Document:

exv10w4

 

    Exhibit 10.4

 

    Base Salaries

    For Executive Officers of

    Qualstar Corporation

    For the Fiscal Year Ending June 30, 2007

 

	 	 	 	 	 	 	 
	
 
	
 
	
 
	
 
	
    Fiscal Year
    2007

    
	
 

	

    Name

	
 
	
    Title
	
 
	
    Base
    Salary(1)
	
 

	 

	

    William J. Gervais
    

	
 
	
    Chief Executive Officer and
    President
    
	
 
	
    $
	
    195,000
	
 

	

    Robert K. Covey
    

	
 
	
    Vice President of Marketing
    
	
 
	
    $
	
    172,000
	
 

	

    David L. Griffith
    

	
 
	
    Vice President of Operations
    
	
 
	
    $
	
    165,000
	
 

	

    Robert C. King
    

	
 
	
    Vice President of Sales
    
	
 
	
    $
	
    165,000
	
    (2)

	

    Richard A. Nelson
    

	
 
	
    Vice President of Engineering
    
	
 
	
    $
	
    170,000
	
 

 

 

			
	
    (1) 		
    Qualstar is an “at will” employer. The expression of
    base salaries in annual amounts does not imply that there is an
    agreement to employ any executive officer for any specific
    period of time.
	 
	
    (2) 		
    Mr. King also receives an auto allowance of $6,000 per year.exv10w5

 

    Exhibit 10.5

 

    Cash Bonus Plan
    for

    Executive Officers of

    Qualstar Corporation

    For the Fiscal Year Ending June 30, 2007

 

    Executive Officers of Qualstar Corporation are entitled to
    receive cash bonuses if the Company achieves stated levels of
    consolidated revenue and pre-tax profits for the fiscal year
    ending June 30, 2007, excluding the effects of
    acquisitions, if any, made during the fiscal year. The
    Company’s Board of Directors reserves the right to modify
    this bonus plan from time to time, if appropriate, in the event
    of extraordinary circumstances.

 

    For all executive officers other than the Vice President of
    Sales, the potential cash bonuses will be as follows:
    (1) from 0% of base salary if consolidated revenue is less
    than $22 million for the fiscal year ending June 30,
    2007, to a maximum of 20% of base salary if consolidated revenue
    is more than $38 million for the fiscal year ending
    June 30, 2007; plus (2) an additional bonus ranging
    from 0% of base salary if the Company is not profitable for the
    fiscal year ending June 30, 2007, to a maximum of 20% of
    base salary if consolidated pre-tax profits are more than 19% of
    consolidated revenue for the fiscal year ending June 30,
    2007. Bonuses will be paid during the first fiscal quarter
    following completion of the fiscal year based on the actual
    revenue and pre-tax profit levels achieved for that year and
    provided that the executive is still employed by the Company as
    of the date of payment.

 

    For the Vice President of Sales, the potential cash bonuses will
    be as follows: (1) from $3,000 if consolidated revenue,
    excluding revenue from sales of power supplies, is
    $20 million, up to $75,000 if consolidated revenue,
    excluding revenue from sales of power supplies, is
    $35 million; plus (2) an additional bonus ranging from
    0% of base salary if consolidated pre-tax profits, including
    profits from sales of power supplies, are less than 5% of
    consolidated revenue for the fiscal year ending June 30,
    2007, to a maximum of 15% of base salary if consolidated pre-tax
    profits, including profits from sales of power supplies, are
    more than 19% of consolidated revenue for the fiscal year ending
    June 30, 2007. His bonus will be computed quarterly based
    on an estimate of full year revenues and pre-tax profits and
    paid during the following quarter provided that he is still
    employed by the Company as of the date of payment. After
    completion of the fiscal year, his bonus will be calculated
    based on the actual revenue and pre-tax profit levels achieved
    for that year, and any adjustments to the estimated bonus
    payments will be made at that time.exv10w01

 

EXHIBIT 10.01

      

MARTEK BIOSCIENCES CORPORATION

AMENDED AND RESTATED 2004 STOCK INCENTIVE PLAN,

(AS AMENDED THROUGH MARCH 16, 2006)

      

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	1.	 	PURPOSE	 	1
	2.	 	DEFINITIONS	 	1
	3.	 	ADMINISTRATION OF THE PLAN	 	4
	 
	 	3.1.	 	Board 	 	4
	 
	 	3.2.	 	Committee	 	4
	 
	 	3.3.	 	Terms of Awards	 	5
	 
	 	3.4.	 	Deferral Arrangement	 	5
	 
	 	3.5.	 	No Liability	 	5
	4.	 	STOCK SUBJECT TO THE PLAN, EFFECTIVE DATE, AND AMENDMENTS	 	6
	 
	 	4.1.	 	Effective Date	 	6
	 
	 	4.2.	 	Term	 	6
	 
	 	4.3.	 	Amendment and Termination of the Plan 	 	6
	5.	 	AWARD ELIGIBILITY AND LIMITATIONS	 	6
	 
	 	5.1.	 	Service Providers and Other Persons 	 	6
	 
	 	5.2.	 	Successive Awards	 	7
	 
	 	5.3.	 	Limitation on Shares of Stock Subject to Awards and Cash Awards	 	7
	 
	 	5.4.	 	Stand-Alone, Additional, Tandem, and Substitute Awards 	 	7
	6.	 	AWARD AGREEMENT	 	7
	7.	 	TERMS AND CONDITIONS OF OPTIONS	 	7
	 
	 	7.1.	 	Option Price 	 	7
	 
	 	7.2.	 	Vesting	 	8
	 
	 	7.3.	 	Term	 	8
	 
	 	7.4.	 	Termination of Service	 	8
	 
	 	7.5.	 	Limitations on Exercise of Option	 	8
	 
	 	7.6.	 	Method of Exercise	 	8
	 
	 	7.7.	 	Rights of Holders of Options 	 	8
	 
	 	7.8.	 	Delivery of Stock Certificates	 	9
	 
	 	7.9.	 	Limitations on Incentive Stock Options	 	9
	8.	 	TRANSFERABILITY OF OPTIONS	 	9
	 
	 	8.1.	 	Transferability of Options 	 	9
	 
	 	8.2.	 	Family Transfers	 	9
	9.	 	STOCK APPRECIATION RIGHTS	 	9
	 
	 	9.1.	 	Right to Payment	 	9
	 
	 	9.2.	 	Other Terms	 	10
	10.	 	RESTRICTED STOCK AND STOCK UNITS	 	10
	 
	 	10.1.	 	Grant of Restricted Stock or Stock Units	 	10
	 
	 	10.2.	 	Restrictions	 	10
	 
	 	10.3.	 	Restricted Stock Certificates	 	10
	 
	 	10.4.	 	Rights of Holders of Restricted Stock	 	10
	 
	 	10.5.	 	Rights of Holders of Stock Units	 	11
	 
	 	 	 	10.5.1. Voting and Dividend Rights	 	11
	 
	 	 	 	10.5.2. Creditor’s Rights	 	11
	 
	 	10.6.	 	Termination of Service	 	11
	 
	 	10.7.	 	Purchase of Restricted Stock	 	11
	 
	 	10.8.	 	Delivery of Stock	 	11
	11.	 	UNRESTRICTED STOCK AWARDS	 	11
	12.	 	FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK	 	11
	 
	 	12.1.	 	General Rule	 	12
	 
	 	12.2.	 	Surrender of Stock	 	12
	 
	 	12.3.	 	Broker-Assisted Exercise	 	12
	 
	 	12.4.	 	Other Forms of Payment	 	12
	13.	 	DIVIDEND EQUIVALENT RIGHTS	 	12

- i -

 

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 	13.1.	 	Dividend Equivalent Rights	 	12
	 
	 	13.2.	 	Termination of Service	 	12
	14.	 	PERFORMANCE AND ANNUAL INCENTIVE AWARDS	 	13
	 
	 	14.1.	 	Performance Conditions 	 	13
	 
	 	14.2.	 	Performance or Annual Incentive Awards Granted to Designated Covered Employees	 	13
	 
	 	 	 	14.2.1. Performance Goals Generally	 	13
	 
	 	 	 	14.2.2. Business Criteria	 	13
	 
	 	 	 	14.2.3. Timing For Establishing Performance Goals	 	13
	 
	 	 	 	14.2.4. Performance or Annual Incentive Award Pool	 	14
	 
	 	 	 	14.2.5. Settlement of Performance or Annual Incentive Awards; Other Terms	 	14
	 
	 	14.3.	 	Written Determinations	 	14
	 
	 	14.4.	 	Status of Section 15.2 Awards Under Code Section 162(m) 	 	14
	15.	 	PARACHUTE LIMITATIONS	 	14
	16.	 	REQUIREMENTS OF LAW	 	15
	 
	 	16.1.	 	General	 	15
	 
	 	16.2.	 	Rule 16b-3	 	15
	17.	 	EFFECT OF CHANGES IN CAPITALIZATION	 	16
	 
	 	17.1.	 	Changes in Stock	 	16
	 
	 	17.2.	 	Reorganization in Which the Company
Is the Surviving Entity Which does not Constitute a Corporate Transaction.	 	16
	 
	 	17.3.	 	Corporate Transaction	 	16
	 
	 	17.4.	 	Adjustments	 	17
	 
	 	17.5.	 	No Limitations on Company	 	17
	18.	 	GENERAL PROVISIONS	 	17
	 
	 	18.1.	 	Disclaimer of Rights 	 	17
	 
	 	18.2.	 	Nonexclusivity of the Plan 	 	17
	 
	 	18.3.	 	Withholding Taxes 	 	18
	 
	 	18.4.	 	Captions 	 	18
	 
	 	18.5.	 	Other Provisions 	 	18
	 
	 	18.6.	 	Number and Gender 	 	18
	 
	 	18.7.	 	Severability 	 	18
	 
	 	18.8.	 	Governing Law 	 	18
	 
	 	18.9.	 	Code Section 409A 	 	19

- ii -

 

 

MARTEK BIOSCIENCES CORPORATION

AMENDED AND RESTATED 2004 STOCK INCENTIVE PLAN

(AS AMENDED THROUGH MARCH 16, 2006)

     Martek Biosciences Corporation, a Delaware corporation (the “Company”), sets forth herein the
terms of its Amended and Restated 2004 Stock Incentive Plan (the “Plan”), as follows:

1. PURPOSE

     The Plan is intended to enhance the Company’s and its Affiliates’ (as defined herein) ability
to attract and retain highly qualified officers, directors, key employees, and other persons, and
to motivate such officers, directors, key employees, and other persons to serve the Company and its
Affiliates and to expend maximum effort to improve the business results and earnings of the
Company, by providing to such persons an opportunity to acquire or increase a direct proprietary
interest in the operations and future success of the Company. To this end, the Plan provides for
the grant of stock options, stock appreciation rights, restricted stock, stock units, unrestricted
stock, dividend equivalent rights and cash awards. Any of these awards may, but need not, be made
as performance incentives to reward attainment of annual or long-term performance goals in
accordance with the terms hereof. Stock options granted under the Plan shall be either incentive
or non-qualified stock options.

2. DEFINITIONS

     For purposes of interpreting the Plan and related documents (including Award Agreements), the
following definitions shall apply:

     2.1 “Affiliate” means, with respect to the Company, any company or other trade or business
that controls, is controlled by or is under common control with the Company within the meaning of
Rule 405 of Regulation C under the Securities Act, including, without limitation, any Subsidiary.

     2.2 “Annual Incentive Award” means an Award made subject to attainment of performance goals
(as described in Section 14) over a performance period of up to one year (the fiscal year, unless
otherwise specified by the Committee).

     2.3 “Award” means a grant of an Option, Stock Appreciation Right, Restricted Stock,
Unrestricted Stock, Stock Unit, Dividend Equivalent Rights, or Performance or Annual Incentive
Award under the Plan.

     2.4 “Award Agreement” means the written agreement between the Company and a Grantee that
evidences and sets out the terms and conditions of an Award.

     2.5 “Benefit Arrangement” shall have the meaning set forth in Section 15 hereof.

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

     2.7 “Cause” means, as determined by the Board and unless otherwise provided in an applicable
agreement with the Company or an Affiliate, (i) gross negligence or willful misconduct in
connection with the performance of duties; (ii) conviction of a criminal offense (other than minor
traffic offenses); or (iii) material breach of any term of any employment, consulting or other
services, confidentiality, intellectual property or non-competition agreements, if any, between the
Service Provider and the Company or an Affiliate.

     2.8 “Code” means the Internal Revenue Code of 1986, as now in effect or as hereafter amended.

     2.9 “Committee” means a committee of, and designated from time to time by resolution of, the
Board,

 

 

which shall be constituted as provided in Section 3.2.

     2.10 “Company” means Martek Biosciences Corporation.

     2.11 “Corporate Transaction” means (i) the dissolution or liquidation of the Company or a
merger, consolidation, or reorganization of the Company with one or more other entities in which
the Company is not the surviving entity, (ii) a sale of substantially all of the assets of the
Company to another person or entity, or (iii) any transaction (including without limitation a
merger or reorganization in which the Company is the surviving entity) which results in any person
or entity (other than persons who are stockholders or Affiliates immediately prior to the
transaction) owning 50% or more of the combined voting power of all classes of stock of the
Company.

     2.12 “Covered Employee” means a Grantee who is a Covered Employee within the meaning of
Section 162(m)(3) of the Code.

     2.13 “Disability” means the Grantee is unable to perform each of the essential duties of such
Grantee’s position by reason of a medically determinable physical or mental impairment which is
potentially permanent in character or which can be expected to last for a continuous period of not
less than 12 months.

     2.14 “Dividend Equivalent Right” means a right, granted to a Grantee under Section 13 hereof,
to receive cash, Stock, other Awards or other property equal in value to dividends paid with
respect to a specified number of shares of Stock, or other periodic payments.

     2.15 “Effective Date” means January 22, 2004, the date the Plan was approved by the Board.

     2.16 “Exchange Act” means the Securities Exchange Act of 1934, as now in effect or as
hereafter amended.

     2.17 “Fair Market Value” means the value of a share of Stock, determined as follows: if on
the Grant Date or other determination date the Stock is listed on an established national or
regional stock exchange, is admitted to quotation on The Nasdaq Stock Market, Inc. or is publicly
traded on an established securities market, the Fair Market Value of a share of Stock shall be the
closing price of the Stock on such exchange or in such market (if there is more than one such
exchange or market the Board shall determine the appropriate exchange or market) on the Grant Date
or such other determination date (or if there is no such reported closing price, the Fair Market
Value shall be the mean between the highest bid and lowest asked prices or between the high and low
sale prices on such trading day) or, if no sale of Stock is reported for such trading day, on the
next preceding day on which any sale shall have been reported. If the Stock is not listed on such
an exchange, quoted on such system or traded on such a market, Fair Market Value shall be the value
of the Stock as determined by the Board in good faith.

     2.18 “Family Member” means a person who is a spouse, former spouse, child, stepchild,
grandchild, parent, stepparent, grandparent, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law, including adoptive
relationships, of the Grantee, any person sharing the Grantee’s household (other than a tenant or
employee), a trust in which any one or more of these persons have more than fifty percent of the
beneficial interest, a foundation in which any one or more of these persons (or the Grantee)
control the management of assets, and any other entity in which one or more of these persons (or
the Grantee) own more than fifty percent of the voting interests.

     2.19 “Grant Date” means, as determined by the Board or authorized Committee, the latest to
occur of (i) the date as of which the Board approves an Award, (ii) the date on which the recipient
of an Award first becomes eligible to receive an Award under Section 5 hereof, or (iii) such other
date as may be specified by the Board.

     2.20 “Grantee” means a person who receives or holds an Award under the Plan.

     2.21 “Incentive Stock Option” means an Option that is an incentive stock option within the
meaning of Section 422 of the Code, or the corresponding provision of any subsequently enacted tax
statute, as amended from time to time.

- 2 -

 

     2.22 “Non-qualified Stock Option” means an Option that is not an incentive stock option within
the meaning of Section 422 of the Code, or the corresponding provision of any subsequently enacted
tax statute, as amended from time to time.

     2.23 “Option” means an option to purchase one or more shares of Stock pursuant to the Plan.

     2.24 “Option Price” means the exercise price for each share of Stock subject to an Option.

     2.25 “Option Proceeds” means, with respect to an Option, the sum of (i) the Option Price paid
in cash, if any, to purchase shares of Stock under such Option, plus (ii) the value of all federal,
state, and local deductions to which the Company is entitled with respect to the exercise of such
Option determined using the highest Federal tax rate applicable to corporations and a blended tax
rate for state and local taxes based on the jurisdictions in which the Company does business and
giving effect to the deduction of state and local taxes for Federal tax purposes.

     2.26 “Other Agreement” shall have the meaning set forth in Section 15 hereof.

     2.27 “Outside Director” means a member of the Board who is not an officer or employee of the
Company.

     2.28 “Performance Award” means an Award made subject to the attainment of performance goals
(as described in Section 14) over a performance period of up to ten (10) years.

     2.29 “Plan” means this Martek Biosciences Corporation 2004 Stock Incentive Plan.

     2.30 “Purchase Price” means the purchase price for each share of Stock pursuant to a grant of
Restricted Stock or Unrestricted Stock.

     2.31 “Reporting Person” means a person who is required to file reports under Section 16(a) of
the Exchange Act.

     2.32 “Restricted Stock” means shares of Stock, awarded to a Grantee pursuant to Section 10
hereof.

     2.33 “SAR Exercise Price” means the per share exercise price of an SAR granted to a Grantee
under Section 9 hereof.

     2.34 “Securities Act” means the Securities Act of 1933, as now in effect or as hereafter
amended.

     2.35 “Service” means service as a Service Provider to the Company or an Affiliate. Unless
otherwise stated in the applicable Award Agreement, a Grantee’s change in position or duties shall
not result in interrupted or terminated Service, so long as such Grantee continues to be a Service
Provider to the Company or an Affiliate. Subject to the preceding sentence, whether a termination
of Service shall have occurred for purposes of the Plan shall be determined by the Board, which
determination shall be final, binding and conclusive.

     2.36 “Service Provider” means an employee, officer or director of the Company or an Affiliate,
or a consultant or adviser currently providing services to the Company or an Affiliate.

     2.37 “Stock” means the common stock, par value $.10 per share, of the Company.

     2.38 “Stock Appreciation Right” or “SAR” means a right granted to a Grantee under Section 9
hereof.

     2.39 “Stock Unit” means a bookkeeping entry representing the equivalent of shares of Stock,
awarded to a Grantee pursuant to Section 10 hereof.

- 3 -

 

     2.40 “Subsidiary” means any “subsidiary corporation” of the Company within the meaning of
Section 424(f) of the Code.

     2.41 “Termination Date” means the date upon which an Option shall terminate or expire, as set
forth in Section 7.3 hereof.

     2.42 “Ten Percent Stockholder” means an individual who owns more than ten percent (10%) of the
total combined voting power of all classes of outstanding stock of the Company, its parent or any
of its Subsidiaries. In determining stock ownership, the attribution rules of Section 424(d) of
the Code shall be applied.

     2.43 “Unrestricted Stock” means an Award pursuant to Section 11 hereof.

3. ADMINISTRATION OF THE PLAN

     3.1. Board

     The Board shall have such powers and authorities related to the administration of the Plan as
are consistent with the Company’s certificate of incorporation and by-laws and applicable law. The
Board shall have full power and authority to take all actions and to make all determinations
required or provided for under the Plan, any Award or any Award Agreement, and shall have full
power and authority to take all such other actions and make all such other determinations not
inconsistent with the specific terms and provisions of the Plan that the Board deems to be
necessary or appropriate to the administration of the Plan, any Award or any Award Agreement. All
such actions and determinations shall be by the affirmative vote of a majority of the members of
the Board present at a meeting or by unanimous consent of the Board executed in writing in
accordance with the Company’s certificate of incorporation and by-laws and applicable law. The
interpretation and construction by the Board of any provision of the Plan, any Award or any Award
Agreement shall be final, binding and conclusive.

     3.2. Committee.

     The Board from time to time may delegate to the Committee such powers and authorities related
to the administration and implementation of the Plan, as set forth in Section 3.1 above and other
applicable provisions, as the Board shall determine, consistent with the certificate of
incorporation and by-laws of the Company and applicable law.

     (i) Except as provided in Subsection (ii) and except as the Board may otherwise
determine, the Committee, if any, appointed by the Board to administer the Plan shall
consist of two or more Outside Directors of the Company who: (a) qualify as “outside
directors” within the meaning of Section 162(m) of the Code, (b) meet such other
requirements as may be established from time to time by the Securities and Exchange
Commission for plans intended to qualify for exemption under Rule 16b—3 (or its successor)
under the Exchange Act and (c) qualify as “independent directors” as required by rules,
regulations or practices promulgated by The NASDAQ Stock Market, Inc. or any other stock
exchange or market on which the Stock is traded (but only to the extent so required).

     (ii) The Board may also appoint one or more separate committees of the Board, each
composed of one or more directors of the Company who need not be Outside Directors, who may
administer the Plan with respect to employees or other Service Providers who are not
officers or directors of the Company, may grant Awards under the Plan to such employees or
other Service Providers, and may determine all terms of such Awards.

In the event that the Plan, any Award or any Award Agreement entered into hereunder provides for
any action to be taken by or determination to be made by the Board, such action may be taken or
such determination may be made by the Committee if the power and authority to do so has been
delegated to the Committee by the Board as provided for in this Section. Unless otherwise
expressly determined by the Board, any such action or determination by the Committee shall be
final, binding and conclusive. To the extent permitted by law, the Committee may delegate its

- 4 -

 

authority under the Plan to a member of the Board.

     3.3.
Terms of Awards.

     Subject to the other terms and conditions of the Plan, the Board shall have full and final authority to:

     (i) designate Grantees,

     (ii) determine the type or types of Awards to be made to a Grantee,

     (iii) determine the number of shares of Stock to be subject to an Award,

     (iv) establish the terms and conditions of each Award (including, but not limited to, the
exercise price of any Option and the nature and duration of any restriction or condition (or
provision for lapse thereof) relating to the vesting, exercise, transfer, or forfeiture of an Award
or the shares of Stock subject thereto,

     (v) prescribe the form of each Award Agreement evidencing an Award, and

     (vi) amend, modify, or supplement the terms of any outstanding Award, including making such
changes as are necessary to avoid the imposition of the excise tax under Code Section 409A;
provided, that no such change shall materially impair the rights of the holder of an outstanding
Award without the holder’s consent.

     Such authority specifically includes the authority, in order to effectuate the purposes of the
Plan but without amending the Plan, to modify Awards to eligible individuals who are foreign
nationals or are individuals who are employed outside the United States to recognize differences in
local law, tax policy, or custom.

     As a condition to any subsequent Award, the Board shall have the right, at its discretion, to
require Grantees to return to the Company Awards previously made under the Plan. Subject to the
terms and conditions of the Plan, any such new Award shall be upon such terms and conditions as are
specified by the Board at the time the new Award is made. The Board shall have the right, in its
discretion, to make Awards in substitution or exchange for any other award under another plan of
the Company, any Affiliate, or any business entity to be acquired by the Company or an Affiliate.
The Company may retain the right in an Award Agreement to cause a forfeiture of the gain realized
by a Grantee on account of actions taken by the Grantee in violation or breach of or in conflict
with any employment agreement, non-competition agreement, any agreement prohibiting solicitation of
employees or clients of the Company or any Affiliate thereof or any confidentiality obligation with
respect to the Company or any Affiliate thereof or otherwise in competition with the Company or any
Affiliate thereof, to the extent specified in such Award Agreement applicable to the Grantee.
Furthermore, the Company may annul an Award if the Grantee is an employee of the Company or an
Affiliate thereof and is terminated for Cause as defined in the applicable Award Agreement or the
Plan, as applicable. The grant of any Award shall be contingent upon the Grantee executing the
appropriate Award Agreement.

     Notwithstanding the foregoing, no amendment or modification may be made to an outstanding
Option or SAR which reduces the Option Price or SAR Exercise Price, either by lowering the Option
Price or SAR Exercise
Price or by canceling the outstanding Option or SAR and granting a replacement Option or SAR
with a lower exercise price, provided, that, appropriate adjustments may be made to outstanding
Options and SARs pursuant to Section 17.

     3.4. Deferral Arrangement.

     The Board may permit or require the deferral of any award payment into a deferred compensation
arrangement, subject to such rules and procedures as it may establish, which may include provisions
for the payment or crediting of interest or dividend equivalents, including converting such credits
into deferred Stock equivalents and restricting deferrals to comply with hardship distribution
rules affecting 401(k) plans.

     3.5. No Liability.

- 5 -

 

     No member of the Board or of the Committee shall be liable for any action or determination
made in good faith with respect to the Plan or any Award or Award Agreement.

4. STOCK SUBJECT TO THE PLAN

     Subject to adjustment as provided in Section 17 hereof, the number of shares of Stock
available for issuance under the Plan shall be: (i) 2,574,791 shares plus (ii) any shares of Stock
granted under the Company’s 2002 Stock Incentive Plan that are forfeited on or after January 28,
2005, and the number of shares that may be available for Incentive Stock Options shall not exceed
2,574,791 shares. Notwithstanding the preceding sentence and also subject to adjustment as provided
in Section 17 hereof, the aggregate number of shares of Stock which cumulatively may be available
for issuance pursuant to Awards other than Awards of Options or SARs shall not exceed 1,000,000
shares. Stock issued or to be issued under the Plan shall be authorized but unissued shares or
issued shares that have been reacquired by the Company. If any shares covered by an Award are not
purchased or are forfeited, or if an Award otherwise terminates without delivery of any Stock
subject thereto, then the number of shares of Stock counted against the aggregate number of shares
available under the Plan with respect to such Award shall, to the extent of any such forfeiture or
termination, again be available for making Awards under the Plan. If the Option Price of any Option
granted under the Plan, or if pursuant to Section 18.3, the withholding obligation of any Grantee
with respect to an Option or other Award, is satisfied by tendering shares of Stock to the Company
(by either actual delivery or by attestation) or by withholding shares of Stock, only the number of
shares of Stock issued net of the shares of Stock tendered or withheld shall be deemed delivered
for purposes of determining the maximum number of shares of Stock available for delivery under the
Plan.”

     4.1. Effective Date.

     The Plan was originally effective as of the Effective Date and was approved by the Company’s
shareholders on March 18, 2004. The Plan as herein amended and restated shall be effective as of
January 28, 2005 (the “Amendment and Restatement Date”), subject to approval of the Plan as herein
amended and restated by the affirmative vote of a majority of the shares of Stock voting thereon.
Upon approval of the Plan as herein amended and restated by the shareholders, all Awards made under
the Plan on or after the Amendment and Restatement Date shall be fully effective as if the
shareholders of the Company had approved the Plan on the Amendment and Restatement Date. If the
shareholders of the Company fail to approve the Plan as herein amended and restated within the
one-year period set forth in this Section 4.1, any Awards made hereunder in excess of the number of
shares available for Awards under the Plan prior to its amendment and restatement shall be null and
void and of no effect, and the applicable terms of the Plan shall be the terms in effect
immediately prior to the Amendment and Restatement Date.

     4.2. Term.

     The Plan shall terminate automatically ten (10) years after the adoption of the Plan’s amendment and
restatement by the Board, and may be terminated on any earlier date as provided in Section 4.3.

     4.3. Amendment and Termination of the Plan

     The Board may, at any time and from time to time, amend, suspend, or terminate the Plan as to
any shares of Stock as to which Awards have not been made. An amendment shall be contingent on
approval of the Company’s stockholders to the extent stated by the Board, required by applicable
law or required by applicable stock exchange listing requirements. No Awards shall be made after
termination of the Plan. No amendment, suspension, or termination of the Plan shall, without the
consent of the Grantee, impair rights or obligations under any Award theretofore awarded under the
Plan.

5. AWARD ELIGIBILITY AND LIMITATIONS

     5.1. Service Providers and Other Persons

     Subject to this Section 5, Awards may be made under the Plan to: (i) any employee of, or other
Service

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Provider to, the Company or of any Affiliate, including any such employee or other Service
Provider who is an officer or director of the Company, or of any Affiliate, as the Board shall
determine and designate from time to time, (ii) any Outside Director, and (iii) any other
individual whose participation in the Plan is determined to be in the best interests of the Company
by the Board.

     5.2. Successive Awards.

     An eligible person may receive more than one Award, subject to such restrictions as are provided herein.

     5.3. Limitation on Shares of Stock Subject to Awards and Cash Awards.

     During any time when the Company has a class of equity security registered under Section 12 of
the Exchange Act:

     (i) the maximum number of shares of Stock subject to Options that can be awarded under the
Plan to any person eligible for an Award under Section 5 hereof is 150,000 per calendar year;

     (ii) the maximum number of shares that can be awarded under the Plan, other than pursuant to
an Option, to any person eligible for an Award under Section 5 hereof is 75,000 per calendar year;
and

     (iii) the maximum amount that may be earned as an Annual Incentive Award or other cash Award
in any calendar year by any one Grantee shall be $3,000,000 and the maximum amount that may be
earned as a Performance Award or other cash Award in respect of a performance period by any one
Grantee shall be $5,000,000.

     The preceding limitations in this Section 5.3 are subject to adjustment as provided in Section
17 hereof.

     5.4. Stand-Alone, Additional, Tandem, and Substitute Awards

     Awards granted under the Plan may, in the discretion of the Board, be granted either alone or
in addition to, in tandem with, or in substitution or exchange for, any other Award or any award
granted under another plan of the Company, any Affiliate, or any business entity to be acquired by
the Company or an Affiliate, or any other right of a Grantee to receive payment from the Company or
any Affiliate. In the case of a business entity acquired by the Company, the number of shares of
Stock reserved pursuant to Section 4 may be increased by the corresponding number of shares of
Stock subject to Awards assumed and, in the case of a substitution, by the net increase in the
number of shares of Stock subject to Awards before and after the substitution. Such additional,
tandem, and substitute or exchange Awards may be granted at any time. If an Award is granted in
substitution or exchange for another Award, the Board shall require the surrender of such other
Award in consideration for the grant of the new Award. In addition, Awards may be granted in lieu
of cash compensation, including in lieu of cash amounts payable under other plans of the Company or
any Affiliate, in which the value of Stock subject to the Award is
equivalent in value to the cash compensation (for example, Stock Units or Restricted Stock), or in
which the Option Price, grant price or purchase price of the Award in the nature of a right that
may be exercised is equal to the Fair Market Value of the underlying Stock minus the value of the
cash compensation surrendered (for example, Options granted with an Option Price “discounted” by
the amount of the cash compensation surrendered).

6. AWARD AGREEMENT

     Each Award granted pursuant to the Plan shall be evidenced by an Award Agreement, in such form
or forms as the Board shall from time to time determine. Award Agreements granted from time to
time or at the same time need not contain similar provisions but shall be consistent with the terms
of the Plan. Each Award Agreement evidencing an Award of Options shall specify whether such
Options are intended to be Non-qualified Stock Options or Incentive Stock Options, and in the
absence of such specification such options shall be deemed Non-qualified Stock Options.

7. TERMS AND CONDITIONS OF OPTIONS

     7.1. Option Price

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     The Option Price of each Option shall be fixed by the Board and stated in the Award Agreement
evidencing such Option. The Option Price of each Option shall be at least the Fair Market Value on
the Grant Date of a share of Stock. In no case shall the Option Price of any Option be less than
the par value of a share of Stock. The Board shall have the authority to grant maximum value
Options, which are Options that provide for a ceiling on the spread value (i.e., the difference
between the Option Price and the Fair Market Value of the Stock on the date of exercise).

     7.2. Vesting.

     Subject to Sections 7.3 and 17.3 hereof, each Option granted under the Plan shall become
exercisable at such times and under such conditions as shall be determined by the Board and stated
in the Award Agreement. For purposes of this Section 7.2, fractional numbers of shares of Stock
subject to an Option shall be rounded down to the next nearest whole number. The Board may provide,
for example, in the Award Agreement for (i) accelerated exercisability of the Option in the event
the Grantee’s Service terminates on account of death, Disability or another event, (ii) expiration
of the Option prior to its term in the event of the termination of the Grantee’s Service, (iii)
immediate forfeiture of the Option in the event the Grantee’s Service is terminated for Cause or
(iv) unvested Options to be exercised subject to the Company’s right of repurchase with respect to
unvested shares of Stock. No Option shall be exercisable in whole or in part prior to the date the
Plan is approved by the Stockholders of the Company as provided in Section 4.1 hereof.

     7.3. Term.

     Each Option granted under the Plan shall terminate, and all rights to purchase shares of Stock
thereunder shall cease, upon the expiration of ten years from the date such Option is granted, or
under such circumstances and on such date prior thereto as is set forth in the Plan or as may be
fixed by the Board and stated in the Award Agreement relating to such Option (the “Termination
Date”). Notwithstanding the foregoing, the Board may provide in the Award Agreement that the
Termination Date is up to eleven years from the date of the Option in the case that the Optionee’s
Service is terminated as a result of the Optionee’s death, but only in the case of a Non-qualified
Stock Option.

     7.4. Termination of Service.

     Each Award Agreement shall set forth the extent to which the Grantee shall have the right to
exercise the

     Option following termination of the Grantee’s Service. Such provisions shall be determined in
the sole discretion of the Board, need not be uniform among all Options issued pursuant to the
Plan, and may reflect distinctions based on the reasons for termination of Service.

     7.5. Limitations on Exercise of Option.

     Notwithstanding any other provision of the Plan, in no event may any Option be exercised, in
whole or in part, prior to the date the Plan is approved by the stockholders of the Company as
provided herein or after the occurrence of an event referred to in Section 17 hereof which results
in termination of the Option.

     7.6. Method of Exercise.

     An Option that is exercisable may be exercised by the Grantee’s delivery to the Company of
written notice of exercise on any business day, at the Company’s principal office, on the form
specified by the Company. Such notice shall specify the number of shares of Stock with respect to
which the Option is being exercised and shall be accompanied by payment in full of the Option Price
of the shares for which the Option is being exercised plus the amount (if any) of federal and/or
other taxes which the Company may, in its judgment, be required to withhold with respect to an
Award. The minimum number of shares of Stock with respect to which an Option may be exercised, in
whole or in part, at any time shall be the lesser of (i) 100 shares or such lesser number set forth
in the applicable Award Agreement and (ii) the maximum number of shares available for purchase
under the Option at the time of exercise.

     7.7. Rights of Holders of Options

     Unless otherwise stated in the applicable Award Agreement, an individual holding or exercising
an Option shall have none of the rights of a stockholder (for example, the right to receive cash or
dividend payments or

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distributions attributable to the subject shares of Stock or to direct the
voting of the subject shares of Stock ) until the shares of Stock covered thereby are fully paid
and issued to him. Except as provided in Section 17 hereof, no adjustment shall be made for
dividends, distributions or other rights for which the record date is prior to the date of such
issuance.

     7.8. Delivery of Stock Certificates.

     Promptly after the exercise of an Option by a Grantee and the payment in full of the Option
Price, such Grantee shall be entitled to the issuance of a stock certificate or certificates
evidencing his or her ownership of the shares of Stock subject to the Option. Notwithstanding any
other provision of this Plan to the contrary, the Company may elect to satisfy any requirement
under this Plan for the delivery of stock certificates through the use of book-entry.

     7.9. Limitations on Incentive Stock Options.

     An Option shall constitute an Incentive Stock Option only (i) if the Grantee of such Option is
an employee of the Company or any Subsidiary of the Company; (ii) to the extent specifically
provided in the related Award Agreement; and (iii) to the extent that the aggregate Fair Market
Value (determined at the time the Option is granted) of the shares of Stock with respect to which
all Incentive Stock Options held by such Grantee become exercisable for the first time during any
calendar year (under the Plan and all other plans of the Grantee’s employer and its Affiliates)
does not exceed $100,000. This limitation shall be applied by taking Options into account in the
order in which they were granted.

8. TRANSFERABILITY OF OPTIONS

     8.1. Transferability of Options

     Except as provided in Section 8.2, during the lifetime of a Grantee, only the Grantee (or, in
the event of legal incapacity or incompetency, the Grantee’s guardian or legal representative) may
exercise an Option. Except as provided in Section 8.2, no Option shall be assignable or
transferable by the Grantee to whom it is granted, other than by will or the laws of descent and
distribution.

     8.2. Family Transfers.

     If authorized in the applicable Award Agreement, a Grantee may transfer, not for value, all or
part of an Option, which is not an Incentive Stock Option to any Family Member provided that the
Grantee provides prior written notice to the Company, in a form satisfactory to the Company, of
such transfer. For the purpose of this Section 8.2, a “not for value” transfer is a transfer which
is (i) a gift, (ii) a transfer under a domestic relations order in settlement of marital property
rights; or (iii) a transfer to an entity in which more than fifty percent of the voting interests
are owned by Family Members (or the Grantee) in exchange for an interest in that entity. Following
a transfer under this Section 8.2, any such Option shall continue to be subject to the same terms
and conditions as were applicable immediately prior to transfer. Subsequent transfers of
transferred Options are prohibited except to Family Members of the original Grantee in accordance
with this Section 8.2 or by will or the laws of descent and distribution. The events of
termination of Service of Section 7.4 hereof shall continue to be applied with respect to the
original Grantee, following which the Option shall be exercisable by the transferee only to the
extent, and for the periods specified, in Section 7.4.

9. STOCK APPRECIATION RIGHTS

     The Board is authorized to grant Stock Appreciation Rights (“SARs”) to Grantees on the
following terms and conditions:

     9.1. Right to Payment.

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     An SAR shall confer on the Grantee to whom it is granted a right to receive, upon exercise
thereof, in shares of Stock the excess of (A) the Fair Market Value of one share of Stock on the
date of exercise over (B) the grant price of the SAR as determined by the Board. The Award
Agreement for an SAR shall specify the grant price of the SAR, which may be fixed at the Fair
Market Value of a share of Stock on the date of grant or may vary in accordance with a
predetermined formula while the SAR is outstanding; provided, that, in no event shall the grant
price be less than the Fair Market Value on the date of grant. An SAR granted in tandem with an
outstanding Option following the Grant Date of such Option may have a grant price that is equal to
the Option Price, even if such grant price is less than the Fair Market Value of a share of Stock
on the grant date of the SAR.

     9.2. Other Terms.

     The Board shall determine at the date of grant or thereafter, the time or times at which and
the circumstances under which an SAR may be exercised in whole or in part (including based on
achievement of performance goals and/or future service requirements), the time or times at which
SARs shall cease to be or become exercisable following termination of Service or upon other
conditions, the method of exercise, method of settlement, method by or forms in which Stock will be
delivered or deemed to be delivered to Grantees, whether or not an SAR shall be in tandem or in
combination with any other Award, and any other terms and conditions of any SAR.

10. RESTRICTED STOCK AND STOCK UNITS

     10.1. Grant of Restricted Stock or Stock Units.

     The Board may from time to time grant Restricted Stock or Stock Units to persons eligible to
receive Awards under Section 5 hereof, subject to such restrictions, conditions and other terms, if any, as
the Board may determine. Awards of Restricted Stock may be made for no consideration (other than
par value of the shares which is deemed paid by Services already rendered).

     10.2. Restrictions.

     At the time a grant of Restricted Stock or Stock Units is made, the Board may, in its sole
discretion, establish a period of time (a “restricted period”) applicable to such Restricted Stock
or Stock Units. Each Award of Restricted Stock or Stock Units may be subject to a different
restricted period. The Board may, in its sole discretion, at the time a grant of Restricted Stock
or Stock Units is made, prescribe restrictions in addition to or other than the expiration of the
restricted period, including the satisfaction of corporate or individual performance objectives,
which may be applicable to all or any portion of the Restricted Stock or Stock Units in accordance
with Section 14.1 and 14.2. Neither Restricted Stock nor Stock Units may be sold, transferred,
assigned, pledged or otherwise encumbered or disposed of during the restricted period or prior to
the satisfaction of any other restrictions prescribed by the Board with respect to such Restricted
Stock or Stock Units.

     10.3. Restricted Stock Certificates.

     The Company shall issue, in the name of each Grantee to whom Restricted Stock has been
granted, stock certificates representing the total number of shares of Restricted Stock granted to
the Grantee, as soon as reasonably practicable after the Grant Date. The Board may provide in an
Award Agreement that either (i) the Secretary of the Company shall hold such certificates for the
Grantee’s benefit until such time as the Restricted Stock is forfeited to the Company or the
restrictions lapse, or (ii) such certificates shall be delivered to the Grantee, provided,
however, that such certificates shall bear a legend or legends that comply with the applicable
securities laws and regulations and makes appropriate reference to the restrictions imposed under
the Plan and the Award Agreement.

     10.4. Rights of Holders of Restricted Stock.

     Unless the Board otherwise provides in an Award Agreement, holders of Restricted Stock shall
have the right to vote such Stock and the right to receive any dividends declared or paid with
respect to such Stock. The Board may provide that any dividends paid on Restricted Stock must be
reinvested in shares of Stock, which may or may not be subject to the same vesting conditions and
restrictions applicable to such Restricted Stock. All distributions, if any,

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received by a Grantee
with respect to Restricted Stock as a result of any stock split, stock dividend, combination of
shares, or other similar transaction shall be subject to the restrictions applicable to the
original Grant.

     10.5. Rights of Holders of Stock Units.

          10.5.1. Voting and Dividend Rights.

     Unless the Board otherwise provides in an Award Agreement, holders of Stock Units shall have
no rights as stockholders of the Company. The Board may provide in an Award Agreement evidencing a
grant of Stock Units that the holder of such Stock Units shall be entitled to receive, upon the
Company’s payment of a cash dividend on its outstanding Stock, a cash payment for each Stock Unit
held equal to the per-share dividend paid on the Stock. Such Award Agreement may also provide that
such cash payment will be deemed reinvested in additional Stock Units at a price per unit equal to
the Fair Market Value of a share of Stock on the date that such dividend is paid.

          10.5.2. Creditor’s Rights.

     A holder of Stock Units shall have no rights other than those of a general creditor of the
Company. Stock Units represent an unfunded and unsecured obligation of the Company, subject to the
terms and conditions of the applicable Award Agreement.

     10.6. Termination of Service.

     Unless the Board otherwise provides in an Award Agreement or in writing after the Award
Agreement is issued, upon the termination of a Grantee’s Service, any Restricted Stock or Stock
Units held by such Grantee that have not vested, or with respect to which all applicable
restrictions and conditions have not lapsed, shall immediately be deemed forfeited. Upon
forfeiture of Restricted Stock or Stock Units, the Grantee shall have no further rights with
respect to such Award, including but not limited to any right to vote Restricted Stock or any right
to receive dividends with respect to shares of Restricted Stock or Stock Units.

     10.7. Purchase of Restricted Stock.

     The Grantee shall be required, to the extent required by applicable law, to purchase the
Restricted Stock from the Company at a Purchase Price equal to the greater of (i) the aggregate par
value of the shares of Stock represented by such Restricted Stock or (ii) the Purchase Price, if
any, specified in the Award Agreement relating to such Restricted Stock. The Purchase Price shall
be payable in a form described in Section 12 or, in the discretion of the Board, in consideration
for past Services rendered to the Company or an Affiliate.

     10.8. Delivery of Stock.

     Upon the expiration or termination of any restricted period and the satisfaction of any other
conditions prescribed by the Board, the restrictions applicable to shares of Restricted Stock or
Stock Units settled in Stock shall lapse, and, unless otherwise provided in the Award Agreement, a
stock certificate for such shares shall be delivered, free of all such restrictions, to the Grantee
or the Grantee’s beneficiary or estate, as the case may be.

11. UNRESTRICTED STOCK AWARDS

     The Board may, in its sole discretion, grant (or sell at par value or such other higher
purchase price determined by the Board) an Unrestricted Stock Award to any Grantee pursuant to
which such Grantee may receive shares of Stock free of any restrictions (“Unrestricted Stock”)
under the Plan. Unrestricted Stock Awards may be granted or sold as described in the preceding
sentence in respect of past services and other valid consideration, or in lieu of, or in addition
to, any cash compensation due to such Grantee.

12. FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK

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     12.1. General Rule.

     Payment of the Option Price for the shares purchased pursuant to the exercise of an Option or
the Purchase Price for Restricted Stock shall be made in cash or in cash equivalents acceptable to
the Company.

     12.2. Surrender of Stock.

     To the extent the Award Agreement so provides, payment of the Option Price for shares
purchased pursuant to the exercise of an Option or the Purchase Price for Restricted Stock may be
made all or in part through the tender to the Company of shares of Stock, which shares, if acquired
from the Company, shall have been held for at least six months at the time of tender and which
shall be valued, for purposes of determining the extent to which the Option Price or Purchase Price
has been paid thereby, at their Fair Market Value on the date of exercise or surrender.

     12.3. Broker-Assisted Exercise.

     With respect to an Option only, to the extent the Award Agreement so provides and subject to
any restrictions or limitations set by the Board in order to comply with applicable law or
regulation, payment of the Option Price for shares purchased pursuant to the exercise of an Option
may be made all or in part by delivery (on
a form acceptable to the Board) of an irrevocable direction to a licensed securities broker
acceptable to the Company to sell shares of Stock and to deliver all or part of the sales proceeds
to the Company in payment of the Option Price and any withholding taxes described in Section 18.3.

12.4. Other Forms of Payment.

     To the extent the Award Agreement so provides, payment of the Option Price for shares
purchased pursuant to exercise of an Option or the Purchase Price for Restricted Stock may be made
in any other form that is consistent with applicable laws, regulations and rules.

13. DIVIDEND EQUIVALENT RIGHTS

     13.1. Dividend Equivalent Rights.

     A Dividend Equivalent Right is an Award entitling the recipient to receive credits based on
cash distributions that would have been paid on the shares of Stock specified in the Dividend
Equivalent Right (or other award to which it relates) if such shares had been issued to and held by
the recipient. A Dividend Equivalent Right may be granted hereunder to any Grantee as a component
of another Award or as a freestanding award. The terms and conditions of Dividend Equivalent
Rights shall be specified in the grant. Dividend equivalents credited to the holder of a Dividend
Equivalent Right may be paid currently or may be deemed to be reinvested in additional shares of
Stock, which may thereafter accrue additional equivalents. Any such reinvestment shall be at Fair
Market Value on the date of reinvestment. Dividend Equivalent Rights may be settled in cash or
Stock or a combination thereof, in a single installment or installments, all determined in the sole
discretion of the Board. A Dividend Equivalent Right granted as a component of another Award may
provide that such Dividend Equivalent Right shall be settled upon exercise, settlement, or payment
of, or lapse of restrictions on, such other award, and that such Dividend Equivalent Right shall
expire or be forfeited or annulled under the same conditions as such other award. A Dividend
Equivalent Right granted as a component of another Award may also contain terms and conditions
different from such other award.

     13.2. Termination of Service.

     Except as may otherwise be provided by the Board either in the Award Agreement or in writing
after the

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Award Agreement is issued, a Grantee’s rights in all Dividend Equivalent Rights or
interest equivalents shall automatically terminate upon the Grantee’s termination of Service for
any reason.

14. PERFORMANCE AND ANNUAL INCENTIVE AWARDS

     14.1. Performance Conditions

     The right of a Grantee to exercise or receive a grant or settlement of any Award, and the
timing thereof, may be subject to such performance conditions as may be specified by the Board.
The Board may use such business criteria and other measures of performance as it may deem
appropriate in establishing any performance conditions, and may exercise its discretion to reduce
the amounts payable under any Award subject to performance conditions, except as limited under
Sections 14.2 hereof in the case of a Performance Award or Annual Incentive Award intended to
qualify under Code Section 162(m). If and to the extent required under Code Section 162(m), any
power or authority relating to a Performance Award or Annual Incentive Award intended to qualify
under Code Section 162(m), shall be exercised by the Committee and not the Board.

     14.2. Performance or Annual Incentive Awards Granted to Designated Covered Employees

          If and to the extent that the Committee determines that a Performance or Annual Incentive
Award to be granted to a Grantee who is designated by the Committee as likely to be a Covered
Employee should qualify as “performance-based compensation” for purposes of Code Section 162(m),
the grant, exercise and/or settlement of such Performance or Annual Incentive Award shall be
contingent upon achievement of pre-established performance goals and other terms set forth in this
Section 14.2.

          14.2.1. Performance Goals Generally.

     The performance goals for such Performance or Annual Incentive Awards shall consist of one or
more business criteria and a targeted level or levels of performance with respect to each of such
criteria, as specified by the Committee consistent with this Section 14.2. Performance goals shall
be objective and shall otherwise meet the requirements of Code Section 162(m) and regulations
thereunder including the requirement that the level or levels of performance targeted by the
Committee result in the achievement of performance goals being “substantially uncertain.” The
Committee may determine that such Performance or Annual Incentive Awards shall be granted,
exercised and/or settled upon achievement of any one performance goal or that two or more of the
performance goals must be achieved as a condition to grant, exercise and/or settlement of such
Performance or Annual Incentive Awards. Performance goals may differ for Performance or Annual
Incentive Awards granted to any one Grantee or to different Grantees.

          14.2.2. Business Criteria.

     One or more of the following business criteria for the Company, on a consolidated basis,
and/or specified subsidiaries or business units of the Company (except with respect to the total
stockholder return and earnings per share criteria), shall be used exclusively by the Committee in
establishing performance goals for such Performance or Annual Incentive Awards: (1) total
stockholder return; (2) such total stockholder return as compared to total return (on a comparable
basis) of a publicly available index such as, but not limited to, the Standard & Poor’s 500 Stock
Index; (3) net income; (4) pretax earnings; (5) earnings before interest expense, taxes,
depreciation and amortization; (6) pretax operating earnings after interest expense and before
bonuses, service fees, and extraordinary or special items; (7) operating margin; (8) earnings per
share; (9) return on equity; (10) return on capital; (11) return on investment; (12) operating
earnings; (13) working capital; (14) ratio of debt to stockholders’ equity; (15) revenue; (16)
technology development milestones; and (17) business development.

          14.2.3. Timing For Establishing Performance Goals.

     Performance goals shall be established not later than 90 days after the beginning of any
performance period

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applicable to such Performance or Annual Incentive Awards, or at such other date
as may be required or permitted for “performance-based compensation” under Code Section 162(m).

          14.2.4. Performance or Annual Incentive Award Pool.

     The Committee may establish a Performance or Annual Incentive Award pool, which shall be an
unfunded pool, for purposes of measuring Company performance in connection with Performance or
Annual Incentive Awards.

          14.2.5. Settlement of Performance or Annual Incentive Awards; Other Terms.

     Settlement of such Performance or Annual Incentive Awards shall be in cash, Stock, other
Awards or other property, in the discretion of the Committee. The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be made in connection with such
Performance or Annual Incentive Awards. The Committee shall specify the circumstances in which
such Performance or Annual Incentive Awards shall be paid or forfeited in the event of termination
of Service by the Grantee prior to the end of a performance period or settlement of Performance
Awards.

     14.3. Written Determinations.

          All determinations by the Committee as to the establishment of performance goals, the amount
of any Performance Award pool or potential individual Performance Awards and as to the achievement
of performance goals relating to Performance Awards, and the amount of any Annual Incentive Award
pool or potential individual Annual Incentive Awards and the amount of final Annual Incentive
Awards, shall be made in writing in the case of any Award intended to qualify under Code Section
162(m). To the extent required to comply with Code Section 162(m), the Committee may delegate any
responsibility relating to such Performance Awards or Annual Incentive Awards.

     14.4. Status of Section 15.2 Awards Under Code Section 162(m)

          It is the intent of the Company that Performance Awards and Annual Incentive Awards under
Section 14.2 hereof granted to persons who are designated by the Committee as likely to be Covered
Employees within the meaning of Code Section 162(m) and regulations thereunder shall, if so
designated by the Committee, constitute “qualified performance-based compensation” within the
meaning of Code Section 162(m) and regulations thereunder. Accordingly, the terms of Section 14.2,
including the definitions of Covered Employee and other terms used therein, shall be interpreted in
a manner consistent with Code Section 162(m) and regulations thereunder. The foregoing
notwithstanding, because the Committee cannot determine with certainty whether a given Grantee will
be a Covered Employee with respect to a fiscal year that has not yet been completed, the term
Covered Employee as used herein shall mean only a person designated by the Committee, at the time
of grant of Performance Awards or an Annual Incentive Award, as likely to be a Covered Employee
with respect to that fiscal year. If any provision of the Plan or any agreement relating to such
Performance Awards or Annual Incentive Awards does not comply or is inconsistent with the
requirements of Code Section 162(m) or regulations thereunder, such provision shall be construed or
deemed amended to the extent necessary to conform to such requirements.

15. PARACHUTE LIMITATIONS

     Notwithstanding any other provision of this Plan or of any other agreement, contract, or
understanding heretofore or hereafter entered into by a Grantee with the Company or any Affiliate,
except an agreement, contract, or understanding hereafter entered into that expressly modifies or
excludes application of this paragraph (an “Other Agreement”), and notwithstanding any formal or
informal plan or other arrangement for the direct or indirect provision of compensation to the
Grantee (including groups or classes of Grantees or beneficiaries of which the Grantee is a
member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit
to or for the Grantee (a “Benefit Arrangement”), if the Grantee is a “disqualified individual,” as
defined in Section 280G(c) of the Code, any Option, Restricted Stock or Stock Unit held by that
Grantee and any right to receive any payment or other benefit under

- 14 -

 

this Plan shall not become exercisable or vested (i) to the extent that such right to exercise, vesting, payment, or benefit,
taking into account all other rights, payments, or benefits to or for the Grantee under this Plan,
all Other Agreements, and all Benefit Arrangements, would cause any payment or benefit to the
Grantee under this Plan to be considered a “parachute payment” within the meaning of Section
280G(b)(2) of the Code as then in effect (a “Parachute Payment”) and (ii) if, as a result of
receiving a Parachute Payment, the aggregate after-tax amounts received by the Grantee from the
Company under this Plan, all Other Agreements, and all Benefit Arrangements would be less than the
maximum after-tax amount that could be received by the Grantee without causing any such payment or
benefit to be considered a Parachute Payment. In the event that the receipt of any such right to
exercise, vesting, payment, or benefit under this Plan, in conjunction with all other rights,
payments, or benefits to or for the Grantee under any Other Agreement or any Benefit Arrangement
would cause the Grantee to be considered to have received a Parachute Payment under this Plan that
would have the effect of decreasing the after-tax amount received by the Grantee as described in
clause (ii) of the preceding sentence, then the Grantee shall have the right, in the Grantee’s sole
discretion, to designate those rights, payments, or benefits under this Plan, any Other Agreements,
and any Benefit Arrangements that should be reduced or eliminated so as to avoid having the payment
or benefit to the Grantee under this Plan be deemed to be a Parachute Payment.

16. REQUIREMENTS OF LAW

     16.1. General.

     The Company shall not be required to sell or issue any shares of Stock under any Award if the
sale or issuance of such shares would constitute a violation by the Grantee, any other individual
exercising an Option, or the Company of any provision of any law or regulation of any governmental
authority, including without limitation any federal or state securities laws or regulations. If at
any time the Company shall determine, in its discretion, that the listing, registration or
qualification of any shares subject to an Award upon any securities exchange or under any
governmental regulatory body is necessary or desirable as a condition of, or in connection with,
the issuance or purchase of shares hereunder, no shares of Stock may be issued or sold to the
Grantee or any other individual exercising an Option pursuant to such Award unless such listing,
registration, qualification, consent or approval shall have been effected or obtained free of any
conditions not acceptable to the Company, and any delay caused thereby shall in no way affect the
date of termination of the Award. Specifically, in connection with the Securities Act, upon the
exercise of any Option or the delivery of any shares of Stock underlying an Award, unless a
registration statement under such Act is in effect with respect to the shares of Stock covered by
such Award, the Company shall not be required to sell or issue such shares unless the Board has
received evidence satisfactory to it that the Grantee or any other individual exercising an Option
may acquire such shares pursuant to an exemption from registration under the Securities Act. Any
determination in this connection by the Board shall be final, binding, and conclusive. The Company
may, but shall in no event be obligated to, register any securities covered hereby pursuant to the
Securities Act. The Company shall not be obligated to take any affirmative action in order to
cause the exercise of an Option or the issuance of shares of Stock pursuant to the Plan to comply
with any law or regulation of any governmental authority. As to any jurisdiction that expressly
imposes the requirement that an Option shall not be exercisable until the shares of Stock covered
by such Option are registered or are exempt from registration, the exercise of such Option (under
circumstances in which the laws of such jurisdiction apply) shall be deemed conditioned upon the
effectiveness of such registration or the availability of such an exemption.

     16.2. Rule 16b-3.

     During any time when the Company has a class of equity security registered under Section 12 of
the Exchange Act, it is the intent of the Company that Awards pursuant to the Plan and the exercise
of Options granted hereunder will qualify for the exemption provided by Rule 16b-3 under the
Exchange Act. To the extent that any provision of the Plan or action by the Board does not comply
with the requirements of Rule 16b-3, it shall be deemed inoperative to the extent permitted by law
and deemed advisable by the Board, and shall not affect the validity of the Plan. In the event
that Rule 16b-3 is revised or replaced, the Board may exercise its discretion to modify this Plan
in any respect necessary to satisfy the requirements of, or to take advantage of any features of,
the revised exemption or its replacement.

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17. EFFECT OF CHANGES IN CAPITALIZATION

     17.1. Changes in Stock.

     If the number of outstanding shares of Stock is increased or decreased or the shares of Stock
are changed into or exchanged for a different number or kind of shares or other securities of the
Company on account of any recapitalization, reclassification, stock split, reverse split,
combination of shares, exchange of shares, stock dividend or other distribution payable in capital
stock, or other increase or decrease in such shares effected without receipt of consideration by
the Company occurring after the Effective Date, the number and kinds of shares for which grants of
Options and other Awards may be made under the Plan shall be adjusted proportionately and
accordingly by the Company. In addition, the number and kind of shares for which Awards are
outstanding shall be adjusted proportionately and accordingly so that the proportionate interest of
the Grantee immediately following such event shall, to the extent practicable, be the same as
immediately before such event. Any such adjustment in outstanding Options or SARs shall not change
the aggregate Option Price or SAR Exercise Price payable with
respect to shares that are subject to the unexercised portion of an outstanding Option or SAR, as
applicable, but shall include a corresponding proportionate adjustment in the Option Price or SAR
Exercise Price per share. The conversion of any convertible securities of the Company shall not be
treated as an increase in shares effected without receipt of consideration. Notwithstanding the
foregoing, in the event of any distribution to the Company’s stockholders of securities of any
other entity or other assets (including an extraordinary cash dividend but excluding a
non-extraordinary dividend payable in cash or in stock of the Company) without receipt of
consideration by the Company, the Company may, in such manner as the Company deems appropriate,
adjust (i) the number and kind of shares subject to outstanding Awards and/or (ii) the exercise
price of outstanding Options and Stock Appreciation Rights to reflect such distribution.

     17.2. Reorganization in Which the Company Is the Surviving Entity Which does not
Constitute a Corporate Transaction.

     Subject to Section 17.3 hereof, if the Company shall be the surviving entity in any
reorganization, merger, or consolidation of the Company with one or more other entities which does
not constitute a Corporate Transaction, any Option or SAR theretofore granted pursuant to the Plan
shall pertain to and apply to the securities to which a holder of the number of shares of Stock
subject to such Option or SAR would have been entitled immediately following such reorganization,
merger, or consolidation, with a corresponding proportionate adjustment of the Option Price or SAR
Exercise Price per share so that the aggregate Option Price or SAR Exercise Price thereafter shall
be the same as the aggregate Option Price or SAR Exercise Price of the shares remaining subject to
the Option or SAR immediately prior to such reorganization, merger, or consolidation. Subject to
any contrary language in an Award Agreement evidencing an Award, any restrictions applicable to
such Award shall apply as well to any replacement shares received by the Grantee as a result of the
reorganization, merger or consolidation.

     17.3. Corporate Transaction.

          Subject to the exceptions set forth in the last sentence of this Section 17.3 and the last
sentence of Section 17.4:

          (i) upon the occurrence of a Corporate Transaction, all outstanding shares of Restricted Stock
shall be deemed to have vested, and all restrictions and conditions applicable to such shares of
Restricted Stock shall be deemed to have lapsed, immediately prior to the occurrence of such
Corporate Transaction, and

          (ii) either of the following two actions shall be taken:

               (A) fifteen days prior to the scheduled consummation of a Corporate Transaction, all Options
and SARs outstanding hereunder shall become immediately exercisable and shall remain exercisable
for a period of fifteen days, or

               (B) the Board may elect, in its sole discretion, to cancel any outstanding Awards of Options,
Restricted Stock, or SARs and pay or deliver, or cause to be paid or delivered, to the holder
thereof an amount in cash or securities having a value (as determined by the Board acting in good
faith), in the case of Restricted Stock, equal to

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the formula or fixed price per share paid to
holders of shares of Stock and, in the case of Options or SARs, equal to the product of the number
of shares of Stock subject to the Option or SAR (the “Award Shares”) multiplied by the amount, if
any, by which (I) the formula or fixed price per share paid to holders of shares of Stock pursuant
to such transaction exceeds (II) the Option Price or SAR Exercise Price applicable to such Award
Shares.

          With respect to the Company’s establishment of an exercise window, (i) any exercise of an
Option or SAR during such fifteen-day period shall be conditioned upon the consummation of the
event and shall be effective only immediately before the consummation of the event, and (ii) upon
consummation of any Corporate Transaction the Plan, and all outstanding but unexercised Options and
SARs shall terminate. The Board shall send written notice of an event that will result in such a
termination to all individuals who hold Options and SARs
not later than the time at which the Company gives notice thereof to its stockholders. This
Section 17.3 shall not apply to any Corporate Transaction to the extent that provision is made in
writing in connection with such Corporate Transaction for the assumption or continuation of the
Options, SARs and Restricted Stock theretofore granted, or for the substitution for such Options,
SARs and Restricted Stock for new common stock options and stock appreciation rights and new common
stock restricted stock relating to the stock of a successor entity, or a parent or subsidiary
thereof, with appropriate adjustments as to the number of shares (disregarding any consideration
that is not common stock) and option and stock appreciation right exercise prices, in which event
the Plan, Options, SARs and Restricted Stock theretofore granted shall continue in the manner and
under the terms so provided.

     17.4. Adjustments.

     Adjustments under this Section 17 related to shares of Stock or securities of the Company
shall be made by the Board, whose determination in that respect shall be final, binding and
conclusive. No fractional shares or other securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case
by rounding downward to the nearest whole share. The Board shall determine the effect of a
Corporate Transaction upon Awards other than Options, SARs, and Restricted Stock, and such effect
shall be set forth in the appropriate Award Agreement. The Board may provide in the Award
Agreements at the time of grant, or any time thereafter with the consent of the Grantee, for
different provisions to apply to an Award in place of those described in Sections 17.1, 17.2 and
17.3.

     17.5. No Limitations on Company.

     The making of Awards pursuant to the Plan shall not affect or limit in any way the right or
power of the Company to make adjustments, reclassifications, reorganizations, or changes of its
capital or business structure or to merge, consolidate, dissolve, or liquidate, or to sell or
transfer all or any part of its business or assets.

18. GENERAL PROVISIONS

     18.1. Disclaimer of Rights

     No provision in the Plan or in any Award or Award Agreement shall be construed to confer upon
any individual the right to remain in the employ or service of the Company or any Affiliate, or to
interfere in any way with any contractual or other right or authority of the Company either to
increase or decrease the compensation or other payments to any individual at any time, or to
terminate any employment or other relationship between any individual and the Company. In
addition, notwithstanding anything contained in the Plan to the contrary, unless otherwise stated
in the applicable Award Agreement, no Award granted under the Plan shall be affected by any change
of duties or position of the Grantee, so long as such Grantee continues to be a director, officer,
consultant or employee of the Company or an Affiliate. The obligation of the Company to pay any
benefits pursuant to this Plan shall be interpreted as a contractual obligation to pay only those
amounts described herein, in the manner and under the conditions prescribed herein. The Plan shall
in no way be interpreted to require the Company to transfer any amounts to a third party trustee or
otherwise hold any amounts in trust or escrow for payment to any Grantee or beneficiary under the
terms of the Plan.

     18.2. Nonexclusivity of the Plan

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     Neither the adoption of the Plan nor the submission of the Plan to the stockholders of the
Company for approval shall be construed as creating any limitations upon the right and authority of
the Board to adopt such other incentive compensation arrangements (which arrangements may be
applicable either generally to a class or classes of individuals or specifically to a particular
individual or particular individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of stock options otherwise than under the Plan.

     18.3. Withholding Taxes

     The Company or an Affiliate, as the case may be, shall have the right to deduct from payments
of any kind otherwise due to a Grantee any federal, state, or local taxes of any kind required by
law to be withheld with respect to the vesting of or other lapse of restrictions applicable to an
Award or upon the issuance of any shares of Stock upon the exercise of an Option or pursuant to an
Award. At the time of such vesting, lapse, or exercise, the Grantee shall pay to the Company or
the Affiliate, as the case may be, any amount that the Company or the Affiliate may reasonably
determine to be necessary to satisfy such withholding obligation. Subject to the prior approval of
the Company or the Affiliate, which may be withheld by the Company or the Affiliate, as the case
may be, in its sole discretion, the Grantee may elect to satisfy such obligations, in whole or in
part, (i) by causing the Company or the Affiliate to withhold shares of Stock otherwise issuable to
the Grantee or (ii) by delivering to the Company or the Affiliate shares of Stock already owned by
the Grantee. The shares of Stock so delivered or withheld shall have an aggregate Fair Market
Value equal to such withholding obligations. The Fair Market Value of the shares of Stock used to
satisfy such withholding obligation shall be determined by the Company or the Affiliate as of the
date that the amount of tax to be withheld is to be determined. A Grantee who has made an election
pursuant to this Section 18.3 may satisfy his or her withholding obligation only with shares of
Stock that are not subject to any repurchase, forfeiture, unfulfilled vesting, or other similar
requirements.

     18.4. Captions

     The use of captions in this Plan or any Award Agreement is for the convenience of reference
only and shall not affect the meaning of any provision of the Plan or such Award Agreement.

     18.5. Other Provisions

     Each Award granted under the Plan may contain such other terms and conditions not inconsistent
with the Plan as may be determined by the Board, in its sole discretion.

     18.6. Number and Gender

     With respect to words used in this Plan, the singular form shall include the plural form, the
masculine gender shall include the feminine gender, etc., as the context requires.

     18.7. Severability

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

     18.8. Governing Law

     The validity and construction of this Plan and the instruments evidencing the Award hereunder
shall be governed by the laws of the State of Maryland, other than any conflicts or choice of law
rule or principle that might otherwise refer construction or interpretation of this Plan and the
instruments evidencing the Awards granted hereunder to the substantive laws of any other
jurisdiction.

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     18.9. Code Section 409A

     If any provision of this Plan would otherwise result in the imposition of the excise tax under
Section 409A of the Code with regard to any Awards or payments made pursuant to this Plan, such
provision shall not be given
effect, or shall be amended, solely to the extent necessary to avoid the imposition of such excise
tax. The Board shall determine, in its sole discretion, the necessity and nature of any
modifications required by this Section 18.9.

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