Document:

exv4w1

 

EXHIBIT 4.1

SYSTEM MANAGEMENT ARTS INCORPORATED

1993 Stock Option Plan

	1.  	Statement of Purpose.

     The purpose of this Stock Option Plan (the “Plan”) is to induce key personnel, including
employees, directors, independent contractors, and other persons rendering valued services, to
remain in the employ or service of System Management Arts Incorporated (the “Corporation” and,
together as a group with any of its subsidiaries, the “Company”), to attract new personnel and to
encourage such personnel to secure or increase on reasonable terms their equity participation in
the Corporation through the ownership of its common shares (the “Common Stock”). The Board of
Directors of the Corporation (the “Board”) believes that the granting of options (the “Options”) to
purchase Common Stock upon the terms and subject to the conditions set forth in this Plan will
promote continuity of management and increased incentive and personal interest in the welfare of
the Company by those who are or may become primarily responsible for shaping and carrying out the
long range plans of the Company and securing its continued growth and financial success. Options
may be designated in whole or in part as (a) “incentive stock options”, within the meaning of
Section 422(b) and successor provisions of the Internal Revenue Code of 1986, as amended (the
“Code”), or (b) options which are not incentive stock options, as determined at the time of Option
grant by the Board or any Committee of the Board constituted in accordance with Section 5 hereof
(the “Committee”).

	2.  	Stock Option Agreements.

     Each Option granted under this Plan shall be evidenced by a Stock Option Agreement (an “Option
Agreement”) between the Corporation and the recipient of such Option (a “Participant”) effective as
of the date of grant. An Option Agreement may contain such terms and conditions, not inconsistent
with the provisions of this Plan, as may be specified by the Board, the Committee or any officer of
the Corporation pursuant to lawful delegation by the Board or Committee at the date of Option
grant. The terms and conditions of Option Agreements need not be identical.

	3.  	Shares Subject to the Plan.

     An aggregate of 12,000,000 shares of the authorized and unissued shares of Common Stock have
been reserved for issuance upon the exercise of Options granted under this Plan. The number of
shares so reserved may from time to time be reduced to the extent that a corresponding number of
issued and outstanding shares of Common Stock are purchased by the Corporation and set aside for
issue upon the exercise of Options. If any Options expire or terminate for any reason without
having been exercised in full, the shares subject thereto shall become available for future grant
of Options under the Plan.

	4.  	Administration.

     The Plan shall be administered in all respects by the Committee; provided, that if at any time
the Committee shall not be duly constituted, the Board shall perform the duties and functions
ascribed herein to the Committee. Subject to the express provisions of the Plan, the Committee
shall have complete authority, in its discretion, to interpret the Plan; to prescribe, amend and
rescind rules and regulations relating to the Plan and its operation; to establish the terms and
conditions of all Option Agreements; to determine the Participants to whom and the

 

 

times and the prices at which Options shall be granted; to establish the periods during which
Options may be exercised, in whole or in part, the number of shares of Common Stock to be subject
to each Option, whether each Option shall be exercisable immediately or in installments and, if in
installments, the time and amount of each installment; to determine whether each Option shall be in
whole or in part an incentive stock option or an Option which is not an incentive stock option; and
to make all other determinations necessary or advisable for the administration of the Plan. In
making such determinations, the Committee may take into account the nature of the services rendered
by the respective Participants, their present and potential contributions to the success of the
Company and such other factors as the Committee, in its discretion, shall deem relevant. The
Committee’s determination on all of the matters referred to in this Section 4 shall be conclusive
and binding on each Participant.

	5.  	The Committee.

     The Committee shall consist of at least three individuals who may, but need not, be members of
the Board and all of whom shall be “disinterested persons” within the meaning of Rule
16b-3(c)(2)(i) of the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended. The Committee shall be appointed by the Board, which may at any time and from time to
time remove any member of the Committee, with or without cause, appoint additional members of the
Committee and fill vacancies, however caused, in the Committee. A majority of the members of the
Committee shall constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination of the Committee reduced to writing and
signed by all of the members of the Committee shall be fully as effective as if it had been made at
a meeting duly called and held.

	6.  	Eligibility.

     Options which are intended in whole or in part to qualify as incentive stock options may be
granted only to key employees of the Company. Options which are not incentive stock options may be
granted to any employees of the Company, independent contractors hired to perform services for the
Company and members of the Board who are not employees of the Company, provided that options
granted to such Board members shall be subject to such conditions and restrictions as shall be
required to maintain the qualification of all members of the Committee as “disinterested persons”
within the meaning of Section 5 hereof.

	7.  	Option Prices.

     A. The initial per share exercise price of any Option which is an incentive stock option shall
not be less than the fair market value of a share of Common Stock on the date of Option grant;
provided, however, that, in the case of a Participant who owns more than 10% of the total combined
voting power of the Common Stock issued and outstanding at the date of grant of an Option intended
to qualify as an incentive stock option, the initial per share exercise price shall at least 110%
of the fair market value of the Common Stock.

     B. The initial per share exercise price of any Option which is not an incentive stock option
shall be established by the Committee at the date of Option grant, but shall not be less than the
par value of the underlying shares.

     C. For the purposes of this Plan, the fair market value of a share of Common Stock on any date
shall be equal to (a) the closing sale price of a share of the Common Stock as published by a
national securities exchange on which the shares of the Common Stock are traded on such date, or
(b) if there is no sale of Common Stock on such date, the average of the bid and asked prices on
such exchange at the close of trading on such date, or (c) if the shares of Common Stock are not
listed on a national securities exchange on such date, the average of the

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bid and asked prices of such shares in the over the counter market, or (d) if the Common Stock is
not traded on a national securities exchange or the over the counter market, the fair market value
of a share of Common Stock on such date as determined in good faith by the Committee in compliance
with Section 422(b)(4) of the Code and the applicable regulations promulgated thereunder.

	8.  	Option Term.

     Options may be exercisable during such periods as the Committee, in its discretion, may
determine at the date of grant; provided, that no Option shall be exercisable at any time beyond
the tenth anniversary of the date of its grant or, in the case of an incentive stock option granted
to a Participant who owns more than 10% of the total combined voting power of the Common Stock
issued and outstanding at the date of grant, at any time after the fifth anniversary of the date of
grant.

	9.  	Limitation on Amount of Incentive Stock Options Granted.

     The aggregate fair market value (determined at the date of grant) of the shares of Common
Stock for which any Participant may be granted incentive stock options which are exercisable for
the first time in any calendar year (whether under the terms of the Plan or any other stock option
plan of the Corporation) shall not exceed $100,000. To the extent that any Option which is
intended to be an incentive stock option fails to satisfy the requirements of this Section, the
Option shall be treated as an Option which is not an incentive stock option. This Section shall be
applied by taking Options into account in the order in which they are granted.

	10.  	Exercise of Options.

     (a) Exercise. Options granted under this Plan shall become exercisable at such times
and in such installments as the Committee shall determine at the time of Option grant. Except as
otherwise specified in the related Option Agreement, each Option may be exercised either in whole
or in part at any time or from time to time. An Option may be exercised only by a written notice
of exercise, in such form as may be specified from time to time by the Committee, with respect to a
specified number of shares of Common Stock.

     (b) Payment. Each notice of exercise shall be accompanied by payment and the
Committee may determine the required or permitted forms of payment, subject to the following: (a)
all payments will be by cash or check acceptable to the Committee, or, if so permitted by the
Committee, (i) through the delivery of shares of Common Stock that have been outstanding for at
least six months (unless the Committee approves a shorter period) and that have a fair market value
equal to the exercise price, (ii) by delivery to the Corporation of a promissory note of the person
exercising the Award, payable on such terms as are specified by the Committee, (iii) through a
broker-assisted exercise program acceptable to the Corporation, or (iv) by any combination of the
foregoing permissible forms of payment; and (b) where shares of Common Stock issued under an Option
are part of an original issue of shares, the Option will require that at least so much of the
exercise price as equals the par value of such shares be paid in a type of consideration that is
lawful for the payment of par value under applicable law. The delivery of shares in payment of the
exercise price under clause (a)(i) above may be accomplished either by actual delivery or by
constructive delivery through attestation of ownership, subject to such rules as the Committee may
prescribe.

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	11.  	Transferability.

     Options shall not be assignable or transferable except by will and/or by the laws of descent
and distribution, and while a Participant remains alive may not be exercised by any other person.

	12.  	Termination of Employment.

     A. Except as otherwise determined by the Committee, in the event a Participant leaves the
employ or service of the Company for any reason other than death, retirement or disability (within
the meaning of Section 22(e) of the Code), whether voluntarily or otherwise, each Option
theretofore granted to the Participant which shall not have expired or otherwise been canceled
shall, to the extent it is exercisable on the date of such termination of employment or service and
to the extent it shall not have theretofore been exercised or become unexercisable, terminate upon
the expiration of a period of 90 days after such termination of employment or service, or such
earlier date as may be specified in the Option Agreement.

     B. In the event a Participant’s employment or service with the Company terminates by reason of
the Participant’s death, each Option theretofore granted to the Participant which shall not have
expired or otherwise been canceled shall, to the extent it is exercisable on the date of such
termination of employment or service and to the extent it shall not have theretofore been exercised
or become unexercisable, terminate upon the expiration of a period of one year after such
termination of employment or service, or such earlier date as may be specified in the Option
Agreement.

     C. In the event a Participant’s employment or service with the Company terminates by reason of
the Participant’s retirement upon the attainment of normal retirement age, or by reason of
disability (within the meaning of Section 22(e) of the Code), each Option theretofore granted to
the Participant which shall not have expired or otherwise been canceled shall become immediately
exercisable in full and shall, to the extent it shall not have theretofore been exercised or become
unexercisable, terminate upon the expiration of a period of 90 days after such termination of
employment or service, or such earlier date as may be specified in the Option Agreement.

     D. The Committee, in its discretion, may extend the period during which an Option held by any
employee of or consultant to the Company may be exercised to such period, not to exceed three years
following the termination of a Participant’s employment or service with the Company, as the
Committee may determine to be appropriate in any particular instance.

	13.  	Adjustment of Number of Shares.

     A. In the event that a dividend shall be declared upon the Common Stock payable in shares of
Common Stock, the number of shares of Common Stock then subject to any Option and the number of
shares of Common Stock reserved for issuance in accordance with the provisions of the Plan but not
yet covered by an Option shall be adjusted by adding to each share the number of shares which would
be distributable thereon if such share had been outstanding on the date fixed for determining the
shareholders entitled to receive such stock dividend. In the event that the outstanding shares of
Common Stock shall be changed into or exchanged for a different number or kind of shares of stock
or other securities of the Corporation or of another corporation, whether through reorganization,
recapitalization, stock split, combination of shares, sale of

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assets, merger or consolidation, there shall be substituted for each share of Common Stock then
subject to any Option and for each share of Common Stock reserved for issuance in accordance with
the provisions of the Plan but not yet covered by an Option, the number and kind of shares of stock
or other securities into which each outstanding share of Common Stock shall be so changed or for
which each such share shall be exchanged; provided, however, that, in the event of a merger or
consolidation in which the Corporation is not the surviving corporation, or of a sale by the
Corporation of all or substantially all of its assets to a corporation or other entity not
controlled by the Corporation (within the meaning of Section 1563(a)(1) of the Code) immediately
prior to such transaction, if the Board determines, in its discretion, that such change or exchange
cannot be effected or would be inappropriate, each Option theretofore granted to a Participant
which shall not have expired or otherwise been canceled shall become immediately exercisable in
full and shall terminate upon the later to occur of (i) the expiration of 30 days following notice
to the Participant by the Corporation of such merger, consolidation or sale, or (ii) the date of
such merger, consolidation or sale.

     B. In the event that there shall be any change, other than those changes specified in this
Section 13, in the number or kind of outstanding shares of Common Stock, or of any stock or other
securities into which the Common Stock shall have been changed, or for which it shall have been
exchanged, then, if the Committee shall, in its sole discretion, determine that such change
equitably requires an adjustment in the number or kind of shares then subject to any Option and the
number or kind of shares reserved for issuance in accordance with the provisions of the Plan but
not yet covered by an Option, such adjustment shall be made by the Committee and shall be effective
and binding for all purposes of the Plan and of each Option Agreement entered into in accordance
with the provisions of the Plan.

     C. In the case of any substitution or adjustment in accordance with the provisions of this
Section 13, the exercise price specified in each Option Agreement for each share covered thereby
prior to such substitution or adjustment shall be the option price for all shares of stock or other
securities which shall have been substituted for such share or to which such share shall have been
adjusted in accordance with the provisions of this Section 13. No adjustment or substitution
provided for in this Section 13 shall require the Corporation to issue any fractional shares of
capital stock.

	14.  	Purchase for Investment and Waivers.

     A. Unless the shares to be issued upon the exercise of an Option by a Participant shall be
registered prior to the issuance thereof under the Securities Act of 1933, as amended, such
Participant shall, as a condition of the Corporation’s obligation to issue such shares, be required
to give a representation in writing that such shares are being acquired for the sole account of the
Participant, as an investment and not with a view to, or for sale in connection with, the
distribution thereof in whole or in part.

     B. In the event of the death of a Participant, an additional condition for the exercise of any
Option shall be the delivery to the Corporation of such tax waivers and other documents as the
Committee shall determine.

     C. Each Participant shall be required, as a condition of exercising any Option which is not an
incentive stock option, to make such arrangements with the Corporation with respect to income tax
withholding as the Committee shall determine.

	15.  	Amendment of Plan.

     The Board may at any time make such modifications of the Plan as it shall deem advisable;
provided, however, that (i) any provisions relating to the receipt of Options by

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members of the Board who are not employees of the Company, the exercise price and terms and
conditions of the exercise thereof may not be amended more than once in any period of six months,
except as may be required to comply with changes in the Code or the Employee Retirement Income
Security Act of 1974, as amended, and (ii) the Board may not without further approval of
shareholders representing a majority of the voting power present in person or by proxy at any
special or annual meeting of shareholders increase the number of shares of Common Stock as to which
Options may be granted under the Plan (as adjusted in accordance with the provisions of Section 13
hereof), or change the class of persons eligible to participate in the Plan or change the manner of
determining the option prices which would result in a decrease in the option price, or extend the
period during which an Option may be granted or exercised. Except as otherwise provided in Section
16 hereof, no termination or amendment of the Plan may, without the consent of the Participant to
whom any Option shall theretofore have been granted, adversely affect the rights of such
Participant under such Option.

	16.  	Expiration and Termination of the Plan.

     The Plan shall terminate on July 31, 2003 or at such earlier date as the Board may determine.
Options may be granted under the Plan at any time and from time to time prior to its termination.
Any Option outstanding under the Plan at the date of termination shall remain in effect until such
Option shall have been exercised or shall have expired in accordance with the terms of the Option
Agreement.

	17.  	Options Granted in Connection with Acquisitions.

     In the event that the Committee determines that, in connection with the acquisition by the
Corporation of another corporation which shall become a subsidiary of the Corporation (such
corporation being hereinafter referred to as an “Acquired Subsidiary”), Options may be granted
under the Plan to employees of an Acquired Subsidiary in exchange for then outstanding options to
purchase securities of the Acquired Subsidiary, such Options may be granted at such exercise prices
and upon such other terms and conditions not inconsistent with the Plan, or the requirement set
forth in Section 15 hereof that certain amendments to the Plan must be approved by the shareholders
of the Corporation, as the Committee, in its discretion, shall deem appropriate at the time of the
grant of such Options.

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EXHIBIT 4.2

SYSTEM MANAGEMENT ARTS INCORPORATED

OMNIBUS STOCK INCENTIVE PLAN

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	ARTICLE I                          DEFINITIONS	 	 	1	 
	 
	 	 	 	 	 	 
	1.01.
	 	Acceleration Date	 	 	 1	 
	1.02.
	 	Administrator	 	 	 1	 
	1.03.
	 	Agreement	 	 	 1	 
	1.04.
	 	Award	 	 	 1	 
	1.05.
	 	Board	 	 	 1	 
	1.06.
	 	Cause	 	 	 1	 
	1.07.
	 	Change in Control	 	 	 1	 
	1.08.
	 	Code	 	 	 2	 
	1.09.
	 	Committee	 	 	 2	 
	1.10.
	 	Common Stock	 	 	 2	 
	1.11.
	 	Company	 	 	 2	 
	1.12.
	 	Control Change Date	 	 	 2	 
	1.13.
	 	Corresponding SAR	 	 	 3	 
	1.14.
	 	Employee	 	 	 3	 
	1.15.
	 	Exchange Act	 	 	 3	 
	1.16.
	 	Fair Market Value	 	 	 3	 
	1.17.
	 	Incentive Stock Option	 	 	 3	 
	1.18.
	 	Initial Public Offering	 	 	 3	 
	1.19.
	 	Initial Value	 	 	 3	 
	1.20.
	 	Insider	 	 	 3	 
	1.21.
	 	Named Executive Officer	 	 	 3	 
	1.22.
	 	Nonqualified Stock Option	 	 	 3	 
	1.23.
	 	Option	 	 	 4	 
	1.24.
	 	Parent	 	 	 4	 
	1.25.
	 	Participant	 	 	 4	 
	1.26.
	 	Performance Award	 	 	 4	 
	1.27.
	 	Permitted Transferee	 	 	 4	 
	1.28.
	 	Person	 	 	 4	 
	1.29.
	 	Phantom Stock Unit	 	 	 4	 
	1.30.
	 	Plan	 	 	 4	 
	1.31.
	 	Restricted Stock	 	 	 5	 
	1.32.
	 	SAR	 	 	 5	 
	1.33.
	 	Subsidiary	 	 	 5	 
	1.34.
	 	Ten Percent Shareholder	 	 	 5	 
	1.35.
	 	Vested	 	 	 5	 
	1.36.
	 	Voting Stock	 	 	 5	 
	 
	 	 	 	 	 	 
	ARTICLE II                          PURPOSES	 	 	5	 
	 
	 	 	 	 	 	 
	ARTICLE III                        ADMINISTRATION	 	 	5	 
	 
	 	 	 	 	 	 
	ARTICLE IV                        ELIGIBILITY	 	 	7	 

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	ARTICLE V                        STOCK SUBJECT TO PLAN	 	 	7	 
	 
	 	 	 	 	 	 
	5.01.
	 	Shares Issued	 	 	 7	 
	5.02.
	 	Aggregate Limits	 	 	 7	 
	5.03.
	 	Individual Limits	 	 	 7	 
	5.04.
	 	Reallocation of Shares	 	 	 7	 
	 
	 	 	 	 	 	 
	ARTICLE VI                        TERMS AND CONDITIONS OF ALL OPTIONS	 	 	8	 
	 
	 	 	 	 	 	 
	6.01.
	 	Grants	 	 	 8	 
	6.02.
	 	Option Price	 	 	 8	 
	6.03.
	 	Maximum Option Period	 	 	 8	 
	6.04.
	 	Nontransferability	 	 	 8	 
	6.05.
	 	Change in Control	 	 	 9	 
	6.06.
	 	Exercise	 	 	 9	 
	6.07.
	 	Payment	 	 	10	 
	6.08.
	 	Shareholder Rights	 	 	10	 
	 
	 	 	 	 	 	 
	ARTICLE VII                        ADDITIONAL TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS	 	 	10	 
	 
	 	 	 	 	 	 
	7.01.
	 	Employee Status	 	 	10	 
	7.02.
	 	Exercise Price	 	 	10	 
	7.03.
	 	Aggregate Exercise Limits	 	 	10	 
	7.04.
	 	Restrictions on Ten-Percent Shareholders	 	 	11	 
	7.05.
	 	Validity of Options	 	 	11	 
	7.06.
	 	Notification Upon Sale	 	 	11	 
	7.07.
	 	No Liability of Company	 	 	11	 
	 
	 	 	 	 	 	 
	ARTICLE VIII                        TERMS AND CONDITIONS OF RESTRICTED STOCK	 	 	11	 
	 
	 	 	 	 	 	 
	8.01.
	 	Grants	 	 	11	 
	8.02.
	 	Change in Control	 	 	11	 
	8.03.
	 	Payment	 	 	12	 
	8.04.
	 	Nontransferability	 	 	12	 
	8.05.
	 	Vesting	 	 	12	 
	8.06.
	 	Shareholder Rights	 	 	12	 
	 
	 	 	 	 	 	 
	ARTICLE IX                          TERMS AND CONDITIONS OF SARS	 	 	13	 
	 
	 	 	 	 	 	 
	9.01.
	 	Grants	 	 	13	 
	9.02.
	 	Maximum SAR Period	 	 	13	 
	9.03.
	 	Nontransferability	 	 	13	 
	9.04.
	 	Change in Control	 	 	13	 
	9.05.
	 	Exercise	 	 	14	 
	9.06.
	 	Special Rules for Corresponding SARs	 	 	14	 
	9.07.
	 	Payment Upon Exercise of SAR	 	 	14	 
	9.08.
	 	Shareholder Rights	 	 	15	 
	 
	 	 	 	 	 	 
	ARTICLE X                          TERMS AND CONDITIONS OF PHANTOM STOCK UNITS	 	 	15	 
	 
	 	 	 	 	 	 
	10.01.
	 	Grants	 	 	15	 

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	10.02.
	 	Maximum Payment Period	 	 	15	 
	10.03.
	 	Nontransferability	 	 	15	 
	10.04.
	 	Change in Control	 	 	16	 
	10.05.
	 	Right to Receive Payment	 	 	16	 
	10.06.
	 	Form of Payment	 	 	16	 
	10.07.
	 	Shareholder Rights	 	 	17	 
	 
	 	 	 	 	 	 
	ARTICLE XI                          TERMS AND CONDITIONS OF PERFORMANCE AWARDS	 	 	17	 
	 
	 	 	 	 	 	 
	11.01.
	 	Grants	 	 	17	 
	11.02.
	 	Maximum Performance Award Period	 	 	17	 
	11.03.
	 	Nontransferability	 	 	17	 
	11.04.
	 	Change in Control	 	 	17	 
	11.05.
	 	Earning Performance Award	 	 	18	 
	11.06.
	 	Shareholder Rights	 	 	18	 
	 
	 	 	 	 	 	 
	ARTICLE XII                        ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO ALL AWARDS	 	 	18	 
	 
	 	 	 	 	 	 
	12.01.
	 	Interruption of Employee or Independent Contractor Status	 	 	18	 
	12.02.
	 	Performance Objectives	 	 	18	 
	12.03.
	 	Other Conditions	 	 	19	 
	12.04.
	 	Forfeiture Provisions	 	 	19	 
	12.05.
	 	Restrictions on Common Stock	 	 	20	 
	 
	 	 	 	 	 	 
	ARTICLE XIII                        LIMITATION ON BENEFITS	 	 	20	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	ARTICLE XIV                        ADJUSTMENT UPON CHANGE IN COMMON STOCK	 	 	21	 
	 
	 	 	 	 	 	 
	ARTICLE XV                          COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES	 	 	21	 
	 
	 	 	 	 	 	 
	15.01.
	 	Compliance	 	 	21	 
	15.02.
	 	Postponement of Exercise or Payment	 	 	22	 
	15.03.
	 	Forfeiture of Payment	 	 	22	 
	 
	 	 	 	 	 	 
	ARTICLE XVI                          RESTRICTIONS ON COMMON STOCK ISSUED UNDER THE PLAN	 	 	23	 
	 
	 	 	 	 	 	 
	16.01.
	 	Transfer Restrictions	 	 	23	 
	16.02.
	 	Right of First Refusal	 	 	23	 
	16.03.
	 	Repurchase Option	 	 	25	 
	 
	 	 	 	 	 	 
	ARTICLE XVII                        GENERAL PROVISIONS	 	 	26	 
	 
	 	 	 	 	 	 
	17.01.
	 	Effect on Employment and Service	 	 	26	 
	17.02.
	 	Unfunded Plan	 	 	26	 
	17.03.
	 	Tax Withholding and Reporting	 	 	26	 
	17.04.
	 	Reservation of Shares	 	 	26	 
	17.05.
	 	Governing Law	 	 	26	 
	17.06.
	 	Other Actions	 	 	26	 

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	ARTICLE XVIII
	 	AMENDMENT AND TERMINATION	 	 	27	 
	 
	 	 	 	 	 	 
	ARTICLE XIX
	 	DURATION OF PLAN	 	 	27	 
	 
	 	 	 	 	 	 
	ARTICLE XX
	 	EFFECTIVE DATE OF PLAN	 	 	27	 
	 
	 	 	 	 	 	 
	ARTICLE XXI
	 	RULES OF CONSTRUCTION	 	 	27	 

iv

 

SYSTEM MANAGEMENT ARTS INCORPORATED

OMNIBUS STOCK INCENTIVE PLAN

ARTICLE I

DEFINITIONS

     1.01. Acceleration Date means the earlier of (i) the date that the Board approves a
transaction or series of transactions that, if consummated, would result in a Change in Control or
(ii) the date that an agreement is entered into with respect to a transaction or series of
transactions that, if consummated, would result in a Change in Control.

     1.02. Administrator means the Committee and any delegate of the Committee that is
appointed in accordance with Article III.

     1.03. Agreement means a written agreement (including any amendment or supplement
thereto) between the Company and a Participant specifying the terms and conditions of an Award
granted to such Participant under the Plan.

     1.04. Award means an Option, Performance Award, Phantom Stock Unit, Restricted Stock
or SAR awarded under the Plan.

     1.05. Board means the Board of Directors of the Company.

     1.06. Cause has the same definition as under any employment or service agreement
between the Company or any Subsidiary and the Participant or, if no such employment or service
agreement exists or if such employment or service agreement does not contain any such definition,
Cause means (i) the Participant’s willful or chronic failure to comply with the lawful directives
of the Board, the Board of Directors of any Subsidiary or any supervisory personnel of the
Participant, (ii) any criminal act or act of dishonesty or gross or willful misconduct by the
Participant, (iii) the breach by the Participant of the terms of any confidentiality,
noncompetition, nonsolicitation, employment or service agreement that the Participant has with the
Company or any Subsidiary, (iv) acts by the Participant of gross negligence or willful malfeasance
in a matter of importance to the Company or any Subsidiary or a deliberate breach of any fiduciary
duty the Participant owes the Company or any Subsidiary, or (v) the continued failure of the
Participant to perform his or her duties with the Company or any Subsidiary. For purposes of the
Plan, in no event shall any termination of employment or service be deemed for Cause unless
the Company’s Chief Executive Officer concludes that the situation warrants a determination that
the Participant’s employment or service terminated for Cause; in the case of the Chief Executive
Officer, any determination that the Chief Executive Officer’s employment terminated for Cause shall
be made by the Board acting without the Chief Executive Officer.

     1.07. Change in Control means the occurrence of any of the following: (i)(a) the
Company consolidates with, or merges with or into, another Person, (b) there is a consolidation,
merger, reorganization, share exchange or other transaction involving the Voting Stock of the
Company, (c) the Company assigns, conveys, leases,

 

 

sells, transfers or otherwise disposes of all or
substantially all of the assets of the Company to any Person, (d) any Person consolidates with, or
merges with or into, the Company, or (e) any similar event, where with respect to any of the events
described in (a) through (e) the outstanding Voting Stock of the Company is converted into or
exchanged for cash, securities or other property or continues as the Voting Stock of the surviving
or transferee Person; provided however, that none of the foregoing events described in (a) through
(e) will constitute a Change in Control where the outstanding Voting Stock of the Company is
converted into or exchanged for or continues as the Voting Stock of the surviving or transferee
Person and the beneficial owners of the Voting Stock of the Company immediately before such event
or series of events own in the aggregate, directly or indirectly, Voting Stock representing more
than 50 percent of the voting power of the Voting Stock of the surviving or transferee Person
immediately after such event or series of events, or (ii) any transaction occurring subsequent to
the date of Board approval of this Plan that results in any Person, other than a trustee or other
fiduciary holding securities under an employee benefit plan of the Company, beneficially owning
Voting Stock of the Company representing, directly or indirectly, more than 50 percent of the
voting power of the Voting Stock of the Company, or (iii) the approval by the holders of Voting
Stock of the Company of any plan or proposal for dissolution or liquidation of the Company or (iv)
the consummation of any other transaction that a majority of the Board, in its sole and absolute
discretion, determines constitutes a Change in Control for purposes of this Plan. Notwithstanding
the foregoing, however, in no event will the sale of Voting Stock of the Company in an Initial
Public Offering or any restructuring of the Company in contemplation of or as a result of an
Initial Public Offering constitute a Change in Control for purposes of the Plan.

     1.08. Code means the Internal Revenue Code of 1986, as amended.

     1.09. Committee means the Compensation Committee of the Board, if the Board appoints
one to administer the Plan, or the Board itself if no such Compensation Committee is appointed to
administer the Plan. If such Compensation Committee is appointed, if and
to the extent deemed necessary by the Board on or after an Initial Public Offering, such
Compensation Committee shall consist of two or more directors who are “non-employee directors”
within the meaning of Rule 16b-3 under the Exchange Act and “outside directors” within the meaning
of Code Section 162(m).

     1.10. Common Stock means shares of the $0.001 par value common stock of the Company.

     1.11. Company means System Management ARTS Incorporated, a Delaware corporation, and
any successor thereof.

     1.12. Control Change Date means the date on which a Change in Control is consummated.
If a Change in Control occurs on account of a series of transactions, the “Control Change Date” is
the date of the last of such transactions.

2

 

     1.13. Corresponding SAR means a SAR that is granted in relation to a particular Option
and that can be exercised only upon the surrender to the Company, unexercised, of that portion of
the Option to which the Corresponding SAR relates.

     1.14. Employee means any person whom the Company or any Subsidiary employs under the
rules of Code Section 3401(c) and the regulations thereunder.

     1.15. Exchange Act means the Securities Exchange Act of 1934, as amended.

     1.16. Fair Market Value of a share of Common Stock means, on any given date, the fair
market value of a share of Common Stock as the Administrator in its discretion shall determine;
provided, however, that the Administrator shall determine Fair Market Value without regard to any
restriction other than a restriction that, by its terms, will never lapse and, if the shares of
Common Stock are traded on any stock exchange, the Fair Market Value of a share of Common Stock
shall be the closing price of a share of Common Stock as reported on such stock exchange as of such
date, or if the shares of Common Stock are not traded on such stock exchange on such date, then on
the immediately preceding day that the shares of Common Stock were traded on such stock exchange,
all as reported by such source as the Administrator shall select. The Fair Market Value that
the Administrator determines shall be final, binding and conclusive on the Company, any
Subsidiary and each Participant.

     1.17. Incentive Stock Option means an Option that is subject to Code Section 422.

     1.18. Initial Public Offering means the issuance of any class of common equity
securities required to be registered under Section 12 of the Exchange Act, such that the Company is
subject to the reporting obligations of Section 12 of the Exchange Act.

     1.19. Initial Value means, with respect to a SAR that is not a Corresponding SAR, the
Fair Market Value of a share of Common Stock on the date of grant and, with respect to a SAR that
is a Corresponding SAR, the Option price of the related Option.

     1.20. Insider means an individual who is an officer, director or ten percent (10%)
beneficial owner of any class of the Company’s equity securities that are registered pursuant to
Section 12 of the Exchange Act, as more fully described under Section 16 of the Exchange Act.

     1.21. Named Executive Officer means a Participant who as of the last day of a taxable
year, is the chief executive officer of the Company (or is acting in such capacity) or one of the
four highest compensated officers of the Company (other than the chief executive officer) or is
otherwise one of the group of “covered employees”, as defined in the Treasury Regulations
promulgated under Code Section 162(m).

     1.22. Nonqualified Stock Option means an Option that is not subject to Code Section
422.

3

 

     1.23. Option means a stock option that entitles the holder to purchase from the
Company a stated number of shares of Common Stock at the price set forth in the Agreement that
specifies the terms and conditions of the Option.

     1.24. Parent means any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company if, at the time of the granting of the Award, each of the
corporations other than the Company owns stock possessing 50 percent or more
of the total combined voting power of all classes of stock in one of the other corporations in
such chain.

     1.25. Participant means an Employee, director, advisor or consultant of the Company or
any Subsidiary who satisfies the requirements of Article IV and whom the Administrator selects to
receive an Award.

     1.26. Performance Award means an Award that entitles the Participant to receive a
specified value in cash or Common Stock of the Company, as the Administrator in its discretion may
set forth in the Agreement that specifies the terms and conditions of the Performance Award, upon
the attainment of the performance objectives set forth in such Agreement.

     1.27. Permitted Transferee means a child, grandchild, parent, grandparent, or spouse
of a Participant, including adoptive relationships, or a trust for the benefit of any of the
foregoing; provided, however, that if any of the foregoing individuals is less than 21 years of age
at the time of a proposed sale, transfer, assignment or other disposition to such individual, then
such sale, transfer, assignment or other disposition only may be made to a trust for the benefit of
such person, which trust will not terminate prior to the beneficiary (or beneficiaries) thereof
attaining age 21.

     1.28. Person means any individual, corporation, limited liability company, joint
venture, partnership, incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization or government or other agency or political subdivision thereof or any
other entity of any kind.

     1.29. Phantom Stock Unit means an Award, stated with respect to a specified number of
shares of Common Stock, that entitles the Participant to receive a payment in cash equal to the
Fair Market Value of a share of Common Stock on the date of payment of such Award with respect to
each Phantom Stock Unit that becomes payable under the Agreement that sets forth the terms and
conditions of the Phantom Stock Unit. If such Agreement so provides, a Phantom Stock Unit may be
increased to reflect the payment of dividends on such number of shares of Common Stock from the
date of grant of the Phantom Stock Unit to the date of payment and the adjustment shall be in the
form of additional Phantom Stock Units as if such dividends had been deemed invested in Common
Stock on the dividend payment date.

     1.30. Plan
means this System Management ARTS Incorporated Omnibus Stock Incentive Plan, in its current
form and as hereafter amended.

4

 

     1.31. Restricted Stock means Common Stock granted or sold to a Participant under the
Plan that is subject to the restrictions, if any, set forth in the Plan and the Agreement that
specifies the terms and conditions of the Restricted Stock. Shares of Common Stock shall cease to
be Restricted Stock when, in accordance with the terms of the applicable Agreement, they become
Vested.

     1.32. SAR means a stock appreciation right that entitles the Participant to receive,
with respect to each share of Common Stock encompassed by the exercise of the SAR, the excess of
the Fair Market Value on the date of exercise of each such share over the Initial Value.
References to SARs include both Corresponding SARs and SARs that are not Corresponding SARs, unless
the context requires otherwise.

     1.33. Subsidiary means any corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company, if at the time of the granting of the Award, each of
the corporations other than the last corporation in the unbroken chain owns stock possessing 50
percent or more of the total combined voting power of all classes of stock in one of the other
corporations in such chain.

     1.34. Ten Percent Shareholder means any individual who (considering the stock
attribution rules described in Code Section 424(d)) owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company, any Parent or any
Subsidiary.

     1.35. Vested means nonforfeitable or transferable within the meaning of Code Section
83.

     1.36. Voting Stock with respect to any specified Person means any class or classes of
stock or other ownership rights of the specified Person pursuant to which the holders thereof have
the general voting power under ordinary circumstances to elect at least a majority of the board of
directors, managers or trustees of the specified Person.

ARTICLE II

PURPOSES

     This Plan is intended to assist the Company and its Subsidiaries in recruiting and retaining
individuals with ability and initiative by enabling such persons to participate in the future
success of the Company and to associate their interests with those of the Company and its
shareholders. The Plan is intended to permit the grant of Options, Performance Awards, Phantom
Stock Units, Restricted Stock and SARs. The proceeds the Company receives from the sale of Common
Stock pursuant to any Participant’s exercise of an Option or the sale of Restricted Stock shall be
used for general corporate purposes.

ARTICLE III

ADMINISTRATION

     The Administrator shall have the complete authority to grant Awards on such terms (not
inconsistent with the provisions of this Plan), as the Administrator may

5

 

consider appropriate.
Such terms may include conditions (in addition to those contained in this Plan) on the
exercisability, Vesting or forfeiture conditions of an Award.

     The Administrator shall administer the Plan. As such, the Administrator shall have the
complete authority to interpret all provisions of this Plan; to prescribe the form of Agreements;
to accelerate the exercisability, Vesting or payment of an Award as a result of a Change in
Control or otherwise; to adopt, amend and rescind rules and regulations pertaining to the
administration of the Plan; and to make all other determinations necessary or advisable for the
administration of this Plan. The express grant in the Plan of any specific power to the
Administrator shall not be construed as limiting any authority or power of the Administrator. Any
action or decision of the Administrator in connection with the administration of this Plan shall be
final, conclusive and binding on all persons. Neither the Administrator nor any member of the
Committee shall be liable for any act done or not done in good faith with respect to this Plan or
any Agreement.

     The Administrator may act only by decision of a majority of its members, except that the
Administrator, in its discretion and provided that applicable law so permits, may delegate to one
or more officers of the Company or another committee of the Board, all or part of the
Administrator’s authority and duties with respect to grants of Awards to Participants. The
Administrator may amend or revoke the terms of such delegation at any time but such amendment or
revocation shall not invalidate any prior actions of the Administrator’s delegate or delegates that
were consistent with the terms of the Plan. Notwithstanding the two preceding sentences, after an
Initial Public Offering, unless and to the extent the Board deems otherwise, the Administrator may
not delegate its authority and duties with respect to an Award to a Participant who is an Insider
or a Named Executive Officer. If and to the extent deemed necessary by the Board after an Initial
Public Offering, (i) all Awards to an Insider shall be approved by the Board or by a Committee
comprised of two or more non-employee directors within the meaning of Rule 16b-3 of the Exchange
Act, unless such Awards will be held by the Participant at
least six months after the date they are granted to such Participant and (ii) all Awards to a
Named Executive Officer shall be approved by a Committee comprised solely of two or more outside
directors within the meaning of Code Section 162(m).

     The Company shall bear all expenses of administering this Plan. The Company shall indemnify
and hold harmless each person who is or shall have been a member of any Board or Committee acting
as the Administrator, or any delegate of such, against and from any cost, liability, loss or
expense that may be imposed upon or reasonably incurred by such person in connection with or
resulting from any action, claim, suit, or proceeding to which such person may be a party or in
which such person may be involved by reason of any action taken or not taken under the Plan and
against and from any and all amounts paid by such person in settlement thereof, with the Company’s
approval, or paid by such person in satisfaction of any judgment in any such action, suit, or
proceeding against such person, provided he or she shall give the Company an opportunity, at its
own expense, to handle and defend the same before he or she undertakes to handle and defend it on
his or her own behalf. Notwithstanding the foregoing, the Company shall not indemnify and hold
harmless any such person if (i)

6

 

applicable law prohibits such indemnification or (ii) such person
did not act in good faith and in a manner that such person believed to be consistent with the Plan
and such person’s conduct constituted gross negligence or willful misconduct. The foregoing right
of indemnification shall not be exclusive of any other rights of indemnification to which such
persons may be entitled under the Company’s Articles of Incorporation or Bylaws, as a matter of law
or otherwise, or under any other power that the Company may have to indemnify such person or hold
him or her harmless. The provisions of the foregoing indemnity shall survive indefinitely the term
of this Plan.

ARTICLE IV

ELIGIBILITY

     Any Employee, director, advisor or consultant of the Company or any Subsidiary (including a
corporation that becomes a Subsidiary after the adoption of this Plan) is eligible to receive
Awards if the Administrator, in its sole discretion, determines that such person has contributed
significantly or can be expected to contribute significantly to the growth or profits of the
Company or any Subsidiary.

ARTICLE V

STOCK SUBJECT TO PLAN

     5.01. Shares Issued. On the exercise of an Option or a SAR or the grant of Restricted
Stock or payment of a Performance Award payable in Common Stock, the Company may deliver to the
Participant (or the Participant’s broker if the Participant so directs) shares of Common Stock from
its authorized but unissued shares of Common Stock or from reacquired shares of Common Stock.

     5.02. Aggregate Limits. The maximum number of shares of Common Stock that may be
issued under this Plan and to which Awards may relate shall be 8,000,000 shares of Common Stock,
subject to adjustment as provided in Article XIV.

     5.03. Individual Limits. Subject to the other limitations set forth in this Plan,
after an Initial Public Offering, no individual may in any calendar year be granted Options or SARs
covering more than 250,000 shares of Common Stock or aggregate Awards covering more than 250,000
shares of Common Stock. After an Initial Public Offering, if and to the extent deemed necessary by
the Board, if an Award that a Participant holds is canceled, the canceled Award shall continue to
be counted against the maximum number of shares of Common Stock for which similar Awards may be
granted to the Participant in any calendar year and any replacement Awards granted to such
Participant in replacement of the canceled Awards also shall count against such maximum limit. The
maximum number of shares that may be granted in any calendar year to any individual shall be
subject to adjustment as provided in Article XIV.

     5.04. Reallocation of Shares. If an Option or SAR is terminated, in whole or in part,
for any reason other than its exercise, or if any Restricted Stock is canceled, expires or
terminates without the Restricted Stock becoming Vested, or if any Performance Award or Phantom
Stock Unit is terminated without payment, the number

7

 

of shares of Common Stock allocated to such
Award or the terminated portion thereof may be reallocated to other Awards to be granted under this
Plan, subject to the limits described above.

ARTICLE VI

TERMS AND CONDITIONS

OF ALL OPTIONS

     6.01. Grants. In accordance with the provisions of Article IV, the Administrator will
designate each individual to whom an Option is to be granted and will specify the number of shares
of Common Stock such grant covers and whether the Option is an Incentive Stock Option or a
Nonqualified Stock Option. Incentive Stock Options must comply with the provisions of Article VII
in addition to the provisions under this Article VI. An Option may be granted with or without a
Corresponding SAR. The date an Option is granted shall be the date on which the Administrator has
approved the terms and conditions of the Option. Each Option granted under the Plan shall be
evidenced by an Agreement in such form and containing such terms, conditions and restrictions (not
inconsistent with this Plan) as the Administrator shall determine.

     6.02. Option Price. The Administrator on the date of grant shall determine the price
per share for Common Stock payable upon the exercise of an Option. With respect to Options granted
to Named Executive Officers, if and to the extent deemed necessary by the Administrator after an
Initial Public Offering, the price per share for Common Stock shall not be less than one hundred
percent (100%) of the Fair Market Value of a share of Common Stock on the date of grant of the
Option unless the exercisability of the Option with respect to shares of Common Stock for which the
Option price is less than such amount is subject to performance objectives that enable such Option
to qualify as “performance-based compensation” under the Treasury Regulations promulgated under
Code Section 162(m).

     6.03. Maximum Option Period. The Administrator on the date of grant shall determine
the maximum period in which an Option may be exercised, except that no Option shall be exercisable
after the expiration of 10 years from the date such Option is granted. The terms of any Option may
provide that it is exercisable for a period less than such maximum period.

     6.04. Nontransferability

     (a) Except as set forth in Section 6.04(b) below, each Option granted under this Plan shall be
nontransferable except by will or by the laws of descent and distribution. In the event of any
such transfer of an Option, the Option must be transferred in its entirety to the same persons or
entities. Except as set forth in Section 6.04(b) below, during the lifetime of the Participant to
whom the Option is granted, only the Participant may exercise the Option. No right or interest of
a Participant in any Option shall be liable for, or subject to, any liability, lien or obligation
of such Participant.

8

 

     (b) Notwithstanding Section 6.04(a) above, if the applicable Agreement so provides, an Option
that is not an Incentive Stock Option may be transferred by the Participant to a Permitted
Transferee of the Participant. Any such transfer will be permitted only if (i) the Participant
does not receive any consideration for the transfer and (ii) the Administrator expressly approves
the transfer. The Permitted Transferee to whom such Option is transferred shall be bound by the
same terms and conditions that governed the Option during the period the Participant held it;
provided, however, that such Permitted Transferee may not transfer such Option except by will or
the laws of descent and distribution. Any such transfer shall be evidenced by an appropriate
written document executed by the Participant, and a copy thereof shall be delivered to the
Administrator on or prior to the effective date of the transfer.

     6.05. Change in Control. In the event of or in anticipation of a Change in Control,
the Administrator in its discretion (i) may declare that outstanding Options previously granted
under the Plan, whether or not then exercisable, shall terminate as of a date on or after an
Acceleration Date or before or on the Control Change Date without any payment to the holder of the
Option, provided the Administrator gives prior written notice to the Participants of such
termination and gives such Participants the right to exercise their outstanding Options at least 15
days before such termination date to the extent then exercisable or (ii) may terminate on or after
an Acceleration Date or before or on the Control Change Date outstanding Options previously granted
under the Plan, whether or not then exercisable, in consideration of payment to the holder of the
Option, with respect to each share of Common Stock to which the Option is then exercisable, of the
excess, if any, of the Fair Market Value on such date of the Common Stock subject to the then
exercisable portion of the Option over the Option price. The payment described in (ii) above may
be made in any manner the Administrator determines, including in cash, Voting Stock or other
property. The Administrator may take the actions described in (i) or (ii) above with respect to
Options that are not then exercisable whether or not the Participant can exercise such Options or
will receive any payment therefor. The Administrator in its discretion may take the actions
described in (i) or (ii) above contingent on consummation of the Change in Control and with respect
to some or all outstanding Options, whether or not then exercisable, or on an Option-by-Option
basis, which actions need not be uniform with respect to all outstanding Options. However, Options
shall not be terminated to the extent that written provision is made for their assumption,
continuance or substitution by a successor employer or its parent or subsidiary in connection with
the Change in Control.

     6.06. Exercise. An Option may be exercised in whole at any time or in part from time
to time and at such times and in compliance with such requirements as the Administrator shall
determine and as set forth in the applicable Agreement. An Option granted under this Plan may be
exercised with respect to any number of whole shares less than the full number of shares for which
the Option could be exercised. A partial exercise of an Option shall not affect the right to
exercise the Option from time to time in accordance with this Plan and the applicable Agreement
with respect to the remaining shares subject to the Option. To the extent an Option relates to a
Corresponding SAR, upon exercise of or payment with respect to such Option, the Participant shall
surrender to the Company, unexercised, the related portion of the Corresponding SAR.

9

 

     6.07. Payment. Unless the Agreement provides otherwise, payment of the Option price
shall be made in cash or cash equivalent acceptable to the Administrator. If the Agreement so
provides, the Administrator, in its discretion and provided applicable law so permits, may permit a
Participant to pay part or all of the Option price (i) by surrendering shares of Common Stock of
the Company that the Participant has held for at least six months, (ii) by delivery of the full
recourse, interest-bearing promissory note of the Participant, bearing interest at such rate as
would avoid interest being imputed under the Internal Revenue Code, (iii) by a cashless exercise
through a broker, (iv) by such other medium of payment as the Administrator, in its discretion,
shall authorize, or (v) by any combination of the aforementioned methods of payment. If Common
Stock is used to pay all or part of the Option price, the sum of the cash and cash equivalent and
other
payments and the Fair Market Value of the Common Stock surrendered must not be less than the
Option price of the shares for which the Option is being exercised.

     6.08. Shareholder Rights. No Participant shall have any rights as a shareholder with
respect to shares of Common Stock subject to an Option until the proper exercise of such Option,
the payment of the Option price and any applicable withholding taxes and the issuance to the
Participant of the certificates representing the shares of Common Stock for which the Option is
exercised. The Company may include on any certificates representing shares of Common Stock issued
pursuant to an Option such legends referring to any representations, restrictions or any other
applicable statements as the Company, in its discretion, shall deem appropriate.

ARTICLE VII

ADDITIONAL TERMS AND CONDITIONS OF

INCENTIVE STOCK OPTIONS

     7.01. Employee Status. Notwithstanding any other provision of the Plan, the
Administrator may only grant an Incentive Stock Option to an Employee of the Company or any
Subsidiary.

     7.02. Exercise Price. No Employee may receive an Incentive Stock Option under the
Plan, unless the Option price per share for such Incentive Stock Option is at least 100 percent of
the Fair Market Value on the date of grant of each share of Common Stock subject to such Incentive
Stock Option.

     7.03. Aggregate Exercise Limits. The Administrator may not grant an Incentive Stock
Option or any Corresponding SAR that relates to an Incentive Stock Option to the extent the
aggregate Fair Market Value, determined at the time the Administrator grants the Incentive Stock
Option and any Corresponding SAR, of shares of Common Stock with respect to which a Participant may
exercise Incentive Stock Options or Corresponding SARs for the first time during any calendar year
under this Plan and any other plan of the Company (or any plan of any Parent or Subsidiary of the
Company) exceeds $100,000. If the limitation is exceeded, the Incentive Stock Options that cause
the limitation to be exceeded shall be treated as Nonqualified Stock Options.

10

 

     7.04. Restrictions on Ten-Percent Shareholders. No Employee may receive an Incentive
Stock Option under the Plan if such Employee, at the time of grant, is a Ten Percent Shareholder,
unless the Option price per share for such Incentive Stock Option is at least 110 percent of the
Fair Market Value on the date of grant of each share of Common Stock subject to such Incentive
Stock Option and unless such Incentive Stock Option is not exercisable after the expiration of
five years from the date such Incentive Stock Option is granted.

     7.05. Validity of Options. Options that are intended to be Incentive Stock Options
but that do not comply with this Article VII shall be treated as Nonqualified Stock Options.

     7.06. Notification Upon Sale. If a Participant sells or otherwise disposes of any
shares of Common Stock acquired under an Incentive Stock Option before the expiration of the later
of the two-year period beginning on the date of grant of the Incentive Stock Option or the one-year
period beginning on the date that the Participant exercises the Incentive Stock Option with respect
to such shares of Common Stock, the Participant shall give written notice to the Company of the
sale or other disposition as soon as possible.

     7.07. No Liability of Company. The Company shall not be liable to any Participant or
any other person if the Internal Revenue Service or any court having jurisdiction over such matter
determines for any reason that an Option intended to be an Incentive Stock Option and granted
hereunder does not qualify as an Incentive Stock Option.

ARTICLE VIII

TERMS AND CONDITIONS

OF RESTRICTED STOCK

     8.01. Grants. In accordance with the provisions of Article IV, the Administrator will
designate each individual to whom Restricted Stock is to be granted or sold and will specify the
number of shares of Common Stock such Award covers and the purchase price, if any, the Participant
must pay for such shares. The date Restricted Stock is granted shall be the date on which the
Administrator has approved the terms and conditions of the Restricted Stock grant. If the
Participant must pay for an Award of Restricted Stock, the date of grant shall not be earlier than
the date the Participant pays for the Restricted Stock in accordance with Section 8.03. Restricted
Stock acquired under the Plan shall be evidenced by an Agreement in such form and containing such
terms, conditions and restrictions (not inconsistent with this Plan) as the Administrator shall
determine.

     8.02. Change in Control. In the event of or in anticipation of a Change in Control,
the Administrator in its discretion may terminate on or after an Acceleration Date or before or on
the Control Change Date outstanding shares of Restricted Stock previously granted under the Plan
that are not then Vested without any payment to the holder of the Restricted Stock. The
Administrator in its discretion may take the action

11

 

described in this Section 8.02
contingent on the consummation of the Change in Control and with respect to some or all
outstanding shares of Restricted Stock or on a Restricted Stock-by-Restricted Stock basis, which
actions need not be uniform with respect to all outstanding shares of Restricted Stock. The shares
of Restricted Stock shall not be terminated to the extent that written provision is made for their
assumption, continuance or substitution by a successor employer or its parent or subsidiary in
connection with the Change in Control.

     8.03. Payment. Unless the Agreement provides otherwise, if the Participant must pay
for an Award of Restricted Stock, payment of the Award shall be made in cash or cash equivalent
acceptable to the Administrator. If the Agreement so provides, the Administrator, in its
discretion and in accordance with applicable law, may permit a Participant to pay all or part of
the purchase price by delivery of the full recourse, interest-bearing promissory note of the
Participant, bearing interest at such rate as would avoid interest being imputed under the Internal
Revenue Code.

     8.04. Nontransferability. Restricted Stock granted under this Plan shall be
nontransferable except by will or by the laws of descent and distribution, until it has become
Vested in accordance with Section 8.05. No Restricted Stock grant or any right or interest of a
Participant in any shares of Restricted Stock shall be liable for, or subject to, any liability,
lien or obligation of such Participant.

     8.05. Vesting. Shares of Restricted Stock acquired under the Plan shall become Vested
in whole at any time or in part from time to time at such times and in compliance with such
requirements as the Administrator shall determine and as set forth in the applicable Agreement. If
and to the extent deemed necessary by the Administrator after an Initial Public Offering, shares of
Restricted Stock granted to Named Executive Officers shall become Vested subject to performance
objectives that enable such Restricted Stock to qualify as “performance based compensation” under
the Treasury Regulations promulgated under Code Section 162(m). The grant of Restricted Stock must
become Vested, if at all, within ten years from the date of grant. The grant of Restricted Stock
can only become Vested during the Participant’s lifetime in the hands of the Participant.

     8.06. Shareholder Rights. Before the shares of Restricted Stock become Vested, the
Participant will have all rights of a shareholder in the shares of Restricted Stock as provided
under the Articles of Incorporation of the Company and applicable law, including without limitation
the right to vote the shares and receive dividends and distributions thereon; provided, however,
that during such period the Participant (i) may not sell, transfer, exchange, pledge, hypothecate
or otherwise dispose of shares of Restricted Stock, (ii) the Company shall retain custody of the
certificates evidencing the shares of Restricted Stock until they become Vested and (iii) the
Participant will deliver to the Company a
stock power, endorsed in blank, with respect to each share of Restricted Stock. The Company
may include on any certificates representing shares of Common Stock issued pursuant to a grant of
restricted stock such legends referring to any representations, restrictions or other applicable
statements as the Company, in its discretion, shall deem appropriate.

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ARTICLE IX

TERMS AND CONDITIONS OF SARS

     9.01. Grants. In accordance with the provisions of Article IV, the Administrator will
designate each individual to whom a SAR is to be granted and will specify the number of shares of
Common Stock encompassed by such grant and whether the SAR is a Corresponding SAR. The date a SAR
is granted shall be the date on which the Administrator has approved the terms and conditions of
the SAR. Each SAR granted under the Plan shall be evidenced by an Agreement in such form and
containing such terms, conditions and restrictions (not inconsistent with this Plan) as the
Administrator shall determine.

     9.02. Maximum SAR Period. The Administrator on the date of grant shall determine the
maximum period in which a SAR may be exercised, except that no SAR shall be exercisable after the
expiration of 10 years from the date the SAR is granted. No Corresponding SAR shall be exercisable
or continue in existence after the expiration of the Option to which the Corresponding SAR relates.
The terms of a SAR may provide that it is exercisable for a period less than such maximum period.

     9.03. Nontransferability.

     (a) Except as set forth in Section 9.03(b) below, each SAR granted under this Plan shall be
nontransferable except by will or by the laws of descent and distribution. In the event of any
transfer of a Corresponding SAR, the Corresponding SAR and the Option to which it relates must be
transferred in their entirety to the same persons or entities. Except as set forth in Section
9.03(b) below, during the lifetime of the Participant to whom the SAR is granted, only the
Participant may exercise the SAR. No right or interest of a Participant in any SAR shall be liable
for, or subject to, any liability, lien or obligation of such Participant.

     (b) Notwithstanding Section 9.03(a) above, if the applicable Agreement so provides, a SAR
(other than a Corresponding SAR that is related to an Incentive Stock Option) may be transferred by
the Participant to a Permitted Transferee of the Participant. Any such transfer will be permitted
only if (i) the Participant does not receive any consideration for the transfer and (ii) the
Administrator expressly approves the transfer. The Permitted Transferee to whom such SAR is
transferred shall be bound by the same terms and conditions that governed the SAR during the period
the Participant held it; provided, however, that such Permitted Transferee may not transfer such
SAR except by will or the laws of descent and distribution. Any such transfer shall
be evidenced by an appropriate written document executed by the Participant, and a copy
thereof shall be delivered to the Administrator on or prior to the effective date of the transfer.
In the event of a transfer of a Corresponding SAR pursuant to this Section 9.03(b), the
Corresponding SAR and the related Option must be transferred to the same Permitted Transferee.

     9.04. Change in Control. In the event of or in anticipation of a Change in Control,
the Administrator in its discretion (i) may declare that outstanding SARs

13

 

previously granted under
the Plan, whether or not then exercisable, shall terminate as of a date on or after an Acceleration
Date or before or on the Control Change Date without any payment to the holder of the SAR, provided
the Administrator gives prior written notice to the Participants of such termination and gives such
Participants the right to exercise their outstanding SARs at least 15 days before such termination
date to the extent then exercisable or (ii) may terminate on or after an Acceleration Date or
before or on the Control Change Date outstanding SARs previously granted under the Plan, whether or
not then exercisable, in consideration of payment to the holder of the SAR, with respect to each
share of Common Stock for which the SAR is then exercisable, of the excess, if any, of the Fair
Market Value of such Common Stock on such date over the Initial Value of the SAR. The payment
described in (ii) above may be made in any manner the Administrator determines, including in cash,
Voting Stock or other property. The Administrator may take the actions described in (i) or (ii)
above with respect to SARs that are not then exercisable whether or not the Participant can
exercise such SARs or will receive any payment therefor. The Administrator in its discretion may
take the actions described in (i) or (ii) above contingent on consummation of the Change in Control
and with respect to some or all outstanding SARs, whether or not then exercisable, or on a
SAR-by-SAR basis, which actions need not be uniform with respect to all outstanding SARs.
Notwithstanding the foregoing, no payment shall be made with respect to a Corresponding SAR to the
extent the Administrator made a payment with respect to the Option that relates to the
Corresponding SAR. The SARs shall not be terminated to the extent that written provision is made
for their assumption, continuance or substitution by a successor employer or its parent or
subsidiary in connection with the Change in Control.

     9.05. Exercise. A SAR may be exercised in whole at any time or in part from time to
time at such times and in compliance with such requirements as the Administrator shall determine
and as set forth in this Plan and the applicable Agreement. A SAR granted under this Plan may be
exercised with respect to any number of whole shares less than the full number of shares covered by
the SAR. A partial exercise of a SAR shall not affect the right to exercise the SAR from time to
time in accordance with this Plan and the applicable Agreement with respect to the remaining shares
covered by the SAR. A SAR may be exercised and paid only to the extent that the Fair Market Value
of the Common Stock that is the subject of the exercise exceeds the Initial Value of the SAR.

     9.06. Special Rules for Corresponding SARs. Upon the exercise or payment of a
Corresponding SAR, the Participant shall surrender to the Company, unexercised and unpaid, any
portion of an Option to which the Corresponding SAR relates. Upon exercise or payment of an Option
to which a Corresponding SAR relates, the Participant shall surrender to the Company, unexercised
and unpaid, the related portion of the Corresponding SAR. A Corresponding SAR may be exercised
only to the extent that the related Option is exercisable.

     9.07. Payment Upon Exercise of SAR. Within 15 days after the exercise of a SAR, the
Company shall pay the Participant, with respect to each share of Common Stock encompassed by the
exercise of the SAR, the excess of the Fair Market Value of

14

 

such Common Stock on the date of
exercise over the Initial Value. The Administrator, in its discretion, shall determine and set
forth in the applicable Agreement whether the amount payable as a result of the exercise of a SAR
will be paid (i) in cash, (ii) Common Stock, (iii) by delivery of the Company’s or any Subsidiary’s
full recourse, interest-bearing promissory note, bearing interest at such rate as would avoid
interest being imputed under the Internal Revenue Code, or (iv) by any combination of the
foregoing.

     9.08. Shareholder Rights. No Participant shall have any rights as a shareholder with
respect to shares of Common Stock subject to a SAR until the proper exercise of the SAR, and then
only to the extent that Common Stock is issued to the Participant. The Company may include on any
certificates representing shares of Common Stock issued pursuant to a SAR such legends referring to
any representations, restrictions or any other applicable statements as the Company, in its
discretion, shall deem appropriate.

ARTICLE X

TERMS AND CONDITIONS OF PHANTOM STOCK UNITS

     10.01. Grants. In accordance with the provisions of Article IV, the Administrator
will designate each individual to whom Phantom Stock Units are to be granted and will specify the
number of Phantom Stock Units such grant covers. The date Phantom Stock Units are granted shall be
the date on which the Administrator has approved the terms and conditions of the Phantom Stock
Units. All Phantom Stock Units granted under the Plan shall be evidenced by an Agreement in such
form and containing such terms, conditions and restrictions (not inconsistent with this Plan) as
the Administrator shall determine.

     10.02. Maximum Payment Period. The Administrator on the date of grant shall determine
the maximum period over which Phantom Stock Units may be payable, except that no Phantom Stock Unit
shall be payable after the expiration of 10 years from the date such Phantom Stock Unit is
granted. The terms of any Phantom Stock Unit may provide that it is payable for a period less than
such maximum period.

     10.03. Nontransferability.

     (a) Except as set forth in Section 10.03(b) below, Phantom Stock Units granted under this Plan
shall be nontransferable except by will or by the laws of descent and distribution. In the event
of any such transfer of any Phantom Stock Units, the Phantom Stock Units must be transferred in
their entirety to the same persons or entities. Except as set forth in Section 10.03(b) below,
during the lifetime of the Participant to whom the Phantom Stock Units are granted, only the
Participant may exercise the Phantom Stock Units. No right or interest of a Participant in any
Phantom Stock Units shall be liable for, or subject to, any liability, lien or obligation of such
Participant.

     (b) Notwithstanding Section 10.03(a) above, if the applicable Agreement so provides, Phantom
Stock Units may be transferred by the Participant to a Permitted

15

 

Transferee of the Participant.
Any such transfer will be permitted only if (i) the Participant does not receive any consideration
for the transfer and (ii) the Administrator expressly approves the transfer. The Permitted
Transferee to whom such Phantom Stock Units are transferred shall be bound by the same terms and
conditions that governed the Phantom Stock Units during the period the Participant held them;
provided, however, that such Permitted Transferee may not transfer such Phantom Stock Units except
by will or the laws of descent and distribution. Any such transfer shall be evidenced by an
appropriate written document executed by the Participant, and a copy thereof shall be delivered to
the Administrator on or prior to the effective date of the transfer.

     10.04. Change in Control. In the event of or in anticipation of a Change in Control,
the Administrator in its discretion may terminate on or after an Acceleration Date or before or on
the Control Change Date outstanding Phantom Stock Units previously granted under the Plan, whether
or not then payable, in consideration of payment to the holder of the Phantom Stock Units, with
respect to each Phantom Stock Unit that is then payable to the Participant, of the Fair Market
Value on such date of the applicable shares of Common Stock, plus, if the applicable Agreement so
provides, the value of any deemed dividends then payable as set forth in the Agreement. The
payment described in the preceding sentence shall be made in cash. The Administrator may take the
action described in this Section 10.04 with respect to any Phantom Stock Units that are not then
payable without any payment to the holder thereof. The Administrator in its discretion may take
the action described in this Section 10.04 contingent on consummation of the Change in Control and
with respect to some or all outstanding Phantom Stock Units, whether or not then payable, or on a
Phantom Stock Unit-by-Phantom Stock Unit basis, which actions need not be uniform with respect to
all outstanding Phantom Stock Units. The Phantom Stock Units shall not be terminated to the extent
that written provision is made
for their assumption, continuance or substitution by a successor employer or its parent or
subsidiary in connection with the Change in Control.

     10.05. Right to Receive Payment. Phantom Stock Units may be paid in whole at any time
or in part from time to time at such times and in compliance with such requirements as the
Administrator shall determine and as set forth in the applicable Agreement. If and to the extent
deemed necessary by the Administrator after an Initial Public Offering, Phantom Stock Units granted
to Named Executive Officers shall become payable subject to performance objectives that enable such
Phantom Stock Units to qualify as “performance based compensation” under the Treasury Regulations
promulgated under Code Section 162(m). The payment of one or more Phantom Stock Units shall not
affect the right to receive payment for any remaining Phantom Stock Units.

     10.06. Form of Payment. Within 15 days after the Participant elects to receive
payment of each Phantom Stock Unit, the Company shall pay the Participant the value of the Phantom
Stock Unit in cash.

16

 

     10.07. Shareholder Rights. No Participant shall have any rights as a shareholder with
respect to any Phantom Stock Units.

ARTICLE XI

TERMS AND CONDITIONS OF PERFORMANCE AWARDS

     11.01. Grants. In accordance with the provisions of Article IV, the Administrator
will designate each individual to whom a Performance Award is to be granted and will specify the
terms and conditions applicable to such Performance Award, including the performance objectives the
Participant must satisfy to receive a payment under the Performance Award. The date a Performance
Award is granted shall be the date on which the Administrator has approved the terms and conditions
of the Performance Award. Each Performance Award granted under the Plan shall be evidenced by an
Agreement in such form and containing such terms, conditions and restrictions (not inconsistent
with this Plan) as the Administrator shall determine.

     11.02. Maximum Performance Award Period. The Administrator on the date of grant shall
determine the maximum period in which a Performance Award may be paid, except that no Performance
Award may be paid after the expiration of 10 years from the date such Performance Award is granted.
The terms of any Performance Award may provide that it can be paid over a period less than such
maximum period.

     11.03. Nontransferability.

     (a) Except as set forth in Section 11.03(b) below, Performance Awards granted under this Plan
shall be nontransferable except by will or by the laws of descent and distribution. In the event
of any such transfer of any Performance Award, the Performance Award must be transferred in its
entirety to the same persons or entities. Except as set forth in Section 11.03(b) below, during
the lifetime of the Participant to whom the Performance Award is granted, only the Participant may
receive the Performance Award. No right or interest of a Participant in any Performance Award
shall be liable for, or subject to, any liability, lien or obligation of such Participant.

     (b) Notwithstanding Section 11.03(a) above, if the applicable Agreement so provides, a
Performance Award may be transferred by the Participant to a Permitted Transferee of the
Participant. Any such transfer will be permitted only if (i) the Participant does not receive any
consideration for the transfer and (ii) the Administrator expressly approves the transfer. The
Permitted Transferee to whom such Performance Award is transferred shall be bound by the same terms
and conditions that governed the Performance Award during the period the Participant held it;
provided, however, that such Permitted Transferee may not transfer such Performance Award except by
will or the laws of descent and distribution. Any such transfer shall be evidenced by an
appropriate written document executed by the Participant, and a copy thereof shall be delivered to
the Administrator on or prior to the effective date of the transfer.

     11.04. Change in Control. In the event of or in anticipation of a Change in Control,
the Administrator in its discretion may terminate on or after an Acceleration

17

 

Date or before or on
the Control Change Date outstanding Performance Awards previously granted under the Plan, whether
or not then payable, in consideration of payment to the holder of the amount then payable under the
Performance Award in accordance with the applicable Agreement. The payment described in the
preceding sentence may be made in any manner the Administrator determines, including cash, Voting
Stock or other property. The Administrator may take the action described in this Section 11.04
with respect to any Performance Awards that are not then payable without any payment to the holder
thereof. The Administrator in its discretion may take the action described above contingent on
consummation of the Change in Control and with respect to some or all outstanding Performance
Awards, whether or not then payable, or on a Performance Award-by-Performance Award basis, which
actions need not be uniform with respect to all outstanding Performance Awards. The preceding
sentences to the contrary notwithstanding, the Performance Awards shall not be terminated and paid
to the extent that written provision is made for their assumption, continuance or substitution by a
successor employer or its parent or subsidiary in connection with the Change in Control.

     11.05. Earning Performance Award. A Performance Award will become payable at such
times, in such amounts and in compliance with such requirements as the Administrator shall
determine and as set
forth in this Plan and the applicable Agreement. If and to the extent deemed necessary by the
Administrator after an Initial Public Offering, Performance Awards granted to Named Executive
Officers shall become payable pursuant to performance objectives that enable the Performance Award
to qualify as “performance based compensation” under the Treasury Regulations promulgated under
Code Section 162(m).

     11.06. Shareholder Rights. No Participant shall have any rights as a shareholder with
respect to any Performance Award until payment of the Performance Award and then only to the extent
that payment is made in Common Stock that is issued to the Participant. The Company may include on
any certificates representing shares of Common Stock issued pursuant to a Performance Award such
legends referring to any representations, restrictions or any other applicable statements as the
Company, in its discretion, shall deem appropriate.

ARTICLE XII

ADDITIONAL TERMS AND CONDITIONS

APPLICABLE TO ALL AWARDS

     12.01. Interruption of Employee or Independent Contractor Status. In the event that
the terms of any Award provide that it may be exercised, Vested or paid only during employment or
service or within a specified period of time after termination of employment or service, the
Administrator may decide to what extent leaves of absence for illness, temporary disability,
governmental or military service or other reasons shall not be deemed interruptions of employment
or service.

     12.02. Performance Objectives. The Administrator may prescribe that an Award may be
exercised, Vested or paid only to the extent that certain performance

18

 

objectives are obtained.
Such performance objectives may be based on one or more of the Company’s or any Subsidiary’s or any
division’s (i) gross, operating or net earnings before or after taxes, (ii) return on equity, (iii)
return on capital, (iv) return on sales, (v) return on assets or net assets, (vi) earnings per
share, (vii) cash flow per share, (viii) book value per share, (ix) earnings growth, (x) sales
growth, (xi) volume growth, (xii) cash flow (as the Administrator may define such term), (xiii)
Fair Market Value of the Company or any Subsidiary or shares of Common Stock, (xiv) share price or
total shareholder return, (xv) market share, (xvi) economic value added, (xvii) market value added,
(xviii) productivity, (xix) level of expenses, (xx) quality, (xxi) safety, (xxii) customer
satisfaction, (xxiii) peer group comparisons of any of the aforementioned performance objectives,
(xxiv) earnings before interest, taxes, depreciation and amortization (“EBITDA”) (whether
normalized or not, including or excluding extraordinary items and subject to such other variations
as the Company may report to creditors or shareholders) or (xxv) except for Awards to Named
Executive Officers after an Initial Public Offering, any other criteria that the Administrator
determines. If the Administrator, on the grant of the
Award, prescribes that the Award shall be exercisable or shall become Vested or payable only
upon the attainment of performance objectives stated with respect to one or more of the foregoing
criteria, the Award shall become exercisable, Vested or payable only to the extent the
Administrator certifies in writing that such performance objectives have been obtained.
Additionally, the Administrator may prescribe that an Award may be exercised, Vested or paid only
to the extent the Participant completes a specified period of employment with the Company or any
Subsidiary.

     12.03. Other Conditions. The Administrator, in its discretion, may, as a condition to
the grant of an Award, require the Participant on or before the date of grant of the Award to enter
into (i) a covenant not to compete (including a confidentiality, non-solicitation or other similar
agreement) with the Company or any Subsidiary, which shall become effective on the date of
termination of employment or service of a Participant with the Company or any Subsidiary or any
other date the Administrator may specify and shall contain such terms and conditions as the
Administrator shall otherwise specify, (ii) an agreement to cancel any other employment agreement,
service agreement, fringe benefit or compensation arrangement in effect between the Company or any
Subsidiary and such Participant and (iii) a shareholders or other agreement covering the Common
Stock acquired or to be acquired pursuant to Awards granted under the Plan, which contains such
terms and conditions as the Administrator may require, including without limitation any repurchase
rights, rights of first refusal, voting agreements or other provisions. If the Participant shall
fail to enter into any such agreements at the Administrator’s request, then no Award shall be
granted to the Participant and the number of shares of Common Stock that would have been subject to
such Award, if any, shall be added to the remaining shares of Common Stock available under the
Plan.

     12.04. Forfeiture Provisions. All rights to any Award that a Participant has will be
immediately discontinued and forfeited, and the Company shall not have any further obligation
hereunder to the Participant with respect to any Award and the Award will not be exercisable
(whether or not previously exercisable) or become Vested or payable on

19

 

and after the time the
Participant is discharged from employment or service with the Company or any Subsidiary for Cause.

     12.05. Restrictions on Common Stock. Shares of Common Stock a Participant receives
pursuant to an Award shall be subject to the transfer restrictions described in Section 16.01.
Prior to an Initial Public Offering, shares of Common Stock a Participant receives pursuant to an
Award shall be subject to the Company’s first refusal and repurchase rights described in Sections
16.02 and 16.03.

ARTICLE XIII

LIMITATION ON BENEFITS

     If the receipt of any payments or benefits under this Plan would subject a Participant to tax
under Code Section 4999, the Administrator may determine whether some amount of payments would meet
the definition of a “Reduced Amount.” If the Administrator determines that there is a Reduced
Amount, the total payments to the Participant hereunder must be reduced to such Reduced Amount, but
not below zero. If the Administrator determines that the benefits and payments must be reduced to
the Reduced Amount, the Company must promptly notify the Participant of that determination, with a
copy of the detailed calculations by the Administrator. All determinations of the Administrator
under this Article XIII are final, conclusive and binding upon the Company and the Participant. It
is the intention of the Company and the Participant to reduce the payments under this Plan only if
the aggregate Net After Tax Receipts to the Participant would thereby be increased. As a result of
the uncertainty in the application of Code Section 4999 at the time of the initial determination by
the Administrator under this Article XIII, however, it is possible that amounts will have been paid
under the Plan to or for the benefit of a Participant that should not have been so paid
(“Overpayment”) or that additional amounts that will not have been paid under the Plan to or for
the benefit of a Participant could have been so paid (“Underpayment”) — in each case, consistent
with the calculation of the Reduced Amount. If the Administrator, based either upon the assertion
of a deficiency by the Internal Revenue Service against the Company or the Participant that the
Administrator believes has a high probability of success or controlling precedent or other
substantial authority, determines that an Overpayment has been made, any such Overpayment must be
treated for all purposes as a loan that the Participant must repay to the Company together with
interest at the applicable federal rate under Code Section 7872(f)(2); provided, however, that no
such loan may be deemed to have been made and no amount shall be payable by Participant to the
Company if and to the extent such deemed loan and payment would not reduce the amount on which the
Participant is subject to tax under Code Section 1, 3101 or 4999 or generate a refund of such
taxes. If the Administrator, based upon controlling precedent or other substantial authority,
determines that an Underpayment has occurred, the Administrator must promptly notify the Company of
the amount of the Underpayment, which then shall be paid to the Participant. For purposes of this
Section, (i) “Net After Tax Receipt” means the Present Value of a payment under this Plan net of
all taxes imposed on Participant with respect thereto under Code Sections 1, 3101 and 4999,
determined by applying the highest marginal rate under Code Section 1 which applies to the
Participant’s taxable income

20

 

for the applicable taxable year; (ii) ”Present Value” means the value
determined in accordance with Code Section 280G(d)(4); and (iii) ”Reduced Amount” means the
smallest aggregate amount of all payments under this Plan which (a) is less than the sum of all
payments under this Plan and (b) results in aggregate Net After Tax Receipts which are equal to or
greater than the Net After Tax Receipts which would result if the aggregate payments under this
Plan were any other amount less than the sum of all payments to be made under this Plan.

ARTICLE XIV

ADJUSTMENT UPON CHANGE IN COMMON STOCK

     The maximum number of shares as to which Awards may be granted under this Plan, the terms of
outstanding Awards and any other limitations in this Plan shall be adjusted as the Administrator
shall determine to be equitably required in the event that (a) the Company (i) effects one or more
stock dividends, stock split-ups, or subdivisions or consolidations of shares or (ii) engages in a
transaction to which Code Section 424 or any similar event applies or (b) there occurs any other
event which, in the judgment of the Administrator, necessitates such action. In addition, the
Administrator may make such other adjustments to the terms of an outstanding Awards to the extent
equitable and necessary to prevent an enlargement or dilution of the Participant’s rights
thereunder as a result of any such event or similar transaction. Any determination the
Administrator makes under this Article XIV shall be final and conclusive. The issuance by the
Company of either shares of stock of any class or securities convertible into shares of stock of
any class, for cash or property, or for labor or services, either upon direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the maximum number of shares as to
which Awards may be granted, any other limitations in this Plan or the terms of outstanding Awards.
The Administrator may grant Awards in substitution for performance shares, stock awards, stock
options, stock appreciation rights, phantom shares, or similar awards held by an individual who
becomes an Employee, director, advisor or consultant of the Company in connection with a
transaction described in this Article XIV. Notwithstanding any provision of the Plan (other than
the limitations of Section 5.02), the terms of such substituted Award shall be as the
Administrator, in its discretion, determines is appropriate.

ARTICLE XV

COMPLIANCE WITH LAW AND

APPROVAL OF REGULATORY BODIES

     15.01. Compliance. No Award shall be granted or become exercisable, Vested or
payable, no Common Stock shall be issued, no certificates for shares of Common Stock shall be
delivered, and no payment shall be made except in compliance with all applicable federal and state
laws and regulations (including, without limitation, withholding tax requirements), any listing
agreement with any stock exchange to which the Company is a party, and the rules of all domestic
stock exchanges on which the Company’s shares of stock may be listed. The Company shall have the
right to rely on

21

 

an opinion of its counsel as to such compliance. Any certificate for shares of
Common Stock issued under the Plan may bear such legends and statements as the Administrator may
deem advisable to assure compliance with federal and state laws and regulations. No Award shall be
granted, become exercisable, Vested or payable, no Common Stock shall be issued, no certificate for
shares of Common Stock shall be delivered and no payment shall be made under this Plan until the
Company has obtained such approval or consent
as the Administrator may deem advisable from regulatory bodies having jurisdiction over such
matters.

     15.02. Postponement of Exercise or Payment. The Administrator may postpone any grant,
exercise, Vesting or payment of an Award for such time as the Administrator in its sole discretion
may deem necessary in order to permit the Company (i) to effect, amend or maintain any necessary
registration of the Plan or the shares of Common Stock issuable upon the grant or exercise of any
Award under the securities laws, (ii) to permit any action to be taken in order to (A) list such
shares of Common Stock or other shares of stock of the Company on a stock exchange if such shares
of Common Stock or other shares of stock of the Company are not then listed on such exchange or (B)
comply with restrictions or regulations incident to the maintenance of a public market for such
shares of Common Stock or other shares of stock of the Company, including any rules or regulations
of any stock exchange on which the shares of Common Stock or other shares of stock of the Company
are listed, (iii) to determine that such shares of Common Stock in the Plan are exempt from such
registration or that no action of the kind referred to in (ii)(B) above needs to be taken, (iv) to
comply with any other applicable law, including without limitation, securities laws, (v) during any
such time the Company or any Subsidiary is prohibited from doing any of such acts under applicable
law, including without limitation, during the course of an investigation of the Company or any
Subsidiary, or under any contract, loan agreement or covenant or other agreement to which the
Company or any Subsidiary is a party or (vi) to otherwise comply with any prohibition on such acts
or payments during any applicable blackout period; and the Company shall not be obligated by virtue
of any terms and conditions of any applicable Agreement or any provision of the Plan to recognize
the grant, exercise, Vesting or payment of any Award or to grant, sell or issue shares of Common
Stock or make any such payments in violation of the securities laws or the laws of any government
having jurisdiction thereof or any of the provisions hereof. Any such postponement shall not
extend the term of an Award and neither the Company nor its directors and officers nor the
Administrator shall have any obligation or liability to any Participant or to any other person with
respect to shares of Common Stock or payments as to which the Award shall lapse because of such
postponement.

     15.03. Forfeiture of Payment. The Participant shall be required to forfeit any and
all rights under Awards or to reimburse the Company for any payment under any Award (with interest
as necessary to avoid imputed interest or original issue discount under the Internal Revenue Code
or as otherwise required by applicable law) to the extent applicable law requires such forfeiture
or reimbursement, including without limitation, in connection with any event where the Company or
any Subsidiary is required to prepare an accounting restatement due to material noncompliance, as a
result of misconduct with financial reporting requirements, for any applicable period.

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ARTICLE XVI

RESTRICTIONS ON COMMON STOCK ISSUED UNDER THE PLAN

     16.01. Transfer Restrictions.

     (a) Prior to an Initial Public Offering, no Participant or Permitted Transferee may sell,
transfer, assign or otherwise dispose of any shares of Common Stock issued or acquired under the
Plan until six months after such shares of Common Stock are issued, except that the foregoing
restriction shall not apply to the sale, transfer, assignment or other disposition (i) by the
Participant to his estate or a Permitted Transferee or (ii) by the Participant’s estate to a
Permitted Transferee.

     (b) The sale, transfer, assignment or other disposition of shares of Common Stock issued or
acquired under this Plan may be restricted at any time to the extent necessary (i) to permit the
Company to take any action in order to (A) list such shares of Common Stock or other shares of
stock of the Company on a stock exchange if such shares of Common Stock or other shares of stock of
the Company are not then listed on such exchange or (B) comply with restrictions or regulations
incident to the maintenance of a public market for such shares of Common Stock or other shares of
stock of the Company, including any rules or regulations of any stock exchange on which the shares
of Common Stock or other shares of stock of the Company are listed, (ii) to comply with any other
applicable law, including without limitation, securities laws, (iii) to otherwise comply with any
prohibition on such acts during any applicable blackout period, or (iv) to comply with any other
agreements that the Company may enter into with respect to any of the foregoing.

     16.02. Right of First Refusal.

     (a) Prior to an Initial Public Offering, a Participant or Permitted Transferee may not sell,
transfer, assign or otherwise dispose of shares of Common Stock issued or acquired under this Plan
unless he or she complies with this Section 16.02. Any attempt to sell, transfer, assign or
dispose of any shares of Common Stock in violation of this Section 16.02 shall be null and void,
and the Company shall not give any effect to any such attempted sale, transfer, assignment or other
disposition in the stock records of the Company.

     (b) At least 60 days before any proposed sale, transfer, assignment or other disposition of
any such shares of Common Stock prior to an Initial Public Offering, the transferring Participant
or Permitted Transferee shall deliver a written notice (a “Sale Notice”) to the Company specifying
the number of shares of Common Stock proposed to be sold, transferred, assigned or otherwise
disposed of (the “Offered Shares”) and the prospective transferee or assignee, and disclosing in
reasonable detail the price, which must be payable solely in cash, and the other terms and
conditions of the proposed sale, transfer, assignment or other disposition.

     (c) The Company then may elect to purchase all of the Offered Shares at the price and on the
terms specified in the Sale Notice by delivering written notice of its

23

 

election (an “Election Notice”) to the transferring Participant or Permitted Transferee within
30 days after delivery to the Company of the Sale Notice (the “Election Period”). Any purchase of
Offered Shares pursuant to this Section 16.02 must be consummated as soon as practical (but in any
event within 30 days) after the expiration of the Election Period.

     (d) If the Company does not elect to purchase all the Offered Shares or has elected to do so
but failed to purchase such Offered Shares within the time Section 16.02(b) and (c) require, the
transferring Participant or Permitted Transferee may, within 60 days after the earlier of the
Company’s declining to purchase such Offered Shares or its failure to do so after its election to
purchase such Offered Shares, transfer such Offered Shares to the prospective transferee identified
in the Sale Notice on terms no more favorable to such transferee than specified in the Sale Notice.
Additionally, as a condition to any such sale, transfer, assignment or other disposition of any
shares of Common Stock, the acquiror must agree to be bound by the terms and provisions of this
Article XVI as if he were a Permitted Transferee. Any Offered Shares not transferred within such
60-day period will be again subject to the provisions of this Section 16.02 upon any subsequent
attempt to sell, transfer, assign or dispose of such Offered Shares.

     (e) The provisions of this Section 16.02 shall not apply to any sale, transfer, assignment or
other disposition of any shares of Common Stock (i) by the Participant or Permitted Transferee to
the Company, (ii) by the Participant to his estate or (iii) by the Participant or his estate to a
Permitted Transferee. Upon (i) the death of a Participant if shares of Common Stock issued under
the Plan would be transferred to a Person other than the Participant’s estate or a Permitted
Transferee, (ii) the transfer from the Participant’s estate of such shares to a Person other than a
Permitted Transferee or (iii) the death of a Permitted Transferee, the Participant, the
Participant’s estate or the Permitted Transferee, as applicable, shall be deemed, immediately
before such event occurs, to have given the Sale Notice above with a proposed sale price of Fair
Market Value at the time of such event. Any other person receiving shares of Common Stock that
were issued under the Plan may not sell, transfer, assign or dispose of any such shares without
complying with the provisions of this Section 16.02 and such shares shall be subject to the
provisions of this Article XVI.

     (f) Notwithstanding any other provision of this Section 16.02, no Participant or Permitted
Transferee may pledge, hypothecate or otherwise use as security or collateral any of the shares of
Common Stock issued or acquired under the Plan. If any Participant or Permitted Transferee (i)
becomes a debtor under the Bankruptcy Code or (ii) makes a general assignment for the benefit of
creditors or permits any of the shares of Common Stock to be attached or levied upon or subject to
judicial sale or execution of judgment, the Participant or Permitted Transferee, as applicable,
shall be deemed, immediately before such event occurs, to have given the Sale Notice to the Company
pursuant to Section 16.02(b) above with a proposed sale price of Fair Market Value at the time of
such event.

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     (g) If any event described in Sections 16.02(e) or (f) occurs and a Sale Notice is deemed
given with a proposed sale price of Fair Market Value, then such purchase price shall be payable in
cash or, if the Company so elects, by delivery of the Company’s full-recourse promissory note
bearing interest at such rate as would avoid interest being imputed under the Code and payable in
equal quarterly installments over no longer than five years, or some combination of cash and
promissory note as the Company so elects.

     16.03. Repurchase Option.

     (a) Prior to an Initial Public Offering, if a Participant’s employment with the Company and
all Subsidiaries terminates for any reason, the shares of Common Stock the Participant or his
Permitted Transferee, as applicable, owns or later acquires that were issued or acquired under the
Plan shall be subject to the Company’s right of repurchase pursuant to this Section 16.03 at a
price per share equal to the Fair Market Value (determined as of the date of repurchase) of such
shares of Common Stock.

     (b) If the Participant terminates employment more than six months after the shares of Common
Stock are issued under the Plan, the Company may exercise its election to purchase such shares of
Common Stock that the Participant, the Participant’s estate or the Permitted Transferee owns
pursuant to this Section 16.03 by delivery to the Participant, the Participant’s estate or the
Permitted Transferee, as applicable, within 90 days after the termination of such Participant’s
employment, of a written notice specifying the Company’s election to purchase all of such shares of
Common Stock that the Participant, the Participant’s estate or the Permitted Transferee owns. If
the Participant terminates employment within six months after the shares of Common Stock are issued
under the Plan or before the shares of Common Stock are issued under the Plan, the Company may
exercise its election to purchase such shares of Common Stock that the Participant, the
Participant’s estate or the Permitted Transferee owns pursuant to this Section 16.03 by delivery to
the Participant, the Participant’s estate or the Permitted Transferee, within 90 days after the
date that is six months after the issuance of such shares of Common Stock under the Plan, of a
written notice specifying the Company’s election to purchase all of such shares of Common Stock

that the Participant, the Participant’s estate or the Permitted Transferee owns. The purchase
price for such shares of Common Stock shall be payable in cash or, if the Company so elects, by
delivery of the Company’s full-recourse promissory note bearing interest at such rate as would
avoid interest being inputed under the Code and payable in equal quarterly installments over no
longer than five years, or some combination of cash and promissory note as the Company so elects,
and the closing of the repurchase shall take place not later than 60 days following the date of the
Company’s notice to repurchase such shares of Common Stock. Otherwise the Company’s repurchase
option under this Section 16.03 shall lapse.

     (c) The Company may assign its repurchase rights hereunder to one or more transferees, subject
only to compliance with applicable securities laws.

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ARTICLE XVII

GENERAL PROVISIONS

     17.01. Effect on Employment and Service. Neither the adoption of this Plan, its
operation, nor any Agreement or other documents describing or referring to this Plan shall confer
upon any individual any right to continue in the employ or service of the Company or any Subsidiary
or in any way affect the right and power of the Company or any Subsidiary to terminate the
employment or service of any individual at any time with or without assigning a reason therefor.

     17.02. Unfunded Plan. The Plan shall be unfunded, and the Company shall not be
required to segregate any assets that may at any time be represented by Awards under this Plan.
Any liability of the Company to any person with respect to any Award under this Plan shall be based
solely upon any contractual obligations that may be created pursuant to this Plan. No such
obligation of the Company shall be deemed to be secured by any pledge of, or other encumbrance on,
any property of the Company.

     17.03. Tax Withholding and Reporting. Each Participant shall be responsible for
satisfying in cash any income and employment tax withholding obligations attributable to the grant,
exercise, Vesting or any other event with respect to an Award. The Company shall comply with all
such reporting and other requirements relating to the administration of this Plan and the grant,
exercise or Vesting of any Award hereunder as applicable law requires.

     17.04. Reservation of Shares. The Company, during the term of this Plan, shall at all
times reserve and keep available such number of shares of Common Stock as shall be sufficient to
satisfy the requirements of the Plan for the payment of Common Stock. In addition, the Company,
during the term of this Plan, shall use its best efforts to seek to obtain from appropriate
regulatory agencies any requisite authorizations needed in order to issue and to sell such number
of shares of Common Stock as shall be sufficient to satisfy the requirements of the Plan. However,
the inability of the Company to obtain from any such regulatory agency the requisite authorizations
the Company’s counsel deems to be necessary for the lawful issuance and sale of any shares of
Common Stock hereunder, or the inability of the Company to confirm to its satisfaction that any
issuance and sale of any shares of Common Stock hereunder will meet applicable legal requirements,
shall relieve the Company of any liability in respect to the failure to issue or to sell such
shares of Common Stock as to which such requisite authority shall not have been obtained.

     17.05. Governing Law.
This Plan and all Awards granted hereunder shall be governed by the laws of the State of
Delaware, except to the extent federal law applies.

     17.06. Other Actions. Nothing in the Plan shall be construed to limit the authority
of the Company to exercise its corporate rights and powers, including, by way of illustration and
not by way of limitation, the right to grant options, restricted stock, performance awards, phantom
stock units or stock appreciation rights for proper corporate purposes otherwise than under the
Plan to any employee or to any other

26

 

person, firm, corporation, association or other entity, or to
grant options, restricted stock, performance awards, phantom stock units or stock appreciation
rights to, or assume such awards of any person in connection with, the acquisition, purchase,
lease, merger, consolidation, reorganization or otherwise, of all or any part of the business and
assets of any person, firm, corporation, association or other entity.

ARTICLE XVIII

AMENDMENT AND TERMINATION

     The Board may amend this Plan from time to time or terminate the Plan; provided, however, that
no amendment of the Plan may become effective to (i) increase the aggregate number of shares of
Common Stock that may be issued pursuant to Awards under the Plan, (ii) change the class of
individuals eligible to receive Awards or (iii) after an Initial Public Offering change the
performance objectives to which the exercisability, Vesting or payment of Awards granted to Named
Executive Officers may be subject, until shareholder approval of such amendment is obtained. No
amendment shall, without a Participant’s consent, adversely affect any rights of such Participant
under any outstanding Award at the time such amendment is made, except as otherwise set forth in
this Plan.

ARTICLE XIX

DURATION OF PLAN

     No Awards may be granted under this Plan 10 years after the Board adopts the Plan. Awards
granted before that date shall remain valid in accordance with their terms.

ARTICLE XX

EFFECTIVE DATE OF PLAN

     Awards may be granted under this Plan upon its adoption by the Board, provided that no Award
shall be effective, exercisable, payable or become Vested unless the Company’s shareholders approve
this Plan within 12 months of the Board’s adoption of the Plan.

ARTICLE XXI

RULES OF CONSTRUCTION

     Headings are given to the articles and sections of this Plan solely as a convenience to
facilitate reference. The reference to any statute, regulation or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.

27

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