in amounts equivalent to cash or stock
    dividends on shares of Commons Stock covered by an Award which
    has not vested or an Option. The Committee in its absolute and
    sole discretion may credit a Participant’s Award with
    Dividend Equivalents with respect to any Awards. To the extent
    that dividends and distributions relating to an Award are held
    in escrow by the Company, or Dividend Equivalents are credited
    to an Award, a Participant shall not be entitled to any interest
    on any such amounts. The Committee may not grant Dividend
    Equivalents to an Award subject to performance-based vesting to
    the extent that the grant of such Dividend Equivalents would
    limit the Company’s deduction of the compensation payable
    under such Award for federal tax purposes pursuant to Code
    Section 162(m).

 

    (d) Deferral of Awards. The Committee
    may from time to time establish procedures pursuant to which a
    Participant may elect to defer, until a time or times later than
    the vesting of an Award, receipt of all or a portion of the
    shares of Common Stock or cash subject to such Award and to
    receive Common Stock or cash at such later time or times, all on
    such terms and conditions as the Committee shall determine. The
    Committee shall not permit the deferral of an Award unless
    counsel for GEO determines that such action will not result in
    adverse tax consequences to a Participant under
    Section 409A of the Code. If any such deferrals are
    permitted, then notwithstanding anything to the contrary herein,
    a Participant who elects to defer receipt of Common Stock shall
    not have any rights as a shareholder with respect to deferred
    shares of Common Stock unless and until shares of Common Stock
    are actually delivered to the Participant with respect thereto,
    except to the extent otherwise determined by the Committee.

 

    (e) Prospective Employees.
    Notwithstanding anything to the contrary, any Award granted to a
    Prospective Employee shall not become vested prior to the date
    the Prospective Employee first becomes an employee of the
    Company.

 

    (f) Issuance of Certificates; Shareholder
    Rights. GEO shall deliver to the Participant a
    certificate evidencing the Participant’s ownership of
    shares of Common Stock issued pursuant to the exercise of an
    Award as soon as administratively practicable after satisfaction
    of all conditions relating to the issuance of such shares. A
    Participant

    

    11

 

    shall not have any of the rights of a shareholder with respect
    to such Common Stock prior to satisfaction of all conditions
    relating to the issuance of such Common Stock, and, except as
    expressly provided in the Plan, no adjustment shall be made for
    dividends, distributions or other rights of any kind for which
    the record date is prior to the date on which all such
    conditions have been satisfied.

 

    (g) Transferability of Awards. A
    Participant may not Transfer an Award other than by will or the
    laws of descent and distribution. Awards may be exercised during
    the Participant’s lifetime only by the Participant. No
    Award shall be liable for or subject to the debts, contracts, or
    liabilities of any Participant, nor shall any Award be subject
    to legal process or attachment for or against such person. Any
    purported Transfer of an Award in contravention of the
    provisions of the Plan shall have no force or effect and shall
    be null and void, and the purported transferee of such Award
    shall not acquire any rights with respect to such Award.
    Notwithstanding anything to the contrary, the Committee may in
    its sole and absolute discretion permit the Transfer of an Award
    to a Participant’s “family member” as such term
    is defined in the Form 8 Registration Statement under the
    Securities Act of 1933, as amended, under such terms and
    conditions as specified by the Committee. In such case, such
    Award shall be exercisable only by the transferee approved of by
    the Committee. To the extent that the Committee permits the
    Transfer of an Incentive Stock Option to a “family
    member”, so that such Option fails to continue to satisfy
    the requirements of an incentive stock option under the Code
    such Option shall automatically be re-designated as a
    Non-Qualified Stock Option.

 

    (h) Buyout and Settlement Provisions.
    Except as prohibited in Section 6(d) of the Plan, the
    Committee may at any time on behalf of GEO offer to buy out any
    Awards previously granted based on such terms and conditions as
    the Committee shall determine which shall be communicated to the
    Participants at the time such offer is made.

 

    (i) Use of Proceeds. The proceeds
    received by GEO from the sale of Common Stock pursuant to Awards
    granted under the Plan shall constitute general funds of GEO.

 

    (j) Modification or Substitution of an
    Award. Subject to the terms and conditions of the
    Plan, the Committee may modify outstanding Awards.
    Notwithstanding the following, no modification of an Award shall
    adversely affect any rights or obligations of the Participant
    under the applicable Award Agreement without the
    Participant’s consent. The Committee in its sole and
    absolute discretion may rescind, modify, or waive any vesting
    requirements or other conditions applicable to an Award.
    Notwithstanding the foregoing, without the approval of the
    shareholders of GEO in accordance with applicable law, an Award
    may not be modified to reduce the exercise price thereof nor may
    an Award at a lower price be substituted for a surrender of an
    Award, provided that (i) the foregoing shall not apply to
    adjustments or substitutions in accordance with Section 5
    or Section 12, and (ii) if an Award is modified,
    extended or renewed and thereby deemed to be in issuance of a
    new Award under the Code or the applicable accounting rules, the
    exercise price of such Award may continue to be the original
    Exercise Price even if less than Fair Market Value of the Common
    Stock at the time of such modification, extension or renewal.
    Notwithstanding anything to the contrary in this
    Section 15(j), unless provided for elsewhere in the Plan,
    there shall be no modification or substitution of an Award
    pursuant to this Section 15(j), to the extent such
    modification or substitution adversely affects the GEO unless
    such modification or substitution is: (A) approved by
    GEO’s shareholders; (B) required by any law or
    regulation of any governmental authority; (C) is in
    connection with death or Disability of a Participant;
    (D) is in connection with termination of employment or
    other service of a Participant; (E) in connection with
    Change in Control of GEO; or (F) in connection with an
    event described in Section 5(f) of the Plan.

 

    (k) Amendment and Termination of Plan.
    The Board may, at any time and from time to time, amend, suspend
    or terminate the Plan as to any shares of Common Stock as to
    which Awards have not been granted; provided, however,
    that the approval of the shareholders of GEO in accordance
    with applicable law and the Articles of Incorporation and Bylaws
    of GEO shall be required for any amendment: (i) that
    changes the class of individuals eligible to receive Awards
    under the Plan: (ii) that increases the maximum number of
    shares of Common Stock in the aggregate that may be subject to
    Awards that are granted under the Plan (except as permitted
    under Section 5 or Section 12 hereof): (iii) the
    approval of which is necessary to comply with federal or state
    law (including without limitation Section 162(m) of the
    Code and
    Rule 16b-3
    under the Exchange Act) or with the rules of any stock exchange
    or automated quotation system on which the Common Stock may be
    listed or traded; or (iv) that proposed to eliminate a
    requirement provided herein that the shareholders of GEO must
    approve an action to be undertaken

    

    12

 

    under the Plan. Except as permitted under Section 5 or
    Section 12 hereof, no amendment, suspension or termination
    of the Plan shall, without the consent of the holder of an
    Award, alter or impair rights or obligations under any Award
    theretofore granted under the Plan. Awards granted prior to the
    termination of the Plan may extend beyond the date the Plan is
    terminated and shall continue subject to the terms of the Plan
    as in effect on the date the Plan is terminated.

 

    (l) Section 409A of the Code.
    With respect to Awards subject to Section 409A of the Code,
    this Plan is intended to comply with the requirements of such
    Section, and the provisions hereof shall be interpreted in a
    manner that satisfies the requirements of such Section and the
    related regulations, and the Plan shall be operated accordingly.
    If any provision of this Plan or any term or condition of any
    Award would otherwise frustrate or conflict with this intent,
    the provision, term or condition will be interpreted and deemed
    amended so as to avoid this conflict.

 

    (m) Notification of 83(b) Election. If
    in connection with the grant of any Award, any Participant makes
    an election permitted under Code Section 83(b), such
    Participant must notify GEO in writing of such election within
    ten (10) days of filing such election with the Internal
    Revenue Service.

 

    (n) Detrimental Activity. All Awards
    shall be subject to cancellation by the Committee in accordance
    with the terms of this Section 15(n) if the Participant
    engages in any Detrimental Activity. To the extent that a
    Participant engages in any Detrimental Activity at any time
    prior to, or during the one year period after, any exercise or
    vesting of an Award but prior to a Change in Control, the
    Company shall, upon the recommendation of the Committee, in its
    sole and absolute discretion, be entitled to
    (i) immediately terminate and cancel any Awards held by the
    Participant that have not yet been exercised,
    and/or
    (ii) with respect to Awards of the Participant that have
    been previously exercised, recover from the Participant at any
    time within two (2) years after such exercise but prior to
    a Change in Control (and the Participant shall be obligated to
    pay over to the Company with respect to any such Award
    previously held by such Participant): (A) with respect to
    any Options exercised, an amount equal to the excess of the Fair
    Market Value of the Common Stock for which any Option was
    exercised over the Exercise Price paid (regardless of the form
    by which payment was made) with respect to such Option;
    (B) with respect to any Award other than an Option, any
    shares of Common Stock granted and vested pursuant to such
    Award, and if such shares are not still owned by the
    Participant, the Fair Market Value of such shares on the date
    they were issued, or if later, the date all vesting restrictions
    were satisfied; and (C) any cash or other property (other
    than Common Stock) received by the Participant from the Company
    pursuant to an Award. Without limiting the generality of the
    foregoing, in the event that a Participant engages in any
    Detrimental Activity at any time prior to any exercise of an
    Award and the Company exercises its remedies pursuant to this
    Section 15(n) following the exercise of such Award, such
    exercise shall be treated as having been null and void, provided
    that the Company will nevertheless be entitled to recover the
    amounts referenced above.

 

    (o) Disclaimer of Rights. No provision
    in the Plan, any Award granted hereunder, or any Award Agreement
    entered into pursuant to the Plan shall be construed to confer
    upon any individual the right to remain in the employ of or
    other service with the Company or to interfere in any way with
    the right and authority of the Company either to increase or
    decrease the compensation of any individual, including any
    holder of an Award, at any time, or to terminate any employment
    or other relationship between any individual and the Company.
    The grant of an Award pursuant to the Plan shall not affect or
    limit in any way the right or power of the Company to make
    adjustments, reclassifications, reorganizations or changes of
    its capital or business structure or to merge, consolidate,
    dissolve or liquidate, or to sell or transfer all or any part of
    its business or assets.

 

    (p) Unfunded Status of Plan. The Plan
    is intended to constitute an “unfunded” plan for
    incentive and deferred compensation. With respect to any
    payments as to which a Participant has a fixed and vested
    interest but which are not yet made to such Participant by the
    Company, nothing contained herein shall give any such
    Participant any rights that are greater than those of a general
    creditor of the Company.

 

    (q) Nonexclusivity of Plan. The
    adoption of the Plan shall not be construed as creating any
    limitations upon the right and authority of the Board to adopt
    such other incentive compensation arrangements (which
    arrangements may be applicable either generally to a class or
    classes of individuals or specifically to a particular
    individual or individuals) as the Board in its sole and absolute
    discretion determines desirable.

    

    13

 

    (r) Other Benefits. No Award payment
    under the Plan shall be deemed compensation for purposes of
    computing benefits under any retirement plan of the Company or
    any agreement between a Participant and the Company, nor affect
    any benefits under any other benefit plan of the Company now or
    subsequently in effect under which benefits are based upon a
    Participant’s level of compensation.

 

    (s) Headings. The section headings in
    the Plan are for convenience only; they form no part of this
    Agreement and shall not affect its interpretation.

 

    (t) Pronouns. The use of any gender in
    the Plan shall be deemed to include all genders, and the use of
    the singular shall be deemed to include the plural and vice
    versa, wherever it appears appropriate from the context.

 

    (u) Successors and Assigns. The Plan
    shall be binding on all successors of the Company and all
    successors and permitted assigns of a Participant, including,
    but not limited to, a Participant’s estate, devisee, or
    heir at law.

 

    (v) Severability. If any provision of
    the Plan or any Award Agreement shall be determined to be
    illegal or unenforceable by any court of law in any
    jurisdiction, the remaining provisions hereof and thereof shall
    be severable and enforceable in accordance with their terms, and
    all provisions shall remain enforceable in any other
    jurisdiction.

 

    (w) Notices. Any communication or
    notice required or permitted to be given under the Plan shall be
    in writing, and mailed by registered or certified mail or
    delivered by hand, to GEO, to its principal place of business,
    attention: John J. Bulfin, General Counsel, The GEO Group Inc.,
    and if to the holder of an Award, to the address as appearing on
    the records of the Company.

    

    14

 

    ANNEX A

    DEFINITIONS

 

    “Award” means any Common Stock, Option,
    Performance Share, Performance Unit, Restricted Stock, Stock
    Appreciation Right or any other award granted pursuant to the
    Plan.

 

    “Award Agreement” means a written
    agreement entered into by GEO and a Participant setting forth
    the terms and conditions of the grant of an Award to such
    Participant.

 

    “Board” means the board of directors of
    GEO.

 

    “Cause” means, with respect to a
    termination of employment or other service with the Company, a
    termination of employment or other service due to a
    Participant’s dishonesty, fraud, insubordination, willful
    misconduct, refusal to perform services (for any reason other
    than illness or incapacity) or materially unsatisfactory
    performance of the Participant’s duties for the Company;
    provided, however, that if the Participant and the
    Company have entered into an employment agreement or consulting
    agreement which defines the term Cause, the term Cause shall be
    defined in accordance with such agreement with respect to any
    Award granted to the Participant on or after the effective date
    of the respective employment or consulting agreement. The
    Committee shall determine in its sole and absolute discretion
    whether Cause exists for purposes of the Plan.

 

    “Change in Control” shall be deemed to
    occur upon:

 

    (a) any “person” as such term is used in
    Sections 13(d) and 14(d) of the Exchange Act (other than
    GEO, any trustee or other fiduciary holding securities under any
    employee benefit plan of the Company, or any company owned,
    directly or indirectly, by the shareholders of GEO in
    substantially the same proportions as their ownership of common
    stock of GEO), is or becomes the “beneficial owner”
    (as defined in Rule
    13d-3 under
    the Exchange Act), directly or indirectly, of securities of GEO
    representing thirty percent (30%) or more of the combined voting
    power of GEO’s then outstanding securities;

 

    (b) during any period of two (2) consecutive years,
    individuals who at the beginning of such period constitute the
    Board, and any new director (other than a director designated by
    a person who has entered into an agreement with the Company to
    effect a transaction described in paragraph (a), (c), or
    (d) of this Section) whose election by the Board or
    nomination for election by GEO’s shareholders was approved
    by a vote of at least two-thirds of the directors then still in
    office who either were directors at the beginning of the
    two-year period or whose election or nomination for election was
    previously so approved, cease for any reason to constitute at
    least a majority of the Board;

 

    (c) a merger, consolidation, reorganization, or other
    business combination of GEO with any other entity, other than a
    merger or consolidation which would result in the voting
    securities of GEO outstanding immediately prior thereto
    continuing to represent (either by remaining outstanding or by
    being converted into voting securities of the surviving entity)
    more than fifty percent (50%) of the combined voting power of
    the voting securities of GEO or such surviving entity
    outstanding immediately after such merger or consolidation;
    provided, however, that a merger or consolidation effected to
    implement a recapitalization of GEO (or similar transaction) in
    which no person acquires more than twenty-five percent (25%) of
    the combined voting power of GEO’s then outstanding
    securities shall not constitute a Change in Control; or

 

    (d) the shareholders of GEO approve a plan of complete
    liquidation of GEO, and such liquidation occurs, or the
    consummation of the sale or disposition by GEO of all or
    substantially all of GEO’s assets other than (x) the
    sale or disposition of all or substantially all of the assets of
    GEO to a person or persons who beneficially own, directly or
    indirectly, at least fifty percent (50%) or more of the combined
    voting power of the outstanding voting securities of GEO at the
    time of the sale or (y) pursuant to a spin-off type
    transaction, directly or indirectly, of such assets to the
    shareholders of GEO.

 

    However, to the extent that Section 409A of the Code would
    cause an adverse tax consequence to a Participant using the
    above definition, the term “Change in Control” shall
    have the meaning ascribed to the phrase “Change in the
    Ownership or Effective Control of a Corporation or in the
    Ownership of a Substantial Portion of the Assets of a
    Corporation” under Treasury Department Proposed
    Regulation 1.409A-3(g)(5),
    as revised from time to time in

    

    15

 

    either subsequent proposed or final regulations, and in the
    event that such regulations are withdrawn or such phrase (or a
    substantially similar phrase) ceases to be defined, as
    determined by the Committee.

 

    “Change in Control Price” means the
    price per share of Common Stock paid in any transaction related
    to a Change in Control of GEO.

 

    “Code” means the Internal Revenue Code
    of 1986, as amended, and the regulations promulgated thereunder.

 

    “Committee” means a committee or
    sub-committee of the Board consisting of two or more members of
    the Board, none of whom shall be an officer or other salaried
    employee of the Company, and each of whom shall qualify in all
    respects as a “non-employee director” as defined in
    Rule 16b-3
    under the Exchange Act, and as an “outside director”
    for purposes of Code Section 162(m). If no Committee
    exists, the functions of the Committee will be exercised by the
    Board; provided, however, that a Committee shall be
    created prior to the grant of Awards to a Covered Employee and
    that grants of Awards to a Covered Employee shall be made only
    by such Committee. Notwithstanding the foregoing, with respect
    to the grant of Awards to non-employee directors, the Committee
    shall be the Board.

 

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

 

    “Company” means The GEO Group, Inc., a
    Florida corporation, the subsidiaries of The GEO Group, Inc.,
    and all other entities whose financial statements are required
    to be consolidated with the financial statements of The GEO
    Group, Inc. pursuant to United States generally accepted
    accounting principles, and any other entity determined to be an
    affiliate of The GEO Group, Inc. as determined by the Committee
    in its sole and absolute discretion.

 

    “Covered Employee” means “covered
    employee” as defined in Code Section 162(m)(3).

 

    “Covered Individual” means any current
    or former member of the Committee, any current or former officer
    or director of the Company, or any individual designated
    pursuant to Section 4(c).

 

    “Detrimental Activity” means any of the
    following: (i) the disclosure to anyone outside the
    Company, or the use in other than the Company’s business,
    without written authorization from the Company, of any
    confidential information or proprietary information, relating to
    the business of the Company, acquired by a Participant prior to
    a termination of the Participant’s employment or service
    with the Company; (ii) activity while employed or providing
    services that is classified by the Company as a basis for a
    termination for Cause; (iii) the Participant’s
    Disparagement, or inducement of others to do so, of the Company
    or its past or present officers, directors, employees or
    services; or (iv) any other conduct or act determined by
    the Committee, in its sole discretion, to be injurious,
    detrimental or prejudicial to the interests of the Company. For
    purposes of subparagraph (i) above, the Chief Executive
    Officer and the General Counsel of the Company shall each have
    authority to provide the Participant with written authorization
    to engage in the activities contemplated thereby and no other
    person shall have authority to provide the Participant with such
    authorization.

 

    “Disability” means a “permanent and
    total disability” within the meaning of Code
    Section 22(e)(3); provided, however, that if a
    Participant and the Company have entered into an employment or
    consulting agreement which defines the term Disability for
    purposes of such agreement, Disability shall be defined pursuant
    to the definition in such agreement with respect to any Award
    granted to the Participant on or after the effective date of the
    respective employment or consulting agreement. The Committee
    shall determine in its sole and absolute discretion whether a
    Disability exists for purposes of the Plan.

 

    “Disparagement” means making any
    comments or statements to the press, the Company’s
    employees, clients or any other individuals or entities with
    whom the Company has a business relationship, which could
    adversely affect in any manner: (i) the conduct of the
    business of the Company (including, without limitation, any
    products or business plans or prospects), or (ii) the
    business reputation of the Company or any of its products, or
    its past or present officers, directors or employees.

 

    “Dividend Equivalents” means an amount
    equal to the cash dividends paid by the Company upon one share
    of Common Stock subject to an Award granted to a Participant
    under the Plan.

    

    16

 

    “Effective Date” shall mean May 4,
    2006 (the date that the Plan was originally approved by the
    shareholders of GEO in accordance with applicable law) or such
    later date as provided in the resolutions adopting the Plan.

 

    “Eligible Individual” means any
    employee, officer, director (employee or non-employee director)
    or consultant of the Company and any Prospective Employee to
    whom Awards are granted in connection with an offer of future
    employment with the Company.

 

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

 

    “Exercise Price” means the purchase
    price per share of each share of Common Stock subject to an
    Award.

 

    “Fair Market Value” means, unless
    otherwise required by the Code, as of any date, the last sales
    price reported for the Common Stock on the day immediately prior
    to such date (i) as reported by the national securities
    exchange in the United States on which it is then traded, or
    (ii) if not traded on any such national securities
    exchange, as quoted on an automated quotation system sponsored
    by the National Association of Securities Dealers, Inc., or if
    the Common Stock shall not have been reported or quoted on such
    date, on the first day prior thereto on which the Common Stock
    was reported or quoted; provided, however, that the
    Committee may modify the definition of Fair Market Value to
    reflect any changes in the trading practices of any exchange or
    automated system sponsored by the National Association of
    Securities Dealers, Inc. on which the Common Stock is listed or
    traded. If the Common Stock is not readily traded on a national
    securities exchange or any system sponsored by the National
    Association of Securities Dealers, Inc., the Fair Market Value
    shall be determined in good faith by the Committee.

 

    “GEO” means The GEO Group, Inc., a
    Florida corporation.

 

    “Grant Date” means the date on which the
    Committee approves the grant of an Award or such later date as
    is specified by the Committee and set forth in the applicable
    Award Agreement.

 

    “Incentive Stock Option” means an
    “incentive stock option” within the meaning of Code
    Section 422.

 

    “Non-Employee Director” means a director
    of GEO who is not an active employee of the Company.

 

    “Non-Qualified Stock Option” means an
    Option which is not an Incentive Stock Option.

 

    “Option” means an option to purchase
    Common Stock granted pursuant to Sections 6 of the Plan.

 

    “Participant” means any Eligible
    Individual who holds an Award under the Plan and any of such
    individual’s successors or permitted assigns.

 

    “Performance Goals” means the specified
    performance goals which have been established by the Committee
    in connection with an Award.

 

    “Performance Period” means the period
    during which Performance Goals must be achieved in connection
    with an Award granted under the Plan.

 

    “Performance Share” means a right to
    receive a fixed number of shares of Common Stock, or the cash
    equivalent, which is contingent on the achievement of certain
    Performance Goals during a Performance Period.

 

    “Performance Unit” means a right to
    receive a designated dollar value, or shares of Common Stock of
    the equivalent value, which is contingent on the achievement of
    Performance Goals during a Performance Period.

 

    “Person” shall mean any person,
    corporation, partnership, joint venture or other entity or any
    group (as such term is defined for purposes of
    Section 13(d) of the Exchange Act), other than a Parent or
    Subsidiary.

 

    “Plan” means this Amended and Restated
    The GEO Group, Inc. 2006 Stock Incentive Plan.

 

    “Prospective Employee” means any
    individual who has committed to become an employee of the
    Company within sixty (60) days from the date an Award is
    granted to such individual.

 

    “Restricted Stock” means Common Stock
    subject to certain restrictions, as determined by the Committee,
    and granted pursuant to Section 8 hereunder.

 

    “Section 424 Employee” means an
    employee of GEO or any “subsidiary corporation” or
    “parent corporation” as such terms are defined in and
    in accordance with Code Section 424. The term
    “Section 424 Employee” also

    

    17

 

    includes employees of a corporation issuing or assuming any
    Options in a transaction to which Code Section 424(a)
    applies.

 

    “Stock Appreciation Right” means the
    right to receive all or some portion of the increase in value of
    a fixed number of shares of Common Stock granted pursuant to
    Section 7 hereunder.

 

    “Transfer” means, as a noun, any direct
    or indirect, voluntary or involuntary, exchange, sale, bequeath,
    pledge, mortgage, hypothecation, encumbrance, distribution,
    transfer, gift, assignment or other disposition or attempted
    disposition of, and, as a verb, directly or indirectly,
    voluntarily or involuntarily, to exchange, sell, bequeath,
    pledge, mortgage, hypothecate, encumber, distribute, transfer,
    give, assign or in any other manner whatsoever dispose or
    attempt to dispose of.

    

    18exv10w46

Exhibit 10.46

CORNELL COMPANIES, INC.

2006 INCENTIVE PLAN

(As Amended and Restated Effective April 22, 2009)

SECTION 1. Purpose.

     The purpose of the 2006 Incentive Plan is to promote the interests of Cornell
Companies, Inc. and its stockholders by (i) attracting and retaining employees, directors, and
consultants of the Company and its affiliates; (ii) motivating such individuals by means of
performance-related incentives to achieve longer- range performance goals; and (iii) enabling such
individuals to participate in the long-term growth and financial success of the Company.

SECTION 2. Definitions.

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

     “Affiliate” means (i) any entity that, directly or through one or more intermediaries,
is controlled by the Company and (ii) any entity in which the Company has a significant equity
interest, as determined by the Committee.

     “Award” means any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock
Unit, Performance Share, Performance Unit, Stock Compensation, Other Stock-Based Award or Cash
Incentive Award.

     “Award Agreement” means any agreement, contract, or other instrument or document
evidencing any Award, which may, but need not, be executed or acknowledged by a Participant.

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

     “Cash Incentive Award” means an award granted to a key executive Employee pursuant to
Section 6(e).

     “Change of Control” shall have the meaning set forth in Section 8.

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

     “Committee” means (i) in the case of an Award granted to a Director, the Board, and
(ii) in the case of any other Award granted under the Plan, the Compensation Committee of the Board
or, if the Compensation Committee of the Board chooses to delegate it duties, a committee of at
least two persons who are members of the Compensation Committee of the Board and are appointed by
the Compensation Committee of the Board to administer the Plan. Each member of the Committee in
respect of his or her participation in any decision with respect to an Award that is intended to
satisfy the requirements of section 162(m) of the Code must satisfy the requirements of “outside
director” status within the meaning of section 162(m) of the Code; provided, however, that the
failure to satisfy such requirement shall not affect the validity of the action of any committee
otherwise duly authorized and acting in the matter. As to Awards, grants or other transactions that
are authorized by the Committee and that are intended to be exempt under Rule 16b-3, the
requirements of Rule 16b-3(d)(1) with respect to committee action must also be satisfied.

     “Company” means Cornell Companies, Inc., a Delaware corporation.

1

 

     “Consultant” means any person, including an advisor, (i) engaged by the Company or an
Affiliate to render consulting or advisory services and who is compensated for such services or
(ii) who is a member of the board of directors of an Affiliate.

     “Covered Employee” means any key Employee who is or may become a “covered employee,”
as defined in Section 162(m) of the Code and the regulations or other guidance promulgated by the
Internal Revenue Service under section 162(m) of the Code, or any successor statute.

     “Director” means a member of the Board.

     “Employee” means any employee of the Company or any Affiliate.

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

     “Exercise Price” means the price determined under Section 6(a)(i).

     “Fair Market Value” of the Shares as of any particular date means,

     (a) if the Shares are traded on a stock exchange,

     (i) and if the Shares are traded on that date, the closing sale price of the
Shares on that date; or

     (ii) and if the Shares are not traded on that date, the closing sale price of
the Shares on the last trading date immediately preceding that date;

as reported on the principal securities exchange on which the Shares are traded; or

     (b) if the Shares are traded in the over-the-counter market,

     (i) and if the Shares are traded on that date, the average between the high
bid and low asked price on that date; or

     (ii) and if the Shares are not traded on that date, the average between the
high bid and low asked price on the last trading date immediately preceding that date;

as reported in such over-the-counter market; provided, however, that (x) if the Shares are not so
traded, or (y) if, in the discretion of the Committee, another means of determining the fair market
value of a Share at such date shall be necessary or advisable, the Committee may provide for
another method or means for determining such fair market value, which method or means shall comply
with the requirements of a reasonable valuation method as described under Section 409A.

     “Full-Value Award” means an Award other than in the form of an Option or Stock
Appreciation Right, and which is settled by the issuance of Shares.

     “Grant Price” means the price established at the time of grant of a Stock Appreciation
Right pursuant to Section 6(b)(i), used to determine whether there is any payment due upon exercise
of the Stock Appreciation Right.

     “Incentive Stock Option” means an option granted under Section 6(a) that is intended
to meet the requirements of Section 422 of the Code or any successor provision thereto.

     “Mature Shares” means Shares held by a Participant for a period of at least six
months.

     “Non-Qualified Stock Option” means an option granted under Section 6(a) that is not
intended to be an Incentive Stock Option.

     “NYSE” means the New York Stock Exchange.

     “Option” means an Incentive Stock Option or a Non-Qualified Stock Option.

2

 

     “Other Stock-Based Award” means an equity-based or equity-related award not otherwise
described by the terms of this Plan, granted pursuant to Section 6(g).

     “Parent Corporation” means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if, at the time of the action or transaction, each of
the corporations other than the Company owns stock possessing 50 percent or more of the total
combined voting power of all classes of stock in one of the other corporations in the chain.

     “Participant” means any Employee, Director, or Consultant granted an Award under the
Plan.

     “Performance-Based Compensation” means compensation under an Award that satisfies the
requirements of section 162(m) of the Code for deductibility of remuneration paid to Covered
Employees.

     “Performance Goals” are those goals determined by the Committee applicable to any
performance-based award under the Plan which may be based on any one or combination of the
following performance criteria: revenue, earnings before interest, taxes, depreciation and
amortization (“EBITDA”), funds from operations, funds from operations per share, operating income,
pre or after tax income, cash available for distribution, cash available for distribution per
share, net earnings, earnings per share, return on equity, return on assets, share price
performance, improvements in the Company’s attainment of expense levels, and implementing or
completion of critical projects, or improvement in cash-flow (before or after tax). A Performance
Goal may be measured over a Performance Period on a periodic, annual, cumulative or average basis
and may be established on a corporate-wide basis or established with respect to one or more
operating units, divisions, subsidiaries, acquired businesses, minority investments, partnerships
or joint ventures. Unless otherwise determined by the Committee by no later than the earlier of the
date that is ninety days after the commencement of the Performance Period or the day prior to the
date on which twenty-five percent of the Performance Period has elapsed, the Performance Goals will
be determined by not accounting for a change in GAAP during a Performance Period. A Performance
Goal must be objective such that a third party having knowledge of the relevant facts could
determine whether the goal is met. In interpreting Plan provisions applicable to Performance Goals
and performance-based awards, it is intended that the Plan will conform with the standards of
Section 162(m) of the Code and Treasury Regulations § 1.162-27(e)(2)(i), and the Committee in
establishing such goals and interpreting the Plan shall be guided by such provisions. Prior to the
payment of any compensation based on the achievement of Performance Goals, the Committee must
certify in writing that applicable Performance Goals and any of the material terms thereof were, in
fact, satisfied.

     “Performance Period” means the period of time during which the Performance Goals must
be met in order to determine the degree of payout and/or vesting with respect to an Award.

     “Performance Share” means any Share granted under Section 6(d).

     “Performance Unit” means an award granted to a Participant pursuant to Section 6(d),
except no Shares are actually awarded to the Participant on the date of grant.

     “Permissible under Section 409A“means with respect to a particular action (such as,
the grant, payment, vesting, settlement or deferral of an amount or award under the Plan) that such
action shall not subject the compensation at issue to be subject to the additional tax or interest
applicable under Section 409A.

     “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in
Section 13(d) thereof.

     “Plan” means this 2006 Incentive Plan, as amended from time to time.

3

 

     “Restricted Period” means a period of time beginning as of the date of grant of an
award of Restricted Stock or Restricted Stock Unit and ending as of the date upon which the Shares
subject to such a Restricted Stock Award are, or the Restricted Stock Unit Award is, no longer
restricted or subject to forfeiture provisions.

     “Restricted Stock” means any Share, prior to the lapse of restrictions thereon,
granted under Section 6(c).

     “Restricted Stock Unit” means an award granted to a Participant pursuant to
Section 6(c) of a restricted stock unit credited to a Participant’s ledger account maintained by
the Company pursuant to Section 6(c).

     “Section 409A” means section 409A of the Code and Department of Treasury rules and
regulations issued thereunder.

     “SEC” means the Securities and Exchange Commission or any successor thereto.

     “Separation from Service” means the termination of the Award recipient’s employment or
service relationship with the Company, the Board and all Affiliates as determined under
Section 409A. “Separation from Service” means, in the case of an Incentive Stock Option, the
termination of the Employee’s employment relationship with all of the Company, any Parent
Corporation, any Subsidiary Corporation and any parent or subsidiary corporation (within the
meaning of section 422(a)(2) of the Code) of any such corporation that issues or assumes an
Incentive Stock Option in a transaction to which section 424(a) of the Code applies.

     “Shares” means the common shares of the Company, $0.001 par value.

     “Stock Appreciation Right” means any right granted under Section 6(b).

     “Stock Compensation” means any right granted under Section 6(f).

     “Subsidiary Corporation” means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if, at the time of the action or transaction, each
of the corporations other than the last corporation in an unbroken chain owns stock possessing
50 percent or more of the total combined voting power of all classes of stock in one of the other
corporations in the chain.

     “Substantial Risk of Forfeiture” shall have the meaning ascribed to that term in
Section 409A.

     “Ten Percent Stockholder” means an individual, who, at the time the applicable Option
is granted, owns stock possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company
or any Parent Corporation or Subsidiary Corporation. An individual shall be considered as owning
the stock owned, directly or indirectly, by or for his brothers and sisters (whether by the whole
or half blood), spouse, ancestors, and lineal descendants; and stock owned, directly or indirectly,
by or for a corporation, partnership, estate, or trust, shall be considered as being owned
proportionately by or for its stockholders, partners, or beneficiaries.

SECTION 3. Administration.

     The Plan shall be administered by the Committee. Subject to the terms of the Plan and
applicable law, and in addition to other express powers and authorizations conferred on the
Committee by the Plan, the Committee shall have full power and authority to:

	 	•	 	designate Participants;
	 
	 	•	 	determine the type or types of Awards to be granted to a Participant;

4

 

	 	•	 	determine the number of Shares to be covered by, or with respect to which payments,
rights, or other matters are to be calculated in connection with, Awards;
	 
	 	•	 	determine the terms and conditions of any Award;
	 
	 	•	 	determine whether, to what extent, and under what circumstances Awards may be settled
or exercised in cash, Shares, other securities, other Awards or other property, or
cancelled, forfeited, or suspended and the method or methods by which Awards may be settled,
exercised, cancelled, forfeited, or suspended;
	 
	 	•	 	determine whether, to what extent, and under what circumstances cash, Shares, other
securities, other Awards, other property, and other amounts payable with respect to an Award
shall be deferred either automatically or at the election of the holder thereof or of the
Committee, provided any such deferral shall be made in a manner that satisfies the
requirements of Section 409A;
	 
	 	•	 	interpret and administer the Plan and any instrument or agreement relating to, or Award
made under, the Plan;
	 
	 	•	 	establish, amend, suspend, or waive such rules and regulations and appoint such agents
as it shall deem appropriate for the proper administration of the Plan; and
	 
	 	•	 	make any other determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan.

     Unless otherwise expressly provided in the Plan, all designations, determinations,
interpretations, and other decisions under or with respect to the Plan or any Award shall be within
the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and
binding upon all persons, including the Company, any Affiliate, any Participant, any holder or
beneficiary of any Award, any stockholder and any Employee.

     Notwithstanding anything herein to the contrary, without the prior approval of the
Company’s stockholders, Options and Stock Appreciation Rights issued under the Plan will not be
repriced, replaced, or regranted through cancellation, or by lowering the Exercise Price or Grant
Price of a previously granted Option or Stock Appreciation Right.

SECTION 4. Shares Available for and Limitations of Awards.

     (a) Shares Available. Subject to the specified limitations and adjustment as
provided in this Section 4, the maximum number of Shares with respect to Awards which may be
granted as specified in Section 6 of the Plan, shall be equal to 2,265,000, all of which may be
granted pursuant to Incentive Stock Options. These Shares will be in a “fungible pool” with
(i) Shares subject to Full Value Awards that are granted under the Plan before June 18, 2009,
counted against this limit as two (2) Shares for every one (1) Share granted, (ii) Shares subject
to Full Value Awards that are granted under the Plan on or after June 18, 2009, counted against
this limit as one and six tenths (1.6) Shares for every one (1) Share granted, and (iii) any Shares
subject to any other type of Award to be counted against this limit as one (1) Share for every one
(1) Share granted.

     The Committee shall determine the appropriate methodology for calculating the number
of Shares issued pursuant to the Plan.

     Any Shares related to Awards which terminate by expiration, forfeiture, cancellation,
or otherwise without the issuance of such Shares, are settled in cash in lieu of Shares, or are
exchanged with the Committee’s permission for Awards not involving Shares, shall be available again
for grant under the Plan. However, the full number of Stock Appreciation Rights granted that are to
be settled by the issuance of Shares shall be counted against the number of Shares available for
award under the Plan,

5

 

regardless of the number of Shares actually issued upon settlement of such Stock Appreciation
Rights. The Shares available for issuance under the Plan may be authorized and unissued Shares or
treasury Shares. Any Shares that again become available for grant pursuant to this Section 4(a)
shall be added back to the “fungible pool” as (i) two (2) Shares if such Shares were subject to a
Full Value Award that was granted under the Plan before June 18, 2009, (ii) one and six tenths
(1.6) Shares if such Shares were subject to a Full Value Award that was granted under the Plan on
or after June 18, 2009, and (iii) as one (1) Share if such Shares were subject to any other type of
Award.

     (b) Section 162(m) Requirements. To the extent an Award to a Covered Employee is
intended to qualify as performance-based compensation under Section 162(m) of the Code, the maximum
aggregate number of Shares subject to all Awards granted to such Covered Employee in a single year
shall be 250,000, subject to adjustments as provided in this Section 4. To the extent an Cash
Incentive Award to a key executive Employee who is a Covered Employee is intended to qualify as
performance-based compensation under Section 162(m) of the Code, the maximum amount that may be
paid to such key executive Employee under Cash Incentive Awards granted to such individual during a
calendar year is $2,000,000.00.

     (c) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to
an Award may consist, in whole or in part, of authorized and unissued Shares or treasury Shares.

     (d) Adjustments. In the event that the Committee determines that any dividend or
other distribution (whether in the form of cash, Shares, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affects the Shares such that an adjustment
is determined by
the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the Committee shall, in such
manner as it may deem equitable, adjust any or all of (i) the number and type of Shares (or other
securities or property) with respect to which Awards may be granted, (ii) the number and type of
Shares (or other securities or property) subject to outstanding Awards, and (iii) the Grant Price
or Exercise Price with respect to any Award or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award; provided, however, that the number of Shares subject
to any Award denominated in Shares shall always be a whole number.

SECTION 5. Eligibility.

     Employees, Consultants, and Directors shall be eligible to be designated a
Participant. Only those individuals who are, on the dates of grant, key employees of the Company or
any Parent Corporation or Subsidiary Corporation are eligible for grants of Incentive Stock Options
under the Plan. The only persons who are eligible to receive Cash Incentive Awards under the Plan
are key executive Employees who, by the nature and scope of their positions, regularly directly
make or influence policy decisions which significantly impact the overall results or success of the
Company.

SECTION 6. Awards.

     (a) Options. The Committee shall have authority to award Options subject to the
following terms and conditions and such additional terms and conditions as the Committee shall
determine are not inconsistent with the provisions of the Plan.

     (i) Exercise Price. The purchase price per Share under an Option (the
“Exercise Price”) shall be determined by the Committee at the time each Option is granted;
provided, however, that the Exercise Price per Share shall not be less than 100% of Fair
Market Value on the date of grant and that if the Option is an Incentive Stock Option
granted to a Ten Percent Stockholder, the

6

 

Exercise Price must not be less than one hundred ten percent (110%) of the Fair Market Value
of the Share on the date the Incentive Stock Option is granted. Subject to the limitations
set forth in the preceding sentences of this Section 6(a)(i) the Committee shall determine
the Exercise Price for each grant of an Option under the Plan.

     (ii) Time and Method of Exercise. Options shall be exercisable in
accordance with such terms and conditions and during such periods as may be established by
the Committee, provided, however, that an Option shall not be exercisable after the earlier
of (A) the general term of the Option specified in the applicable Award Agreement (which
shall not exceed ten years, or, in the case of a Ten Percent Stockholder, no Incentive Stock
Option shall be exercisable later than the fifth (5th) anniversary of the date of
its grant) or (B) the period of time specified in the applicable Award Agreement that
follows the Participant’s Separation from Service.

     (iii) Payment of Option Exercise Price. The payment of the Exercise Price
of an Option granted under this Section 6 shall be subject to the following:

     (A) The full Exercise Price for Shares purchased upon the exercise of
any Option shall be paid at the time of such exercise (except that, in the case of
an exercise arrangement approved by the Committee and described in
Section 6(a)(iii)(C), payment may be made as soon as practicable after the
exercise).

     (B) The Exercise Price shall be payable in cash or by tendering Mature
Shares (by either actual delivery of Mature Shares or by attestation, with such
Shares valued at Fair Market Value as of the day of exercise), or in any combination
thereof, as determined by the Committee.

     (C) The Committee may permit a Participant to elect to pay the
Exercise Price upon the exercise of an Option by authorizing a third party broker to
sell Shares (or a sufficient portion of the Shares) acquired upon exercise of the
Option and remit to the Company a sufficient portion of the sale proceeds to pay the
entire Exercise Price and any tax withholding resulting from such exercise.

     (iv) Incentive Stock Options. The terms of any Incentive Stock Option
granted under the Plan shall comply in all respects with the provisions of Section 422 of
the Code, or any successor provision, and any regulations promulgated thereunder. Only
employees of the Company or a Parent Corporation or Subsidiary Corporation are eligible to
receive options that qualify as “incentive stock options” under Section 422 of the Code.

     (v) Transferability—Incentive Stock Options. Notwithstanding anything in
the Plan or an Award Agreement to the contrary, no Incentive Stock Option granted under the
Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution, and all Incentive Stock
Options granted to a qualifying Employee under this Section 6(a) shall be exercisable during
his or her lifetime only by such Employee.

     (vi) Notification of Disqualifying Disposition. If any Employee shall
make any disposition of Shares issued pursuant to the exercise of an Incentive Stock Option
under the circumstances described in section 421(b) of the Code (relating to certain
disqualifying dispositions), such Employee shall notify the Company of such disposition
within ten (10) days thereof.

7

 

     (vii) $100,000 Limitation on Incentive Stock Options. To the
extent that the aggregate Fair Market Value of Shares with respect to which
Incentive Stock Options first become exercisable by a holder of Options in any
calendar year exceeds $100,000, taking into account both Shares subject to Incentive
Stock Options under the Plan and Shares subject to Incentive Stock Options under all
other plans of the Company, such Options shall be treated as Non-Qualified Stock
Options. For this purpose, the “Fair Market Value” of the Shares subject to Options
shall be determined as of the date the Options were awarded. In reducing the number
of Options treated as Incentive Stock Options to meet the $100,000 limit, the most
recently granted Options shall be reduced first. To the extent a reduction of
simultaneously granted Options is necessary to meet the $100,000 limit, the
Committee may, in the manner and to the extent permitted by law, designate which
Shares are to be treated as shares acquired pursuant to the exercise of an Incentive
Stock Option.

     (b) Stock Appreciation Rights. The Committee shall have authority to award Stock
Appreciation Rights which shall consist of a right to receive the excess of the Fair Market Value
of Shares over the Grant Price of such Shares. Subject to the following conditions, a Stock
Appreciation Right may be granted in tandem with another Award, in addition to another Award, or
freestanding and unrelated to another Award. A Stock Appreciation Right granted in addition to
another Award may be granted either at the same time as such other Award or at a later time.

     (i) Grant Price. The Grant Price of a Stock Appreciation Right
shall be determined by the Committee; provided, however, that the Grant Price shall
not be less than 100% of the Fair Market Value of the Shares on the date of grant.

     (ii) Other Terms and Conditions. The Committee may impose such
conditions or restrictions on the exercise of any Stock Appreciation Right as it
shall deem appropriate; provided, however, no Stock Appreciation Right shall be
exercisable later than the tenth (10th) anniversary date of its grant.

     (c) Restricted Stock and Restricted Stock Units. The Committee shall have
authority to award Restricted Stock and Restricted Stock Units subject to such conditions,
restrictions and contingencies as the Committee shall determine, including but not limited to the
following terms and conditions.

     (i) Dividends. Unless otherwise determined by the Committee,
Restricted Stock awards shall provide for the payment of dividends during the
Restricted Period. Dividends paid on Restricted Stock may be paid directly to the
Participant or may be subject to risk of forfeiture and/or transfer restrictions
during any period established by the Committee, all as determined by the Committee
in its discretion.

     (ii) Registration. Any Restricted Stock may be evidenced in such
manner, as the Committee shall deem appropriate, including, without limitation,
book-entry registration or issuance of a stock certificate or certificates. In the
event any stock certificate is issued in respect of Restricted Stock granted under
the Plan, such certificate shall be registered in the name of the Participant and
shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Stock. Unrestricted Shares, evidenced in
such manner as the Committee shall deem appropriate, shall be issued to the holder
of Restricted Stock promptly after the applicable restrictions have lapsed or
otherwise been satisfied.

     (iii) Transfer Restrictions. During the applicable Restricted
Period, Restricted Stock and/or Restricted Stock Units will be subject to the
limitations on transfer as provided in Section 6(h)(iii).

     (iv) Performance Based. The Committee may, subject to the terms
of the Plan, establish at the time a Restricted Stock or Restricted Stock Unit Award
is granted the Performance

8

 

Period, the Performance Goals pursuant to which the restrictions on the Restricted
Stock or Restricted Stock Unit Award will lapse and establish the schedule or
schedules setting forth the portion of the Restricted Stock or Restricted Stock Unit
Award which will be earned or forfeited based on the degree of achievement, or lack
thereof, of the Performance Goals at the end of the relevant Performance Period.
During any Performance Period, the Committee shall have authority to adjust the
Performance Goals in such manner as the Committee, in its sole discretion, deems
appropriate with respect to such Performance Period. Provided, however, to the
extent such adjustment affects Awards to Covered Employees, they shall be prescribed
in a form that meets the requirements of Code Section 162(m) for deductibility.

     (v) Voting Rights. Unless otherwise determined by the Committee
and set forth in a Participant’s Award Agreement, to the extent permitted or
required by law, as determined by the Committee, Participants holding Shares of
Restricted Stock granted hereunder may be granted the right to exercise full voting
rights with respect to those Shares during the Restricted Period. A Participant
shall have no voting rights or any other rights as a stockholder of the Company with
respect to any Restricted Stock Units granted hereunder.

     (d) Performance Shares and Performance Units. The Committee shall have authority
to grant Performance Shares and Performance Units and shall confer on the holder thereof
compensation rights based upon the achievement of Performance Goals.

     (i) Terms and Conditions. Subject to the terms of the Plan, the
Committee shall establish at the time a Performance Share or Performance Unit is
granted the Performance Period (which shall not be less than one year), the
Performance Goals pursuant to which a Participant may earn and be entitled to a
payment under such Performance Share or Performance Unit and establish the schedule
or schedules setting forth the portion of the Performance Share or Performance Unit
which will be earned or forfeited based on the degree of achievement, or lack
thereof, of the Performance Goals at the end of the relevant Performance Period.
During any Performance Period, the Committee shall have authority to adjust the
Performance Goals in such manner as the Committee, in its sole discretion, deems
appropriate with respect to such Performance Period. Provided, however, to the
extent such adjustment affects Awards to Covered Employees, they shall be prescribed
in a form that meets the requirements of Code Section 162(m) for deductibility.

     (ii) Payment of Awards. Performance Share and Performance Unit
compensation payments may be paid in a lump sum, in cash, Shares or in any
combination thereof. A payment under a Performance Share and Performance Unit shall
be made at such time as is specified in the applicable Award Agreement. The Award
Agreement for a Performance Unit Award shall specify that the payment will be made
(A) by a date that is no later than the date that is two and one-half
(21/2) months after the end of the calendar year in which the
Performance Share or Performance Unit is no longer subject to a Substantial Risk of
Forfeiture or (B) at a time that is Permissible under Section 409A.

     (e) Cash Incentive Awards.

     (i) Subject to the terms and provisions of the Plan, the Committee,
at any time, and from time to time, may grant Cash Incentive Awards under the Plan
to key executive Employees who, by the nature and scope of their positions,
regularly directly make or influence policy decisions which significantly impact the
overall results or success of the Company in such amounts and upon such terms as the
Committee shall determine. Subject to the following provisions in this Section 6(e)
the amount of any Cash Incentive Awards shall be based on the attainment of such
Performance Goals as the Committee may determine and the term, conditions and
limitations applicable to any Cash Incentive Awards made pursuant to the Plan shall
be determined by the Committee.

9

 

     (ii) The performance goals upon which the payment or vesting of an
Cash Incentive Award to a Covered Employee that is intended to qualify as
Performance-Based Compensation must meet the requirements of a Performance Goal set
forth in Section 2 of the Plan.

     (iii) Each Cash Incentive Award shall be evidenced by an Award
Agreement that contains any vesting, transferability restrictions and other
provisions not inconsistent with the Plan as the Committee may specify.

     (iv) Payment under an Cash Incentive Award shall be made in
cash.

     (v) A payment under an Cash Incentive Award shall be made at such
time as is specified in the applicable Award Agreement. The Award Agreement shall
specify that the payment will be
made (a) by a date that is no later than the date that is two and one-half
(21/2) months after the end of the calendar year in which the
Cash Incentive Award payment is no longer subject to a Substantial Risk of
Forfeiture or (2) at a time that is permissible under Section 409A.

     (vi) With respect to a Covered Employee, a Performance Goal for a
particular Cash Incentive Award or other Award that is intended to qualify as
performance-based compensation under Section 162(m) of the Code must be established
by the Committee prior to the earlier to occur of (a) 90 days after the commencement
of the period of service to which the Performance Goal relates or (b) the lapse of
25 percent of the period of service, and in any event while the outcome is
substantially uncertain.

     (vii) Neither the Committee nor the Board may increase the amount of
compensation payable under an Cash Incentive Award or other Award that is intended
to qualify as performance-based compensation under Section 162(m) of the Code. If
the time at which a Cash Incentive Award or other Award that is intended to qualify
as performance-based compensation under Section 162(m) of the Code will vest or be
paid is accelerated for any reason, the amount payable under the Cash Incentive
Award or other Award that is intended to qualify as performance-based compensation
under Section 162(m) of the Code shall be reduced pursuant to Department of Treasury
Regulation § 1.162-27(e)(2)(iii) to reasonably reflect the time value of money.

     (viii) No payments of cash will be made to a Covered Employee
pursuant to this Section 6(e) unless the stockholder approval requirements of
Department of Treasury Regulation § 1.162-27(e)(4) are satisfied.

     (f) Stock Compensation. The Committee shall have authority to make an Award in
lieu of all or a portion of the cash compensation payable under any compensation program of the
Company. The number and type of Shares to be distributed, as well as the terms and conditions of
any such Awards, shall be determined by the Committee.

     (g) Other Stock-Based Awards. The Committee may grant other types of
equity-based or equity-related awards not otherwise described by the terms of this Plan (including
the grant or offer for sale of unrestricted Shares) in such amounts and subject to such terms and
conditions, as the Committee shall determine. Such Awards may involve the transfer of actual Shares
to Participants, or payment in cash or otherwise of amounts based on the value of Shares and may
include, without limitation, Awards designed to comply with or take advantage of the applicable
local laws of jurisdictions other than the United States.

     (i) Value of Other Stock-Based Awards. Each Other Stock-Based
Award shall be expressed in terms of Shares or units based on Shares, as determined
by the Committee. The Committee may establish Performance Goals in its discretion.
If the Committee exercises its

10

 

discretion to establish Performance Goals, the number and/or value of Other
Stock-Based Awards that will be paid out to the Participant will depend on the
extent to which the Performance Goals are met.

     (ii) Payment of Other Stock-Based Awards. Payment, if any, with
respect to an Other Stock-Based Award shall be made in accordance with the terms of
the Award, in cash or Shares as the Committee determines.

     (h) General.

     (i) Awards May Be Granted Separately or Together. Awards may, in
the discretion of the Committee, be granted either alone or in addition to, in
tandem with, or in substitution for any other Award granted under the Plan or any
award granted under any other plan of the Company or any Affiliate. Awards granted
in addition to other Awards or awards granted under any other plan of the Company or
any Affiliate may be granted either at the same time as or at a different time from
the grant of such other Awards or awards. In the case of a Stock Appreciation Right
granted in tandem with an Option, the Stock Appreciation Right terminates at the
same time as the related Option.

     (ii) Forms of Payment by Company Under Awards. Subject to the
terms of the Plan and of any applicable Award Agreement, payments or transfers to be
made by the Company or an Affiliate upon the grant, exercise or payment of an Award
may be made in such form or forms as the Committee shall determine, including,
without limitation, cash, Shares, other securities, other Awards or other property,
or any combination thereof, and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case in accordance with rules and
procedures established by the Committee. Such rules and procedures may include,
without limitation, provisions for the payment or crediting of reasonable interest
on installment or deferred payments.

     (iii) Limits on Transfer of Awards.

     (A) Each Award, and each right under any Award, shall be
exercisable only by the Participant during the Participant’s lifetime, or,
if permissible under applicable law, by the Participant’s guardian or legal
representative or by a transferee receiving such Award pursuant to a
qualified domestic relations order (a “QDRO”) as determined by the
Committee.

     (B) Except as otherwise provided by the Committee, Awards
under the Plan are not transferable except as designated by the Participant
by will or by the laws of descent and distribution.

     (iv) Duration of Options. Each Option granted to a Participant
shall expire at such time as the Committee shall determine at the time of grant;
provided, however, no Non-Qualified Stock Option shall be exercisable later than the
tenth (10th) anniversary date of its grant.

     (v) Term of Stock Appreciation Rights. The term of a Stock
Appreciation Right granted under the Plan shall be determined by the Committee, in
its sole discretion, provided, however, no Stock Appreciation Right shall be
exercisable later than the tenth (10th) anniversary date of its grant.

     (vi) Share Certificates. All certificates for Shares or other
securities of the Company or any Affiliate delivered under the Plan pursuant to any
Award or the exercise thereof shall be subject to such stop transfer orders and
other restrictions as the Committee may deem advisable under the Plan or the rules,
regulations, and other requirements of the Securities and Exchange Commission, any
stock exchange upon which such Shares or other securities are then listed, and any
applicable Federal or state laws, and the Committee may cause a legend

11

 

or legends to be put on any such certificates to make appropriate reference to such
restrictions.

     (vii) Consideration for Grants. Awards may be granted for no cash
consideration or for such consideration as the Committee determines including,
without limitation, such minimal cash consideration as may be required by applicable
law.

     (viii) Delivery of Mature Shares or other Securities and Payment by
Participant of Consideration. No Shares or other securities shall be delivered
pursuant to any Award until payment in full of any amount required to be paid and
all applicable tax withholding is received by the Company pursuant to the Plan or
the applicable Award Agreement. Such payment may be made by such method or methods
and in such form or forms as the Committee shall determine, including, without
limitation, cash, Mature Shares, other securities, other Awards or other property,
or any combination thereof; provided, however, that the combined value, as
determined by the Committee, of all cash and cash equivalents and the Fair Market
Value of any such Shares or other property so tendered to the Company, as of the
date of such tender, is at least equal to the full amount required to be paid
pursuant to the Plan or the applicable Award Agreement to the Company.

SECTION 7. Amendment and Termination.

     Except to the extent prohibited by applicable law and unless otherwise expressly
provided in an Award Agreement or in the Plan:

     (a) Amendments to the Plan. The Board may amend, alter, suspend, discontinue, or
terminate the Plan without the consent of any stockholder, Participant, other holder or beneficiary
of an Award, or other Person; provided, however, that notwithstanding any other provision of the
Plan or any Award Agreement, without the approval of the stockholders of the Company no such
amendment, alteration, suspension, discontinuation, or termination shall be made that would:

     (i) increase the total number of Shares available for Awards under
the Plan, except as provided in Section 4(d);

     (ii) permit Awards encompassing rights to purchase Shares to be
granted with per Share grant, exercise or purchase prices of less than the Fair
Market Value of a Share on the date of grant thereof, except as otherwise permitted
under Section 6;

     (iii) permit a change in the class of individuals eligible to
receive Awards; or

     (iv) materially increase the benefits accruing to Participants under
the Plan.

Additionally, no amendment of the Plan shall be made without stockholder approval if stockholder
approval is required by law, regulation, or stock exchange rule; including, but not limited to, the
Exchange Act, the Code, and, if applicable, the New York Stock Exchange Listed Company Manual/the
Nasdaq issuer rules.

     (b) Amendments to Awards. The Committee may amend any Award theretofore granted,
provided no change in any Award shall reduce the benefit to Participant without the consent of such
Participant. Notwithstanding the foregoing, the Committee is not authorized to reprice or cancel
and reissue Options.

     (c) Adjustment of Awards. The Committee is authorized to make adjustments in the
terms and conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in Section 4(d)) affecting
the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or of
changes in applicable laws, regulations, or accounting principles, whenever the Committee
determines that such adjustments are

12

 

appropriate in order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, provided, however, that no Award that is intended to
qualify as performance-based compensation under Section 162(m) of the Code shall be adjusted in an
manner that is not allowed by Section 162(m) of the Code.

SECTION 8. Change of Control.

     (a) Notwithstanding any other provision of the Plan to the contrary, in the event
of a Change of Control and as of the date such Change of Control is determined to have
occurred:

     (i) Any Options and Stock Appreciation Rights outstanding as of the
date of the Change of Control, and which are not then exercisable and vested, shall
become fully exercisable and vested.

     (ii) The restrictions applicable to any Restricted Stock as of the
date of the Change of Control which is not performance based shall lapse and such
Restricted Stock shall become free of all restrictions and become fully vested and
transferable.

     (iii) Except as otherwise set forth in a Participant’s Award
Agreement, as of the date of the Change of Control, the restrictions applicable to
any Performance Share and any performance-based Restricted Stock granted pursuant to
Section 6(c)(iv) or Section 6(d) shall become free of all restrictions and become
fully vested and transferable.

     (iv) Except as otherwise set forth in a Participant’s Award
Agreement, on the date of the Change of Control any Cash Incentive Award outstanding
under the Plan will vest on that date as if the target/expect level of performance
required for vesting of the award was accomplished for the performance period and
the amount payable under such award shall be paid on the date of the Change of
Control if Permissible under Section 409A and if not permissible then on the payment
date set forth in the Participant’s Award Agreement.

     (v) Except as otherwise set forth in a Participant’s Award
Agreement, on the date of the Change of Control any Restricted Stock Unit and
Performance Unit Award outstanding under the Plan will vest on that date and the
amount payable under such award shall be paid on the date of the Change of Control
if Permissible under Section 409A and if not permissible then on the payment date
set forth in the Participant’s Award Agreement.

     (b) In addition to the Committee’s authority conferred by the Plan, in order to
maintain the Participants’ rights in the event of any Change of Control, the Board, as constituted
before such Change of Control, is hereby authorized, and has sole discretion, as to any Award,
either at the time such Award is made hereunder or any time thereafter, to take any one or more of
the following actions: (i) provide for the purchase of any such Award for an amount of cash equal
to the amount that could have been attained upon the exercise of such Award or realization of the
Participant’s rights had such Award been currently exercisable or payable; (ii) make such
adjustment to any such Award then outstanding as the Board deems appropriate to reflect such Change
of Control; or (iii) cause any such Award then outstanding to be assumed, or new rights substituted
therefor, by the acquiring or surviving corporation after such Change of Control. The Board may, in
its discretion, include such further provisions and limitations in any Award Agreement, as it may
deem equitable and in the best interests of the Company.

     (c) A “Change of Control” shall be deemed to occur if:

     (i) any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) acquires beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
50% or more of either (A) the then outstanding shares of common stock of the Company
(the “Outstanding Company Common

13

 

Stock”) or (B) the combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); provided, however, that for purposes of
this subsection (i), the following acquisitions shall not constitute a Change of
Control: (1) any acquisition directly from the Company, (2) any acquisition by the
Company, (3) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the Company
or (4) any acquisition pursuant to a transaction which complies with clauses (A),
(B) and (C) of subsection (iii) of this Section (c); or

     (ii) individuals who, as of the effective date of the Plan,
constitute the Board (the “Incumbent Board”) cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual becoming a
director subsequent to the effective date of the Plan whose election, or nomination
for election by the Company’s stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the election or removal
of directors or other actual or threatened solicitation of proxies or consents by or
on behalf of a person other than the Board; or

     (iii) consummation by the Company of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the assets
of the Company or the acquisition of assets of another entity (a “Business
Combination”), in each case, unless, following such Business Combination, (A) all or
substantially all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own, directly
or indirectly, more than 50% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without limitation,
a corporation which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no person (excluding
any employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially own, directly or indirectly,
50% or more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting power of
the then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination, and (C) at least a
majority of the members of the board of directors of the corporation resulting from
such Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for
such Business Combination; or

     (iv) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.

14

 

SECTION 9. General Provisions.

     (a) No Rights to Awards. No Employee, Director, Consultant, Participant or other
person shall have any claim to be granted any Award, and there is no obligation for uniformity of
treatment of Employees, Directors, Consultants, Participants, or holders or beneficiaries of
Awards. The terms and conditions of Awards need not be the same with respect to each recipient.

     (b) Delegation. Subject to the terms of the Plan and applicable law, the
Committee may delegate to one or more officers or managers of the Company or any Affiliate, or to a
committee of such officers or managers, the authority, subject to such terms and limitations as the
Committee shall determine, to grant Awards to, or to cancel, modify or waive rights with respect
to, or to alter, discontinue, suspend, or terminate Awards held by Participants who are not
officers or directors of the Company for purposes of Section 16 of the Exchange Act, or any
successor Section thereto, or who are otherwise not subject to such Section. The Committee may
engage or authorize the engagement of a third party administrator to carry out administrative
functions under the Plan.

     (c) Tax Withholding. The Company or any Affiliate is hereby authorized to
withhold from any Award, from any payment due or transfer made under any Award or under the Plan or
from any compensation or other amount owing to a Participant the amount (in cash, Shares, other
securities, other Awards or other property) of any applicable withholding taxes in respect of an
Award, its exercise, the lapse of restrictions thereon, or any payment or transfer under an Award
or under the Plan and to take such other action as may be necessary in the opinion of the Company
to satisfy all obligations for the payment of such taxes.

     (d) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall
prevent the Company or any Affiliate from adopting or continuing in effect other compensation
arrangements (subject to stockholder approval of such other arrangement, if such approval is
required), and such arrangements may be either generally applicable or applicable only in specific
cases.

     (e) No Right to Employment. The grant of an Award shall not be construed as giving a
Participant the right to be retained in the employ of the Company or any Affiliate or service on
the Board. Further, the Company or an Affiliate may at any time dismiss a Participant from
employment or the Board may dismiss a Participant from service on the Board, free from any
liability or any claim under the Plan, unless otherwise expressly provided in the Plan or in any
Award Agreement.

     (f) Governing Law. The validity, construction, and effect of the Plan and any rules
and regulations relating to the Plan shall be determined in accordance with the laws of the State
of Texas and applicable Federal law.

     (g) Severability. If any provision of the Plan or any Award is or becomes or is
deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any person or Award,
or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be
construed or deemed amended without, in the determination of the Committee, materially altering the
intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, person
or Award and the remainder of the Plan and any such Award shall remain in full force and effect.

     (h) Other Laws. The Committee may refuse to issue or transfer any Shares or other
consideration under an Award if, acting in its sole discretion, it determines that the issuance or
transfer of such Shares or such other consideration might violate any applicable law or regulation
or entitle the Company to recover the same under Section 16(b) of the Exchange Act, and any payment
tendered to the Company by a Participant, other holder or beneficiary in connection with the
exercise of such Award shall be promptly refunded to the relevant Participant, holder or
beneficiary.

15

 

     (i) Section 409A. Awards shall be designed, granted and administered in such a
manner that they are either exempt from the application of, or comply with, the requirements of
Section 409A. The Plan and each Award Agreement under the Plan that is intended to comply the
requirements of Section 409A shall be construed and interpreted in accordance with such intent. If
the Committee determines that an Award, Award Agreement, payment, distribution, deferral election,
transaction, or any other action or arrangement contemplated by the provisions of the Plan would,
if undertaken, cause a holder of such award to become subject to additional taxes under
Section 409A, then unless the Committee specifically provides otherwise, such Award, Award
Agreement, payment, distribution, deferral election, transaction or other action or arrangement
shall not be given effect to the extent it causes such result and the related provisions of the
Plan and/or Award Agreement will be deemed modified, or, if necessary, suspended in order to comply
with the requirements of Section 409A to the extent determined appropriate by the Committee, in
each case without the consent of or notice to the holder of such Award. The exercisability of an
Option or a Stock Appreciation Right shall not be extended to the extent that such extension would
subject the holder of the Award to additional taxes under Section 409A.

     (j) No Trust or Fund Created. Neither the Plan nor any Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary relationship between the
Company or any Affiliate and a Participant or any other person. To the extent that any person
acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such
right shall be no greater than the right of any unsecured general creditor of the Company or any
Affiliate.

     (k) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant
to the Plan or any Award, and the Committee shall determine whether cash, other securities, or
other property shall be paid or transferred in lieu of any fractional Shares or whether such
fractional Shares or any rights thereto shall be cancelled, terminated, or otherwise eliminated.

     (l) Headings. Headings are given to the Sections and subsections of the Plan solely
as a convenience to facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of the Plan or any provision thereof.

     (m) Employees Based Outside of the United States. Without limiting in any way the
generality of the Committee’s powers under this Plan, including but not limited to the power to
specify any terms and conditions of an Award consistent with law, in order to comply with the laws
in other countries in which the Company operates or has Employees, the Committee, in its sole
discretion, shall have the power and authority, notwithstanding any provision of the Plan to the
contrary, to:

     (i) determine which Affiliates shall be covered by the Plan;

     (ii) determine which Employees outside the United States are eligible to
participate in the Plan;

     (iii) modify the terms and conditions of any Award granted to Employees
outside the United States to comply with applicable foreign laws;

     (iv) establish subplans and modify exercise procedures and other terms and
procedures, to the extent such actions may be necessary or advisable, any subplans and
modifications to Plan terms and procedures established under this Section 9(m) by the
Committee shall be attached to this Plan document as appendices; and

     (v) take any action, before or after an Award is made that it deems advisable
to obtain approval or comply with any necessary local government regulatory exemptions or
approvals.

Notwithstanding the above, the Committee may not take any actions hereunder and no Awards shall be
granted that would violate the Exchange Act, the Code, any securities law, or governing statute or
any applicable law.

16

 

SECTION 10. Effective Date of the Plan.

     The Plan shall be effective as of the date of its approval by the Board, subject to
its approval by the stockholders of the Company.

SECTION 11. Term of the Plan.

     No Award shall be granted under the Plan on or after the tenth anniversary of the date
of approval of the Plan by the Board. However, unless otherwise expressly provided in the Plan or
in an applicable Award Agreement, any Award theretofore granted may, and the authority of the Board
or the Committee to amend, alter, adjust, suspend, discontinue, or terminate any such Award or to
waive any conditions or rights under any such Award shall, extend beyond such date.

17

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