Document:

Exhibit 10.1

 

Exhibit 10.1

Pike Electric Corporation

2008 Omnibus Incentive Compensation Plan

     SECTION 1. Purpose. The purpose of this Pike Electric Corporation 2008 Omnibus
Incentive Compensation Plan is to promote the interests of Pike Electric Corporation, a Delaware
corporation (the “Company”), and its stockholders by (a) attracting and retaining exceptional
directors, officers, employees and consultants (including prospective directors, officers,
employees and consultants) of the Company and its Affiliates and (b) enabling such individuals to
participate in the long-term growth and financial success of the Company.

     SECTION 2. Definitions. As used herein, the following terms have the meanings set
forth below:

     “Affiliate” means (a) any entity that, directly or indirectly, is controlled by, controls or
is under common control with, the Company and (b) any entity in which the Company has a significant
equity interest, in either case as determined by the Committee.

     “Award” means any award that is made to a Participant under Section 6.

     “Award Agreement” means any written agreement, contract or other instrument or document
evidencing any Award, which may, but need not, require execution or acknowledgment by a
Participant.

     “Beneficial Ownership” or “Beneficial Owners” have the meanings assigned to those terms in
Rule 13d-3 under the Exchange Act.

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

     “Cash Incentive Award” has the meaning specified in Section 6(g).

     “Change in Control” means the occurrence of any of the following events:

          (a) at any time during any period of 24 consecutive months at least a majority of the Board
shall cease to consist of “directors of the Company who either were directors at the beginning of
such period or who subsequently became directors and whose election, or nomination for election by
the Company’s stockholders, was approved by a majority of the then Incumbent Directors (“Incumbent
Directors”); or

          (b) any “person” or “group,” as determined in accordance with Section 13(d)(3) of the Exchange
Act (other than (A) any Subsidiary or employee benefit plan (or related trust or fiduciary)
sponsored or maintained by the Company or an Affiliate or (B) Lindsay Goldberg & Bessemer L.P. and
its affiliates) acquires Beneficial Ownership of thirty-five percent (35%) or more of the combined
voting power of the then outstanding Company Voting Securities, unless such acquisition is approved
by a majority of the directors of the Company in office immediately preceding such acquisition; or

          (c) the consummation of a merger, consolidation, statutory share exchange or similar
transaction to which the Company or any Subsidiary is a party (a “Merger”), unless immediately
following the Merger:

     (1) the Beneficial Owners of the Company Voting Securities outstanding immediately
prior to such Merger are the Beneficial Owners of more than 50% of the combined voting
power of the then outstanding voting securities of the corporation or other entity
resulting from such Merger (including a corporation or other entity that as a result of
such Merger directly or

 

 

indirectly owns the Company or all or substantially all the Company’s assets) (the
“Continuing Company”), provided such Beneficial Ownership is attributable solely to
Company Voting Securities held immediately prior to such Merger; and

     (2) at least a majority of the members of the board of directors (or equivalent
body) of the Continuing Company are Incumbent Directors; or

          (d) the consummation of the sale of all, or substantially all, of the Company’s assets; or

          (e) the stockholders of the Company approve a plan of complete liquidation of the Company.

Notwithstanding the foregoing, with respect to any Awards that provide or may provide for a
deferral of compensation within the meaning of Section 409A of the Code and that provide for an
accelerated payment in connection with a Change of Control, “Change of Control” shall then have the
meaning set forth in Section 409A of the Code.

     “Code” means the Internal Revenue Code of 1986, as amended from time to time, together with
the rules, regulations and interpretations promulgated thereunder.

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

     “Company Voting Securities” means the securities eligible to vote for the election of the
Board.

     “Deferred Share Unit” means a deferred share unit Award that represents an unfunded and
unsecured promise to deliver Shares in accordance with the terms of the applicable Award Agreement.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time,
together with the rules, regulations and interpretations promulgated thereunder.

     “Exercise Price” means (a) in the case of Options, the price specified in the applicable Award
Agreement as the price-per-Share at which Shares may be purchased pursuant to such Option or (b) in
the case of SARs, the price specified in the applicable Award Agreement as the reference
price-per-Share used to calculate the amount payable to the Participant.

     “Fair Market Value” means

          (a) with respect to any property other than Shares, the fair market value of such property
determined by such methods or procedures as shall be established from time to time by the
Committee; and

          (b) with respect to the Shares, as of any date, (i) if the Shares are listed on the NYSE or
any other exchange or quotation system, the mean between the high and low sales prices of the
Shares on such exchange or quotation system for such date or, if no sales occur on such date, then
on the next preceding date on which there were sales of Shares; or (ii) in the event the Shares are
not listed on an exchange or quotation system, the fair market value of the Shares as determined in
good faith by the Committee, in each case with respect to this clause (b), as determined in
accordance with Section 409A of the Code to the extent required under Section 409A of the Code.

     “Incentive Stock Option” means an option to purchase Shares from the Company that (a) is
granted under Section 6 and (b) is intended to be and is specifically designated as an “incentive
stock option” within the meaning of Section 422 of the Code.

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     “Independent Director” means a member of the Board who is neither (a) an employee of the
Company nor (b) an employee of any Affiliate, and who, at the time of acting, is a “Non-Employee
Director” under Rule 16b-3.

     “IRS” means the Internal Revenue Service or any successor thereto and includes the staff
thereof.

     “Nonqualified Stock Option” means an option to purchase Shares from the Company that (a) is
granted under Section 6 and (b) is not an Incentive Stock Option.

     “NYSE” means the New York Stock Exchange or any successor thereto.

     “Option” means an Incentive Stock Option or a Nonqualified Stock Option or both, as the
context requires.

     “Participant” means any director, officer, employee or consultant (including any prospective
director, officer, employee or consultant) of the Company or its Affiliates who is eligible for an
Award under Section 5 and who is selected by the Committee to receive an Award under the Plan or
who receives a Substitute Award pursuant to Section 4(c).

     “Performance Compensation Award” means any Award designated by the Committee as a Performance
Compensation Award pursuant to Section 6(e).

     “Performance Criteria” means the criterion or criteria that the Committee selects for purposes
of establishing a Performance Goal for a Performance Period with respect to any Performance
Compensation Award, Performance Unit or Cash Incentive Award under the Plan.

     “Performance Formula” means, for a Performance Period, the one or more objective formulas
applied against the relevant Performance Goal to determine, with regard to the Performance
Compensation Award, Performance Unit or Cash Incentive Award of a particular Participant, whether
all, a portion or none of the Award has been earned for the Performance Period.

     “Performance Goal” means, for a Performance Period, the one or more goals established by the
Committee for the Performance Period based upon the Performance Criteria.

     “Performance Period” means the one or more periods of time as the Committee may select over
which the attainment of one or more Performance Goals will be measured for the purpose of
determining a Participant’s right to and the payment of a Performance Compensation Award,
Performance Unit or Cash Incentive Award.

     “Performance Unit” means an Award under Section 6(f) that has a value set by the Committee (or
that is determined by reference to a valuation formula specified by the Committee or the Fair
Market Value of Shares), which value may be paid to the Participant by delivery of such property as
the Committee shall determine, upon achievement of such Performance Goals during the relevant
Performance Period as the Committee shall establish at the time of such Award or thereafter.

     “Plan” means this Pike Electric Corporation 2008 Omnibus Incentive Compensation Plan, as in
effect from time to time.

     “Restricted Share” means a Share delivered under the Plan that is subject to certain transfer
restrictions, forfeiture provisions and/or other terms and conditions specified herein and in the
applicable Award Agreement.

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     “RSU” means a restricted stock unit Award that is designated as such in the applicable Award
Agreement and that represents an unfunded and unsecured promise to deliver Shares, cash, other
securities, other Awards or other property in accordance with the terms of the applicable Award
Agreement.

     “Rule 16b-3” means Rule 16b-3 as promulgated and interpreted by the SEC under the Exchange Act
or any successor rule or regulation thereto as in effect from time to time.

     “SAR” means a stock appreciation right Award that represents an unfunded and unsecured promise
to deliver Shares, cash, other securities, other Awards or other property equal in value to the
excess, if any, of the Fair Market Value per Share over the Exercise Price per Share of the SAR,
subject to the terms of the applicable Award Agreement.

     “SEC” means the Securities and Exchange Commission or any successor thereto and shall include
the staff thereof.

     “Shares” means shares of common stock of the Company or such other securities of the Company
(a) into which such shares shall be changed by reason of a recapitalization, merger, consolidation,
split-up, combination, exchange of shares or other similar transaction or (b) as may be determined
by the Committee pursuant to Section 4(b).

     “Subsidiary” means any entity in which the Company, directly or indirectly, possesses 50% or
more of the total combined voting power of all classes of its stock.

     “Substitute Awards” have the meaning specified in Section 4(c).

     “Substituted Options” have the meaning specified in Section 6(c)(v).

     “Substitution SARs” have the meaning specified in Section 6(c)(v).

     SECTION 3. Administration.

          (a) Composition of Committee. The Plan shall be administered by the Committee, which
shall be composed of one or more directors, as determined by the Board; provided that to the extent
necessary to comply with the rules of the NYSE and Rule 16b-3 and to satisfy any applicable
requirements of Section 162(m) of the Code and any other applicable laws or rules, the Committee
shall be composed of two or more directors, all of whom shall be Independent Directors and all of
whom shall (i) qualify as “outside directors” under Section 162(m) of the Code and (ii) meet the
independence requirements of the NYSE.

          (b) Authority of 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 is authorized to grant Awards under the Plan, to construe and interpret the Plan, to
promulgate, amend and rescind rules and regulations relating to the implementation of the Plan and
to make all other determinations necessary or advisable for the administration of the Plan;
provided, however, that any permitted accelerations, deferrals or payments in respect of any Award
granted under the Plan shall comply with all applicable requirements of Section 409A of the Code,
including the timing of any deferral elections and the timing and form of payments. 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 and plenary
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 person validly
claiming under or through any Participant, any holder or beneficiary of any Award and any
stockholder. The Company shall effect the granting of Awards under the Plan in accordance with the

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determinations made by the Committee, by execution of instruments in writing in such form as
are approved by the Committee.

          (c) Indemnification. No member of the Board, the Committee or any employee of the
Company (each such person, a “Covered Person”) shall be liable for any action taken or omitted to
be taken or any determination made in good faith with respect to the Plan or any Award hereunder.
Each Covered Person shall be indemnified and held harmless by the Company against and from (i) any
loss, cost, liability or expense (including attorneys’ fees) that may be imposed upon or incurred
by such Covered Person in connection with or resulting from any action, suit or proceeding to which
such Covered Person may be a party or in which such Covered Person may be involved by reason of any
action taken or omitted to be taken under the Plan or any Award Agreement and (ii) any and all
amounts paid by such Covered Person, with the Company’s approval, in settlement thereof, or paid by
such Covered Person in satisfaction of any judgment in any such action, suit or proceeding against
such Covered Person; provided that the Company shall have the right, at its own expense, to assume
and defend any such action, suit or proceeding, and, once the Company gives notice of its intent to
assume the defense, the Company shall have sole control over such defense with counsel of the
Company’s choice. The foregoing right of indemnification shall not be available to a Covered Person
to the extent that a court of competent jurisdiction in a final judgment or other final
adjudication, in either case not subject to further appeal, determines that the acts or omissions
of such Covered Person giving rise to the indemnification claim resulted from such Covered Person’s
bad faith, fraud or willful criminal act or omission or that such right of indemnification is
otherwise prohibited by law or by the Company’s Certificate of Incorporation or Bylaws. The
foregoing right of indemnification shall not be exclusive of any other rights of indemnification to
which Covered Persons may be entitled under the Company’s Certificate of Incorporation or Bylaws,
as a matter of law, or otherwise, or any other power that the Company may have to indemnify such
persons or hold them harmless.

          (d) Delegation of Authority to Senior Officers. The Committee may delegate, on such
terms and conditions as it determines in its sole and plenary discretion, to one or more senior
officers of the Company the authority to make grants of Awards to officers (other than executive
officers), employees and consultants of the Company and its Affiliates (including any prospective
officer, employee or consultant).

          (e) Awards to Independent Directors. Notwithstanding anything to the contrary
contained herein, the Board may, in its sole and plenary discretion, at any time and from time to
time, grant Awards to Independent Directors or administer the Plan with respect to such Awards. In
any such case, the Board shall have all the authority and responsibility granted to the Committee
herein.

     SECTION 4. Shares Available for Awards.

          (a) Shares Available. Subject to adjustment as provided in Section 4(b), (i) the
aggregate number of Shares that may be delivered pursuant to Awards granted under the Plan shall be
2,500,000, of which the maximum number of Shares that may be delivered pursuant to Incentive Stock
Options granted under the Plan shall be 500,000 and the maximum number of Shares that may be
delivered pursuant to Awards of Restricted Shares under the Plan shall be 500,000 and (ii) the
maximum number of Shares with respect to which Awards may be granted to any Participant in any
fiscal year of the Company shall be 600,000. If, after the effective date of the Plan, any Award
granted under the Plan is forfeited, or otherwise expires, terminates or is canceled without the
delivery of Shares, then the Shares covered by such forfeited, expired, terminated or canceled
Award shall again become available to be delivered pursuant to Awards under the Plan. If Shares
issued upon exercise, vesting or settlement of an Award, or Shares owned by a Participant (which
are not subject to any pledge or other security interest and which have been owned by the
Participant for at least six months), are surrendered or tendered to the Company in payment of the
Exercise Price of an Award or any taxes required to be withheld in respect of an Award, in each
case, in accordance with the terms and

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conditions of the Plan and any applicable Award Agreement, such surrendered or tendered Shares
shall again become available to be delivered pursuant to Awards under the Plan.

          (b) Adjustments for Changes in Capitalization and Similar Events. 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 in its discretion to be appropriate
or desirable, then the Committee may:

          (i) in such manner as it may deem equitable or desirable, adjust any or all of (A) the
number of Shares or other securities of the Company (or number and kind of other securities
or property) with respect to which Awards may be granted, including (1) the aggregate number
of Shares that may be delivered pursuant to Awards granted under the Plan (as provided in
Section 4(a)), and (2) the maximum number of Shares or other securities of the Company (or
number and kind of other securities or property) with respect to which Awards may be granted
to any Participant in any fiscal year of the Company, and (B) the terms of any outstanding
Award, including (1) the number of Shares or other securities of the Company (or number and
kind of other securities or property) subject to outstanding Awards or to which outstanding
Awards relate and (2) the Exercise Price with respect to any Award;

          (ii) if deemed appropriate or desirable by the Committee, make provision for a cash
payment to the holder of an outstanding Award in consideration for the cancellation of such
Award, including, in the case of an outstanding Option or SAR, a cash payment to the holder
of such Option or SAR in consideration for the cancellation of such Option or SAR in an
amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the
Committee) of the Shares subject to such Option or SAR over the aggregate Exercise Price of
such Option or SAR; and

          (iii) if deemed appropriate or desirable by the Committee, cancel and terminate any
Option or SAR having a per Share Exercise Price equal to, or in excess of, the Fair Market
Value of a Share subject to such Option or SAR without any payment or consideration
therefor.

          (c) Substitute Awards. Awards may, in the discretion of the Committee, be granted
under the Plan in assumption of, or in substitution for, outstanding awards previously granted by
the Company or any of its Affiliates or a company acquired by the Company or any of its Affiliates
or with which the Company or any of its Affiliates combines (“Substitute Awards”). The number of
Shares underlying any Substitute Awards shall be counted against the aggregate number of Shares
available for Awards under the Plan; provided, however, that Substitute Awards issued in connection
with the assumption of, or in substitution for, outstanding awards previously granted by an entity
that is acquired by the Company or any of its Affiliates or with which the Company or any of its
Affiliates combines shall not be counted against the aggregate number of Shares available for
Awards under the Plan.

          (d) 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 of treasury Shares.

     SECTION 5. Eligibility. Any director, officer, employee or consultant (including any
prospective director, officer, employee or consultant) of the Company or any of its Affiliates
shall be eligible to be designated a Participant.

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     SECTION 6. Awards.

          (a) Types of Awards. Awards may be made under the Plan in the form of (i) Options,
(ii) SARs, (iii) Restricted Shares, (iv) RSUs, (v) Performance Units, (vi) Cash Incentive Awards,
(vii) Deferred Share Units and (viii) other equity-based or equity-related Awards that the
Committee determines are consistent with the purpose of the Plan and the interests of the Company.
Awards may be granted in tandem with other Awards. No Incentive Stock Option (other than an
Incentive Stock Option that may be assumed or issued by the Company in connection with a
transaction to which Section 424(a) of the Code applies) may be granted to a person who is
ineligible to receive an Incentive Stock Option under the Code.

          (b) Options.

          (i) Grant. Subject to the provisions of the Plan, the Committee has sole and
plenary authority to determine the Participants to whom Options shall be granted, the number of
Shares to be covered by each Option, whether the Option will be an Incentive Stock Option or a
Nonqualified Stock Option and the conditions and limitations applicable to the vesting and
exercise of the Option. In the case of Incentive Stock Options, the terms and conditions of such
grants shall be subject to and comply with such rules as may be prescribed by Section 422 of the
Code and any regulations related thereto, as may be amended from time to time. All Options
granted under the Plan shall be Nonqualified Stock Options unless the applicable Award Agreement
expressly states that the Option is intended to be an Incentive Stock Option. If an Option is
intended to be an Incentive Stock Option, and if for any reason such Option (or any portion
thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such
nonqualification, such Option (or portion thereof) shall be regarded as a Nonqualified Stock
Option appropriately granted under the Plan; provided that such Option (or portion thereof)
otherwise complies with the Plan’s requirements relating to Nonqualified Stock Options.

          (ii) Exercise Price. Except as otherwise established by the Committee at the time
an Option is granted and set forth in the applicable Award Agreement, the Exercise Price of each
Share covered by an Option shall be not less than 100% of the Fair Market Value of such Share
(determined as of the date the Option is granted); provided, however, that in the case of an
Incentive Stock Option granted to an employee who, at the time of the grant of such Option, owns
stock representing more than 10% of the voting power of all classes of stock of the Company or
any Affiliate, the per Share Exercise Price shall be no less than 110% of the Fair Market Value
per Share on the date of the grant. Options are intended to qualify as “qualified
performance-based compensation” under Section 162(m) of the Code.

          (iii) Exercisability. Each Option shall be vested and exercisable at such times, in
such manner and subject to such terms and conditions as the Committee may, in its sole and
plenary discretion, specify in the applicable Award Agreement or thereafter. Except as otherwise
specified by the Committee in the applicable Award Agreement, an Option may only be exercised to
the extent that it has already vested at the time of exercise. Except as otherwise specified by
the Committee in the applicable Award Agreement, Options shall become vested and exercisable
with respect to one-third of the Shares subject to such Options on each of the first three
anniversaries of the date of grant.

          (iv) Method of Exercise. An Option shall be deemed to be exercised when written or
electronic notice of such exercise has been given to the Company in accordance with the terms of
the Award by the person entitled to exercise the Award and full payment for the Shares with
respect to which the Award is exercised has been received by the Company. The Committee may
impose such conditions with respect to the exercise of Options, including, without limitation,
any relating to the application of Federal or state securities laws, as it may deem necessary or
advisable. No Shares shall be delivered pursuant to any exercise of an Option until payment in
full of the aggregate Exercise Price therefor is received by the

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Company, and the Participant has paid to the Company an amount equal to any Federal, state,
local and foreign income and employment taxes required to be withheld.

          The Exercise Price due upon exercise of any Option shall be payable to the Company in full
either: (A) in cash or its equivalent or (B) in the Committee’s sole and plenary discretion, by
tendering previously acquired Shares having an aggregate Fair Market Value at the time of
exercise equal to the aggregate Exercise Price (provided that the shares which are tendered must
have been held by the Participant for at least six (6) months prior to their tender to satisfy
the option price unless such shares had been acquired by the Participant on the open market), or
(C) by a combination of (A) and (B).

          As soon as practicable after notification of exercise and full payment, the Company shall
deliver the shares to the Participant in an appropriate amount based upon the number of shares
purchased under the Option.

          Notwithstanding the foregoing provisions of this paragraph 6(b)(iv), the Committee, in its
sole and plenary discretion, may also allow (A) cashless exercises or (B) exercises by any other
means which the Committee determines to be consistent with the Plan’s purpose and applicable
law.

          (v) Expiration. Except as otherwise set forth in the applicable Award Agreement,
each Option shall expire immediately, without any payment, upon the earlier of (A) the tenth
anniversary of the date the Option is granted and (B) 90 days after the date the Participant who
is holding the Option ceases to be a director, officer, employee or consultant of the Company or
one of its Affiliates. In no event may an Option be exercisable after the tenth anniversary of
the date the Option is granted.

          (c) SARs.

          (i) Grant. Subject to the provisions of the Plan, the Committee has sole and
plenary authority to determine the Participants to whom SARs shall be granted, the number of
Shares to be covered by each SAR, the Exercise Price thereof and the conditions and limitations
applicable to the exercise thereof. SARs may be granted in tandem with another Award, in
addition to another Award or freestanding and unrelated to another Award. SARs granted in tandem
with, or in addition to, an Award may be granted either at the same time as the Award or at a
later time.

          (ii) Exercise Price. Except as otherwise established by the Committee at the time a
SAR is granted and set forth in the applicable Award Agreement, the Exercise Price of each Share
covered by a SAR shall be not less than 100% of the Fair Market Value of such Share (determined
as of the date the SAR is granted). SARs are intended to qualify as “qualified performance-based
compensation” under Section 162(m) of the Code.

          (iii) Exercise. A SAR shall entitle the Participant to receive an amount equal to
the excess, if any, of the Fair Market Value of a Share on the date of exercise of the SAR over
the Exercise Price thereof. The Committee shall determine, in its sole and plenary discretion,
whether a SAR shall be settled in cash, Shares, other securities, other Awards, other property
or a combination of any of the foregoing.

          (iv) Other Terms and Conditions. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine, at or after the grant of a SAR, the
vesting criteria, term, methods of exercise, methods and form of settlement and any other terms
and conditions of any SAR. Any such determination by the Committee may be changed by the
Committee from time to time and may govern the exercise of SARs granted or exercised thereafter.
The Committee may impose such conditions or restrictions on the exercise of any SAR as it shall
deem appropriate or desirable.

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          (v) Substitution SARs. The Committee may substitute, without the consent of the
affected Participant or any holder or beneficiary of SARs, SARs settled in Shares (or SARs
settled in Shares or cash in the Committee’s discretion) (“Substitution SARs”) for outstanding
Nonqualified Stock Options (“Substituted Options”); provided that (A) the substitution shall not
otherwise result in a modification of the terms of any Substituted Option, (B) the number of
Shares underlying the Substitution SARs shall be the same as the number of Shares underlying the
Substituted Options and (C) the Exercise Price of the Substitution SARs shall be equal to the
Exercise Price of the Substituted Options. If, in the opinion of the Company’s auditors, this
provision creates adverse accounting consequences for the Company, it shall be considered null
and void.

          (d) Restricted Shares and RSUs.

          (i) Grant. Subject to the provisions of the Plan, the Committee has sole and
plenary authority to determine the Participants to whom Restricted Shares and RSUs shall be
granted, the number of Restricted Shares and RSUs to be granted to each Participant, the
duration of the period during which, and the conditions, if any, under which, the Restricted
Shares and RSUs may vest or may be forfeited to the Company and the other terms and conditions
of such Awards.

          (ii) Transfer Restrictions. Restricted Shares and RSUs may not be sold, assigned,
transferred, pledged or otherwise encumbered except as provided in the Plan or as may be
provided in the applicable Award Agreement; provided, however, that the Committee may in its
discretion determine that Restricted Shares and RSUs may be transferred by the Participant.
Certificates issued in respect of Restricted Shares shall be registered in the name of the
Participant and deposited by such Participant, together with a stock power endorsed in blank,
with the Company or such other custodian as may be designated by the Committee or the Company,
and shall be held by the Company or other custodian, as applicable, until such time as the
restrictions applicable to such Restricted Shares lapse. Upon the lapse of the restrictions
applicable to such Restricted Shares, the Company or other custodian, as applicable, shall
deliver such certificates to the Participant or the Participant’s legal representative.

          (iii) Payment/Lapse of Restrictions. Each RSU shall have a value equal to the Fair
Market Value of a Share. RSUs shall be paid in cash, Shares, other securities, other Awards or
other property, as determined in the sole and plenary discretion of the Committee, upon the
lapse of restrictions applicable thereto, or otherwise in accordance with the applicable Award
Agreement. If a Restricted Share or an RSU is intended to qualify as “qualified
performance-based compensation” under Section 162(m) of the Code, all requirements set forth in
Section 6(e) must be satisfied in order for the restrictions applicable thereto to lapse.

          (e) Performance Compensation Awards.

          (i) General. The Committee has the authority, at the time of grant of any Award, to
designate such Award (other than Options and SARs) as a Performance Compensation Award in order
to qualify such Award as “qualified performance-based compensation” under Section 162(m) of the
Code or to qualify such Award as “performance-based compensation” under Section 409A of the
Code. Options and SARs granted under the Plan shall not be included among Awards that are
designated as Performance Compensation Awards under this Section 6(e).

          (ii) Eligibility. The Committee shall, in its sole discretion, designate within the
time period prescribed under Section 162(m) of the Code which Participants will be eligible to
receive Performance Compensation Awards in respect of such Performance Period. However,
designation of a Participant eligible to receive an Award hereunder for a Performance Period
shall not in any manner entitle the Participant to receive payment in respect of any Performance
Compensation Award for such

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Performance Period. The determination as to whether or not such Participant becomes
entitled to payment in respect of any Performance Compensation Award shall be decided solely in
accordance with the provisions of this Section 6(e). Designation of a Participant eligible to
receive an Award hereunder for a particular Performance Period shall not require designation of
such Participant eligible to receive an Award hereunder in any subsequent Performance Period and
designation of one person as a Participant eligible to receive an Award hereunder shall not
require designation of any other person as a Participant eligible to receive an Award hereunder.

          (iii) Discretion of Committee with Respect to Performance Compensation Awards. With
regard to a particular Performance Period, the Committee has full discretion to select the
length of such Performance Period, the types of Performance Compensation Awards to be issued,
the Performance Criteria that will be used to establish the Performance Goals, and the
Performance Formula. Within the time period prescribed under Section 162(m) of the Code, the
Committee shall, with regard to the Performance Compensation Awards to be issued for such
Performance Period, exercise its discretion with respect to each of the matters enumerated in
the immediately preceding sentence and record the same in writing.

          (iv) Performance Criteria. Notwithstanding the foregoing, the Performance Criteria
that will be used to establish the Performance Goals shall be (A) based on the attainment of
specific levels of performance of the Company or any of its Subsidiaries, Affiliates, divisions,
regions, departments, operational units, or any combination of the foregoing, (B) established
within the time period prescribed by Section 162(m) of the Code, and (C) limited to one or more
of the following:

— Net income before or after taxes;

 — Earnings before or after taxes (including earnings before interest, taxes, depreciation and amortization);

 — Operating income;

 — Earnings per share;

 — Return on shareholders’ equity;

 — Return on investment or capital;

 — Return on assets;

 — Level or amount of acquisitions,

 — Share price;

 — Profitability and profit margins;

 — Market share;

 — Revenues or sales (based on units or dollars);

 — Costs;

 — Cash flow;

 — Working capital; and

 — Safety and accident rates.

          (v) Modification of Performance Goals. The Committee is authorized at any time
within the time period permitted by Section 162(m) of the Code, or any time thereafter (but only
to the extent the exercise of such authority after such period would not cause the Performance
Compensation Awards granted to any Participant for the Performance Period to fail to qualify as
“qualified performance-based compensation” under Section 162(m) of the Code), in its sole and
plenary discretion, to adjust or modify the calculation of a Performance Goal for such
Performance Period to the extent permitted under Section 162(m) of the Code (A) in the event of,
or in anticipation of, any unusual or extraordinary corporate item, transaction, event or
development affecting the Company or any of its Affiliates, Subsidiaries, divisions or operating
units (to the extent applicable to such Performance Goal) or (B) in recognition of,

10

 

or in anticipation of, any other unusual or nonrecurring events affecting the Company or
any of its Affiliates, Subsidiaries, divisions or operating units (to the extent applicable to
such Performance Goal), or the financial statements of the Company or any of its Affiliates,
Subsidiaries, divisions or operating units (to the extent applicable to such Performance Goal),
or of changes in applicable rules, rulings, regulations or other requirements of any
governmental body or securities exchange, accounting principles, law or business conditions.

          (vi) Payment of Performance Compensation Awards.

          (A) Condition to Receipt of Payment. A Participant must be employed by the
Company on the last day of a Performance Period to be eligible for payment in respect of a
Performance Compensation Award for such Performance Period. Notwithstanding the foregoing,
in the discretion of the Committee, Performance Compensation Awards may be paid to
Participants who have retired or whose employment has terminated after the beginning of the
Performance Period for which a Performance Compensation Award is made or to the designee or
estate of a Participant who died prior to the last day of a Performance Period.

          (B) Limitation. A Participant shall be eligible to receive payments in respect
of a Performance Compensation Award only to the extent that (1) the Performance Goals for
such period are achieved and certified by the Committee in accordance with Section
6(e)(vi)(C), and (2) the Performance Formula as applied against such Performance Goals
determines that all or some portion of such Participant’s Performance Compensation Award has
been earned for the Performance Period.

          (C) Certification. Following the completion of a Performance Period, the
Committee shall meet to review and certify in writing whether, and to what extent, the
Performance Goals for the Performance Period have been achieved and, if so, to calculate and
certify in writing that amount of the Performance Compensation Awards earned for the period
based upon the Performance Formula. The Committee shall then determine the actual size of
each Participant’s Performance Compensation Award for the Performance Period and, in so
doing, may apply negative discretion as authorized by Section 6(e)(vi)(D).

          (D) Negative Discretion. In determining the actual size of an individual
Performance Compensation Award for a Performance Period, the Committee may, in its sole and
plenary discretion, reduce or eliminate the amount of the Award earned in the Performance
Period, even if applicable Performance Goals have been attained.

          (E) Timing of Award Payments. The Performance Compensation Awards granted for a
Performance Period shall be paid to Participants as soon as administratively possible
following completion of the certifications required by Section 6(e)(vi)(C), unless the
Committee shall determined that any Performance Compensation Award shall be deferred to a
date no later than the short-term deferral period provided under Section 409A of the Code.

          (F) Discretion. In no event shall any discretionary authority granted to the
Committee by the Plan be used to (1) grant or provide payment in respect of Performance
Compensation Awards for a Performance Period if the Performance Goals for such Performance
Period have not been attained, (2) increase a Performance Compensation Award for any
Participant at any time after the time period prescribed under Section 162(m) of the Code,
or (3) increase a Performance Compensation Award above the maximum amount payable under
Sections 4(a) or 6(g) of the Plan.

11

 

          (f) Performance Units.

          (i) Grant. Subject to the provisions of the Plan, the Committee has sole and
plenary authority to determine the Participants to whom Performance Units shall be granted.

          (ii) Value of Performance Units. Each Performance Unit shall have an initial value
that is established by the Committee at the time of grant. The Committee shall set Performance
Goals in its discretion which, depending on the extent to which they are met during a
Performance Period, will determine the number and value of Performance Units that will be paid
out to the Participant.

          (iii) Earning of Performance Units. Subject to the provisions of the Plan, after
the applicable Performance Period has ended, the holder of Performance Units shall be entitled
to receive a payout of the number and value of Performance Units earned by the Participant over
the Performance Period, to be determined by the Committee, in its sole and plenary discretion,
as a function of the extent to which the corresponding Performance Goals have been achieved. No
Performance Unit under the Plan shall permit a payment to any Participant in excess of
$2,000,000 during any Performance Period.

          (iv) Form and Timing of Payment of Performance Units. Subject to the provisions of
the Plan, the Committee, in its sole and plenary discretion, may pay earned Performance Units in
the form of cash or in Shares (or in a combination thereof) that has an aggregate Fair Market
Value equal to the value of the earned Performance Units at the close of the applicable
Performance Period. Such Shares may be granted subject to any restrictions in the applicable
Award Agreement deemed appropriate by the Committee. The determination of the Committee with
respect to the form and timing of payout of such Awards shall be set forth in the applicable
Award Agreement. If a Performance Unit is intended to qualify as “qualified performance-based
compensation” under Section 162(m) of the Code or “performance based compensation” under Section
409A of the Code, all requirements set forth in Section 6(e) must be satisfied in order for a
Participant to be entitled to payment.

          (g) Cash Incentive Awards. Subject to the provisions of the Plan, the Committee, in
its sole and plenary discretion, has the authority to grant Cash Incentive Awards. The Committee
shall establish Cash Incentive Award levels to determine the amount of a Cash Incentive Award
payable upon the attainment of Performance Goals. No Cash Incentive Award under the Plan for any
Participant shall exceed $2,000,000 during any Performance Period. If a Cash Incentive Award is
intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code
or “performance based compensation” under Section 409A of the Code, all requirements set forth in
Section 6(e) must be satisfied in order for a Participant to be entitled to payment.

          (h) Other Stock-Based Awards. Subject to the provisions of the Plan, the Committee has
the sole and plenary authority to grant to Participants other equity-based or equity-related Awards
(including, but not limited to, Deferred Share Units and fully-vested Shares) in such amounts and
subject to such terms and conditions as the Committee shall determine, provided that any such
Awards must comply, to the extent deemed desirable by the Committee, with Rule 16b-3 and applicable
law.

          (i) Dividend Equivalents. In the sole and plenary discretion of the Committee, an
Award, other than an Option, SAR or Cash Incentive Award, may provide the Participant with
dividends or dividend equivalents, payable in cash, Shares, other securities, other Awards or other
property, on a current or deferred basis, on such terms and conditions as may be determined by the
Committee in its sole and plenary discretion, in accordance with Section 409A of the Code, to the
extent applicable, including, without limitation, payment directly to the Participant, withholding
of such amounts by the Company subject to vesting of the Award or reinvestment in additional
Shares, Restricted Shares or other Awards.

12

 

     SECTION 7. Amendment and Termination.

          (a) Amendments to the Plan. Subject to any government regulation, to any requirement
that must be satisfied if the Plan is intended to be a shareholder approved plan for purposes of
Section 162(m) of the Code and to the rules of the NYSE or any successor exchange or quotation
system on which the Shares may be listed or quoted, the Plan may be amended, modified or terminated
by the Board without the approval of the stockholders of the Company, except that stockholder
approval shall be required for any amendment that would (i) increase the maximum number of Shares
for which Awards may be granted under the Plan (provided, that any adjustment under Section 4(b)
shall not constitute an increase for purposes of this Section 7(a)) or (ii) change the class of
employees or other individuals eligible to participate in the Plan. No modification, amendment or
termination of the Plan may, without the consent of the Participant to whom any Award shall
theretofor have been granted, materially and adversely affect the rights of such Participant (or
his or her transferee) under such Award, unless otherwise provided by the Committee in the
applicable Award Agreement. Notwithstanding the foregoing, the Company reserves the right to amend
the Plan, by action of the Board or the Committee without the consent of any affected Participant,
to the extent deemed necessary or appropriate for purposes of maintaining compliance with Section
409A of the Code.

          (b) Amendments to Awards. The Committee may waive any conditions or rights under,
amend any terms of, or alter, suspend, discontinue, cancel or terminate any Award theretofor
granted, prospectively or retroactively; provided, however, that, except as set forth in the Plan,
unless otherwise provided by the Committee in the applicable Award Agreement, any such waiver,
amendment, alteration, suspension, discontinuance, cancellation or termination that would
materially and adversely impair the rights of any Participant or any holder or beneficiary of any
Award theretofor granted shall not to that extent be effective without the consent of the impaired
Participant, holder or beneficiary. Notwithstanding the foregoing, the Company reserves the right
to amend any Award granted under the Plan, by action of the Board or the Committee without the
consent of any affected Participant, to the extent deemed necessary or appropriate for purposes of
maintaining compliance with Section 409A of the Code.

          (c) Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring
Events. 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(b) or the occurrence of a Change of Control)
affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate,
or of changes in applicable rules, rulings, regulations or other requirements of any governmental
body or securities exchange, accounting principles or law (i) whenever the Committee, in its sole
and plenary discretion, determines that such adjustments are appropriate or desirable, including,
without limitation, providing for a substitution or assumption of Awards, accelerating the
exercisability of, lapse of restrictions on, or termination of, Awards or providing for a period of
time for exercise prior to the occurrence of such event, (ii) if deemed appropriate or desirable by
the Committee, in its sole and plenary discretion, by providing for a cash payment to the holder of
an Award in consideration for the cancellation of such Award, including, in the case of an
outstanding Option or SAR, a cash payment to the holder of such Option or SAR in consideration for
the cancellation of such Option or SAR in an amount equal to the excess, if any, of the Fair Market
Value (as of a date specified by the Committee) of the Shares subject to such Option or SAR over
the aggregate Exercise Price of such Option or SAR, and (iii) if deemed appropriate or desirable by
the Committee, in its sole and plenary discretion, by canceling and terminating any Option or SAR
having a per Share Exercise Price equal to, or in excess of, the Fair Market Value of a Share
subject to such Option or SAR without any payment or consideration therefor.

          (d) Prohibition of Certain Amendments and Adjustments. Absent certain unusual or
nonrecurring events, neither the Board nor the Committee shall, without further approval of the
stockholders of the Company, (i) authorize the amendment of any outstanding Option to reduce the
Exercise Price or (ii) cancel any Option and replace it with an award having a lower Exercise
Price. The foregoing sentence is intended

13

 

to prohibit the repricing of “underwater” Options and shall not be construed to prohibit the
adjustments provided for in Section 7(b) and (c) of this Plan. Furthermore, neither the Board nor
the Committee shall, without further approval of the stockholders of the Company, authorize any
Option grant to provide for automatic “reload” rights, the automatic grant of Options to the
Optionee upon the exercise of Options using Shares or other equity.

     SECTION 8. Change of Control. In the event of a Change of Control after the date of
the adoption of the Plan, unless (i) otherwise provided in the applicable Award Agreement or (ii)
provision is made in connection with the Change of Control for (A) assumption of Awards previously
granted or (B) substitution for previously granted Awards with new awards (which, in the discretion
of the Committee, may have the same vesting schedule as the awards assumed) covering stock of a
successor corporation or its “parent corporation” (as defined in Section 424(e) of the Code) or
“subsidiary corporation” (as defined in Section 424(f) of the Code) with appropriate adjustments as
to the number and kinds of shares and the Exercise Prices, if applicable:

          (a) any outstanding Options or SARs then held by Participants that are unexercisable or
otherwise unvested shall automatically be deemed exercisable or otherwise vested, as the case may
be, as of immediately prior to such Change of Control;

          (b) all Performance Units and Cash Incentive Awards shall be paid out as if the date of the
Change of Control were the last day of the applicable Performance Period and “target” performance
levels had been attained; and

          (c) all other outstanding Awards (i.e., other than Options, SARs, Performance Units and Cash
Incentive Awards) then held by Participants that are unexercisable, unvested or still subject to
restrictions or forfeiture, shall automatically be deemed exercisable and vested and all
restrictions and forfeiture provisions related thereto shall lapse as of immediately prior to such
Change of Control.

Notwithstanding the foregoing, nothing contained in this Section 8 shall affect the Committee’s
authority to make the adjustments provided in Section 7(c) in the event of a Change of Control.

     SECTION 9. General Provisions.

          (a) Nontransferability. Except as otherwise specified in the applicable Award
Agreement, during the Participant’s lifetime each Award (and any rights and obligations thereunder)
shall be exercisable only by the Participant, or, if permissible under applicable law, by the
Participant’s legal guardian or representative, and no Award (or any rights and obligations
thereunder) may be assigned, alienated, pledged, attached, sold or otherwise transferred or
encumbered by a Participant otherwise than by will or by the laws of descent and distribution, and
any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall
be void and unenforceable against the Company or any Affiliate; provided that (i) the designation
of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer
or encumbrance and (ii) the Board or the Committee may permit further transferability, on a general
or specific basis, and may impose conditions and limitations on any permitted transferability;
provided, however, that Incentive Stock Options granted under the Plan shall not be transferable in
any way that would violate Section 1.422-2(a)(2) of the Treasury Regulations. All terms and
conditions of the Plan and all Award Agreements shall be binding upon any permitted successors and
assigns.

          (b) No Rights to Awards. No Participant or other Person shall have any claim to be
granted any Award, and there is no obligation for uniformity of treatment of Participants or
holders or beneficiaries of Awards. The terms and conditions of Awards and the Committee’s
determinations and interpretations with

14

 

respect thereto need not be the same with respect to each Participant and may be made
selectively among Participants, whether or not such Participants are similarly situated.

          (c) 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, the applicable Award Agreement or the rules, regulations and other requirements of
the SEC, the NYSE or any other stock exchange or quotation system upon which such Shares or other
securities are then listed or reported and any applicable Federal or state laws, and the Committee
may cause a legend or legends to be put on any such certificates to make appropriate reference to
such restrictions.

          (d) Withholding. A Participant may be required to pay to the Company or any Affiliate,
and the Company or any Affiliate has the right and 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 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 Committee or the Company to satisfy all obligations for the payment
of such taxes.

          (e) Award Agreements. Each Award hereunder shall be evidenced by an Award Agreement,
which shall be delivered to the Participant and shall specify the terms and conditions of the Award
and any rules applicable thereto, including, but not limited to, the effect on such Award of the
death, disability or termination of employment or service of a Participant and the effect, if any,
of such other events as may be determined by the Committee.

          (f) 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, which may, but need not, provide for the grant of options, restricted stock, shares
and other types of equity-based awards (subject to stockholder approval if such approval is
required), and such arrangements may be either generally applicable or applicable only in specific
cases.

          (g) No Right to Employment. The grant of an Award shall not be construed as giving a
Participant the right to be retained as a director, officer, employee or consultant of or to the
Company or any Affiliate, nor shall it be construed as giving a Participant any rights to continued
service on the Board. Further, the Company or an Affiliate may at any time dismiss a Participant
from employment or discontinue any consulting relationship, free from any liability or any claim
under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement.

          (h) No Rights as Stockholder. No Participant or holder or beneficiary of any Award has
any rights as a stockholder with respect to any Shares to be distributed under the Plan until he or
she has become the holder of such Shares. In connection with each grant of Restricted Shares,
except as provided in the applicable Award Agreement, the Participant shall not be entitled to the
rights of a stockholder in respect of such Restricted Shares. Except as otherwise provided in
Section 4(b), Section 7(c) or the applicable Award Agreement, no adjustments shall be made for
dividends or distributions on (whether ordinary or extraordinary, and whether in cash, Shares,
other securities or other property), or other events relating to, Shares subject to an Award for
which the record date is prior to the date such Shares are delivered.

          (i) Governing Law. The validity, construction and effect of the Plan and any rules and
regulations relating to the Plan and any Award Agreement shall be determined in accordance with the
laws of the State of Delaware, without giving effect to the conflict of laws provisions thereof.

15

 

          (j) 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 the 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 construed or deemed 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.

          (k) Other Laws. The Committee may refuse to issue or transfer any Shares or other
consideration under an Award if, acting in its sole and plenary 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. Without limiting the generality of the foregoing, no Award granted hereunder shall be
construed as an offer to sell securities of the Company, and no such offer shall be outstanding,
unless and until the Committee in its sole and plenary discretion has determined that any such
offer, if made, would be in compliance with all applicable requirements of the U.S. Federal and any
other applicable securities laws.

          (l) 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, on one hand, and a Participant or any other Person, on the other hand. 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 such Affiliate.

          (m) 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 canceled, terminated or otherwise eliminated.

          (n) Requirement of Consent and Notification of Election Under Section 83(b) of the Code or
Similar Provision. No election under Section 83(b) of the Code (to include in gross income in
the year of transfer the amounts specified in Section 83(b) of the Code) or under a similar
provision of law may be made unless expressly permitted by the terms of the applicable Award
Agreement or by action of the Committee in writing prior to the making of such election. If an
Award recipient, in connection with the acquisition of Shares under the Plan or otherwise, is
expressly permitted under the terms of the applicable Award Agreement or by such Committee action
to make such an election and the Participant makes the election, the Participant shall notify the
Committee of such election within ten days of filing notice of the election with the IRS or other
governmental authority, in addition to any filing and notification required pursuant to regulations
issued under Section 83(b) of the Code or other applicable provision.

          (o) Requirement of Notification Upon Disqualifying Disposition Under Section 421(b) of the
Code. If any Participant shall make any disposition of Shares delivered 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) or any successor provision of the Code, such
Participant shall notify the Company of such disposition within ten days of such disposition.

          (p) Compliance with Code Section 409A. The Plan is intended to comply with Section
409A of the Code. Notwithstanding any provision of the Plan to the contrary, the Plan shall be
interpreted, operated and administered consistent with this intent.

16

 

          (q) 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.

     SECTION 10. Term of the Plan.

          (a) Effective Date. The Plan shall be effective as of January 1, 2008, subject to
approval by the holders of the Company’s common stock, in accordance with applicable law and the
listing requirements of the NYSE, at the annual Meeting of Stockholders held on December 5, 2007 or
any adjournment thereof.

          (b) Expiration Date. No Award shall be granted under the Plan after December 31, 2017.
Unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award
granted hereunder 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, nevertheless continue thereafter.

17exv10w46

 

Exhibit 10.46

VISTACARE, INC.

AMENDED AND RESTATED 1998 STOCK OPTION PLAN

(As amended through December 6, 2006)

1. Purposes.

     (a) The purpose of the Plan is to provide a means by which selected Employees and Directors
and Consultants may be given an opportunity to purchase stock of the Company.

     (b) By issuing Common Stock pursuant to Awards granted under the Plan, the Company seeks to
retain the services of persons who are now Employees or Directors or Consultants, to secure and
retain the services of new Employees, Directors and Consultants, and to provide incentives for such
persons to exert maximum efforts for the success of the Company and its Affiliates.

     (c) The Company intends that the Options issued under the Plan shall, in the discretion of the
Board or any Committee to which responsibility for administration of the Plan has been delegated or
any Authorized Officer with authority to make Awards, in each case pursuant to subsection 3(c), be
either Incentive Stock Options or Nonstatutory Stock Options. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and in such
form as issued pursuant to Section 6, and a separate certificate or certificates will be issued for
shares purchased on exercise of each type of Option.

2. Definitions.

     As used herein, the following terms have the meanings set forth below:

     (a) “Affiliate” means any parent corporation or subsidiary corporation, whether now or
hereafter existing, as those terms are defined in Section 424(e) and (f) respectively, or any
successor provision, of the Code.

     (b) “Authorized Officer” shall have the meaning set forth in subsection 3(c).

     (c) “Award” means any Option or Stock Purchase Right granted pursuant to the Plan.

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

     (e) “Cause” shall have the meaning set forth in the applicable Option Agreement or Stock
Purchase Agreement.

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

     (g) “Committee” means a Committee appointed by the Board in accordance with subsection 3(c) of
the Plan.

 

 

     (h) “Common Stock” means the Company’s Class A Common Stock, $.01 par value per share.

     (i) “Company” means VistaCare, Inc.

     (j) “Consultant” means any consultant or adviser if: (i) the consultant or adviser renders
bona fide services to the Company or any of its Affiliates; (ii) the services rendered by the
consultant or adviser are not in connection with the offer or sale of securities in a
capital-raising transaction and do not directly or indirectly promote or maintain a market for the
Company’s securities; and (iii) the consultant or adviser is a natural person who has contracted
directly with the Company or any of its Affiliates to render such services.

     (k) “Continuous Status as an Employee, Director or Consultant” means that the service of an
individual to the Company or an Affiliate of the Company, whether as an Employee, Director or
Consultant, is not interrupted or terminated. The Board, in its sole discretion, may determine
whether Continuous Status as an Employee, Director or Consultant shall be considered interrupted in
the case of: (i) any leave of absence approved by the management of the Company, including sick
leave, military leave, or any other personal leave; or (ii) transfers between the Company,
Affiliates or their successors.

     (l) “Director” means a member of the Board.

     (m) “Employee” means any person, including officers and Directors, employed by the Company or
any Affiliate of the Company. Neither service as a Director nor payment of a director’s fee by the
Company shall be sufficient to constitute “employment” by the Company.

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

     (o) “Fair Market Value” means, as of any date, the value of Common Stock determined as
follows:

          (1) If the Common Stock is listed on any established stock exchange or a national market
system, including without limitation the Nasdaq National Market or the Nasdaq SmallCap Market of
the Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or
the closing bid, if no sales were reported) as quoted on such exchange or system for the last
market trading day prior to the time of determination, as reported in The Wall Street Journal or
such other source as the Board deems reliable;

          (2) If the Common Stock is regularly quoted by a recognized securities dealer but selling
prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked
process for the Common Stock on the last market trading day prior to the day of determination; or

          (3) In the absence of an established market for the Common Stock, the Fair Market Value
thereof shall be determined in good faith by the Board.

2

 

     (p) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

     (q) “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock
Option.

     (r) “Option” means a stock option granted pursuant to the Plan.

     (s) “Option Agreement” means a written agreement between the Company and a Participant
evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be
subject to the terms and conditions of the Plan.

     (t) “Participant” means an Employee, Director or Consultant who holds an outstanding Award.

     (u) “Plan” means this VistaCare, Inc. Amended and Restated 1998 Stock Option Plan, as amended
and/or restated from time to time.

     (v) “Post-Termination Exercise Period” means the period of time commencing on the date the
Participant’s Continuous Status as an Employee, Director or Consultant ceases and ending on the
Termination Date.

     (w) “Purchase Price” means (1) in the case of an Option, the exercise price per share of
Common Stock subject to such Option and (2) in the case of a Stock Purchase Right, the per share
purchase price for shares of Common Stock subject to such Stock Purchase Right.

     (x) “Restricted Shares” means shares of Common Stock acquired pursuant to the exercise of an
Award that are subject to a Right of Repurchase.

     (y) “Right of Repurchase” means the right of the Company to repurchase Restricted Shares
issued pursuant to an Award.

     (z) “Stock Purchase Agreement” means a written agreement between the Company and a Participant
evidencing the terms and conditions of a Stock Purchase Right granted under the Plan. Each Stock
Purchase Agreement shall be subject to the terms and conditions of the Plan.

     (aa) “Stock Purchase Right” means the right of a Participant to purchase Common Stock pursuant
to a Stock Purchase Agreement.

     (bb) “Termination Date” means the date three (3) months after the termination of the
Participant’s Continuous Status as an Employee, Director or Consultant or such later or earlier
date specified in or determined in accordance with the Award prior to which an Award may be
exercised.

3

 

3. Administration.

     (a) The Plan shall be administered by the Board unless and until the Board delegates
administration in accordance with subsection 3(c).

     (b) The Board shall have the power, subject to, and within the limitations of, the express
provisions of the Plan:

          (1) To determine from time to time which of the persons eligible under the Plan shall be
granted Awards; when and how each Award shall be granted; in the case of Options, whether an Option
will be an Incentive Stock Option or a Nonstatutory Stock Option; the provisions of each Award
granted (which need not be identical), including, with respect to Options, the time or times such
Options may be exercised in whole or in part; and the number of shares for which an Award will be
granted to each such person.

          (2) To construe and interpret the Plan and Awards granted under it, and to establish, amend
and revoke rules and regulations for its administration. The Board, in the exercise of this power,
may correct any defect, omission or inconsistency in the Plan or in any Option Agreement or Stock
Purchase Agreement, in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.

          (3) To amend the Plan or an Award as provided in Section 13.

          (4) Generally, to exercise such powers and to perform such acts as the Board deems necessary
or expedient to promote the best interests of the Company which are not in conflict with the
provisions of the Plan.

     (c) The Board may delegate administration of the Plan to a committee (the “Committee”)
consisting of two or more Directors, each of whom is an “outside director” within the meaning of
Section 162(m) of the Code and a “non-employee director” within the meaning of Section 16b-3
promulgated under the Exchange Act. Such Committee, if so appointed, shall have the powers
theretofore possessed by the Board (and references in this Plan to the Board shall thereafter be to
such Committee), subject, however, to such resolutions, not inconsistent with the provisions of the
Plan, as may be adopted from time to time by the Board. The foregoing notwithstanding, the Board
may abolish such Committee at any time and revest in the Board the administration of the Plan. In
addition, the Board (or the Committee, if applicable) may authorize one or more officers of the
Company (each an “Authorized Officer”) to:

          (1) designate Employees (with the exception of Directors) of the Company or any Affiliate of
the Company to whom Awards may be made hereunder, and

          (2) determine the number of shares of Common Stock subject to any such Award,

provided, however, that the resolution adopted by the Board (or the Committee, if applicable)
regarding the appointment of any Authorized Officer shall specify the aggregate number of shares of
Common Stock that may be issued pursuant to Awards designated by such Authorized

4

 

Officer; and provided, further, that an Authorized Officer may not designate himself or herself as
a recipient of any such Award.

4. Shares Subject to the Plan.

     (a) Subject to the provisions of Section 12 relating to adjustments upon changes in the Common
Stock, the Common Stock that may be issued pursuant to Awards shall not exceed in the aggregate
four million (4,000,000) shares. If any Award shall for any reason expire or otherwise terminate,
in whole or in part, without having been exercised in full, the stock not purchased under such
Award shall revert to and again become available for issuance under the Plan. In addition, shares
of Common Stock acquired by the Company pursuant to its exercise of a Right of Repurchase shall
revert to and again become eligible for issuance under the Plan.

     (b) The stock subject to the Plan may be unissued shares or reacquired shares, bought on the
market or otherwise.

     (c) The number of shares of Common Stock for which an Award may be granted in any single
fiscal year of the Company to any participant in the Plan shall not exceed 600,000 shares (the
“Individual Limit” ). The Individual Limit shall be construed and applied consistently with Section
162 (m) of the Code. For purposes of the foregoing limitation, if any Award is canceled, the
canceled Award shall continue to be counted against the Individual Limit. If after grant the
Purchase Price of an Award is modified, the transaction shall be treated as the cancellation of the
Award and the grant of a new Award; in any such case, both the Award that is canceled and the Award
deemed to be granted shall be counted against the Individual Limit.

5. Eligibility to Receive Options.

     (a) Incentive Stock Options may be granted only to eligible Employees. Nonstatutory Stock
Options may be granted only to Employees, Directors or Consultants.

     (b) No person shall be eligible for the grant of an Incentive Stock Option if, at the time of
grant, such person owns (or is deemed to own pursuant to Section 424(d) of the Code) stock
possessing more than ten percent (10%) of the total combined voting power of all classes of stock
of the Company or any of its Affiliates unless the exercise price of such Incentive Stock Option is
at least one hundred ten percent (110%) of the Fair Market Value of such stock at the date of grant
and the Incentive Stock Option is not exercisable after the expiration of five (5) years from the
date of grant. To the extent required by applicable law, the provisions of this subsection 5(b)
shall also apply to the grant of a Nonstatutory Stock Option granted to a ten percent (10%)
stockholder described in the preceding sentence.

6. Option Provisions.

     Each Option shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. The provisions of separate Options need not be identical, but each Option
shall include (through incorporation of provisions hereof by reference in the Option or otherwise)
the substance of each of the following provisions:

5

 

     (a) Term. No Option shall be exercisable after the expiration of ten (10) years from the date
it was granted.

     (b) Price. The exercise price of each Incentive Stock Option shall be not less than one
hundred percent (100%) of the Fair Market Value on the date of grant. The exercise price of each
Nonstatutory Stock Option shall be as determined by the Board at the time such Option is granted.
Notwithstanding the foregoing, the Board may grant an Incentive Stock Option with an exercise price
lower than that set forth above if such Option is granted as part of a transaction to which section
424(a) of the Code applies.

     (c) Consideration. The purchase price of stock acquired pursuant to an Option shall be paid,
to the extent permitted by applicable statutes and regulations, either (i) in cash at the time the
Option is exercised, or (ii) at the discretion of the Board, at the time of the grant of the
Option, (A) by delivery to the Company of other capital stock of the Company, (B) according to a
deferred payment or other arrangement (which may include, without limiting the generality of the
foregoing, the use of other capital stock of the Company) with the person to whom the Option is
granted or to whom the Option is transferred pursuant to subsection 6(d) (but no deferred payment
of the Common Stock’s par value may be made unless permitted by applicable law), or (C) by delivery
to the Company of irrevocable instructions to a broker to (i) either sell the shares subject to the
Option being exercised or hold such shares as collateral for a margin loan and (ii) promptly
deliver to the Company the amount of the sale or loan proceeds required to pay the exercise price
or (D) in any other form of legal consideration that may be acceptable to the Board.

     In the case of any deferred payment arrangement, interest shall be payable at least annually
and shall be charged at the minimum rate of interest necessary to avoid the treatment as interest,
under any applicable provisions of the Code, of any amounts other than amounts stated to be
interest under the deferred payment arrangement.

     (d) Transferability. An Option shall not be transferable except by will, by the laws of
descent and distribution or pursuant to a qualified domestic relations order, and shall be
exercisable during the lifetime of the person to whom the Option is granted only by such person.
The Participant to whom the Option is granted may, by delivering written notice to the Company, in
a form satisfactory to the Company, designate a third party who, in the event of the death of the
Participant, shall thereafter be entitled to exercise the Option.

     (e) Vesting. The total number of shares of stock subject to an Option may, but need not, be
allotted in periodic installments (which may, but need not, be equal). The Option Agreement may
provide that from time to time during each of such installment periods, the Option may become
exercisable (“vest”) with respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period and/or period as to
which the Option became vested but was not fully exercised. The Option may be subject to such other
terms and conditions on the time or times when it may be exercised (which may be based on
performance or other criteria) as the Board may deem appropriate. The provisions of this subsection
6(e) are subject to any Option provisions governing the minimum number of

6

 

shares as to which an Option may be exercised.

     (f) Securities Law Compliance. The Company may require any Participant, or any person to whom
an Option is transferred under subsection 6(d), as a condition of exercising any such Option, (1)
to give written assurances satisfactory to the Company as to the Participant’s knowledge and
experience in financial and business matters and/or to employ a purchaser representative reasonably
satisfactory to the Company who is knowledgeable and experienced in financial and business matters,
and that he or she is capable of evaluating, alone or together with the purchaser representative,
the merits and risks of exercising the Option; and (2) to give written assurances satisfactory to
the Company stating that such person is acquiring the stock subject to the Option for such person’s
own account and not with any present intention of selling or otherwise distributing the stock. The
foregoing requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (i) the issuance of the shares upon the exercise of the Option has been registered
under a then currently effective registration statement under the Securities Act of 1933, as
amended (the “Securities Act” ), or (ii) as to any particular requirement, a determination is made
by counsel for the Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may require the Participant to provide such other
representations, written assurances or information which the Company shall determine is necessary,
desirable or appropriate to comply with applicable securities and other laws as a condition of
granting an Option to such Participant or permitting the Participant to exercise such Option. The
Company may, upon advice of counsel to the Company, place legends on stock certificates issued
under the Plan as such counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer of stock.

     (g) Termination of Continuous Status as an Employee, Director or Consultant. In the event a
Participant’s Continuous Status as an Employee, Director or Consultant terminates (other than upon
the Participant’s death or disability), the Participant may exercise his or her Option (to the
extent that the Participant was entitled to exercise it as of the date of termination) but only
within such period of time ending on the earlier of (i) the Termination Date, or (ii) the
expiration date of the Option as set forth in the Option Agreement (the “Expiration Date” ). If,
after termination, the Participant does not exercise his or her Option within the time specified in
the Option Agreement, the Option shall terminate, and the shares covered by such Option shall
revert to and again become available for issuance under the Plan.

     A Participant’s Option Agreement may also provide that if the exercise of the Option following
the termination of the Participant’s Continuous Status as an Employee, Director or Consultant
(other than upon the Participant’s death or disability) and prior to the Termination Date would be
prohibited at any time solely because the issuance of shares would violate the registration
requirements under the Securities Act, the Termination Date shall be extended to such date that
would allow the Option to be exercisable without violation of such restriction requirements for an
aggregate period equal to the Post-Termination Exercise Period (but in no event after the
Expiration Date).

     (h) Disability of Participant. In the event a Participant’s Continuous Status as an Employee,
Director or Consultant terminates as a result of the Participant’s total and permanent disability

7

 

(as determined by the Board in its sole discretion), the Participant may exercise his or her Option
(to the extent that the Participant was entitled to exercise it as of the date of termination) but
only within such period of time ending on the earlier of (i) the Expiration Date, or (ii) the date
that is the one-year anniversary of the termination of the Participant’s Continuous Status as an
Employee, Director or Consultant. If, after termination, the Participant does not exercise his or
her Option within the time specified herein, the Option shall terminate, and the shares covered by
such Option shall revert to and again become available for issuance under the Plan.

     (i) Death of Participant. In the event of the death of a Participant during, or within a
period specified in the Option Agreement after the termination of, the Participant’s Continuous
Status as an Employee, Director or Consultant, the Option may be exercised by the Participant’s
estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the Option upon the Participant’s death pursuant to subsection 6(d),
(to the extent that the Participant was entitled to exercise it as of the date of termination) but
only within such period of time ending on the earlier of (i) the Expiration Date, or (ii) the date
that is the one-year anniversary of the termination of the Participant’s Continuous Status as an
Employee, Director or Consultant. If, after the Participant’s death, the Option is not exercised
within the time specified herein, the Option shall terminate, and the shares covered by such Option
shall revert to and again become available for issuance under the Plan.

7. Stock Purchase Rights.

     Stock Purchase Rights may be issued either alone, in addition to, or in tandem with Options
granted under the Plan and/or other benefits or awards made outside of the Plan. After the Board
determines that it will offer a Stock Purchase Right under the Plan, the Company shall advise the
prospective Participant in writing of the terms, conditions and restrictions related to the offer,
including the number of shares of Common Stock subject to the Stock Purchase Right, the Purchase
Price and the terms and conditions of the Right of Repurchase applicable thereto and the time
within which such prospective Participant must accept such offer. Each Stock Purchase Right, and
the acceptance of the terms thereof by the Company and the Participant, shall be evidenced by a
Stock Purchase Agreement. Each Stock Purchase Agreement shall contain such terms, provisions and
conditions not inconsistent with the Plan as may be determined by the Board, in its sole
discretion.

8. Right of Repurchase and Restricted Shares.

     (a) Each Option Agreement may, and, unless the Board determines otherwise, each Stock Purchase
Agreement shall, grant the Company a Right of Repurchase exercisable upon the termination of the
Participant’s Continuous Status as an Employee, Director or Consultant for any reason (including
death or disability) or upon the failure to satisfy any performance objectives or other conditions
specified in the applicable Option Agreement or Stock Purchase Agreement. The Right of Repurchase
shall lapse upon such conditions or at such rate as the Board may determine and as shall be set
forth in the applicable Option Agreement or Stock Purchase Agreement. Shares of Common Stock issued
as Restricted Shares may not be sold, assigned, transferred, pledged or otherwise disposed of,
except by will or the laws of descent and distribution, pursuant to a qualified domestic relations
order or as otherwise determined by the

8

 

Board and set forth in the applicable Option Agreement or Stock Purchase Agreement. Any attempt to
dispose of Restricted Shares in contravention of the Right of Repurchase shall be null and void and
without effect.

     (b) The per share purchase price for Restricted Shares repurchased pursuant to a Right of
Repurchase shall be the Purchase Price paid by the Participant for such Restricted Shares, and may
be paid by cancellation of any indebtedness of the Participant to the Company. Notwithstanding the
foregoing, the applicable Option Agreement or Stock Purchase Agreement may provide that the per
share purchase price for Restricted Shares repurchased pursuant to a Right of Repurchase shall be
less than the Purchase Price for such shares if the Participant’s Continuous Status as an Employee,
Director or Consultant is terminated by the Company or an Affiliate for Cause.

     (c) Each certificate for Restricted Shares shall bear an appropriate legend referring to the
Right of Repurchase, together with any other applicable legends, and, upon issuance, shall be
deposited by the stockholder with the Company together with a stock power and such other
instruments of transfer as may be reasonably requested by the Company, duly endorsed in blank, if
appropriate; provided, however, that the failure of the Company or its transfer agent to place
such a legend on a certificate for Restricted Shares shall have no effect on the Right of
Repurchase applicable to such shares. If the Company does not exercise the Right of Repurchase
within the time and in the manner specified in the applicable Option Agreement or Stock Purchase
Agreement, such Right of Repurchase shall terminate and be of no further force and effect.

     (d) The Board may, in its sole discretion, waive the Company’s Right of Repurchase applicable
to any Restricted Shares. Such waiver shall result in the immediate vesting of the Participant’s
interest in the Restricted Shares as to which the waiver applies. Such waiver may be effected at
any time, whether before or after the termination of the Participant’s Continuous Status as an
Employee, Director or Consultant or the attainment or non-attainment of the applicable conditions.

9. Covenants of the Company.

     (a) Notwithstanding the second sentence of Section 14(a) hereof, so long as any Awards remain
outstanding under the Plan, the Company shall keep available the number of shares of Common Stock
required to satisfy such Awards.

     (b) The Company shall seek to obtain from each regulatory commission or agency having
jurisdiction of the Plan such authority as may be required to issue and sell shares of Common Stock
issued pursuant to Awards; provided, however, that this undertaking shall not require the Company
to register under the Securities Act either the Plan, any Award or any Common Stock issued or
issuable pursuant to any such Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for the Company deems
necessary for the lawful issuance and sale of Common Stock issued pursuant to Awards granted under
the Plan, the Company shall be relieved from any liability for failure to issue and sell such
Common Stock unless and until such authority is obtained.

9

 

10. Use of Proceeds.

     Proceeds from the sale of Common Stock pursuant to Awards shall constitute general funds of
the Company.

11. Miscellaneous.

     (a) Acceleration of Vesting of Options. The Board shall have the power to accelerate the time
at which an Option may first be exercised or the time during which an Option or any part thereof
will vest pursuant to subsection 6(e), notwithstanding the provisions in the Option stating the
time at which it may first be exercised or the time during which it will vest. In addition, the
Board shall have the power to waive the Right of Repurchase under any Award, notwithstanding the
provisions of the agreement evidencing such Award.

     (b) No Rights as a Stockholder. Neither a Participant who holds an outstanding Option, nor any
person to whom an Option is transferred under subsection 6(d) shall be deemed to be the holder of,
or to have any of the rights of a holder with respect to, any shares subject to such Option unless
and until such person has satisfied all requirements for exercise of the Option pursuant to its
terms.

     (c) No Retention Rights. Nothing in the Plan or any instrument executed or Award granted
pursuant thereto shall confer upon any Participant any right to continue in the employ of the
Company or any of its Affiliates (or to continue acting as a Director or Consultant) or shall
affect the right of the Company or any Affiliate to terminate the employment of any Employee with
or without Cause, the right of the Board and/or the Company’s stockholders to remove any Director
pursuant to the terms of the Company’s By-Laws and applicable law, or the right to terminate the
relationship of any Consultant pursuant to the terms of such Consultant’s agreement with the
Company or any of its Affiliates.

     (d) Incentive Stock Option Limitation. To the extent that the aggregate Fair Market Value
(determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by any Participant during any calendar year under all plans of the
Company and its Affiliates exceeds one hundred thousand dollars ($100,000), the Options or portions
thereof which exceed such limit (according to the order in which they were granted) shall be
treated as Nonstatutory Stock Options.

     (e) Withholding. To the extent provided by the terms of an Option Agreement or Stock Purchase
Agreement, the Participant may satisfy any federal, state or local tax withholding obligation
relating to the exercise of an Award by any of the following means or by a combination of such
means: (1) tendering a cash payment; (2) authorizing the Company to withhold shares from the shares
of Common Stock otherwise issuable to the Participant as a result of the exercise of the Award; or
(3) delivering to the Company owned and unencumbered shares of the capital stock of the Company.

     (f) Agreement Not to Compete. Any Option Agreement or Stock Purchase Agreement may,

10

 

but need not, provide that at any time that the Participant serves as an Employee, Director or
Consultant of the Company or any of its Affiliates and for a period of one year after the
termination of such service for any reason, the Participant may not directly or indirectly,
individually or as a consultant to, or employee, officer, director, stockholder, partner or other
owner or participant in any business entity, whether for profit or not-for-profit, other than the
Company or an Affiliate, engage in or assist any other person to engage in any business in which
the Company or its Affiliates are engaging or in which the Company or its Affiliates plan to engage
at the time of such Participant’s termination, including but not limited to the provision of
hospice related services, anywhere in the United States of America. In the case of an Option
subject to an Option Agreement that contains such an agreement not to compete, if the Participant
violates such agreement not to compete, the Option shall terminate, and the shares covered by such
Option shall revert to and again become available for issuance under the Plan. In the case of a
Stock Purchase Right subject to a Stock Purchase Agreement that contains such an agreement not to
compete, the violation by the Participant of such agreement not to compete shall (i) entitle the
Company to immediately exercise the Right of Repurchase if the Stock subject to such Stock Purchase
Agreement has been purchased prior to the time of such violation or (ii) result in the immediate
cancellation of the Stock Purchase Right if the Stock subject to such Stock Purchase Agreement has
not been purchased prior to the time of such violation.

12. Adjustments Upon Changes in the Common Stock.

     (a) If any change is made in the Common Stock subject to the Plan, or subject to any Award
(through merger, consolidation, reorganization, reincorporation, recapitalization, stock dividend,
dividend in property other than cash, stock split, liquidating dividend, combination of shares,
exchange of shares, change in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan will be appropriately adjusted, automatically and without
further action by the Board or any other person, in the class(es) and maximum number of shares
subject to the Plan pursuant to subsection 4(a), the Individual Limit set forth in Section 4(c) and
the outstanding Awards will be appropriately adjusted, automatically and without further action by
the Board or any other person, in the Purchase Price and the class(es) and number of shares subject
to such outstanding Awards. The determination of the Board as to the effect of any such adjustment
shall be final, binding and conclusive.

     (b) In the event of: (1) a dissolution, liquidation, or sale of all or substantially all of
the assets of the Company; (2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving corporation but the shares
of the Common Stock outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or otherwise; or (4) the
acquisition by any person, entity or group within the meaning of Section 13(d) or 14(d) of the
Exchange Act, or any comparable successor provisions (excluding any employee benefit plan, or
related trust, sponsored or maintained by the Company or any Affiliate of the Company) of the
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act, or
comparable successor rule) of securities of the Company representing at least fifty percent (50%)
of the combined voting power entitled to vote in the election of directors, then to the extent
permitted by applicable law: (i) any surviving or acquiring corporation or entity shall assume all
outstanding Options and Stock Purchase Rights under the Plan or shall substitute for

11

 

all outstanding Options and Stock Purchase Rights similar options or rights with respect to such
corporation’s or entity’s equity securities (which substitution could take the form of options or
rights to acquire the same consideration paid to the stockholders of the Company in the transaction
described in this subsection 12(b)) for those outstanding under the Plan or (ii) such Awards or
Stock Purchase Rights shall continue in full force and effect. In the event any surviving or
acquiring corporation or entity refuses to assume such Options or Stock Purchase Rights or to
substitute similar options or rights for those outstanding under the Plan, then, with respect to
Options or Stock Purchase Rights held by persons then performing services as Employees, Directors
or Consultants, the time during which such Options or Stock Purchase Rights may be exercised shall
be accelerated prior to such event and the Options or Stock Purchase Rights terminated if not
exercised after such acceleration and at or prior to such event.

13. Amendment of the Plan and Awards.

     (a) The Board at any time, and from time to time, may amend the Plan; provided, however, that
(i) any amendment of Section 13(e) shall require the approval of the Company’s stockholders in
accordance with National Association of Securities Dealers Rule 4350(i)(1)(A), and (ii) any
amendment which requires stockholder approval in order for the Plan to satisfy Section 422 of the
Code (including any increase in the number of shares reserved for issuance under the Plan) shall be
subject to stockholder approval within twelve (12) months before or after the adoption of such
amendment.

     (b) The Board may, in its sole discretion, submit any other amendment to the Plan for
stockholder approval.

     (c) It is expressly contemplated that the Board may amend the Plan in any respect the Board
deems necessary or advisable to provide Participants with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated thereunder relating to
Incentive Stock Options and/or to bring the Plan and/or Incentive Stock Options granted under it
into compliance therewith.

     (d) Rights and obligations under any Award granted before amendment of the Plan shall not be
impaired by any amendment of the Plan without the written consent of the Participant to whom the
Award was granted or the person to whom such Award has been transferred in accordance with the
Plan.

     (e) The Board at any time, and from time to time, may amend the terms of any one or more
Awards, provided, however, that the rights and obligations under any Award shall not be impaired by
any such amendment without the written consent of the Participant to whom the Award was granted or
the person to whom such Award has been transferred in accordance with the Plan; and provided,
further, however, that the Board may not amend any outstanding Option in a manner that would have
the effect of decreasing the exercise price thereof other than pursuant to Section 12.

14. Termination or Suspension of the Plan.

12

 

     (a) The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the
Plan shall terminate on July 17, 2008. No Awards may be granted under the Plan while the Plan is
suspended or after it is terminated.

     (b) Rights and obligations under any Award granted while the Plan is in effect shall not be
impaired by suspension or termination of the Plan, except with the written consent of the
Participant to whom the Award was granted or the person to whom such Award has been transferred in
accordance with the Plan.

15. Authorization of Plan Supplements.

     The Board may from time to time adopt one or more supplements to the Plan for the purpose of
satisfying applicable blue sky, securities or tax laws of various jurisdictions. Any such
supplement shall contain only such provisions as the Board, in its sole discretion, deems necessary
or desirable to satisfy such laws of the applicable jurisdiction. All supplements adopted by the
Board shall be deemed to be part of the Plan, but each supplement shall apply only to Participants
within the affected jurisdiction and the Company shall not be required to provide copies of any
supplements to Participants in any jurisdiction which is not the subject of such supplements.
Capitalized terms used in any supplements without being defined therein shall have the meanings
ascribed to them in the Plan.

16. Effective Dates.

     The Plan initially became effective on July 17, 1998. The Plan was amended and restated
effective as of November 11, 2002. A further amendment and restatement of the Plan was adopted by
the Board on April 12, 2004, and such further amendment and restatement became effective upon its
approval by the stockholders of the Company. The Board amended the Plan on August 10, 2004 to
allow the Board or Committee administering the Plan to authorize one or more officers of the
Company to designate recipients of Awards and determine the number of shares of Common Stock
subject to such Awards. The Board subsequently amended the Plan on December 6, 2006 to permit the
transfer of Options and Restricted Shares pursuant to a qualified domestic relations order.

13

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