Document:

exv10w6

 

Exhibit 10.6

Statement of Work

For

Assisted Living Concepts

 

 

					
	
	 	 Statement of Work
	 	 

Table of Contents

	 	 	 	 	 
	EXECUTIVE SUMMARY
	 	 	3	 
	 
	 	 	 	 
	1. SCOPE OF WORK
	 	 	3	 
	1.1 Services to be delivered
	 	 	3	 
	1.2 VCPI Responsibilities
	 	 	3	 
	1.3 Client Responsibilities
	 	 	3	 
	1.4 Assumptions
	 	 	3	 
	1.5 Change Management
	 	 	4	 
	1.6 Other Conditions and Exceptions
	 	 	4	 
	1.7 Service Level Agreement(s) (SLA)
	 	 	4	 
	1.8 Deliverables
	 	 	4	 
	2.1 Pricing Sheet
	 	 	17	 
	2.2 Contract Term
	 	 	18	 
	2.3 Method of Payment
	 	 	18	 
	 
	 	 	 	 
	ATTACHMENT A: CLIENT SOFTWARE DECLARATION
	 	 	19	 
	 
	Hosted Software Schedule
	 	 	20	 
	Client License Terms
	 	 	22	 
	 
	 	 	 	 
	ATTACHMENT B: CHANGE MANAGEMENT PROCESS
	 	 	26	 
	 
	 	 	 	 
	ATTACHMENT C: SERVICE LEVEL AGREEMENTS
	 	 	27	 
	 
	 	 	 	 
	ATTACHMENT D: SITE LISTING
	 	 	29	 
	 
	 	 	 	 
	ATTACHMENT E: STANDARD RATE SCHEDULE
	 	 	30	 

	 				
	 
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	 	 Statement of Work
	 	 

Executive Summary

VCPI is pleased to present this Statement of Work (SOW) defining the services to be provided to
Assisted Living Concepts (“Client”). It is the goal of both organizations to reduce the total
cost of ownership for information technology for Assisted Living Concepts. VCPI believes that
by providing the services outlined in this SOW we can enable Assisted Living Concepts to benefit
from a more stable information technology environment and to increase focus on providing quality
care to its residents.

This Contract is entered into pursuant to the Master Technology Services–Standard Provisions
Agreement (“Master Agreement”) between VCPI and Assisted Living Concepts (“Client”), the terms
and provisions of which are hereby incorporated herein by this reference as fully as though set
forth herein. This Statement of Work replaces and supersedes any prior Statement of Work,
however titled, between the parties.

	1.	 	Scope of Work
	 
	1.1	 	Services to be delivered
	 
	 	 	 Recurring Services

	 	•	 	Co-Location/Hosting Services
	 
	 	•	 	Client Support Services – Limited Scope
	 
	 	•	 	Telecommunication Services

Non-Recurring Services – as needed

	 	•	 	Service Desk – Call Escalation
	 
	 	•	 	Field Support Services
	 
	 	•	 	Facility Implementation Services
	 
	 	•	 	IT Consulting Services
	 
	 	•	 	Procurement Services
	 
	 	•	 	Software Rental Services

	1.2	 	VCPI Responsibilities

	 	•	 	Provide an Account Manager to serve as the communication focal point between Client and VCPI.
	 
	 	•	 	Provide reasonable notification to Client of planned changes to the VCPI network
or hosting environment that could potentially impact Client.

	1.3	 	Client Responsibilities

	 	•	 	Provide an individual to serve as the focal point for communication between Client and VCPI.
	 
	 	•	 	Client-owned hardware and software maintenance will be the responsibility of the client.
	 
	 	•	 	Disaster recovery costs for client-owned hardware with third-party vendor(s)
will be the responsibility of the client.

	1.4	 	Assumptions

	 	•	 	Software that is being hosted and supported by VCPI is at a level that is supported by the manufacturer.
	 
	 	•	 	Client will not have access to the VCPI data center. Any access needed for
client will be in the presence of a VCPI employee and will need to be pre-approved
with the Director of Production Services 24-hours prior to time access is needed.
	 
	 	•	 	All non-recurring fees are subject to VCPI quarterly rate changes.

	 				
	 
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	 	 Statement of Work
	 	 

	 	•	 	All fees are subject to annual price increase provisions not to exceed 10% of prior Fee/Unit.

	1.5	 	Change Management

	 	•	 	Changes to this Scope of Work will be managed utilizing the Change
Management Process defined in Attachment B.
	 
	 	•	 	Additional recurring quantities and services may be added to this SOW by means
of the Statement of Work — Addendum. Any additional recurring quantities and
services added 6 months after the effective date of this SOW will cause the term on
this SOW to be extended by 12 months.

	1.6	 	Other Conditions and Exceptions

	 	•	 	In the event of software manufacturer (beyond the control of VCPI) or
regulatory changes requiring architectural or infrastructure changes, VCPI reserves
the right to adjust fees by a reasonable amount.
	 
	 	•	 	In the event VCPI resources are required to address situations clearly caused by
the Client or any party acting on behalf of the Client, they will be billed at the
Time & Materials rate with no Service Level Agreement (SLA) guarantees.

	1.7	 	Service Level Agreement(s) (SLA)

	 	•	 	The service levels agreed to between VCPI and Client are contained in Attachment C.
	 
	 	•	 	SLA attainment is dependent upon Client Requirements/Assumptions identified
within each deliverable being met.

	1.8	 	Deliverables

Co-Location/Hosting Services (150)

Production Services – Application Hosting (150.1)

Overview

	 	•	 	VCPI will host up to five (5) applications on the Client Software
Declaration (Attachment A) on a Citrix Metaframe distribution model.
	 
	 	•	 	Additional fees will be charged for every hosted application above the five (5)
included in the Application Hosting base offering.
	 
	 	•	 	VCPI supports applications certified to work in a Microsoft operating system
(Windows 2000 and later) with a terminal services topology.
	 
	 	•	 	Applications will be available 24x7x365 with the exception of scheduled
maintenance windows which will be communicated and coordinated with advance notice.
	 
	 	•	 	Client will not have access to the VCPI data center. Any access needed for
client will be in the presence of a VCPI employee and will need to be pre-approved with
the Director of Production Services 24-hours prior to time access is needed.

Hardware Provided by VCPI

	 	•	 	Application, database and access server hardware.
	 
	 	•	 	Data center networking hardware.
	 
	 	•	 	Storage and application backup hardware.
	 
	 	•	 	Maintenance of provided hardware including hardware lifecycle management.

Software Provided by VCPI

	 	•	 	Server and network operating systems.
	 
	 	•	 	Systems management, network management and storage hierarchy management
software.
	 
	 	•	 	Application server security solutions.

Services Provided by VCPI

	 	•	 	Routine server and network administration.
	 
	 	•	 	Server and network monitoring, troubleshooting.
	 
	 	•	 	System recovery in the event of failure of hosted system(s).
	 
	 	•	 	Daily backup of user and application data on hosted systems.
	 
	 	•	 	Offsite archival of backed up data.
	 
	 	•	 	Microsoft security management.

	 				
	 
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Messaging

	 	o	 	Hosted Email system is using Microsoft Exchange platform.
	 
	 	o	 	Highly redundant and highly available solution.
	 
	 	o	 	VCPI supports MS Outlook, Citrix access and MS Outlook Web Access (OWA).
	 
	 	o	 	Mobile messaging via MS Windows Mobile or Blackberry technology available.
	 
	 	o	 	Environment backup up daily.
	 
	 	o	 	Anti-Spam solution available.
	 
	 	o	 	Mailbox/Email restoration available.
	 
	 	o	 	Email Archiving available.

Data Storage

	 	o	 	Highly redundant file systems for high availability.
	 
	 	o	 	Network attached systems available for hosting business data.
	 
	 	o	 	SAN (Storage Area Network) attached database environment.
	 
	 	o	 	Environment backup up daily.
	 
	 	o	 	On site MS SQL database expertise.

Client Requirements and Assumptions

Hardware

	 	•	 	Client provides all application, database and access server hardware and is responsible for any
maintenance of the hardware.
	 
	 	•	 	Client provides personal computers and networking devices (or other VCPI-approved devices) configured for
access to the VCPI network using TCP/IP.
	 
	 	•	 	Any applications that require additional hardware resources or do not conform with standard hardware
configurations could be an additional expense for clients

Software Licensing, Software Support and Software Maintenance

	 	•	 	Client is responsible for all application and database software licensing, server operating system
software, Client-access licenses, software support and software maintenance costs.
	 
	 	•	 	Client is responsible for all workstation based operating systems, applications and network access
licensing, connectivity software (i.e. Microsoft Terminal Server and/or Citrix) licensing, support and
maintenance.
	 
	 	•	 	Client is to provide software technical support contact for non-VCPI software partners.

Email

	 	•	 	Client will use the VCPI domain name (i.e.
user@vcpiclients.com) unless Client has a registered
domain.
	 
	 	•	 	Client is responsible for domain name registration and renewal.
	 
	 	•	 	Client must provide VCPI engineering staff with technical contact access to domain name registration for
proper routing of mail to VCPI mail servers.
	 
	 	•	 	All mailboxes are limited to 25mb of storage.
	 
	 	•	 	All Corporate offices are entitled to 50 mailboxes with base hosting fee.
	 
	 	•	 	All sites are entitled to 20 mailboxes with base hosting fee.

General

	 	•	 	Telecommunications equipment owned and/or managed by the Client must be configured for access to the
VCPI network. Client understands that VCPI involvement is billed at a Time & Materials rate.
	 
	 	•	 	Client must adhere to the VCPI issued IP address scheme.
	 
	 	•	 	For the safety and security of all hosted users, Client must follow VCPI User/Network Security policies
(i.e. Username standards, password format and change period, etc.)
	 
	 	•	 	Undeclared/non-contracted software and systems are the responsibility of the Client to support. Any VCPI
involvement or integration is billed at a Time & Materials rate and is outside the scope of any specified SLAs.
	 
	 	•	 	Storage allowance included in base hosting fee: 1GB for Corporate Offices, 500MB per site.
	 
	 	•	 	Default tape retention is current calendar year + 2 years from date of backup.
	 
	 	•	 	All personal computers and servers connected to the VCPI network must have current Anti-virus software,
and latest Operating System security and service packs installed to be eligible for SLAs.
	 
	 	•	 	Virus infections and related support and cleanup will be billed at a Time & Materials rate. If Client
does not address identified infections, Client will be disconnected from the VCPI network until resolved.

	 				
	 
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Production Services – Information Security Services (150.2)

Overview

VCPI will strive to protect Client’s information from damage,
loss, misuse, or unauthorized disclosure in a manner that helps
VCPI develop and preserve valuable trust relationships, instill
absolute confidence with our clients, and comply with applicable
regulatory compliance objectives.

VCPI will protect the confidentiality, integrity, and availability
of Client’s information by identifying, controlling, and minimizing
or eliminating security risks through targeted protection,
detection, and response services and capabilities established
throughout each of VCPI’s Service Offerings.

The Identity & Access Management and Information Security
Engineering & Operations Services have been outlined commensurate
with the IT business needs of the Long Term Care Industry to
minimize Client’s security risks, including; reputational
(competitive advantage), operational, legal, financial, and
regulatory.

Production Services – Identity & Access Management (150.3)

Overview

The VCPI Identity & Access Management (IAM) Team Provide a single, centralized authorization and role based
user account provisioning solution for all VCPI hosted solutions.

VCPI provides a user provisioning process to ensure compliance with applicable internal Information Security
Policies for user account management and regulatory requirements such as Sarbanes Oxley & HIPAA to ensure the
protection of Client’s data in a consistent and repeatable manner.

Hardware Provided by VCPI

	 	•	 	Fully Redundant Domain Controller server hardware.
	 
	 	•	 	Data center networking hardware.
	 
	 	•	 	Maintenance of provided hardware.

Software Provided by VCPI

	 	•	 	Microsoft Active Directory (AD) and defined services.
	 
	 	•	 	Server and network operating systems.
	 
	 	•	 	Systems management, security management, and network management software.

Services Provided by VCPI

     Centralized Network and Application User Account Management including:

	 	•	 	New Account Requests: Employees who are new or have never logged onto the PC using their own
credentials.
	 
	 	•	 	Additional Access Requests: Employees who have an existing account in which more access is needed.
This Type of request does not remove the existing access that employee already has.
	 
	 	•	 	Transfer/Change Position Requests: Employees who have relocated to a new House and/or have changed
positions. This type of request does result in the removal of access not required at the new House or under
the new position.
	 
	 	•	 	Name Change Requests: Employees who have had a name change and need to have their existing account
updated to reflect the new name. This type of request does not change the existing employee access.
	 
	 	•	 	Disable/Employee Termination Account Requests: Employees who have been terminated or are still employed
but no longer need a computer account.

Production Services – Server & Workstation Anti-Virus (150.4)

Overview

	 	•	 	VCPI will ensure anti-virus software is configured to proactively protect and automatically update to the
latest anti-virus files on a regular basis to protect the Client’s physical and electronic assets.
	 
	 	•	 	VCPI will proactively manage the Anti-Virus software in a in a professional and planned way to reduce the
potential impact of Malware (e.g. viruses, worms, Trojans). Failure to respond appropriately to a virus incident can
rapidly result in multiple system failures and continued infection.

					
	 	 	 	 	 
	 
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Hardware Provided by VCPI

	 	•	 	Data center networking hardware.
	 
	 	•	 	Maintenance of provided hardware.

Software Provided by VCPI

	 	•	 	VCPI defined Anti-Virus agents and management software.
	 
	 	•	 	Network operating systems.
	 
	 	•	 	Systems management, security management, database management, and network management software.

Services Provided

	 	•	 	Installation as well as ongoing updates and management of Anti-Virus agents on Client’s desktops and
servers.
	 
	 	•	 	VCPI provides protection from the newest potentially unwanted program security threats, application-specific
buffer overflow attacks, and blended attacks
	 
	 	•	 	VCPI utilizes firewall and intrusion prevention technology to delivers maximum proactive protection in a
single, integrated solution package
	 
	 	•	 	VCPI utilizes a single, centralized event monitoring and alerting repository solution to provide a complete
security management solution, including detailed graphical reporting on a client by client basis.

Client Requirements and Assumptions

	 	•	 	Users must log out of PC and leave PC powered on in order to receive updates after business hours.
	 
	 	•	 	If anti-virus software provider has not recognized the virus and it does cause damage to the Client’s
software/hardware, VCPI is not responsible for the damages.
	 
	 	•	 	Telecommunications equipment owned and/or managed by the Client must be configured for access to the VCPI
network. VCPI involvement is billed on a Time & Materials basis.
	 
	 	•	 	Client adherence to VCPI issued IP address scheme.
	 
	 	•	 	For the safety and security of all hosted users, Client must follow VCPI User/Network Security policies. (i.e.
Username standards, password format and change period, etc.).

Production Services – Messaging Security (150.5)

Overview

	 	•	 	Unsecured communications and uncontrolled content not only threaten your ability to be HIPAA compliant, they can
also damage your relationship with clients, partners, and suppliers.
	 
	 	•	 	VCPI’s Messaging Security services defend your organization against such dangers, allowing you to control email
content, and to secure communications into your organization.

Services Provided by VCPI

	 	•	 	VCPI provides Messaging Security services to guard against email specific threats such as viruses, spam,
identity theft (i.e. phishing) and targeted blackmail campaigns that jeopardize business continuity, regulatory compliance,
reputation and brand.
	 
	 	•	 	VCPI provides initial service implementation as well as ongoing support for service changes, information, and
training
	 
	 	•	 	VCPI guarantees 100% protection from all viruses
	 
	 	•	 	VCPI guarantees 95% of all inbound unsolicited, bulk email (SPAM) will not reach your email box.

Production Services – Security Event Monitoring (150.6)

Services Provided by VCPI

	 	•	 	VCPI utilizes a centralized, intelligent Security event monitoring appliance to
collect and correlate log data from selected network and system devices to alert the VCPI staff
of any suspicious information or events related to VCPI’s servers and network infrastructure.
Where necessary, this information is utilized as part of the VCPI Incident Response & Management
Process (IRAMP), which is a cross functional response process, which includes reporting and
corrective action guidelines and based upon incident criticality in a professional and planned
way reducing its impact (i.e. downtime) and cost to the business.

					
	 	 	 	 	 
	 
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General

	 	•	 	Telecommunications equipment owned and/or managed by the Client must be configured
for access to the VCPI network. Client understands that VCPI involvement is billed at a Time &
Materials rate.
	 
	 	•	 	Client must adhere to the VCPI issued IP address scheme.
	 
	 	•	 	For the safety and security of all hosted users, Client must follow VCPI User/Network
Security policies (i.e. Username standards, password format and change period, etc.)
	 
	 	•	 	Undeclared/non-contracted software and systems are the responsibility of the Client to
support. Any VCPI involvement or integration is billed at a Time & Materials rate and is
outside the scope of any specified SLAs.
	 
	 	•	 	Storage allowance included in base hosting fee: 1GB for Corporate Offices, 500MB per
site.
	 
	 	•	 	Default tape retention is current calendar year + 2 years from date of backup.
	 
	 	•	 	All personal computers and servers connected to the VCPI network must have current
Anti-virus software, and latest Operating System security and service packs installed to be
eligible for SLAs.
	 
	 	•	 	Virus infections and related support and cleanup will be billed at a Time & Materials
rate. If Client does not address identified infections, Client will be disconnected from the
VCPI network until resolved.

Production Services – Hosting Facilities and Environment (150.7)

Services Provided

	 	•	 	Complete Data Center environmental management including:

	 	§ 	 	Redundant power via Uninterruptible Power Supply (UPS) units
	 
	 	§ 	 	Backup generators covering all systems and environments.
	 
	 	§ 	 	Fire suppression system
	 
	 	§ 	 	Redundant cooling system
	 
	 	§ 	 	Raised Floor

	 	•	 	Physical access controls
	 
	 	•	 	7x24 environmental monitoring of all critical systems including UPS, Cooling Units, and Fire Suppression
System
	 
	 	•	 	Network Operations Center (NOC) onsite for continuous environment monitoring and management

Production Services – Business Resumption (150.8)

Services Provided

     Disaster Recovery

	 	•	 	Contract with Sungard providing:

	 	§ 	 	Data Center facilities
	 
	 	§ 	 	Production equipment including servers, network, and data storage platforms
	 
	 	§ 	 	DR exercises conducted 3 to 4 times annually

	 	•	 	Defendable and Auditable Disaster Recovery Plan documenting all procedures and
responsibilities.
	 
	 	•	 	Disaster Recovery Coordinator overseeing all DR planning and exercises.
	 
	 	•	 	Production data duplicated daily and stored at an offsite location.

Client Requirements and Assumptions

	 	•	 	Client is responsible for costs incurred directly with SunGard for Disaster Recovery (DR)
coverage for client owned hardware. These fees will be passed to client at VCPI’s cost and are
subject to change as the client’s data center environment changes. Any changes to the SunGard DR
contract or changes in fees for client-owned hardware would need to be pre-approved by client.

Production Services – Enterprise Monitoring and Management (150.9)

Services Provided

	 	•	 	7x24 monitoring of all critical production systems
including:

	 	•	 	Servers
	 
	 	•	 	Network
	 
	 	•	 	Storage
	 
	 	•	 	Backup
	 
	 	•	 	Data Access – Data Security

	 	•	 	Incidents and events identified are automatically communicated
to Engineering Support Teams, Operations, and the Service Desk.
	 
	 	•	 	Centralized availability and performance dashboard implemented
to provide visibility and information on the status of production
systems.

					
	 	 	 	 	 
	 
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Production Services – Change and Performance Management (150.10)

Services Provided

	 	•	 	Centralized Change Management standards and procedures to ensure coordination and communication of all scheduled
system updates.
	 
	 	•	 	Daily review and approval process for all requested system changes, upgrades, and maintenance activities.
	 
	 	•	 	Performance Management for production systems coordinated within Engineering Team to ensure high levels of client
application performance.
	 
	 	•	 	Centralized systems management tools gathering availability and performance metrics for all production
equipment.

					
	 	 	 	 	 
	 
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Client Support Services (210)

Service Desk (210.1)

Services Provided

	 	•	 	Support calls requiring escalation from Client’s Service Desk to VCPI’s
Service Desk for support needed from VCPI personnel such as Tier 3 techs, system and
network engineering, and other support groups within VCPI.
	 
	 	•	 	Phone coverage, 24 hours per day, 7 days per week, is provided:

	 	§ 	 	Monday through Friday: Client Service Desk is staffed with onsite
analyst(s) taking calls from 6:30 AM through 8:30 PM Central Time.
	 
	 	§ 	 	Holidays (excluding Christmas Day): Client Service Desk is staffed with
onsite analyst taking calls from 8:00 AM through 2:30 PM Central Time (during
high call volume, calls may be answered by answering service).
	 
	 	§ 	 	Saturday and Sunday: Calls are answered by an answering service. The
answering service will triage and escalate to the on-call analyst, and Client
will receive a call back.

General

	 	•	 	Standardized call reports, generated from the Remedy Call Tracking database,
may be provided to Client on a weekly basis by request.
	 
	 	•	 	VCPI will meet or exceed service levels outlined above at a 90% or greater level
based on a rolling monthly average of all Client calls within a specific priority.

Priority Definitions

The VCPI service desk triages incoming service requests based upon the impact to the
client. VCPI utilizes four levels of priorities to categorize service requests. The four
levels are defined below. Employing these four levels of priorities ensures that those service
issues with greatest financial or business impact are addressed as quickly as possible to
eliminate or reduce the impact to our clients’ ability to perform their job functions.

	 	•	 	Urgent: Entire facility or corporate department down; severe business impact
(compliance, resident care); time deadline with financial penalties (e.g. MDS
submission; payroll; State is in the building)

SLA: Warm Transfer
	 
	 	•	 	High: Affecting single user, work cannot continue elsewhere; possible financial
impact; issue must be resolved same day

SLA: 2.5 Hours
	 
	 	•	 	Medium: Affecting single user; work can continue elsewhere; no financial
impact.

SLA: 8 Business Hours
	 
	 	•	 	Low: Installation/Move/Add/Change (IMAC)

SLA: As scheduled

Client
Support Services – Service Desk Objective Level Agreement

Call Back

	 	•	 	Urgent – Call will be warm transferred to a technician.
	 
	 	•	 	High – Initial call back within 2.5 hours.
	 
	 	•	 	Medium – Initial call back within 8 business hours.
	 
	 	•	 	Low – As scheduled per work order or project plan.

Definition of Terms

Business Day

	 	•	 	Calls placed to the VCPI 800 service desk Monday through Friday between 6:00 AM
and 6:00 PM will be returned between Monday and Friday, 7:30 AM to 5:30 PM local time
based on caller location (excluding published Holidays.)
	 
	 	•	 	Calls placed to the VCPI 800 service desk Monday through Friday between 6:00 AM
and 5:00 PM will be returned Monday through Friday, 6:00 AM to 6:00 PM local time based
on caller location (excluding published Holidays.)

     Example:

A call placed at 3:00 PM Central Time on Monday, the business day will begin at 3:00 PM
and end at 6:00 PM. The business day will start again at 7:00 AM the following day.

					
	 	 	 	 	 
	 
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Events which can delay service levels and service delivery

	 	•	 	Virus affecting multiple sites and VCPI servers.
	 
	 	•	 	Third Party Vendor takes application off line, planned or unplanned.
	 
	 	•	 	Client makes a change that causes the server to go down, creates performance issues on the server, or causes access
issues.
	 
	 	•	 	Force Majeure (e.g. Flood, Weather, Tornado, etc.).
	 
	 	•	 	Third Party Vendor is the defined service provider for specific client/area.

Client Requirements and Assumptions

	 	•	 	VCPI staff will identify call priority based on Priority Definitions above.
	 
	 	•	 	Client will provide an accurate site number (see attachment D – Site Listing for site numbers) when placing a call.
	 
	 	•	 	Client must be available to take the analyst’s call or identify alternate contact person.
	 
	 	•	 	PC or printer must be connected to VCPI network.
	 
	 	•	 	PC must be running anti-virus software with updated definition files.
	 
	 	•	 	Client must have called the VCPI Service desk directly to log the call. Calls placed to other members of the organization
are not subject to Service Desk SLAs.
	 
	 	•	 	Cabling must be certified and clearly marked.
	 
	 	•	 	Workstation hardware requirement:

	 	o	 	NeoWare ThinClient (or equivalent)
	 
	 	o	 	PC: P200 or above, 128 MB RAM, 4 GB HDD

Management Services – Account Manager (210.2)

Services Provided

	 	•	 	Serve as a focal point of communication between Client and VCPI.
	 
	 	•	 	Facilitate weekly or monthly meetings to update status of projects and to report on service level agreements.
	 
	 	•	 	Conduct quarterly satisfaction surveys.
	 
	 	•	 	Project Management for projects with VCPI resources.
	 
	 	•	 	Responsible for getting necessary authorization for: installations, moves, adds and/or changes to the current
environment as well as the labor and travel required to provide such service.
	 
	 	•	 	Review monthly invoices for accuracy prior to issuance.
	 
	 	•	 	Provide case studies to justify current Client expenditures.
	 
	 	•	 	Identify and effectively communicate services that VCPI has to offer as it relates to the Client’s business
requirements.

Objective Level Agreement

	 	•	 	Respond to Client E-mails/voicemails in a timely manner.

Client Requirements and Assumptions

	 	•	 	Provide a single point of contact to serve as the focal point for communications between Client and Account
Manager, especially communications regarding project approvals, billing and issue resolution.

      

					
	 
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Telecommunication Services (450)

Telecommunication Services and Network Operations– Network Connectivity (450)

Services Provided

	 	•	 	Access to the VCPI network via Virtual Private Networking (VPN) through the Internet.
	 
	 	•	 	Network analysis and growth planning.
	 
	 	•	 	Wide Area Network (WAN) monitoring, reporting, troubleshooting, security, and maintenance for Client’s
corporate, facility sites, and other business locations.
	 
	 	•	 	Where applicable, frame relay service with a port speed from 128K to 1.5Mbps with rate limited Internet
service.
	 
	 	•	 	Configuration and Management of all Customer Premise Equipment (CPE) including wireless based upon VCPI
standards

Client Requirements and Assumptions

	 	•	 	Location-level connectivity to the VCPI network through dedicated point-to-point connection, Frame relay,
or Virtual Private Network (VPN).
	 
	 	•	 	Equipment procurement based upon pre-approved/VCPI standard CPE.
	 
	 	•	 	WAN Telecommunication troubleshooting and escalation to data carriers and problem resolution.
	 
	 	•	 	Business Class broadband service with static IP Addressing such as DSL and Cable modem with static IP address
is required for facility VPN connectivity.
	 
	 	•	 	Remote or VPN access requires VCPI approved VPN technology and Internet connectivity using DSL, Cable modem or
dial-up access. VCPI can provide dial-up access service.
	 
	 	•	 	High speed Internet service (DSL, cable modem) will be billed directly to Client.
	 
	 	•	 	All connectivity services require a minimum 45-60 days notice prior to requested installation date (expedited
installations are available for an additional charge based on carrier availability).
	 
	 	•	 	Hardware purchased independently by Client for connectivity use must be delivered to VCPI at least 2 weeks
prior to requested turn-up date.
	 
	 	•	 	Cisco routers are required for all frame relay installations. Juniper Netscreens or Cisco routers are required
for all site VPN installations as CPE.
	 
	 	•	 	Access to CPE is limited to VCPI staff only.

      

					
	 
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Field Support Services (310) – As needed

Onsite Technical Support (310.1)

Services Provided

	 	•	 	Onsite technical support to resolve issues that cannot be fixed remotely.
	 
	 	•	 	Hardware diagnosis, troubleshooting, repair, and potential replacement.
	 
	 	•	 	Operating System diagnosis, troubleshooting, repair, and potential reinstallation not related to scheduled
updates.
	 
	 	•	 	Local Area Network (LAN) diagnosis, troubleshooting, and potential repair.
	 
	 	•	 	“Good Faith” estimates (labor, travel, and mileage) will be given to Clients before we go onsite.
	 
	 	•	 	Onsite service is offered Monday thru Friday from 8:00am to 5:00pm (local standard time) and is billed at the
current VCPI Standard Hourly Rate (see Attachment E – “Standard Rate Schedule”) plus applicable travel and expenses.
Requests for weekend, after hours, or Holiday work must be given two weeks in advance. However, availability is based on
FTE schedule. All weekend and after hours work is to be billed at Time and a Half, all Holiday work is billed at Double
Time (labor and travel).

Client Requirements and Assumptions

	 	•	 	Client must authorize prior to site visit.

Field Support Services – Site Assessment (510)

Services Provided

  Comprehensive IT assessment of sites as requested by client including:

	 	•	 	Inventory of PC’s, printers (local and network), servers, network equipment and network infrastructure.
	 
	 	•	 	Inventory of current systems in use by the site (i.e. Dietary, Therapy, AP, AR, GL, Resident Trust, Clinical and Financial
Applications).
	 
	 	•	 	Inventory of any other local software in use by sites (i.e. office productivity, anti-virus, communications programs, etc.).
	 
	 	•	 	Inventory of user drives to be moved to network share.
	 
	 	•	 	Determine internet connectivity.
	 
	 	•	 	Floor plan of site (if one is available) detailing cable runs, locations of offices, PC’s, printers, etc.

  Deliverables:

	 	•	 	Document detailing site assessment objectives.
	 
	 	•	 	Schedule with date of visit by facility and technician’s name.
	 
	 	•	 	Call to facility the day prior to site assessment.
	 
	 	•	 	Recommendation detailing equipment not meeting VCPI standards which must be upgraded to be covered by support agreements.

Client Requirements and Assumptions

	 	•	 	VCPI will need at least 2 weeks notice prior to site assessment to ensure availability of resource to perform this
survey.
	 
	 	•	 	VCPI will provide Client with the VCPI site assessment objectives before going onsite. If there is any other information
the Client requires, they must provide this to VCPI one day prior to the technician going onsite.
	 
	 	•	 	Provide contact to tour site with VCPI technician.
	 
	 	•	 	A site not ready fee of $750 per FTE scheduled will be assessed to Client if the site denies access to VCPI technician on
the scheduled date for the site visit.
	 
	 	•	 	Standard facility implementation will be completed no earlier than 45-days from contact execution date. If an expedited
implementation is requested by client, VCPI’s standard list price for site implementation will be voided, and the client will be
billed on a time and material basis for time spent to implement these expedited facilities.
	 
	 	•	 	Fee for Site Assessment (510) does not include travel expenses or travel time. These will be billed to the client as they
occur.

      

					
	 
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Field Support Services – Site Implementation (515)

Services Provided

	 	•	 	Setup of IT equipment at new/existing Client sites.
	 
	 	•	 	Configuration of Client’s hardware (that meets VCPI hardware specs) for use on the VCPI
network.
	 
	 	•	 	Establish connectivity to the VCPI network, through use of VCPI approved network appliance.
	 
	 	•	 	Move user files to network share, as required.
	 
	 	•	 	Basic user training on accessing and logging in to Citrix.

VCPI Requirements

	 	•	 	Due to the lead times dictated by telecom companies to install Frame Circuits or high
speed Cable/DSL service, VCPI requires 45-60 days notice prior to site implementation to have Frame
circuits installed and 30 days notice to have Cable/DSL modem connectivity established. VCPI will
make no guarantees that said service will be installed by a given date because of our reliance on the
telecom companies to finish their work.
	 
	 	   Note:	 	 

	 	•	 	If client requires installation dates which require VCPI to work with the telecom
company twice; the second work will be billable at current Field Engineering Services hourly
rate in Appendix E.

	 	•	 	If the site will need cabling and Client will contract with VCPI to install cabling, VCPI
requires at least 30 days notice. VCPI can have cable runs done at a Time & Materials rate using
3rd parties that VCPI has contracts with. Emergency jobs can be done at $150/hr or more.
	 
	 	•	 	VCPI recommends the Client have the cabling contractor that will be installing cable, perform
a cabling survey to determine the cost and the time required for the cabling run. This also ensures
that they have the proper materials and manpower available to do the installations in a timely manner.

Client Requirements and Assumptions

	 	•	 	Minimum of 45 days notice prior to Site Implementation. VCPI cannot guarantee Cabling,
hardware availability, and availability of staff for Site Implementation without this notice.
	 
	 	•	 	Data carrier connectivity must be established prior to Site Implementation date for the site.
	 
	 	•	 	Connection to VCPI must have a fixed IP address provisioned to it.
	 
	 	•	 	All locations in the site that will have a network device (PC, Printer, Thin Client, etc) must
all be cabled from devices to the network closet.
	 
	 	•	 	All hardware purchased independently by Client for use in Site Implementation must be
delivered to VCPI or Site at least one (1) week prior to Site Implementation date. Configuration of
hardware after Site Implementation will be performed as a separate project.
	 
	 	•	 	A “Site Not Ready” fee of $750 per scheduled FTE may be assessed if the connectivity and/or
cabling arranged by the Client or hardware purchased by the Client are not available by the scheduled
Site Implementation date.
	 
	 	•	 	Existing cabling or cabling installed by Client must be tested and certified for VCPI to
ensure that connectivity can be established from network devices to VCPI network. VCPI will not make
any guarantees for cabling that is pre-existing or that has been installed by a contractor other than
those that VCPI has existing contracts with.
	 
	 	•	 	Standard facility implementation will be completed no earlier than 45-days from contact
execution date. If an expedited implementation is requested by client, VCPI’s standard list price for
site implementation will be voided, and the client will be billed on a time and material basis for
time spent to implement these expedited facilities.
	 
	 	•	 	Fee for Site Implementation (515) does not include travel expenses or travel time. These will
be billed to the client as they occur.

      

					
	 
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IT
Consulting Services (760) – As needed

Service Options

     This service is available for IT solutions beyond the scope of the Recurring Services offering. This offering includes:

	 	•	 	Leading industry expertise in various IT disciplines
	 
	 	•	 	Access to leading IT research materials and bleeding edge technologies
	 
	 	•	 	Long-Term Care specific IT knowledge
	 
	 	•	 	PMI Project Management disciplines
	 
	 	•	 	See Attachment E – “Standard Rate Schedule” for VCPI’s Standard hourly rates

Procurement Services – Procurement (995) – As needed

Services Provided

     Acquire technology components on Client’s behalf at current VCPI List Price:

	 	•	 	Desktops and Accessories
	 
	 	•	 	Laptops and Accessories
	 
	 	•	 	Miscellaneous Technology Accessories
	 
	 	•	 	Networking Equipment
	 
	 	•	 	Printers and Accessories
	 
	 	•	 	Servers and Accessories

Objective Level Agreements

	 	•	 	For emergency requests VCPI can purchase items at Client-set deadline. However, VCPI cannot guarantee delivery time.
	 
	 	•	 	VCPI will obtain refund or replacement for Client if hardware received is damaged or defective. VCPI will obtain refund or replacement upon receipt of
hardware from Client and credit Client account with VCPI as appropriate.

VCPI Purchasing Time Frames (From time order is received by VCPI Purchasing to when

order is delivered to site)

	 	 	 	 	 	 	 	 	 	 	 
	 	 	Standard Order	 	 	 	Large Order	 	Non-Standard	 	 
	 	 	(Equipment listed	 	 	 	(Quantified as over	 	Order (Equipment	 	 
	 	 	on VCPI Standards	 	 	 	10 pieces of	 	not on VCPI	 	 
	 	 	List)	 	Rush Order	 	equipment)	 	Standards List)	 	Service Parts Order
	Turnaround time (including order

processing)

	 	5-7 business days.
	 	1-3 business days.
	 	9-12 business days.
	 	5-7 business days –
Reasonable Effort.
	 	5-7 business days –
Reasonable Effort.

Product Availability

VCPI reserves the right to substitute models within brands, potentially at a higher rate, if Client requested hardware becomes discontinued or unavailable.
VCPI will notify Client of rate and/or model change as soon as the model information becomes available to VCPI personnel and will provide advice to Client on a
migration path.

Client Requirements and Assumptions

	 	•	 	If software licenses are not rented/purchased through VCPI then Client is responsible for producing valid proof of licensure for software hosted
through VCPI.
	 
	 	•	 	If Client requires that an emergency request be processed and shipped same day, VCPI must receive the purchase request by 3 PM CST.
	 
	 	•	 	If hardware arrives defective or damaged, Client must ship hardware back to VCPI within 2 business days of receipt of hardware so that VCPI may obtain
replacement or refund for Client.

					
	 	 	 	 	 
	 
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Software Rental (158)

Services Provided

     Software rental through VCPI for the current supported versions of the following software:

	 	•	 	Microsoft Office XP Standard & Professional Editions
	 
	 	•	 	Microsoft Exchange 2000
	 
	 	•	 	Microsoft Terminal Services
	 
	 	•	 	Microsoft Visio
	 
	 	•	 	Microsoft SQL Standard & Professional Server Editions
	 
	 	•	 	Clinical/Financial Client chosen applications
	 
	 	•	 	McAfee Anti-virus software

Client Requirements/Assumptions

	 	•	 	Client must indicate to VCPI which option for software is chosen.
	 
	 	•	 	Client must sign “Client License Terms and Conditions Regarding Use of Microsoft Software Products” (Attachment
B).
	 
	 	•	 	Client agrees to provide properly licensed software necessary to host Client’s applications (the “Third Party
Software”) other than VCPI standard monitoring, and statistics software (the “VCPI Software), which will be provided by
VCPI.
	 
	 	•	 	Client will provide VCPI with proof of licensing for Third Party Software not acquired by VCPI. Client assumes
the full responsibility for all Third Party Software used in connection with hosting Client’s applications, other than
software acquired on its behalf by VCPI. Third Party Software shall be licensed to Client from its respective owner(s)
(The “Software Vendor(s)”).
	 
	 	•	 	Client hereby indemnifies VCPI for any claims, damages, and/or causes of action arising from or relating to (1)
Client’s failure to acquire and maintain valid software licenses for all Third Party Software; and (2) any claims by a
software vendor that Client, or any party who has received access to the Third Party Software through Client (other than
VCPI), has misused its Third Party Software, breached a Third Party Software license, or infringed its intellectual
property rights in its Third Party Software.

					
	 	 	 	 	 
	 
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	2.	 	SUMMARY of SERVICES and PRICING
	 
	 	 	This Contract is entered into pursuant to the Master Technology Services–Standard
Provisions agreement (“Master Agreement”) between VCPI and
client name (“Client”) the terms and
provisions of which are hereby incorporated herein by this reference as fully as though set
forth herein.
	 
	2.1	 	Pricing Sheet

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	One-Time	 	 
	Service	 	Occurrence	 	Fee/Unit	 	Quantity	 	Fee	 	Monthly Fee
	 
	Recurring Services
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Co-Location/Hosting Services [150]
	 	Monthly	 	$	305.00	 	 	 	210	 	 	 	 	 	 	$	64,050.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Client Support Services [210.2]
	 	Monthly	 	$	30.00	 	 	 	210	 	 	 	 	 	 	$	6,300.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Telecommunication Services [450]
	 	Monthly	 	$	100.00	 	 	 	210	 	 	 	 	 	 	$	21,000.00	 
	IT Consulting Services
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Service Desk
- Call Escalation [210.1]
	 	As needed	 	Attachment E - Standard Rates	 	 	 	 	 	 	 	 	 	 	 	 
	IT Consulting Services [760]
	 	As needed	 	Attachment E - Standard Rates	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Total Service Fees
	 	 	 	 	 	$	435.00	 	 	 	 	 	 	$	 	 	 	$	91,350.00	 
	 

Additional Pricing Terms:

	1.	 	All non-recurring fees are subject to VCPI quarterly rate changes. Prices do not include annual software maintenance fees or taxes.
	 
	2.	 	Licensing fees are subject to vendor rate at time of contract draft.
	 
	3.	 	All recurring fees are subject to annual price increase provisions not to exceed 10% of prior Fee/Unit.

					
	 	 	 	 	 
	 
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2.2 Contract Term

36 months beginning the first full month after effective date

This SOW shall be deemed effective as of                     , 20___(“Effective Date”).

All recurring fees stated within this contract, or new recurring fees added for additional
services during the term of the contract are valid through the end date of the Contract Term
listed above.

Monthly recurring fees will be charged beginning the first full month after the execution
date of the SOW.

Upon renewal of this contract, prices are subject to change.

2.3 Method of Payment

Monthly fees are billed, in arrears, as the services are performed or the expenses are
incurred. Payment is due within 30 days of the invoice date.

	 	 	 	 	 	 	 	 	 	 	 
	Accepted by VCPI:	 	 	 	Accepted by Assisted Living Concepts:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 

	 	 	 	 	 	 

	 	 
	Name:

	 	 	 	 	 	Name:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:

	 	 	 	 	 	Title:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 	 	Date:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 

					
	 	 	 	 	 
	 
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ATTACHMENT A: Client Software Declaration

Required Licenses: Client agrees to provide properly licensed software necessary to host
Client’s applications (the “Third Party Software”) other than VCPI standard monitoring, and
statistics software (the “VCPI Software”), which will be provided by VCPI. Client agrees that all
Third Party Software required in connection with its initial configuration is set forth below, and
will be acquired through the option selected by Client.

To the extent that Client desires to install, or have VCPI install on its behalf, additional Third
Party Software, it will provide VCPI with proof of licensing for Third Party Software not acquired
by VCPI. Client assumes the full responsibility for acquiring and maintaining valid software
licenses for all Third Party Software used in connection with hosting Client’s applications, other
than software acquired on its behalf by VCPI. Third Party Software shall be licensed to Client
from its respective owner(s) (the “Software Vendor(s)”).

All title and intellectual property rights in and to Third Party Software shall be controlled by
the terms of the applicable licenses, and Client agrees to only use such software in accordance
with the instructions, use rights and/or licenses provided by the applicable Software Vendor. All
right, title and interest in and to the VCPI Software shall be controlled by the applicable license
agreement, or if not specified, shall be owned at all times by VCPI. All title and intellectual
property rights in and to any content accessed through use of Third Party Software or VCPI Software
is the property of the respective content owner, may be protected by applicable copyright or other
intellectual property laws and treaties, and may only be used as authorized by such owner. Nothing
herein grants Client any rights to use such content.

Client hereby indemnifies VCPI for any claims, damages, and/or causes of action arising from or
relating to (i) Client’s failure to acquire and maintain valid software licenses for all Third
Party Software; and (ii) any claims by a Software Vendor that Client, or any party who has received
access to the Third Party Software through Client (other than VCPI), has misused its Third Party
Software, breached a Third Party Software license, or infringed its intellectual property rights in
its Third Party Software.

					
	 	 	 	 	 
	 
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Hosted Software Schedule

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	VCPI Monthly	 	 	 	 
	Vendor	 	Title	 	Version	 	Price1	 	Option	 	Quantity2
	ADP
	 	Payroll	 	 	 	 	 	 	N/A	 	 	 	C	 	 	 	N/A	 
	Comshare
	 	ALC Budgeting application.	 	 	 	 	 	 	N/A	 	 	 	C	 	 	 	N/A	 
	Document Entry
	 	Accounts Payable invoice information	 	 	 	 	 	 	N/A	 	 	 	C	 	 	 	N/A	 
	eTime
	 	Time and Attendence	 	 	 	 	 	 	N/A	 	 	 	C	 	 	 	N/A	 
	F9
	 	Solomon Add-on application	 	 	 	 	 	 	N/A	 	 	 	C	 	 	 	N/A	 
	FAS
	 	Fixed Asset application. - Still used?	 	 	 	 	 	 	N/A	 	 	 	C	 	 	 	N/A	 
	FRx
	 	Report Generator Application	 	 	 	 	 	 	N/A	 	 	 	C	 	 	 	N/A	 
	NetSatisfaction
	 	 	 	 	 	 	 	 	N/A	 	 	 	C	 	 	 	N/A	 
	Office
	 	Microsoft Office	 	 	 	 	 	 	N/A	 	 	 	C	 	 	 	N/A	 
	Petty Checks
	 	 	 	 	 	 	 	 	N/A	 	 	 	C	 	 	 	N/A	 
	QCT Review
	 	 	 	 	 	 	 	 	N/A	 	 	 	C	 	 	 	N/A	 
	Rate Increase
	 	Annual rate increase application.	 	 	 	 	 	 	N/A	 	 	 	C	 	 	 	N/A	 
	Sharepoint Portal
	 	Intranet Server	 	 	 	 	 	 	N/A	 	 	 	C	 	 	 	N/A	 
	Solomon
	 	Accounts Payable, Accounts Receivable, General Ledger	 	 	 	 	 	 	N/A	 	 	 	C	 	 	 	N/A	 
	SQL 2000
	 	SQL Database Server	 	 	 	 	 	 	N/A	 	 	 	C	 	 	 	N/A	 
	U are U
	 	Employee identification verification application	 	 	 	 	 	 	N/A	 	 	 	C	 	 	 	N/A	 

 

			
	1	 	VCPI Monthly Price: This VCPI price is a monthly charge for Microsoft licenses if
Option A is selected, which includes Client and server licensing; Citrix user licenses are
One-Time-Charge (OTC).
	 
	2	 	Quantity: Quantity listed is the number reported to VCPI by Client at the time of
signature. This number may be updated during the term of the active agreement.

					
	 	 	 	 	 
	 
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Option A. Monthly Rental from VCPI of Microsoft Software:

Client hereby agrees that VCPI will acquire licenses on a monthly basis for the Microsoft products
set forth as Option A (the “Microsoft Software Products”). VCPI may change the prices charged to
Client for such Microsoft Software Products on 30 days’ prior written notice due to increases in
the prices charged by Microsoft. Client hereby agrees to comply with all terms and conditions set
forth in Attachment B with respect to such Software Products, and to otherwise cooperate with VCPI
to use the Microsoft Software Products only as authorized by Microsoft.

Option B. Client to use VCPI as Preferred Software Vendor:

Client hereby directs and authorizes VCPI to order on Client’s behalf the Third Party Software
products listed as Option B. Client agrees to remit payment to VCPI, (a) the amount of the license
fee, which VCPI will remit to the Third Party Software provider on Client’s behalf; and (b) a 5%
service fee for this administration. Upon payment by Client, title to such software licenses will
pass directly to Client.

Option C. Client-Supplied Third Party Software:

Client agrees to acquire directly from its own supplier licenses for the Third Party Software
products listed as Option C. Client agrees to supply to VCPI prior to Activation with software
media and proof of licensing for such Software Products, however, Client assumes the full
responsibility for acquiring and maintaining valid software licenses for all Third Party Software
acquired by Client for use in connection with hosting Client’s applications.

					
	 	 	 	 	 
	 
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Client License Terms

Terms and Conditions Regarding Use of Microsoft Software Products

This document concerns Client’s use of Microsoft software, which includes computer software
provided to Client as described below, and may include associated media, printed materials, and
“online” or electronic documentation (individually and collectively “SOFTWARE PRODUCTS”). VCPI
does not own the SOFTWARE PRODUCTS and the use thereof is subject to certain rights and
limitations of which VCPI needs to inform the Client. Client’s right to use the SOFTWARE PRODUCTS
provided by your agreement with VCPI, and to your understanding of, compliance with and consent to
the following terms and conditions, which VCPI does not have authority to vary, alter or amend.

	1.	 	DEFINITIONS.

	 	a.	 	“Client Software” means software that allows a Device to access or utilize the
services or functionality provided by the Server Software.
	 
	 	b.	 	“Device” means each of a computer, workstation, terminal, handheld PC, pager,
telephone, “smart phone”, or other electronic device.
	 
	 	c.	 	“MICROSOFT SOFTWARE” means computer software, and may also include associated
media, printed materials, and “online” or electronic documentation licensed by Microsoft
and provided to Client as a service by VCPI.
	 
	 	d.	 	“Server Software” means software that provides services or functionality on a
computer acting as a server.
	 
	 	e.	 	“Redistribution Software” means the software described in Paragraph 4 (“Use of
Redistribution Software”) below.

2. OWNERSHIP OF SOFTWARE PRODUCTS. The SOFTWARE PRODUCTS are licensed to VCPI from an affiliate
of the Microsoft Corporation. All title and intellectual property rights in and to the SOFTWARE
PRODUCTS (and the constituent elements thereof, including but not limited to any images,
photographs, animations, video, audio, music, text and “applets” incorporated into the SOFTWARE
PRODUCTS) are owned by Microsoft or its suppliers. The SOFTWARE PRODUCTS are protected by
copyright laws and international copyright treaties, as well as other intellectual property laws
and treaties. The Client’s possession, access, or use of the SOFTWARE PRODUCTS does not transfer
any ownership of the SOFTWARE PRODUCTS or any intellectual property rights to the Client.

3. USE OF CLIENT SOFTWARE. Client may only use the MICROSOFT SOFTWARE PRODUCTS in accordance with
the instructions, and in connection with the application services, provided to Client by VCPI.
Client is only authorized to remotely access the functionality of the MICROSOFT SOFTWARE PRODUCTS
except for certain Client Software and Other Software that may be installed on Client’s Devices as
expressly authorized by VCPI. Other than such Client Software and Other Software, Client may not
install any other components of the MICROSOFT SOFTWARE PRODUCTS on Client’s Devices.

4. COPIES. Client may not make any copies of the SOFTWARE PRODUCTS; provided, however, that
Client may (a) install one (1) copy of certain Client Software on Client’s Device as expressly
authorized by VCPI; and (b) Client may install copies of certain Other Software as described in
Paragraph 14 (Other Rights and Limitations) below. Client must erase or destroy such Client
Software and/or the Other Software upon termination of Client’s agreement with VCPI, upon notice
from VCPI or upon transfer of Client’s Device to another person or entity, whichever first occurs.
Client may not copy the printed materials accompanying the MICROSOFT SOFTWARE PRODUCTS.

5. LIMITATION ON REVERSE ENGINEERING, DECOMPILATION AND DISASSEMBLY. Client may not reverse
engineer, decompile, or disassemble the MICROSOFT SOFTWARE PRODUCTS, except and only to the extent
that such activity is expressly permitted by applicable law notwithstanding this limitation.

6. RENTAL. Client may not rent, lease, lend, or transfer, directly or indirectly, the MICROSOFT
SOFTWARE PRODUCTS to any third party.

7. TERMINATION. Without prejudice to any other rights, VCPI may terminate Client’s rights to use the MICROSOFT SOFTWARE PRODUCTS if Client fails to
comply with these licensing terms. In such event, Client must cease using and destroy all copies
of the MICROSOFT SOFTWARE PRODUCTS and all of its component parts, and delete same from any Device
owned or controlled by Client.

8. NO WARRANTIES, LIABILITIES OR REMEDIES BY MICROSOFT. CLIENT’S AGREEMENT IS WITH VCPI AND ANY WARRANTIES, ASSUMPTION OF LIABILITY FOR
DAMAGES AND REMEDIES, IF ANY, ARE PROVIDED BY VCPI AND NOT BY MICROSOFT.

					
	 	 	 	 	 
	 
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9. INDEMNIFICATION. Client agrees to indemnify and hold VCPI harmless from any claim, demand or
cause of action and all damages, judgments, decrees, costs and expenses, including attorneys’
fees, arising from Client’s use of MICROSOFT SOFTWARE or any violation by Client of any of the
terms of this Agreement.

10. PRODUCT SUPPORT. Product support for the SOFTWARE PRODUCTS is provided to Client by VCPI and
is not provided by Microsoft or its affiliates or subsidiaries.

11. NOT FAULT TOLERANT. THE MICROSOFT SOFTWARE PRODUCTS MAY CONTAIN TECHNOLOGY THAT IS NOT FAULT
TOLERANT AND IS NOT DESIGNED, MANUFACTURED, OR INTENDED FOR USE OR RESALE IN THE ENVIRONMENTS OR
APPLICATIONS IN WHICH THE FAILURE OF THE MICROSOFT SOFTWARE PRODUCTS COULD LEAD TO DEATH, PERSONAL
INJURY, OR SEVERE PHYSICAL OR ENVIRONMENTAL DAMAGE.

12. EXPORT RESTRICTIONS. Client acknowledges that the MICROSOFT SOFTWARE PRODUCTS are U.S.
origin. Client agrees to comply with all applicable international and national laws that apply to
the MICROSOFT SOFTWARE PRODUCTS, including the U.S. Export Administration Regulations, as well as
end-user, end-use and destination restrictions issued by U.S. and other governments. For
additional information, see http://www.microsoft.com/exporting/.

13. NOTE ON JAVA SUPPORT. The MICROSOFT SOFTWARE PRODUCTS may contain support for programs written
in Java. Java technology is not fault tolerant and is not designed, manufactured, or intended for
use or resale as online control equipment in hazardous environments requiring fail-safe
performance, such as in the operation of nuclear sites, aircraft navigation or communication
systems, air traffic control, direct life support machines, or weapons systems, in which the
failure of Java technology could lead directly to death, personal injury, or severe physical or
environmental damage. Sun Microsystems, Inc. has contractually obligated Microsoft to make this
disclaimer.

14. U.S. GOVERNMENT RIGHTS. All MICROSOFT SOFTWARE PRODUCTS provided to the U.S. Government
pursuant to solicitations issued on or after December 1, 1995 is provided with the commercial
rights and restrictions described elsewhere herein. ALL SOFTWARE PRODUCT provided to the U.S.
Government pursuant to solicitations issued prior to December 1, 1995 is provided with RESTRICTED
RIGHTS as provided for FAR, 48 CFR 52.277-14 (JUNE 1987) or FAR, 48 CFR 252.227-7013 (OCT 1988),
as applicable.

15. OTHER RIGHTS AND LIMITATIONS.

a. For Commerce Server, Host Integrations Server and Internet Security and Acceleration
Server—Use of Redistributable Software (“SKD Software”). If included in the SOFTWARE PRODUCT,
Client may install and use copies of the SDK Software on one or more computers located at the
Client’s premises solely for the purpose of building applications that work in conjunction
with the Server Software (“Applications”). Client may modify the Sample Code (identified in
the “samples” directories) to design, develop, and test Client Applications, and may reproduce
and use the Sample Code, as modified, on one or more computers located at Client’s premises.
Client may also reproduce and distribute the Sample Code, along with any modifications Client
make thereto (for purposes of this section, “modifications” shall mean enhancements to the
functionality of the Sample Code), and any files that may be listed and identified in a
REDIST.TXT file as “redistributable” (collectively, the “Redistributable Code”) provided that
Client agrees:

(1) to distribute the Redistributable Code in object code form and only in conjunction
with Client’s Application, which Application adds significant and primary functionality to the
Redistributable Code;

(2) not to use MICROSOFT’s name, logo, or trademarks to market the Application;

(3) to include a valid copyright notice in Client’s name on the Application;

(4) to indemnify, hold harmless, and defend Microsoft from and against any claims or
lawsuits, including attorney’s fees, that arise or result from the use or distribution of the Application;

(5) to otherwise comply with the terms of this License; and

(6) that Microsoft reserves all rights not expressly granted.

b. For Small Business Server-General (excluding Microsoft SQL Server). Note Regarding Use of
Redistributable Components. Client may modify, reproduce and/or distribute the files listed in
the REDIST.TXT file (collectively referred to as “Redistributable Components”) provided that
Client complies with the Modifications Distribution Terms listed in such REDIST.TXT file.

     c. For Small Business Server-Microsoft SQL Server. Note Regarding the Use of Redistributable
Components. Client has the nonexclusive, royalty-free right to use, reproduce and distribute the
Microsoft SQL Server Desktop Engine (“MSDE”) and the files listed in the REDIST.TXT contained in
the SOFTWARE PRODUCT (collectively, the “Redistributable Code”), provided that Client also
complies with the following:

(1) General Requirements. If Client chooses to redistribute any portion of the
Redistributable Code, Client agrees:

					
	 	 	 	 	 
	 
	 	Page 23 of 30
	 	Confidential

 

 

					
	
	 	Statement of Work
	 	 

a. to distribute the Redistributable Code in object code form and only in conjunction
with and as a part of a software application product developed by Client that adds
significant and primary functionality to the SOFTWARE PRODUCT (“Application”);

b. not to use Microsoft’s name, logo, or trademarks to market the Application;

c. to include a valid copyright notice in Client’s name on the Application;

d. to indemnify, hold harmless, and defend Microsoft from and against any claims or
lawsuits, including attorney’s fees, that arise or result from the use or distribution of
the Application; and

e. to otherwise comply with the terms of this License.

Client also agrees not to permit further distribution of the Redistributable Code by
Client’s end users except Client may permit further redistribution of the Redistributable
Code by Client distributors if they only distribute the Redistributable Code in
conjunction with, and as part of, the Application and Client and Client’s distributors
comply with all other terms of this License.

(2) Additional Requirements for MSDE. If Client chooses to redistribute MSDE, Client also
agrees:

a. that Client’s Application shall not substantially duplicate the capabilities of
Microsoft Access or, in the reasonable opinion of Microsoft, compete with same; and

b. that unless Client Application requires Client’s Clients to license Microsoft Access in
order to operate, Client shall not reproduce or use MSDE for commercial distribution in
conjunction with a general purpose word processing, spreadsheet or database management
software product, or an integrated work or product suite whose components include a
general purpose word processing, spreadsheet, or database management software product
except for the exclusive use of importing data to the various formats supported by
Microsoft Access. Note: A product that includes limited word processing,
spreadsheet or database components along with other components which provide significant
and primary value, such as an accounting product with limited spreadsheet capability, is
not considered to be a “general purpose” product.

	d.	 	For Microsoft SQL Server. Use of Redistributable Code. Client have the nonexclusive,
royalty-free right to use, reproduce and distribute the Microsoft SQL Server Desktop Engine
(“MSDE”) and the files listed in the REDIST.TXT contained in the SOFTWARE PRODUCT
(collectively, the “Redistributable Code”), provided that Client also comply with the
following:

(1) General Requirements. If Client chooses to redistribute any portion of the
Redistributable Code, Client agrees:

a. to distribute the Redistributable Code in object code from and only in conjunction
with and as a part of a software application product developed by Client that adds
significant and primary functionality to the SOFTWARE PRODUCT (“Application”);

b. not to use Microsoft’s name, logo, or trademarks to market the Application;

c. to include a valid copyright notice in Client’s name on the Application;

d. to indemnify, hold harmless, and defend Microsoft from and against any claims or
lawsuits, including attorney’s fees, that arise or result form the use of distribution of
the Application; and

e. To otherwise comply with the terms of this License.

Client also agrees not to permit further distribution of the Redistributable Code by
Client’s end users except Client may permit further redistribution of the
Redistributable Code by Client distributors if they distribute the Redistributable
Code in conjunction with, and as part of, the Application and Client’s distributors
comply with all other terms of this License.

(2) Additional Requirements for MSDE. If Client chooses to redistribute MSDE, Client
also agrees:

a. that Client’s Application shall not substantially duplicate the capabilities of
Microsoft Access or, in the reasonable opinion of Microsoft, compete with same; and

b. that unless Client’s Application requires Client’s Clients to license Microsoft Access
in order to operate, Client shall not reproduce or use MSDE for commercial distribution in
conjunction with a general purpose word processing, spreadsheet or database management
software product, or an integrated work or product suite whose components include a
general purpose word processing, spreadsheet, or database management software product
except for the exclusive use of importing data to the various formats supported by
Microsoft Access. Note: A product that includes limited word processing, spreadsheet or
database components along with other components which provide significant and primary
value, such as an accounting product with limited spreadsheet capability, is not
considered to be a “general purpose” produce.

c. For SMS Server. Installation — Client Software. Client may install and use the
Installer component of the Client Software (“SMS Installer”) only for the purpose of
creating installation programs through the use of SMS Installer (“Setup Programs”).
Client may also use and modify the source code

					
	 	 	 	 	 
	 
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	 	Confidential

 

 

					
	
	 	Statement of Work
	 	 

designated as “Sample Code” in the
SAMPLES.TXT file for the sole purposes of designing, developing, and testing Client’s
Setup Programs. Client may also install and use in object code form the Redistributable
Components (as defined below), along with any modifications Client may make to the Sample
Code, only on Devices within Client’s organization for a purpose other than creation of
Setup Programs, provided that: (a) Client reproduces and uses the Redistributable
Components only in conjunction with or as part of a Setup Program; (b) a valid SAL is
acquired by VCPI on Client’s behalf for Microsoft Systems Management Server for each User
that uses the Redistributable Components; and (c) Client indemnifies, holds harmless and
defends Microsoft and its suppliers from and against any claims or lawsuit, including
attorneys’ fees, that arise or result from the use of Client Setup Program or any software
installed by Client Setup Program. Client does not have any other right to install or use
SMS Installer. Client may reproduce and distribute the files listed in the REDIST.TXT
file (collectively referred to as “Redistributable Components”), along with any
modifications Client may make to the Sample Code, provided that Client comply with the
Distribution Terms listed in such REDIST.TXT file. Note that the Distribution Terms
include, among other conditions, terms similar to those described above. Use of the
Redistributable Components. Client may reproduce and distribute the files listed in the
REDIST.TXT file (collectively referred to as “Redistributable Components”), along with any
modifications Client may make to the Sample Code, provided that Client comply with the
Distribution Terms listed in such REDIST.TXT file. Note that the Distribution Terms
include, among other conditions, terms similar to those described in subsection (a)-(c) of
the Client Software note above.

IN WITNESS WHEREOF, the parties named below, by signatures of their duly authorized
representatives, have executed this Agreement on the dates set forth below, the latter of which
shall be the effective date of the Agreement.

	 	 	 	 	 	 	 	 	 	 	 
	Accepted by VCPI:	 	 	 	Accepted by Assisted Living Concepts:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	Name:

	 	 	 	 	 	Name:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	Title:

	 	 	 	 	 	Title:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	Date:

	 	 	 	 	 	Date:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 

					
	 	 	 	 	 
	 
	 	Page 25 of 30
	 	Confidential

 

 

					
	 	 	 	 	 
	
	 	Statement of Work
	 	 

ATTACHMENT B: Change Management Process

Requirements for initiating a change to the scope of work being performed

The VCPI Statement of Work (“SOW”) provides comprehensive, detailed information concerning the
scope and pricing of all services provided by VCPI to the Client.

The SOW is executed by the joint signing of both Section 2 and Attachment A. Section 2 summarizes
the services and pricing, and Attachment A details the hosted software and method of licensure.

On the SOW, the Version and Release numbers are indicated in the lower left-hand corner of each
page. As VCPI periodically changes our standard SOW, the Version number will change to reflect
those improvements. The VCPI Account Manager will notify the Client of new Versions of the SOW as
available, and the Client will choose whether to migrate to the newer Version of the SOW. If the
Client would like to benefit from the enhanced Version, the Account Manager will draft an updated
SOW for joint execution.

Client-initiated changes require a Statement of Work – Addendum to be signed. Examples of changes
requiring a new Release would include:

	 	(a)	 	Acquisitions/divestitures of sites;
	 
	 	(b)	 	Additions/deletions of hosted applications; and
	 
	 	(c)	 	Scope and/or pricing changes, etc.

The VCPI Account Manager will notify the Client if any Client-requested change requires an
amendment to the SOW. If so, the Account Manager will draft a Statement of Work – Addendum
agreement, which details the changes to be made to the SOW.

Through this process the SOW will always represent a cumulative and current documentation of the
services to be performed by VCPI and the pricing to be paid by the Client. The VCPI Account
Manager will ensure accurate record-keeping of the SOW history, and is available to the Client to
address any questions or issues.

					
	 	 	 	 	 
	 
	 	Page 26 of 30
	 	Confidential

 

 

					
	 	 	 	 	 
	
	 	Statement of Work
	 	 

ATTACHMENT C: Service Level Agreements

VCPI minimum performance standards

Service level agreements and non-performance penalties (if applicable) between VCPI and Client
for services delivered under this contract are defined below.

General Disclaimer

In the event VCPI fails to attain the service levels identified below, in total or in part, the
Client is entitled to receive a negotiated portion of the monthly application hosting fees as a
credit with the following stipulations:

	 	•	 	The Client has executed the Statement of Work.
	 
	 	•	 	The Client has no past-due balances at the time of the credit request.
	 
	 	•	 	VCPI systems management tools and data will be the basis for calculations and determinations.
	 
	 	•	 	Client must notify VCPI in writing of a credit request within 30 days after the applicable month-end.
	 
	 	•	 	The Client meets Client Requirements/Assumptions identified in the Deliverables section of this Statement of Work.
	 
	 	•	 	All personal computers and servers connected to the VCPI network must have current
Anti-virus software, and latest OS security and service packs installed to be eligible
for SLAs .

Production Services — Application Hosting SLA

Availability

	 	•	 	Shared storage environment meets or exceeds 99.9% scheduled uptime.
	 
	 	•	 	Wide area network (WAN) environment meets or exceeds 99.9% scheduled uptime.

Utilization

	 	•	 	Central Processor Unit (CPU) utilization not to exceed 70% monthly average during normal business
hours (7am – 7pm Central Time).
	 
	 	•	 	Memory utilization not to exceed 70% monthly average during normal business hours (7am – 7pm Central
Time).

Definitions

	 	•	 	‘Scheduled Uptime’ is defined as the duration in hours of system availability, including planned
scheduled outages, divided by the total hours in a month, expressed as a percentage.
	 
	 	•	 	‘Scheduled Uptime’ is alternatively defined as the total hours in a month less unscheduled outage or
interruption duration, divided by the total hours in a month, expressed as a percentage.
	 
	 	•	 	‘Unscheduled Outage or Interruption’ is defined as the duration in hours that the Client cannot access of
the specifically named hosted applications (please refer to the Client Software Declaration), excluding:

	 	(1)	 	planned scheduled outages for system maintenance.
	 
	 	(2)	 	access circuit problems of the Client’s local network connection.
	 
	 	(3)	 	latency or other problems related to Internet-based Virtual Private Networks (VPNs).
	 
	 	(4)	 	unscheduled outages or interruptions caused by Client-owned equipment, applications not listed on the
Client Software Declaration, or Client-site network problems.
	 
	 	(5)	 	unscheduled outages or interruptions caused by circumstances beyond VCPI’s reasonable control (i.e.
force majeure, exploits in packaged software, etc.).
	 
	 	(6)	 	Software no longer supported by the vendor.
	 
	 	(7)	 	Software in non-current releases and/or patch levels.

					
	 	 	 	 	 
	 
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	 	Statement of Work
	 	 

Telecommunication Services – Network Connectivity SLA

General

	 	•	 	Credits due to data carrier Service Level Agreement
violations will be passed through to the Client if VCPI is paying
carrier invoices on Client’s behalf.

Client Support Services – Service Desk SLA

Call Back

	 	•	 	URGENT– Call will be warm transferred to a technician.
	 
	 	•	 	HIGH – Initial call back within 2.5 hours.
	 
	 	•	 	MEDIUM – Initial call back within 8 business hours.
	 
	 	•	 	LOW – As scheduled per work order or project plan.

General

	 	•	 	Call reports generated from the HEAT call tracking database will be provided to Client on a weekly
basis.
	 
	 	•	 	SLAs are void in the following conditions:

	 	§	 	Planned, scheduled outages for system maintenance.
	 
	 	§	 	Access circuit problems of the Client’s local network connection.
	 
	 	§	 	Latency or other problems related to Internet-based Virtual Private Networks (VPNs).
	 
	 	§	 	Unscheduled outages or interruptions caused by Client-owned equipment, applications not listed on
the Client Software Declaration, or Client-site network problems.
	 
	 	§	 	Unscheduled outages or interruptions caused by circumstances beyond VCPI’s reasonable control (i.e.
force majeure, exploits in packaged software, etc.).
	 
	 	§	 	Software no longer supported by the vendor.
	 
	 	§	 	Software in non-current releases and/or patch levels.

Field Support Services – Onsite Technical Support SLA

Onsite

VCPI will have a technician onsite to troubleshoot the reported issue within the timeframes listed below (based on issue severity):

	 	•	 	Priority 1 (high priority): Resource onsite within two (2) business days.
	 
	 	•	 	Priority 3 (medium priority): Resource onsite within five (5) business days.
	 
	 	•	 	Priority 5 (low priority): Resource onsite within ten (10) business days.

General

	 	•	 	If a VCPI technician is not available to fulfill the timeframes listed above, a third party technical resource will be
utilized to troubleshoot and resolve the issue.
	 
	 	•	 	Rates will be billed per 3rd party rates in the Client’s area; however, these time frames cannot be guaranteed by
VCPI.

					
	 	 	 	 	 
	 
	 	Page 28 of 30
	 	Confidential

 

 

					
	 	 	 	 	 
	
	 	Statement of Work
	 	 

ATTACHMENT D: Site Listing

	 	 	 	 	 	 	 	 	 	 	 
	Facility Name	 	Address	 	City	 	County	 	State
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	Total Facilities

	 	 	0	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

					
	 	 	 	 	 
	 
	 	Page 29 of 30
	 	Confidential

 

 

					
	 	 	 	 	 
	
	 	Statement of Work
	 	 

ATTACHMENT E: Standard Rate Schedule

Effective until September 30, 2006

	 	 	 	 	 	 	 	 	 
	      
           Service	 	Standard Hourly Rate	 	 	ALC Hourly Rate	 
	 
	Training Services
	 	$125/Hr	 	$125/Hr
	 
	 	 	 	 	 	 	 	 
	System Engineering Support
	 	$125/Hr	 	$125/Hr
	 
	 	 	 	 	 	 	 	 
	Network Engineering Support
	 	$125/Hr	 	$125/Hr
	 
	 	 	 	 	 	 	 	 
	Telecommunications Support
	 	$  85/Hr	 	$  85/Hr
	 
	 	 	 	 	 	 	 	 
	IT Security Support
	 	$125/Hr	 	$125/Hr
	 
	 	 	 	 	 	 	 	 
	Service Desk Analyst Service
	 	$  85/Hr	 	$  75/Hr
	 
	 	 	 	 	 	 	 	 
	Field Engineering Support
	 	$  85/Hr	 	$  85/Hr
	 
	 	 	 	 	 	 	 	 
	Disaster Recovery Services
	 	$125/Hr	 	$125/Hr
	 
	 	 	 	 	 	 	 	 
	Development Services
	 	$110/Hr	 	$110/Hr
	 
	 	 	 	 	 	 	 	 
	Project Management
	 	$125/Hr	 	$125/Hr
	 
	 	 	 	 	 	 	 	 
	IT Hardware Procurement
	 	VCPI current list	 	VCPI current list

					
	 	 	 	 	 
	 
	 	Page 30 of 30
	 	Confidentialexv10w7

 

Exhibit 10.7

ASSISTED LIVING CONCEPTS, INC.

2006 OMNIBUS INCENTIVE COMPENSATION PLAN

     SECTION 1. Purpose. The purpose of this Assisted Living Concepts, Inc. 2006 Omnibus
Incentive Compensation Plan is to promote the interests of Assisted Living Concepts, Inc., a Nevada
corporation (the “Company”), and its stockholders by (a) attracting and retaining exceptional
directors, officers, employees and consultants (including prospective directors, officers,
employees and consultants) of the Company and its Affiliates (as defined below) and (b) enabling
such individuals to participate in the long-term growth and financial success of the Company.

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

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

     “Award” means any award that is permitted under Section 6 and granted under the Plan.

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

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

     “Cash Incentive Award” shall have the meaning specified in Section 6(f).

     “Change of Control” shall (a) have the meaning set forth in an Award Agreement or (b) if there
is no definition set forth in an Award Agreement, mean the occurrence of any of the following
events, not including any events occurring prior to or in connection with the Initial Distribution
(including the occurrence of such Initial Distribution):

          (i) the consummation of (A) a merger, consolidation, statutory share exchange or similar form
of corporate transaction involving (x) the Company or (y) any of its subsidiaries, but in the case
of this clause (y) only if Company Voting Securities (as defined below) are issued or issuable in
connection with such transaction (each of the transactions referred to in this clause (A), a
“Reorganization”) or (B) a sale or other disposition of all or substantially all the assets of the
Company to a person that is not an Affiliate of the Company (a “Sale”), in each case, if such
Reorganization or Sale requires the approval of the Company’s stockholders under the law of the
Company’s jurisdiction of organization (whether such approval is required for such Reorganization
or Sale or for the issuance of securities in such Reorganization or Sale), unless, immediately
following such Reorganization or Sale, (1) all or substantially all the persons who were the
“beneficial owners” (as such term is defined in Rule 13d-3 under the Exchange Act) of the
securities

 

2

eligible to vote for the election of the Board (“Company Voting Securities”) outstanding
immediately prior to the consummation of such Reorganization or Sale beneficially own, directly or
indirectly, more than 50% of the combined voting power of the then outstanding voting securities of
the corporation or other entity resulting from such Reorganization or Sale (including a corporation
or other entity that as a result of such transaction directly or indirectly owns the Company or all
or substantially all the Company’s assets) (the “Continuing Company”) in substantially the same
proportions as their ownership, immediately prior to the consummation of such Reorganization or
Sale, of the outstanding Company Voting Securities (excluding any outstanding voting securities of
the Continuing Company that such beneficial owners hold immediately following the consummation of
such Reorganization or Sale as a result of their ownership prior to such consummation of voting
securities of any corporation or other entity (other than the Company) involved in or forming part
of such Reorganization or Sale), (2) no Person (excluding (x) any employee benefit plan (or related
trust or fiduciary) sponsored or maintained by the Company or its Affiliates, (y) Scotia and (z)
the Company and its Affiliates) beneficially owns, directly or indirectly, 20% or more of the
combined voting power of the outstanding voting securities of the Continuing Company immediately
following the consummation of such Reorganization or Sale and (3) immediately following the
consummation of such Reorganization or Sale, at least a majority of the members of the board of
directors (or equivalent body) of the Continuing Company are Incumbent Directors;

          (ii) the stockholders of the Company approve a plan of complete liquidation or dissolution of
the Company, unless such liquidation or dissolution is part of a transaction or series of
transactions described in paragraph (i) above that does not otherwise constitute a Change of
Control; or

          (iii) any Person or “group” (as used in Section 14(d)(2) of the Exchange Act) (excluding (x)
any employee benefit plan (or related trust or fiduciary) sponsored or maintained by the Company or
its Affiliates, (y) Scotia and (z) the Company and its Affiliates) becomes the beneficial owner,
directly or indirectly, of Company Voting Securities representing 20% or more of the combined
voting power of the then outstanding Company Voting Securities; provided, however,
that, for purposes of this subparagraph (iv), no acquisition of Company Voting Securities (x)
directly from the Company or (y) by any employee benefit plan (or related trust or fiduciary)
sponsored or maintained by the Company or its Affiliates shall constitute a Change of Control.

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

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

     “EBITDA” means earnings before interest, taxes, depreciation and amortization.

 

3

     “Effective Date” has the meaning assigned thereto in the Arrangement Agreement, dated as of
July     , 2006, among Extendicare Real Estate Investment Trust, the Company and the other parties
thereto.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute
thereto.

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

     “Fair Market Value” means (a) with respect to any property other than Shares, the fair market
value of such property determined by such methods or procedures as shall be established from time
to time by the Committee and (b) with respect to the Shares, as of any date, (i) the mean between
the high and low sales prices of the Shares (A) as reported by the NYSE for such date or (B) if the
Shares are listed on any other national stock exchange, as reported on the stock exchange composite
tape for securities traded on such stock exchange for such date or, with respect to each of clauses
(A) and (B), if there were no sales on such date, on the closest preceding date on which there were
sales of Shares or (ii) in the event there shall be no public market for the Shares on such date,
the fair market value of the Shares as determined in good faith by the Committee.

     “Incentive Stock Option” means an option to purchase Shares from the Company that (a) is
granted under Section 6 and (b) is intended to qualify for special Federal income tax treatment
pursuant to Sections 421 and 422 of the Code, as now constituted or subsequently amended, or
pursuant to a successor provision of the Code, and which is so designated in the applicable Award
Agreement.

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

     “Initial Distribution” means the issuance of shares of Class A common stock and Class B common
stock of the Company to the holders of Extendicare Inc. Subordinate Voting Shares and Multiple
Voting Shares, respectively, on the Effective Date pursuant to the Plan of Arrangement to be filed
by Extendicare Inc. with Canadian authorities in connection with, among other things, the Company’s
separation from Extendicare Inc.

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

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

 

4

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

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

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

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

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

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

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

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

     “Performance Unit” means an Award under Section 6(e) that has a value set by the Committee (or
that is determined by reference to a valuation formula specified by the Committee or the Fair
Market Value of Shares), which value may be paid to the Participant by delivery of such property as
the Committee shall determine, including without limitation, cash or Shares, or any combination
thereof, upon achievement of such Performance Goals during the relevant Performance Period as the
Committee shall establish at the time of such Award or thereafter.

     “Person” means an individual, partnership, corporation, limited liability company,
association, trust, unincorporated organization or a government agency or political subdivision
thereof or any other entity.

     “Plan” means this Assisted Living Concepts, Inc. 2006 Omnibus Incentive Compensation Plan, as
in effect from time to time.

 

5

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

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

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

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

     “Scotia” means, collectively, Scotia Investments Limited, Minas Basin Creditco Limited,
Parrsboro Lumber Company, Minas Basin Investments and BH Investments Limited, and any Person who
would be deemed the same “person” as any such entity for purposes of Sections 13(d) and 14(d) of
the Exchange Act, whether or not applicable or who is directly or indirectly controlled by members
of the family of the late R.A. Jodrey.

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

     “Shares” means shares of Class A common stock of the Company, $0.01 par value, or such other
securities of the Company (a) into which such shares shall be changed by reason of a
recapitalization, merger, consolidation, split-up, combination, exchange of shares or other similar
transaction or (b) as may be determined by the Committee pursuant to Section 4(b).

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

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

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

 

6

“outside directors” under Section 162(m) of the Code and (ii) meet the independence
requirements of the NYSE.

     (b) Authority of Committee. Subject to the terms of the Plan and applicable law, and
in addition to other express powers and authorizations conferred on the Committee by the Plan, the
Committee shall have sole and plenary authority to administer the Plan, including, but not limited
to, the authority to (i) designate Participants, (ii) determine the type or types of Awards to be
granted to a Participant, (iii) determine the number of Shares to be covered by, or with respect to
which payments, rights or other matters are to be calculated in connection with, Awards, (iv)
determine the terms and conditions of any Awards, (v) determine the vesting schedules of Awards
and, if certain performance criteria must be attained in order for an Award to vest or be settled
or paid, establish such performance criteria and certify whether, and to what extent, such
performance criteria have been attained, (vi) determine whether, to what extent and under what
circumstances Awards may be settled or exercised in cash, Shares, other securities, other Awards or
other property, or canceled, forfeited or suspended and the method or methods by which Awards may
be settled, exercised, canceled, forfeited or suspended, (vii) determine whether, to what extent
and under what circumstances cash, Shares, other securities, other Awards, other property and other
amounts payable with respect to an Award shall be deferred either automatically or at the election
of the holder thereof or of the Committee, (viii) interpret, administer, reconcile any
inconsistency in, correct any default in and supply any omission in, the Plan and any instrument or
agreement relating to, or Award made under, the Plan, (ix) establish, amend, suspend or waive such
rules and regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan, (x) accelerate the vesting or exercisability of, payment for or lapse
of restrictions on, Awards, (xi) amend an outstanding Award or grant a replacement Award for an
Award previously granted under the Plan if, in its sole discretion, the Committee determines that
(A) the tax consequences of such Award to the Company or the Participant differ from those
consequences that were expected to occur on the date the Award was granted or (B) clarifications or
interpretations of, or changes to, tax law or regulations permit Awards to be granted that have
more favorable tax consequences than initially anticipated and (xii) make any other determination
and take any other action that the Committee deems necessary or desirable for the administration of
the Plan.

     (c) Committee Decisions. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations and other decisions under or with respect to the Plan
or any Award shall be within the sole and plenary discretion of the Committee, may be made at any
time and shall be final, conclusive and binding upon all persons, including the Company, any
Affiliate, any Participant, any holder or beneficiary of any Award and any stockholder.

     (d) Indemnification. No member of the Board, the Committee or any employee of the
Company (each such person, a “Covered Person”) shall be liable for any action taken or omitted to
be taken or any determination made in good faith with respect to the Plan or any Award hereunder.
Each Covered Person shall be indemnified and held harmless by the Company against and from (i) any
loss, cost, liability or expense (including attorneys’ fees) that may be imposed upon or incurred
by such Covered Person

 

7

in connection with or resulting from any action, suit or proceeding to which such Covered
Person may be a party or in which such Covered Person may be involved by reason of any action taken
or omitted to be taken under the Plan or any Award Agreement and (ii) any and all amounts paid by
such Covered Person, with the Company’s approval, in settlement thereof, or paid by such Covered
Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered
Person; provided that the Company shall have the right, at its own expense, to assume and
defend any such action, suit or proceeding, and, once the Company gives notice of its intent to
assume the defense, the Company shall have sole control over such defense with counsel of the
Company’s choice. The foregoing right of indemnification shall not be available to a Covered
Person to the extent that a court of competent jurisdiction in a final judgment or other final
adjudication, in either case not subject to further appeal, determines that the acts or omissions
of such Covered Person giving rise to the indemnification claim resulted from such Covered Person’s
bad faith, fraud or willful criminal act or omission or that such right of indemnification is
otherwise prohibited by law or by the Company’s Amended and Restated Articles of Incorporation or
Bylaws. The foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which Covered Persons may be entitled under the Company’s Amended and Restated
Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any other power that the
Company may have to indemnify such persons or hold them harmless.

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

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

     SECTION 4. Shares Available for Awards; Other Limits. (a) Shares
Available. Subject to adjustment as provided in Section 4(b), the aggregate number of Shares
that may be delivered pursuant to Awards granted under the Plan shall be 4,000,000, of which the
maximum number of Shares that may be delivered pursuant to Incentive Stock Options granted under
the Plan shall be 4,000,000, provided that each such number of Shares shall automatically
be adjusted to take into account any stock distribution or stock split that occurs in connection
with the Initial Distribution. If, after the effective date of the Plan, any Award granted under
the Plan is forfeited, or otherwise expires, terminates or is canceled without the delivery of
Shares, then the Shares covered by such forfeited, expired, terminated or canceled Award shall
again become available to

 

8

be delivered pursuant to Awards under the Plan. If Shares issued upon exercise, vesting or
settlement of an Award, or Shares owned by a Participant (which are not subject to any pledge or
other security interest), are surrendered or tendered to the Company in payment of the Exercise
Price of an Award or any taxes required to be withheld in respect of an Award, in each case, in
accordance with the terms and conditions of the Plan and any applicable Award Agreement, such
surrendered or tendered Shares shall again become available to be delivered pursuant to Awards
under the Plan; provided, however, that in no event shall such Shares increase the
number of Shares that may be delivered pursuant to Incentive Stock Options granted under the Plan.
Subject to adjustment as provided in Section 4(b), (i) the maximum number of Shares with respect to
which Awards may be granted to any Participant in any fiscal year of the Company shall be 200,000,
provided that such number of Shares shall automatically be adjusted to take into account
any stock distribution or stock split that occurs in connection with the Initial Distribution, and
(ii) the maximum aggregate amount of cash and other property (valued at its Fair Market Value)
other than Shares that may be paid or delivered pursuant to Awards to any Participant in any fiscal
year of the Company shall be $2,000,000.

     (b) Adjustments for Changes in Capitalization and Similar Events. In the event that
the Committee determines that any dividend or other distribution (whether in the form of cash,
Shares, other securities or other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of
Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares
or other securities of the Company, or other similar corporate transaction or event affects the
Shares such that an adjustment is determined by the Committee in its discretion to be appropriate
or desirable, then the Committee may (i) in such manner as it may deem equitable or desirable,
adjust any or all of (A) the number of Shares or other securities of the Company (or number and
kind of other securities or property) with respect to which Awards may be granted, including (1)
the aggregate number of Shares that may be delivered pursuant to Awards granted under the Plan, as
provided in Section 4(a) and (2) the maximum number of Shares or other securities of the Company
(or number and kind of other securities or property) with respect to which Awards may be granted to
any Participant in any fiscal year of the Company and (B) the terms of any outstanding Award,
including (1) the number of Shares or other securities of the Company (or number and kind of other
securities or property) subject to outstanding Awards or to which outstanding Awards relate and (2)
the Exercise Price with respect to any Award, (ii) if deemed appropriate or desirable by the
Committee, make provision for a cash payment to the holder of an outstanding Award in consideration
for the cancellation of such Award, including, in the case of an outstanding Option or SAR, a cash
payment to the holder of such Option or SAR in consideration for the cancellation of such Option or
SAR in an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by
the Committee) of the Shares subject to such Option or SAR over the aggregate Exercise Price of
such Option or SAR and (iii) if deemed appropriate or desirable by the Committee, cancel and
terminate any Option or SAR having a per Share Exercise Price equal to, or in excess of, the Fair
Market Value of a Share subject to such Option or SAR without any payment or consideration
therefor.

 

9

     (c) Substitute Awards. Awards may, in the discretion of the Committee, be granted
under the Plan in assumption of, or in substitution for, outstanding awards previously granted by
the Company or any of its Affiliates or a company acquired by the Company or any of its Affiliates
or with which the Company or any of its Affiliates combines (“Substitute Awards”). The number of
Shares underlying any Substitute Awards shall be counted against the aggregate number of Shares
available for Awards under the Plan; provided, however, that Substitute Awards
issued in connection with the assumption of, or in substitution for, outstanding awards previously
granted by an entity that is acquired by the Company or any of its Affiliates or with which the
Company or any of its Affiliates combines shall not be counted against the aggregate number of
Shares available for Awards under the Plan; provided further, however, that
Substitute Awards issued in connection with the assumption of, or in substitution for, outstanding
stock options intended to qualify for special tax treatment under Sections 421 and 422 of the Code
that were previously granted by an entity that is acquired by the Company or any of its Affiliates
or with which the Company or any of its Affiliates combines shall be counted against the aggregate
number of Shares available for Incentive Stock Options under the Plan.

     (d) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an
Award may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares.

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

     SECTION 6. Awards. (a) Types of Awards. Awards may be made under the Plan
in the form of (i) Options, (ii) SARs, (iii) Restricted Shares, (iv) RSUs, (v) Performance Units,
(vi) Cash Incentive Awards and (viii) other equity-based or equity-related Awards that the
Committee determines are consistent with the purpose of the Plan and the interests of the Company.
Awards may be granted in tandem with other Awards. No Incentive Stock Option (other than an
Incentive Stock Option that may be assumed or issued by the Company in connection with a
transaction to which Section 424(a) of the Code applies) may be granted to a person who is
ineligible to receive an Incentive Stock Option under the Code.

     (b) Options. (i) Grant. Subject to the provisions of the Plan, the
Committee shall have sole and plenary authority to determine the Participants to whom Options shall
be granted, the number of Shares to be covered by each Option, whether the Option will be an
Incentive Stock Option or a Nonqualified Stock Option and the conditions and limitations applicable
to the vesting and exercise of the Option. In the case of Incentive Stock Options, the terms and
conditions of such grants shall be subject to and comply with such rules as may be prescribed by
Section 422 of the Code and any regulations related thereto, as may be amended from time to time.
All Options granted under the Plan shall be Nonqualified Stock Options unless the applicable Award
Agreement expressly states that the Option is intended to be an Incentive Stock Option. If an
Option is intended to be an Incentive Stock Option, and if for any reason such

 

10

Option (or any portion thereof) shall not qualify as an Incentive Stock Option, then, to the
extent of such nonqualification, such Option (or portion thereof) shall be regarded as a
Nonqualified Stock Option appropriately granted under the Plan; provided that such Option
(or portion thereof) otherwise complies with the Plan’s requirements relating to Nonqualified Stock
Options.

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

          (iii) Vesting and Exercise. Each Option shall be vested and exercisable at such times,
in such manner and subject to such terms and conditions as the Committee may, in its sole and
plenary discretion, specify in the applicable Award Agreement or thereafter. Except as otherwise
specified by the Committee in the applicable Award Agreement, an Option may only be exercised to
the extent that it has already vested at the time of exercise. Except as otherwise specified by
the Committee in the Award Agreement, Options shall become vested and exercisable with respect to
one-fourth of the Shares subject to such Options on each of the first four anniversaries of the
date of grant. An Option shall be deemed to be exercised when written or electronic notice of such
exercise has been given to the Company in accordance with the terms of the Award by the person
entitled to exercise the Award and full payment pursuant to Section 6(b)(iv) for the Shares with
respect to which the Award is exercised has been received by the Company. Exercise of an Option in
any manner shall result in a decrease in the number of Shares that thereafter may be available for
sale under the Option and, except as expressly set forth in Section 4(c), in the number of Shares
that may be available for purposes of the Plan, by the number of Shares as to which the Option is
exercised. The Committee may impose such conditions with respect to the exercise of Options,
including, without limitation, any relating to the application of Federal or state securities laws,
as it may deem necessary or advisable.

          (iv) Payment. (A) No Shares shall be delivered pursuant to any exercise of an
Option until payment in full of the aggregate Exercise Price therefor is received by the Company,
and the Participant has paid to the Company an amount equal to any Federal, state, local and
foreign income and employment taxes required to be withheld. Such payments may be made in cash (or
its equivalent) or, in the Committee’s sole and plenary discretion, (1) by exchanging Shares owned
by the Participant (which are not the subject of any pledge or other security interest) or (2) if
there shall be a public market for the Shares at such time, subject to such rules as may be
established by the Committee, through delivery of irrevocable instructions to a broker to sell the
Shares otherwise deliverable upon the exercise of the Option and to deliver promptly to the Company
an amount equal to the aggregate Exercise Price, or by a combination of the foregoing;
provided that the combined value of all cash and cash equivalents and the Fair Market Value
of any such Shares so tendered to the Company

 

11

as of the date of such tender is at least equal to such aggregate Exercise Price and the
amount of any Federal, state, local or foreign income or employment taxes required to be withheld.

     (B) Wherever in the Plan or any Award Agreement a Participant is permitted to pay the Exercise
Price of an Option or taxes relating to the exercise of an Option by delivering Shares, the
Participant may, subject to procedures satisfactory to the Committee, satisfy such delivery
requirement by presenting proof of beneficial ownership of such Shares, in which case the Company
shall treat the Option as exercised without further payment and shall withhold such number of
Shares from the Shares acquired by the exercise of the Option.

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

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

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

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

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

 

12

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

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

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

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

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

          (iii) Earning of Performance Units. Subject to the provisions of the Plan, after the
applicable Performance Period has ended, the holder of Performance Units shall be entitled to
receive a payout of the number and value of Performance Units earned by the Participant over the
Performance Period, to be determined by the Committee, in its sole and plenary discretion, as a
function of the extent to which the corresponding Performance Goals have been achieved.

 

13

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

     (f) Cash Incentive Awards. Subject to the provisions of the Plan, the Committee, in
its sole and plenary discretion, shall have the authority to grant Cash Incentive Awards. The
Committee shall establish Cash Incentive Award levels to determine the amount of a Cash Incentive
Award payable upon the attainment of Performance Goals. If a Cash Incentive Award is intended to
qualify as “qualified performance-based compensation” under Section 162(m) of the Code, all
requirements set forth in Section 6(i) must be satisfied in order for a Participant to be entitled
to payment.

     (g) Other Stock-Based Awards. Subject to the provisions of the Plan, the Committee
shall have the sole and plenary authority to grant to Participants other equity-based or
equity-related Awards (including, but not limited to, fully-vested Shares) in such amounts and
subject to such terms and conditions as the Committee shall determine. If such an Award is
intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code,
all requirements set forth in Section 6(i) must be satisfied in order for a Participant to be
entitled to payment.

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

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

 

14

          (ii) Eligibility. The Committee shall, in its sole discretion, designate within the
first 90 days of a Performance Period (or, if shorter, within the maximum period allowed under
Section 162(m) of the Code) which Participants will be eligible to receive Performance Compensation
Awards in respect of such Performance Period. However, designation of a Participant eligible to
receive an Award hereunder for a Performance Period shall not in any manner entitle the Participant
to receive payment in respect of any Performance Compensation Award for such Performance Period.
The determination as to whether or not such Participant becomes entitled to payment in respect of
any Performance Compensation Award shall be decided solely in accordance with the provisions of
this Section 6(i). Moreover, designation of a Participant eligible to receive an Award hereunder
for a particular Performance Period shall not require designation of such Participant eligible to
receive an Award hereunder in any subsequent Performance Period and designation of one person as a
Participant eligible to receive an Award hereunder shall not require designation of any other
person as a Participant eligible to receive an Award hereunder in such period or in any other
period.

          (iii) Discretion of Committee with Respect to Performance Compensation Awards. With
regard to a particular Performance Period, the Committee shall have full discretion to select the
length of such Performance Period, the types of Performance Compensation Awards to be issued, the
Performance Criteria that will be used to establish the Performance Goals, the kinds and levels of
the Performance Goals that are to apply to the Company or any of its Subsidiaries, Affiliates,
divisions or operational units, or any combination of the foregoing, and the Performance Formula.
Within the first 90 days of a Performance Period (or, if shorter, within the maximum period allowed
under Section 162(m) of the Code), the Committee shall, with regard to the Performance Compensation
Awards to be issued for such Performance Period, exercise its discretion with respect to each of
the matters enumerated in the immediately preceding sentence and record the same in writing.

          (iv) Performance Criteria. Notwithstanding the foregoing, the Performance Criteria
that will be used to establish the Performance Goals shall be based on the attainment of specific
levels of performance of the Company or any of its Subsidiaries, Affiliates, divisions or
operational units, or any combination of the foregoing, and shall be limited to the following: (A)
net income before or after taxes, (B) earnings before or after taxes (including EBITDA), (C)
operating income, (D) earnings per share, (E) return on stockholders’ equity, (F) return on
investment or capital, (G) return on assets, (H) level or amount of acquisitions, (I) share price,
(J) profitability and profit margins (including EBITDA margins), (K) market share, (L) revenues or
sales (based on units or dollars), (M) costs, (N) cash flow, (O) working capital and
(P) project completion time and budget goals. Such performance criteria may be applied on an absolute basis and/or be
relative to one or more peer companies of the Company or indices or any combination thereof. To
the extent required under Section 162(m) of the Code, the Committee shall, within the first 90 days
of the applicable Performance Period (or, if shorter, within the maximum period allowed under
Section 162(m) of the Code), define in an objective manner the method of calculating the
Performance Criteria it selects to use for such Performance Period.

 

15

          (v) Modification of Performance Goals. The Committee is authorized at any time
during the first 90 days of a Performance Period (or, if shorter, within the maximum period allowed
under Section 162(m) of the Code), or any time thereafter (but only to the extent the exercise of
such authority after such 90-day period (or such shorter period, if applicable) would not cause the
Performance Compensation Awards granted to any Participant for the Performance Period to fail to
qualify as “qualified performance-based compensation” under Section 162(m) of the Code), in its
sole and plenary discretion, to adjust or modify the calculation of a Performance Goal for such
Performance Period to the extent permitted under Section 162(m) of the Code (A) in the event of, or
in anticipation of, any unusual or extraordinary corporate item, transaction, event or development
affecting the Company or any of its Affiliates, Subsidiaries, divisions or operating units (to the
extent applicable to such Performance Goal) or (B) in recognition of, or in anticipation of, any
other unusual or nonrecurring events affecting the Company or any of its Affiliates, Subsidiaries,
divisions or operating units (to the extent applicable to such Performance Goal), or the financial
statements of the Company or any of its Affiliates, Subsidiaries, divisions or operating units (to
the extent applicable to such Performance Goal), or of changes in applicable rules, rulings,
regulations or other requirements of any governmental body or securities exchange, accounting
principles, law or business conditions.

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

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

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

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

 

16

earned in the Performance Period, even if applicable Performance Goals have been attained.

     (E) Timing of Award Payments. The Performance Compensation Awards granted for a
Performance Period shall be paid to Participants as soon as administratively possible following
completion of the certifications required by Section 6(i)(vi)(C), unless the Committee shall
determine that any Performance Compensation Award shall be deferred.

     (F) Discretion. In no event shall any discretionary authority granted to the
Committee by the Plan be used to (1) grant or provide payment in respect of Performance
Compensation Awards for a Performance Period if the Performance Goals for such Performance Period
have not been attained, (2) increase a Performance Compensation Award for any Participant at any
time after the first 90 days of the Performance Period (or, if shorter, the maximum period allowed
under Section 162(m)) or (3) increase a Performance Compensation Award above the maximum amount
payable under Section 4(a) of the Plan.

     SECTION 7. Amendment and Termination. (a) Amendments to the Plan. Subject
to any applicable law or government regulation, to any requirement that must be satisfied if the
Plan is intended to be a stockholder approved plan for purposes of Section 162(m) of the Code and
to the rules of the NYSE or any successor exchange or quotation system on which the Shares may be
listed or quoted, the Plan may be amended, modified or terminated by the Board without the approval
of the stockholders of the Company except that stockholder approval shall be required for any
amendment that would (i) increase the maximum number of Shares for which Awards may be granted
under the Plan or increase the maximum number of Shares that may be delivered pursuant to Incentive
Stock Options granted under the Plan; provided, however, that any adjustment under
Section 4(b) shall not constitute an increase for purposes of this Section 7(a) or (ii) change the
class of employees or other individuals eligible to participate in the Plan. No modification,
amendment or termination of the Plan may, without the consent of the Participant to whom any Award
shall theretofor have been granted, materially and adversely affect the rights of such Participant
(or his or her transferee) under such Award, unless otherwise provided by the Committee in the
applicable Award Agreement.

     (b) Amendments to Awards. The Committee may waive any conditions or rights under,
amend any terms of, or alter, suspend, discontinue, cancel or terminate any Award theretofor
granted, prospectively or retroactively; provided, however, that, except as set
forth in the Plan, unless otherwise provided by the Committee in the applicable Award Agreement,
any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination
that would materially and adversely impair the rights of any Participant or any holder or
beneficiary of any Award theretofor granted shall not to that extent be effective without the
consent of the impaired Participant, holder or beneficiary.

 

17

     (c) Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring
Events. The Committee is hereby authorized to make adjustments in the terms and conditions of,
and the criteria included in, Awards in recognition of unusual or nonrecurring events (including,
without limitation, the events described in Section 4(b) or the occurrence of a Change of Control)
affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate,
or of changes in applicable rules, rulings, regulations or other requirements of any governmental
body or securities exchange, accounting principles or law (i) whenever the Committee, in its sole
and plenary discretion, determines that such adjustments are appropriate or desirable, including,
without limitation, providing for a substitution or assumption of Awards, accelerating the
exercisability of, lapse of restrictions on, or termination of, Awards or providing for a period of
time for exercise prior to the occurrence of such event, (ii) if deemed appropriate or desirable by
the Committee, in its sole and plenary discretion, by providing for a cash payment to the holder of
an Award in consideration for the cancellation of such Award, including, in the case of an
outstanding Option or SAR, a cash payment to the holder of such Option or SAR in consideration for
the cancellation of such Option or SAR in an amount equal to the excess, if any, of the Fair Market
Value (as of a date specified by the Committee) of the Shares subject to such Option or SAR over
the aggregate Exercise Price of such Option or SAR and (iii) if deemed appropriate or desirable by
the Committee, in its sole and plenary discretion, by canceling and terminating any Option or SAR
having a per Share Exercise Price equal to, or in excess of, the Fair Market Value of a Share
subject to such Option or SAR without any payment or consideration therefor.

     SECTION 8. Change of Control. Unless otherwise provided in the applicable Award
Agreement, in the event of a Change of Control after the date of the adoption of the Plan, unless
provision is made in connection with the Change of Control for (a) assumption of Awards previously
granted or (b) substitution for such Awards of new awards covering stock of a successor corporation
or its “parent corporation” (as defined in Section 424(e) of the Code) or “subsidiary corporation”
(as defined in Section 424(f) of the Code) with appropriate adjustments as to the number and kinds
of shares and the Exercise Prices, if applicable, (i) any outstanding Options or SARs then held by
Participants that are unexercisable or otherwise unvested shall automatically be deemed exercisable
or otherwise vested, as the case may be, as of immediately prior to such Change of Control, (ii)
all Performance Units and Cash Incentive Awards shall be paid out as if the date of the Change of
Control were the last day of the applicable Performance Period and “target” performance levels had
been attained and (iii) all other outstanding Awards (i.e., other than Options, SARs,
Performance Units and Cash Incentive Awards) then held by Participants that are unexercisable,
unvested or still subject to restrictions or forfeiture, shall automatically be deemed exercisable
and vested and all restrictions and forfeiture provisions related thereto shall lapse as of
immediately prior to such Change of Control.

     SECTION 9. General Provisions. (a) Nontransferability. Except as otherwise
specified in the applicable Award Agreement, during the Participant’s lifetime each Award (and any
rights and obligations thereunder) shall be exercisable only by the Participant, or, if permissible
under applicable law, by the Participant’s legal guardian or

 

18

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

     (b) No Rights to Awards. No Participant or other Person shall have any claim to be
granted any Award, and there is no obligation for uniformity of treatment of Participants or
holders or beneficiaries of Awards. The terms and conditions of Awards and the Committee’s
determinations and interpretations with respect thereto need not be the same with respect to each
Participant and may be made selectively among Participants, whether or not such Participants are
similarly situated.

     (c) Share Certificates. All certificates for Shares or other securities of the
Company or any Affiliate delivered under the Plan pursuant to any Award or the exercise thereof
shall be subject to such stop transfer orders and other restrictions as the Committee may deem
advisable under the Plan, the applicable Award Agreement or the rules, regulations and other
requirements of the SEC, the NYSE or any other stock exchange or quotation system upon which such
Shares or other securities are then listed or reported and any applicable Federal or state laws,
and the Committee may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.

     (d) Withholding. A Participant may be required to pay to the Company or any
Affiliate, and the Company or any Affiliate shall have the right and is hereby authorized to
withhold from any Award, from any payment due or transfer made under any Award or under the Plan or
from any compensation or other amount owing to a Participant, the amount (in cash, Shares, other
securities, other Awards or other property) of any applicable withholding taxes in respect of an
Award, its exercise or any payment or transfer under an Award or under the Plan and to take such
other action as may be necessary in the opinion of the Committee or the Company to satisfy all
obligations for the payment of such taxes.

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

 

19

     (f) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall
prevent the Company or any Affiliate from adopting or continuing in effect other compensation
arrangements, which may, but need not, provide for the grant of options, restricted stock, shares
and other types of equity-based awards (subject to stockholder approval if such approval is
required), and such arrangements may be either generally applicable or applicable only in specific
cases.

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

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

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

     (j) Severability. If any provision of the Plan or any Award is or becomes or is
deemed to be invalid, illegal or unenforceable in any jurisdiction or as to any Person or Award, or
would disqualify the Plan or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot
be construed or deemed amended without, in the determination of the Committee, materially altering
the intent of the Plan or the Award, such provision shall be construed or deemed stricken as to
such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in
full force and effect.

     (k) Other Laws. The Committee may refuse to issue or transfer any Shares or other
consideration under an Award if, acting in its sole and plenary discretion, it determines that the
issuance or transfer of such Shares or such other consideration might violate any applicable law or
regulation or entitle the Company to recover the same under Section 16(b) of the Exchange Act, and
any payment tendered to the Company by a Participant, other holder or beneficiary in connection
with the exercise of such Award

 

20

shall be promptly refunded to the relevant Participant, holder or beneficiary. Without
limiting the generality of the foregoing, no Award granted hereunder shall be construed as an offer
to sell securities of the Company, and no such offer shall be outstanding, unless and until the
Committee in its sole and plenary discretion has determined that any such offer, if made, would be
in compliance with all applicable requirements of the U.S. Federal and any other applicable
securities laws.

     (l) No Trust or Fund Created. Neither the Plan nor any Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary relationship between the
Company or any Affiliate, on one hand, and a Participant or any other Person, on the other hand.
To the extent that any Person acquires a right to receive payments from the Company or any
Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured
general creditor of the Company or such Affiliate.

     (m) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant
to the Plan or any Award, and the Committee shall determine whether cash, other securities or other
property shall be paid or transferred in lieu of any fractional Shares or whether such fractional
Shares or any rights thereto shall be canceled, terminated or otherwise eliminated.

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

     (o) Requirement of Notification Upon Disqualifying Disposition Under Section 421(b) of the
Code. If any Participant shall make any disposition of Shares delivered pursuant to the
exercise of an Incentive Stock Option under the circumstances described in Section 421(b) of the
Code (relating to certain disqualifying dispositions) or any successor provision of the Code, such
Participant shall notify the Company of such disposition within ten days of such disposition.

     (p) Headings. Headings are given to the Sections and subsections of the Plan solely
as a convenience to facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of the Plan or any provision thereof.

 

21

     SECTION 10. Term of the Plan. (a) Effective Date. The Plan shall be
effective as of the date of its adoption by the Board and approval by the Company’s stockholders;
provided, however, that no Incentive Stock Options may be granted under the Plan
unless it is approved by the Company’s stockholders within twelve (12) months before or after the
date the Plan is adopted by the Board.

     (b) Expiration Date. No Award shall be granted under the Plan after the tenth
anniversary of the date the Plan is approved under Section 10(a). Unless otherwise expressly
provided in the Plan or in an applicable Award Agreement, any Award granted hereunder may, and the
authority of the Board or the Committee to amend, alter, adjust, suspend, discontinue or terminate
any such Award or to waive any conditions or rights under any such Award shall, nevertheless
continue thereafter.

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