Document:

exv10w5

 

Exhibit 10.5

SEVERANCE AGREEMENT

	 	 	THIS SEVERANCE AGREEMENT (the “Agreement”) is made as of December 1, 2006 by and
between TTM Printed Circuit Group, Inc., formerly known as TTM (Ozarks) Acquisition, Inc.
(“TTM”), and                                         , an employee of TTM or one of its affiliates (the
“Employee”).

     WHEREAS, on October 27, 2006 TTM acquired substantially all of the assets of the Tyco Printed
Circuit Group business unit (“TPCG”) of Tyco International Ltd. (the
“Acquisition”).

     WHEREAS, TTM recognizes that the Acquisition may give rise to uncertainty among certain
members of the TCPG senior management team, and TTM considers it in its best interests to reduce
the risk of the Employee’s departure and the inevitable distraction of the Employee’s attention
from his or her duties to TTM, which are normally attendant to such uncertainties.

     WHEREAS, the Employee confirms that the terms of this Agreement reduce the risks of his or her
departure and distraction of his or her attention from his or her duties to TTM and, accordingly,
desires to enter into this Agreement.

     NOW, THEREFORE, for good and valuable consideration, the Employee and TTM hereby agree as
follows:

1. Definitions.

          (a) Cause. For purposes of this Agreement, the term “Cause” shall mean incompetent performance
or substantial or continuing inattention to or neglect of the duties and responsibilities assigned
to the Employee as determined by the Employee’s current supervisor, with the concurrence of the
Human Resources department; fraud, misappropriation or embezzlement involving TTM or any of its
affiliates; a material breach of TTM’s policies, this Agreement or any other agreement between the
Employee and TTM (or any of its affiliates); or commission of any felony.

          (b) Closing: Closing Date. For purposes of this agreement, “Closing” shall have the meaning described in that
certain Stock and Asset Purchase Agreement by and among Tyco Printed Circuit Group, L.P., Tyco
Electronics Corporation, Raychem International, Tyco Kappa Limited, Tyco Electronics Logistics AG
and TTM (Ozarks) Acquisition, Inc dated as of August 2, 2006 (the “Purchase Agreement”).
The date on which the Closing occurs is October 27, 2006 (the “Closing Date”).

     2. Term. The term of this Agreement shall commence on the Closing Date and end on the 18-month
anniversary of the Closing Date (April 27, 2008).

     3. Severance; Eligibility

          (a) Compensation and Benefits Required by Law or Applicable Benefit Plan. Notwithstanding anything to the contrary herein, the Employee or his or her estate shall be
entitled to any and all compensation, benefits, awards and other payments required by any written
employee benefit plan in effect and in which the Employee participates as of the time of the
termination of his or her employment or applicable law, after taking into account the agreements
set forth herein.

          (b) Severance. If the Employee’s employment with TTM is terminated by TTM or any of its affiliates other
than for Cause (subject to paragraph 3(c) hereof) prior to the 18-month anniversary of the Closing
Date, then, as soon as practical following the date of such termination, TTM (or one of its
affiliates) will pay the Employee a lump sum cash payment in an amount equal to 12 months of

 

 

the Employee’s then current base salary (minus any applicable withholding taxes (the
“Severance Payment”)).

          (c) Eligibility for Severance Payment. Notwithstanding anything to the contrary herein, in the event that the Employee’s
employment with TTM is terminated as a result of any of the following: (i) the Employee’s
resignation; (ii) termination by TTM or any of its affiliates for Cause; or (iii) the Employee’s
death or long-term disability; the Employee shall forfeit any and all rights to receive a Severance
Payment under this Agreement.

          (d) No Severance Payment Without Release. The Employee shall not be entitled to any of the compensation or payments provided herein
in respect of the termination of his or her employment, unless and until he or she has provided to
TTM a full release of claims, in a form reasonably acceptable to TTM, which release shall be dated
not earlier than the date of the termination of his or her employment and shall release TTM and its
affiliates of any and all claims that the Employee may have in respect of his or her employment
with TTM or its affiliates and/or the termination of such employment.

     4. At Will Employment. The Employee’s employment shall continue to be at-will, as defined under applicable law.
If the Employee’s employment terminates for any reason or no reason, the Employee shall not be
entitled to any compensation, benefits, damages, awards or other payments in respect of such
termination, except as provided in this Agreement.

     5. Non-Benefit Bearing Payments. Any amount to be paid under this Agreement shall not be treated as compensation for
purposes of computing or determining any additional benefit payable under any bonus plan, savings
plan, insurance plan, pension plan, or other employee benefit plan maintained by TTM or any of its
affiliates.

     6. Governing Law. This Agreement shall be deemed to be made in, and in all respects shall be interpreted,
construed and governed by and in accordance with, the laws of the State of Delaware without regard
to any principles governing conflicts of laws or canons of construction interpreting written
agreements against the drafter.

     7. Waiver of Right To Jury Trial. TTM AND EMPLOYEE HEREBY AGREE TO WAIVE ALL RIGHTS TO A JURY TRIAL IN CONNECTION WITH ANY
DISPUTE ARISING OUT OF OR RELATING TO THE TERMS OF THIS AGREEMENT.

     8. Severability. If any clause, phrase or provision of this Agreement or the application thereof to any
person or circumstance shall be invalid or unenforceable under any applicable law, this shall not
affect or render invalid or unenforceable the remainder of this Agreement, and this Agreement shall
be deemed to be amended to the extent necessary, but only to the extent necessary, to permit the
enforcement of the terms of this Agreement, as so amended.

     9. Waiver. The waiver by TTM of a breach by the Employee of any provision of this Agreement shall not
be construed as a waiver of any subsequent breach.

     10. Entire Agreement. This Agreement sets forth the entire understanding of TTM and the Employee, and supersedes
all prior agreements and communications, whether oral or written, specifically pertaining to the
subject matter hereof. This Agreement shall not be modified except by written agreement of the
Employee and TTM.

[SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first set
forth above.

	 	 	 	 	 
	 	 	TTM PRINTED CIRCUIT GROUP, INC.
	 
	 	 	 	 
	 

	 	By:
	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	EMPLOYEE:
	 
	 	 	 	 
	 	 	 
	 

	 	Name:	 	 
	 
	 	 	 	 
	 

	 	Date:	 	 
	 

	 	 	 	 

 

 

 

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    SCHEDULE
    TO

    FORM OF SEVERANCE
    AGREEMENT

 

    The form of Severance Agreement was executed by the following
    persons on the dates indicated:

 

	 	 	 	 	 
	
    Name
	
 
	
    Title
	
 
	
    Date of Execution

	

    Phillip Titterton
    

	
 
	
    Vice President, Operations
    
	
 
	
    December 1, 2006
    

	

     
    

	
 
	
     
    
	
 
	
     
    

	

    Bo Price
    

	
 
	
    Accounting Manager
    
	
 
	
    December 1, 2006
    

	

     
    

	
 
	
     
    
	
 
	
     
    

	

    John Vesce
    

	
 
	
    Vice President, Product Development
    
	
 
	
    December 1, 2006
    

	

     
    

	
 
	
     
    
	
 
	
     
    

	

    Curtis Robinson
    

	
 
	
    Vice President, Administration
    
	
 
	
    December 1, 2006
    

	

     
    

	
 
	
     
    
	
 
	
     
    

	

    Dale Knecht
    

	
 
	
    Vice President, Information
    Technology
    
	
 
	
    December 1, 2006
    

	

     
    

	
 
	
     
    
	
 
	
     
    

	

    William Pillard
    

	
 
	
    Director, Operations
    
	
 
	
    December 1, 2006
    

	

     
    

	
 
	
     
    
	
 
	
     
    

	

    Lee Wilmot
    

	
 
	
    Director, Environmental, Health
    and Safety
    
	
 
	
    December 1, 2006exv10w6

 

Exhibit-10.6

TTM Technologies, Inc.

 

2006 Incentive Compensation Plan

 

 

TTM Technologies, Inc.

2006 Incentive Compensation Plan

     1. Purpose. The purpose of this Plan is to assist the Company and its Related
Entities in attracting, motivating, retaining and rewarding high-quality Employees, officers,
Directors and Consultants by enabling such persons to acquire or increase a proprietary interest in
the Company in order to strengthen the mutuality of interests between such persons and the
Company’s shareholders, and providing such persons with annual and long-term performance incentives
to expend their maximum efforts in the creation of shareholder value. The Plan is intended to
qualify certain compensation awarded under the Plan for tax deductibility under Section 162(m) of
the Code (as hereafter defined) to the extent deemed appropriate by the Plan Administrator.

     2. Definitions. For purposes of the Plan, the following terms shall be defined as set
forth below.

          (a) “2000 Plan Award” means a stock award granted under the 2000 Equity Compensation Plan.

          (b) “Applicable Laws” means the requirements relating to the administration of equity
compensation plans under U.S. state corporate laws, U.S. federal and state securities laws, the
Code, the rules and regulations of any stock exchange upon which the Common Stock is listed and the
applicable laws of any foreign country or jurisdiction where Awards are granted under the Plan.

          (c) “Award” means any award granted pursuant to the terms of this Plan, including an
Option, Stock Appreciation Right, Restricted Stock, Stock Unit, Stock granted as a bonus or in lieu
of another award, Dividend Equivalent, Other Stock-Based Award or Performance Award, together with
any other right or interest, granted to a Participant under the Plan.

          (d) “Award Agreement” means the written agreement evidencing an Award granted under
the Plan.

          (e) “Beneficiary” means the person, persons, trust or trusts which have been
designated by a Participant in his or her most recent written beneficiary designation filed with
the Plan Administrator to receive the benefits specified under the Plan upon such Participant’s
death or to which Awards or other rights are transferred if and to the extent permitted under
Section 10(b) hereof. If, upon a Participant’s death, there is no designated Beneficiary or
surviving designated Beneficiary, then the term Beneficiary means the person, persons, trust or
trusts entitled by will or the laws of descent and distribution to receive such benefits.

          (f) “Beneficial Owner”, “Beneficially Owning” and “Beneficial
Ownership” shall have the meanings ascribed to such terms in Rule 13d-3 under the Exchange Act
and any successor to such Rule.

          (g) “Board” means the Company’s Board of Directors.

 

 

          (h) “Cause” shall, with respect to any Participant, have the meaning specified in the
Award Agreement. In the absence of any definition in the Award Agreement, “Cause” shall have the
equivalent meaning or the same meaning as “cause” or “for cause” set forth in any employment,
consulting, change in control or other agreement for the performance of services between the
Participant and the Company or a Related Entity or, in the absence of any such definition in such
agreement, such term shall mean (i) the failure by the Participant to perform his or her duties as
assigned by the Company (or a Related Entity) in a reasonable manner, (ii) any violation or breach
by the Participant of his or her employment, consulting or other similar agreement with the Company
(or a Related Entity), if any, (iii) any violation or breach by the Participant of his or her
confidential information and invention assignment, non-competition, non-solicitation,
non-disclosure and/or other similar agreement with the Company or a Related Entity, if any, (iv)
any act by the Participant of dishonesty or bad faith with respect to the Company (or a Related
Entity), (v) any material violation or breach by the Participant of the Company’s or a Related
Entity’s policy for employee conduct, if any, (vi) use of alcohol, drugs or other similar
substances in a manner that adversely affects the Participant’s work performance, or (vii) the
commission by the Participant of any act, misdemeanor, or crime reflecting unfavorably upon the
Participant or the Company or any Related Entity. The good faith determination by the Plan
Administrator of whether the Participant’s Continuous Service was terminated by the Company for
“Cause” shall be final and binding for all purposes hereunder.

          (i) “Change in Control” means and shall be deemed to have occurred on the earliest of
the following dates:

               (i) the date on which any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) obtains “beneficial ownership” (as defined in Rule 13d-3 of the Exchange Act) or a
pecuniary interest in thirty-five percent (35%) or more of the Voting Stock;

               (ii) the consummation of a merger, consolidation, reorganization or similar transaction other
than a transaction: (1) (a) in which substantially all of the holders of Company’s Voting Stock
hold or receive directly or indirectly fifty percent (50%) or more of the voting stock of the
resulting entity or a parent company thereof, in substantially the same proportions as their
ownership of the Company immediately prior to the transaction; or (2) in which the holders of
Company’s capital stock immediately before such transaction will, immediately after such
transaction, hold as a group on a fully diluted basis the ability to elect at least a majority of
the directors of the surviving corporation (or a parent company);

               (iii) there is consummated a sale, lease, exclusive license or other disposition of all or
substantially all of the consolidated assets of the Company and its Subsidiaries, other than a
sale, lease, license or other disposition of all or substantially all of the consolidated assets of
the Company and its Subsidiaries to an entity, fifty percent (50%) or more of the combined voting
power of the voting securities of which are owned by shareholders of the Company in substantially
the same proportions as their ownership of the Company immediately prior to such sale, lease,
license or other disposition; or

               (iv) individuals who, on the date this Plan is adopted by the Board, are Directors (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the

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Directors; provided, however, that if the appointment or election (or nomination for election)
of any new Director was approved or recommended by a majority vote of the members of the Incumbent
Board then still in office, such new member shall, for purposes of this Plan, be considered as a
member of the Incumbent Board.

     For purposes of determining whether a Change in Control has occurred, a transaction includes
all transactions in a series of related transactions, and terms used in this definition but not
defined are used as defined in the Plan. The term Change in Control shall not include a sale of
assets, merger or other transaction effected exclusively for the purpose of changing the domicile
of the Company.

     Notwithstanding the foregoing or any other provision of this Plan, the definition of Change in
Control (or any analogous term) in an individual written agreement between the Company and the
Participant shall supersede the foregoing definition with respect to Awards subject to such
agreement (it being understood, however, that if no definition of Change in Control or any
analogous term is set forth in such an individual written agreement, the foregoing definition shall
apply).

          (j) “Code” means the Internal Revenue Code of 1986, as amended from time to time,
including regulations thereunder and successor provisions and regulations thereto.

          (k) “Committee” means a committee designated by the Board to administer the Plan with
respect to at least a group of Employees, Directors or Consultants.

          (l) “Company” means TTM Technologies, Inc., a Delaware corporation. 

          (m) “Consultant” means any person (other than an Employee or a Director, solely with
respect to rendering services in such person’s capacity as a director) who is engaged by the
Company or any Related Entity to render consulting or advisory services to the Company or such
Related Entity.

          (n) “Continuous Service” means uninterrupted provision of services to the Company or
any Related Entity in the capacity as either an officer, Employee, Director or Consultant.
Continuous Service shall not be considered to be interrupted in the case of (i) any approved leave
of absence, (ii) transfers among the Company, any Related Entities, or any successor entities, in
the capacity as either an officer, Employee, Director or Consultant or (iii) any change in status
as long as the individual remains in the service of the Company or a Related Entity in the capacity
as either an officer, Employee, Director, Consultant (except as otherwise provided in the Award
Agreement). An approved leave of absence shall include sick leave, military leave, or any other
authorized personal leave.

          (o) “Corporate Transaction” means the occurrence, in a single transaction or in a
series of related transactions, of any one or more of the following events:

               (i) a sale, lease, exclusive license or other disposition of a substantial portion of the
consolidated assets of the Company and its Subsidiaries, as determined by the Plan Administrator,
in its discretion;

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               (ii) a sale or other disposition of more than twenty percent (20%) of the outstanding
securities of the Company; or

               (iii) a merger, consolidation, reorganization or similar transaction, whether or not the
Company is the surviving corporation.

          (p) “Covered Employee” means an Eligible Person who is a Covered Employee as specified
in Section 7(d) of the Plan.

          (q) “Director” means a member of the Board or the board of directors of any Related
Entity.

          (r) “Disability” means a permanent and total disability (within the meaning of Section
22(e) of the Code), as determined by a medical doctor satisfactory to the Plan Administrator.

          (s) “Dividend Equivalent” means a right, granted to a Participant under Section 6(g)
hereof, to receive cash, Shares, other Awards or other property equal in value to dividends paid
with respect to a specified number of Shares or other periodic payments.

          (t) “Effective Date” means the effective date of this Plan, which shall be the date
this Plan is adopted by the Board, subject to the approval of the shareholders of the Company.

          (u) “Eligible Person” means each officer, Director, Employee or Consultant. The
foregoing notwithstanding, only employees of the Company, any Parent or any Subsidiary shall be
Eligible Persons for purposes of receiving Incentive Stock Options. An Employee on leave of
absence may be considered as still in the employ of the Company or a Related Entity for purposes of
eligibility for participation in the Plan.

          (v) “Employee” means any person, including an officer or Director, who is an employee
of the Company or any Related Entity. The payment of a director’s fee by the Company or a Related
Entity shall not be sufficient to constitute “employment” by the Company.

          (w) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time, including rules thereunder and successor provisions and rules thereto.

          (x) “Executive Officer” means an executive officer of the Company as defined under the
Exchange Act.

          (y) “Fair Market Value” means the fair market value of Shares, Awards or other
property as determined by the Plan Administrator, or under procedures established by the Plan
Administrator. Unless otherwise determined by the Plan Administrator, the Fair Market Value of
Shares as of any given date, after which the Shares are publicly traded on a stock exchange or
market, shall be the closing sale price per share reported on a consolidated basis for stock listed
on the principal stock exchange or market on which Shares is traded on the date as of which such
value is being determined or, if there is no sale on that date, then on the last previous day on
which a sale was reported.

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          (z) “Good Reason” shall, with respect to any Participant, have the meaning specified
in the Award Agreement. In the absence of any definition in the Award Agreement, “Good Reason”
shall have the equivalent meaning (or the same meaning as “good reason” or “for good reason”) set
forth in any employment, consulting, change in control or other agreement for the performance of
services between the Participant and the Company or a Related Entity or, in the absence of any such
definition in such agreement(s), such term shall mean (i) the assignment to the Participant of any
duties inconsistent in any material respect with the Participant’s position (including status,
offices, titles and reporting requirements), authority, duties or responsibilities as assigned by
the Company (or a Related Entity) or any other action by the Company (or a Related Entity) which
results in a material diminution in such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which
is remedied by the Company (or a Related Entity) promptly after receipt of notice thereof given by
the Participant; (ii) any failure by the Company (or a Related Entity) to comply with its
obligations to the Participant as agreed upon, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the Company (or a Related
Entity) promptly after receipt of notice thereof given by the Participant; (iii) the Company’s (or
Related Entity’s) requiring the Participant to be based at any office or location more than fifty
(50) miles from the location of employment as of the date of Award, except for travel reasonably
required in the performance of the Participant’s responsibilities; (iv) any purported termination
by the Company (or a Related Entity) of the Participant’s Continuous Service otherwise than for
Cause, as defined in Section 2(f), death, or by reason of the Participant’s Disability as defined
in Section 2(o); or (v) any reduction in the Participant’s base salary (unless such reduction is
part of Company-wide reduction that affects a majority of the persons of comparable level to the
Participant).

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

          (bb) “Management Plan Award” means a stock award granted under the Management Stock
Option Plan.

          (cc) “Non-Employee Director” means a Director of the Company who is not an Employee.

          (dd) “Non-Qualified Stock Option” means any Option that is not intended to be
designated as an incentive stock option within the meaning of Section 422 of the Code or any
successor provision thereto.

          (ee) “Option” means a right, granted to a Participant under Section 6(b) hereof, to
purchase Shares or other Awards at a specified price during specified time periods.

          (ff) “Other Stock-Based Awards” means Awards granted to a Participant pursuant to
Section 6(h) hereof.

          (gg) “Parent” means any corporation (other than the Company), whether now or hereafter
existing, in an unbroken chain of corporations ending with the Company, if each of the

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corporations in the chain (other than the Company) owns stock possessing fifty percent (50%)
or more of the combined voting power of all classes of stock in one of the other corporations in
the chain.

          (hh) “Participant” means a person who has been granted an Award under the Plan which
remains outstanding, including a person who is no longer an Eligible Person.

          (ii) “Performance Award” means a right, granted to an Eligible Person under Sections
6(h) or 7 hereof, to receive Awards based upon performance criteria specified by the Plan
Administrator.

          (jj) “Performance Period” means that period established by the Plan Administrator at
the time any Performance Award is granted or at any time thereafter during which any performance
goals specified by the Plan Administrator with respect to such Award are to be measured.

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

          (ll) “Plan” means this TTM Technologies, Inc. 2006 Incentive Compensation Plan.

          (mm) “Plan Administrator” means the Board or any Committee delegated by the Board to
administer the Plan. There may be different Plan Administrators with respect to different groups
of Eligible Persons.

          (nn) “Related Entity” means any Parent, Subsidiary and any business, corporation,
partnership, limited liability company or other entity designated by the Plan Administrator in
which the Company, a Parent or a Subsidiary, directly or indirectly, holds a substantial ownership
interest.

          (oo) “Restricted Stock” means Stock granted to a Participant under Section 6(d)
hereof, that is subject to certain restrictions, including a risk of forfeiture.

          (pp) “Rule 16b-3” and “Rule 16a-1(c)(3)” means Rule 16b-3 and Rule
16a-1(c)(3), as from time to time in effect and applicable to the Plan and Participants,
promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act.

          (qq) “Share” means a share of the Company’s Common Stock, and the share of such other
securities as may be substituted (or resubstituted) for Stock pursuant to Section 10(c) hereof.

          (rr) “Stock” means the Company’s Common Stock, and such other securities as may be
substituted (or resubstituted) for the Company’s Common Stock pursuant to Section 10(c) hereof.

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          (ss) “Stock Appreciation Right” means a right granted to a Participant pursuant to
Section 6(c) hereof.

          (tt) “Stock Unit” means a right, granted to a Participant pursuant to Section 6(e)
hereof, to receive Shares, cash or a combination thereof at the end of a specified period of time.

          (uu) “Subsidiary” means any corporation (other than the Company), whether now or
hereafter existing, 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 fifty
percent (50%) or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

          (vv) “Voting Stock” means the stock of the Company with a right to vote for the
election of Directors.

     3. Administration.

          (a) Administration by Board. The Board shall administer the Plan unless and until the
Board delegates administration to a Committee, as provided in Section 3(c). The Board and/or
Committee(s) administering the Plan shall be the Plan Administrator.

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

               (i) Subject to Section 3(g) below, to determine from time to time which of the persons
eligible under the Plan shall be granted Awards; when and how each Award shall be granted; what
type or combination of types of Award shall be granted; the provisions of each Award granted (which
need not be identical), including the time or times when a person shall be permitted to receive
Shares or cash pursuant to an Award; and the number of Shares or amount of cash with respect to
which an Award shall be granted to each such person.

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

               (iii) To amend the Plan or an Award as provided in Section 10(e).

               (iv) To terminate or suspend the Plan as provided in Section 10(e).

               (v) To adopt such modifications, procedures, and subplans as may be necessary or desirable to
comply with provisions of the laws of foreign countries in which the Company or Related Entities
may operate to assure the viability of the benefits from Awards granted to Participants performing
services in such countries and to meet the objectives of the Plan.

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               (vi) Generally, to exercise such powers and to perform such acts as the Plan Administrator
deems necessary or appropriate to promote the best interests of the Company and that are not in
conflict with the provisions of the Plan.

          (c) Delegation to Committee.

               (i) General. The Board may delegate administration of the Plan to a Committee or
Committees of more members of the Board, and the term “Committee” shall apply to any person or
persons to whom such authority has been delegated. If administration is delegated to a Committee,
the Committee shall have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board, to the extent delegated by the Board, including the power to delegate to a
subcommittee any of the administrative powers the Committee is authorized to exercise, subject,
however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted
from time to time by the Board. The Board may abolish the Committee at any time and revest in the
Board the administration of the Plan.

               (ii) Section 162(m) and Rule 16b-3 Compliance. In the discretion of the Board, the
Committee may consist solely of two or more “Outside Directors”, in accordance with Section 162(m)
of the Code, and/or solely of two or more “Non-Employee Directors”, in accordance with Rule 16b-3.
In addition, the Plan Administrator may delegate to a committee of two or more members of the Board
the authority to grant Awards to Eligible Persons who are either (a) not then Covered Employees and
are not expected to be Covered Employees at the time of recognition of income resulting from such
Award, (b) not persons with respect to whom the Company wishes to comply with Section 162(m) of the
Code or (c) not then subject to Section 16 of the Exchange Act.

          (d) Effect of Plan Administrator’s Decision. All determinations, interpretations and
constructions made by the Plan Administrator shall be made in good faith and shall not be subject
to review by any person and shall be final, binding and conclusive on all persons.

          (e) Arbitration. Any dispute or claim concerning any Award granted (or not granted)
pursuant to the Plan or any disputes or claims relating to or arising out of the Plan shall be
fully, finally and exclusively resolved by binding and confidential arbitration conducted pursuant
to the rules of Judicial Arbitration and Mediation Services, Inc. (“JAMS”) in the nearest city in
which JAMS conducts business to the city in which the Participant is employed by the Company. The
Company shall pay all arbitration fees. In addition to any other relief, the arbitrator may award
to the prevailing party recovery of its attorneys’ fees and costs. By accepting an Award, the
Participant and the Company waive their respective rights to have any such disputes or claims tried
by a judge or jury.

          (f) Limitation of Liability. The Board and any Committee(s), and each member thereof,
who act as the Plan Administrator, shall be entitled to, in good faith, rely or act upon any report
or other information furnished to him or her by any officer or Employee, the Company’s independent
auditors, Consultants or any other agents assisting in the administration of the Plan. Members of
the Board and any Committee(s), and any officer or Employee acting at the direction or on behalf of
the Board and any Committee(s), shall not be personally liable for any

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action or determination taken or made in good faith with respect to the Plan, and shall, to
the extent permitted by law, be fully indemnified and protected by the Company with respect to any
such action or determination.

          (g) Administration of the Plan For Non-Employee Directors. Notwithstanding the
foregoing, the grant of all Awards to the Non-Employee Directors shall be approved by a majority of
the Directors who qualify as independent under the stock exchange rules with which the Company
complies or a Committee composed solely of such independent Directors.

     4. Shares Issuable Under the Plan.

          (a) Number of Shares Available for Issuance Under Plan. Subject to adjustment as
provided in Section 10(c) hereof, the total number of Shares reserved and available for issuance in
connection with Awards shall be 3,000,000 Shares. In addition, any shares available for issuance
under the 2000 Equity Compensation Plan and the Management Stock Option Plan that are not subject
to an outstanding award under the 2000 Equity Compensation Plan and the Management Stock Option
Plan as of the date of shareholder approval of this Plan shall become available for issuance under
this Plan, and shall no longer be available for issuance under the 2000 Equity Compensation Plan
and the Management Stock Option Plan, as applicable. Any Shares issued under the Plan may consist,
in whole or in part, of authorized and unissued shares or treasury shares.

          (b) Availability of Shares Not Issued pursuant to Awards.

               (i) If any Shares subject to an Award or to a 2000 Plan Award or Management Plan Award are
forfeited, expire or otherwise terminate without issuance of such Shares or any Award, 2000 Plan
Award or Management Plan Award is settled for cash or otherwise does not result in the issuance of
all or a portion of the Shares subject to such Award, 2000 Plan Award or Management Plan Award, the
Shares shall, to the extent of such forfeiture, expiration, termination, cash settlement or
non-issuance, be available for Awards under the Plan, subject to Section 4(b)(iv) below.

               (ii) If any Shares issued pursuant to an Award, 2000 Plan Award or Management Plan Award are
forfeited back to or repurchased by the Company, including, but not limited to, any repurchase or
forfeiture caused by the failure to meet a contingency or condition required for the vesting of
such shares, then the Shares forfeited or repurchased shall revert to and become available for
issuance under the Plan, subject to Section 4(b)(iv) below.

               (iii) In the event that any Option or other Award granted hereunder is exercised through the
withholding of Shares from the Award by the Company or withholding tax liabilities arising from
such Option or other Award are satisfied by the withholding of Shares from the Award by the
Company, then only the number of Shares issued net of the Shares withheld shall be counted as
issued for purposes of determining the maximum number of Shares available for grant under the Plan,
subject to Section 4(b)(iv) below. In the event that any 2000 Plan Award or Management Plan Award
is exercised through the withholding of Shares by the Company from the 2000 Plan Award or the
Management Plan Award or withholding tax liabilities arising from such 2000 Plan Award or
Management Plan Award are satisfied by the withholding of Shares from the

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2000 Plan Award or Management Plan Award by the Company, then Shares withheld shall become
available for issuance under the Plan, subject to Section 4(b)(iv) below.

               (iv) Notwithstanding anything in this Section 4(b) to the contrary, solely for purposes of
determining whether Shares are available for the grant of Incentive Stock Options, the maximum
aggregate number of Shares that may be granted under this Plan through Incentive Stock Options
shall be determined without regard to any Shares restored pursuant to this Section 4(b) that, if
taken into account, would cause the Plan, for purposes of the grant of Incentive Stock Options, to
fail the requirement under Code Section 422 that the Plan designate a maximum aggregate number of
shares that may be issued.

          (c) Application of Limitations. The limitation contained in this Section 4 shall
apply not only to Awards that are settled by the delivery of Shares but also to Awards relating to
Shares but settled only in cash (such as cash-only Stock Appreciation Rights). The Plan
Administrator may adopt reasonable counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute awards) and may make adjustments if
the number of Shares actually delivered differs from the number of shares previously counted in
connection with an Award.

     5. Eligibility; Per-Person Award Limitations. Awards may be granted under the Plan
only to Eligible Persons.

     In any one calendar year, an Eligible Person may not be granted Options or Stock Appreciation
Rights under which more than 1,000,000 Shares could be received by the Participant, subject to
adjustment as provided in Section 10(c). In any one calendar year, an Eligible Person may not be
granted Awards (other than an Option or Stock Appreciation Right) under which more than 1,000,000
Shares could be received by the Participant in any one calendar year, subject to adjustment as
provided in Section 10(c). In addition, the maximum dollar value payable in cash to any one
Participant with respect to Performance Awards is $5,000,000 per calendar year.

     6. Terms of Awards.

          (a) General. Awards may be granted on the terms and conditions set forth in this
Section 6. In addition, the Plan Administrator may impose on any Award or the exercise thereof, at
the date of grant or thereafter (subject to Section 10(e)), such additional terms and conditions,
not inconsistent with the provisions of the Plan, as the Plan Administrator shall determine,
including terms requiring forfeiture of Awards in the event of termination of the Participant’s
Continuous Service and terms permitting a Participant to make elections relating to his or her
Award. The Plan Administrator shall retain full power and discretion to accelerate, waive or
modify, at any time, any term or condition of an Award that is not mandatory under the Plan.

          (b) Options. The Plan Administrator is authorized to grant Options to any Eligible
Person on the following terms and conditions:

               (i) Stock Option Agreement. Each grant of an Option shall be evidenced by an Award
Agreement. Such Award Agreement shall be subject to all applicable terms and conditions of the
Plan and may be subject to any other terms and conditions which are

- 10 -

 

not inconsistent with the Plan and which the Plan Administrator deems appropriate for
inclusion in the Award Agreement. The provisions of the various Award Agreements entered into
under the Plan need not be identical.

               (ii) Number of Shares. Each Award Agreement shall specify the number of Shares that
are subject to the Option and shall provide for the adjustment of such number in accordance with
Section 10(c) hereof. The Award Agreement shall also specify whether the Stock Option is an
Incentive Stock Option or a Non-Qualified Stock Option.

               (iii) Exercise Price.

                    (A) In General. The Plan Administrator shall determine (which determination shall be
included in each Award Agreement) the price at which Shares subject to the Option may be purchased
(the “Exercise Price”), provided that such exercise price shall be not less than 100% of the Fair
Market Value of the Stock on the date of grant (except in the case of substituted awards in
connection with a merger or other acquisition).

                    (B) Ten Percent Shareholder. If a Participant 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 or Subsidiary, any Incentive
Stock Option granted to such Employee must have an exercise price per Share of at least 110% of the
Fair Market Value of a Share on the date of grant.

               (iv) Time and Method of Exercise. The Plan Administrator shall determine the time or
times at which or the circumstances under which an Option 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 Options shall cease to be or become exercisable following termination of
Continuous Service or upon other conditions, the methods by which the exercise price may be paid or
deemed to be paid (including, in the discretion of the Plan Administrator, a cashless exercise
procedure), the form of such payment, including, without limitation, cash, Stock, net exercise,
other Awards or awards granted under other plans of the Company or a Related Entity, other property
(including notes or other contractual obligations of Participants to make payment on a deferred
basis) or any other form of consideration legally permissible, and the methods by or forms in which
Stock will be delivered or deemed to be delivered to Participants.

               (v) Termination of Service. Subject to earlier termination of the Option as otherwise
provided in the Plan and unless otherwise provided by the Plan Administrator with respect to an
Option and set forth in the Award Agreement, an Option shall be exercisable after a Participant’s
termination of Continuous Service only during the applicable time period determined in accordance
with this Section and thereafter shall terminate and no longer be exercisable:

                    (A) Death or Disability. If the Participant’s Continuous Service terminates because
of the death or Disability of the Participant, the Option, to the extent unexercised and
exercisable on the date on which the Participant’s Continuous Service terminated, may be exercised
by the Participant (or the Participant’s legal representative or estate) at any time prior to the
expiration of twelve (12) months (or such other period of time as determined by the

- 11 -

 

Plan Administrator, in its discretion) after the date on which the Participant’s Continuous
Service terminated, but in any event only with respect to the vested portion of the Option and no
later than the date of expiration of the Option’s term as set forth in the Award Agreement
evidencing such Option (the “Option Expiration Date”).

                    (B) Termination for Cause. Notwithstanding any other provision of the Plan to the
contrary, if the Participant’s Continuous Service is terminated for Cause, the Option shall
terminate and cease to be exercisable immediately upon such termination of Continuous Service.

                    (C) Other Termination of Service. If the Participant’s Continuous Service terminates
for any reason, except Disability, death or Cause, the Option, to the extent unexercised and
exercisable by the Participant on the date on which the Participant’s Continuous Service
terminated, may be exercised by the Participant at any time prior to the expiration of three (3)
months (or such longer period of time as determined by the Plan Administrator, in its discretion)
after the date on which the Participant’s Continuous Service terminated, but in any event only with
respect to the vested portion of the Option and no later than the Option Expiration Date.

               (vi) Incentive Stock Options. The terms of any Incentive Stock Option granted under
the Plan shall comply in all respects with the provisions of Section 422 of the Code. If and to
the extent required to comply with Section 422 of the Code, Options granted as Incentive Stock
Options shall be subject to the following special terms and conditions:

                    (1) The Option shall not be exercisable more than ten years after the date such Incentive
Stock Option is granted; provided, however, that if a Participant 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 or Subsidiary and the Incentive Stock
Option is granted to such Participant, the Incentive Stock Option shall not be exercisable (to the
extent required by the Code at the time of the grant) for no more than five years from the date of
grant; and

                    (2) If the aggregate Fair Market Value (determined as of the date the Incentive Stock Option
is granted) of the Shares with respect to which Incentive Stock Options granted under the Plan and
all other option plans of the Company, its Parent or any Subsidiary are exercisable for the first
time by a Participant during any calendar year in excess of $100,000, then such Participant’s
Incentive Stock Option(s) or portions thereof that exceed such $100,000 limit shall be treated as
Non-Qualified Stock Options (in the reverse order in which they were granted, so that the last
Incentive Stock Option will be the first treated as a Non-Qualified Stock Option). This paragraph
shall only apply to the extent such limitation is applicable under the Code at the time of the
grant.

          (c) Stock Appreciation Rights. The Plan Administrator is authorized to grant Stock
Appreciation Rights to Participants on the following terms and conditions:

               (i) Agreement. Each grant of a Stock Appreciation Right shall be evidenced by an
Award Agreement. Such Award Agreement shall be subject to all applicable

- 12 -

 

terms and conditions of the Plan and may be subject to any other terms and conditions which
are not inconsistent with the Plan and which the Plan Administrator deems appropriate for inclusion
in the Award Agreement. The provisions of the various Award Agreements entered into under the Plan
need not be identical.

               (ii) Right to Payment. A Stock Appreciation Right shall confer on the Participant to
whom it is granted a right to receive, upon exercise thereof, 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 Stock
Appreciation Right as determined by the Plan Administrator. The per Share grant price of each
Stock Appreciation Right shall not be less than the Fair Market Value of a Share on the grant date.

               (iii) Other Terms. The Plan Administrator shall determine at the date of grant or
thereafter, the time or times at which and the circumstances under which a Stock Appreciation Right
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 Stock Appreciation Rights shall cease to
be or become exercisable following termination of Continuous Service or upon other conditions, the
form of payment upon exercise of Shares, cash or other property, the method of exercise, method of
settlement, form of consideration payable in settlement (either cash, Shares or other property),
method by or forms in which Stock will be delivered or deemed to be delivered to Participants,
whether or not a Stock Appreciation Right shall be in tandem or in combination with any other
Award, and any other terms and conditions of any Stock Appreciation Right. Stock Appreciation
Rights may be either freestanding or in tandem with other Awards. Notwithstanding any other
provision of the Plan, unless otherwise exempt from Section 409A of the Code or otherwise
specifically determined by the Plan Administrator, each Stock Appreciation Right shall be
structured to avoid the imposition of any excise tax under Section 409A of the Code.

          (d) Restricted Stock. The Plan Administrator is authorized to grant Restricted Stock
to any Eligible Person on the following terms and conditions:

               (i) Grant and Restrictions. Restricted Stock shall be subject to such restrictions on
transferability, risk of forfeiture and other restrictions, if any, as the Plan Administrator may
impose, or as otherwise provided in this Plan. The terms of any Restricted Stock granted under the
Plan shall be set forth in a written Award Agreement which shall contain provisions determined by
the Plan Administrator and not inconsistent with the Plan. The restrictions may lapse separately
or in combination at such times, under such circumstances (including based on achievement of
performance goals and/or future service requirements), in such installments or otherwise, as the
Plan Administrator may determine at the date of grant or thereafter. Except to the extent
restricted under the terms of the Plan and any Award Agreement relating to the Restricted Stock, a
Participant granted Restricted Stock shall have all of the rights of a shareholder, including the
right to vote the Restricted Stock and the right to receive dividends thereon (subject to any
mandatory reinvestment or other requirement imposed by the Plan Administrator). During the
restricted period applicable to the Restricted Stock, subject to Section 10(b) below, the
Restricted Stock may not be sold, transferred, pledged, hypothecated, margined or otherwise
encumbered by the Participant. Notwithstanding the foregoing, all grants of Restricted Stock shall
comply with the vesting terms of Section 8(f).

- 13 -

 

               (ii) Forfeiture. Except as otherwise determined by the Plan Administrator, upon
termination of a Participant’s Continuous Service during the applicable restriction period, the
Participant’s Restricted Stock that is at that time subject to a risk of forfeiture that has not
lapsed or otherwise been satisfied shall be forfeited to or reacquired by the Company; provided
that, the Plan Administrator may provide, by rule or regulation or in any Award Agreement or may
determine in any individual case, that restrictions or forfeiture conditions relating to Restricted
Stock shall be waived in whole or in part in the event of terminations resulting from specified
causes, and the Plan Administrator may in other cases waive in whole or in part the forfeiture of
Restricted Stock. Notwithstanding the foregoing, all grants of Stock Units shall comply with the
vesting acceleration terms of Sections 8(g).

               (iii) Certificates for Shares. Restricted Stock granted under the Plan may be
evidenced in such manner as the Plan Administrator shall determine. If certificates representing
Restricted Stock are registered in the name of the Participant, the Plan Administrator may require
that such certificates bear an appropriate legend referring to the terms, conditions and
restrictions applicable to such Restricted Stock, that the Company retain physical possession of
the certificates, that the certificates be kept with an escrow agent and that the Participant
deliver a stock power to the Company, endorsed in blank, relating to the Restricted Stock.

               (iv) Dividends and Splits. As a condition to the grant of an Award of Restricted
Stock, the Plan Administrator may require that any cash dividends paid on a share of Restricted
Stock be automatically reinvested in additional shares of Restricted Stock or applied to the
purchase of additional Awards under the Plan. Unless otherwise determined by the Plan
Administrator, Shares distributed in connection with a stock split or stock dividend, and other
property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to
the same extent as the Restricted Stock with respect to which such Shares or other property has
been distributed.

          (e) Stock Units. The Plan Administrator is authorized to grant Stock Units to
Participants, which are rights to receive Shares, cash or other property, or a combination thereof
at the end of a specified time period, subject to the following terms and conditions:

               (i) Award and Restrictions. Satisfaction of an Award of Stock Units shall occur upon
expiration of the time period specified for such Stock Units by the Plan Administrator (or, if
permitted by the Plan Administrator, as elected by the Participant). In addition, Stock Units
shall be subject to such restrictions (which may include a risk of forfeiture) as the Plan
Administrator may impose, if any, which restrictions may lapse at the expiration of the time period
or at earlier specified times (including based on achievement of performance goals and/or future
service requirements), separately or in combination, in installments or otherwise, as the Plan
Administrator may determine. The terms of an Award of Stock Units shall be set forth in a written
Award Agreement which shall contain provisions determined by the Plan Administrator and not
inconsistent with the Plan. Stock Units may be satisfied by delivery of Stock, cash equal to the
Fair Market Value of the specified number of Shares covered by the Stock Units, or a combination
thereof, as determined by the Plan Administrator at the date of grant or thereafter. Prior to
satisfaction of an Award of Stock Units, an Award of Stock Units carries no voting or dividend or
other rights associated with share ownership. Notwithstanding the foregoing, all grants of Stock
Units shall comply with the vesting terms of Sections 8(f). Notwithstanding any

- 14 -

 

other provision of the Plan, unless otherwise exempt from Section 409A of the Code or
otherwise specifically determined by the Plan Administrator, each Stock Unit shall be structured to
avoid the imposition of any excise tax under Section 409A of the Code.

               (ii) Forfeiture. Except as otherwise determined by the Plan Administrator, upon
termination of a Participant’s Continuous Service during the applicable time period thereof to
which forfeiture conditions apply (as provided in the Award Agreement evidencing the Stock Units),
the Participant’s Stock Units (other than those Stock Units subject to deferral at the election of
the Participant) shall be forfeited; provided that the Plan Administrator may provide, by rule or
regulation or in any Award Agreement or may determine in any individual case, that restrictions or
forfeiture conditions relating to Stock Units shall be waived in whole or in part in the event of
terminations resulting from specified causes, and the Plan Administrator may in other cases waive
in whole or in part the forfeiture of Stock Units. Notwithstanding the foregoing, all grants of
Stock Units shall comply with the vesting acceleration terms of Sections 8(g).

               (iii) Dividend Equivalents. Unless otherwise determined by the Plan Administrator at
date of grant, any Dividend Equivalents that are granted with respect to any Award of Stock Units
shall be either (A) paid with respect to such Stock Units at the dividend payment date in cash or
in Shares of unrestricted Stock having a Fair Market Value equal to the amount of such dividends or
(B) deferred with respect to such Stock Units and the amount or value thereof automatically deemed
reinvested in additional Stock Units, other Awards or other investment vehicles, as the Plan
Administrator shall determine or permit the Participant to elect.

          (f) Bonus Stock and Awards in Lieu of Obligations. The Plan Administrator is
authorized to grant Shares as a bonus or to grant Shares or other Awards in lieu of Company
obligations to pay cash or deliver other property under the Plan or under other plans or
compensatory arrangements, provided that, in the case of Participants subject to Section 16 of the
Exchange Act, the amount of such grants remains within the discretion of the Plan Administrator to
the extent necessary to ensure that acquisitions of Shares or other Awards are exempt from
liability under Section 16(b) of the Exchange Act. Shares or Awards granted hereunder shall be
subject to such other terms as shall be determined by the Plan Administrator. Notwithstanding the
foregoing, all grants Shares pursuant to this Section shall comply with the vesting terms of
Section 8(f) and the vesting acceleration terms of Section 8(g).

          (g) Dividend Equivalents. The Plan Administrator is authorized to grant Dividend
Equivalents to any Eligible Person entitling the Eligible Person to receive cash, Shares, other
Awards, or other property equal in value to dividends paid with respect to a specified number of
Shares, or other periodic payments. Dividend Equivalents may be awarded on a free-standing basis
or in connection with another Award. The terms of an Award of Dividend Equivalents shall be set
forth in a written Award Agreement which shall contain provisions determined by the Plan
Administrator and not inconsistent with the Plan. The Plan Administrator may provide that Dividend
Equivalents shall be paid or distributed when accrued or shall be deemed to have been reinvested in
additional Stock, Awards, or other investment vehicles, and subject to such restrictions on
transferability and risks of forfeiture, as the Plan Administrator may specify. Notwithstanding
any other provision of the Plan, unless otherwise exempt from Section 409A of the Code or otherwise
specifically determined by the Plan Administrator, each Dividend

- 15 -

 

Equivalent shall be structured to avoid the imposition of any excise tax under Section 409A of
the Code.

          (h) Performance Awards. The Plan Administrator is authorized to grant Performance
Awards to any Eligible Person payable in cash, Shares, other property, or other Awards, on terms
and conditions established by the Plan Administrator, subject to the provisions of Section 7 if and
to the extent that the Plan Administrator shall, in its sole discretion, determine that an Award
shall be subject to those provisions. The performance criteria to be achieved during any
Performance Period and the length of the Performance Period shall be determined by the Plan
Administrator upon the grant of each Performance Award. Except as provided in this Plan or as may
be provided in an Award Agreement, Performance Awards will be distributed only after the end of the
relevant Performance Period. The performance goals to be achieved for each Performance Period
shall be conclusively determined by the Plan Administrator and may be based upon the criteria set
forth in Section 7(b), or in the case of an Award that the Plan Administrator determines shall not
be subject to Section 7 hereof, any other criteria that the Plan Administrator, in its sole
discretion, shall determine should be used for that purpose. The amount of the Award to be
distributed shall be conclusively determined by the Plan Administrator. Performance Awards may be
paid in a lump sum or in installments following the close of the Performance Period or, in
accordance with procedures established by the Plan Administrator, on a deferred basis.
Notwithstanding the foregoing, all grants of Performance Awards which would qualify as Full Value
Awards (as defined in Section 8(f)) shall comply with the vesting terms of Section 8(f).

          (i) Other Stock-Based Awards. The Plan Administrator is authorized, subject to
limitations under applicable law, to grant to any Eligible Person such other Awards that may be
denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or
related to, Shares, as deemed by the Plan Administrator to be consistent with the purposes of the
Plan, including, without limitation, convertible or exchangeable debt securities, other rights
convertible or exchangeable into Stock, purchase rights for Stock, Awards with value and payment
contingent upon performance of the Company or any other factors designated by the Plan
Administrator, and Awards valued by reference to the book value of Stock or the value of securities
of or the performance of specified Related Entities or business units. The Plan Administrator
shall determine the terms and conditions of such Awards. The terms of any Award pursuant to this
Section shall be set forth in a written Award Agreement which shall contain provisions determined
by the Plan Administrator and not inconsistent with the Plan. Stock delivered pursuant to an Award
in the nature of a purchase right granted under this Section 6(h) shall be purchased for such
consideration (including without limitation loans from the Company or a Related Entity), paid for
at such times, by such methods, and in such forms, including, without limitation, cash, Stock,
other Awards or other property, as the Plan Administrator shall determine. Cash awards, as an
element of or supplement to any other Award under the Plan, may also be granted pursuant to this
Section 6(h). Notwithstanding any other provision of the Plan, unless otherwise exempt from
Section 409A of the Code or otherwise specifically determined by the Plan Administrator, each such
Award shall be structured to avoid the imposition of any excise tax under Section 409A of the Code.
Notwithstanding the foregoing, all grants of Other Stock Based Award which would qualify as Full
Value Awards (as defined in Section 8(f)) shall comply with the vesting terms of Section 8(f) and
the vesting acceleration terms of Section 8(g).

- 16 -

 

     7. Tax Qualified Performance Awards.

          (a) Covered Employees. A Committee, composed in compliance with the requirements of
Section 162(m) of the Code, in its discretion, may determine at the time an Award is granted to an
Eligible Person who is, or is likely to be, as of the end of the tax year in which the Company
would claim a tax deduction in connection with such Award, a Covered Employee, that the provisions
of this Section 7 shall be applicable to such Award.

          (b) Performance Criteria. If an Award is subject to this Section 7, then the lapsing
of restrictions thereon and the distribution of cash, Shares or other property pursuant thereto, as
applicable, shall be contingent upon achievement of one or more objective performance goals.
Performance goals shall be objective and shall otherwise meet the requirements of Section 162(m) of
the Code 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.” One or more of the following business criteria for the Company, on a
consolidated basis, and/or for Related Entities, or for business or geographical units of the
Company and/or a Related Entity (except with respect to the total stockholder return and earnings
per share criteria), shall be used by the Committee in establishing performance goals for such
Awards: (1) earnings per share; (2) revenues or gross margins; (3) cash flow; (4) operating margin;
(5) return on net assets, investment, capital, or equity; (6) economic value added; (7) direct
contribution; (8) net income; pretax earnings; earnings before interest and taxes; earnings before
interest, taxes, depreciation and amortization; earnings after interest expense and before
extraordinary or special items; operating income; income before interest income or expense, unusual
items and income taxes, local, state or federal and excluding budgeted and actual bonuses which
might be paid under any ongoing bonus plans of the Company; (9) working capital; (10) management of
fixed costs or variable costs; (11) identification or consummation of investment opportunities or
completion of specified projects in accordance with corporate business plans, including strategic
mergers, acquisitions or divestitures; (12) total stockholder return; and (13) debt reduction. Any
of the above goals may be determined on an absolute or relative basis or as compared to the
performance of a published or special index deemed applicable by the Committee including, but not
limited to, the Standard & Poor’s 500 Stock Index or a group of companies that are comparable to
the Company. The Committee shall exclude the impact of an event or occurrence which the Committee
determines should appropriately be excluded, including without limitation (i) restructurings,
discontinued operations, extraordinary items, and other unusual or non-recurring charges, (ii) an
event either not directly related to the operations of the Company or not within the reasonable
control of the Company’s management, or (iii) a change in accounting standards required by
generally accepted accounting principles.

          (c) Performance Period; Timing For Establishing Performance Goals. Achievement of
performance goals in respect of such Performance Awards shall be measured over a Performance
Period, as specified by the Committee. Performance goals shall be established not later than
ninety (90) days after the beginning of any Performance Period applicable to such Performance
Awards, or at such other date as may be required or permitted for “performance-based compensation”
under Section 162(m) of the Code.

          (d) Adjustments. The Committee may, in its discretion, reduce the amount of a
settlement otherwise to be made in connection with Awards subject to this Section 7, but may not

- 17 -

 

exercise discretion to increase any such amount payable to a Covered Employee in respect of an
Award subject to this Section 7. The Committee shall specify the circumstances in which such
Awards shall be paid or forfeited in the event of termination of Continuous Service by the
Participant prior to the end of a Performance Period or settlement of Awards.

          (e) Committee Certification. Within a reasonable period of time after the performance
criteria have been satisfied (but no later than three (3) months after the satisfaction of the
performance criteria), in order to meet the requirements of Section 162(m) of the Code, the
Committee shall certify, by resolution or other appropriate action in writing, that the performance
criteria and any other material terms previously established by the Committee or set forth in the
Plan, have been satisfied to the extent necessary to qualify as “performance based compensation”
under Section 162(m) of the Code. To the extent that the performance criteria have been satisfied,
but the Committee has not certified such result within three (3) months after such satisfaction,
then the Participant shall receive the payment provided for under the Participant’s Award.

     8. Certain Provisions Applicable to Awards or Sales.

          (a) Stand-Alone, Additional, Tandem and Substitute Awards. Awards granted under the
Plan may, in the discretion of the Plan Administrator, 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 Related Entity or any business entity to be acquired by the
Company or a Related Entity or any other right of a Participant to receive payment from the Company
or any Related Entity. 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 or award, the
Plan Administrator shall require the surrender of such other Award or 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 Related Entity.

          (b) Form and Timing of Payment Under Awards; Deferrals. Subject to the terms of the
Plan and any applicable Award Agreement, payments to be made by the Company or a Related Entity
upon the exercise of an Option or other Award or settlement of an Award may be made in such forms
as the Plan Administrator shall determine, including, without limitation, cash, other Awards or
other property, and may be made in a single payment or transfer, in installments or on a deferred
basis. The settlement of any Award may be accelerated, and cash paid in lieu of Shares in
connection with such settlement, in the discretion of the Plan Administrator or upon occurrence of
one or more specified events (in addition to a Change in Control). Installment or deferred
payments may be required by the Plan Administrator (subject to Section 10(g) of the Plan) or
permitted at the election of the Participant on terms and conditions established by the Plan
Administrator. Payments may include, without limitation, provisions for the payment or crediting
of a reasonable interest rate on installment or deferred payments or the grant or crediting of
Dividend Equivalents or other amounts in respect of installment or deferred payments denominated in
Shares.

          (c) Exemptions from Section 16(b) Liability. It is the intent of the Company that
this Plan comply in all respects with applicable provisions of Rule 16b-3 or Rule 16a-1(c)(3) to
the extent necessary to ensure that neither the grant of any Awards to nor other transaction by a

- 18 -

 

Participant who is subject to Section 16 of the Exchange Act is subject to liability under
Section 16(b) thereof (except for transactions acknowledged in writing to be non-exempt by such
Participant). Accordingly, if any provision of this Plan or any Award Agreement does not comply
with the requirements of Rule 16b-3 or Rule 16a-1(c)(3) as then applicable to any such transaction,
such provision will be construed or deemed amended to the extent necessary to conform to the
applicable requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such Participant shall avoid
liability under Section 16(b).

          (d) Code Section 409A. If and to the extent that the Plan Administrator believes that
any Awards may constitute a “nonqualified deferred compensation plan” under Section 409A of the
Code, the terms and conditions set forth in the Award Agreement for that Award shall be drafted in
a manner that is intended to comply with, and shall be interpreted in a manner consistent with, the
applicable requirements of Section 409A of the Code, unless otherwise agreed to in writing by the
Participant and the Company.

          (e) No Option Repricing. Other than pursuant to Section 10(c), without approval of the
Company’s shareholders, the Plan Administrator shall not be permitted to (A) lower the exercise
price per Share of an Option after it is granted, (B) cancel an Option when the exercise price per
Share exceeds the Fair Market Value of the underlying Shares in exchange for another Award or cash,
or (C) take any other action with respect to an Option that may be treated as a repricing.

          (f) Vesting Restrictions for Full Value Awards. Each award of Restricted Stock, Stock
Units, Bonus Stock, a Performance Award or Other Stock Based Award where the Participant is not
required to pay more than the par value of the Award in cash for the Shares delivered (each a
“Full Value Award”) shall have a minimum vesting schedule of (A) with respect to Full Value
Awards that vest over time, a three (3) year vesting schedule with a maximum of one-third
(1/3rd) of the Full Value Award vesting in any one (1) year; (B) with respect to Full
Value Awards that vest based upon the achievement of performance goals, the performance period
shall be a minimum of one (1) year in length; provided, however, that five percent (5%) of the
Shares reserved under the Plan may be granted as Full Value Awards that are not subject to the
vesting requirements of the last sentence.

          (g) Vesting Acceleration for Full Value Awards. Except with respect to “extraordinary
circumstances”, the Plan Administrator may not waive the forfeiture or repurchase rights with
respect to the unvested portion of any Full Value Award, where the forfeiture or repurchase would
otherwise occur upon the cessation of the Participant’s Continuous Service or the non-attainment of
the performance objectives applicable to the Full Value Award. The Plan Administrator shall, in
its discretion, determine what constitutes extraordinary circumstances, provided, however that the
following shall be considered extraordinary circumstances: a Change in Control, a termination of
Continuous Service as a result of the death, Disability or retirement of the Participant. Any
waiver may be effected upon the occurrence of the extraordinary circumstances or at any time after
the occurrence of the extraordinary circumstances, and may be conditioned upon additional events
after the occurrence of the extraordinary circumstances, such as the Participant’s cessation of
Continuous Service.

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     9. Change in Control; Corporate Transaction.

          (a) Change in Control.

               (i) The Plan Administrator may, in its discretion, accelerate the vesting, exercisability,
lapsing of restrictions or expiration of deferral of any Award, including upon a Change in Control.
In addition, the Plan Administrator may provide in an Award Agreement that the performance goals
relating to any Award will be deemed to have been met upon the occurrence of any Change in Control.

               (ii) In addition to the terms of Sections 9(a)(i) above, the effect of a “change in control,”
may be provided (1) in an employment, compensation or severance agreement, if any, between the
Company or any Related Entity and the Participant, relating to the Participant’s employment,
compensation or severance with or from the Company or such Related Entity or (2) in the Award
Agreement.

          (b) Corporate Transactions. In the event of a Corporate Transaction, any surviving
corporation or acquiring corporation (together, the “Successor Corporation”) may either (i) assume
any or all Awards outstanding under the Plan; (ii) continue any or all Awards outstanding under the
Plan; or (iii) substitute similar stock awards for outstanding Awards (it being understood that
similar awards include, but are not limited to, awards to acquire the same consideration paid to
the shareholders or the Company, as the case may be, pursuant to the Corporate Transaction). In
the event that the Successor Corporation does not assume or continue any or all such outstanding
Awards or substitute similar stock awards for such outstanding Awards, then with respect to Awards
that have been not assumed, continued or substituted, such Awards shall terminate if not exercised
(if applicable) at or prior to such effective time (contingent upon the effectiveness of the
Corporate Transaction).

               The Administrator, in its sole discretion, shall determine whether each Award is assumed,
continued, substituted or terminated. Notwithstanding the foregoing, to the extent that
substantially all of the holders of the Company’s Voting Stock hold or receive directly or
indirectly ninety percent (90%) or more of the Voting Stock of the resulting entity or a parent
company thereof, in substantially the same proportions as their ownership of the Company
immediately prior to the transaction, the Awards shall be either assumed or substituted by the
successor corporation or its parent or continued by the Company.

          The Plan Administrator, in its discretion and without the consent of any Participant, may (but
is not obligated to) either (i) accelerate the vesting of any Awards (determined on an Award by
Award basis), including permitting the lapse of any repurchase rights held by the Company (and, if
applicable, the time at which such Awards may be exercised), in full or as to some percentage of
the Award, to a date prior to the effective time of such Corporate Transaction as the Plan
Administrator shall determine (contingent upon the effectiveness of the Corporate Transaction) or
(ii) provide for a cash payment in exchange for the termination of an Award or any portion thereof
where such cash payment is equal to the Fair Market Value of the Shares that the Participant would
receive if the Award were fully vested and exercised (if applicable) as of such date (less any
applicable exercise price).

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          Notwithstanding any other provision in this Plan to the contrary, with respect to Restricted
Stock and any other Award granted under the Plan with respect to which the Company has any
reacquisition or repurchase rights, the reacquisition or repurchase rights for such Awards may be
assigned by the Company to the successor of the Company (or the successor’s parent company) in
connection with such Corporate Transaction. In the event any such rights are not continued or
assigned to the Successor Corporation, then such rights shall lapse and the Award shall be fully
vested as of the effective time of the Corporate Transaction. In addition, the Plan Administrator,
in its discretion, may (but is not obligated to) provide that any reacquisition or repurchase
rights held by the Company with respect to any such Awards (determined on an Award by Award basis)
shall lapse in whole or in part (contingent upon the effectiveness of the Corporate Transaction).

          (c) Dissolution or Liquidation. In the event of a dissolution or liquidation of the
Company, then all outstanding Awards shall terminate immediately prior to the completion of such
dissolution or liquidation, and Shares subject to the Company’s repurchase option may be
repurchased by the Company notwithstanding the fact that the holder of such stock is still in
Continuous Service.

     10. General Provisions.

          (a) Compliance With Legal and Other Requirements. The Company may, to the extent
deemed necessary or advisable by the Plan Administrator, postpone the issuance or delivery of
Shares or payment of other benefits under any Award until completion of such registration or
qualification of such Shares or other required action under any federal or state law, rule or
regulation, listing or other required action with respect to any stock exchange or automated
quotation system upon which the Shares or other Company securities are listed or quoted or
compliance with any other obligation of the Company, as the Plan Administrator may consider
appropriate, and may require any Participant to make such representations, furnish such information
and comply with or be subject to such other conditions as it may consider appropriate in connection
with the issuance or delivery of Shares or payment of other benefits in compliance with applicable
laws, rules, and regulations, listing requirements or other obligations. The foregoing
notwithstanding, in connection with a Change in Control, the Company shall take or cause to be
taken no action, and shall undertake or permit to arise no legal or contractual obligation, that
results or would result in any postponement of the issuance or delivery of Shares or payment of
benefits under any Award or the imposition of any other conditions on such issuance, delivery or
payment, to the extent that such postponement or other condition would represent a greater burden
on a Participant than existed on the ninetieth (90th) day preceding the Change in
Control.

          (b) Limits on Transferability; Beneficiaries.

               (i) General. Except as provided in the Award Agreement, a Participant may not assign,
sell, transfer or otherwise encumber or subject to any lien any Award or other right or interest
granted under this Plan, in whole or in part, other than by will or by operation of the laws of
descent and distribution, and such Awards or rights that may be exercisable shall be exercised
during the lifetime of the Participant only by the Participant or his or her guardian or legal
representative.

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               (ii) Permitted Transfer of Option. The Plan Administrator, in its sole discretion,
may permit the transfer of an Option (but not an Incentive Stock Option or any other right to
purchase Shares other than an Option) as follows: (A) by gift to a member of the Participant’s
Immediate Family or (B) by transfer by instrument to a trust providing that the Option is to be
passed to beneficiaries upon death of the Participant. For purposes of this Section 10(b)(ii),
“Immediate Family” shall mean the Participant’s spouse (including a former spouse subject to terms
of a domestic relations order); child, stepchild, grandchild, child-in-law; parent, stepparent,
grandparent, parent-in-law; sibling and sibling-in-law, and shall include adoptive relationships.
If a determination is made by counsel for the Company that the restrictions contained in this
Section 10(b)(ii) are not required by applicable federal or state securities laws under the
circumstances, then the Plan Administrator, in its sole discretion, may permit the transfer of
Awards (other than Incentive Stock Options and Stock Appreciation Rights in tandem therewith) to
one or more Beneficiaries or other transferees during the lifetime of the Participant, which may be
exercised by such transferees in accordance with the terms of such Award, but only if and to the
extent permitted by the Plan Administrator pursuant to the express terms of an Award Agreement
(subject to any terms and conditions which the Plan Administrator may impose thereon, and further
subject to any prohibitions and restrictions on such transfers pursuant to Rule 16b-3). A
Beneficiary, transferee or other person claiming any rights under the Plan from or through any
Participant shall be subject to all terms and conditions of the Plan and any Award Agreement
applicable to such Participant, except as otherwise determined by the Plan Administrator, and to
any additional terms and conditions deemed necessary or appropriate by the Plan Administrator.

          (c) Adjustments.

               (i) Adjustments to Awards. In the event that any dividend or other distribution
(whether in the form of cash, Shares or other property), recapitalization, forward or reverse
split, reorganization, merger, consolidation, spin-off, combination, share exchange, liquidation,
dissolution or other similar corporate transaction or event affects the Shares and/or such other
securities of the Company or any other issuer such that a substitution, exchange or adjustment is
determined by the Plan Administrator to be appropriate, then the Plan Administrator shall, in an
equitable manner, substitute, exchange or adjust any or all of (A) the number and kind of Shares
which may be delivered in connection with Awards granted thereafter, (B) the number and kind of
Shares by which annual per-person Award limitations are measured under Section 5 hereof, (C) the
number and kind of Shares subject to or deliverable in respect of outstanding Awards, (D) the
exercise price, grant price or purchase price relating to any Award and/or make provision for
payment of cash or other property in respect of any outstanding Award, and (E) any other aspect of
any Award that the Plan Administrator determines to be appropriate.

               (ii) Other Adjustments. The Plan Administrator (which shall be a Committee to the
extent such authority is required to be exercised by a Committee to comply with Code Section
162(m)) is authorized to make adjustments in the terms and conditions of, and the criteria included
in, Awards (including Awards subject to performance goals) in recognition of unusual or
nonrecurring events (including, without limitation, acquisitions and dispositions of businesses and
assets) affecting the Company, any Related Entity or any business unit, or the financial statements
of the Company or any Related Entity, or in response to changes in applicable laws, regulations,
accounting principles, tax rates and regulations or business conditions or in view of the Plan
Administrator’s assessment of the business strategy of the Company, any Related

- 22 -

 

Entity or business unit thereof, performance of comparable organizations, economic and
business conditions, personal performance of a Participant, and any other circumstances deemed
relevant; provided that no such adjustment shall be authorized or made if and to the extent that
such authority or the making of such adjustment would cause Options, Stock Appreciation Rights or
Performance Awards granted to Participants designated by the Plan Administrator as Covered
Employees and intended to qualify as “performance-based compensation” under Code Section 162(m) and
the regulations thereunder to otherwise fail to qualify as “performance-based compensation” under
Code Section 162(m) and regulations thereunder.

          (d) Taxes. The Company and any Related Entity are authorized to withhold from any
Award granted, any payment relating to an Award under the Plan, including from a distribution of
Shares or any payroll or other payment to a Participant, amounts of withholding and other taxes due
or potentially payable in connection with any transaction involving an Award, and to take such
other action as the Plan Administrator may deem advisable to enable the Company and Participants to
satisfy obligations for the payment of withholding taxes and other tax obligations relating to any
Award. This authority shall include authority to withhold or receive Shares or other property and
to make cash payments in respect thereof in satisfaction of a Participant’s tax obligations, either
on a mandatory or elective basis in the discretion of the Plan Administrator.

          (e) Changes to the Plan and Awards. The Board may amend, alter, suspend, discontinue
or terminate the Plan or the Committee’s authority to grant Awards under the Plan, without the
consent of shareholders or Participants. Any amendment or alteration to the Plan shall be subject
to the approval of the Company’s shareholders if such shareholder approval is deemed necessary and
advisable by the Board or if required under the rules or regulations of the stock exchange that has
the highest trading volume for the Shares for the prior calendar year. However, without the consent
of an affected Participant, no such amendment, alteration, suspension, discontinuance or
termination of the Plan may materially and adversely affect the rights of such Participant under
any previously granted and outstanding Award. The Plan Administrator may waive any conditions or
rights under or amend, alter, suspend, discontinue or terminate any Award theretofore granted and
any Award Agreement relating thereto, except as otherwise provided in the Plan; provided that,
without the consent of an affected Participant, no such action may materially and adversely affect
the rights of such Participant under such Award.

          (f) Limitation on Rights Conferred Under Plan. Neither the Plan nor any action taken
hereunder shall be construed as (i) giving any Eligible Person or Participant the right to continue
as an Eligible Person or Participant or in the employ of the Company or a Related Entity; (ii)
interfering in any way with the right of the Company or a Related Entity to terminate any Eligible
Person’s or Participant’s Continuous Service at any time, (iii) giving an Eligible Person or
Participant any claim to be granted any Award under the Plan or to be treated uniformly with other
Participants and Employees or (iv) conferring on a Participant any of the rights of a shareholder
of the Company unless and until the Participant is duly issued or transferred Shares in accordance
with the terms of an Award.

          (g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended to constitute
an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet
made to a Participant or obligations to deliver Shares pursuant to an Award,

- 23 -

 

nothing contained in the Plan or any Award shall give any such Participant any rights that are
greater than those of a general creditor of the Company; provided that the Plan Administrator may
authorize the creation of trusts and deposit therein cash, Shares, other Awards or other property
or make other arrangements to meet the Company’s obligations under the Plan. Such trusts or other
arrangements shall be consistent with the “unfunded” status of the Plan unless the Plan
Administrator otherwise determines with the consent of each affected Participant. The trustee of
such trusts may be authorized to dispose of trust assets and reinvest the proceeds in alternative
investments, subject to such terms and conditions as the Plan Administrator may specify and in
accordance with applicable law.

          (h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor its
submission to the shareholders of the Company for approval shall be construed as creating any
limitations on the power of the Plan Administrator to adopt such other incentive arrangements as it
may deem desirable including incentive arrangements and awards which do not qualify under Code
Section 162(m).

          (i) Fractional Shares. No fractional Shares shall be issued or delivered pursuant to
the Plan or any Award. The Plan Administrator shall determine whether cash, other Awards or other
property shall be issued or paid in lieu of such fractional shares or whether such fractional
shares or any rights thereto shall be forfeited or otherwise eliminated.

          (j) Governing Law. The validity, construction and effect of the Plan, any rules and
regulations under the Plan, and any Award Agreement shall be determined in accordance with the laws
of the State of Delaware without giving effect to principles of conflicts of laws, and applicable
federal law.

          (k) Plan Effective Date and Shareholder Approval; Termination of Plan. The Plan shall
become effective on the Effective Date, subject to subsequent approval within twelve (12) months of
its adoption by the Board by shareholders of the Company eligible to vote in the election of
directors, by a vote sufficient to meet the requirements of Code Sections 162(m) (if applicable)
and 422, Rule 16b-3 under the Exchange Act (if applicable), applicable Nasdaq requirements, and
other laws, regulations, and obligations of the Company applicable to the Plan. Awards may be
granted subject to shareholder approval, but may not be exercised or otherwise settled in the event
shareholder approval is not obtained. The Plan shall terminate no later than ten (10) years from
the date of the later of (x) the Effective Date and (y) the date an increase in the number of
shares reserved for issuance under the Plan is approved by the Board (so long as such increase is
also approved by the shareholders).

- 24 -

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