Document:

EX-10.3:

 

Exhibit 10.3

GARTNER GROUP, INC.

1998 LONG TERM STOCK OPTION PLAN

As amended and restated June 29, 2005

     1. Purpose of the Plan. The purposes of the 1998 Long Term Stock Option Plan (the
“Plan”) are:

	 	•	 	to attract and retain quality personnel for positions of substantial
responsibility,
	 
	 	•	 	to create additional incentive for senior personnel of the Company by
offering long term equity participation in the Company, and
	 
	 	•	 	to promote the long-term success of the Company’s business.

     Awards granted under the Plan may be Options or Time Accelerated Restricted Stock. Options
granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined
by the Administrator at the time of grant and subject to the applicable provisions of Section 422
of the Code and the regulations promulgated thereunder.

     2. Definitions. As used herein, the following definitions shall apply:

          (a) “Administrator” means the Board or such of its Committees as shall be
administering the Plan, in accordance with Section 4 of the Plan.

          (b) “Applicable Laws” means the legal requirements relating to the administration of
stock option plans under state corporate and securities laws and the Code.

          (c) “Award” means a grant of Options and/or Time Accelerated Restricted Stock.

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

          (e) “Code” means the Internal Revenue Code of 1986, as amended.

          (f) “Committee” means a Committee appointed by the Board in accordance with Section 4
of the Plan.

          (g) “Common Stock” means the Common Stock, Class A, par value $.0005, of the Company.

          (h) “Company” means Gartner Group, Inc., a Delaware corporation.

          (i) “Continuous Status as an Employee” means that the employment relationship with the
Company, any Parent, or Subsidiary, is not interrupted or terminated. Continuous Status as an
Employee shall not be considered interrupted in the case of (i) any leave of absence approved by
the Company or (ii) transfers between locations of the Company or between the Company, its

 

 

Parent, any Subsidiary, or any successor. A leave of absence approved by the Company shall
include sick leave, military leave, or any other personal leave approved by an authorized
representative of the Company. For purposes of Incentive Stock Options, no such leave may exceed
90 days, unless reemployment upon expiration of such leave is guaranteed by statute or contract.
If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed,
on the 91st day of such leave any Incentive Stock Option held by the Optionee shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock
Option. Continuous employment shall be interrupted and terminated for an Employee if the
Employee’s weekly work hours change from full time to part time. Part-time status for the purpose
of vesting continuation or eligibility to receive Options shall be determined in accordance with
policies adopted by the Company from time to time, which policies, if any, shall supercede the
determination of part-time status set forth in the Company’s posted “employee status definitions”.

          (j) “Director” means a member of the Board.

          (k) “Disability” means total and permanent disability as defined in Section 22(e)(3)
of the Code.

          (l) “Employee” means any person, including Officers and Directors, employed by the
Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a
director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

          (m) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          (n) “Fair Market Value” means, as of any date, the value of Common Stock determined as
follows:

               (i) If the Common Stock is listed on any established stock exchange or a national market
system, including without limitation the Nasdaq National Market of the National Association of
Securities Dealers, Inc. Automated Quotation (“NASDAQ”) System, the Fair Market Value of a share of
Common Stock shall be the closing sales price for such stock (or the closing bid price, if no sales
were reported) as quoted on such exchange or system (or the exchange with the greatest volume of
trading in Common Stock) on the date of determination, as reported in The Wall Street Journal or
such other source as the Administrator of the Plan deems reliable.

               (ii) If the Common Stock is quoted on the NASDAQ System (but not on the Nasdaq National Market
thereof) or is regularly quoted by a recognized securities dealer but selling prices are not
reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the date of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable.

               (iii) In the absence of an established market for the Common Stock, the Fair Market Value
shall be determined in good faith by the Administrator.

          (o) “Holder” means an Employee who holds Shares of Time Accelerated Restricted Stock.

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          (p) “Incentive Stock Option” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

          (q) “Insider” means an Employee subject to Section 16 of the Exchange Act.

          (r) “Nonstatutory Stock Option” means an Option not intended to qualify as an
Incentive Stock Option.

          (s) “Notice of Grant” means a written notice evidencing certain terms and conditions
of an individual Award. The Notice of Grant is part of the Option Agreement or Restricted Stock
Agreement, as applicable.

          (t) “Officer” means a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

          (u) “Option” means a stock option granted pursuant to the Plan.

          (v) “Option Agreement” means a written agreement between the Company and an Optionee
evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject
to the terms and conditions of the Plan.

          (w) “Option Exchange Program” means a program whereby outstanding options are
surrendered in exchange for options with a lower exercise price.

          (x) “Optioned Stock” means the Common Stock subject to an Option.

          (y) “Optionee” means an Employee or Consultant who holds an outstanding Option.

          (z) “Parent” means a “parent corporation”, whether now or hereafter existing, as
defined in Section 424(e) of the Code.

          (aa) “Restricted Stock Agreement” means a written agreement between the Company and a
Holder evidencing the terms and conditions of an individual award of Time Accelerated Restricted
Stock. The Restricted Stock Agreement is subject to the terms and conditions of the Plan.

          (bb) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3,
as in effect when discretion is being exercised with respect to the Plan.

          (cc) “Senior Manager” means an Employee who is an executive officer, vice president,
director-level employee or senior analyst of the Company, or such other Employee as the
Administrator shall deem eligible to participate in the Plan.

          (dd) “Share” means a share of Common Stock, as adjusted in accordance with Section 13
of the Plan.

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          (ee) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing,
as defined in Section 424(f) of the Code.

          (ff) “Time Accelerated Restricted Stock” means an Award of Shares pursuant to the Plan
which are subject to restrictions on transferability.

     3. Stock Subject to the Plan. Subject to the provisions of Section 13 of the Plan,
the maximum aggregate number of Shares which may be optioned and sold under the Plan is 2,500,000
Shares. The Shares may be authorized, but unissued, or reacquired Common Stock.

     If an Option expires or becomes unexercisable without having been exercised in full, or is
surrendered pursuant to an Option Exchange Program, the unpurchased Shares which were subject
thereto shall become available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued under the Plan shall not
be returned to the Plan and shall not become available for future distribution under the Plan,
except that if unvested Shares are repurchased by the Company at their original purchase price, and
the original purchaser of such Shares did not receive any benefits of ownership of such Shares,
such Shares shall become available for future grant under the Plan. For purposes of the preceding
sentence, voting rights shall not be considered a benefit of Share ownership.

     4. Administration of the Plan.

          (a) Procedure

               (i) Multiple Administrative Bodies. The Plan may be administered by different
Committees with respect to Directors, Officers who are not Directors, and Senior Managers who are
neither Directors nor Officers.

               (ii) Section 162(m). To the extent that the Administrator determines it to be
desirable to qualify Options granted hereunder as “performance-based compensation” within the
meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee of two or more
“outside directors” within the meaning of Section 162(m) of the Code.

               (iii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt
under Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the
requirements for exemption under Rule 16b-3.

               (iv) Other Administration. Other than as provided above, the Plan shall be
administered by (A) the Board or (B) a Committee, which committee shall be constituted to satisfy
Applicable Laws.

          (b) Powers of the Administrator. Subject to the provisions of the Plan, and in the
case of a Committee, subject to the specific duties delegated by the Board to such Committee, the
Administrator shall have the authority, in its discretion:

               (i) to determine the Fair Market Value of the Common Stock, in accordance with Section 2(n) of
the Plan;

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               (ii) to select the Senior Managers to whom Options may be granted hereunder;

               (iii) to determine whether and to what extent Options are granted hereunder;

               (iv) to determine the number of shares of Common Stock to be covered by each Option granted
hereunder;

               (v) to approve forms of agreement for use under the Plan;

               (vi) to determine the terms and conditions, not inconsistent with the terms of the Plan, of
any Award granted hereunder. Such terms and conditions include, but are not limited to, the
exercise price, the time or times when Options may be exercised (which may be based on performance
criteria), any acceleration of vesting or waiver of forfeiture restrictions, any acceleration of
the lapse of restrictions on the transferability of Shares of Time Accelerated Restricted Stock,
and any restriction or limitation regarding any Award or the shares of Common Stock relating
thereto, based in each case on such factors as the Administrator, in its sole discretion, shall
determine;

               (vii) to reduce the exercise price of any Option;

               (viii) to construe and interpret the terms of the Plan and awards granted pursuant to the
Plan;

               (ix) to prescribe, amend and rescind rules and regulations relating to the Plan, including
rules and regulations relating to sub-plans established for the purpose of qualifying for preferred
tax treatment under foreign tax laws;

               (x) to modify or amend each Option (subject to Section 15(c) of the Plan), including the
discretionary authority to extend the post-termination exercisability period of Options longer than
is otherwise provided for in the Plan;

               (xi) to modify or amend (subject to Section 15(c) of the Plan) each Restricted Stock
Agreement, including the acceleration of the lapse of restrictions on the transferability of Shares
of Time Accelerated Restricted Stock;

               (xii) to authorize any person to execute on behalf of the Company any instrument required to
effect the grant of an Option previously granted by the Administrator;

               (xiii) to institute an Option Exchange Program;

               (xiv) to make all other determinations deemed necessary or advisable for administering the
Plan.

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          (c) Effect of Administrator’s Decision. The Administrator’s decisions, determinations
and interpretations shall be final and binding on all Optionees and Holders and any other holders
of Options and Shares of Time Accelerated Restricted Stock.

          (d) Buyout Provisions. The Administrator may at any time offer to buy from an Optionee
an Option previously granted, on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.

     5. Eligibility. Options may be granted to Senior Managers. If otherwise eligible, a
Senior Manager who has been granted an Option may be granted additional Options.

     6. Limitations.

          (a) Each Option shall be designated in the Notice of Grant as either an Incentive Stock Option
or a Nonstatutory Stock Option. However, notwithstanding such designations, to the extent that the
aggregate Fair Market Value of Shares subject to an Optionee’s Incentive Stock Options granted by
the Company, any Parent or Subsidiary, which become exercisable for the first time during any
calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such
excess Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 6(a),
Incentive Stock Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of the Shares shall be determined as of the time of grant.

          (b) Neither the Plan nor any Option shall confer upon an Optionee any right with respect to
continuing the Optionee’s employment or consulting relationship with the Company, nor shall they
interfere in any way with the Optionee’s right or the Company’s right to terminate such employment
or consulting relationship at any time, with or without cause.

          (c) The following limitations shall apply to grants of Options to Employees:

               (i) No Employee shall be granted, in any fiscal year of the Company, Options to purchase more
than 150,000 shares.

               (ii) In connection with his or her initial employment, an Employee may be granted Options to
purchase up to an additional 150,000 Shares which shall not count against the limit set forth in
subsection (i) above.

               (iii) The foregoing limitations shall be adjusted proportionately in connection with any
change in the Company’s capitalization as described in Section 13.

               (iv) If an Option is canceled in the same fiscal year of the Company in which it was granted
(other than in connection with a transaction describe in Section 13), the canceled Option will be
counted against the limit set forth in Section 6(c)(i). For this purpose, if the exercise price of
an Option is reduced, the transaction will be treated as a cancellation of the Option and the grant
of a new Option.

     7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall become effective
upon the earlier to occur of its adoption by the Board or its approval by the shareholders of the
Company

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as described in Section 19 of the Plan. It shall continue in effect for a term of ten (10)
years unless terminated earlier under Section 15 of the Plan.

     8. Term of Option. The term of each Option shall be ten (10) years from the date of
grant. However, in the case of an Incentive Stock Option, the term shall be ten (10) years from
the date of grant or such shorter term as may be provided in the Notice of Grant. Moreover, in the
case of an Incentive Stock Option granted to an Optionee who, at the time the Incentive Stock
Option is granted, owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option
shall be five (5) years from the date of grant or such shorter term as may be provided in the
Notice of Grant.

     9. Option Exercise Price and Consideration.

          (a) Exercise Price. The per share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be determined by the Administrator, subject to the following:

               (i) In the case of an Incentive Stock Option

                    (A) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of stock of the Company
or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.

                    (B) granted to any Employee other than an Employee described in paragraph (A) immediately
above, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share
on the date of grant.

               (ii) In the case of a Nonstatutory Stock Option, the per Share exercise price shall be
determined by the Administrator. In the case of a Nonstatutory Stock Option intended to qualify as
“performance-based compensation” within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

               (iii) Notwithstanding the foregoing, Options may be granted with a per Share exercise price of
less than 100% of the Fair Market Value per Share on the date of grant pursuant to a merger or
other corporate transaction.

          (b) Waiting Period and Exercise Dates. At the time an Option is granted, the
Administrator shall fix the period within which the Option may be exercised and shall determine any
conditions which must be satisfied before the Option may be exercised. In so doing, the
Administrator may specify that an Option may not be exercised until the completion of a service
period.

          (c) Form of Consideration. The Administrator shall determine the acceptable form of
consideration for exercising an Option, including the method of payment. In the case of an
Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at
the time of grant. Such consideration may consist entirely of:

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               (i) cash;

               (ii) check;

               (iii) promissory note (on such terms and conditions as determined by the Administrator);

               (iv) other Shares which have a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the Shares as to which said Option shall be exercised;

               (v) in the case of a “cashless exercise” during the trading window permitted by the Company’s
Insider Trading Policy, delivery of a properly executed exercise notice together with such other
documentation as the Administrator and the broker, if applicable, shall require to effect an
exercise of the Option and delivery to the Company of the sale or loan proceeds required to pay the
exercise price;

               (vi) a reduction in the amount of any Company liability to the Optionee, including any
liability attributable to the Optionee’s participation in any Company-sponsored deferred
compensation program or arrangement;

               (vii) any combination of the foregoing methods of payment; or

               (viii) such other consideration and method of payment for the issuance of Shares to the extent
permitted by Applicable Laws.

     10. Exercise of Option.

          (a) Procedure for Exercise; Rights as a Stock-holder. Any Option granted hereunder
shall be exercisable according to the terms of the Plan and at such times and under such conditions
as determined by the Administrator and set forth in the Option Agreement

     An Option may not be exercised for a fraction of a Share.

     An Option shall be deemed exercised when the Company receives: (i) written notice of exercise
(in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii)
full payment for the Shares with respect to which the Option is exercised. Full payment may
consist of any consideration and method of payment authorized by the Administrator and permitted by
the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the
name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her
spouse. Until the stock certificate evidencing such Shares is issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall
issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No
adjustment will be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 13 of the Plan.

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     Exercising an Option in any manner shall decrease the number of Shares thereafter available,
both for purposes of the Plan and for sale under the Option, by the number of Shares as to which
the Option is exercised.

          (b) Termination of Employment Relationship.

               (i) Upon termination of an Optionee’s Continuous Status as an Employee, such Optionee may
exercise his or her Option to the extent that he or she was entitled to exercise it as of the date
of such termination. Such exercise may occur only before the end of the period determined by the
Administrator for exercise following termination. In the case of an Incentive Stock Option, such
period shall not exceed three (3) months. In no event shall such period extend beyond the
expiration date of the term of the Option as set forth in the Option Agreement.

               (ii) To the extent that the Optionee is not entitled to exercise his or her Option at the date
of such termination, or if the Optionee does not exercise such Option to the extent so entitled
within the time specified herein, the Option shall terminate.

          (c) Disability of Optionee. Upon termination of an Optionee’s Continuous Status as an
Employee or Consultant as a result of the Optionee’s Disability, the Optionee may exercise his or
her Option at any time within twelve (12) months from the date of such termination (but in no event
later than the expiration of the term of such Option as set forth in the Notice of Grant), only to
the extent that the Optionee was entitled to exercise it at the date of such termination. If, at
the date of termination, the Optionee is not entitled to exercise his or her entire Option, the
Shares covered by the unexercisable portion of the Option shall revert to the Plan. If, after
termination, the Optionee does not exercise his or her Option within the time specified herein, the
Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

          (d) Death of Optionee. Upon the death of an Optionee, the Option may be exercised at
any time within twelve (12) months following the date of death (but in no event later than the
expiration of the term of such Option as set forth in the Notice of Grant), by the Optionee’s
estate or by a person who acquired the right to exercise the Option by bequest or inheritance, only
to the extent that the Optionee was entitled to exercise the Option at the date of death. If, at
the time of death, the Optionee was not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall immediately revert to the Plan. If, after
death, the Optionee’s estate or a person who acquired the right to exercise the Option by bequest
or inheritance does not exercise the Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

     11. Transferability of Options. Unless otherwise determined by the Administrator to
the contrary, Options may not be sold, pledged, assigned, hypothecated, transferred or disposed of
in any manner other than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee. The Administrator may, in the manner
established by the Administrator, provide for the transfer of a Nonstatuatory Stock Option by the
Optionee to any member of the Optionee’s immediate family. In such case, the Nonstatutory Stock
Option shall be exercisable only by such transferee. Following transfer, any such Nonstatutory
Stock Options shall continue to be subject to the same terms and conditions as were applicable

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immediately prior to the transfer. For purposes of this Section, an Optionee’s “immediate
family” shall mean any of the following who have acquired the Option from the Optionee through a
gift or domestic relations order: a child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, trusts for the exclusive benefit of these persons
and any other entity owned solely by these persons, and such other persons and entities as shall be
eligible to be included as transferees in the Form S-8 Registration Statement under the Securities
Act of 1933, as amended, filed or to be filed by the Company to register shares of Common Stock to
be issued upon the exercise of Options granted pursuant to the Plan.

     12. Time Accelerated Restricted Stock.

          (a) Grants of Time Accelerated Restricted Stock. Shares of Time Accelerated
Restricted Stock may be granted either alone, in addition to, or in tandem with other Awards
granted under the Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will grant Time Accelerated Restricted Stock under the Plan, it shall advise the
Holder in writing of the terms, conditions and restrictions related to the Award, including the
number of Shares subject to the Award. The Award shall be evidenced by execution of a Restricted
Stock Agreement in the form determined by the Administrator.

          (b) The Restricted Stock Agreement. The Restricted Stock Agreement shall contain such
terms, provisions and conditions not inconsistent with the Plan as may be determined by the
Administrator in its sole discretion. In addition, the provisions of Restricted Stock Agreements
need not be the same with respect to each Holder.

          (c) Nontransferability. Shares of Time Accelerated Restricted Stock may not be sold,
assigned, transferred, alienated, commuted, anticipated, or otherwise disposed of (except, subject
to the provisions of the Restricted Stock Agreement, by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I
of ERISA or the rules promulgated thereunder), or pledged or hypothecated as collateral for a loan
or as security for the performance of any obligation, or be otherwise encumbered, and are not
subject to attachment, garnishment, execution or other legal or equitable process, prior to the
lapse of the period of time restrictions on the transferability of such Shares remain in effect as
set forth in the Restricted Stock Agreement, and any attempt at action in contravention of this
Section shall be null and void. The lapse of restrictions on the transferability of such Shares
may be accelerated upon the attainment of performance criteria as set forth in the Restricted Stock
Agreement.

          (d) Termination of Employment Relationship.

               (i) If, prior to the lapse of restrictions on transferability applicable to Shares of Time
Accelerated Restricted Stock, the Holder’s Continuous Status as an Employee ceases, other than as
set forth in subsection (ii) below, such Shares as to which restrictions on transferability have
not lapsed shall be forfeited to the Company and all rights of the Holder to such Shares shall
terminate without further obligation on the part of the Company, effective on the date the Holder’s
Continuous Status as an Employee ceases, unless the Administrator determines otherwise.

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               (ii) If, prior to the lapse of restrictions on transferability applicable to Shares of Time
Accelerated Restricted Stock, the Holder’s Continuous Status as an Employee ceases as a result of
the Holder’s death or Disability, the restrictions on the transferability of such Shares shall
lapse.

          (e) Rule 16b-3. Time Accelerated Restricted Stock granted to Insiders, and Shares
acquired by Insiders in connection with an Award of Shares of Time Accelerated Restricted Stock,
shall be subject to any restrictions applicable thereto in compliance with Rule 16b-3.

          (f) Rights as a Stockholder. Once Shares of Time Accelerated Restricted Stock are
granted, the Holder shall have the rights equivalent to those of a stockholder, and shall be a
stockholder when the Shares are entered upon the records of the duly authorized transfer agent of
the Company in the name of the Holder. Certificates representing the Shares may bear a legend, if
the Company deems it advisable, to the effect that they are issued subject to specified
restrictions. Shares issued and transferred to a Holder pursuant to an Award shall be deposited
with an officer of the Company designated by the Administrator for the Holder’s account to be held
until the lapse of the restrictions upon such Shares or the earlier forfeiture of the Shares to the
Company in accordance with the terms of the Restricted Stock Agreement. Each Holder shall execute
and deliver to the Company stock powers enabling the Company to exercise its rights hereunder.

          (g) Dividends. Dividends paid on the Shares of Time Accelerated Restricted Stock,
whether in cash, stock or property, at the discretion of the Administrator, may be paid to the
Holder currently or be held by the Company subject to the same restrictions on transferability as
the Shares to which they relate. If such cash dividends are held subject to such restrictions on
transferability, the Administrator may determine whether, and on what terms, interest may be paid
on such dividends until the lapse of restrictions on transferability. If the Shares to which such
dividends relate are forfeited to the Company, such dividends, including interest thereon, if any,
shall likewise be forfeited to the Company without further obligation on the part of the Company.

     13. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale.

          (a) Changes in Capitalization. Subject to any required action by the shareholders of
the Company, the number of shares of Common Stock covered by each Award, and the number of shares
of Common Stock which have been authorized for issuance under the Plan but as to which no Awards
have yet been granted or which have been returned to the Plan upon cancellation or expiration of an
Award, as well as the price per share of Common Stock covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number of issued shares of
Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed to have been
“effected without receipt of consideration.” Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Award.

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          (b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, to the extent that an Option has not been previously exercised, it will
terminate immediately prior to the consummation of such proposed action. The Board may, in the
exercise of its sole discretion in such instances, declare that any Option shall terminate as of a
date fixed by the Board and give each Optionee the right to exercise his or her Option as to all or
any part of the Optioned Stock, including Shares as to which the Option would not otherwise be
exercisable.

          (c) Merger or Asset Sale. In the event of a merger of the Company with or into
another corporation, or the sale of substantially all of the assets of the Company, each
outstanding Option may be assumed or an equivalent option may be substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. The Administrator may, in lieu
of such assumption or substitution, provide for the Optionee to have the right to exercise the
Option as to all or a portion of the Optioned Stock, including Shares as to which it would not
otherwise be exercisable. If the Administrator makes an Option exercisable in lieu of assumption
or substitution in the event of a merger or sale of assets, the Administrator shall notify the
Optionee that the Option shall be fully exercisable for a period of fifteen (15) days from the date
of such notice, and the Option will terminate upon the expiration of such period. For the purposes
of this paragraph, the Option shall be considered assumed if, following the merger or sale of
assets, the option confers the right to purchase or receive, for each Share of Optioned Stock
subject to the Option immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of assets by holders
of Common Stock for each Share held on the effective date of the transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received in the merger or
sale of assets was not solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for the consideration to
be received upon the exercise of the Option, for each Share of Optioned Stock subject to the
Option, to be solely common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the merger or sale of
assets.

     14. Date of Grant. The date of grant of an Award shall be, for all purposes, the date
on which the Administrator makes the determination granting such Award, or such other later date as
is determined by the Administrator. Notice of the determination shall be provided to each Optionee
and Holder within a reasonable time after the date of such grant.

     15. Amendment and Termination of the Plan.

          (a) Amendment and Termination. The Board may at any time amend, alter, suspend or
terminate the Plan.

          (b) Shareholder Approval. The Company shall obtain shareholder approval of any Plan
amendment to the extent necessary and desirable to comply with Section 422 or Section 162(m) of the
Code (or any successor rule or statute or other applicable law, rule or regulation, including the
requirements of any exchange or quotation system on which the Common Stock is listed or quoted).
Such shareholder approval, if required, shall be obtained in such a manner and to such a degree as
is required by the applicable law, rule or regulation.

 -12-

 

          (c) Effect of Amendment or Termination. No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any Optionee or Holder, unless mutually agreed
otherwise between the Optionee or Holder and the Administrator, which agreement must be in writing
and signed by the Optionee or Holder and the Company.

     16. Conditions Upon Issuance of Shares.

          (a) Legal Compliance. Shares shall not be issued pursuant to the exercise of an
Option or the grant of Shares of Time Accelerated Restricted Stock unless the exercise of such
Option and the issuance and delivery of such Shares shall comply with all relevant provisions of
law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the
rules and regulations promulgated thereunder, Applicable Laws, and the requirements of any stock
exchange or quotation system upon which the Shares may then be listed or quoted, and shall be
further subject to the approval of counsel for the Company with respect to such compliance.

          (b) Investment Representations. As a condition to the exercise of an Option, the
Company may require the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.

     17. Liability of Company.

          (a) Inability to Obtain Authority. The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of
any liability in respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.

          (b) Grants Exceeding Allotted Shares. If the Optioned Stock covered by an Option or
the number of Shares of Time Accelerated Restricted Stock exceeds, as of the date of grant, the
number of Shares which may be issued under the Plan without additional shareholder approval, such
Award shall be void with respect to such excess Shares, unless shareholder approval of an amendment
sufficiently increasing the number of Shares subject to the Plan is timely obtained in accordance
with Section 15(b) of the Plan.

     18. Reservation of Shares. The Company, during the term of this Plan, will at all
times reserve and keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.

     19. Shareholder Approval. Continuance of the Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months before or after the date the Plan is adopted.
Such shareholder approval shall be obtained in the manner and to the degree required under
applicable federal and state law.

     20. Tax and Social Security Indemnity. An Optionee or Holder shall indemnify the
Company against any tax arising in respect of the grant or exercise of the Option or the grant of

 -13-

 

Shares of Time Accelerated Restricted Stock which is a liability of the Optionee or Holder but
for which the Company is required to account under the laws of any relevant territory. The Company
may recover the tax from the Optionee or Holder in such manner as the Administrator deems
appropriate, including (but without prejudice to the generality of the foregoing):

          (a) withholding shares upon the exercise of the Option and selling the same;

          (b) deducting the necessary amount from the Optionee’s or Holder’s compensation; or

          (c) requiring the Optionee or Holder to make cash payment to the Company for such tax.

     21. Options Granted to Employees of French Subsidiaries.

          (a) Purpose. Options granted under the Plan to Employees of French subsidiaries are
intended to qualify under the French regulations as provided in articles 208-1 to 208-8-2 of the
French Company Act (Code des Societes). The purpose of this Section is to specify the applicable
rules to Options for French Employees and shall not be applicable to any other Employee of the
Company.

          (b) General. Options granted to French Employees under the Plan are subject to the
provisions of the Plan and any option agreement unless otherwise provided in this Section 21.

          (c) Eligible Participants. Options may be granted exclusively to Employees (as
defined in Section 2(l)) of the Plan) of French subsidiaries. Payment of Director fees by the
Company shall not be sufficient to constitute employment for any purposes of the Options granted to
Employees of French subsidiaries. Employees of French subsidiaries may not be granted Options if,
at the date of grant, they hold more than ten percent (10%) of the Common Stock of the Company.

          (d) Options. Eligible Employees may be granted Options as provided in the Plan. If
Shares of Time Accelerated Restricted Stock mentioned in Section 12 of the Plan are granted to
Employees of French subsidiaries, the provisions of this Section shall not apply to the Shares of
Time Accelerated Restricted Stock granted.

          (e) Option Price. The exercise price of the Option shall be determined as set forth
in the Plan but it shall not be less than 80% of the average Fair Market Value of the Common Stock
during the twenty (20) market trading days prior to the date of the grant. The exercise price
shall remain unchanged once the Option is granted. The authority of Administrator to reduce the
Option exercise price, as set forth in Section 8(b)(x) of the Plan, shall, with respect to Options
granted to Employees of French subsidiaries, be limited to the extend that such reduction may not
be to a price less than 80% of the average Fair Market Value of the Common Stock during the twenty
(20) market trading days prior to the date of such reduction.

          (f) Exercise of the Option. Upon exercise of an Option, Employees of French
subsidiaries will receive Shares of Common Stock. Section 4(b)(vii) of the Plan, concerning the

 -14-

 

ability to settle the Option in cash instead of Shares of Common Stock, is not applicable to
Employees of French subsidiaries.

          (g) Qualification of Plan. In order to have the Plan qualify in France, any other
provision of the Plan that would not be consistent with French company law or tax law requirements
shall not apply to Employees of French subsidiaries.

 -15-EX-10.4:

 

Exhibit 10.4

GARTNER, INC.

2003 LONG-TERM INCENTIVE PLAN

1. Purpose of the Plan. The purpose of this 2003 Long-Term Incentive Plan is to enable the
Company to provide incentives to eligible employees, officers, consultants and directors whose
present and potential contributions are important to the continued success of the Company, to
afford these individuals the opportunity to acquire a proprietary interest in the Company, and to
enable the Company to enlist and retain qualified personnel. This purpose will be effected through
the granting of (a) stock options, (b) stock appreciation rights, (c) restricted stock awards, (d)
restricted stock units, (e) long-term performance awards, and (f) director common stock
equivalents.

2. Definitions.

     (a) “Award” means an Option, SAR, Restricted Stock Award, Restricted Stock Unit,
Long-Term Performance Award or Common Stock Equivalent awarded under the Plan.

     (b) “Award Agreement” means a written agreement between the Company and a Participant
evidencing the terms and conditions of an individual Award.

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

     (d) “Cause” means (i) Participant’s failure to perform his or her assigned duties or
responsibilities (other than a failure resulting from disability) in such a manner as to cause
material loss, damage or injury to the Company; (ii) gross negligence or serious misconduct by
Participant in connection with the discharge of the duties of his or her position in such a manner
as to cause material loss, damage or injury to the Company; (iii) Participant’s use of drugs or
alcohol in such a manner as to materially interfere with the performance of his or her assigned
duties; or (iv) Participant’s being convicted of, or entering a plea of nolo contendere to, a
felony. In each instance, the foregoing acts and omissions shall not constitute Cause unless and
until the Participant has been provided with written notice from the Company describing
Participant’s act or omission that otherwise would constitute Cause and Participant’s failure to
remedy such act or omission within 30 days of receiving written notice.

     (e) “Change in Control” means the happening of any of the following:

     (i) when any “person,” as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than the Company, a Subsidiary or a Company employee benefit plan,
including any trustee of such plan acting as trustee) is or becomes the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing more than fifty (50%) of the combined voting power of the
Company’s then outstanding securities entitled to vote generally in the election of
directors (other than as a

- 1 -

 

result of a repurchase of securities by the Company or in connection with a transaction
described in clause (ii) below); or

     (ii) a merger or consolidation of the Company with any other entity, other than a
merger or consolidation that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity) at least
fifty percent (50%) of the total voting power represented by the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation; or

     (iii) the stockholders of the Company approve an agreement for the sale or disposition
by the Company of all or substantially all the Company’s assets; or

     (iv) a change in the composition of the Board occurring after approval of the Plan by
the Company’s stockholders, as a result of which fewer than a majority of the Directors
holding voting rights on the Board are Incumbent Directors.

     (f) “Code” means the Internal Revenue Code of 1986, as amended.

     (g) “Committee” means a Committee appointed by the Board in accordance with Section 11
to administer the Plan or, if no Committee is appointed, the entire Board.

     (h) “Common Stock” means the Class A Common Stock of the Company.

     (i) “Common Stock Equivalent” means a right to receive Shares in the future that may
be granted to an Outside Director pursuant to Section 10.

     (j) “Company” means Gartner, Inc., a Delaware corporation.

     (k) “Consultant” means any person, including an advisor, engaged by the Company or a
Parent or Subsidiary to render services and who is compensated for such services, provided that the
term “Consultant” shall not include Directors who are paid only a director’s fee by the Company or
who are not compensated by the Company for their services as Directors.

     (l) “Director” means a member of the Board and, except for the purposes of determining
the eligibility for grants of Options under Section 10, also means any Director Emeritus appointed
in accordance with the Company’s Bylaws.

     (m) “Employee” means any person, including any officer or Director, employed by the
Company or any Parent or Subsidiary of the Company. A Director whose services to the Company are
limited to services as a Director will not be considered “employed” by the Company.

     (n) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

- 2 -

 

     (o) “Existing Plans” means the Company’s 1993 Director Stock Option Plan, 1994 Long
Term Option Plan, 1996 Long Term Stock Option Plan, 1998 Long Term Stock Option Plan and 1999 Stock
Option Plan.

     (p) “Fair Market Value” means, as of any date, the fair market value of the Common
Stock as determined in good faith by the Committee. Absent a specific determination by the
Committee to the contrary, the fair market value of the Common Stock will be the closing price of
the Common Stock reported on a consolidated basis on the New York Stock Exchange on the relevant
date or, if there were no sales on such date, the closing price on the nearest preceding date on
which sales occurred.

     (q) “Freestanding SARs” means a SAR granted under Section 6 without a related Option.

     (r) “Incentive Stock Option” means an Option that is intended to qualify as an
“incentive stock option” under Section 422 of the Code or any successor provision.

     (s) “Incumbent Directors” means Directors who either are (A) directors of the Company
as of the date the Plan is approved by the Company’s stockholders, or (B) elected, or nominated for
election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors
(or majority of the Incumbent Directors serving as members of any nominating or similar committee
of the Board) at the time of such election or nomination (but shall not include an individual whose
election or nomination is in connection with an actual or threatened proxy contest relating to the
election of Directors).

     (t) “Long-Term Performance Award” means an award under Section 9. A Long-Term
Performance Award will permit the recipient to receive a cash or stock bonus upon satisfaction of
such Performance Objectives as the Committee may determine.

     (u) “Nonstatutory Stock Option” means an Option that is not intended to qualify as an
Incentive Stock Option.

     (v) “Option” means an option to purchase Shares of Common Stock granted under Section
5.

     (w) “Outside Director” means a Director who is not an Employee.

     (x) “Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.

     (y) “Participant” means any person who receives an Award under the Plan.

     (z) “Performance Objectives” means the performance objectives established under this
Plan for Participants who receive grants of Long-Term Performance Awards or, if determined by the
Committee, Restricted Stock Awards, Restricted Stock Units or other

- 3 -

 

Awards. Any Performance Objectives that are intended to qualify as “performance-based compensation”
under Section 162(m) of the Code shall be limited to specified levels of, or increases in, the
Company’s, Parent’s or Subsidiary’s return on equity, earnings per share, total earnings, earnings
growth, return on capital, return on assets, economic value added, earnings before interest and
taxes, earnings before interest, taxes and amortization, core research contract value, total sales
bookings, sales growth, gross margin return on investment, increase in the Fair Market Value of the
Shares, share price (including, but not limited to, growth measures and total stockholder return),
net operating profit, cash flow (including, but not limited to, operating cash flow and free cash
flow), cash flow return on investment (which equals net cash flow divided by total capital),
internal rate of return, increase in net present value or expense targets. Any Performance
Objective used may be measured, as applicable, (i) in absolute terms, (ii) in relative terms
(including, but not limited to, passage of time and/or against another company or companies), (iii)
on a per-share basis, (iv) against the performance of the Company as a whole or of a Parent,
Subsidiary or business unit of the Company, and/or (v) to the extent not otherwise specified by the
definition of the Performance Objective, on a pre-tax or after-tax basis. The Committee shall
appropriately adjust any evaluation of performance under a Performance Objective to exclude (i) any
extraordinary non-recurring items as described in Accounting Principles Board Opinion No. 30 and/or
in management’s discussion and analysis of financial conditions and results of operations appearing
in the Company’s annual report to stockholders for the applicable year, or (ii) the effect of any
changes in accounting principles affecting the Company’s, a Parent’s, Subsidiary’s or business
units’ reported results. Except in the case of an Award intended to qualify under Section 162(m)
of the Code, if the Committee determines that a change in the business, operations, corporate
structure or capital structure of the Company or a Parent, Subsidiary or business unit of the
Company, or other circumstances render the Performance Objectives unsuitable, the Committee may
modify such Performance Objectives or the related minimum acceptable level of achievement, in whole
or in part, as the Committee deems appropriate and equitable.

     (aa) “Plan” means this 2003 Long-Term Incentive Plan.

     (bb) “Quarterly Compensation” means the retainer fee and committee fees, as
applicable, that an Outside Director receives from the Company for each of the Company’s fiscal
quarters.

     (cc) “Restricted Stock” means shares of Common Stock that are subject to a risk of
forfeiture or other restrictions that will lapse upon the satisfaction of specified conditions or
the achievement of specified Performance Objectives.

     (dd) “Restricted Stock Award” means a grant under Section 7 of Restricted Stock or the
right to purchase Restricted Stock.

     (ee) “Restricted Stock Unit” means an Award granted pursuant to Section 8.

- 4 -

 

     (ff) “Rule 16b-3” means Rule 16b-3 under the Exchange Act or any successor rule, as in
effect when discretion is being exercised with respect to the Plan.

     (gg) “SAR” means a stock appreciation right granted under Section 6.

     (hh) “Section 16 Person” means a person who, with respect to the Shares, is subject to
Section 16 of the Exchange Act.

     (ii) “Share” means a share of Common Stock, as adjusted in accordance with Section 12.

     (jj) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing,
as defined in Section 424(f) of the Code.

     (kk) “Tandem SAR” means a SAR granted under Section 6 in connection with a related
Option.

3. Shares Available Under the Plan.

     (a) Subject to adjustment under Section 12, 20,928,000* Shares are reserved
and available for distribution to Participants and their beneficiaries under the Plan.

     (b) The following Shares will continue to be available for distribution under this Plan
through the grant of additional Awards:

	 	•	 	Shares subject to any Award that is canceled, expires or lapses for any
reason;
	 
	 	•	 	Shares used to pay the exercise or purchase price under any Award, or to
satisfy any tax withholding obligation attributable to any Award, whether such
Shares are withheld by the Company upon exercise of the Award or are tendered by
the Participant from previously owned Shares; and
	 
	 	•	 	Shares available under any Award to the extent the Award is settled in cash
rather than Shares.

     (d) The payment of stock dividends on outstanding Awards will not reduce the number of Shares
available for distribution under the Plan.

 

	*	 	This reflects 9,928,000 shares reserved
for issuance under the Plan upon its adoption in 2003, and an increase of
11,000,000 shares (subject to the approval of the Company’s stockholders)
in April 2005, for a total of 20,928,000 shares reserved for issuance under the
Plan.

- 5 -

 

4. Eligibility, Award Limits and Other General Matters.

     (a) All Employees, Directors and Consultants selected by the Committee for their potential to
contribute to the success of the Company are eligible to participate in this Plan. Only Employees
are eligible to receive Incentive Stock Options.

     (b) The following limits will apply to Awards under the Plan:

	 	•	 	No Participant may receive Options or Freestanding SARs or Tandem SARs during
any one (1) fiscal year of the Company covering in the aggregate more than
2,000,000 Shares; provided, that a Share subject to a Tandem SAR and a related
Option shall only count as one Share against this limitation.
	 
	 	•	 	No Participant may receive Restricted Stock Units, Restricted Stock Awards
or, to the extent payable in or measured by the value of Shares, Long-Term
Performance Awards during any one (1) fiscal year of the Company covering in the
aggregate more than 1,000,000 Shares.
	 
	 	•	 	No Participant may receive Long-Term Performance Awards payable in cash and
not measured by the value of Shares during any one (1) fiscal year of the
Company covering an amount in excess of $2,500,000.

     (c) The Committee, in its discretion, may grant Awards on terms and conditions that vary from
Participant to Participant.

     (d) Each Award under this Plan, other than an award of Common Stock Equivalents, will be
evidenced by a written Award Agreement between the Company and the Participant in such form and
containing such provisions, not inconsistent with this Plan, as the Committee, in its discretion,
determines from time to time. Common Stock Equivalents will be evidenced by the Company on a
book-entry basis and administered in accordance with this Plan.

     (e) The Company may, but will not be required to, issue any fractional Share under the Plan.
The Committee may provide for the elimination of fractions or for the settlement of fractions in
cash.

     (f) This Plan does not constitute a contract of employment, and adoption of the Plan or the
grant of any Award will not confer upon any Employee any right to continued employment or interfere
in any way with the right of the Company (or its Parent or any Subsidiary) to terminate the
employment of any Employee at any time. This Plan or the grant of any Award does not confer upon
any Director any right to continuation of service as a director or any right to nomination as a
Director, or interfere in any way with any rights that a Director or the Company may have to
terminate his or her directorship at any time.

     (g) Unless otherwise determined by the Committee, Awards may not be sold, pledged, assigned,
transferred or disposed of in any manner other than by will or by the

- 6 -

 

laws of descent or distribution, and during the lifetime of a Participant may be exercised
only by a Participant. The Committee may, in its discretion, provide for the transfer of an Award
by a Participant to any member of the Participant’s immediate family. In such case, the Award will
be exercisable only by such transferee. Following transfer, any such Award will continue to be
subject to the same terms and conditions as were applicable immediately prior to the transfer. For
purposes of this Section 4(g), a Participant’s “immediate family” shall mean any of the following
who have acquired the Award from the Participant through a gift or domestic relations order: a
child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, trusts for the exclusive benefit of these persons and any other entity owned solely
by these persons, and such other persons and entities as shall be eligible to be included as
transferees in the Form S-8 Registration Statement under the Securities Act of 1933, as amended,
filed or to be filed by the Company to register shares of Common Stock to be issued upon the
exercise of Awards granted under the Plan.

     (h) Unless otherwise determined by the Committee, the date of grant of an Award will be the
date on which the Committee makes the determination to grant such Award.

     (i) The Committee may determine the manner in which the exercise price or purchase price is
payable with respect to any Award, which may include: (i) cash in the form of currency or check or
other cash equivalent acceptable to the Company; (ii) nonforfeitable, unrestricted Shares owned by
the Participant which have a Fair Market Value at the time of exercise that is equal to the price
payable by the Participant; (iii) net exercise, (iv) any other legal consideration that the
Committee may deem appropriate, including restricted Shares or other Shares that are subject to
risk or forfeiture or restrictions on transfer, on such basis as the Committee may determine; or
(v) any combination of the foregoing. Unless otherwise determined by the Committee, whenever any
exercise price or purchase price is paid in whole or in part by forfeitable or restricted Shares,
the Shares received by the Participant upon the exercise or receipt of the Award shall be subject
to the same risks of forfeiture or restrictions on transfer as those that applied to the Shares
surrendered by the Participant, provided that such risks of forfeiture and restrictions on transfer
shall apply only to the same number of Shares received by the Participant as applied to the
forfeitable or restricted Shares surrendered by the Participant. Any Award may provide for deferred
payment of the exercise price from the proceeds of the sale of such Shares through a bank or
broker.

     (j) The Company may not make loans to Participants for the purpose of paying the exercise
price, purchase price or taxes related to any Award. Any of the methods of payment specified in
clause (i) above shall not be deemed to be a loan by the Company.

     (k) Unless otherwise determined by the Committee upon the grant of an Award, in the event of a
Change in Control of the Company the following provisions shall apply to Awards granted before the
date the amended and restated Plan (as presented to stockholders in the Company’s 2005 proxy) is
approved by the stockholders :

- 7 -

 

	 	•	 	any Award outstanding on the date of such Change in Control that is not yet
exercisable and vested on such date shall become fully exercisable and vested,
and will remain exercisable by the Participant for a period of at least ninety
(90) days from the date the Participant receives written notice of the Change in
Control and the Participant’s exercise rights;
	 
	 	•	 	all restrictions imposed on Restricted Stock will immediately lapse;
	 
	 	•	 	all Performance Objectives applicable to Awards will be deemed fully met at
target amounts;
	 
	 	•	 	each outstanding Common Stock Equivalent shall convert into Shares (as
provided in Section 10(d)) immediately prior to the Change in Control; and
	 
	 	•	 	each outstanding Award shall be assumed by the successor entity (if any) or
by a Parent or Subsidiary of the successor entity (if any).

     (l) Unless otherwise determined by the Committee upon the grant of an Award, with respect to
Awards granted on or after the date the amended and restated Plan (as presented to stockholders in
the Company’s 2005 proxy) is approved by the stockholders, the following provisions shall apply in
the event of a participant’s termination of employment without Cause within twelve (12) months
following a Change in Control of the Company:

	 	•	 	each outstanding Award assumed or substituted for by the successor entity (if
any) or by a Parent or Subsidiary of the successor entity (if any) shall become
fully exercisable and vested, and will remain exercisable by the Participant for
a period of at least ninety (90) days from the date of the Participant’s
termination of employment without Cause;
	 
	 	•	 	all restrictions imposed on Restricted Stock will immediately lapse;
	 
	 	•	 	all Performance Objectives applicable to Awards will be deemed fully met at
target amounts; and
	 
	 	•	 	each outstanding Common Stock Equivalent shall convert into Shares (as
provided in Section 10(d)) immediately prior to the Change in Control.

5. Options.

     (a) Grant of Options. The Committee, in its discretion, may grant Options to eligible
Employees, Directors and Consultants, subject to the following:

	 	•	 	each grant will specify the number of Shares issuable upon exercise of the
Option;
	 
	 	•	 	each grant will specify whether it is intended to be an Incentive Stock
Option or a Nonstatutory Stock Option;

- 8 -

 

	 	•	 	each grant will specify the term during which the Option is exercisable, but
no Option will be exercisable more than 10 years after its date of grant;
	 
	 	•	 	each grant will specify the exercise price for the Shares issuable upon
exercise of an Option, which price shall not be less than the Fair Market Value
of the Shares on the date of grant;
	 
	 	•	 	each grant will specify the form of consideration to be paid in satisfaction
of the exercise price and the manner of payment of such consideration; and
	 
	 	•	 	each grant will specify the other terms and conditions under which the Shares
underlying the Option may be purchased, including any vesting requirements and
the treatment of the Option upon termination of the Participant’s employment or
directorship (including by reason of death or disability).

     (b) Repricing Prohibited. Except for adjustments made under Section 12, the exercise
price for any outstanding Option may not be declared or reduced after the date of grant and any
outstanding Option may not be surrendered to the Company as consideration for the grant of a new
Option with a lower exercise price without approval of the Company’s stockholders.

     (c) Additional Rules for Incentive Stock Options. The following additional rules
shall apply to each Option intended to be granted as an Incentive Stock Option:

	 	•	 	the aggregate Fair Market Value (determined on the grant date(s)) of the Shares with
respect to which Incentive Stock Options are exercisable for the first time by any
Employee during any calendar year (under all plans of the Company and its Subsidiaries and
any Parent of the Company) shall not exceed $100,000;
	 
	 	•	 	the exercise price of an Incentive Stock Option shall be not less than one hundred and
ten percent (110%) of the Fair Market Value of a Share on the grant date that if on the
grant date, the Employee (together with persons whose stock ownership is attributed to the
Employee pursuant to Section 424(d) of the Code) owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or any of its
Subsidiaries or any Parent of the Company; and
	 
	 	•	 	no Incentive Stock Option will be exercisable more than 5 years after its date of grant
if it is granted to an Employee who, together with persons whose stock ownership is
attributed to the Employee pursuant to Section 424(d) of the Code, owns stock possessing
more than 10% of the total combined voting power of all classes of the stock of the
Company or any of its Subsidiaries or any Parent of the Company.

6. SARs.

     (a) Tandem SARs. The Committee may grant Tandem SARs to eligible Employees in
connection with all or part of an Option, either concurrently with the grant

- 9 -

 

of the Option or at any time thereafter during the term of the Option, subject to the following:

	 	•	 	the Tandem SAR will entitle the Participant to exercise it by surrendering to
the Company the unexercised Option in connection with which the Tandem SAR was
granted. The Participant will receive in exchange from the Company an amount
equal to the excess of (i) the Fair Market Value on the date of exercise of the
Tandem SAR of the Shares covered by the surrendered Option, over (ii) the
exercise price of the Shares covered by the surrendered Option, provided that
the Committee may place limits on the amount that may be paid upon exercise of a
Tandem SAR, which limits will not restrict the exercisability of the related
Option;
	 
	 	•	 	amounts payable pursuant to a Tandem SAR may be paid, in the sole discretion
of the Committee, in cash, Shares, or a combination thereof.
	 
	 	•	 	when a Tandem SAR is exercised, the related Option will cease to be
exercisable;
	 
	 	•	 	a Tandem SAR will be exercisable only when and to the extent that the related
Option is exercisable and shall expire no later than the date on which the
related Option expires; and
	 
	 	•	 	each grant will specify the other terms and conditions under which the Tandem
SAR is exercisable, including any vesting requirements and the treatment of the
Tandem SAR upon termination of the Participant’s employment (including by reason
of death or disability).

     (b) Freestanding SARs. The Committee may grant Freestanding SARs to eligible Employees
without related Options, subject to the following:

	 	•	 	the Freestanding SAR will entitle the Participant, by exercising the
Freestanding SAR, to receive from the Company an amount equal to the excess of
(i) the Fair Market Value of the Shares covered by the exercised portion of the
Freestanding SAR, as of the date of such exercise, over (ii) the Fair Market
Value of the Shares covered by the exercised portion of the Freestanding SAR on
the date of grant, provided that the Committee may place limits on the aggregate
amount that may be paid upon exercise of a Freestanding SAR;
	 
	 	•	 	amounts payable pursuant to a Freestanding SAR may be paid, in the sole
discretion of the Committee, in cash, Shares, or a combination thereof.
	 
	 	•	 	each grant will specify the number of Shares covered by the Freestanding SAR;
	 
	 	•	 	each grant will specify the term during which the Freestanding SAR is
exercisable, but no Freestanding SAR will be exercisable more than 10 years
after its date of grant; and
	 
	 	•	 	each grant will specify the other terms and conditions under which the
Freestanding SAR is exercisable, including any vesting requirements

- 10 -

 

	 	 	 	and the treatment of the Freestanding SAR upon termination of the Participant’s
employment (including by reason of death or disability).

7. Restricted Stock Awards.

     (a) Grant of Restricted Stock. The Committee may grant Restricted Stock to eligible
Employees on such terms and conditions as the Committee may determine, subject to the following:

	 	•	 	each grant of Restricted Stock will provide that the Restricted Stock will be
subject to a “substantial risk of forfeiture” within the meaning of Section 83
of the Code, on such terms and for such period as may be determined by the
Committee;
	 
	 	•	 	each grant will constitute an immediate transfer of the ownership of the
Restricted Stock to the Participant in consideration for the performance of
services. Unless otherwise determined by the Committee, a Restricted Stock Award
will entitle the Participant to dividend, voting and other ownership rights
during the period in which the Restricted Stock is subject to substantial risk
of forfeiture;
	 
	 	•	 	each grant may be made without additional consideration from the Participant
or in consideration of a payment by the Participant that is less than the Fair
Market Value of the Restricted Stock on the date of grant;
	 
	 	•	 	each grant will provide that during the period in which the Stock is subject
to substantial risk of forfeiture, the transferability of the Restricted Stock
will be prohibited or restricted in the manner and to the extent determined by
the Committee. Such restrictions may include rights of repurchase or first
refusal in favor of the Company or provisions subjecting the Restricted Stock to
a continuing substantial risk of forfeiture in the hands of any transferee;
	 
	 	•	 	any grant or the vesting of any Restricted Stock may be further conditioned
upon the attainment of Performance Objectives established by the Committee in
accordance with the applicable provisions of Section 9 of this Plan regarding
Long-Term Performance Awards; and
	 
	 	•	 	any grant may require that any or all dividends or other distributions paid
on the Restricted Stock during the period that it is subject to a substantial
risk of forfeiture be automatically set aside and reinvested on an immediate or
deferred basis in additional Shares, which may be subject to the same
restrictions as the underlying Restricted Stock or such other restrictions as
the Committee may determine.

     (b) Repurchase Option. Unless the Committee determines otherwise, the Award Agreement
for each Restricted Stock Award will grant the Company a repurchase option exercisable upon the
voluntary or involuntary termination of the Participant’s employment with the Company for any
reason (including death or disability), on such terms and conditions as the Committee shall
determine.

- 11 -

 

     (c) Certificates. Shares of Restricted Stock shall be evidenced in such manner as the
Committee may deem appropriate, including book-entry registration or by the issuance of one or more
certificates. Any certificates representing Restricted Stock shall bear a legend as the Committee
shall deem appropriate referring to the applicable terms, conditions and restrictions. The
Committee may require that each Certificate representing Restricted Stock be held in custody by the
Company, together with a stock power endorsed in blank by the Participant, until such Restricted
Stock is no longer subject to a substantial risk of forfeiture.

8. Restricted Stock Units.

     (a) Grant. Restricted Stock Units may be granted at any time and from time to time as
determined by the Committee. Each Restricted Stock Unit grant shall be evidenced by an Award
Agreement that shall specify such other terms and conditions as the Committee, in its sole
discretion, shall determine, including all terms, conditions, and restrictions related to the
grant, the number of Restricted Stock Units and the form of payout.

     (b) Value of Restricted Stock Unit. Each Restricted Sock Unit shall have an initial
value equal to the Fair Market Value of a Share on the date of grant.

     (c) Vesting Criteria and Other Terms. The Committee shall set vesting criteria in its
discretion, which, depending on the extent to which the criteria are met, will determine the number
of Restricted Stock Units that will be paid out to the Participant. The Committee may set vesting
criteria based upon the achievement of Company-wide, business unit, or individual goals (including,
but not limited to, continued employment or service), or any other basis determined by the
Committee in its discretion. Any grant or the vesting of any Restricted Stock Unit may be further
conditioned upon the attainment of Performance Objectives established by the Committee in
accordance with the applicable provisions of Section 9 of this Plan regarding Long-Term Performance
Awards.

     (d) Earning Restricted Stock Units. Upon meeting the applicable vesting criteria, the
Participant shall be entitled to receive a payout as specified in the Restricted Stock Unit Award
Agreement. Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units,
the Committee, in its sole discretion, may reduce or waive any vesting criteria that must be met to
receive a payout.

     (e) Form and Timing of Payment. Payment of earned Restricted Stock Units shall be
made as soon as practicable after the date(s) set forth in the Restricted Stock Unit Award
Agreement. The Committee, in its sole discretion, may permit a Participant to defer receipt of the
payment of earned Restricted Stock Units, and any such deferral elections shall be subject to such
rules and procedures as shall be determined by the Committee in its sole discretion. The
Committee, in its sole discretion, may pay earned Restricted Stock Units in cash, Shares, or a
combination thereof. Shares represented by Restricted Stock Units that are fully paid in cash
again shall be available for grant under the Plan.

- 12 -

 

     (f) Cancellation. On the date set forth in the Restricted Stock Unit Award Agreement,
all unearned Restricted Stock Units shall be forfeited to the Company.

     (g) Dividend Equivalents. Participants holding unvested Restricted Stock Units shall
be entitled to be credited with all dividends and other distributions paid with respect to the
underlying Shares, unless otherwise provided in the Award Agreement. Unless otherwise determined
by the Committee, such dividends and distributions shall be deemed reinvested in Restricted Stock
Units, which shall be subject to the same terms and conditions as the underlying Award.

9. Long-Term Performance Awards. The Committee may grant Long-Term Performance Awards to
eligible Employees on such terms and conditions as the Committee may determine, subject to the
following:

	 	•	 	each grant will specify the payment for which the Participant is eligible,
which may be a fixed or variable number of Shares (subject to adjustment in
accordance with Section 12), or a fixed or variable cash bonus. The Committee
may provide any Participant with a choice to elect between Shares, cash and a
combination of Shares and cash;
	 
	 	•	 	each grant will specify the nature, length and starting date of the
performance period during which the payment under the Long-Term Performance
Award may be earned;
	 
	 	•	 	each grant will specify the Performance Objectives that are to be achieved
by the Participant and, to the extent that any payments under the Long-Term
Performance Award are variable, the formula under which such payments are to be
computed;
	 
	 	•	 	each grant will specify the terms and manner of payment of any Shares or
amounts earned under the Long-Term Performance Award;
	 
	 	•	 	a grant may provide, in the Committee’s discretion, for the payment of
dividend equivalents in cash or additional Shares on a current, deferred or
contingent basis; and
	 
	 	•	 	no payment will be made with respect to a Long-Term Performance Award until
the Committee has determined that the relevant Performance Objectives have been
achieved.

10. Awards to Outside Directors.

     (a) Award of Common Stock Equivalents. On an annual basis, each Outside Director may
elect to receive up to 50% of his or her compensation in cash and the balance in Common Stock
Equivalents. Such election shall be made no later than December 31st of each calendar year for the
following calendar year, provided that during the first fiscal year during which the Plan is in
effect, the elections made by the Outside Directors with respect to the common stock equivalents
provided for in the Company’s 1993 Director Stock Option Plan shall be deemed to be their elections
under this Plan. Beginning on April 1, 2003, and on the first business day of each of the Company’s
fiscal quarters during the term of this Plan, the Company shall grant to each Outside Director that
number of Common Stock Equivalents equal in value to that portion of the Outside Director’s
Quarterly Compensation for the immediately preceding

- 13 -

 

quarter that he or she has elected to receive in Common Stock Equivalents divided by the Fair
Market Value of the Common Stock on such day.

     (b) Book-Entry Account; Nontransferability. The number of Common Stock Equivalents
awarded to each Outside Director shall be credited to a book-entry account established in the name
of the Outside Director. The Company’s obligation with respect to such Common Stock Equivalents
will not be funded or secured in any manner. No Common Stock Equivalent may be sold, pledged,
assigned, transferred or disposed of in any manner, other than by will, the laws of descent or
distribution or pursuant to a qualified domestic relations order, and may be exercised during the
life of the Outside Director only by the Outside Director or a permitted transferee.

     (c) Dividends. If the Company pays a cash dividend with respect to the Shares at any
time while Common Stock Equivalents are credited to an Outside Director’s account, additional
Common Stock Equivalents shall be credited to the Outside Director’s account equal to (i) the
dollar amount of the cash dividend the Outside Director would have received had he or she been the
actual owner of the Shares to which the Common Stock Equivalents then credited to the Outside
Director’s account relate, divided by (ii) the Fair Market Value of one Share on the dividend
payment date.

     (d) Conversion. As soon as practicable following the date on which an Outside Director
ceases to be a member of the Board for any reason, or as otherwise provided by this Plan, the
Company shall deliver to the Outside Director (or his or her designated beneficiary or estate) a
number of Shares equal to the whole number of Common Stock Equivalents then credited to the Outside
Director’s account, or at the Outside Director’s option, shall have the Shares credited to an
account for the Director with a brokerage firm of the Outside Director’s choosing.

     (e) Stockholder Rights. An Outside Director (or his or her designated beneficiary or
estate) shall not be entitled to any voting or other stockholder rights as a result of the credit
of Common Stock Equivalents to the Outside Director’s account, until certificates representing
Shares are delivered to the Outside Director (or his or her designated beneficiary or estate) upon
conversion of the Outside Director’s Common Stock Equivalents to Shares pursuant to Section 10(d).

     (f) Discretionary Awards. Outside Directors may, in the sole discretion of the
Committee, receive additional Awards under this Plan, subject to such terms and conditions as
determined by the Committee in accordance with the terms of the Plan.

11. Administration.

     (a) The Committee. This Plan shall be administered by one or more committees appointed
by the Board. If the Board does not appoint a specific committee, the Compensation Committee of the
Board, or a subcommittee appointed by the Compensation Committee, shall administer the Plan. Each
member of the Committee shall meet such standards of independence as the Board shall determine from
time to time. With respect to Awards granted to Section 16 Persons or intended to qualify as
“performance-based” compensation under Section 162(m) of the Code, the Committee

- 14 -

 

shall consist solely of not less than two (2) Directors who both are (a) “non-employee directors”
under Rule 16b-3, and (b) “outside directors” under Section 162(m) of the Code. The interpretation
and construction by the Committee of any provision of this Plan or of any Award Agreement or other
document evidencing the grant of any Award and any determination by the Committee pursuant to any
provision of this Plan or any such Award Agreement or other document, shall be final and
conclusive. No member of the Committee shall be liable to any person for any such action taken or
determination made in good faith.

     (b) Delegation of Authority. The Committee, in its sole discretion and on such terms
and conditions as it may provide, may delegate all or any part of its authority and powers under
the Plan to one or more Directors or officers of the Company; provided, however, that the Committee
may not delegate its authority and powers (a) with respect to Section 16 Persons, or (b) in any way
which would jeopardize the Plan’s qualification under Section 162(m) of the Code or Rule 16b-3.

     (c) Powers of the Committee. Subject to the provisions of the Plan, and in the case of
the Committee, subject to the specific duties delegated by the Board to the Committee, the
Committee shall have the authority, in its discretion:

	 	•	 	to determine the Fair Value of the Common Stock;
	 
	 	•	 	to select the Employees and Consultants to whom Awards are granted;
	 
	 	•	 	except as provided in Section 10, to determine whether and to what extent
Awards are granted;
	 
	 	•	 	except as provided in Section 10, to determine the number of Shares to be
covered by each Award;
	 
	 	•	 	to approve forms of agreement for use under the Plan;
	 
	 	•	 	to determine the terms and conditions, not inconsistent with the terms of the
Plan, of each Award;
	 
	 	•	 	to construe and interpret the provisions of the Plan;
	 
	 	•	 	to prescribe, amend and rescind rules and regulations relating to the Plan;
	 
	 	•	 	to determine whether and under what circumstances an Award may be settled in
cash instead of Common Stock or Common Stock instead of cash;
	 
	 	•	 	to modify or amend any Award (subject to the restrictions contained in this
Plan, including Sections 5(b) (repricing), 9 (Outside Directors) and 15(b)
(rights of Participants));
	 
	 	•	 	to authorize any person to execute on behalf of the Company any instrument
required to effect the grant of an Award approved by the Committee or provided
for in this Plan; and
	 
	 	•	 	to make all other determinations deemed necessary or advisable for
administering the Plan.

- 15 -

 

12. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale.

     (a) Changes in Capitalization. Subject to any required action by the stockholders of
the Company, the number of shares of Common Stock covered by each outstanding Award, the number of
Shares and other Awards provided for in Section 10 (Outside Directors), the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to which no Awards have
yet been granted or which have been returned to the Plan upon cancellation or expiration of an
Award, and the limitations set forth in Section 4(b), as well as the price per share of Common
Stock covered by each such outstanding Award, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, spin-off or split-up or combination or reclassification of the Common Stock,
or any other increase or decrease in the number of issued shares of Common Stock effected without
receipt of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number
or price of shares of Common Stock subject to an Award.

     (b) Dissolution or Liquidation. Subject to Sections 4(k) and 4(l) (Change in Control),
in the event of the proposed dissolution or liquidation of the Company, to the extent that an Award
has not been previously exercised, it will terminate immediately prior to the consummation of such
proposed action.

     (c) Merger or Asset Sale. Subject to Sections 4(k) and 4(l) (Change in Control), if
the Company is merged with or into another corporation, or substantially all of its assets are
sold, each outstanding Award shall be assumed or an equivalent Award substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. If the successor corporation
does not agree to assume an Award or to substitute an equivalent Award, the Committee shall provide
for the Participant to have the right to exercise the Award, in whole or in part, including Awards
that would not otherwise be exercisable. If the Committee makes an Award exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the Committee shall notify
the Participant that the Award shall be exercisable for at least fifteen (15) days from the date of
such notice, and the Award will terminate upon the expiration of the notice period. For the
purposes of this Section, an Award shall be considered assumed if, immediately following the merger
or sale of assets, the Award confers the right to purchase, for each underlying Share subject to
the Award immediately prior to the merger or sale of assets, the consideration (whether stock, cash
or other securities or property) received in the merger or sale of assets by holders of Common
Stock for each Share held on the effective date of the transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a majority of the
outstanding Shares); provided, that if the consideration received in the merger or sale of
assets was not solely common stock of the successor corporation or

- 16 -

 

its Parent, the Committee may, with the consent of the successor corporation and the Participant,
provide for the consideration to be received upon the exercise of the Award, for each underlying
Share, to be solely common stock of the successor corporation or its Parent equal in Fair Market
Value to the per Share consideration received by holders of the Common Stock in the merger or sale
of assets.

13. Conditions Upon Issuance of Shares.

     (a) Legal Compliance. Shares shall not be issued pursuant to the exercise of an Award
unless the exercise of such Award and the issuance and delivery of such Shares shall comply with
all relevant provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange or quotation system upon which the Shares may then be listed or quoted, and
shall be further subject to the approval of counsel for the Company with respect to such
compliance.

     (b) Investment Representations. As a condition to the exercise of an Award, the
Company may require the person exercising such Award to represent and warrant at the time of any
such exercise that the Shares issuable upon exercise of the Award are being purchased only for
investment and without any present intention to sell or distribute such Shares if, in the opinion
of counsel for the Company, such a representation is necessary or desirable.

14. Liability of Company. The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.

15. Reservation of Shares. During the term of this Plan, the Company will at all times
reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements
of the Plan.

16. Amendment and Termination of the Plan.

     (a) Amendment and Termination. The Board may at any time amend, alter, suspend or
terminate the Plan, but no amendment shall increase the number of Shares available for issuance
under the Plan (except as contemplated by Section 12) or increase any of the limitations provided
for in Section 4(b) without the further approval of the stockholders of the Company.

     (b) Effect of Amendment or Termination. No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any Participant, unless mutually agreed between
the Participant and the Committee, which agreement must be in writing and signed by the Participant
and the Company.

- 17 -

 

17. Term of the Plan. The Plan shall become effective upon its approval by the stockholders
of the Company as described in Section 23. It shall continue in effect for new Awards until April
19, 2015, unless sooner terminated under Section 16.

18. Tax and Social Security Indemnity. Each Participant shall indemnify the Company against
any tax arising in respect of the grant or exercise of an Award which is a liability of the
Participant but for which the Company is required to account under the laws of any relevant
jurisdiction. The Company may recover the tax from the Participant in such manner as the Committee
deems appropriate, including:

     (a) withholding Shares or payment upon the exercise of an Award;

     (b) deducting the necessary amount from the Participant’s compensation; or

     (c) requiring the Participant to make a cash payment to the Company.

19. Options Granted to Employees of French Subsidiaries.

     (a) Purpose. Options granted under the Plan to employees of French subsidiaries are
intended to qualify under the French regulations as provided in articles 208-1 to 208-8-2 of the
French Company Act (Code des Societes). The purpose of this Section is to specify the applicable
rules for Options granted to French Employees and shall not be applicable to any other Employee of
the Company.

     (b) General. Options granted to French Employees under the Plan are subject to the
provisions of the Plan and any related Award Agreement unless otherwise provided in this Section.

     (c) Eligible Participants. Only Employees of French Subsidiaries are eligible to
receive Options granted pursuant to this Section. Payment of Director fees by the Company shall not
be sufficient to constitute employment for this purpose. Employees of French subsidiaries may not
be granted Options if, at the date of grant, they hold more than ten percent (10%) of the Common
Stock of the Company.

     (d) Options. Eligible Employees may be granted Options as provided in Section 5 of the
Plan. This Section shall not apply to the grant of SARs, Restricted Stock or Long-Term Performance
Awards.

     (e) Option Price. The exercise price of each Option granted pursuant to this Section
shall be determined as set forth in the Plan but it shall not be less than 80% of the average Fair
Market Value of the Common Stock during the twenty (20) market trading days prior to the date of
the grant. The exercise price shall remain unchanged once the Option is granted. Any authority of
the Committee to reduce the Option exercise price shall, with respect to Options granted to
Employees of French Subsidiaries, be limited to the extent that such reduction may not be to a
price less than 80% of the average Fair

- 18 -

 

Market Value of the Common Stock during the twenty (20) market trading days prior to the date of
such reduction.

     (f) Exercise of the Option. Upon exercise of an Option granted pursuant to this
Section, Employees of French Subsidiaries will receive Shares of Common Stock and may not settle
any Option in cash.

     (g) Qualification of Plan. In order to have the Plan qualify in France, any other
provision of the Plan that would be inconsistent with French company law or tax law requirements
shall not apply to Employees of French Subsidiaries.

20. Options Granted to Employees of Italian Subsidiaries.

     (a) Purpose. Options granted under the Plan to Employees of Italian Subsidiaries are
intended to qualify under Italian law. The purpose of this Section is to specify the applicable
rules for Options granted to Italian Employees and shall not be applicable to any other Employee of
the Company.

     (b) General. Options granted to Italian Employees under the Plan are subject to the
provisions of the Plan and any related Award Agreement unless otherwise provided in this Section.

     (c) Eligible Participants. Only Employees of Italian Subsidiaries may be granted
Options granted pursuant to this Section. The amount of Shares (or related option rights) assigned
to each Italian Employee shall not exceed 10% of the voting rights in the ordinary shareholders’
meeting or 10% of the capital or equity of the offering Company. This Section shall not apply to
the grant of SARs, Restricted Stock or Long-Term Performance Awards granted.

     (d) Option Price. The exercise price of Options granted to Italian Employees shall be
the higher of (i) the Fair Market Value determined as set forth in the Plans, and (ii) the average
closing price of the Common Stock during the month preceding the grant date. The exercise price
shall remain unchanged once the Options are granted. Any authority of the Committee to reduce the
Option exercise price shall, with respect to Options granted to Employees of Italian Subsidiaries,
be limited to the extent that such reduction may not be to a price less than the price calculated
under (ii) above on the grant date.

     (e) Qualification of Plan. In order to have the Plan qualify in Italy, any other
provision of the Plan that would be inconsistent with Italian law shall not apply to Employees of
Italian subsidiaries.

21. Options Granted to Employees of Indian and Dutch Subsidiaries.

     (a) Purpose. The purpose of this Section is to specify the applicable rules for
Options granted to Indian and Dutch Employees and shall not be applicable to any other Employee of
the Company.

- 19 -

 

     (b) General. Options granted to Indian and Dutch Employees under the Plan are subject
to the provisions of the Plan and any related Award Agreement unless otherwise provided in this
Section.

     (c) Exercise of Options. The consideration to be paid for Options exercised by Indian
and Dutch Employees under the Plan shall be limited to a “cashless exercise”, which is delivery of
a properly executed exercise notice together with such other documentation as the Committee and any
broker approved by the Company, if applicable, shall require to effect an exercise of the Option
and delivery to the Company of the sale or loan proceeds required to pay the exercise price.

22. Foreign Jurisdictions. In order to facilitate the making of any Award under this Plan,
the Committee may provide for special terms for Awards to Participants who are foreign nationals or
who are employed by the Company (or its Parent or any Subsidiary) outside of the United States, as
the Committee may consider necessary or appropriate to accommodate differences in local law, tax
policy or custom. In addition, the Committee may approve such supplements to, or amendments,
restatements or alternative versions of, this Plan as it may consider necessary or appropriate for
such purposes without affecting the terms of this Plan as in effect for any other purpose, provided
that no such supplements, amendments, restatements or alternative versions shall include any
provisions that are inconsistent with the terms of this Plan, as then in effect, unless the Plan
could have been amended to eliminate such inconsistency without further approval by the
stockholders of the Company.

23. Stockholder Approval. This Plan shall be subject to approval by the stockholders of the
Company at the first annual meeting of stockholders held subsequent to the Board of Director’s
approval of the Plan. Such stockholder approval shall be obtained as required under applicable
state and federal law. As of the date of stockholder approval, no new awards may be made under the
Existing Plans. Any awards outstanding under such plans as of the date of stockholder approval of
this Plan shall remain outstanding and shall otherwise continue to be subject to the terms and
conditions of such plans.

- 20 -

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