Document:

exv10w52

 

Exhibit 10.52

SECOND AMENDMENT TO LEASE

(Mission Ridge)

     THIS SECOND AMENDMENT TO LEASE (“Second Amendment”) is made and entered into as of the
13th day of December, 2007, by and between MISSION RIDGE ASSOCIATES LLC, a Delaware
limited liability company (“Landlord”), and ENSIGN FACILITY SERVICES, INC., a Nevada corporation
(“Tenant”).

R E C I T A L S:

     A. Landlord and Tenant, entered into that certain Office Lease dated as of August 28, 2003
(the “Lease”), as amended by that certain First Amendment to Lease Agreement dated January 15,
2004, whereby Landlord leased to Tenant and Tenant leased from Landlord certain office space
located in that certain building located and addressed at 27101 Puerta Real, Mission Viejo,
California 92691 (the “Building”).

     B. By this Second Amendment, Landlord and Tenant desire to expand the Premises and to
otherwise modify the Lease as provided herein.

     C. Unless otherwise defined herein, capitalized terms as used herein shall have the same
meanings as given thereto in the Lease.

     NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

A G R E E M E N T:

     1. The Premises. Landlord and Tenant hereby agree that pursuant to the Lease,
Landlord currently leases to Tenant and Tenant currently leases from Landlord that certain office
space in the Building containing 15,920 rentable (14,242 usable) square feet located on the fourth
(4th) floor of the Building and commonly known as Suite 450 (the “Original Premises”),
as further described in the Lease.

     2. Expansion of the Premises. Effective as of the Expansion Effective Date (defined
below), the “Premises”, as defined in the Lease, is increased to approximately 20,719 rentable
square feet on the fourth (4th) floor of the Building by the addition of space
containing approximately 4,799 rentable (4,280 usable) square feet described as Suite Nos. 460 and
470 on the fourth (4th) floor of the Building as shown on Exhibit A attached
hereto (the “Expansion Space”). From and after the Expansion Effective Date, the Original Premises
and the Expansion Space, collectively, shall be deemed the Premises, as defined in the Lease and as
used herein. The Lease Term for the Expansion Space shall commence on the Expansion Effective Date
and end on the Lease Expiration Date. The Expansion Space is subject to all the terms and
conditions of the Lease except as expressly modified herein and except that Tenant shall not be
entitled to receive any allowances, abatements or other financial concessions granted with respect
to the Original Premises unless such concessions are expressly provided for herein with respect to
the Expansion Space.

	 	2.1	 	The Expansion Effective Date shall be the later to occur of (i) January 1, 2008
(“Target Expansion Effective Date”), and (ii) the date upon which the Tenant
Improvements (as

 

 

	 	 	 	defined in the “Tenant Work Letter” attached as Exhibit B hereto) in the
Expansion Space have been substantially completed; provided, however, that if
Landlord shall be delayed in substantially completing the Tenant Improvements in the
Expansion Space as a result of the occurrence of a Tenant Delay (defined below),
then, for purposes of determining the Expansion Effective Date, the date of
substantial completion shall be deemed to be the day that said Tenant Improvements
would have been substantially completed absent any such Tenant Delay(s). A “Tenant
Delay” means any act or omission of Tenant or its agents, employees, vendors or
contractors that actually delays substantial completion of the Tenant Improvements,
including, without limitation, the following:

	 	2.1.1	 	Tenant’s failure to furnish information or approvals within
any time period specified in the Lease or this Second Amendment, including the
failure to prepare or approve preliminary or final plans by any applicable due
date;
	 
	 	2.1.2	 	Tenant’s selection of equipment or materials that have long
lead times after first being informed by Landlord that the selection may result
in a delay;
	 
	 	2.1.3	 	Changes requested or made by Tenant to previously approved
plans and specifications;
	 
	 	2.1.4	 	The performance of work in the Expansion Space by Tenant or
Tenant’s contractor(s) during the performance of the Tenant Improvements; or
	 
	 	2.1.5	 	If the performance of any portion of the Tenant Improvements
depends on the prior or simultaneous performance of work by Tenant, a delay by
Tenant or Tenant’s contractor(s) in the completion of such work.

	 	 	 	The Expansion Space shall be deemed to be substantially completed on the date that
Landlord reasonably determines that all Tenant Improvements have been performed (or
would have been performed absent any Tenant Delays), other than any details of
construction, mechanical adjustment or any other matter, the noncompletion of which
does not materially interfere with Tenant’s use of the Expansion Space. The
adjustment of the Expansion Effective Date and, accordingly, the postponement of
Tenant’s obligation to pay rent on the Expansion Space shall be Tenant’s sole remedy
and shall constitute full settlement of all claims that Tenant might otherwise have
against Landlord by reason of the Expansion Space not being ready for occupancy by
Tenant on the Target Expansion Effective Date.
	 
	 	2.2	 	In addition to the postponement, if any, of the Expansion Effective Date as a
result of the applicability of Section 2.1 of this Second Amendment, the Expansion
Effective Date shall be delayed to the extent that Landlord fails to deliver possession
of the Expansion Space for any other reason (other than Tenant Delays), including but
not limited to, holding over by prior occupants. Any such delay in the Expansion
Effective Date shall not subject Landlord to any liability for any loss or damage
resulting therefrom. If the Expansion Effective Date is delayed, the Lease Expiration
Date shall not be similarly extended.

     3. Monthly Base Rent. Notwithstanding anything to the contrary in the Lease, as of
the Expansion Effective Date, Tenant shall pay, in accordance with the provisions of this Section 3
(but subject to Section 4 below), monthly Base Rent for the Expansion Space as follows:

2

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Monthly Base Rent Per
	 	 	 	 	 	 	Rentable Square Foot
	Months	 	Monthly Base Rent	 	of Premises
	Expansion Effective Date -12
	 	$	14,157.05	 	 	$	2.95	 
	13-Lease Expiration Date
	 	$	14,588.96	 	 	$	3.04	 

     Landlord and Tenant acknowledge that the foregoing schedule is based on the assumption that the
Expansion Effective Date is the Target Expansion Effective Date. If the Expansion Effective Date
is other than the Target Expansion Effective Date, the schedule set forth above with respect to the
payment of any installment(s) of monthly Base Rent for the Expansion Space shall be appropriately
adjusted on a per diem basis to reflect the actual Expansion Effective Date, and the actual
Expansion Effective Date shall be set forth in a confirmation letter to be prepared by Landlord.

     4. Base Rent Abatement. Notwithstanding anything above to the contrary and provided
that the Tenant faithfully performs all of the terms and conditions of the Lease (as modified by
this Second Amendment), Landlord hereby agrees to abate Tenant’s obligation to pay Tenant’s monthly
Base Rent for the first (1st) full month following the Expansion Effective Date. During
such abatement period, Tenant shall still be responsible for the payment of all other monetary
obligations under the Lease (as modified by this Second Amendment). In the event of a default by
Tenant under the terms of the Lease (as modified by this Second Amendment) that results in early
termination pursuant to the provisions of Article 19 of the Lease, then as a part of the recovery
set forth in Article 19 of the Lease, Landlord shall be entitled to the recovery of the monthly
Base Rent that was abated under the provisions of this Section 4.

     5. Tenant’s Share of Operating Expenses, Tax Expenses and Utilities Costs; Base Year.
Notwithstanding anything to the contrary in the Lease, for the period commencing with the Expansion
Effective Date and ending on the Lease Expiration Date, Tenant’s Share for the Expansion Space is
4.14%. Tenant’s Share for the Expansion Space and the Original Premises is, collectively, 17.86%.
The Expense Base Year and the Utilities Base Year for the Expansion Space shall be the calendar
year of 2008.

     6. Parking. In addition to the parking passes to which Tenant is entitled under the
Lease, Tenant shall be entitled to four (4) parking passes for every 1,000 usable square foot of
the Expansion Space. Tenant’s use of such parking passes shall be in accordance with, and subject
to, all provision of Article 23 of the Original Lease. In addition, Tenant shall be responsible at
all times for the full amount of any taxes imposed by any governmental authority in connection with
the rental of such parking passes by Tenant or the use of the parking facilities by Tenant.

     7. Improvements to the Expansion Space. Tenant hereby agrees to accept the Expansion
Space in its “AS-IS” condition. Tenant hereby acknowledges that Landlord shall not be obligated to
provide or pay for any improvement work or services related to the improvement of the Expansion
Space, except as may be expressly provided otherwise in this Second Amendment. Landlord shall
perform improvements to the Expansion Space in accordance with the terms of Exhibit B
attached hereto. Tenant also acknowledges that Landlord has made no representation or warranty
regarding the condition of the Expansion Space.

     8. Brokers. Each party represents and warrants that it has had no dealings with any
real estate broker, agent or finder in connection with the Expansion Space except for the Staubach
Company (“Broker”) with this Second Amendment. Tenant further represents and warrants to Landlord
that

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Tenant will not receive (i) any portion of any potential brokerage commission or finder’s fee
payable to Broker in connection with this lease or (ii) any other form of compensation or incentive
from Broker with respect to this Second Amendment. Broker will receive a commission from Landlord,
should an amendment be fully executed by Landlord and Tenant, equal to four (4%) percent of the
total lease consideration. Each party further agrees to defend, indemnify and hold harmless the
other party from and against any claim for commission or finder’s fee by any entity (other than
Broker and the Grubb & Ellis Company) who claims or alleges that they were retained or engaged by
the first party or at the request of such party in connection with this Second Amendment.

     9. Defaults. Tenant hereby represents and warrants to Landlord that, as of the date
of this Second Amendment, Tenant is in full compliance with all terms, covenants and conditions of
the Lease and that there are no breaches or defaults under the Lease by Landlord or Tenant, and
that Tenant knows of no events or circumstances which, given the passage of time, would constitute
a default under the Lease by either Landlord or Tenant.

     10. Signing Authority. Tenant hereby represents and warrants that Tenant is a duly
formed and existing entity qualified to do business in the State of California and that Tenant has
full right and authority to execute and deliver this Second Amendment and that each person signing
on behalf of Tenant is authorized to do so. Tenant hereby represents and warrants that neither
Tenant, nor any persons or entities holding any legal or beneficial interest whatsoever in Tenant,
are (i) the target of any sanctions program that is established by Executive Order of the President
or published by the Office of Foreign Assets Control, U.S. Department of the Treasury (“OFAC”);
(ii) designated by the President or OFAC pursuant to the Trading with the Enemy Act, 50 U.S.C. App.
§ 5, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-06, the Patriot Act,
Public Law 107-56, Executive Order 13224 (September 23, 2001) or any Executive Order of the
President issued pursuant to such statutes; or (iii) named on the following list that is published
by OFAC: “List of Specially Designated Nationals and Blocked Persons.” If the foregoing
representation is untrue at any time during the Extended Lease Term, a default under the Lease will
be deemed to have occurred, without the necessity of notice to Tenant.

     11. Guaranty. At Landlord’s option, this Second Amendment shall be of no force and
effect unless and until accepted in writing by any guarantors of the Lease, who by signing that
certain Reaffirmation of Guaranty of Lease, dated on or about the date hereof, shall agree that
their guaranty shall apply to the Lease as amended herein, unless such requirement is waived by
Landlord in writing.

     12. No Further Modification. Except as set forth in this Second Amendment, all of the
terms and provisions of the Lease shall remain unmodified and in full force and effect.

     13. ERISA. To satisfy compliance with the Employee Retirement Income Security Act of
1974, as amended, Tenant represents and warrants to Landlord and The Prudential Insurance Company
of America, a New Jersey corporation (“Prudential”), that:

               (a) Tenant is not an “employee benefit plan” (as that term is defined in Section 3(3) of
ERISA); and

               (b) Tenant is not acquiring an interest in the Expansion Space as a plan asset subject to
ERISA but for Tenant’s own investment account; and

               (c) Tenant is not an “affiliate” of Prudential as defined in Section IV(b) of PTE 90-1;

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               (d) Tenant is not a “party in interest” (as that term is defined in Section 3(14) of ERISA) to
the Virginia Retirement System; and

               (e) Tenant agrees to keep the identity of the Virginia Retirement System confidential, except
to the extent that Tenant may be required to disclose such information as a result of (i) legal
process, or (ii) compliance with ERISA or other Laws governing Tenant’s operations.

     14. Limitation of Liability. Redress for any claim against Landlord under the Lease
and this Second Amendment shall be limited to and enforceable only against and to the extent of
Landlord’s interest in the Building. The obligations of Landlord under the Lease are not intended
to and shall not be personally binding on, nor shall any resort be had to the private properties
of, any of its trustees or board of directors and officers, as the case may be, its investment
manager, the general partners thereof, or any beneficiaries, stockholders, employees, or agents of
Landlord or the investment manager.

     IN WITNESS WHEREOF, this Second Amendment has been executed as of the day and year first above
written.

	 	 	 	 	 	 	 	 	 	 	 
	“Landlord”:	 	MISSION RIDGE ASSOCIATES LLC,

a Delaware limited liability company
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Legacy Partners Commercial, L.P.,

a California limited partnership,

as Manager and Agent for Owner	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Legacy Partners Commercial, Inc.,

General Partner
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ Debra Smith
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Debra Smith
	 

	 	 	 	 	 	Its:
	 	Executive Vice President

	 	 	 	 	 	 	 	 	 
	“Tenant”:	 	ENSIGN FACILITY SERVICES, INC.,
a Nevada corporation
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Christopher R. Christensen	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Christopher R. Christensen	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Its:
	 	President & CEO	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 

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EXHIBIT A — OUTLINE AND LOCATION OF EXPANSION SPACE

attached to and made a part of the Amendment dated as of December 13, 2007, between

MISSION RIDGE ASSOCIATES LLC, a Delaware limited liability company (“Landlord”), and

ENSIGN FACILITY SERVICES, INC., a Nevada corporation (“Tenant”)

     This Exhibit A is intended only to show the general layout of the Expansion Space as of the
beginning of Expansion Effective Date. It does not in any way supersede any of Landlord’s rights
set forth in the Lease with respect to arrangements and/or locations of public parts of the
Building and changes in such arrangements and/or locations. It is not to be scaled; any
measurements or distances shown should be taken as approximate.

A-1

 

EXHIBIT B — TENANT WORK LETTER

attached to and made a part of the Amendment dated as of December 13, 2007, between

MISSION RIDGE ASSOCIATES LLC, a Delaware limited liability company (“Landlord”), and

ENSIGN FACILITY SERVICES, INC., a Nevada corporation (“Tenant”)

     As used in this Exhibit B, the “Premises” shall be deemed to mean the Expansion Space,
as defined in the Second Amendment to which this Exhibit B is attached.

1. Landlord shall perform improvements to the Premises substantially in accordance with the plans
prepared by Hattox Design Group, dated ___, and attached hereto as Exhibit B-1
(the “Plans”). The improvements to be performed by Landlord in accordance with the Plans are
hereinafter referred to as the “Tenant Improvements.” It is agreed that construction of the Tenant
Improvements will be completed at Landlord’s sole cost and expense (subject to the terms of Section
2 below) using Building standard methods, materials and finishes. Landlord shall enter into a
direct contract for the Tenant Improvements with a general contractor selected by Landlord. In
addition, Landlord shall have the right to select and/or approve of any subcontractors used in
connection with the Tenant Improvements. Landlord’s supervision or performance of any work for or
on behalf of Tenant shall not be deemed a representation by Landlord that such Plans or the
revisions thereto comply with applicable insurance requirements, building codes, ordinances, laws
or regulations, or that the improvements constructed in accordance with the Plans and any revisions
thereto will be adequate for Tenant’s use, it being agreed that Tenant shall be responsible for all
elements of the design of Tenant’s Plans (including, without limitation, compliance with law,
functionality of design, the structural integrity of the design, the configuration of the Premises
and the placement of Tenant’s furniture, appliances and equipment).

2. If Tenant shall request any revisions to the Plans, Landlord shall have such revisions prepared
at Tenant’s sole cost and expense and Tenant shall reimburse Landlord for the cost of preparing any
such revisions to the Plans, plus any applicable state sales or use tax thereon, upon demand.
Promptly upon completion of the revisions, Landlord shall notify Tenant in writing of the increased
cost in the Tenant Improvements, if any, resulting from such revisions to the Plans. Tenant,
within one business day, shall notify Landlord in writing whether it desires to proceed with such
revisions. In the absence of such written authorization, Landlord shall have the option to
continue work on the Premises disregarding the requested revision. Tenant shall be responsible for
any Tenant Delay in completion of the Premises resulting from any revision to the Plans. If such
revisions result in an increase in the cost of Tenant Improvements, such increased costs, plus any
applicable state sales or use tax thereon, shall be payable by Tenant upon demand. Notwithstanding
anything herein to the contrary, all revisions to the Plans shall be subject to the approval of
Landlord.

3. These Exhibits B and B-1 shall not be deemed applicable to any additional space, other
than the Expansion Space contemplated by this Amendment, added to the Premises at any time or from
time to time, whether by any options under the Lease, as amended hereby, or otherwise, or to any
portion of the original Premises or any additions to the Premises in the event of a renewal or
extension of the original Term of the Lease, whether by any options under the Lease or otherwise,
unless expressly so provided in the Lease or any amendment or supplement to the Lease.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

B-1

 

EXHIBIT B-1 — PLANS

attached to and made a part of the Amendment dated as of December 13, 2007, between

MISSION RIDGE ASSOCIATES LLC, a Delaware limited liability company (“Landlord”), and

ENSIGN FACILITY SERVICES, INC., a Nevada corporation (“Tenant”)

B-2

 

REAFFIRMATION OF 

GUARANTY OF LEASE

     THIS REAFFIRMATION OF GUARANTY OF LEASE dated as of December 13, 2007 is made by The Ensign
Group, Inc., a Delaware corporation (“Guarantor”) with respect to that certain Guaranty of Lease
dated as of August 29, 2003 (the “Guaranty”) by Guarantor in favor of MISSION RIDGE ASSOCIATES LLC,
a Delaware limited liability company (“Lessor”) with respect to that certain Lease Agreement dated
August 28, 2003 by and between Mission as “Lessor” and ENSIGN FACILITY SERVICES, INC., a Nevada
corporation (“Lessee”), as Lessee (as the same may have been amended, supplemented or otherwise
modified from time to time, the “Lease”), covering certain office space located in Mission Viejo,
California, as more particularly described in the Lease.

RECITALS

     WHEREAS, Lessor and Lessee desire to amend the Lease upon certain terms and conditions more
fully set forth in that certain Second Amendment to Lease of even date herewith (the “Amendment”);
and

WHEREAS, the Amendment is not effective until Guarantor reaffirms the Guaranty;

     NOW THEREFORE, in consideration of the premises and for other good and valuable consideration,
the receipt and sufficiency of which the Guarantor hereby acknowledges, Guarantor hereby agrees:

REAFFIRMATION

     AS A MATERIAL and necessary inducement to Lessor to fulfill its obligations with respect to
the Amendment, Guarantor hereby unconditionally and irrevocably reaffirms the Guaranty on the same
terms and conditions as set forth therein and confirms that Guarantor’s obligations under the
Guaranty shall and do extend to Lessee’s obligations under the Amendment, including but not limited
to the payment of rent and all other sums now or hereafter becoming due or payable under the Lease,
as amended by the Amendment.

     EXECUTED as of this 13th day of December, 2007.

	 	 	 	 	 
	 	THE ENSIGN GROUP, INC., 

a Delaware corporation 

 	 
	 	By:  	/s/ Alan J. Norman
 	 
	 	 	Alan J. Norman                       	 
	 	 	Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	            /s/ Gregory K. Stapley
 	 
	 	 	Gregory K. Stapley                   	 
	 	 	Vice Presidentexv10w30

 

 Exhibit
10.30

APRIA HEALTHCARE GROUP INC.

2003 PERFORMANCE INCENTIVE PLAN

STOCK APPRECIATION RIGHTS AWARD AGREEMENT

          THIS STOCK APPRECIATION RIGHTS AWARD AGREEMENT (this “Award Agreement”) dated                      by and between APRIA HEALTHCARE GROUP INC., a Delaware corporation (the “Corporation”), and
                     (the “Grantee”) evidences the award (the “Award”) granted by the
Corporation to the Grantee of the number of stock appreciation rights (the “SARs”) first set forth
below.

	 	 	 	 	 	 	 
	Number of SARs:1

	 	 	 	 	 	Award Date:                     
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Base Price per SAR:1

	 	                    	 	 	 	Expiration Date:1,2                      

Vesting1,2 The Award shall become vested as to one-fourth of the total
number of SARs subject to the Award on each of the first, second, third and fourth anniversaries of the Award Date.

          The Award is granted under the Apria Healthcare Group Inc. 2003 Performance Incentive Plan
(the “Plan”) and subject to the Terms and Conditions of Stock Appreciation Rights (the “Terms”)
attached to this Award Agreement (incorporated herein by this reference) and to the Plan. The
Award has been granted to the Grantee in addition to, and not in lieu of, any other form of
compensation otherwise payable or to be paid to the Grantee. Capitalized terms are defined in the
Plan if not defined herein. The parties agree to the terms of the Award set forth herein. The
Grantee acknowledges receipt of a copy of the Terms, the Plan and the Prospectus for the Plan.

	 	 	 	 	 	 	 
	“GRANTEE”	 	APRIA HEALTHCARE GROUP INC.
	 	 	a Delaware corporation
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Signature

	 	By:
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Print
	 	Name:	 	 
	 	 	 	 	 	 	 
	Print Name
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 	 	 	 	 

CONSENT OF SPOUSE

          In consideration of the Corporation’s execution of this Award Agreement, the undersigned
spouse of the Grantee agrees to be bound by all of the terms and provisions hereof and of the Plan.

	 	 	 	 	 
	 

	 	 	 	 
	 	 	 
	Signature of Spouse

	 	Date	 	 

 

			
	1	 	Subject to adjustment under Section 7.1
of the Plan.
	 
	2	 	Subject to early termination under
Section 4 of the Terms and Section 7.4 of the Plan.

 

 

TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS

	1.	 	Vesting; Limits on Exercise.

          The Award shall vest and become exercisable in percentage installments of the aggregate number
of SARs subject to the Award as set forth on the cover page of this Award Agreement. The SARs may
be exercised only to the extent the SARs are vested and exercisable.

	 	•	 	Cumulative Exercisability. To the extent that the SARs are vested and
exercisable, the Grantee has the right to exercise the SARs (to the extent not
previously exercised), and such right shall continue, until the expiration or earlier
termination of the SARs.
	 
	 	•	 	No Fractional SARs. Fractional SARs shall be disregarded, but may be
cumulated.
	 
	 	•	 	Minimum Exercise. No fewer than 100 SARs (subject to adjustment under
Section 7.1 of the Plan) may be exercised at any one time, unless the number
exercised is the total number at the time exercisable under the Award.

	2.	 	Continuance of Employment/Service Required; No Employment/Service Commitment.

          The vesting schedule requires continued employment or service through each applicable vesting
date as a condition to the vesting of the applicable installment of the Award and the rights and
benefits under this Award Agreement. Employment or service for only a portion of the vesting
period, even if a substantial portion, will not entitle the Grantee to any proportionate vesting or
avoid or mitigate a termination of rights and benefits upon or following a termination of
employment or services as provided in Section 4 below or under the Plan.

          Nothing contained in this Award Agreement or the Plan constitutes a continued employment or
service commitment by the Corporation or any of its Subsidiaries, affects the Grantee’s status, if
he or she is an employee, as an employee at will who is subject to termination without cause,
confers upon the Grantee any right to remain employed by or in service to the Corporation or any
Subsidiary, interferes in any way with the right of the Corporation or any Subsidiary at any time
to terminate such employment or service, or affects the right of the Corporation or any Subsidiary
to increase or decrease the Grantee’s other compensation.

	3.	 	Exercise and Payment of SARs.

          3.1 Method of Exercise. The SARs shall be exercisable by the delivery to the Secretary of the
Corporation (or such other person as the Administrator may require pursuant to such administrative
exercise procedures as the Administrator may implement from time to time) of a written notice
stating the number of SARs to be exercised pursuant to the Award or by the completion of such other
administrative exercise procedures as the Administrator may require from time to time. If the
Grantee is at the relevant time subject to the insider trading policies of the Corporation, the
SARs shall be exercised only during a window period in which trades in the equity securities of the
Corporation by the Grantee are permitted under such policies.

1

 

          3.2 Payment of SARs.

          (A) Amount. Upon the exercise of the SARs and the attendant surrender of an
exercisable portion of the Award, the Grantee will be entitled to receive payment of an
amount (subject to the tax withholding provisions of Section 3.3) determined by
multiplying:

	 	•	 	the difference (but not less than zero) obtained by subtracting the Base
Price of the SARs being exercised from the per-share fair market value
(determined in accordance with the applicable provisions of the Plan) of the
Common Stock of the Corporation as of the date of exercise (the “Exercise
Date”), by
	 
	 	•	 	the number of SARs being exercised.

          (B) Form of Payment. The amount determined under Section 3.2(A) will
be paid to the Grantee on or as soon as administratively practicable after the Exercise Date
by delivery to the Grantee of a number of shares of Common Stock (either by delivering one
or more certificates for such shares or by entering such shares in book entry form, as
determined by the Corporation in its discretion) equal to (i) the amount of the payment
determined under Section 3.2(A), divided by (ii) the fair market value (determined
in accordance with the applicable provisions of the Plan) of a share of Common Stock as of
the Exercise Date. The Corporation’s obligation to deliver shares of Common Stock or
otherwise make payment with respect to the SARs is subject to the condition precedent that
the Grantee or other person entitled under the Plan to receive any shares with respect to
the SARs deliver to the Corporation any representations or other documents or assurances
required pursuant to Section 8.1 of the Plan. The Grantee shall have no further
rights with respect to any SARs that are paid or that terminate pursuant to Section
4.

          (C) SARs Not Funded. SARs payable under this Award Agreement will be paid from
the general assets of the Corporation, and no special or separate reserve, fund or deposit
will be made to assure payment of the SARs. Neither this Award Agreement nor any action
taken pursuant to the provisions of this Award Agreement will create, or be construed to
create, a trust of any kind or a fiduciary relationship between the Corporation and the
Grantee (or any other person). To the extent that the Grantee (or any permitted transferee)
acquires a right to receive payment pursuant to any SAR hereunder, such right will be no
greater than the right of any unsecured general creditor of the Corporation.

          3.3 Tax Withholding. Subject to Section 8.5 of the Plan, upon any distribution of
Common Stock in respect of the SARs, the Corporation shall, to the extent it is legally permitted
to do so, automatically reduce the number of shares to be delivered by (or otherwise reacquire) the
appropriate number of whole shares, valued at their then fair market value (with the “fair market
value” of such shares determined in accordance with the applicable provisions of the Plan), to
satisfy any withholding obligations of the Corporation or its Subsidiaries with respect to such
distribution of shares at the minimum applicable withholding rates unless the Grantee has made
other arrangements approved by the Administrator to provide for such withholding. In the

2

 

event that the Corporation cannot legally satisfy such withholding obligations by such
reduction of shares, or in the event of a cash payment or any other withholding event in respect of
the SARs, the Corporation (or a Subsidiary) shall be entitled to require a cash payment by or on
behalf of the Grantee and/or to deduct from other compensation payable to the Grantee any sums
required by federal, state or local tax law to be withheld with respect to such distribution or
payment.

	4.	 	Early Termination of Award.

          4.1 Possible Termination of Award upon Change in Control. The Award is subject to termination
in connection with a Change in Control Event or certain similar reorganization events as provided
in Section 7.4 of the Plan, provided that the then outstanding and otherwise unvested
portion of the Award shall have become fully vested as required or contemplated by Section
7.2 or 7.3 of the Plan.

          4.2 Termination of Award upon a Termination of Grantee’s Employment or Services. Subject to
earlier termination on the Expiration Date of the Award or pursuant to Section 4.1 above,
if the Grantee ceases to be employed by or ceases to provide services to the Corporation or a
Subsidiary, the following rules shall apply (the last day that the Grantee is employed by or
provides services to the Corporation or a Subsidiary is referred to as the Grantee’s “Severance
Date”):

	 	•	 	other than as expressly provided below in this Section 4.2: (a) the Grantee
will have until the date that is 90 days after his or her Severance Date to exercise
the Award (or portion thereof) to the extent that it was vested on the Severance Date,
(b) the Award, to the extent not vested on the Severance Date, shall terminate on the
Severance Date, and (c) the Award, to the extent exercisable for the 90-day period
following the Severance Date and not exercised during such period, shall terminate at
the close of business on the last day of the 90-day period;
	 
	 	•	 	if the termination of the Grantee’s employment is the result of the Grantee’s
voluntary Retirement (as defined below and other than a termination by the Corporation
or a Subsidiary for Cause as provided below), then (a) the Grantee will have until the
date that is 3 years after his or her Severance Date to exercise the Award (or portion
thereof) to the extent that it was vested on the Severance Date, (b) the Award, to the
extent not vested on the Severance Date, shall terminate on the Severance Date, and (c)
the Award, to the extent exercisable for the 3-year period following the Severance Date
and not exercised during such period, shall terminate at the close of business on the
last day of the 3-year period;
	 
	 	•	 	if the termination of the Grantee’s employment is the result of the Grantee’s death
or Disability (as defined below), then (a) the Grantee (or his beneficiary or personal
representative, as the case may be) will have until the date that is 1 year after the
Grantee’s Severance Date to exercise the Award (or portion thereof) to the extent that
it was vested on the Severance Date, (b) the Award, to the extent not vested on the
Severance Date, shall terminate on the Severance Date, and (c) the Award, to the extent
exercisable for the 1-year period following the Severance Date and not

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	 	 	 	exercised during such period, shall terminate at the close of business on the last day
of the 1-year period;

	 	•	 	if the termination of the Grantee’s employment is the result of a termination by the
Corporation or a Subsidiary for Cause, the Award (whether vested or not) shall
terminate on the Severance Date.

          In all events, the Award is subject to earlier termination on the Expiration Date of the Award
or as contemplated by Section 4.1. The Administrator shall be the sole judge of whether
the Grantee continues to render employment or services for purposes of this Award Agreement.

          Notwithstanding the foregoing (including, for purposes of clarity, notwithstanding any
provision above that would have otherwise resulted in the termination of the outstanding and
unvested portion of the Award on the Grantee’s Severance Date), the then outstanding and otherwise
unvested portion of the Award shall be deemed to have been fully vested immediately prior to the
Grantee’s Severance Date in the event that the Grantee incurs a Qualifying Termination. The
Grantee shall be deemed to have incurred a “Qualifying Termination” for this purpose if any of the
following events occur:

	 	(a)	 	the Grantee’s Severance Date is the result of a termination of employment by
the Corporation or a Subsidiary without Cause within the period that ends with a Change
in Control Event and begins with the first to occur of (i) the initial public
announcement of the Change in Control Event, or (ii) the 90th day preceding the Change
in Control Event,
	 
	 	(b)	 	the Grantee’s Severance Date is the result of a termination of employment by
the Corporation or a Subsidiary for any reason other than Cause (and other than due to
the Grantee’s death or Disability) upon or at any time within two years following a
Change in Control Event, or
	 
	 	(c)	 	the Grantee’s Severance Date is the result of a termination of employment by
the Grantee for Good Reason upon or at any time within two years following a Change in
Control Event.

In the event that the Grantee’s Severance Date is more than 90 days preceding a Change in Control
Event (such that the vested portion of the Award generally would have otherwise terminated before
the Change in Control Event) and the Grantee is entitled to deemed accelerated vesting pursuant to
clause (a) above, then, as to any portion of the Award that was deemed to become vested pursuant to
clause (a) above, such portion of the Award shall be deemed to have not terminated prior to the
closing of the Change in Control Event and the Grantee shall be afforded a reasonable opportunity
to exercise such portion of the Award upon or immediately prior to the Change in Control Event.

          For purposes of the Award, “Retirement” means a termination of employment by the Grantee that
occurs both (a) upon or after the Grantee’s attainment of age 55 and (b) upon or after the date
when the sum of the Grantee’s age and the Grantee’s years of service to the

4

 

Corporation and its Subsidiaries (such years of service determined in accordance with the
rules for determining years of service under the Corporation’s 401(k) Plan) is at least 60.

          For purposes of the Award, “Cause” means the occurrence of either or both of the following:
(a) the Grantee’s conviction for committing an act of fraud, embezzlement, theft, or other act
constituting a felony (other than traffic related offenses or as a result of vicarious liability);
or (b) the willful engaging by the Grantee in misconduct that is significantly injurious to the
Corporation. However, no act or failure to act, on the Grantee’s part shall be considered
“willful” unless done, or omitted to be done, by the Grantee not in good faith and without
reasonable belief that the Grantee’s action or omission was in the best interest of the
Corporation.

          For purposes of the Award, “Disability” means a permanent disability (within the meaning of
Section 22(e)(3) of the Code or as otherwise determined by the Administrator).

          For purposes of the Award, “Good Reason” means, without the Grantee’s express written consent,
the occurrence of any one or more of the following: (a) a material reduction in the nature or
status of the Grantee’s authorities, duties, and/or responsibilities, (when such authorities,
duties, and/or responsibilities are viewed in the aggregate) from their level in effect on the day
immediately prior to the Change in Control Event; (b) a reduction in the Grantee’s base salary from
its highest level in effect at any point in the three months preceding the Change in Control Event;
a significant reduction in the Grantee’s aggregate incentive opportunities under the Corporation’s
short and/or long-term incentive programs, as such opportunities exist immediately prior to the
Change in Control Event; (3) the failure of the Corporation to maintain the Grantee’s relative
level of coverage and accruals under the Corporation’s employee benefit and/or retirement plans,
policies, practices, or arrangements in which the Grantee participates immediately prior the Change
in Control Event (both in terms of the amount of benefits provided, and amounts accrued) (for this
purpose, the Corporation may eliminate and/or modify existing programs and coverage levels;
provided, however, that the Grantee’s level of coverage under all such programs must be at least as
great as is provided to executives who have the same or lesser levels of reporting responsibilities
within the Corporation’s organization); or (4) the Grantee is informed by the Corporation that his
or her principal place of employment for the Corporation will be relocated to a location that is
greater than fifty (50) miles away from the Grantee’s principal place of employment for the
Corporation immediately prior to the Change in Control Event)

	5.	 	Non-Transferability.

          The Award and any other rights of the Grantee under this Award Agreement or the Plan are
nontransferable and exercisable only by the Grantee, except as set forth in Section 5.7 of
the Plan.

	6.	 	Notices.

          Any notice to be given under the terms of this Award Agreement shall be in writing and
addressed to the Corporation at its principal office to the attention of the Secretary, and to the
Grantee at the address last reflected on the Corporation’s payroll records, or at such other
address

5

 

as either party may hereafter designate in writing to the other. Any such notice shall be
delivered in person or shall be enclosed in a properly sealed envelope addressed as aforesaid,
registered or certified, and deposited (postage and registry or certification fee prepaid) in a
post office or branch post office regularly maintained by the United States Government. Any such
notice shall be given only when received, but if the Grantee is no longer employed by the
Corporation or a Subsidiary, shall be deemed to have been duly given five business days after the
date mailed in accordance with the foregoing provisions of this Section 6.

	7.	 	Plan.

          The Award and all rights of the Grantee under this Award Agreement are subject to the terms
and conditions of the Plan, incorporated herein by this reference. In the event of a conflict or
inconsistency between the terms and conditions of this Award Agreement and of the Plan, the terms
and conditions of the Plan shall govern. The Grantee agrees to be bound by the terms of the Plan
and this Award Agreement (including these Terms). The Grantee acknowledges having read and
understanding the Plan, the Prospectus for the Plan, and this Award Agreement and having had ample
opportunity to consult (to the extent the Grantee has determined it appropriate to do so) with his
or her own legal, tax and financial advisors regarding the Award. Unless otherwise expressly
provided in other sections of this Award Agreement, provisions of the Plan that confer
discretionary authority on the Board or the Administrator do not and shall not be deemed to create
any rights in the Grantee unless such rights are expressly set forth herein or are otherwise in the
sole discretion of the Board or the Administrator so conferred by appropriate action of the Board
or the Administrator under the Plan after the date hereof.

	8.	 	Entire Agreement.

          This Award Agreement (including these Terms and any other document expressly referred to
herein) and the Plan together constitute the entire agreement and supersede all prior
understandings and agreements, written or oral, of the parties hereto with respect to the subject
matter hereof. The Plan and this Award Agreement may be amended pursuant to Section 8.6 of the
Plan. Such amendment must be in writing and signed by the Corporation. The Corporation may,
however, unilaterally waive any provision hereof in writing to the extent such waiver does not
adversely affect the interests of the Grantee hereunder, but no such waiver shall operate as or be
construed to be a subsequent waiver of the same provision or a waiver of any other provision
hereof.

	9.	 	Governing Law.

          This Award Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Delaware without regard to conflict of law principles thereunder.

	10.	 	Effect of this Agreement.

          Subject to the Corporation’s right to terminate the Award pursuant to Section 7.2 of the Plan,
this Award Agreement shall be assumed by, be binding upon and inure to the benefit of any successor
or successors to the Corporation.

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	11.	 	Counterparts.

          This Award Agreement may be executed simultaneously in any number of counterparts, each of
which shall be deemed an original but all of which together shall constitute one and the same
instrument.

	12.	 	Section Headings.

          The section headings of this Award Agreement are for convenience of reference only and shall
not be deemed to alter or affect any provision hereof.

	13.	 	Arbitration.

          Any dispute or controversy arising under or in connection with this Award Agreement shall be
settled exclusively by arbitration, conducted before a single neutral arbitrator in accordance with
the American Arbitration Association’s National Rules for Resolution of Employment Disputes as then
in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction.
The fees and expenses of the arbitrator shall be borne by the Company.

	14.	 	[Stock Ownership Requirements.

          The Award and all rights of Grantee under this Award Agreement or in connection with any
Common Stock received pursuant to this Award Agreement are and shall be subject to, and Grantee
agrees to be bound by, all of the terms and conditions of the Corporation’s Stock Ownership
Requirements as in effect from time to time.] [provision included in agreements for Senior Vice
Presidents and above]

	15.	 	[Agreements Regarding Noncompetition and Nonsolicitation.

          Notwithstanding anything else contained herein to the contrary, the right of the Grantee to
the Award, as well as the right of the Grantee to or with respect to any Common Stock or cash that
is payable or has, at the relevant time, previously been paid with respect to the Award (or any
consideration received in respect thereof, as the case may be) is subject to the terms and
conditions of the Grantee’s “Noncompetition and Nonsolicitation Agreement” with the Corporation (or
any similar or successor agreement, as applicable), including any such agreement that may be
entered into after the Award Date (the Grantee’s “Noncompetition and Nonsolicitation Agreement”).
This Award Agreement is one of the Grantee’s Incentive Compensation Agreements as defined in such
Noncompetition and Nonsolicitation Agreement. By accepting the Award, and again by accepting any
payment of Common Stock or cash with respect to the Award, the Grantee affirms his or her
representations, covenants and agreements set forth in his or her Noncompetition and
Nonsolicitation Agreement and agrees that his or her rights with respect to the Award and any such
payment (or any consideration received in respect thereof, as the case may be) are and shall
continue thereafter to be subject to such Noncompetition and Nonsolicitation Agreement. ]
[provision included in agreements for Division Vice Presidents and above]

7

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