Document:

exv10w1

 

Exhibit 10.1

AMENDED AND RESTATED VNUS SEVERANCE PLAN

FOR MANAGEMENT AND KEY EMPLOYEES

     The Board of Directors of VNUS Medical Technologies, Inc., a Delaware corporation (the
“Company”) has determined that it is in the best interests of the Company and its stockholders to
secure the continued services, dedication and objectivity of certain officers and employees of the
Company without concern as to whether such officers or employees might be hindered or distracted by
personal uncertainties and risks in connection with a Change of Control. To encourage the full
attention and dedication to the Company by such officers and employees, the Board of Directors of
the Company has authorized the Company to adopt this Amended and Restated VNUS Severance Plan (the
“Plan”).

	 	1.	 	Definitions. As used in this Plan, the following terms shall have the respective meanings
set forth below:
	 
	 	(a)	 	“Administrator” means the person designated by the Board as the administrator of this
Plan.
	 
	 	(b)	 	“Base Salary” means the Participant’s annual rate of base salary in effect immediately
prior to the Effective Date.
	 
	 	(c)	 	“Board” means the Board of Directors of the Company.
	 
	 	(d)	 	“Bonus” means the Participant’s target bonus opportunity determined immediately prior to
the Effective Date under the Company’s annual bonus plan.
	 
	 	(e)	 	“Cause” means (1) the willful and deliberate failure by a Participant to perform his or
her duties and responsibilities (other than as a result of incapacity due to physical or mental
illness) which is not remedied in a reasonable period of time after receipt of written notice from
the Company specifying such failure, (2) willful misconduct by a Participant which is demonstrably
injurious to the business or reputation of the Company, or (3) a Participant’s conviction of, or
plea of guilty or nolo contendere to, a felony or other crime involving moral turpitude. The
Company must notify such Participant that it believes “Cause” has occurred within ninety (90) days
of its knowledge of the event or condition constituting Cause or such event or condition shall not
constitute Cause hereunder.
	 
	 	(f)	 	“Change of Control” means the occurrence of any one of the following events:

	 	(i)	 	any “person” (as such term is used in Section 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”)), is or becomes the “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly of securities of the Company
representing 50% or more of the combined voting power of the Company’s then outstanding securities;
or
	 
	 	(ii)	 	during any period of two consecutive years (not including any period prior to the
execution of this Agreement) individuals who at the beginning of such period constitute the Board
and any new director whose election by the Board or nomination for election by the Company’s
shareholders was approved by a vote of at least two-thirds (2/3) of the directors at the beginning
of the period or whose election or nomination for election was previously so approved, cease for
any reason to constitute a majority thereof; or
	 
	 	(iii)	 	the consummation of a merger, consolidation, statutory share exchange or similar form of
corporate transaction involving the Company or any of its subsidiaries that requires the approval
of the Company’s stockholders, whether for such transaction or the issuance of securities in the
transaction (a “Reorganization”), or sale or other disposition of all or substantially all of the
Company’s assets to an entity that is not wholly owned by the Company (a “Sale”), unless
immediately following such Reorganization or Sale, more than 50% of the total voting power (in
respect of the election of directors, or similar officials in the case of an entity other than a
corporation) of either (x) the surviving corporation or entity resulting from such Reorganization
or the entity which has acquired all or substantially all of the assets of the Company (in either
case, the “Surviving Entity”), or (y) if applicable, the ultimate parent entity that directly or
indirectly has beneficial ownership of 50% or more of the total voting power (in respect of the
election

 

 

of directors, or similar officials in the case of an entity other than a corporation) of the
Surviving Entity (the “Parent Entity”), is represented by Company voting securities that were
outstanding immediately prior to such Reorganization or Sale (or, if applicable, is represented by
shares into which such Company voting securities were converted pursuant to such Reorganization or
Sale), and such voting power among the holders thereof is in substantially the same proportion as
the voting power of such Company voting securities among the holders thereof immediately prior to
the Reorganization or Sale, or the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company.

	 	(g)	 	“Company” means VNUS Medical Technologies, Inc., a Delaware corporation and any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by operation of law, or otherwise.
	 
	 	(h)	 	“Date of Termination” means the date on which a Participant’s employment with the Company
terminates.
	 
	 	(i)	 	“Effective Date” means the date on which a Change in Control occurs.
	 
	 	(j)	 	“Good Reason” means the occurrence of any of the following without the Participant’s
express written consent: (1) any reduction in a Participant’s annual rate of base salary in effect
immediately prior to the Effective Date, as such may be increased thereafter, (2) the termination
or material reduction of the levels of pension and welfare benefits that were provided to a
Participant immediately prior to the Effective Date, as such may be increased thereafter, (3) the
requirement by the Company that the Participant have his principal location of work changed to any
location that is in excess of 25 miles from its location on the Effective Date, or (4) with respect
to Participants that are employees of the Company at the vice president level and above, removal of
duties customarily assigned to an employee with such Participant’s title, or a substantial adverse
alteration in the nature or status of such Participant’s duties; provided, however, that a
significant reduction in job responsibility and/or authority shall not be deemed to have occurred
simply by virtue of a Change of Control, the fact that the Company becomes a subsidiary of another
entity or the Company’s status changing from publicly-traded to privately-held, as a result of the
Change in Control.
	 
	 	(k)	 	“Participant” means the CEO, vice presidents, directors and managers of the Company, other
than those persons whose most recent performance evaluation is below standard.
	 
	 	(l)	 	“Plan” means this VNUS Severance Plan as set forth herein and as amended from time to
time.
	 
	 	(m)	 	“Qualifying Termination” means the termination of a Participant’s employment by the
Company other than for Cause or by a Participant for Good Reason, which termination occurs during a
Termination Period.
	 
	 	(n)	 	“Separation Benefit” means the benefit payable in accordance with Section 2(a)(1) of this
Plan.
	 
	 	(o)	 	“Service” means a Participant’s service with the Company.
	 
	 	(p)	 	“Termination Period” means, with respect to the occurrence of a Change of Control, the
period of time beginning with the Effective Date and ending on the two-year anniversary of the
Effective Date.
	 
	 	2.	 	Payments Upon Termination of Employment.
	 
	 	(a)	 	If, during a Termination Period, the employment of a Participant who was a Participant at
the Effective Date for such Termination Period is terminated by reason of a Qualifying Termination,
such Participant shall be entitled to receive:

	 	(i)	 	(A) if such termination occurs on or before the one year anniversary of the Effective
Date, a lump sum payment equal to the percent of his or her Base Salary and Bonus shown in column A
below, or (B) if such termination occurs on a date following the one year anniversary of the
Effective Date but prior to the two year anniversary of the Effective Date, a lump sum payment
equal to the percent of his or her Base Salary and Bonus shown in column B below;

 

 

	 	(ii)	 	continued coverage under any and all life, medical, dental, vision and disability
insurance in which such Participant was participating immediately prior to the Effective Date. Such
benefits will continue (A) if such termination occurs on or before the one year anniversary of the
Effective Date, for the number of months shown in column A below following the Termination Date or
(B) if such termination occurs after the one year anniversary of the Effective Date but prior to
the two year anniversary of the Effective Date, for the number of months shown in column B below
following the Termination Date; provided, however, that upon the Participant’s acceptance of
comparable employment, such continued coverage under plans and programs of the Company shall be
secondary to the benefits available, if any, from the benefit plans provided by the Participant’s
new employer; and
	 
	 	(iii)	 	full vesting and immediate exercisability of any outstanding stock options or restricted
stock units held by the Participant.
	 
	 	(iv)	 	immediate lapsing of all repurchase rights relative to shares held by the Participant.

	 	 	 	 	 
	 	 	A	 	B
	 	 	Qualifying Termination	 	Qualifying Termination
	 	 	Within first year of	 	Between 1 and 2 years
	 	 	Change of Control	 	after Change of Control
	CEO & vice presidents

	 	100% of Base Salary & Bonus
12 months of benefits
	 	67% of Base Salary & Bonus
8 months of benefits
	Directors

	 	50% of Base Salary & Bonus

6 months of benefits
	 	33% of Base Salary & Bonus

4 months of benefits
	Managers

	 	33% of Base Salary & Bonus

4 months of benefits
	 	25% of Base Salary & Bonus

3 months of benefits

	 	(b)	 	Lump sum payments of amounts due a Participant pursuant to this Section 2 shall be payable
within ten (10) working days following the Participant’s Date of Termination. The benefits
described in this Section 2 shall be payable in addition to, and not in lieu of, all other accrued,
vested or deferred compensation, rights, options or other benefits which may be owed to a
Participant following termination of employment, including but not limited to accrued sick pay and
vacation pay, amounts or benefits payable under any bonus or other compensation plan, stock option
plan, stock ownership plan, stock purchase plan, life insurance plan, health plan, disability plan
or similar or successor plan; provided, however, that any Separation Benefit a Participant is
entitled to hereunder shall be reduced by the amount of any cash payments in the nature of
separation allowance, severance pay, or “notice” pay which the Company is required to pay such
Participant upon termination of employment pursuant to any applicable law or other severance
program or arrangement. For this purpose, unemployment compensation benefits shall not reduce the
Separation Benefit hereunder.
	 
	 	3.	 	Confidentiality. The benefits provided in Section 2 are expressly conditioned upon
Participant’s agreement not to, directly or indirectly, for a period of one (1) year after his or
her Date of Termination, disclose or utilize any trade secrets or confidential information of the
Company, and the provision of such benefits shall immediately cease in the event of the
Participant’s violation of the provisions of this Section 3.
	 
	 	4.	 	Withholding Taxes. The Company may withhold from all payments due hereunder all taxes
which, by applicable federal, state, local or other law, it is required to withhold therefrom.
	 
	 	5.	 	Reimbursement of Expenses and Settlement of Disputes. If any contest or dispute shall arise
under this Plan involving termination of a Participant’s employment or involving the failure or
refusal of the Company to perform fully in accordance with the terms hereof, the Company shall
reimburse such Participant, on a current basis, for all reasonable legal fees and expenses, if any,
reasonably incurred by such in connection with such contest or dispute (to the extent the
Participant prevails in such contest or dispute), provided, that, if it is determined by a court or
by arbitration that such Participant did not enter into the contest or dispute in good faith, such
Participant shall be obligated to return to the Company such reimbursed fees and expenses. All
disputes hereunder shall be settled exclusively by arbitration in the State of California in
accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitration award in any court having
jurisdiction. The Company shall bear all costs and expenses in connection with the retention of the
arbitration panel for any proceeding.

 

 

	 	6.	 	Termination or Amendment of Plan.
	 
	 	(a)	 	Subject to paragraph (b) below, this Plan shall be in effect as of May 3, 2001.
	 
	 	(b)	 	The Board shall have the right at any time prior to a Change of Control, in its sole
discretion, to terminate or amend the Plan, which right includes, but is not limited to, the right
to add any person to the Plan as a Participant or to remove any Person from the Plan as a
Participant. In no event shall this Plan be terminated or amended following a Change of Control in
any manner which would adversely affect the rights or potential rights of a Participant (or his or
her dependents) under this Plan with respect to such Change of Control.
	 
	 	7.	 	Successors.
	 
	 	(a)	 	This Plan shall not be terminated by any merger, consolidation, share exchange or similar
event involving the Company whereby the Company is or is not the surviving or resulting entity. In
the event of any merger, consolidation, share exchange or similar event, the provisions of this
Plan shall be binding upon the surviving or resulting corporation or the person or entity to which
the Company’s assets are transferred.
	 
	 	(b)	 	Concurrently with any merger, consolidation, share exchange or sale, lease or transfer of
all or substantially all of its assets, the Company will cause any successor or transferee
unconditionally to assume all of the obligations of the Company hereunder.
	 
	 	(c)	 	This Plan shall inure to the benefit of and be enforceable by each Participant’s personal
or legal representatives, executors, administrators, successors, heirs, distributees, devisees and
legatees. If a Participant shall die while any amounts are payable to such Participant hereunder,
all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of
this Plan to such Participant’s surviving spouse or, if none, to such Participant’s estate.
	 
	 	8.	 	No Mitigation, Offset. The obligation of the Company to provide a Participant with the
benefits specified in Section 2 and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against such Participant or others. In no event shall a Participant be
obligated to seek other employment or take other action by way of mitigation of the amounts payable
to such Participant under any of the provisions of this Plan and such amounts shall not be reduced
whether or not such Participant obtains other employment, except as provided in Section 2(a)(ii) of
this Plan.
	 
	 	9.	 	Governing Law; Law Validity. The interpretation, construction and performance of this Plan,
unless preempted by the Standard Participant Retirement Income Security Act of 1974, as amended
(“ERISA”), shall be governed by and construed and enforced in accordance with the laws of the State
of California without regard to the principle of conflicts of laws. The invalidity or
unenforceability of any provision of this Plan shall not affect the validity or enforceability of
any other provision of this Plan, which other provisions shall remain in full force and effect.
	 
	 	10.	 	Administration. The Plan shall be administered by the Administrator. Consistent with the
requirements of ERISA and the regulations of the Department of Labor, the Administrator shall
provide adequate written notice to any Participant covered by the Plan whose claim for a Separation
Benefit or other benefits hereunder has been denied, setting forth specific reasons for such
denial, written in a manner calculated to be understood by such Participant and affording such
Participant a full and fair review of the decision denying the claim.
	 
	 	11.	 	Miscellaneous.
	 
	 	(a)	 	The Company shall not be required to fund or otherwise segregate assets to be used for the
payment of any benefits under the Plan. The Company shall make such payments only out of its general corporate
funds, and therefore its obligation to make such payments shall be subject to any claims of its
other creditors having priority as to its assets.

 

 

	 	(b)	 	This Plan does not constitute a contract of employment or impose on the Company any
obligation to retain a Participant as an officer or employee (as the case may be), to retain a
Participant as a Participant (prior to a Change in Control), not to change the status of a
Participant’s employment, or not to change the policies of the Company regarding termination of
employment.
	 
	 	(c)	 	No rights of any Participant (or beneficiary) to payments of any amounts under the Plan
shall be sold, exchanged, transferred, assigned, pledged, hypothecated or otherwise disposed of
other than by will or by the laws of descent and distribution.
	 
	 	(d)	 	Unless the Company specifically provides otherwise, any benefits payable under this Plan
shall not be taken into account for purposes of determining benefits payable to a Participant under
any other benefit plan or program.
	 
	 	(e)	 	The Company’s obligations hereunder shall be subject to all applicable laws, and the
Separation Benefit and other benefits payable hereunder may be adjusted to comply with any such
laws.

     IN WITNESS WHEREOF, the foregoing VNUS Severance Plan has been duly adopted by the Board of
Directors of the Company as of the 7th of November 2005.

	 	 	 	 	 
	 	 	 
	 	By:  	
/s/ Brian E. Farley	 
	 	 	Brian E. Farley, Chief Executive Officer 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	
/s/ Timothy A. Marcotte	 
	 	 	Timothy A. Marcotte, Secretaryexv4w2

 

Exhibit 4.2

LAM RESEARCH CORPORATION

1997 STOCK INCENTIVE PLAN

Amended and restated effective as of November 2, 2005

SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.

     The name of this plan is the Lam Research Corporation 1997 Stock Incentive Plan (the “Plan”).
The purpose of the Plan is to enable the Company to attract and retain highly qualified personnel
who will contribute to the Company’s success by their ability, ingenuity and industry and to
provide incentives to the participating officers, directors, employees, consultants and advisors
that are linked directly to increases in stockholder value and will therefore inure to
the benefit of all stockholders of the Company.

     For purposes of the Plan, the following terms shall be defined as set forth below:

     (1) “Administrator” means the Board, or if and to the extent the Board does not administer the
Plan, the Committee in accordance with Section 2.

     (2) “Award” means Stock Options, Restricted Stock awards, Deferred Stock awards, Performance
Shares, Restricted Stock Units, or any combination of the foregoing awarded under this Plan.

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

     (4) “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any
successor thereto.

     (5) “Committee” means the Stock Committee of the Board or any Committee the Board may
subsequently appoint to administer the Plan. To the extent applicable, the Committee shall be
composed entirely of individuals who meet the qualifications referred to in Section 162(m) of the
Code and Rule 16b-3 under the Securities Exchange Act of 1934, as amended. If at any time or to any
extent the Board shall not administer the Plan, then the functions of the Board specified in the
Plan shall be exercised by the Committee.

     (6) “Company” means Lam Research Corporation, a Delaware corporation (or any successor
corporation).

     (7) “Deferred Stock” means an award made pursuant to Section 7 below of the right to receive
Stock at the end of a specified deferral period.

     (8) “Disability” means the inability of a Participant to perform substantially his or her
duties and responsibilities to the Company by reason of a physical or mental disability or
infirmity (i) for a continuous period of six months, or (ii) at such earlier time as the
Participant submits medical evidence satisfactory to the Administrator that he or she has a
physical or mental disability or infirmity which will likely prevent him or her from returning to
the performance of his or her work duties for six months or longer. The date of such Disability
shall

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be on the last day of such six-month period or the day on which the Participant submits such
satisfactory medical evidence, as the case may be.

     (9) “Effective Date” shall mean the date set forth in Section 11.

     (10) “Eligible Recipient” means an officer, director, employee, consultant or advisor of the
Company or any Subsidiary.

     (11) “Fair Market Value” means, as of any given date, with respect to any awards granted
hereunder, (A) if the Stock is publicly traded, the closing sale price of the Stock on such date as
reported in the Western Edition of the Wall Street Journal, or the average of the closing price of
the Stock on each day on which the Stock was traded over a period of up to twenty trading days
immediately prior to such date, (B) the fair market value of the Stock as determined in accordance
with a method prescribed in the agreement evidencing any award hereunder, or (C) the fair market
value of the Stock as otherwise determined by the Administrator in the good faith exercise of its
discretion.

     (12) “Incentive Stock Option” means any Stock Option intended to be designated as an
“incentive stock option” within the meaning of Section 422 of the Code.

     (13) “Non-Qualified Stock Option” means any Stock Option that is not an Incentive Stock
Option, including any Stock Option that provides (as of the time such option is granted) that it
will not be treated as an Incentive Stock Option.

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

     (15) “Participant” means any Eligible Recipient selected by the Administrator, pursuant to the
Administrator’s authority in Section 2 below, to receive grants of Stock Options, Restricted Stock
awards, Deferred Stock awards, Performance Shares, Restricted Stock Unit awards or any combination
of the foregoing.

     (16) “Performance Share” means an award of shares of Stock pursuant to Section 7 that is
subject to restrictions based upon the attainment of specified performance objectives.

     (17) “Restricted Stock” means an award granted pursuant to Section 7 of shares of Stock
subject to certain restrictions.

     (18) “Restricted Stock Unit” means an award granted pursuant to Section 7 which may be settled
in whole or in part in cash or shares of Stock upon satisfaction of certain vesting conditions.

     (19) “Stock” means the common stock, par value $.001 per share, of the Company.

     (20) “Stock Option” means any option to purchase shares of Stock granted pursuant to Section
5.

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

SECTION 2. ADMINISTRATION.

     The Plan shall be administered in accordance with the requirements of Section 162(m) of the
Code (but only to the extent necessary to maintain qualification of the Plan under Section 162(m)
of the Code) and, to the extent applicable, Rule 16b-3 under the Securities Exchange Act of 1934,
as amended (“Rule 16b-3”) by the Board or by the Committee which shall be appointed by the Board
and which shall serve at the pleasure of the Board.

     Pursuant to the terms of the Plan, the Administrator shall have the power and authority to
grant to Eligible Recipients pursuant to the terms of the Plan: (a) Stock Options, (b) Restricted
Stock, (c) Deferred Stock, (d) Performance Shares, (e) Restricted Stock Units, or (f) any
combination of the foregoing.

     In particular, the Administrator shall have the authority:

               (a) to select those Eligible Recipients who shall be Participants;

               (b) to determine whether and to what extent Stock Options, Restricted Stock, Deferred Stock,
Performance Shares, Restricted Stock Units or a combination of the foregoing, are to be granted
hereunder to Participants;

               (c) to determine the number of shares of Stock to be covered by each such award granted
hereunder;

               (d) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any
award granted hereunder (including, but not limited to, (x) the restrictions applicable to
Restricted or Deferred Stock awards and the conditions under which restrictions applicable to such
Restricted or Deferred Stock shall lapse, and (y) the performance goals and periods applicable to
an award of Performance Shares or Restricted Stock Units); and

               (e) to determine the terms and conditions, not inconsistent with the terms of the Plan, which
shall govern all written instruments evidencing the Stock Options, Restricted Stock, Deferred
Stock, Performance Shares, Restricted Stock Units or any combination of the foregoing granted
hereunder to Participants.

     The Administrator shall have the authority, in its discretion, to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall from time to time
deem advisable; to interpret the terms and provisions of the Plan and any award issued under the
Plan (and any agreements relating thereto); and to otherwise supervise the administration of the
Plan.

     All decisions made by the Administrator pursuant to the provisions of the Plan shall be final
and binding on all persons, including the Company and the Participants.

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SECTION 3. STOCK SUBJECT TO PLAN.

     The total number of shares of Stock reserved and available for issuance under the Plan is nine
million (as adjusted for the Company’s three-for-one stock split of March 2000); provided, however,
that the number of shares so reserved shall automatically be increased at the beginning of each
calendar quarter if and to the extent that, as of such date, the quotient determined by dividing
(x) the total number of shares of Stock reserved for issuance under all of Lam’s stock-based
incentive plans pursuant to outstanding and future awards by (y) the sum of (i) the total number of
shares of Stock outstanding plus (ii) the number determined under clause (x), is less than 20%,
such that immediately following any such increase such quotient will equal 18.5%; and provided,
further, that the number of shares reserved for issuance under the Plan shall in no event exceed
fifteen million shares as adjusted for the Company’s three-for-one stock split of March 2000 and as
shall be further adjusted to take into account additional changes in capitalization as set forth
below. Such shares may consist, in whole or in part, of authorized and unissued shares or treasury
shares. The aggregate number of shares of Stock as to which Stock Options, Restricted Stock,
Deferred Stock, Performance Shares and Restricted Stock Units may be granted to any individual
during any calendar year may not, subject to adjustment as provided in this Section 3, exceed 20%
of the shares of Stock reserved for the purposes of the Plan in accordance with the provisions of
this Section 3.

     Consistent with the provisions of Section 162(m) of the Code, as from time to time applicable,
to the extent that (i) a Stock Option expires or is otherwise terminated without being exercised,
(ii) any shares of Stock subject to any Restricted Stock, Deferred Stock, Performance Share or
Restricted Stock Unit award granted hereunder are forfeited; or (iii) any shares subject to
Restricted Stock Unit awards are settled in cash rather than in Stock, such shares shall again be
available for issuance in connection with future awards under the Plan. If any shares of Stock have
been pledged as collateral for indebtedness incurred by a Participant in connection with the
exercise of a Stock Option and such shares are returned to the Company in satisfaction of such
indebtedness, such shares shall again be available for issuance in connection with future awards
under the Plan.

     In the event of any merger, reorganization, consolidation, recapitalization, stock dividend or
other change in corporate structure affecting the Stock, a substitution or adjustment shall be made
in (i) the aggregate number of shares reserved for issuance under the Plan, (ii) the kind, number
and option price of shares subject to outstanding Stock Options granted under the Plan, and (iii)
the kind, number and purchase price of shares issuable pursuant to awards of Restricted Stock,
Deferred Stock, Performance Shares and Restricted Stock Units, as may be determined by the
Administrator, in its sole discretion. Such other substitutions or adjustments shall be made as may
be determined by the Administrator, in its sole discretion. In connection with any event described
in this paragraph, the Administrator may provide, in its discretion, for the cancellation of any
outstanding awards and payment in cash or other property therefor.

SECTION 4. ELIGIBILITY.

     Officers, directors and employees of the Company or any Subsidiary, and consultants and
advisors and advisors to the Company or any Subsidiary, who are responsible for or are in a
position to contribute to the management, growth and/or profitability of the business of the

4

 

Company shall be eligible to be granted Stock Options, Restricted Stock awards, Deferred Stock
awards, Performance Shares or Restricted Stock Unit awards hereunder. The Participants under the
Plan shall be selected from time to time by the Administrator, in its sole discretion, from among
the Eligible Recipients recommended by the senior management of the Company, and the Administrator
shall determine, in its sole discretion, the number of shares of Stock covered by each award.

SECTION 5. DISCRETIONARY GRANTS OF STOCK OPTIONS.

     Stock Options may be granted alone or in addition to other awards granted under the Plan. Any
Stock Option granted under the Plan shall be in such form as the Administrator may from time to
time approve, and the provisions of Stock Option awards need not be the same with respect to each
optionee. Recipients of Stock Options shall enter into an award agreement with the Company, in
such form as the Administrator shall determine, which agreement shall set forth, among other
things, the exercise price of the option, the term of the option and provisions regarding
exercisability of the option granted thereunder.

     The Stock Options granted under the Plan may be of two types: (i) Incentive Stock Options and
(ii) Non-Qualified Stock Options.

     The Administrator shall have the authority to grant any officer or employee of the Company
(including directors who are also officers of the Company) Incentive Stock Options, Non-Qualified
Stock Options, or both types of Stock Options. Directors who are not officers of the Company,
consultants and advisors and advisors may only be granted Non-Qualified Stock Options. To the
extent that any Stock Option does not qualify as an Incentive Stock Option, it shall constitute a
separate Non-Qualified Stock Option. More than one option may be granted to the same optionee and
be outstanding concurrently hereunder.

     Stock Options granted under the Plan shall be subject to the following terms and conditions
and shall contain such additional terms and conditions, not inconsistent with the terms of the
Plan, as the Administrator shall deem desirable:

     (1) Option Price. The option price per share of Stock purchasable under a Stock Option shall
be determined by the Administrator in its sole discretion at the time of grant but shall not be
less than 100% of the Fair Market Value of the Stock on such date. If an employee owns or is deemed
to own (by reason of the attribution rules applicable under Section 424(d) of the Code) more than
10% of the combined voting power of all classes of stock of the Company or any Parent Corporation
and an Incentive Stock Option is granted to such employee, the option price of such Incentive Stock
Option (to the extent required by the Code at the time of grant) shall be no less than 110% of the
Fair Market Value of the Stock on the date such Incentive Stock Option is granted.

     (2) Option Term. The term of each Stock Option shall be fixed by the Administrator, but no
Stock Option shall be exercisable more than ten years after the date such Stock Option is granted;
provided, however, that if an employee owns or is deemed to own (by reason of the attribution rules
of Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock
of the Company or any Parent Corporation and an Incentive Stock Option is

5

 

granted to such employee, the term of such Incentive Stock Option (to the extent required by
the Code at the time of grant) shall be no more than five years from the date of grant.

     (3) Exercisability. Stock Options shall be exercisable at such time or times and subject to
such terms and conditions as shall be determined by the Administrator at or after grant. The
Administrator may provide, in its discretion, that any Stock Option shall be exercisable only in
installments, and the Administrator may waive such installment exercise provisions at any time in
whole or in part based on such factors as the Administrator may determine, in its sole discretion,
including but not limited to in connection with any “change in control” of the Company, as defined
in any stock option agreement or otherwise.

     (4) Method of Exercise. Subject to Section 5(3) above, Stock Options may be exercised in whole
or in part at any time during the option period, by giving written notice of exercise to the
Company specifying the number of shares to be purchased, accompanied by payment in full of the
purchase price in cash or its equivalent as determined by the Administrator. As determined by the
Administrator, in its sole discretion, payment in whole or in part may also be made (i) by means of
any cashless exercise procedure approved by the Administrator, (ii) in the form of unrestricted
Stock already owned by the optionee, or (iii) in the case of the exercise of a Non-Qualified Stock
Option, in the form of Restricted Stock or Performance Shares subject to an award hereunder (based,
in each case, on the Fair Market Value of the Stock on the date the option is exercised); provided,
however, that in the case of an Incentive Stock Option, the right to make payment in the form of
already owned shares may be authorized only at the time of grant. If payment of the option exercise
price of a Non-Qualified Stock Option is made in whole or in part in the form of Restricted Stock
or Performance Shares, the shares received upon the exercise of such Stock Option shall be
restricted in accordance with the original terms of the Restricted Stock or Performance Share award
in question, except that the Administrator may direct that such restrictions shall apply only to
that number of shares equal to the number of shares surrendered upon the exercise of such option.
An optionee shall generally have the rights to dividends and any other rights of a stockholder with
respect to the Stock subject to the option only after the optionee has given written notice of
exercise, has paid in full for such shares, and, if requested, has given the representation
described in paragraph (1) of Section 10.

     The Administrator may require the voluntary surrender of all or a portion of any Stock Option
granted under this Plan or any other equity incentive plan of the Company or its Subsidiaries as a
condition precedent to the grant of a new Award under this Plan or under any other equity incentive
plan of the Company or its Subsidiaries. Subject to the provisions of this Plan, such new Award
shall be exercisable at the price, during such period and on such other terms and conditions as are
specified by the Administrator at the time the new Award is granted. Consistent with the
provisions of Section 162(m), to the extent applicable, upon their surrender, Stock Options shall
be canceled and the shares previously subject to such canceled Stock Options shall again be
available for grants of Stock Options and other awards hereunder.

     (5) Loans. The Company may make loans available to Stock Option holders in connection with the
exercise of outstanding options granted under the Plan, as the Administrator, in its discretion,
may determine. Such loans shall (i) be evidenced by promissory notes entered into by the Stock
Option holders in favor of the Company, (ii) be subject to the terms and conditions set forth in
this Section 5(5) and such other terms and conditions, not inconsistent

6

 

with the Plan, as the Administrator shall determine, (iii) bear interest, if any, at such rate
as the Administrator shall determine, and (iv) be subject to Board approval (or to approval by the
Administrator to the extent the Board may delegate such authority). In no event may the principal
amount of any such loan exceed the sum of (x) the exercise price less the par value (if any) of the
shares of Stock covered by the option, or portion thereof, exercised by the holder, and (y) any
Federal, state, and local income tax attributable to such exercise. The initial term of the loan,
the schedule of payments of principal and interest under the loan, the extent to which the loan is
to be with or without recourse against the holder with respect to principal or interest and the
conditions upon which the loan will become payable in the event of the holder’s termination of
employment shall be determined by the Administrator. Unless the Administrator determines
otherwise, when a loan is made, shares of Stock having a Fair Market Value at least equal to the
principal amount of the loan shall be pledged by the holder to the Company as security for payment
of the unpaid balance of the loan, and such pledge shall be evidenced by a pledge agreement, the
terms of which shall be determined by the Administrator, in its discretion; provided, however, that
each loan shall comply with all applicable laws, regulations and rules of the Board of Governors
of the Federal Reserve System and any other governmental agency having jurisdiction.

     (6) Non-Transferability of Options. Unless otherwise determined by the Administrator in
accordance with Rule 16b-3, no Stock Option shall be transferable by the optionee, and all Stock
Options shall be exercisable, during the optionee’s lifetime, only by the optionee.

     (7) Termination of Employment or Service. If an optionee’s employment with or service as a
director, consultant or advisor to the Company terminates by reason of death, Disability or for any
other reason, the Stock Option may thereafter be exercised to the extent provided in the applicable
subscription or award agreement, or as otherwise determined by the Administrator.

     (8) Annual Limit on Incentive Stock Options. To the extent that the aggregate Fair Market
Value (determined as of the date the Incentive Stock Option is granted) of shares of Stock with
respect to which Incentive Stock Options granted to an Optionee under this Plan and all other
option plans of the Company or its Parent Corporation become exercisable for the first time by the
Optionee during any calendar year exceeds $100,000, such Stock Options shall be treated as
Non-Qualified Stock Options.

SECTION 6. [RESERVED]

SECTION 7. RESTRICTED STOCK, DEFERRED STOCK, PERFORMANCE SHARES AND
RESTRICTED STOCK UNITS.

     (1) General. Restricted Stock, Deferred Stock, Performance Shares or Restricted Stock Unit
awards may be issued either alone or in addition to other awards granted under the Plan. The
Administrator shall determine the Participants to whom, and the time or times at which, grants of
Restricted Stock, Deferred Stock, Performance Share or Restricted Stock Unit awards shall be made;
the number of shares to be awarded; the price, if any, to be paid by the recipient of Restricted
Stock, Deferred Stock, Performance Share or Restricted Stock Unit awards; the Restricted Period (as
defined in paragraph (3) hereof) applicable to Restricted Stock or Deferred Stock awards; the
performance objectives applicable to Restricted Stock, Deferred

7

 

Stock, Performance Share or Restricted Stock Unit awards; the date or dates on which restrictions
applicable to such Restricted Stock or Deferred Stock awards shall lapse during such Restricted
Period; the date or dates on which the Participant’s rights in the Restricted Stock Units shall
vest; and all other conditions of the Restricted Stock, Deferred Stock, Performance Share and
Restricted Stock Unit awards. The Administrator may also condition the grant of Restricted Stock,
Deferred Stock awards, Performance Shares or Restricted Stock Units upon the exercise of Stock
Options, or upon such other criteria as the Administrator may determine, in its sole discretion.
The provisions of Restricted Stock, Deferred Stock, Performance Share or Restricted Stock Unit
awards need not be the same with respect to each recipient. In the discretion of the Administrator,
loans may be made to Participants in connection with the purchase of Restricted Stock under
substantially the same terms and conditions as provided in Section 5(5) herein with respect to the
exercise of Stock Options.

     (2) Awards and Certificates. The prospective recipient of a Restricted Stock, Deferred Stock,
Performance Share or Restricted Stock Unit award shall not have any rights with respect to such
Award, unless and until such recipient has executed an agreement evidencing the Award (a
“Restricted Stock Award Agreement,” “Deferred Stock Award Agreement,” “Performance Share Award
Agreement,” or Restricted Stock Unit Award Agreement,” as appropriate) and delivered a fully
executed copy thereof to the Company, within a period of sixty days (or such other period as the
Administrator may specify) after the Date of Grant. Except as otherwise provided below in this
Section 7(2), (i) each Participant who is awarded Restricted Stock or Performance Shares shall be
issued a stock certificate in respect of such shares of Restricted Stock or Performance Shares; and
(ii) such certificate shall be registered in the name of the Participant, and shall bear an
appropriate legend referring to the terms, conditions, and restrictions applicable to such Award.

     The Company may require that the stock certificates evidencing Restricted Stock or Performance
Share awards hereunder be held in the custody of the Company until the restrictions thereon shall
have lapsed, and that, as a condition of any Restricted Stock award or Performance Share award, the
Participant shall have delivered a stock power, endorsed in blank, relating to the Stock covered by
such award.

     With respect to Deferred Stock and Restricted Stock Unit awards (to the extent, if any, that
Restricted Stock Unit awards shall be settled in shares of Stock), at the expiration of the
Restricted Period or upon the vesting and settlement of the Restricted Stock Units, stock
certificates in respect of such shares of Deferred Stock or Stock issuable pursuant to the vesting
of a Restricted Stock Unit shall be delivered to the Participant, or his or her legal
representative, or the shares of Stock issued pursuant to a Deferred Stock or Restricted Stock Unit
award shall be otherwise distributed to the Participant, in a number equal to the number of shares
of Stock covered by the Deferred Stock or Restricted Stock Unit award. As appropriate, applicable
legends may be placed on stock certificates issued pursuant to a Deferred Stock or Restricted Stock
Unit award.

     (3) Restrictions and Conditions. The Restricted Stock, Deferred Stock, Performance Share and
Restricted Stock Unit awards granted pursuant to this Section 7 shall be subject to the following
restrictions and conditions:

8

 

     (a) Subject to the provisions of the Plan and the Restricted Stock Award Agreement, Deferred
Stock Award Agreement, Performance Share Award Agreement, or Restricted Stock Unit Award Agreement,
as appropriate, governing such Award, during such period as may be set by the Administrator
commencing on the Date of Grant (the “Restricted Period”), the Participant shall not be permitted
to sell, transfer, pledge or assign shares of Restricted Stock, Deferred Stock or Performance
Shares or shall not be vested in the rights to the Restricted Stock Units awarded under this Plan;
provided that the Administrator may, in its sole discretion, provide for the lapse of such
restrictions or the vesting in such rights in installments and may accelerate or waive such
restrictions or vesting in whole or in part based on the attainment of certain performance related
goals, the Participant’s termination of employment or service, death or Disability or the
occurrence of a “Change of Control” as defined in the agreement evidencing such award or otherwise.

     (b) Except as provided in paragraph (3)(a) of this Section 7 or in the Award agreement, the
Participant shall generally have, with respect to the shares of Restricted Stock or Performance
Shares, all of the rights of a stockholder with respect to such stock during the Restricted Period.
The Participant shall generally not have the rights of a stockholder with respect to stock subject
to Deferred Stock awards during the Restricted Period or with respect to unissued Stock subject to
Restricted Stock Unit awards; provided, however, that dividends declared during the Restricted
Period with respect to the number of shares covered by a Deferred Stock award shall be paid to the
Participant. With respect to Restricted Stock Unit awards, prior to settlement or forfeiture, any
Restricted Stock Unit award may, at the Administrator’s discretion, carry with it a right to
dividend equivalents. Such right entitles the Participant to be credited with an amount equal to
all cash dividends paid on one share of Stock while the Restricted Stock Unit is outstanding.
Dividend equivalents may be converted into additional Restricted Stock Units. Settlement of
dividend equivalents may be made in the form of cash, in the form of shares of Stock, or in a
combination of both. Prior to distribution, any dividend equivalents that are not paid shall be
subject to the same conditions and restrictions as the Restricted Stock Units to which they attach.
Certificates for shares of unrestricted Stock shall be delivered to the Participant promptly
after, and only after, the Restricted Period shall expire without forfeiture in respect of such
shares of Restricted Stock, Performance Shares or Deferred Stock, or upon vesting, without
forfeiture, in Restricted Stock Units, except as the Administrator, in its sole discretion, shall
otherwise determine.

     (c) The rights of holders of Restricted Stock, Deferred Stock, Performance Share and
Restricted Stock Unit awards upon termination of employment or service for any reason during the
Restricted Period or prior to completion of vesting in the Restricted Stock Units shall be set
forth in the Restricted Stock Award Agreement, Deferred Stock Award Agreement, Performance Share
Award Agreement or Restricted Stock Unit Award, as appropriate, governing such awards.

     (d) Settlement of vested Restricted Stock Units may be made in the form of (i) cash, (ii)
shares of Stock, or (iii) any combination of both, as determined by the Administrator. The actual
number of Restricted Stock Units eligible for settlement may be larger or smaller than the number
included in the original Award, based on predetermined performance factors. Methods of converting
Restricted Stock Units into cash may include (without limitation ) a method based on the average
Fair Market Value of a share of Stock over a series of trading days.

9

 

     Vested Restricted Stock Units may be settled in a lump sum or in installments. The distribution
may occur or commence when all vesting conditions applicable to the Restricted Stock Units have
been satisfied or lapsed, or it may be deferred to any later date. The amount of a deferred
distribution may be increased by an interest factor or by dividend equivalents. Until a Restricted
Stock Unit award is settled, the number of such Restricted Stock Units shall be subject to
adjustment pursuant to Section 3.

     (e) With respect to awards intended to constitute “qualified performance based compensation”
for purposes of Section 162(m) of the Code, the applicable performance goals shall be based upon
earnings, earnings per share, revenue growth or return on equity.

SECTION 8. AMENDMENT AND TERMINATION.

     The Board may amend, alter or discontinue the Plan, but no amendment, alteration, or
discontinuation shall be made that would impair the rights of a Participant under any award
theretofore granted without such Participant’s consent, or that without the approval of the
stockholders (as described below) would:

     (1) except as provided in Section 3, increase the total number of shares of Stock reserved for
the purpose of the Plan;

     (2) change the class of directors, officers, employees, consultants and advisors and advisors
eligible to participate in the Plan; or

     (3) extend the maximum option period under paragraph (2) of Section 5 of the Plan.

     Notwithstanding the foregoing, stockholder approval under this Section 8 shall only be
required at such time and under such circumstances as stockholder approval would be required under
Section 162(m) of the Code or other applicable law, rule or regulation with respect to any material
amendment to any employee benefit plan of the Company.

     The Administrator may amend the terms of any award theretofore granted, prospectively or
retroactively, but, subject to Section 3 above, no such amendment shall impair the rights of any
holder without his or her consent.

SECTION 9. UNFUNDED STATUS OF PLAN.

     The Plan is intended to constitute an “unfunded” plan for incentive compensation. With respect
to any payments not yet made to a Participant by the Company, nothing contained herein shall give
any such Participant any rights that are greater than those of a general creditor of the Company.

SECTION 10. GENERAL PROVISIONS.

     (1) The Administrator may require each person purchasing shares pursuant to a Stock Option to
represent to and agree with the Company in writing that such person is acquiring the

10

 

shares without a view to distribution thereof. The certificates for such shares may include
any legend which the Administrator deems appropriate to reflect any restrictions on transfer.

     All certificates for shares of Stock delivered under the Plan shall be subject to such
stock-transfer orders and other restrictions as the Administrator may deem advisable under the
rules, regulations, and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Stock is then listed, and any applicable Federal or state securities law,
and the Administrator may cause a legend or legends to be placed on any such certificates to make
appropriate reference to such restrictions.

     (2) Nothing contained in the Plan shall prevent the Board from adopting other or additional
compensation arrangements, subject to stockholder approval if such approval is required; and such
arrangements may be either generally applicable or applicable only in specific cases. The adoption
of the Plan shall not confer upon any officer, director, employee, consultant or advisor of the
Company any right to continued employment or service with the Company, as the case may be, nor
shall it interfere in any way with the right of the Company to terminate the employment or service
of any of its officers, directors, employees, consultants and advisors or advisors at any time.

     (3) Each Participant shall, no later than the date as of which the value of an award first
becomes includible in the gross income of the Participant for Federal income tax purposes, pay to
the Company, or make arrangements satisfactory to the Administrator regarding payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with respect to the
award. The obligations of the Company under the Plan shall be conditional on the making of such
payments or arrangements, and the Company shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment of any kind otherwise due to the Participant.

     (4) No member of the Board or the Administrator, nor any officer or employee of the Company
acting on behalf of the Board or the Administrator, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Administrator and each and any officer or employee of the Company
acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by
the Company in respect of any such action, determination or interpretation.

SECTION 11. EFFECTIVE DATE OF PLAN.

     The Plan became effective (the “Effective Date”) on August 5, 1997, the date the Company’s
stockholders formally approved the Plan.

SECTION 12. TERM OF PLAN.

     No Stock Option, Restricted Stock, Deferred Stock, Performance Share or Restricted Stock Unit
award shall be granted pursuant to the Plan on or after the tenth anniversary of the Effective
Date, but awards theretofore granted may extend beyond that date.

11

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